Wizz Air Holdings PLC
LSE:WIZZ
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
1 161
2 536
|
| Price Target |
|
We'll email you a reminder when the closing price reaches GBX.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Wizz Air Holdings PLC
You don't have any saved screeners yet
Good day, and thank you for standing by. Welcome to the Wizz Air F ‘23 Q3 Results Conference Call. At this time all participants are in listen-only mode. After the speakers’ presentation, there will be the question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Jozsef Varadi, CEO. Please go ahead.
Thank you. Good morning, everyone. Thank you for coming to this presentation. So this is Wizz Air Holdings plc Q3 fiscal ‘23 result presentation. So let me just give you the highlights as we consider this period.
So the reporting -- in the reporting period, revenue was up 43% versus pre-pandemic level. So that is Q3 fiscal ’20. If you take the financial year-to-date, the first nine months, we are up 35% versus pre-pandemic level. So clearly, Wizz Air is the fastest-growing airline in Europe. At the same time, unit revenue grew by 4%. I think we said that before that this is the first time, we are seeing a very substantial volume growth, capacity growth delivered to the market at the same time being able to grow unit revenue too. And within that revenue growth as unit revenue represented 7% growth relative to pre-pandemic levels.
We delivered breakeven EBITDA, slightly profitable quarter on net profit, although with some fluctuation of financial inputs, especially foreign exchange. Fuel unit costs came down by 5% versus the first half of the financial year. So we are seeing some improvements of the macro environment. Let's not forget that we are unhedged in this period. So we are really subject to the market, both on fuel and foreign exchange.
Completion rates improved significantly. You recall that we got severely affected by operational disruptions during the summer. And post-summer, we were able to stabilize operations and improved our completion rates. So we are nearly back to historical standards, still a small gap, but I think we are heading the right way.
Liquidity, close to EUR1.4 billion. This is the same liquidity level. As a year ago, without taking any incremental financing. So essentially, the business over the past year was cash flow breakeven, despite the P&L loss what we are reporting. We got strong ratings out of the rating agencies from Fitch and Moody's. And we continue to focus on our environmental footprint and our sustainability performance, which is becoming increasingly recognized by the outside world as well. And the latest manifestation of that is the CAPA Global Environmental Sustainability Airline the award, what we received recently.
If you look at kind of the key metrics of the business as it stands. With regard to our passenger account, we carried 12.5 million passengers in the period. This is 60% more than a year ago and 24% more than the pre-pandemic quarter before the breakout of COVID-19. In terms of aircraft count, the fleet has been growing on a constant basis. We added 27 aircraft over the past year. And our fleet is now 57 aircraft larger than what it was pre-pandemic.
We extended our footprint. But at the same time, we also consolidated our operations, as you can see. We were striking out smaller ineffective operating basis to make sure that we are gaining scale benefits and operational efficiency, as well as financial performance from those moves. So it is a more focused, more concentrated network what we are having right now.
At the same time, we entered some new markets, new countries, added three more countries to our franchise versus a year ago and nine versus pre-pandemic levels. We have been talking about sustainability, but also, we have been getting some other awards in this period. I mean, we are not really trophy collectors, but of course, it feels good when the industry recognizes our performance.
This is important because, as we said, the current financial year is a transition year. We are ramping up operations, and we are ramping up our investments we have made during the COVID times. As a result, you can see our market share has grown substantially in Central and Eastern Europe from 18% pre-pandemic times to 27% now. I mean, that's a substantial growth. So essentially, our impact is 50% bigger in Central and Eastern Europe, than prior to the breakout of COVID-19.
And we have continued to invest across our markets in Central and Eastern Europe, we consider an Eastern Europe as home run for Wizz Air. So it remains an investment market. Although on a going-forward basis, you will see that our growth rate is moderated in Central and Eastern Europe, because really the growth will come through some of the new market investments that we have made during the COVID period. So strong results across the board following through our commitment to Central and Eastern Europe.
And with those highlights that we just turn it over to Ian to talk about the financial performance, and I will take it back for some of the other insights of the business. Thank you.
Thank you, Jozsef. Good morning, and thank you. As outlined in the highlights, revenue more than doubled in Q3 versus last year at this time, with the Q3 revenue figure of almost EUR1 billion, 43% higher than the same period pre-COVID in F ‘20. EBITDA was roughly breakeven and our operating result improved, though still affected by higher operating costs, which we will break down in detail later, as well as explain how these we be brought back in line with pre-pandemic levels.
Ultimately, we turned to EUR33.5 million profit for the quarter, admittedly helped by a course correction from a strengthening euro. Cash remained level with last year's balance despite the growth and the higher volume of business.
Revenue is 43% higher than fiscal year ‘20 for the same quarter. Notably, unit revenue growth when compared to this quarter in fiscal year ‘20 came in at EUR3.73, which is almost 4% higher than F ‘20 and 50% higher than the same quarter last year, and it is lining up with the half two guidance we gave you in November.
Ancillary revenue is growing fast at 7.5% versus fiscal year ‘20 as we optimize and segment our customers better and tailor suitable products to their requirements. Longer routes such as those to the Middle East and that region, in general, present the opportunity to price up and across the network as our load factor increases, so will our ticket-related unit revenue.
The cash balance at the end of December was EUR1.37 billion, in line with our forecast, and it reflects the seasonality of the reporting period. In addition, we purchased EUR125 million of EU and U.K. emissions trading credits as part of our offset obligations. Unflown revenue for future flight purchases and the refund of PDP payments from Airbus contributed to almost EUR100 million of positive cash flow during the period.
We ended the quarter with roughly the same amount of cash as we did in the same quarter last year, despite the 43% growth in available seat kilometers, which demonstrates the business' ability to generate cash, while withstanding the summer challenges. We have not required the PDP financing facility that we mentioned in last quarter's results presentation, although that credit line has now progressed from a term sheet stage to definitive documentation, and we anticipate a closing in early February to provide additional liquidity, should there be an unexpected deterioration in macro factors.
With respect to our fleet financing obligations, we have secured financing commitments for all aircraft scheduled for delivery in calendar year 2023. In addition, we have been engaging with the market and preparing for deliveries for next year for 2024. And we remain confident that the combination of the Wizz Air credit quality and the superior Airbus A321neo aircraft in the 239-seat configuration will make our order book the most attractive asset for the leasing community to finance, which will ultimately put us at a cost advantage compared to other airlines.
