Ladies and gentlemen, thank you for standing by. I am Yota, your Chorus Call operator. Welcome and thank you for joining the Aegean Airlines conference call to present and discuss the Full Year 2020 Financial Results. All participants will be in a listen only mode and the conference is being recorded. The presentation will be followed by a question and answer session.
At this time, I would like to turn the conference over to Mr. Efthijil Vasylakis, Chairman. Mr. Dafilakis, you may now proceed.
Yes. Good afternoon, everybody. Welcome to our annual results call. I'm afraid, of course, that the completion of the year, as we all know and as we've explained in our AGM and various different occasions over the last few months, the close of the year, the last Quarter was actually one of the weakest quarters or one of the most impacted by the pandemic. So our full year ended up with just about $415,000,000 of revenue Versus $1,300,000,000 in 2019, which is a 60 8% reduction relative to the year before.
And indeed only with 5,100,000, 5,200,000 passengers Relative to the €15,000,000 that we had the year before, so again, a very significant 65% reduction. Indeed, as we've also highlighted On the text that we released this morning, due to the resurgence of the pandemic on Q4, the restrictions that we had across Europe And indeed, the restrictions that we have was what we call the 2nd lockdown here in Greece since early November. The last quarter in terms of Amount of activity and quality of activity was the 2nd most restricted quarter of the year, following, of course, the April to June quarter, which was effectively the beginning of the pandemic and which had a total block. So if we look back at the whole year, just €415,000,000 of revenue, just 5.2 1,000,000 passengers down from $15,000,000 And of course, a loss level before taxes of $297,000,000 And after taxes of $228,000,000 compared with $106,000,000 of profit on the year before, before tax and $78,000,000 after tax. So very much the, I would say, I'm afraid, consistent conclusion of a very challenging year, a very unique year, one where airlines around the world Face similar problems, and of course, our case is no exception.
Trying to put some color Again, and what has happened throughout the year, just to say, of course, the Q2, as we said earlier on, Well, the one of absolute block, the one was generated together with the Q1, the March Part of the Q1 of the year, the majority of the losses of the year also because of the various hedging effects, Hedging becoming ineffective and burdening the first half of the year With a total significant amount of additional losses along with the inactivity and the ability to cover the fixed costs. Q3 was the only part of the year with a reasonable amount Of activity, but of course, even that reasonable amount was around about 60% lower in flights And the year before and 62% lower in passengers. So it's still not by A long shot, any approximation of a normal summer. And indeed, that was the reason why Q3 itself was not as it typically is for our company. As you know, Q3 represents more than 100%.
It actually it represents roughly 140% of annual profit. And this year, even Q3, due to the weakness of the demand and the very short period in which We were able to operate with any sense of normality was also loss making. There was a, Shall we call it short window where, passengers were booking well For late June early July until the end of July. And then from August and on, we saw again the reduction of the trend of bookings Due to the resurgence of the pandemic, it lasted for another couple of months and then by mid October, it was obvious that Europe was going Very rapidly towards a second wave, which then became the 3rd wave and which resulted in basically From mid October and on, a series of lockdown around Europe, including a very, very serious lockdown in Greece as well as of November 2, which lasts, of course, to the end of the year and indeed is still in effect and which restricted Not only international travel from the point of view of requiring tests before and after the flight, but also very significantly for us From November and on, restricted the reasons for which people could move within Greece, so placing a burden of what is known as Central travel, so November, December itself was heavily restricted as in the Q1 This year, resulting in only a fraction of the activity.
So for Q4 2020, we operated roundabout 61 percent less slight than normal, but this is a dirty number because it combines A more than 75% reduction in international flying, with a 50% reduction in domestic flying. The reason why the domestic reduction in flying is not even more than that is because simply in winter frequencies are less And you need to connect the islands with some degree of capacity. So unfortunately, we were not able to reduce even further By having due to the restrictions very, very low load factors and that was the result of the 75% decrease of International flying, 50% decrease of domestic flying in the last quarter and the restrictions, passenger traffic was down by 78% And revenues basically followed more or less the same trend, although for international, there was some fair resilience because flights There were very few passengers with a few in the flights, but the few passengers paid a somewhat improved fare from previous years as typically happens when the whole market only retains Roundabout 1, I've added, but before, one of every 5 international flights. So the end of the year, again, Very weak, causing us to reach the results that we talked about already.
Of Of course, the company, as you know, has taken a series of different actions to prepare itself about how to address the challenge of the Pandemic which has well exceeded the duration that we had initially expected. And so just to name a few of the things that we did. We, of course, addressed our The banking system to draw capital, to draw debt from the banking system here in Greece. We use the horizontal measures also provided to healthy European companies to borrow funds with the guarantee of the So through a combination of commercial loans and partially government guaranteed loans, we raised 200 which effectively allowed us to retain a Cash level of €478,000,000 by the end of the year, even though the total cash burn for the year was 280,000,000 Out of which EUR 280,000,000 roundabout EUR 50,000,000 was the effect of Actually buying aircraft or paying inequity for aircraft. And roundabout €80,000,000 was the effect of the hedging losses that we had.
