Ladies and gentlemen, thank you for standing by. I'm Konstantinos, your Chorus Call operator. Welcome, and thank you for joining the ATN Airlines conference call to extend and discuss a brief hold on current developments. All participants will be in a listen only mode if the conference is being recorded. The presentation will be followed by a question and answer session.
Mr. Vasilakis, Chairman. Mr. Vasilakis, you may now proceed. Good
afternoon, everybody. Thank you for being on our call. First of all, I'd like to let you know that our CEO, Mr. Yorgani, Dimitio Yorgani, is here with us, our CFO, Michalis Kuberiotis, and, hello, Maraki, our treasurer. So we're all here in case you need us to provide you some more, life in view of the current situation, which is certainly the most challenging, 3 month period we've ever experienced in our 2021 year aviation life.
But I think this is not unique to us. It's probably quite common in aviation and indeed other travel related businesses around the world. I think it's fair to say we've never seen a crisis with equivalent reach. With equivalent uniqueness in terms of global disruption and an unprecedented shutdown in nations across Europe and around the world. Including, of course, our own.
And if there is one piece of good news that's important to deliver, I believe that would be the Greece has very successfully dealt with this initial attack of the COVID nineteen to our country in a very effective way, showing, I think, excellent reflexes, some decent implementation skills and achieving one of the lowest debt counts around Europe. So, even proportional to the population, I might add. So I would at least like to say, and probably it's going to be one of the few good news of this conference is that the brand agrees which is a key item of business, a key metric for our ability to work in the future has been safeguarded and possibly strengthened by this positive experience for the country. Now going back to aviation, it's clear that this crisis poses some unique challenges. First of all, the intensity of the disruption with revenues being drawn down very close to 0 around Europe, in the last 2 months.
Is unique. The situation with regards to visibility forward being essentially very, very limited, very obscure, very vague is also unique. The burden sharing that's required by all constituents in aviation companies whether those are management, employees, shareholders, but also suppliers, particularly suppliers, the whole ecosystem of aviation, which is all to some degree being affected must find a way to adjust within this new environment to address its relationship with each other and to recreate this ecosystem in a more, COVID relevant form, not only in terms of its operations, but also in terms of its, let's say, financial characteristics. And of course, this will require sacrifices by all. The role of the states is also very important and the current predicament is about controlling the disease, of course, It's also about supporting the economy or particular enterprises in terms of recovering from the damage, sustained from COVID.
Is about coordinating the restart, getting out of the shutdowns, out of COVID, and we really, really need them to do better than the very little coordination they had when they were winding down operations due to COVID. And of course, we need them to ensure a reasonably level playing field for all market participants. Now airline teams, airlines internally also have to come together in a much more effective way than ever in the past. Despite the difficulty, the losses, the sacrifices, and to provide the flexibility and the tenacity to adjust in a way for each company and in specific, in particular, to become once again relevant, competitive and ultimately performing. Adjusting to ensure the safety of our customers, the safety of our crews, And again, ultimately once again, a successful renewed business model, business structure that can drive the company forward once the fog and disruption of this crisis hopefully at some point gradually subsides.
So if we want to look back at what happens, I'm not going to bore you with details you've heard all around Europe. So we all know how here in Europe, the crisis became relevant late in February by the outbreak in Italy. We immediately started having a significant loss of incoming reservations, which over the next few weeks, grew from a normal 100% to next to nothing. COVID was recognized as a pandemic by the World Health Organization in March 12, And following back and proceeding that gradually, all countries throughout Europe imposed restrictions to travel, the to even local movements. And frankly, the whole continent, in aviation in particular came to a standstill.
Indeed, it is estimated around about 85% to 90% of European aircraft became grounded by the end of March. And, we ourselves in a GM actually did ground the great majority of our fleet by March by March 26. Continuing 4th, both March 26th, only a skeleton domestic, domestic schedule, covering with minimal frequencies, automatic destinations, responding to a request of a government that we continue to do that despite the restriction that existed on people's travel. Now this is what drove the developments in March down to the level, as I said, very near to 0. And today, I'm gonna try to put some context on what, the numbers will look like for the first quarter, a quarter of the year, where we started extremely strong after a successful year in 2019 where we were one of the few airlines in Europe that indeed increased our revenues and increased our bottom line as well.
We started very strong in January February. With an 11% 7% respective increase of patent per numbers. And then came COVID with a complete reversal, creating a completed disaster of March, where we had 56% loss of passengers. Our flights were down by 30% vis a vis the previous year. But of course, we couldn't cut slight fast enough, and our load factor dropped from 82% in February to just 57% in March, a number that has never been encountered in the gend, oh, I don't know, for the last probably 15 years.