Our ex-fuel CASK figure continues to drop and ended at 2.49-euro cents, which is now only 10% higher than pre-pandemic levels and is approaching guidance, which targets the second half of this year's increase to no more than single-digits, compared to fiscal year 2020. Cost reduction is our top priority now that the post-COVID ramp-up pressure is starting to normalize and the enhancements we spoke about previously start to mature.
We remain confident that the results of these efforts combined with higher aircraft utilization, will deliver reduced unit costs that return to historical levels. In fact, if you look at the last row on this slide, it shows how our utilization increased, compared to this quarter last year. but how it is still below our fiscal year ‘20 levels and dramatically below our target minimum of 12.5 hours a day, which Jozsef will talk about later.
Fuel costs continue to put pressure on earnings this quarter, but as of today, we -- I can confirm that we are -- that we continue to follow our hedging policy, and we have 45% of our fuel requirements for next year hedged and 20% of our fuel-related currency hedged as well for next year.
In terms of how we're going to tackle ex-fuel CASK, it's two-fold. Firstly, there are a number of structural cost reductions that we will benefit from. These include having the youngest fleet with an average age of 4.6 years, which means lower operating costs and higher fuel efficiency. Then you have an up gauged fleet with 239-seats for the new deliveries, which, especially with utilization returning puts us far ahead of any other operator whose seat count is simply unmatched.
Secondly, we factor in the work we've been putting in this winter to optimize the business, such as rationalizing basis, optimizing the route network, eliminating certain flying patterns, reducing flight disruptions and improving customer service.
And with that, I'll hand the floor back to Jozsef to further talk about our cost advantage and targets for the balance of this year and next. Thank you.
Thank you, Ian. Well, maybe the best way to put this is that we are putting fleet utilization in the forefront of the business, and utilization is the religion of the airline. And everything as is sort of subordinated to that. And we would like to highlight a few major directions here with regard to flight disruptions, operational resilience, customer service enhancement, the fleet efficiency, network development and sustainability. But please kind of keep in mind the utilization target of the business to be reinstated back to pre-pandemic levels.
So if you look at the business, you are seeing that disruptions are moderating, but at the same time, they are still a factor. And we are clearly resetting the operating model to make sure that we get more resilience out of the system. We are expecting to grow ASKs by around 30% in the first half of fiscal ‘24 versus previous year. While load factors have been building up, they have not reached pre-pandemic levels, but we are expecting load factors to be reinstated to pre-pandemic levels, 90% to 93%.
Utilization, again, while improving, but we are not fully transitioned. But we are expecting in the first half of fiscal ‘24 to be back into a pre-historic levels with 5.5 hours of utilization. And same for completion rate I mean significant improvement during the quarter, but more improvement to follow with 99.5% target. I mean you can see that in Q3 fiscal ‘22 that was achieved. So we want to make sure that it's not only the off-peak period, but during the peak summer period, that performance level is sustained.
We are heavily investing into operational resilience. We gave notice on this direction before. We are investing in the infrastructure into people and into aircraft. So with regard to our infrastructure, quite a significant number of systemic and automation initiatives are taking place, but also, we are changing design elements of the model to make sure that we get more output through the system.
I mean, we have gone through some significant disruptions and the consequences of those disruptions were to manage all the claims, customer claims. We are adding capacity to that figure should that happen again that we are ready to do that and effectively process that claim volume. Also, we are adding more crews to the system, on standby to make sure that if the operating environment is disruptive that actually we have better ways to recover.
We hired 3,000 people during the last two years in 2021, 2022. I mean, this is against the 4,000 people we had at the bottom of the COVID period. So we nearly doubled the size of the organization over the last two years. Obviously, we are putting these people through training, and we have very significant throughput increase in our training center. And we have a number of other programs to make sure that people are properly trained and advanced in their carriers like the Wizz Air Academy or the Cadet program that we have in place.
We continue to embark on the A321neo aircraft. This is the best craft of our times in terms of economic efficiency and in terms of environmental impact as well. And as you know, that we have the high-density 239-seat of aircraft coming online, and we continuously take deliveries of those aircraft and to advance the renewal of the fleet.
If you look at the customer side of the equation, we are very focused on the customers. We have basically the entire document validation put through online brand awareness is increasing in key markets and in investment markets across the board. We are becoming increasingly digitalized in our interactions with the customers. So moving away from call support towards digital support, as you can see, a significant shift with that regard. Obviously, this is a lot more efficient and effective with the customer.
As said, the fleet remains to be a cornerstone issue to the business. We continue to receive new aircraft deliveries. I mean, we all know that the industry is disturbed at the moment in terms of the manufacturer's ability to produce and deliver on time to operators. So we are not immune from that. But if you really think about this, we are programmatically delivered the aircraft. So even if that is delayed, that we suffering doesn't really mean that we would be lacking aircraft over time, but it would just be delivered later. But at one point, we would be getting pretty much the same number of aircraft as originally scheduled, because we have a delivery stream program for five, six years in front of us. So we have a large aircraft order book out there.
I think we are in a privileged position to have access to the best aircraft of the world, while other airlines don't have that order book. And certainly should you want to order as of today, you would not be able to take it from the manufacturers. So we're seeing that the aircraft itself and the order stream in front of us are a great source of structural competitive advantage for the business going forward.
If you look at the way we are delivering growth in fiscal ‘24, this is a very safe way of growing the business. So essentially, most of the growth, roughly 80% of the growth will come through as increasing frequencies on existing routes, 16% on joining existing airports. So essentially 95% of the growth come through the existing network, existing routes, existing airports.
And if you look at the geographical split of deploying growth, half of the growth comes through new markets, namely Abu Dhabi and Italy, and the other half would come through the existing network. So again, it is not like that we are blowing growth in our existing market and diluting our revenues as a result. But really, growth is put through largely the newly invested markets.
Maybe just a few words on Abu Dhabi. We find Abu Dhabi a very exciting venture be it great results coming through now. I mean, it was a slow start because we launched the airline during the pandemic under quite restrictive COVID measures. But as the market opened up, we are seeing the fruit harvested from that investment. We have significantly scaled operation. We are having actually nine aircraft based in Abu Dhabi, eight flying, one being spared. Obviously, it's a young fleet of aircraft. Brand awareness is growing. Customer reaction is very significant, providing further ground for growth in the future.