So again, dollars 200,000,000 of cash burn for the whole year, dollars 50,000,000 of that We've gone to invest in aircraft, euros 80,000,000 of that taken away by hedging losses, Hedges were included, mostly ineffective hedging. And the rest is what we can refer to as the Sure. Operating loss before, of course, the hedging effect, which itself has turned into an operating loss for the year. So Despite that cash burn, as I said, the level of cash at the end of the year retained at 478,000,000 Part of the reason for that, of course, was not only the fact that we started with a very significant amount of cash And effectively, a net cash position already in the beginning of 2020, but also that we stretched to out our delivery horizon for our Airbus A320 order, which means that basically also stretched out our PTPs and protected our outlays by some additional amounts that would have further burdened our company in 2020 2021. Again, here when we talk about fleet, to remind you about certain things.
We do have a total order Between the SOARs and Airbus Skyline of 46 aircraft, we have already taken delivery of 8. We're taking delivery of 9th In a month from now roughly, and the remainder of the order have been stretched out between 22/26, Well, the majority of the aircraft, roundabout 30 being delivered between 22 2024. So that stretching of the delivery of the aircraft has stretched also the PDP payments and allowed us to retain Some more cash to defend ourselves in this very difficult situation. And of course, That was the second measure that was taken that I will consider major. 3rd measure referred to Putting our 2 headquarter facilities together, now the entire company, financial and commercial is together in the operations building, speeding up The cooperation of people and I think also significantly reducing costs.
We placed a lot of efforts in reducing Overhead because effectively, the reduced fine period that we're going through still produces very, very little margin. So fixed costs Are definitely what we've been trying to work to address. Overheads have been significantly reduced and the actual merging All the operational headquarter facilities with the commercial one and the financial one has a significant effect there as well. The other thing we are trying to do, of course, and we can talk about that perhaps a little bit more in Q and A, is try to take advantage Of the weakness in the fleet market to and the fact that we've got a significant amount of expiries over the next Months and years to renegotiate terms and set ourselves up in a more competitive position. And of course, all that In all across Europe, there have been programs for labor support while people have to work less.
In Germany, they call them kutzarbeitgels. In Greece, we call it syndegracia, but more or less, it is a program whereby You can ask your employees to temporarily work less. In Greece, it's a limit of down to 50%. You cannot go lower than that. The employer retains The obligation, of course, to pay for the 50%, but the government also takes a role to substitute a part of what The employee is missing out in regular pay, so they will substitute 60% of the missing pay Of the missing 60, in other words.
Arriving with the employee getting basically something between 85%, 83%, 86% Of total, but only actually working for 50% of the time that he regularly works for. And of course, this is a major way to support employees During this crisis and to allow businesses also to reduce their costs while they don't need the services of the Specific employees or to the degree that is regularly required. There is another program here in Greece that our company does not use very much. Suspension or furlough. Typically, unfortunately, for airline Average pay levels, furlough in Greece or suspension in Greece is probably very low, what's the right, low compensation for employees.
So we Try to avoid as much as we can to try to retain our staff and motivate them to be ready to start again as we progress towards what We hopefully expect to be a rather better second half of the year. I think We talked about the fleet, we talked about cash flow, we talked about the debt. Obviously, there is a big element of Work still missing that has to do with the capital increase that we expect to execute in May, €60,000,000 as was decided in our recent AGM. And also following that, we expect to receive €120,000,000 Of grants as compensation for the losses of March to June Last year, it was approved by the EU during last December. Our expectation today is that the Requirements of the Capital Markets Commission and various other procedural things we need to complete with the Greek state We'll be completed roundabout right after Easter.
So after Easter, around after Greek Easter, forgive me, that means around between 6 10th Of May, we will be able to announce the specific terms of the capital increase. In other words, what kind of Capital Integrated is going to be one with rights to existing shareholders. That's what the intent of the Board is to recommend. And indeed, this is the Nature of the book list has been submitted to the Capital Markets Commission here in Greece. So we expect to have the approval by the Capital Markets Commission over the next roughly 3 weeks.
That puts us right After Easter, that's when our Board will confirm also exactly the terms of the capital increase, How many shares at what per existing, how many shares every for every existing share that you have now, At what rate? What we do know, of course, for sure is the €60,000,000 number, which will be the requirement in order to reach The statement of the conditions that the Greek stake has issued in order for our grants to get us the SEK120 million following that. So these conditions for the share capital increase will be announced somewhere between, let's say, 6th 12th May. Not our expectation today. So the whole process of the rights being traded and the participation of Shareholders will take place probably somewhere between 15th 30th May of this year.
This is why we have actually scheduled a second call, briefing call on the 10th May, I believe, Because then I think we will have much more specific information to give you to this effect, which of course is of significant interest.
The
other item That I suppose we should mention is the how we look at The opening up of the markets this year and to give some initial color of that. So first, let's start with the Q1. The Q1 is very much like the last quarter. Indeed, it's very much like the last 2 months of the year, Very, very low in terms of activity and load factors due to the restrictions, restrictions to travel with quarantines around Europe and Restrictions of essential travel only for domestic market in Greece. So we expect very similar performance in terms of losses, in terms of revenues With the Q3 of the year, because frankly sorry, with the Q4 of the year, because there's not very much has changed.