So we've just found out a new definition of crisis. We've gone through crisis in the past, particularly hearing risks. Between 2010 2015, 2016. However, this one is unparalleled in this effect. So our revenues for the first quarter are going to be down to 145,000,000, 15% lower than last year.
This is, of course, driven by March, which was 59% lower than last year, while January February were indeed 14% better than last year. And it's an irony of fate that actually the last quarter of 2019 and the 1st 2 months of, 2020, we're probably the best last quarter and the best 1st couple of months we've had in the year. As you know, that typically the lowest part of the year, we were doing very, very well until COVID came. Therefore, again, to reiterate not to confuse you with numbers, revenues will be down 15% for the quarter because of the 59% drop in revenues of March, and the 57% load factor, which was quote and quote achieved during this month's due to the COVID effect. Now due to the fact that we flew planes and had roughly 35% less customers than normal.
Obviously, March was significantly burdened in our financial results. So March will be about $43,000,000 to $44,000,000 negative as a month resulting in an overall quarter of EBT of roundabout $80,000,000 negative relative to $48,700,000 last year. I repeat that these numbers are preliminary. But the 80,000,000 EBT, we feel pretty close to what reality will be when we close our books. So that's an $80,000,000 result for the 1st 3 months of the year with a March that's, worth about 55% of it whereas normally March is the 1st month of the year that's close to being breakeven or close to being breakeven.
Beyond the operating results, the earnings before tax results of $80,000,000. As you know, there is another effect that comes with grounding aircraft. Grounding aircraft for Q2 means that a lot of the hedged oil that was pre purchased to safeguard our operations withstood at roundabout 65% of our estimated needs becomes ineffective. And as a result, because we're not going to use it in the 2nd quarter. And as a result, about $30,000,000 of negative valuation of those hedges will also affect the first quarter because it will not be used during the second quarter due to the inactivity.
So while the $30,000,000 refers to a loss coming out of the 2nd quarter, because the fuel hedging is becoming ineffective as we will not be flying our aircraft substantially in quarter in Q2. It becomes part of the first quarter results. And therefore, the total loss would be somewhere between 101110,000,000 pretax for the first quarter. Liquidity, which is, of course, in this situation, important, was stood at 465,000,000 at the end of Q1, starting the year at 510, I believe. So we have, during that period circa 50,000,000 drop in cash reserves.
Now I think it's also important to give you a little bit of color how we think, Q2 will be shaped. Q2 is going to be a pretty simple quarter to forecast simply because we will not be flying very much. Essentially, in April, in May, we have more than 90% reduction in flights, and more than 98% reduction in passengers. The residual flights refer to those that we were requested to fly by the Greek states, domestically to cover the is skeleton network for which we'll receive, a small 2,000,000 compensation, which will essentially cover our variable costs. So what will be left, since there is no revenue in this slide, so it will be left is effectively our fixed costs, without being burdened by any operational costs, but also without receiving any benefit of any contribution margin or any revenues.
So pretty much Q2 will be 3 months of inactivity. There might be very little flying in June, but it's not going to be significant enough to change the fact that, Essentially, we'll be dealing with our fixed cost structure without revenues. Now there is a marginal improvement in our cost structure for the next 3 months coming out of efforts to address and reduce various contract values and various suppliers that are providing services to us. And there is also a suspension program for part of our labor force. We're roughly 70% of our people have entered for April and May.
And these two items together serve to reduce our fixed cost structure for, April, May, and June to an average that's going to be between 26,000,000 to 28,000,000 per month because Of course, what I mentioned earlier, the hedging loss has been already moved into quarter 1. So it will no longer burden quarter 2 in terms of financial results. However, of course, because the actual hedging, settlements will be taking place in Q2. The cash flow shortfall in Q2, per month would be much closer to 40,000,000. So q 2 is gonna look like 26,000,000 to 28,000,000 of fixed costs without any revenues per month.
And round about $40,000,000 of cash burn per month, in the 0 essentially zero scenario, zero activity, forgive me, scenario. Now beyond that, It's true that we have seen some efforts, to within the e c in the last 15 days to put together guidelines, to reopen internal borders in Europe. As you know, effectively, while there's supposed to be no borders in Europe, the disease, the pandemics, and the travel restrictions imposed by individual stakes, have created a restriction and effective restriction of travel, even within Europe, let alone, between Europe and non EU places. Therefore, we saw on May 13th an effort from the European Commission to put forth guidelines for reopening Europe, travel, tourism, transport in general. We, of course, very much welcome this effort.