We are looking at dubbing down on Abu Dhabi in the coming years. So we are going to double the fleet size would be in the next 15 months or so. Already we are the second largest are in Abu Dhabi, and we continue to grow our business there. We are seeing market demand pretty much across the board to Europe, to the CIS countries, to the Middle East, to the Gulf region itself, but also to the subcontinent. But obviously, some of them are easier to be accessed, some of them are more difficult from a regulatory standpoint, but we are working on each of these countries to make sure that we are able to access those markets. But Abu Dhabi has been a very strong story with strong results coming through encouraging us to invest further in that market.
I've already commented on sustainability. Sustainability remains in the focus of the business in the company. You can see the current performance of the business and the target for 2030. I've publicly stated, we are value ahead of the game, value ahead of the industry in terms of current performance and future commitment in terms of CO2 unit target for the business. And we are working on a number of initiatives to create staff capacity for the business going forward. Obviously, this is a work in progress. We are kind of inching in every period. So the latest one is an MOU signed with OFO in Austria, but we are looking at a number of other initiatives to get access to soft.
So maybe a bit of a summary on existing performance and what you should be expecting from the business going into the next financial year. We are maintaining our ex-fuel cost guidance for the second half of the current financial year. That's single-digit versus single-digit increase versus the same period pre-pandemic. We also maintain our guidance on revenue, unit revenue, mid-single-digit for the half year versus pre-pandemic period capacity growth remains on track with 35% projected for the second half of the financial year. We are halfway through that financial year, and we are tracking in line with that protection. Of course, we are expecting net loss for the financial year as indicated before, as this is a year of transition, but we are expecting to return to significant profitability in fiscal ‘24.
With that, for fiscal ‘24, we are focused on two major operational KPIs getting aircraft utilization back to 12.5 hours. Obviously, this is not only an operational issue, but it is also a commercial resource allocation issue, and we are adjusting our models as such that we can deliver on 12.5 hours. This is what this business used to deliver player to panic with completion rate to achieve 99.5%, which again, is the restoration of historical performance. Very importantly, we are very focused on getting ex-fuel CASK performance back to pre-pandemic level.
You may recall we used to be presenting a chart showing like a very consistent ex-fuel performance year after year for five, six years since listing the business. Obviously, we broke down on that during the COVID times due to circumstantial issues. But we are intending to reinstate that level of unit cost performance.
And I would just highlight again the strategic advantages, competitive advantages we have versus the market. We have the most renewed fleet program benefiting from new technology. We are up gauging flying the highest density aircraft. Obviously, that benefits unit cost production. And we believe that those cost savings together with productivity gains offset the headwinds. But of course, we are seeing on inflation, on macros and all those sort of areas. So we believe that we are in a lot better position versus any other airlines when it comes to unit cost prospects of the business, given the advantages falling out of the fleet. We are expecting the first half of the next financial year to grow by 30% relative to the current financial year.
So with that, let me just quickly summarize the presentation. So as said, we are much focused on unit cost reduction to get back to pre-pandemic performance levels through increasing utilization, gaining advantages from the aircraft. We are on fuel hedge parity with our competitors. So that issue is eliminated going into the next financial year.
Revenue growth is focused on ancillaries and load factor performance. I mean, you may wonder why we dropped down load factor. We dropped down load factor for two reasons: One is that we made a lot of new market investments. And obviously, all those new markets investments go through a maturity curve. And those markets are now maturing. They will be in the segment third year of maturity, and that is the time that you expect those markets to deliver full load factor potential and also because the COVID booking terms were very different from the normalized booking terms. And now we are transitioning from COVID to normalized. And it takes some time. So because of those two factors, you saw the drop of load factor. But now we are going back to historical performance levels.
Network continues to expand, and it will become more robust going forward. But the way we are growing capacity is very safe, 95% of the capacity growth is put through by increasing frequencies and showing excess results in the system. And most of the growth goes through new market activities without inflating existing market yields. And we are having strong liquidity, and we believe that the improving financial performance, we use significant liquidity gains for the business.
But again, I would emphasize that, irrespective of the P&L loss we are reporting actually, last year was a cash flow breakeven year, and we are expecting to top our decides position substantially going into next financial year.
Thank you. And now it's questions.
Hi, good morning. It's James Hollins from BNP Paribas. Three for me, please. Just on the ex-fuel CASK, up 10% in Q3 wondering if we should be thinking about single-digit being high single-digit or maybe close to 10% for the half as a whole? And maybe if you could just run us through near-term where you're seeing particular cost inflation or indeed some tailwinds in the business?
Secondly, you talked about financing your leases this year. I was just wondering, a, some general thoughts on the market, as well as your loss of investment grade make much difference to leasing cost. Obviously, IAG claim that doesn't perhaps you give me your view?
And then just third one, I might be being stupid here, but does your utilization back to pre-COVID levels? Is that not made slightly more difficult by your route network changes? I guess, a specifically high Abu Dhabi, I think you're starting up Turkey as well?
All right. So maybe I take the utilization model. But the utilization model is at the moment, down to operational ramp-up mainly, but also commercial ramp-up. So we don't see any natural barriers to range that the utilization model. Now obviously, we are testing the resilience of that operating model in light of expected turbulence in the operating environment and some stress coming out of especially ATC operations going into summer.
So ATC is going to be a complicated issue, due to the whole system being on the soft on the one side and dealing with hugely increasing levels of complexities, especially arising from the partial air space closer over Ukraine and Russia redirecting traffic as a result and also increased military activities in the air, which has priority over-city flying. And this is really a question how we put the operating model on the ground as such that it is resilient on the one side, but it is delivering the utilization targets on the other side. And this is what we have worked out during the year. I think we told you that we are transitioning the model. Abu Dhabi actually is adding to the utilization target, because its longer sectors flying more. So the Abu Dhabi utilization is more like 14-plus hours as opposed to 12.5 for the European operations.
So in terms of ex-fuel CASK, the question, I think, was whether we expect it to land in sort of high-single-digits or somewhere in the lower or middle single-digit range. There's certainly a ramp-up period that we have to get through from the lower seasons, where we are now back into the summer season. So I would expect it to be more in the higher single-digit range at this point. and then reducing rapidly into next year. Because if we're going to go back to pre-pandemic levels of F ‘24, we're going to have to get to that pretty quickly to land there for the full-year.