What we do expect There was a marginal improvement of sales as we head towards the summer. But of course, that still Keeps a cash burn that is still there. I would say we expect We remain at around between €18,000,000 €20,000,000 of cash burn in the Q1, but with a declining trend from the 1st month to the 3rd month. And hopefully, if things begin to open up, I would expect by the end of May or June to have reached Cash breakeven in terms of a monthly running basis. I don't want to be misunderstood.
If there is indeed a gradual opening, then we expect roughly 2 months from now to be on a running basis on the category. Even that Does not mean, of course, that we will recover what has been burned in the 1st 4 or 5 months if Expectations continue to be as they are today. Now what we expect will happen over the next 3 months, well, I think everybody has said very clearly guidance is difficult. Nobody knows exactly how things will turn out. What we do know is that finally, in the last two weeks, we have an acceleration of the vaccination program across Europe.
And we did have on the 17th March a voting in by the European Parliament of the Digital Green Passport. So what does that mean? That means that if things go as they are moving in the last 10 days around Europe and in Greece in terms of vaccination, We will have reached by June, half of June, something between 40% 45% or 50% All the adult population of Europe are brief to be vaccinated. We believe that this will gradually create A tendency and ability to travel. We do not know how soon this will manifest itself in Buying tickets, it could be as soon as May for late June or July travel or it could be as late June, so there is a significant uncertainty still with that.
And of course, we do know to what degree this Demand which will come back will actually how will it compare with the year of 2019, which was our last normal year. So what we have done is we have taken the approach, as I think we referred to in the past also, of Spreading a significant portion of the fleet in island bases around Greece, in creek, In Roads, in Porfou, in Mykonos, in Santorini and of course, in Thessaloniki in the north as well, taking some more aircraft away from Athens I'm trying to benefit from last year's experience that people within the pandemic tended to fly directly to these destinations. So we have taken some capacity out of Athens, put it In the islands and have the flexibility, of course, to adjust further as we get closer to the summer. We expect, As I said that Greece will gradually start to remove its various restrictions Within the next 3, 4 weeks. But of course, the real ability and tendency of people to travel will depend on how much lower the pandemic numbers are across countries, including Greece.
And that will take, we think, another 2 months for it to settle As the vaccination improves. Now again, as of July and on, we are assuming a level of operation that overall is at roundabout 70% to 75% of what 2019 was, but we have the flexibility to reduce that number Or increase that number depending on how demand appears to develop and restrictions appear to develop during the next 2 months. So flexibility we have, that's for sure. We get more of it As we also restructure some of our agreements with LeSors as the original agreements end, and we get more flexibility in terms of the way to use the aircraft and how Pay for the aircraft, which is important for us. But flexibility is going to be a key word.
And probably the other one, Also equally important to endurability or durability, which I think our cost management, Our cash retention to date and our upcoming capital increase and state subsidy grant, whatever that we will get In late May or June, we'll build further on. Before going for questions, I would just like to say that among the carriers that are responsible for specific markets, Some people like to call them national carriers or related to a country. As you know, most carriers around Europe That are related to specific countries have gotten specific assistance. And I'm just glad to emphasize that our company was strong enough To survive for a year and more than a year, 14 months now and still retain, never go below €400,000,000 of cash On its own feet and only using horizontal measures and having the patience to execute a capital increase And the execution of the brand around about 15, 16 months since the beginning of the pandemic, Which I think shows something about how we have learned to manage with difficult crisis. There's no way to remove the effects, But ultimately, what you have to do is to be able to endure, to adjust, to keep your people motivated, keep your people at the core Together, it's hard to say that they have not been affected.
It's hard to say for anybody that they have not been affected But it's important to keep the core around and able to contribute and trained enough We've been retrained enough to be able to contribute positively when things open up, and I think this is what we're looking to do. We're also working to create new services for our customers. We need people to begin to want to fly, to love To fly again, there are restrictions that will be retained. The mats will be retained in the planes. So we need to create other elements of interest for them, and we're working to do that.
And I think our competitiveness will certainly be no less at the end of the cycle than it was in the beginning. Although, of course, our numbers, Our losses, our profitability will have been substantially affected for last year and this year and possibly 1 or 2 years to come in terms of what levels they would have been had the pandemic not been around. So with all that, Thank you for your patience, and happy to answer a few questions. Again, having in mind that we will Have a chance to talk again together in roundabout 30 days on 10th May when we're ready to Present also the terms of the upcoming capital increase. And of course, by that time, we might have some additional color about summer demand.
Thank you.
Ladies and gentlemen, at this time, we will begin the question and answer session. Please use your handset when asking your question for better quality. One moment for the first question please. The first question comes from the line of Raziotis Stamatis with Eurobank Equities. Please go ahead.
Yes. Hi, there. Thank you very much for taking my questions. Firstly, on the capital actions, namely the Day rate and EUR 60,000,000 capital injection. These are part of a plan that was Effectively agreed in Q4 of last year.
So the question that pops up is whether you feel that this Will it be enough for you to navigate what seems to be, as you said, another challenging Year old, whether you might be looking for further capital enhancing actions? And Related to that is the second question about the capital raising. You mentioned €60,000,000 Is this like a Final figure or is it a minimum figure that you are looking at? And last question, Although I know it's hard to say how the situation will play out, how are bookings looking for the summer at the moment in terms of demand, please? Thank you.