They also went ahead to create, to assign the ECDC and EASA to work on creating common protocols for travel that could form a a sort of a framework of recommendations or rules for the state, individual states to follow, in terms of how to adopt traveling within Europe by different means, including, of course, by aircraft. And this is encouraging. However, we must say that it is very, very difficult to evaluate when individual states based on their own individual cycle of the, corporate crisis
will take decisions as to
effectively apply those principles and those guidelines and effectively allow their own citizens to travel to other countries and of course, citizens of other countries who visit them. So while we have an initial effort by the commission that is welcome, it is certainly very difficult at this stage to say what exactly will happen in terms of timing, even assuming we don't have some kind of relapse of the disease in countries where it is gradually subsided. Now because we have to have a scenario, we are assuming that as of July, we will cautiously reinitiate international operations at some magnitudes. And we expect between July September to gradually develop our international operations from sorry, our overall operations, Domestic and International from of 25% in July to possibly a maximum of around 45% to 50% in September. We don't think exceeding 50% of normal is, of, of, regular, schedule is actually going to be feasible vis a vis a consumer base, that of course has sustained significant fear, significant loss of life in different countries.
And also, of course, from companies in aviation and airports, the whole ecosystem, but happy to adhere completely different protocols about operations that make some of the operations significantly more cumbersome. Therefore, this is what we expect, gradually building our operations from 25% in early July, to up to 50% of normal in September. I think this is truly a best case scenario given the starting point. But I think we also have to caution that it has been the experience in similar situations, mostly
in Asia, but have
been faced in the past less gravity, but similar to this one, but it typically takes 2 to 3 months from the time that operations are initiated until you get to a point where the actual flight revenues exceed the flight variable costs so that the flight variable revenues minus the flight variable costs, leave some small margin to start offsetting your fixed costs. So we do not expect our financial performance in terms of P and L to improve in July August. As a matter of fact, there is a possibility and a risk that it might deteriorate depending on the level of revenues. But there's no other way to reinitiate operations rather than taking the risk of actually starting and seeing what you get from customers in terms of revenue and adjusting as you go. You will hear us saying many times today that flexibility is a must when you have to deal with, something so hard to read and so hard to forecast as a crisis such as this one.
Therefore, in Q3, we expect the P and L not to improve until September. However, what we do expect is that cash flows because of presales will be marginally better than they will be in Q2. So in a short, let's say, if you can call that, rational prediction, no improvement in P and L in Q3, but a decent, first improvement of cash flows from the loss level we are forecasting for Q2. Now conclusion of all that, of course, is that you know the significance of Q3 for our GM, typically Q3 P and L is higher than the total of the whole year. It's the year.
It's a 2 quarter that makes a difference in our financial results. And the fact that it is lost and it will be loss making, can very quickly establish that this is going to be very, very clearly the worst year in our history and indeed a year where our own viability and our ability to adjust to this very difficult environment will be challenged in a very, very efficient and effective way. I think before handing over to Dimitri, so he can tell you, some of our concerns and some of our with regards to our fleet and our suppliers as well as our personnel. I would like to say at this stage that Yes. This is a very heavy crisis.
This is a crisis that can cost any airline in the world its viability, its profitability, possibly its own existence. We are a company that has dealt with crisis in the past, We are a company that has started this crisis in very, very strong footing, but the challenges are so great that nobody can speak with certitude either about their performance or exactly with the steps that one has to take in order to adjust. With that, I hand over to our CEO, Dimitry Urganis, to give you some more color on some issues.
Good afternoon. It's actually a flip. Give me the extreme degree of funding utilization of our records in the coming months, and the uncertainty surrounding the degree of utilization, the lasting effects of demand, of demand, on demand expected for the next, for the next 2 years, It is clear that adjustments must be made on the fleet, both on entry and exit of aircraft now fleet. Currently we're engaged with, with all the relevant parties, the source of existing aircraft, the source we have contracted in the pre COVID bond for new capacity and obviously with airbag itself. The purpose of force of of this engagement is to make the necessary adjustments, which are obviously necessitated by the unprecedented event.
And the reactions of of the states with the measures they have taken in order to combat the the the the pandemic. As the features said earlier, it is absolutely necessary that the the the ecosystem and our suppliers overall in this business recognize the uniqueness of the of the situation and are willing to understand and share the burden. It is a unique situation and no, no side alone can single handedly deal wave or solve it. Everybody has to continue. The uncertainty going forward is very high and visibility is very low, obviously.
And we believe we are we are following a very responsible attitude in this direction. And going on to into our our our people, our employees, our staff, and we have repeatedly said that Our employees at all levels are, of course, the the core of the company, the people who deliver the service day, every day, and and the people that have contributed to to to make a general what it is today and create the the level of service, that that we had established. We're naturally very eager to support them as much as it is possible within, obviously, the very dire context that this this crisis has created. And and we have done that in April and in May. Those are the 1st 2 months that practically, our aircraft has been granted.