In terms of where we're seeing cost inflation across the line. So I would say that our airport costs are higher just because of the lower utilization currently in terms of 10.5 hours versus where we want to be at 12.5 hours. Handling is up across the board, due to wage growth and general inflation pressures. A different airport mix also contributes to that. Navigation charges are up 10% as a factor of Euro Control communications. Maintenance is actually coming down, because of the new aircraft that we operate and the more reliable that they can be. Crew costs are up.
As Jozsef mentioned, we are obviously having to add a lot of people into the system and then train them up. And there's also wage inflation across the board. We would expect slight disruption costs to come down, although they have been up in this quarter as a result of compensation claims and other adjustments having to work their way through the system. Overhead, we're planning on bringing in line or below ex-fuel historical or current CASK ex-fuel CASK levels. And depreciation is actually going up as we take more -- if we take newer planes that are -- that have a higher cost.
In terms of your third question, in terms of whether the loss of investment grade has a negative impact on our financing costs. So I would agree with the statement you said, which is that the feedback from the aircraft financing market is the investment grade. And remember, we are a split rating right now. So we still maintain one investment-grade rating. But I would agree that it has little to no impact on our financing costs. What does matter is the quality of the airline and the quality of the asset. And so aircraft financing costs across the board are going to increase, whether you lease or finance them just, because of the base rate increases that have happened, where we will be competitive is because of our remaining investment grade rating and because of the asset.
And so on a relative basis, our costs will be lower. And for this period and for going into next year, cost is the name of the game, eliminating any cost advantages or disadvantages that we might have and getting the utilization up to 12.5, which from 10.5 where we are currently is a 25% increase in utilization, and that 25% increase will dramatically bring down those unit costs across the board.
Stephen Furlong from Davy. Two quick ones. Could you just remind me, actually, what changes you made internally in the crewing model from last summer disruptions? I think you made some changes so that at least I know ATC can be an issue next summer, but that there will be nothing internal that will be an issue. And I was just wondering, Jozsef, do you have any comments on what happened with the EU in December in terms of the phase out of the ETS allowances, I think, out to 2026, '27? And how fair or unfair that is? It's certainly focused, obviously, into Europe rather than ex-Europe. Thank you.
Thank you. Maybe to benefit from the presence of our Chief Operating Officer, here. So Mike, maybe you want to elaborate on the crew modeling issue. So this is Mike Delehant, being in charge of the airline's overall operations.
Thank you, and good morning, everybody. Yes. Certainly, the tightness of the crew model in years past where we had a stable underlying environment, we were able to push the duty times towards where the regulatory high-end would be. So as we learned through the summer that having no ability within the flight duties in terms of hours available of the crew members was what was being triggered once the environment got highly disruptive.
So essentially, we've designed out the majority of all of the high-risk duties, which included such things as you may have heard of W patterns other complex flying that would push to that end. So as we look towards our ability to be able to respond to longer ATC and ground times, we've been working towards getting multiple hours of buffer into flight duties on a daily basis, while still being able on a monthly basis to maintain productivity by spreading across the days in a better way.
So that ability to absorb doesn't necessarily increase costs at all, but it does provide the crews with the ability to still have duty time available when disruption occurs. So that was the fundamental change that we've made as the model moves towards summer. And the utilization of the aircraft move-up, the productivity of the crews should be still able to move up, yet each individual day, they should have more ability to absorb, along with a stronger standby model in terms of available people at the right times in day.
Thank you, Mike. With regard to ETS, I mean, this is a long-debated issue in the industry, whether this is fair or unfair, I mean I would say that phasing of the current system benefits Wizz Air because we are yet not benefiting from free allowances. So essentially, we have to buy pretty much everything because of the growth, while most of our competitors are protected based on their history. And we think it's an non-fair system because essentially, that is freezing the status we are supposed to allowing more efficient operators to merge the issue of who gets exempted and who's not from any schemes coming into play in Europe.
I think this is, yes, a debate we totally disagree with any exemptions on long haul or cargo or anything like that because this is just a cross subsidization for the life of tours, et cetera. And that really makes a system unfair. And we are fighting against that approach. We understand that there is a significant lobbying of the legacy airlines for getting some single for the favor versus our standpoint here. But I don't think this is yet a settled view in Europe.
Hi, good morning. It's Harry Gowers from JPMorgan. I've got two questions. Could I firstly ask about pricing and load factors in Abu Dhabi, are these higher-yielding routes on average and also as it grows, also matures? How that affects the group CASK mix? And then just following on from James' question on ex-fuel CASK, up 10% in Q3. If we assume improved a fair bit relative to ‘19? What's the real kicker on the improvement relative to Q3? Thanks.
All right. So maybe to also benefit from the presence of our President, who runs the commercial line of the of the airline. So Robert, would you please comment on the Abu Dhabi pricing load factor equation?
Yes. Good morning, everybody. I think we're continuing to see strength in Abu Dhabi, and it's building up and maturing nicely. So it will be up to as you've seen the announcement, we have the eight aircraft there operating now, and we have a much more diversified network we're operating through this winter with a nice bounce of short, medium and long sectors in there.
I think load factors are -- it's still early in the maturity curve, but low taxes are building very nicely with what we would expect. So actually in some of the markets outpacing expectations and yields on some of these sectors. It's a market that has not seen ultra-low-cost competition to date. And so while we're coming in with price points the market hasn't seen, they are still healthy yields for markets that are basically one-year-old.
Thanks, Robert. And Harry, on the ex-fuel CASK kicker question. So I would expect thus to see airport flat with pre-pandemic levels handling down as we build more ASKs through higher utilization. We have a stable mix and benefit from some contract adjustments and negotiations. And so that's a structural change that we've made to the system. Navigation costs will come down as we increase ASK. We don’t expect Euro Control to be passing any further costs through to us.
As I mentioned earlier, maintenance cost to be flat – or sorry, to be down like we’re seeing currently. Crew costs down as we no longer need to ramp up as aggressively. Sales and distribution to come down as we grow pack, that’s quite predominantly credit card costs and fees associated with that. And then flight disruptions to be down as we maintain our 99.5% regularity target overhead under control and depreciation to be flat with where we are currently. So higher than pre-pandemic levels as a result of the larger and newer fleet. So overall, ex-fuel CASK to remain in line with guidance with bringing it down to pre-pandemic levels in F ‘24.