Okay. So to start with the easy part first, the $60,000,000 is $60,000,000 it's not going to be more or less than 60,000,000 And so together with the €120,000,000 that's €180,000,000 of capital increase and of course, Cash increase. Now considering that we still have a substantial amount of cash in the company, still in excess of €400,000,000,000 today, I believe that this addition is more than sufficient to make the company strong enough To get to the summer and the summer of 2022, I would say quite easily from all sides. That doesn't mean that it doesn't make a difference how the summer will be or how the winter will be and what the degree of losses, the degree of cash flow Bernardo, we might have, but in any case, the company will be able to get to next summer very Readily, following the capital increase and the state subsidy that we have agreed and voted into law as of this year because, frankly, The numbers that we stand to lose this year, even in an equivalent situation, would be lower because our Cost is lower and because hedging is not there. So in a very, very big disaster scenario, which I do not expect, and I think most airlines in Europe do not Or indeed anywhere in the world.
We would still have significantly lower losses this year than last year simply because our cost is lower And because we don't have the effect of €84,000,000 of hedging to look At or to pay for. So I think even with a very bad scenario about The return of demand, we're perfectly fine to get very well to the summer of 2022, 1. 2, Our expectation, as I said earlier on, is that assuming the vaccination continues, And this, I'll get to your last the last part of your question. The vaccination continues in the pace that's been initiated the last And 15 days around Europe and indeed in Greece, we will get to around 45% to 50% adult population coverage by mid June, And this will bring some additional travel. What we do not know is to what degree.
I believe, therefore, that this What you asked about the bookings in the summer, right now, they're still weak. There's a lot of interest, but there's very few bookings because people do not know yet The conditions with which they might travel in the summer and the time when it would be safer or perceived safer to travel or to get to another destination Next summer, it's actually so these things will need to be clarified within the next 60 days. The first step, as I mentioned, was the digital green passport in the EU, but this was just the implementation on a legal basis. The implementation on a technical basis and the conditions that will be attached by countries in order to use the passport and how it will be Applied, making sure it doesn't have quarantine in most cases, if somebody is vaccinated or somebody is highly tested, this kind of thing will determine Exactly how it works and the effectiveness of travel in Europe. Now I think it's pretty Safe to assume that once roundabout 50% of European population, adult population has been vaccinated, there will be More willingness and ability to travel and less restrictions.
And that's what I referred to earlier by saying that by June, I think that if things go this way, We will have achieved basically a cash burn neutrality, okay, which of course should take us at least through the summer And depending on how things go, put us into a more regularized winter because by winter, I think 80% of anybody willing or practically everybody willing to be vaccinated will have been vaccinated. So Making a sort of a long answer to a short one, I'm very confident we will not need Over the next 18 months, any further capital strengthening than the €60,000,000 in €120,000,000 Of course, that doesn't mean that we cannot take various actions in order about how to deal with our fleet in terms of financing or whatnot, but I'm talking about equity and subsidy. Of course, it's very important to secure that states across Europe will continue to support labor. This is a huge requirement for many different sectors and we are one of them. And with these two conditions and the gradual evolution of the vaccines, I feel, I think, well, Confidence that we will not need anything more.
Now how well we will perform is another story that depends and there I cannot give you guidance Because that's a matter of degree of demand resurgence, and this I do not know.
That makes perfect Thank you. And just a final follow-up on the last question regarding bookings, etcetera. Just wondering from a competition perspective, what is the current state of play in terms of summer capacity versus Normal levels, let's say. Are we talking about a decline similar to yours, I. 20%, 25% in terms of scheduled seats versus normal levels?
Well, it really doesn't mean very much when you look 2, 3 months forward because airlines follow different strategies. Some canceled flights just a month before. Some tried to have a more realistic schedule. Some are trying to babysit slots. Some are trying To force advanced sales, it's very, very hard.
But I can tell you, you can actually go to the various statements of CEOs of airlines to see that they're all calculating a lower level of Now whether they say 20, 30, 40, that's another story. What there is no average number. And frankly, today again, nobody likes to commit. Everybody is talking about how they are adjusting, How they will further adjust depending on what happens and how they are ready to take advantage of a surge in demand. And this is the case with us I mean, the whole idea is to have the flexibility with the fleet and the personnel and to put capacity where you see will be need.
And so this is what everybody tries to retain, enough cash to Cover the downside and enough flexibility and capacity to respond effectively when demand begins to resurface.
That's great. Thank you so much.
The next Question comes from the line of Sreedhar Nattaria with Evang Equities. Please go ahead.
Yes. Good afternoon to everybody. Thank you for taking my question. I was actually Thinking on a follow-up on what we were just discussing. On the actual mix of the countries that are going to if we see a change there that are going to come from the summer like if The UK would have a higher share in the capacities and people will I'll be allowed to travel earlier.
Should we be expecting there this affecting fares or the flexibility we talked About maybe this would make any changes in the capacities over there. That was one question. And I have also a question on current hedging, your current hedging policies, If we could have an update on that because it's remained quite stable. I don't think you have Any new hedging coming into 2021 on fuel hedging, could you give us an update on that, please? Thank you.
Okay. Let's start from the 2/21 fuel hedging. I don't believe we have undertaken any significant New positions, our hedging for 2021 is at what? 15%. 16%.
16%. Sorry, 2021. Yes. Yes. 2021, 15%.
