J'Maine Chubb, CPA, CGMA, studied avionics in high school and also took an interest in a law career. He followed a familial career path, however, becoming an accountant, and he discusses some of that journey in this episode of the Journal of Accountancy podcast. Chubb, now the CFO at TravelWifi, was previously CFO of the Houston Airport System, where he worked for almost six years.
What you'll learn from this episode:
- Chubb's family ties to accounting.
- An early area of focus that helped set Chubb on his career path.
- His comparison of career management and investing.
- How forecasting passenger numbers was accomplished during the pandemic.
- The challenges in implementing GASB 68.
- Chubb's advice for aspiring CFOs.
- Why he didn't follow in the footsteps of some of the famous singers in his family.
Play the episode below or read the edited transcript:
— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.
Neil Amato: Welcome to the Journal of Accountancy podcast. This is your host, Neil Amato. For this episode, I'm going to be joined by J'Maine Chubb, the CFO of the company TravelWifi. We're going to have that conversation about airlines, careers, mentorship, and more right after this word from our sponsor.
Amato: Welcome back to the podcast. As I said at the top of the show, I'm joined by J'Maine Chubb. J'Maine is a CPA who holds the CGMA designation, and he's the featured accountant in the May issue of the Journal of Accountancy, The Last Word feature. J'Maine, I've read in that Last Word feature that accounting seems to be popular in your family. As a welcome to the podcast, I'd like to say, tell me more about what inspired you to become a CPA.
J'Maine Chubb: Thank you, Neil. Very honored that you have me here today, looking forward to our conversation here. What inspired me to become a CPA? Graduating high school, I went to a high school called Benjamin Oliver Davis Aerospace High School, studied avionics, a kid in the 11th and 12th grade looking at FAA regulations and the like, and somewhat seemed natural for me to move out and go into avionics and maybe electrical engineering.
I had in the back of my mind for the longest that I really wanted to pursue law. It seems all over the place, but this is what you do as a young person in your formative years, you're trying to decide what you want to do in life. Really enjoy what I did in high school, wanted to pursue law. But my brother and my father, they were accountants.
My father was an accountant, neither a CPA at the time, and my brother finalized his bachelor's at the time as an accountant. I reasoned that I would go and pursue an accounting degree. After that, if I wanted to pursue law, I could do that. I studied business law and possibly some other area. That's what led me down that road at the time.
Amato: In the feature, you also talked about why you think it's important to be a role model. What do you get out of that experience?
Chubb: Well, that's a really good question. You must do this by trade. However, what I get out of that experience is, I recall being in high school myself and graduating afterwards. Again, if you look back at what you previously asked me, trying to figure out exactly what I wanted to do.
Then also as I reflect back on my education, I thought that there were more practical things that could be taught in the school systems that would help a person really to start their life out. I think what I get out of it is really helping the individual to get on track because the faster you get on track, it's almost like investing.
The earlier you start, the greater you're going to do in the long run. An individual that's out there considering maybe I want to go into accounting, maybe I want to go into law. The faster you determine what you want to do, and that determination, turn that determination into action. It's really going to help you in your career. I think that's the greatest benefit I get out of it is trying to help that young person to get on track and spell out the things that they need to do to actually achieve their goals.
Amato: In mentoring young professionals, what is your advice to them for those who might ask, how can I get on the same path as you? How can I become a CFO?
Chubb: Absolutely. If you think about it, if you perceive it, you certainly can achieve it. But again, it's going to require a lot of dedication and determination. You need to know what it is that you want to do. Use organizations like the AICPA to go and become a CPA. See what's required of that. What are the educational requirements? What prerequisites are there? What study materials can you utilize to actually go and pass that exam?
Then look at CFOs for organizations and see what their background is. There may be other areas of finance and accounting that you need to learn as well. Many of them may have organizations that they participate in and provide mentorship as well. Your destiny, your goals are your own. Your determination is really going to matter in terms of whether you achieve your goals or not.
Really charting that course for yourself and shoot in a straight line towards your goals, I would say, is the way to go for any young individual thinking of becoming a CFO.
Amato: You mentioned earlier your interests, I guess, as a teenager in airspace, air travel, and I guess that led in part to you becoming CFO of the Houston Airport System, which is the role you held until really recently. Let's first talk about the new role: CFO of TravelWifi. You've been in that a few weeks?
Chubb: Yes, just a few weeks now, and certainly very interesting. This organization is headquartered in Houston but has operations across the globe. In this case, we actually earn revenues across the globe in continents like Africa, and Asia as well, Europe, South America, and some in the States as well.
But we actually provide connectivity for you with hotspots and the like, backup internet service. If you're traveling, let's say, to a country, we make sure that you have the best internet connection within that country, and if you're going to go to France, for an example, and Spain and Italy, we make sure that you stay connected, and you have the best service throughout your journey.
We also provide service for the armed forces in contingency zones as well. You have soldiers that are deployed to these various areas. It's very important that they stay connected to their families, but we're at Memorial Day now. We want our soldiers to be able to maintain contact with their loved ones when they're going out and they're being deployed to help defend our interests across the world.
Amato: Is that just the on-the-ground in the airport Wi-Fi or is it also the in-flight variety?
Chubb: No in-flight, and I understand how you would match those two. It would be great, I'm sure if we could get the contract with the airlines now, we'd provide that in-flight internet service. If you have any contacts, let me know.
Amato: For sure. Now, let's go back to your role as CFO of the Houston Airport System. What about that was fulfilling to you and what about it was a challenge?
Chubb: I had many accomplishments at the Houston Airport System as their CFO. One of the things I was able to do when I stepped into the organization, GASB 68 was implemented and this was a change in accounting for pensions. I noticed that all of the accounting was done properly, but I noticed that the individuals that were responsible for charge-outs to the airlines, they were not necessarily accountants by trade.