Thanks. Alex Irving from Bernstein. Three for me, please. First, let me come back to utilization. So your target looks like slightly ahead of pre-pandemic at 12.5 hours per day. You mentioned earlier on that Euro Control has been warning on potential disruptions, but you seem quite confident that you'll still be able to maintain that 12.5 hours. Can you please go into the reasons about why that is?
Second, on network structure. So those in your average stage length is up materially this quarter, north of 1,700 kilometers. Does that have any impact on the unit costs we've been talking about around crew overnights or other expenses you may have not incurred before? And you able to maintain your cash targets?
And then finally, on use of liquidity. So liquidity seems pretty far ahead of your EUR 1 billion target with interest rates coming up, is it become more attractive to own your fleet rather than use sale and leasebacks or JOLCOs or you need that to term out the EMTN that matures about a year from now? How are you kind of thinking about the use of that cash balance, please?
Maybe I would start with utilization. So in light of expected ATC disruptions, how are we going to deliver 12.5 hours. But we're going to be planning for more than 1.5 hours to create the lowest for ATC disruptions. We just know from historical performance that we made a strategic choice of flying brand-new aircraft. That also means that we have to fly that aircraft as opposed to keeping the aircraft on ground to maximize the economics sorting out of the fleet. So this is absolutely critical and cornerstone to the model. So you can get fleet economics out of used aircraft in a low utilization model, but this is not the model of what we elected to do. So we have to fly the aircraft.
And given the allowance and the change to the operating model, we're seeing that we will be a lot more resilient coming into summer than where we were last summer, because simply. We just didn't have that level of resilience built-in, because ATC may not be necessarily forcing you to cancel every time, but you have to be able to process longer delays than how we designed ourselves before an using that's the change in our model.
With regard to the network structure, yes, indeed, we are clearly discovering that people pay for stage length. As a result, the model of what we bring to the market is equally comparing for medium-haul activities, medium-haul flying. I mean Abu Dhabi is probably the best example for that. But it's not only Abu Dhabi. I mean we are having significant stage lengths operations within the European network like flying to the Canarys and those sort of areas.
And let's not forget that in 18 months from now, we are expecting to receive the first XLRAC 21 XLR, and we have 70 of that aircraft on order. And we are looking for best ways to operate that capacity. And to some extent, we are testing those with the existing fleet. It won't distress the cost structure of the airline. And obviously, one issue we will have to contemplate, especially when the XLR comes into play is crew overnight. But we are looking at it to figure out the best way to minimize the incremental cost of it. So through daily rotations as opposed to keeping crews out for multiple days. So this is something that we are working on at the moment. And we might be testing it on a few routes. But we are not adding complexities and we are not adding incremental cost to the system as a result.
Then on liquidity, I mean there's no secret that it is getting harder to identify sources of capital for, I think, weaker or smaller sized airlines. But in terms of your question as to whether we're going to buy or continue leasing, as long as there's leasing companies out there prepared to offer us the kinds of rates that we're seeing, whether it's a standard operating lease or JOLCO or some other sort of structure like that, it is far more efficient for us to unlock the value in our order book that way and give us the flexibility down the road to continue to recycle aircraft and exercise orders and options on our order book to bring our average fleet age down and benefit from the newer technology and the enhancements that are happening as the fleet evolves.
I mentioned earlier the PDP financing. We haven't needed to draw that down, although it is in final documentation stage. That is a feature that we're putting in as an insurance policy, reflecting on the fact that spreads have increased across the board and is a bird in the hand sort of opportunity right now. We remain confident on our January 1, 2024 bond repayment and have no issues there in terms of whether the business is going to have the liquidity to do so through a combination of that PDP facility and cash on hand from operations and what's generated over the course of the year. So overall, as I said earlier, I believe that everyone is going to be impacted, whether you own or rent from fleet, I think our impact is going to be lower than others.
Good morning, everyone. It's Jarrod Castle from UBS. Three as well. We've obviously got relatively encouraging commentary about Easter and summer from EasyJet, Jet 2. Do you want to give any comments on how booking patterns are progressing for Easter and summer?
And then you've given us the 30% growth in the first half of '24. Is it possible to give us an indication of the quarters how that would evolve?
And then just lastly, you've obviously put a lot of growth in Italy, recent announcements around Ita and Lufthansa, just if that impacts how you're thinking about the Italian opportunity?
Maybe I will start with the Italy question. In the meantime, I will just ask Robert to answer the summer question and the growth breakdown across quarters. So with regard to Italy, if you look at the Italian market capacity, it is still down versus pre-pandemic levels after our investment. So that has been a significant constellation in the marketplace, not only from all Italia Ita, but also from other smaller underperforming airlines pulling capacity out of the market.
I think on the one hand, that created the demand opportunity for Visa to come to market. But let's not forget that structurally, we took advantage of the COVID times to use our leverage with constituency in Italy to strike long-term arrangement, cost arrangements benefiting the business for a longer period of time, five years, et cetera. And those opportunities wouldn't have been available to us prior to COVID or after COVID. So we kind of pushed ourselves through that window. So we feel comfortable with regard to our settings in Italy, both on the cost side and the revenue side of the business, and we continue to grow our activities.
You might have noticed that we have done some consolidation in Italy in terms of seizing smaller base operations and redirected growth to large airports like Rome and Milan, where we have very strong reaction to our products and services. So maybe Robert, if you take the summer and the growth question.
Yes. On the question around the color around Easter and into summer, I think we're seeing bookings in line with our expectations at this point. You've seen and you -- I mean, there were comments earlier around where the ticket yield is at right now. We see trends continuing, but I think the real focus we've got is on, as we've said, closing the load factor gap versus where we were at pre-pandemic levels. So when we say we see bookings in line with forecast that assumes for closing that gap and filling up at both factors. So I think we're very comfortable with where summer is booking and Easter is booking at this point.
And you had the quarterly breakdown of 30% growth in the first half.
Yes. So the quarterly breakdown of the 30% growth, it's going to be heavier. We can come back to you with the exact numbers on it. It's heavier in the first quarter. Obviously, I believe it's closer to 40% given we had the reductions last year of Ukraine and Russia impacting that quarter, and then it's a little closer to 25% in the second quarter.