And we also Have a little bit of vehicle purchased, just fuel that we're have with a local supplier, Eipe, here in Greece that we can use. So that maybe add another 4%, 5% on what is effectively hedged. Now so most of it is not hedged. And we're not planning to do anything dramatic for our short term hedging position Clear because the great uncertainty this year, how much we will fly and when, and therefore, it's difficult to use hedging to protect yourself. With regards to what countries might be coming to Greece, well, all I can say is that Last year, effectively, it was only EU.
This year, we hope, but do not know, We hope that Russia, Israel and possibly even the United States could be Part of the game as well. This has to do with both bilateral and European related agreements that Still need to take place in terms of accessing vaccination protocols or different ways of allowing people to come into the country. We understand from the government and from the region, the newspapers that these are things that are underway. But again, nothing has been completed. However, there is a possibility that more countries have access to our country and more tourists Have access to our country than the year before, and these 3 that I mentioned are among the major ones.
There could be other in the Middle East Or even in Asia. But these are the 3 that we keep hearing more about. And they're obviously, for significance of Size reasons, quite significant for us. The U. K.
Versus Germany, we don't know these things. Yes, of course, U. K. Vaccination has run faster, but that means that people are feeling a little bit safer at home. I believe by as I said earlier on, by mid, late June, which we don't expect Significant traffic in tourism to materialize before mid June.
Therefore, no matter Who is a little bit ahead of the game or more than a little bit ahead of the game outside of Greece, So for instance, Israel and U. K, we don't expect significant numbers of people from Israel and the U. K. To come before. We are also More vaccinated and we also have lower levels of the pandemic because populations governments rather governments want To protect their citizens from basically reimporting the virus back into So they are likely to keep restrictive measures even if they do have Higher level of vaccination in their country, restrictive measures towards countries, but the pandemic is still high.
So the common European effort And the only possible goal is that it goes down everywhere over the next 60 days as, of course, the weather changes, but more importantly, as the vaccination Campaign goes higher because what we want to avoid this year is what we had last year. It's better to delay by another 20 days, Even though that costs money or another month, but to make sure that once flying, traveling, tourism opens up well, Then we will not have a reversal again, a resurgence again and a stop in that Trend, because that is more risky to airlines in particular, but I think to the whole market. Because as you understand, we have an x level of fixed cost when we don't fly much, But we have significantly additional variable costs when we do increase our flying. Therefore, we want to do that in an environment Whereby it will not just be for a couple of weeks and then we stop again, but that would rather be a gradual rebuilding towards a normality that will gradually evolve slowly, not within a week or a day or a month as vaccinations and other measures take effect. So we don't know which countries will be more important.
There will be more countries than there were last year because non EU, we think, We'll be accessible as well at some point, but to talk numbers is really impossible.
Okay. That's pretty clear. Thank you very much.
The next question comes from the line of Kumar Rahal with HSBC. Please go ahead.
Hi. Thank you for taking the questions. First of all, I wanted to follow-up on the previous Question regarding the capacity plans, especially now given that you're already in April and it looks like You must have got clarity about the next couple of months. And you have not Given any plan as to you said that you have the flexibility in terms of returning 18 aircrafts, 8 this year and 10 next Yes. So what sort of capacity plan do you have in mind, given that some bit of clarity you have for this year?
And when it comes to the capacity, what kind of flexibility you have to prepone the aircrafts, which you have delayed In case the demand comes better than expected, so do you what sort of flexibility do you have in that sense? Thanks.
Okay. I'll start from the end, Kumar, because it is easier to answer that. First of all, Still today, we are higher in aircraft capacity than we were in 2019 because as of today, we have accepted the 8 aircraft and only I believe 4 have departed. So we're still 3 have departed. So we are still higher than we were In 2019 aircraft capacity and this summer we will retain theoretically the capacity to fly more than we flew in 2019.
So Aircraft to fly the to cover the demand is not the problem. The problem is where is the demand, How late will it come and how efficiently we can cover it. So from the point of view of aircraft capacity, we are not concerned about this year. About next year, well, we have expirations of aircraft that can leave, but they can also stay. An expiration of an aircraft Means an opportunity to reposition the rent and the other conditions of the aircraft with the lessor.
So in the current Situation in the current market, great to have an aircraft expiration because you can actually reset the lease, you can reset the maintenance conditions, You can reset the redelivery conditions, I meant to say, which are important and are important determinant of cost. So we have the flexibility To actually retain the fleet that we need in different situations, and we have the flexibility to keep options about how to cover the demand either this year or the year after or the year 2022. So I'm not worried about that part of our ability to compete either from the point of view of adequacy of aircraft Number or in terms of conditions, which would be somewhat improved from what they were in the past. Now In terms of the capacity plan for this year, okay, we are not making specific commitments because exactly things keep changing. But if I am to make a prediction, I said again, the Q1 is going to look very much like the quarter of the last quarter of last year.
May June, I hope will be better from one aspect, Essential travel restriction within Greece should be removed by May, June. So there would be some more at least domestic travel and Probably a little more international travel, but not anything that looks like the beginning of a normal tourism season. Now At the end of June, mid June June, beginning July is when we think the real tourism season will actually begin. And there, We've said that our current plan between 75% 80% of what was 2019, but it's not uniform because it's split It's actually higher from the regions of Greece and lower from Athens, significantly lower from Athens than it was in 2019. Now whether it's going to be from July until the end of the year 70% or 75% or 80% or 85%, It really depends on how we evaluate the demand that's coming in.