As the teacher has already mentioned, 70% of the employees of our employees have been put into the suspension program that was created by the Greek government. And it's a program that every employee, which we will start on this suspension program, receives a flat €5.30 net received per month. Plus the program covers the social security contributions. Obviously, and that must be noted. We, for the suspended staff, which is staff that did not work for GMV during this time, we have procured some additional benefits in time for this period in order to try to mitigate part of the effects that that this situation, the crisis is created to for our people.
Secondly, the coming months of very low utilization of our of our aircraft, partial work will have to be applied driven every month by by the level of activity of our effort. And as we said, the level of activity is a big uncertainty, depending on the evolution, parameters of the pandemic in different countries. We can only decide the direction on the employment and compensation structure Once the unemployment support scheme, we become available as we succeed, the current suspension scheme supported by the government. We expect that in the next 7 to 10 days, when we have clear idea once the government announced it about the parameters of such a scheme and then we will decide how the combination of suspension and parcel work would it be will be applied? Regarding now our headcount, as you know, in the past years, due to the seasonality of our business model, We have always a significant part of temporary seasonal, seasonal contracts in our within our staff.
And and this this has has given us the the the the possibility to to adjust quickly outside. In late February, we stopped the hiring of every of every of the temporary temporary fluid that we would need for the summer. And that helped us to adapt to adapt our size. That's why we currently, we are 300 people less lower than our maximum size of summer 2019. So this, this gave us the flexibility to adjust our size and we still have another 550, employees that are in in in seasonal contracts in various in various departments.
Obviously, maintaining high quality of in our staff, it's a decisive factor, for for the next day in terms of maintaining the competitiveness at the level of service that we want to offer to our customers. Apart from the seasonal contracts on our pilot court, due to the growth, but we experienced in the past, we had in the past 6 to 7 years, and by the efforts to to to develop our permanent pilot cost every year. We never managed to get enough enough, brake pilots to to to to fly out to to fly a red So we had to employ a number of, of, contractual pilots, which were pilots from, from, other different nationalities that came and were employed by Adrian for the summer season, and some of them also in order to cover our permanent needs also during the winter. So unfortunately, the first thing we had to do when the crisis emerged was to terminate, the this temporary contract that we had, we had employees, which, it it boosts our our pilot cost by about 20% versus what it was in, in February. This also, gave an adjustment of our, of our pilot corps that allow us now to to fly a fleet of data in the range of 40 to 42 data.
With our current pilot costs. There is a number of possible recovery scenarios assuming a size of about about 75 percent of plan, of plan to 2020 to 2020 beyond, and through the measures that I just mentioned, our frontline personnel is more or less sized for this kind of activity. As of May, in terms of our, measures for our payroll, for our employees, As of May, we have, we introduced a 20% to 30% salary reduction in the fixed part of their salary for the for the management. And obviously, there's not going to be any depreciation this year, any variable pay, for 2020. So overall, these are the the measures that have been taken so far in terms of adapting our our headcounts.
And our payroll structure, we do expect to see the program, similar to Greek bedroom, the food supply program, that we support partial work and suspension. We didn't expect to see the parameters before we go into deciding how will we deal, with the partial employment suspension in the next, in the next, in the next few months.
Thank you, Dimitry. I think, what you can understand already is that basically we're looking at everything with a new light. We're looking at our supplier relationships and a new light. We are looking at our valued employees in the same light, but trying to adjust in a different circumstance. We are still waiting to see the exact frame that the Greek government will produce to support partial employment as in other countries.
And of course, we will be working also with the local authorities. We have already worked quite a bit with them and also with the other to develop the necessary in flight, pre flight, both flight protocols for ourselves. So I'll to ensure that our even few customers in our current few flights are as safe as they can be within an aviation environment because that is always way and the lowest B, our number one priority, the safety of our passengers and the safety of our roofs. Now I think by everything you've heard of it until now with regards to financial results, with regards to the near grounding of the activity, and our efforts to bring together efforts with suppliers and with personnel. You understand that we are trying everything we can to deal with this unprecedented crisis.
This crisis, which has actually hit aviation, I would say, 1st and more than practically any other sector in the world due to the nature, the long term nature of its investments, to people, but also to capital goods and of course, to the absolute link between aviation and travel, which has been disruptive. So within this very unique and unprecedented environment, the EU has deemed it necessary to establish a special framework, a specific framework to complement other 3 existing rules to deal with the ability and provide the ability of 2 individual states to support enterprises within the current crisis. This framework, this adjusted framework was first introduced on the 19th March of this year and has been amended twice since that time and until mid May. The framework is supposed to provide tools and rules for individual stakes to be able to help enterprises either horizontally in their countries or indeed vertically or specifically due to specific needs. So under this growth framework, the states have been able to establish multiple loan guarantee schemes for governments to provide companies with the ability to borrow from their banks under the benefit of the bank guarantee or sorry, the state guarantee.