Good morning. It's Neil Glynn from Air Control Tower. So I'll also follow the trend of three questions. The first one on the -- back to the financing chest note, I guess, obviously, interest rates rising, but not everywhere. I'm just interested, can you give us a sense of the shape of instruments you're using in FY ’24? For example, are JOLCOs helping you take advantage of low interest rates in Japan to keep that financing cost per new delivery down?
The second question with respect to U.S. dollar hedging. You've got 20% in place. Is that considered optimal? I'm aware that you're obviously financing in euros, some of the new aircraft delivery. Just interested in your thoughts as to what that natural hedge actually is and how that compares to the 20%?
And then a final question, obviously, a different market, but your, I guess, sister company, Volaris has announced a loyalty strategy this week, which isn't, I guess, considered the norm for ULCC. Might that be something that Wizz Air would think about in the future? Or does your target markets prohibit that or make it less sensible, certainly in the foreseeable future?
Let me take the last one and then Ian, you take the first two. So I remember in my previous life when I worked for Procter & Gamble, and we were looking at the U.S. retail market, and you observed two very clearly different strategies in U.S. retailing price going high and low with the head loyalty program attached to it. and everyday low pricing launched by Walmart at that time. I think we had a Walmart kind of execution in the industry. So we think there is nothing more to do for loyalty than bringing everyday low pricing to the consumer.
And that's why we are so focused on cost, because that creates our ability to price low in the market if we are the lowest cost producer in the industry. So we don't have any intention to history copy what Sister Airlines are doing. I mean, they are in a different market context, competing against different competitors. We remain focused on cost on ULCC being the lowest cost producer and the lowest fare provider to the market.
In terms of interest rates and the mix between traditional financing or sort of more structured financing. So as I mentioned earlier, all of our aircraft deliveries for the calendar year are committed, not time but committed in terms of binding term sheets. The majority of our financing still comes out of the Far East, and JOLCOs play an important role to that effect. We don't have the breakdown in terms of that, but I can say that we are still pursuing innovative structures.
For example, in December, we closed a JOLCO that had a debt element to it tied to sustainability. So the more sustainable we can be in the lower interest rate we benefit from. So features like that continue to drive down our overall cost and make us competitive in relative terms to the rest of the market.
In terms of hedging in terms of the 20% currency hedge, that is the currency related to fuel portion. Our policy dictates that we first execute the policy with regards to the fuel commodity. Once we hit policy levels, we then move to currency, and we've put 20% in place as of January on the fuel -- on the currency-related portion to fuel. And we continue to follow a policy with periodic reviews of the policy.
I think where you're getting to in terms of whether that's enough or not puts us back into the dangerous territory speculating, which is not what systemic hedging is meant to do at this point, and it's something that we currently have no intention of doing rather than -- but then following the policy and reviewing the policy proactively from time to time.
Natural hedges are a benefit that we have currently. And because many of our vendors, including, for example, maintenance providers and parties like that are European-based. We do have the ability to balance either some of these contracts by all being in euro payments or some portion of it being a mix depending on the objectives and the pricing that we are able to get.
Fixing currencies in different -- fixing contracts in different currencies does come with a cost, and we constantly evaluate the cost and the benefit of that versus the overall unit cost that we're looking to achieve. And so we're confident that we have a hedging policy, both on the commodity and the currency that's robust and in line with the market.
I would just make a further comment on our hedging attitudes, if you want to put it that way. Do we like hedging? No, we don't. Do we make money on hedging? No, we don't. Is this a strategic long-term driver of the business? No, it isn't. The reason we do it is that we are in a very volatile environment with lots of risks to be that with. And this is one risk less you just strike this out in line with competitive practices and you can focus on bigger fish to fly. That's why we are doing it.
Good morning. This is Sathish from Citigroup. I got two questions here. Firstly, on the fleet utilization, if you could actually give some color on what was the exit rate in December? And where are you seeing it in for January in terms of fleet utilization, like number of hours? Is it more than 10.5 hours as we go into March quarter? And you actually mentioned that the utilization is greater in Abu Dhabi around 14 hours whereas Europe, it's around five hours. How much of it is actually related to the bottleneck that we have due to the conflict on the air space? And within Europe, what has actually been the major drag on the utilization?
And the second one is around the return-to-profitability into FY ‘24. What are the moving blocks here? Is it mainly getting the CASK ex-fuel back to pre-pandemic levels? Is that the major driver in terms of getting back to the profitability level? Thank you.
Maybe on the second one first. As far as I'm concerned, absolutely ex-fuel CASK is determining profitability of the business. This is what you can control. I mean, I have no idea how fuel is going to go in the future. Yes, we are hedging. So we are lowering of the fuel cost component in the business, but I'm not in control, but I can control ex-fuel costs to an extent I can. And the real question is how our ex-fuel cost performance compared to other airlines we are competing with. And should we be returning to pre-pandemic level ex-fuel unit cost levels. We would again become the lowest-cost producer in the industry in Europe. And thus, in that's the position we need to take to be able to create shareholder value to drive growth in the business and drive profitability of the business. So it is absolutely a cornerstone. I mean that's the single most important asking metrics, what we are having.
And this is heavily utilization driven. This is why we are talking so much about utilization because it is driven fundamentally by utilization. And it is important because empirical evidence suggests, and I'm pretty sure that you have maybe even broader knowledge on this than what I have, that if you look at this industry over the last, I don't know, 10, 15, 20 years, you see rising input costs flowing through the system over time and declining input cost are also taken out of the system over time and fuel being the most volatile input cost to the industry.
So if fuel price goes up structurally, over time, kind of, through a time lag of 12-months, you're going to see that affecting the industry through capacity discipline. So capacity is removed, restart the yield is moving up to cover the cost of increased input costs. And same happens through a time lag when input cost decline. So I think the industry has almost like a self-defense mechanism to protect its financial performance against input cost volatility over time. I mean this is not an adjustment happening overnight. But really where we can make the difference as a competitive vector in the market is to get our business delivered at the lowest unit cost and being on that basis, especially as we are in commodities and in commodities, lower cost means -- utilization you want to take?
I think the question was what...
So in utilization in Europe, yes, I mean, I would say that ATC is going to be the trickiest constituent going into summer. Last summer, we had lots of issues with airports, handling and those sort of economic factors. But I think they have largely fixed that is true. So I'm not expecting them to fall apart. I mean that is one factor. The European is talking about that all industries might be expecting more social orders than before because inflation will creep through and will affect consumers. And economic recession might be taking at all on employees, creating some sort of a social unrest. I think this is something to be seen whether that's a real fear or not.