We want to make sure that we'll be able to get To serve the places demand shows up, this is why we've increased the number of bases around Greece, and we keep monitoring What is happening even with the low reservation number that we have now, and we're ready to adapt that. So If you want one answer, I will stick to the 75%, 80% in 2019 after July. And before July, The Q2 is going to be at least at maximum, I would say, 35% Of what a regular year would be in terms of activity. I don't know. I hope I've answered your questions.
I'm not sure.
Yes, that's fine. Sorry, one clarity. So you mentioned that you have an opportunity to renegotiate The contract and the terms, are you talking about the older aircraft or are you talking about the aircraft which are yet to be delivered? Do you have have to renegotiate the prices on that on those aircraft also.
The space is on the expiring leases. Expiring leases refer to the older aircraft. The younger the new aircraft that are coming, I think we have a very good deal. You can still negotiate some things here and there, but you have a contract that is binding. And in order to change it, You need to come up with very different conditions in terms of volumes of aircraft, which I don't think are likely.
The major improvement we will get Will be from the expiring aircraft that we can renegotiate if we need to keep some of them to remove to make power by the hour agreement, to remove to reduce lease conditions lease terms lease rent, sorry, Or facilitated delivery conditions. So the point was referring to the expiring leases of the existing aircraft. That's it.
Okay, perfect. My second question was around the cost. I mean, you have been working a lot and you're trying to cut down the or cut down on your admin cost of staff costs and all. So could you please give a bit more color As to where do you think your staff cost would land up next year? And otherwise, given that this is a kind of opportunity where you can really review your costs, so What how do you see costs evolving once your full operation restarts?
I mean, I believe Not all the costs would come back to the business, so you will have some better efficiency in NIM post pandemic. So how do you see the overall Cost development or cost evolving post pandemic? And in particular, where do you see your employee cost going next year?
I really think it is I mean, you talked about staff costs mainly. I think the two things that are going to change materially are overheads other than staff. And I referred to the headquarters issues, a lot of other efforts and costs And the fleet issue, which Rudolf was talking about, just before. Those are the two areas where fixed costs are going to be reduced more significantly from. Now Staff costs, we have a high number of seasonal employees that are contract employees.
And when we hire them, When we need them, we hire them. And then if we don't need them any longer, when the contract expires with them, they are no longer retained. But that is not cost saving. That is just adjusting the size of your workforce to match your needs. So I don't think of that as cost saving.
It's some flexibility in terms of cost structure relative to other people that have only fixed Sorry, only permanent, let's say, employment, no contract employees, but That is not a matter of cost saving. It is a matter of flexibility. So and then comes the last issue. Of course, So long as the pandemic is retained, it continues, then of course, there will be some kind of labor support from the government. But Again, that goes along only for the time that we will be all restricted.
So when it comes to flexibility, yes, we have much more flexibility in The size of the workforce by about 15% or even 20% relative to other people Without having to fire employees simply because we are a seasonal business and we need to have seasonal employment and We are one of the few airlines that does that in Europe. So that's flexibility. It's not cost saving. The elements of cost saving refer Either the fleet or various contracts that we have renegotiated or the merging of the headquarters that I would say, Okay. They can produce a cost saving on a monthly basis between 1,500,000 and 2,500,000 relative to what we had before the pandemic.
But again, that depends on what size we choose to be in a year from now. So it's very hard to make forward looking statements when you don't know what the degree of recovery will be and how aggressive you want to be You want to be as this, let's say, comes back to normality. So I'm afraid I cannot give you very specific answers, Kumar, because it is a very different situation, one which cannot be, What's the right word? Broken down in pieces and then reconstructed. You just need to keep your options open and you need to keep your flexibility.
And then As things materialize, you see what you do. Because last year, at this time of year, 1 month after the pandemic had started, None of us would have expected to still be in this situation now. So we all have to have the flexibility and the endurance. This is the two things that matter most.
Sorry. No, in terms of staff cost, what I was trying what I was wondering is like the staff cost has been down by almost 42%, 43 And this year, where do we expect it to land next year? I mean, do you think the staff cost next year would be very similar to this year? Or do you think
It will be sort
of it will go back to the pre COVID levels. That's what I want to ask when it's overstaff cost.
In 2021? For 2021? Yes, exactly. No, it will be close. I mean, It will be obviously lower than it was in the 1st 6 months last year and higher than it was the last of the 6 month of 2020.
Overall, I would not expect that the variability can be plus or minus 6% or 7 From the number of 2020, I believe.
Okay. Perfect.
Hopefully, on the plus side because we want people to work because they don't work, we don't have aircraft to fly. So if we see further cost saving, it's not good news on that
Right, right. My final one my final question is around the CapEx guidance. So what sort of CapEx We should assume for 2021. And I'm assuming there won't be any further fuel hedging losses going ahead. Is that correct?
Well, you should ask the fuel, but yes, we have significantly lower exposure as we Thanks, about 10 minutes ago. In terms of what was the other question?
The CapEx guidance, please?