The terms for these horizontal programs are designed broadly by the EU in terms of possible duration, value of state guarantee, relative size of loan that can be claimed with regards to the activity levels of this company, in particular, the revenue and the, cost of the personnel. And then the same rules are actually reclassified on a local level. And indeed, they have been in our country and are already in function. For several, 100 and 1000 of businesses to access. So that's one tool.
The ability of the state to back loans provided to different, enterprises, who need additional liquidity. The second very important tool, and of course, I'm not going to reiterate the whole temporary framework to you. I am only referring to parts of the framework that may be pertinent to a gym. The second part that is pertinent to us is the possibility to receive or support horizontal, but also specific wage and payroll support systems because, of course, the one thing that governments need to support more than anything else in the beginning of the crisis and during a crisis is the employment levels or the effects of this crisis to employees and to companies being able to retain employees. And the 3rd, level of The third tool that is possibly available is the ability to, require or to provide lost recovery calculations for enterprises that have been affected and where transport is specifically named.
So
I've just named some of
the tools that are available under the framework. There are many others. These particular three are quite relevant to to a gym. But there's one more very, very important caveat to all that. The provisions of the special temporary network are supposed to be applied to enterprises that were not under financial distress prior to the beginning of the crisis that is at the end of 2019.
And of course, I think all of you will agree that Adrian qualifies in flying colors. We were very healthy We were well financed. We were very low in debt, and we were profitable for a significant number of years in a row. Therefore, nobody can contest that we were not under financial distress. And in fact, this cannot be said for all of the airlines in Europe.
Therefore, we have initiated that effort as well. Having at the onset of the crisis, despite having at the onset of the crisis, the LEAP burden, 1 of the LEAP burden balance sheets in Europe. And also despite the fact that we have such a strong starting base recognizing that the intensity of the crisis together with the nature of our industry makes up makes it impossible for us not to request also the support of the state, not asking the state, of course, to bear the full court but putting the state in place together with all the other efforts, with all the other constituencies are undertaking towards the resolution or the partial addressing of the effects of this crisis. But what I feel I have to say is that There was, and there is what they would have been in theory, a possibility that the company has unburdened and as healthy as a GM could have indeed sustained at least this initial effects of this crisis without resorting to the aid of the states with one caveat, but other airlines in Europe also did not have the ability to address the aid of their faith and that indeed so many other airlines in Europe did not already address, have not already addressed their state and received or are about to receive very, very significant an amount, amount and in some cases are very impressive and which in all cases change the ability of these airlines to compete.
Therefore, even if one could essentially consider not going for state aid as possibly to rely on their own resources here, you're essentially forced to do that by the fact that so many others have done it in such an impressive way that you would be truly burdened and that your abilities to serve the needs of your employees of your customers, of your shareholders would be indeed unfairly served if you didn't try to exercise also this direction of effort. Again, not so in this direction of effort, but introduce it as part of an overall efforts to try to mitigate the effects of the crisis from different Therefore, in conclusion, I'd like to say, we are proud of the condition we had prior to the crisis We're proud to our contribution to all our constituencies and we will of course do our utmost to retain the significance of our operation to the degree we can as Dimitry said, 75, 80 percent of what we did before could be achievable If we have a balanced approach, to all sides and from all sides, of course, This is, an objective for something to try to reach next year, not the level of operation we can even hope for this year.
But the level we can probably try to sustain going forward at a level that will be significant enough to allow us to compete well in Europe and significant enough to allow us to support certainly of the company to align and to adjust to this new environment. Our agreements with our suppliers to reflect the needs and the levels of revenues can be achieved in this new reality. I would certainly believe again, but this is a universal requirement for aviation. We also need to reenergize our team internally. We have to talk to our employees and get them all committed to the direction of creating and supporting and even more efficient, but more importantly, even more flexible organizations have the ability to adjust literally in a moment's notice So the change in circumstances we will all have to deal with in the next few months.
Nobody knows exactly what's coming next, we have to create the space and the reflexes to be able to deal with different outcomes This lack of ability to forecast and creating the ability to adjust as a remedy is the key. And yes, of course, the state is also a part of, of of the of the equation. It has become a part of the equation also because of the effect of the crisis, but also once again, because you cannot afford to be the only or one of the very, very few airlines in Europe that has not been held and has become a shadow of itself when others have had the resources fully or close to fully or over fully replenished. Finally, we have, as always, to address successfully and find a way to convince our customers, but our needs can be served by our new protocols by a new way of operation in the face of this much more difficult environment because again, besides cost cutting, cost adjustments, discussions with the state, energizing employees in the end. We do all that to serve our customers, and it's only their choice that will again validate our model and allow us to go forward whenever we create the space and the visibility to move beyond the crisis.