The very nature of that adjustment and accounting principle called for the increase in liability to be offset by an expense that did not hit the operating expense line item. For that reason, the individuals responsible for charging the airlines didn't charge the airlines one penny for the additional $100 million or so they were responsible for on their rates and charges.
Granted, we wouldn't charge them in one year for that $100 million, we probably need to spread that out. What I did is I went in and, of course, when we talk charges to the airlines, we're usually dealing with someone that they're not necessarily just a finance professional by trade, and so I pretty much wrote a white paper for them explaining what happened with the implementation of GASB 68, why it was difficult for someone who did not necessarily have the accounting knowledge to understand that charges needed to be made there.
But everybody can understand that if you have some additional liability, there's an expense associated with that. I was able to spell that out for everyone and identify that. We took on an additional nearly $200 million in liability and the airlines' portion of that was $100 million, and I actually came to agreement with the airlines that we were going to charge that out over a number of years and recapture those monies for the airport system.
A large accomplishment, that's $100 million that can go into reinvestment in the airport system. Of course, the airport system is a huge financial engine for the region, and so being able to capture dollars like that is going to help us go out and build the facilities that are needed for growth and the like.
I found ways that we could go out and finance additional projects as well. I looked into our master bond ordinance. We were able to utilize funds in a different manner that we'd never had done previously, and I worked with our external bond council there and city legal to identify that my approaches to utilizing those funds were correct. In doing so, we were able to go out and finance an additional billion dollars of projects. If you look at the airport system, a billion dollars goes a long way.
Some of the airports might say, well, I need two or three or four, but of course, one billion is certainly going to help you. It could build a pretty nice size terminal there. Quite a few accomplishments, and so it's really worthy, that's really impactful, and that's what I enjoyed most about my role there.
Amato: Now, obviously, in the air travel business, there was plenty of uncertainty in the midst of the pandemic, so what I'd like to ask on that topic is, how has the past 2–3 years maybe helped you grow your forecasting skills?
Chubb: Absolutely. When the pandemic hit, it was very difficult for us to determine what was our next year going to look like. Right around March of 2020, our fiscal year ends June 30th, and so planning for that next year that will begin July 1st, really couldn't depend on our normal forecasting methodology that would say, "Traffic is going to increase by pretty much your area's gross domestic product of 2 % or so."
That's very reliable in the airport industry. When something like COVID happens, what do you do? It was very difficult for us to determine what the amount of passengers would be, which is really the source of our revenues and it would help us determine what our revenues might be. For airports, a large portion of your revenues are derived from parking and concessions.
We know how much we make per passenger, and then as it relates to the airline revenue, airlines are charged based on their use of our facilities. We know the cost of our facilities and they pay a certain portion of that. In order for us to really determine our ability to pay our debt service and the like and forecast for that, we must know the level of passengers and plan from there.
What we did is we looked at the possibility of a vaccine being completed. At this time, there was no vaccine out there and no real understanding of when it would be finalized. We made guesstimates of when a vaccine would be made available, and how that would impact passenger travel.
We determined that a vaccine would be made available at a certain point in the fiscal year, and then from there decided that a certain amount of passengers would take that vaccine and begin traveling again. Then over some time, more individuals would become comfortable and then another percentage of travelers would begin traveling again. All in all, we've said that our budgeted passengers would be down about 60% versus the prior year.
All said, we came in pretty close, and we were fortunate enough that a vaccine did come out. Since then, passenger traffic has recovered very good. However, there was a lot of uncertainty. Forecasting is a way for management to cope with uncertainty. We laid out the level of passengers that we expected, and we used that to come up with our budget for the subsequent year, and certainly managed through it very well.
Alongside that forecasting, we came up with certain policies that would really maintain our cash position because cash is king in a situation like that. We started the pandemic with a high level of days cash on hand. We wanted to maintain that. What I said with that, we wouldn't use any cash for any capital expenditures. We'd have to go out to the market for any capital expenditure needs.
We did just that over the year, and actually we maintained very well throughout the pandemic, maintaining one of the best days cash on hands across the airport industry.
Amato: You said in The Last Word that one of your uncles [Levi Stubbs] was the lead singer of the Four Tops. I gotta ask: Are you a singer?
Chubb: I've been told before that I have a good speaking voice, but somehow that does not translate into singing. I have to wonder, maybe it's good to have a good speaking voice and maybe I could get into radio, but I would introduce the singers rather than doing the singing myself.
I have another uncle, Joe Stubbs as well, that was famous before Levi, and so many people don't know that. Very interesting growing up with a family that way, I guess, it puts a little pressure on you to have a singing voice yourself. I'm the one that steps into the background once the individual starts singing.
Amato: That's funny. That's me as well. I like talking on the podcast, but you wouldn't catch me singing for — it'd be rare.
Chubb: We can go karaoke one day if you like.
Amato: That's right. J'Maine, thank you very much for being on the podcast. Anything you'd like to add in closing?
Chubb: No. In closing, I really thank you, again, for your time here. I would really like to say for any young professional that's out there thinking of becoming a CPA, taking that exam, becoming a CFO, just know that you can do it. It's all about your determination and your will to do it. Nothing stands in your way but yourself and your mind, and so I look forward to you doing exactly what you set out to do.
Amato: Again, that was CPA J'Maine Chubb. You can read more about him in the May issue of the Journal of Accountancy. We will post a link to that issue and to the specific feature on J'Maine in the show notes for this episode. Thank you, the listener, for tuning in to the JofA podcast. Talk to you again on Thursday.