But ATC, I think is very tangible. So ATC is going to be dragging. And that's why it is important that we have the model, the operating model as such that we are able to process at least a large part of the ATC drag in our performance as opposed to being forced to cancel in the end.
There's one question specifically, I believe, on January utilization, we haven't completed the month yet, so we're not advertising yet.
What about the December rate like?
Say again?
Sorry. In December, what was the exit rate like?
So for the people on the microphone, I didn't hear the answer. So we published the quarterly figures, which is 10 hours and 31 minutes. In December, it was slightly higher on the back of that.
Good morning. Jaime Rowbotham from Deutsche Bank. Two from me. I think one for Jozsef, one for Ian. Jozsef, some investors very high-level struggle, I think, with the idea that when it comes to A321 utilization that you can make as much money as much profit flying on rotation to the Middle East versus, say, three rotations in your core existing markets. Perhaps you could offer some further thoughts on that. I appreciate we've touched on some of the aspects already.
And then secondly, Ian, on the EU ETS advanced purchases. Obviously, it will be entirely up to you when you choose to use the offsets. But could you give us a rough idea for fiscal ‘24 of how much exposure you've still got in terms of offsets that you might need to buy versus what you've got locked in? Thanks.
I think I would actually challenge the statement of Middle East rotations cannot produce the same level of profitability as more frequent rotations in Europe. That's simply just not true. I mean if you look at the Middle Eastern environment, we, first of all, I think people generally pay for stage length. And two, it is a less competitive environment, if I may put it that way, giving us more room to maneuver on the yield side. So I don't think that profitability is at structural jeopardy just because we are operating in the Middle East and/or even I don't think that we are leaving opportunity costs from the table by not operating in Europe as a result.
Now having said all of that, we should certainly not be operating one rotation a day, and this is not the plan. And we would be still operating multiple rotations during the day. But of course, we would have motivations coming out of the European network, just given the geographic of Euro relative to Abu Dhabi, for example. But we are not seeing a structural deterioration of profitability as a result of this model. Ian?
In terms of ETFs purchases, we target to be 100% covered after the F ‘24. Yes.
Hi, everyone. [indiscernible] from Bloomberg Intelligent. Just going back to what you said about load factor I'm getting back to pre-pandemic levels. Can we assume that's just 2024 guidance? And what are the sort of underlying drivers. I appreciate there's general demand recovery in there, but is there sort of company-specific factors. I think you mentioned about fuel being a headwind meaning you have to prioritize yield this year. And then maybe if we could just have some comment on the Saudi operations. What appreciate its early days, was the customer profile looking like? What's the performance like so far? Any update on if you could possibly do outbound?
All right. So on the first one, I can make a quick answer, sorry. We don't guide on load factor. It's an operational target that we have, but we don't guide on it.
But I think if you just if you just look at kind of the underpinning factors affecting load factor. So we decided to invest into Abu Dhabi, into Albania, into London, Gatwick through the acquisition of a slot portfolio into Italy. And that what happened during the COVID times. And obviously, all those investments are yet maturing. So you can't expect structural load factor performance to fall out of those investments on day one. So it takes some time. It's not a long time, but two to three years. And if you look at the portion of that investment within the total network, we are talking about roughly 25% of the total network that would fall into that category. On top of that, we have to remove significant capacity that was intended to operate to Ukraine and Russia. That's roughly, what was it, 11% of the total capacity, we had to remove and reallocate.
Now this is premature capacity, obviously, because we had to find a new home for the aircraft for that capacity. So we have like 1/3 of our capacity basically maturing. This is the underlying cause of the drop of load factor. But as that maturity takes place, obviously, we will benefit from the load factor ramp-up on that. And next year, we are kind of getting into the period when you should be expecting significant maturity happening and see the different office load factors. So that's really what's driving up the load factor performance. And that's not forget the growth what we are intending to deliver will be deployed the safest way possible just putting on existing routes and existing gas which as opposed to adventuring new markets, new airports, new territories. So we are derisking that growth substantially as through the way we are deploying that growth.
And Saudi, I think Saudi is very exciting. Probably equally exciting to Abu Dhabi, if not more. We are gaining a lot of traction in terms of market awareness for Wizz despite the fact that we actually just started operating that market. I mean we don't have a long operating history, 1.5, two months. And so far, so good. So we like the reaction. As a result, we decided to launch more routes. Now we have 24 routes on sail to Saudi. Half of that network is operated. The other half is yet to be operated. And we are seeing quite a mix of travelers. I mean, Robert, what's your early profile detection on the customers?
Yes. It's actually a really good mix of travelers on board. It's both Saudi originating and inbound into Saudi as well with everything you can imagine from tourist volumes, families going back and forth, religious tourism going back and forth. So I mean there's quite a diverse mix with -- as we said, I think both the load factor and yield expectations are outperforming what we anticipated going in. So it started off strong.
Outbound?
I don't think we have any comments to make on outbound. I think the position or the same. It's a market we're focused on building up the route we have and we'll continue to explore new opportunities.
Now we're going to take some questions over from the participants on audio line. And the first question comes from the line of Mark Simpson from Goodbody. Your line is open. Please ask your question.
Yes. Good morning. Just one left actually after the lengthy call here to date. Obviously, cost of visibility is often recognized as something attractive. And I'm just wondering in terms of long-term contracts, both with airports and section staff, where do you stand currently? And where do you think you could take that in future years?
Mark, if I got your question right, you had a bit of a background noise.
Yes. Sorry about that.
So if you remove the far to behind you, I think you asking your question was to what extent we can expand our long-term context with airports and people?
And yes, exactly.
Okay. I mean I think COVID represented a significant opportunity for this to unlock the benefits of our growth in a distressed period for the constituents and we try to really look it down for the long period of time to sustain that benefit structurally I think what we are bringing to the part out is certainly growth. I mean, let's not forget that we are the fastest-growing airline in Europe. So we can deliver more growth than anyone else in the industry.
And secondly, which I think is gaining traction is the environmental sensitivities of the industry. We are deploying the best aircraft from an environmental standpoint and also from an economic standpoints to airports, which I think makes -- that makes this value appearing from an airport perspective. And we are trying to negotiate that kind of an element into the long-term contracts with Airport. So we think we have leverage as we speak, growth and carbon footprint of the airplane.