Thank you for your attention and we're glad to take a few questions. We will not take too many questions, but But we will try to be as, as, specific as we can, and it's very, very difficult to forecast environment.
Tom will begin the question and answer session. Anyone who wishes to us please. The first question is from the line of Raja Gustavamidis with Eurobank Equities. Please go ahead.
Hi, Darren. Thank you very much for taking my questions. I appreciate these are unprecedented circumstances for you. You have plenty of issues to deal with. I my my my first question is with regards to your, liquidity position.
In the doctor before about a monthly cash burn, let's say, of close to 40,000,000 in, in Q2, which will be a bit smaller in the 3rd quarter. I'm just wondering are you in any sort of discussion to secure additional credit lines so as not to, exhaust of your, your cash balance, until the endoftheyear. That's the first question. And secondly, just a question on the external support and an option that you that you have that you have, certainly, if you could tell us to to what extent you've taken advantage of the relief measures implemented by the Greek government.
So if
you if you've taken full advantage of those, and and also, you talked about the the state auctions that are on the table. Could we actually see the state providing support and in return getting a stake in a GM? Thank you.
No, is the answer to the last question. 2, the second question on relief, yes, of course, we are using any horizontal measure provided by the Greek State, which means yes, so if the Ioannis and I both said that we have used the suspension measure for around about 70% of our staff, even while complementing their salaries, there are many more salaries that it is in the States with benefits, from the company to mitigate the loss. And yes, we have used, the tax withheld chances they give to all Greek companies. With regards to your initial question about liquidity, let me remind you what I said. I said, yes, around about 40,000,000, per month for the 2nd quarter.
We expect a significant improvement in the liquidity drain in the third quarter, even though we don't because we will have presales of tickets, even though we don't expect our P and L to reduce sorry, to improve in the third quarter because we don't expect our initial flights to exceed the revenues, the variable costs. So the cash flow outlook will improve as of July. It will not continue the same exact burn. It will be somewhat better. How much better?
Somebody up in the sky probably knows, but it's not, really visible to us here. Yes. Now with regard to actions with banks and liquidity, yes, we have secured from the 4 systemic Greek banks 30,000,000 of credit lines from each, without the backing of the statements and working capital lines, So this is a 120,000,000 that you can add to our, a Q1 and the cash liquidity. So if you, consider that as well, then our total, cash available would go up potentially to 5, 580. 58585, but I will caution you to remember that practically roundabout a 120 to 150,000,000 of our cash needs to be blocked for different needs.
Referring to hedging, referring to issuance of loan guarantees abroad, referring to different 2 different, elements like that. So I hope I have answered, your question, division, please. I'm sorry. I can't hear you.
Mister Rajotis, can you hear us? Moving onto the next question. The next question is from the line of Kumar Achal with HSBC. Please go ahead.
Yeah. Hi. I had a couple of questions actually. 1, I wanted to understand, now the policy on your fuel hedging. So, you have above fuel hedges, which which are sort of all all all, and the one in the water.
And until now, are you sort of planning to increase you're hedging given the low price. Also, what what sort of policy are you adopting there? And secondly, I wanted to understand about the opportunity in the cargo space, given that many airlines are sort of, trying to use the fleet for the cargo, consolidation of cargo, and then then and that is given the demand is solid. I mean, so what sort of opportunity or or or or or, the business you have there, you know, where you can deploy your feet? The the the other thing I wanted to understand about, of course, the uncertainty is high.
And as you said, you've been in discussion with the different with the different, when does, I mean, including the including the lesser amount? So so would be would would appreciate, would appreciate if you could please talk a little bit more about the sort of fleet plan. I mean, are you in discussion with the lessors, in regards to these holidays, are you in discussion with with the Graph manufacturer OEMs and then let's also delay the releases. Are you planning to are you planning to return the or or lead their lead has got earlier than earlier than expected. So what sort of pre plant can we expect?
And and then similar and then and then similarly, what sort of capacity growth do you expect next year? Of course, this year is is nobody knows. You know, what will happen and and how many when the when the capacity will come and all, what is it that you think and you're expecting that next year, how you expect your capacity to be?
Let me start from from the end. It's not about expectations right now. It's about wishful thinking. Wishful thinking for next year, which we're planning planning to trying, trying to manage, to make it from wishful thinking into an executable plan. But this refers not only to the success of our efforts, but also to the evolution of the disease and rather, let's say, a normal deflationary matter, is that we would aim to be, as Dimitri and I both said, in the initial statements, somewhere between 75 and 80% at peak of what we were in 19, which is roughly 30%, 35% smaller than what we were planning to be in summer 2020.