I believe we have $65,000,000 of pre delivery payments to Airbus That we need to undertake in H2.
Okay. Okay. Perfect. Perfect. Fine.
Thank you so much. Good luck.
Thank you.
The next question comes from the line of Kuk Juulian with Atka Capital. Please go ahead.
Yes, good afternoon. I guess following up a bit on Kumar's question, can you give us an indication of what your unit Costs will be coming out of this crisis. So if you forget about 2021, just looking forward, all these Cost cutting measures, where do you think you can end up in terms of your CASK?
No, I would not like to get into a discussion About the detail of what the cost level will be after the crisis. Because again, to answer that, you also need to know The total size of the business, because the size of the business
No, just assuming the business comes back to 2019, but just assuming that.
Well, I'm sorry, I cannot answer that question off the top of my head. We I don't remember. It should be a little bit Less than 2019, of course. But it's going to be a mixed number. It depends so much also on you're talking about pre fuel CASK, right?
Yes, yes, ex fuel, yes.
Should be a little bit lower, but I don't have the number off the top of my head. I'm sorry. I don't want to give you wrong number.
Okay. And just a second question coming back to the capacity for the summer. I mean, there were I read somewhere a few weeks ago that the capacity from London to Greece is actually going to or worse, They're going to be much higher than 2019 and specifically British Airways was looking to put quite a lot of capacity. They even mentioned putting some white bodies on the roofs. Can you any comment on that?
It was not referring to Athens. It was referring to Greece overall.
Sure,
sure. And well, there's 2 reads to that. The one read is that Greece is one of the top destinations in terms of interest. So you might say that is a positive because people apparently are interested to come back to Greece because Greece has performed really Reasonably well during this pandemic in terms of protecting people and not having too many deaths and blah, blah, blah. And also because of the islands are many different places you can go to, we can give you more remote options.
But of course, the flip side of that is that if you are considered a Desirable destination, there will be more capacity relative to other places as well. So the question is, what would you rather have? A destination that people don't want to go to with less capacity or a destination that people want to go to with some more capacity? The answer to that should be Destination that everybody wants to go to and only you flying. It just doesn't happen.
So I don't think There is a significant what's the right word? There's a way for us to predict what will happen in the summer. I do think that, yes, people will put capacity to Greece because it is a desirable market. It is not going to be mainly capacity To Athens, which is our main hub, I expect people to have increased capacity like we have increased capacity to the islands. So there will be more capacity to Crete.
There will be more capacity to roads. There will be more capacity to Mykonos and SMIC relative to 2019, Always from July and on. Until July, it is actually much lower. And of course, today, we don't know that the flights That are published for July will indeed materialize, but we certainly hope so. So what does it look like now?
It looks like less capacity To Athens, which is our main hub, more capacity directly to the islands, which is where we have also diverted more capacity. And this is Uniform, let's call it that way, from the big source markets, U. K, Journey, at least, which are the 2 big source markets for Greece.
Great. So thanks a lot. But just maybe the implication on FERC, can you just comment, are you seeing anything Pricing in terms of July orders, that is below what you would previous years Because of the fixed capacity in some
Well, I can tell you that the budget that we presented to our Board, because we have presented a couple of scenarios to our Board, Assume the lower fares for the summer than 2019 because simply that is the conservative way to consider it. Whether we are correct in this assumption or not, I cannot tell you.
But at the moment, what you're looking at your first competitive first, Looking at the July, August 1st in the market and we're looking for
In my view, the problem is that there's not, as I said, a lot of interest but not too many bookings at the time. So it's not about competitive fares. It's how many Bookings are being made, okay? And so it's the pace of the bookings that has to increase. I cannot tell you how the average will work out in the summer.
As I said, we have assumed it will be lower than 2019 Because that's the conservative assumption when you get a resurgence of capacity after a period of inactivity effectively and restriction. Whether that's going to be 5% or 10%, it's impossible to estimate.
Thank you very much. Thanks a lot.
We have a follow-up question from the line of Kumar Rahal with HSBC. Please go ahead.
Yes, hi. I'm extremely sorry for asking 2 more questions, Chad missed it out, and I'm really, very sorry. The first question is about, if you could please give us some color on debt repayment, so where how much of debt that you're earning in 2021 and in 22, sorry, if you could please talk about the debt repayment. And secondly, I also wanted to understand about any change in your Ketanji, as you just said that you're taking your capacity away from Athens, while previously you were consolidating your position in Athens, Now you're taking your capacity away. So is that a so do we so do you assume there's a change in strategy because of the change in the potential traffic mix Because you see a lot of traffic, a lot of major demand.
So how do we
assume your strategy going forward?
If you could please talk about 2 things.
You should not consider that a permanent trend. This is only because urban centers are actually less likely to be visited during a pandemic than in normal times. We very much believe in Athens. Athens continues to be the area which we think over the next 4, 5 years, we'll have Very significant growth in Greece with the development of the seaside, the seafront, with all the works that are starting there. Adam, we believe very much in the combination of Athens in a regular trip to Greece with another destination, which will come back.