But obviously, the COVID times were unique with that regard. But we also see that, especially when you step outside Europe, let's say, kind of the peripheral markets are very eager to get this into their territories, especially observing the successful expansion in Abu Dhabi and now in Saudi. And I think that also that kind of a desire also gives us significant opportunities for locking in long-term cost advantages through -- access to our infrastructure.
With regard to people, I mean when it comes to our own employees, I mean, we manage our employees according to market. So if the market changes, we go with the market, we don't have specific policies. We don't have long-term contracts with people. We go with the market. We think it is a fair way of approaching our people with that regard. And that's what we are doing. This is what we have been doing, and this is what we will continue to do that. So we are not trying to lock in long-term employment contracts. We just go by the market.
And if I might add a few anecdotal points to that. So I've been looking at a number of the contracts, and I know because I've also sat on the other side of where there is a supplier or a potential supplier. In many cases, the company took the opportunity during COVID to enter into new long-term arrangements. That was before the inflationary pressures as aggressively as they have now. And those contracts have provisions in their A4 inflation escalation tied to caps in terms of what happens in terms of indexes, and they have extension rights on terms similar to the original terms.
And so what we're seeing is that we are protected through contractual arrangements from the vendors and suppliers. Now I'm not talking about specifically airports, but across the supplier base in terms of what they are able to pass through to us in terms of cost increases, and that puts us at a very competitive advantage going forward for maintaining our cost advantage and our unit costs.
And Mark, maybe just to add to it, if you look at it from a people perspective, so from an employee perspective, we are gaining a lot of productivity benefits from the gauging of the aircraft moving from 180-seat to 239 seats, because 239 seats would require the same two pilots and are on more cabin crew. So we are gaining significant productivity, which offset the inflationary pressure on labor cost.
That's great, Ian. And I say apologies about the party, but we're just celebrating the recovery in the industry. So great news.
Good.
Thanks for the invite.
Thank you. Now we're going to take our next question. And the next question comes from the line of Alex Paterson from Peel Hunt. Your line is open. Please ask your question.
Yes. Good morning, everybody. Actually, can I ask just a couple of questions. Just to -- and sorry to labor the profile of the ex-fuel cost ex-fuel CASK decline. You're saying that you're coming in the second half of this year at sort of high single-digit, but you're expecting to be flat next year. Do you -- I mean, that would be a very dramatic change in a very short period of time. Do you think that when you say flat, you might be a little bit above or actually are we looking at exiting ‘24 below pre-pandemic levels of ex-fuel CASK?
And then the second question is just obviously, with your network, you're trying to derisk the opening of new routes. You have had quite a bit of change of routes, trialing some and then launching them and then closing them. Can you just say sort of what the costs are of starting and closing a route? And what sort of impact that's had on your utilization and also on your CASK?
Maybe I would start and Ian, please is to add. I mean, if you look at CASK, there are a number of drivers to it. I mean, first of all, utilization, we are, at the moment, down to 1.5 hours. We are intending to be 12.5 hours. I mean this is a very significant uplift of utilization. I mean that profound the effect actual cost performance.
Second issue is that we were heavily down to all kind of change costs and disruption costs in the current financial year. If you recall, the board effect, changing the network, removing aircraft, reallocating crews. All those issues obviously incurred a lot, of course, not only immature revenue, but also substantial incremental cost in the system coming with the peak summer disruptions, which we are trying to create resilience against. So that's another driver that we are expecting a lot better performance and a lot less operational distress coming out of the operation of the coming summer despite the ATC comments, what we have made.
So basically, you're going to be also gaining on compensation costs as we are targeting the 99.5% completion rate, which we were unable to achieve last year. So I think we should be in a lot better place. And when you are, kind of, adding all these factors on top of that, recognizing that we're going to be flying a younger fleet of aircraft to further up gauged fleet of aircraft with the productivity benefits and the maintenance benefits of the younger fleet. So when you kind of add up all those elements of the puzzle, that's how you get to the kind of the high single-digit improvement on ex-fuel CASK.
I think to answer your question on the cost of opening and closing bases or airports and things like that, I think it's important to look at that in the context of what are the real drivers of our cost lines in our business, which -- and looking at this period's numbers, clearly, our fuel airport handling and on route charges and depreciation and amortization, that right -- those three right there make up the bulk of the cost base.
And so it's important to maintain perspective that yes, there is a cost of opening and closing base. But the benefit of optimizing that and finding the right route structure, so that you can generate the right yields and the right load factors far outweigh the cost of that when it comes to what really matters in terms of relative sale and getting the network right so that we can deliver the utilization and the on-time performance and the actual productivity is going too far outweigh the individual costs of those modifications.
Can you just, sort of, give an indication of what those costs might be?
I think it depends on the case-by-case and the market-to-market, so we don't break that out in any specific detail.
But it is -- I mean, closing a base, opening a base, I mean, these activities are not cost critical. I mean, most of our pilots are flexible. So you basically relocate them, so you don't really incur substantial cost. And with regard to cabin crew, we are also offering the cabin crew jobs across the network, maybe the take-up rate is not the same as the pilots, but many -- actually, many of our cabin crews float around with the movements of aircraft. So we don't really incur structural costs. So we don't have any infrastructure cost. We would be committing or have to or leaving behind when we close. So this is all down to personnel costs. And I think that is actually very flexible. So it is fairly marginal, I would say.
Thank you.
Thank you. There are no further questions for today. I would now like to hand the conference over to our speaker, Jozsef Varadi for closing remarks.
Well, ladies and gentlemen, thank you for your interest. Thank you for coming over. Thank you for listening and your participation with your question. I mean, just a very quick summary from me. I mean, clearly, this business has been transitioning from these COVID periods to getting back to normalized circumstances. We have been encountering significant challenges throughout the current year. But we are very confident that now the ship is moving in the right direction. So we have turned the corner, and you should be expecting a lot more normalized performance coming out of the airline comparable to pre-COVID times. And we will certainly benefit from our fleet program on the one side, and that's going to be topped with the operational KPIs, cost performance coming into play, which are important drivers of the business going forward. Thank you again.
That does concludes our conference for today. Thank you for participating. You may now all disconnect, have a nice day.