So we are fully recognizing that with regards to what our plans for 20 were, We will have to be round about 30 to 35 percent smaller, and that translates to 25 to 20 percent smaller than 2019. And this is our planning objective. However, this has to be validated by exactly the kinds of answers to the questions that you asked before, will we be able to successfully renegotiate
fleet entries, fleet exits, the terms
in terms of financial conditions of various leases, the terms in terms of financial conditions, in terms of other contracts that are not leases. We have many contracts that create obligations and costs, unit costs to the company, we are absolutely necessitated to reduce our costs per unit of production because we know we will be smaller and being smaller unless you reduce your unit costs, makes you less efficient. And I don't think any airline in Europe and certainly not us can afford to be less efficient in the face of what is happening here. In answer to your question about hedging, I, I think you know, because I've also seen your reports that that we were 65% hedged We have not, bought any additional financial instruments, 2 headwinds, but we are in active negotiations to acquire physical, oil, and storage. And we think this is a more efficient way to take a relatively more efficient position, in terms of the market because of the significant contango that we see.
However, It's the first time we attempt to do that. And obviously space, the right space is not so easy to come about. So we are now at the completion stage of our first effort with some of our suppliers, for which and to which we're very helpful. We're very thankful. I'm sorry.
For trying to to provide this facility to us. So, I I am sorry that I'm not too specific about the numbers of exit or entry on the fleet, but you would be very correct to assume that we will be trying to scratch out deliveries we will certainly not accelerate the arrival of any aircraft will be quite the reverse. After all, Airbus is reducing its production, as well. And I think nobody is in a hurry in the market to actually take aircraft equally, we have to say that one of the reasons we feel quite demanding towards Airbus is because we have been absolutely compliant with our obligations to them to date, and we have not created any problems with accepting aircraft that were already built and will be indeed delivered either were delivered a couple of months back or will be delivered next month or 2 months from now. And that's why we think that it is also important for suppliers like Airbus to recognize the value of the corporation and the ability to respond in different ways of different customers.
That's why we think they have to be more responsive to our needs to secure the changes we need in the contracts to make, to contribute to our availability and to contribute to hopefully retaining the relationship with them intact. I hope I have answered some of your questions.
Yep. Now the problem is?
We we did do quite a bit of cargo, but I'm afraid we didn't charge for it. It was, it was a donation to the Greek government together with Elpe, a local, oil supplier. We jointly got together and offered, a significant number of flights to China, to the Greek government, and the city of government, and since the oil was the the fuel, I'm sorry, was being supplied by, health plan. We had plenty of aircraft available. We did that as a as a as a service as a grant.
But beyond that, we have done very, very little, and we haven't really looked into converting aircraft into cargo. We are limited by the size of our passenger entry doors, which are not very conducive to changing, the nature or of the of the, usage of the aircraft.
Right. Necessarily on on the on the oil, mean, so so you said you are sort of acquiring physical oil and trying to store it, and then you've been able to, do for standard agreement, with someone agreed to, offer you this. I mean, so so they do have sort of, target in mind as as you know, you want to acquire, so, say, 40% of your full fuel requirement for 2021 is to start 2020 or 2021, or or or, you know, just
I apologize. I won't be able to answer that because that will depend on the ability of financial resources also. It is not only about the, our view the current situation. It is about how your actions, what is obviously becoming, more scarce financial resources. Therefore, I doubt we will be able to make, significant actions in this direction.
Right. Also, just one thing which I mean, so sorry. Two two more questions actually. I'm so sorry for a bit of a long list. So one thing which I want to understand about about the the the recovery mean, so so, basically, of course, sir, given the Greek economy, the children based economy and and and and, you know, in this if we if you look at the series, in terms of what possible recovery, how possible recovery could look like.
I mean, so, of course, the corporate travel might come first and then, you know, if you need to if you need to go and see your family, then then you'll travel. But if if it's a if it's a leisure travel, probably, you may go last. So and and then especially the Greek economy is the is the leisure based, travel. Do you how do you see recovery? I mean, do you think recovery could be much slower than the other part of the Europe?
How do you expect in your views? Of course, because I know I know and I appreciate that. It's very difficult to answer this question because, you know, you really don't know what will happen, but looking at the leisure travel and then if you sort of segmentize the travel, looks like if I was going to the last one, for the recovery, So that is, but that is where I want to know your thoughts on this. 2nd, I wanted to understand. I mean, so because I've been a whenever I speak to the clients, And these days, one question has become very common.
I I understand that, you know, see the the prices there are so many 80 to 90% fleet is grounded. Do you think airlines if airlines have the capacity and liquidity, do you think airlines can go and actually take this opportunity to buy more aircraft because you'll they they get the cheaper aircraft or to airlines have the capacity to renegotiate the prices I know it's it's bit important. But but, you know, in this in this current time, whenever you everybody wants to preserve the cash, you may not want to buy or or or do that that kind of thing. Do you think is there any possibility of renegotiation, the prices, or or airlines might want to go and do more shopping? Thank you so much.