We just don't know when it will come back. It will come back this year a little bit, 2022, 2023, depends very much on how people's sense of safety about the pandemic will recover as we go over the next couple of years. But looking forward, the strategy of having Athens as our main hub and investing in Athens to develop as their destination It's definitely the heart of what AGN will continue to be doing. Now having said that, there is absolutely nothing wrong in trying To fly from the islands as well, we will have we've been in the islands for many years. It's just that we did not grow our capacity.
We always have the base in Heraklion, in Rhodes, in Chania, in Thessaloniki. The new Bases this year are basically an aircraft we're positioning in Mykonos, an aircraft in Santorini, an aircraft in Porfou, And we are increasing also our capacity out of Irakli and Thessaloniki. The reason that this year makes more sense to do that is simply because It's going to be a short season anyhow because we don't expect significant traffic before July from abroad. And since it's a short season, you might as well use it where you get good yields for a short period of time, But then you can't use utilize the plane for the whole year. So normally, out of Athens, you would have a much better utilization around the year than out of Crete or out of Mykonos or out Santorini.
But this year, if the season is only going to be 2, 3 months, Then you might as well take the blame where it might get a better yield for a shorter period. So this is the reason that this delta It's happening more aggressively this year, but it's definitely not going to change the long term direction of what we do.
Perfect. And about debt repayments, please?
I believe the only debt that's maturing next year is €120,000,000 which is not fully drawn. Yes, we have €90,000,000
Yes, we have
€960,000,000 repayment in September 2022.
Yes.
And EUR 18,000,000 from the EUR 150,000,000
breakeven beyond in the last quarter of
Did you hear that? So basically there's a I'm sorry to watch. There's a €100,000,000 expiring between September December December of
2022. Right.
Perfect. Thank you so much.
Thank
you. The next question comes from the line of Tony Sarguellos with Axia Ventures. Please go ahead.
Good afternoon. A quick question from my side. Could you please comment a bit on the credit vouchers And of the potential liabilities still on balance sheet from money essentially that you Could need to return to clients, how should we think about looking at December 2020 liabilities?
Thank you. Well, vouchers are, I think, a common practice around Europe. I think we have 80 €7,000,000 of vouchers issued and not yet used by customers at the end of the year. Effectively, These have a different duration. Some of them will expire in the summer.
Some of them will expire in the winter. Some of them might even expire in the beginning of 2023, depending on when they have been issued. But that is essentially a A way of saying that this customer will travel without giving additional money to AGN, so it is effectively a What I would call it, yes, as you said, a line of duty that has to be covered. So it is Like saying, okay, out of the customers that will actually fly, a certain percentage have already given you money, so they are not Going to pay additional cash for their tickets. Also, some of them will not use the vouchers and those will eventually have the right To be fully refunded from for this amount.
So this is, As you correctly said, effectively, a liability which needs to be addressed over the next 12, 14, 15 months depending on the expiration of each voucher, depending on whether it will be Mr. So and so flying but not Paying you additional money or being refunded, but it's definitely going to take place and this should be considered in that way. Now What you also have to consider is that because of the so this is a negative on the cash flow. This is the weight on the cash flow, okay? On the other hand, our presales were very low at the end of the year.
And hopefully, at the end of This year, our presales must be much higher. In other words, there must be people that will have bought tickets for 2023 at the end of 2020 Sorry, 2022, at the end of 2021, many, many more than there were at the end of 2020. So rebuilding our forward sales should have a counterbalancing effect. But You are correct in assuming that the vouchers will have to be paid out and therefore this is a cash flow burden.
No, that's clear. Thank you very much. So in terms of apart from the vouchers, meaning tickets not flown that have been settled through vouchers, Are there any similar type of liabilities on your balance sheet that you need to take care with to cash outflows over the coming, let's say, Q1 or Q2 2021.
I think Anita, to simplify, there's different things that are there's a lot of I mean, if you want to go into the detail of numbers, we'll take here a lot of time. So I would advise you if you have questions like this to call our CFO or our Treasurer, our Investor Relations people And talk to them about it and try to get an itemized understanding of different items in the balance sheet. But that The major potential cash outflow is that one that we just already addressed, okay? There are others There's also opportunities for liabilities to not continue to be there because some people will That have not showed up for flights have forfeited the right to fly a ticket, to have a ticket, but we've kept them in the balance sheet for conservative purposes. So there are Counterbalancing things there that are of lower level than the vouchers, and they're both less than right.
But it's better not to discuss this with everybody. It's better to go through with the balance sheet, if you like, with one of our people and get a specific response About what this item is?
No, that's clear. I will leave on the big picture show. I understand that the big item is the voucher show. It's okay. Thank you very much.
Ladies and gentlemen, I think there's no more questions. And also Hold your interest for the 10th May. We'll be back in, as I said, in a month. Together with We'll increase terms, which should be of interest to the market and, of course, with a better feeling about what the summer Might look like in a day in a month from now, although to be fair, this pandemic has actually taught us to Be patient and never to think that in 30 days the world is going to change. Nevertheless, I hope at least we've been able to explain why we feel confident That from a cash flow point of view and from a capital point of view, we will be well endowed to sustain this year no matter how difficult it And so we keep working to keep the flexibility, increase the endurance And try to be able to be competitive when the market reopens.
So thank you all. And I'll talk to you again we'll talk to you again in another month's Thank you.
Ladies and gentlemen, the conference is now concluded and you may connect your telephone. Thank you for calling and have a pleasant evening.