Yeah. Okay. Quick quick answers. I do not agree with your assessment that leisure will recover last. Leisure will recover first.
It is the first thing people want to do, or those people that don't feel afraid when they get outside of their restricted houses or restricted offices, they would like to go somewhere for leisure. So I think leisure will look at it before business. I believe business is the one that will be hit more out of two things, the practice of zooming and, and, and the teaming and the Webexing, which has, dominated business life. And at the same time, of course, the economic restrictions that businesses will be facing around Europe, which will be initially, I believe, more intense, more intense than consumers themselves. So I think leisure will recover first.
I think Greece, has proved itself to be a very safe country has strengthened this brand. And I think this is not a bad starting point either for the country or at least they're looking for a GM. Now Greek consumers, unfortunately, will be again in a crisis after another crisis. None of us like that, about it would be a recession. Again, there is no way to avoid it, and we can only all try to mitigate, how much it is by jointly trying to work together to reconstitute all the possible business activities in the country that can be safely executed this environment.
With regards to, well, investing money in aircraft, again, I would have to take you back to my previous response We have to action our financial responders, financial resources. Of course, I understand that this is a good time to make such investments But first, we have to deal with what we have in excess, and then we have to, look at opportunities. So this is I am afraid even potentially not on the table. Perfect.
Thank you so much.
The next question is from the line of Kaisaam Miyakub with Wound And Co. Please go ahead.
Hello, everybody. Thanks for the presentation. It's Jacob from good. Two questions, please, one on ticket refund. If, you could shed some light on how much, what amount is potentially at stake, there, how much you may be required to return to customers.
And, you know, is that, kind of partly, included or the, in the, in the first quarter number or kind of how much, should we budget, you know, may come, in, in second, second quarter? And the second question, you were mentioning, and talking about the fleet development plan. On, on one hand, you were talking about the kind of unit cost management and its importance going forward. On the other hand, trying to, delay the, deliveries Could you perhaps, explain how do you see the priorities? I mean, would you be looking to kind of get the more efficient aircraft and perhaps accelerate the, sale of the older ones, or do you see the cash preservation as more, more important?
How do we kind of squared is all these things, please?
Yeah. Thank you. First of all, I would like to say, certainly, with the the cash flow forecast that we have given to you, takes, into account all the elements including the one that you mentioned. Therefore, I think this 40,000,000 number per month has all the elements that we forecast to have. Also, I would like to say that I I would like to hope that the majority of flight cancellations is behind us because we have already canceled, May and June effectively from what used to be there.
So the majority of the customer claims should be behind us, assuming that we do indeed, a start, some measure of operations in, July, Internationally and August that will give the customers the ability to actually fly with the flights they have booked partially. And partially, for other people to to buy tickets. Therefore, I I think, I don't have much more blood on the cash flow other than to say, yes, it takes accounts or into accounts, all the elements. The other question was sorry? There was?
Oh, the police. Yes. You didn't call me a customer. Okay. Yeah, I mean, quite quite frankly, oil price hasn't been, well, we've had the reverse interest of oil price in the last few months.
Meaning, for the first time, because we use more, sorry, less than we already own, we were kind of hoping it will recover a little bit so that we would lose less from the hedging. So our our minds have been more in this direction, I have to say. But obviously, we are not, going to have a situation where we will not have a substantial portion of our fleet, to the meals We have already taken delivery of 4. There's 2 more coming in the summer. We'll be up to 6.
So the delivery program for this year, while it will be partially compromised towards the end of the year, it is not at all, discontinuous. And we expect, at slower pace in the next years, assuming all our agreements will come online, but we will continue to receive These aircraft either from the source where we have contracted new capacity or possibly as well from Airbus itself. So we have not changed our need to introduce new aircraft, but we have change the total expectation of size in the fleet. So, are we looking to actually affect faster exit. Yes.
We actually did already achieve the early exit of, 2, previous generation or Airbus a320, with Eleazor, during the last 30 days. So already, we have taken an action in this direction. And as I said earlier on, we will explore all different ways of cooperation and renegotiation with current and future lessors to find ways to best meet their needs and ours. And we are willing to be very, very open minded and very creative so long as we feel the basic element of burden sharing is actually applied. We we the only thing we do not respond well to is people that think that life can continue exactly as previous one has actually changed for everybody at least in aviation and possibly in many other things.
I don't know if there's some other question that I missed.
No. This is it.
Thank you very much. So just to, perhaps, follow-up on your last last answer with respect to the pre delivery payment, and the guidance thereof, which has been in place pre COVID, that will be, kind of postponed at the very least.
The pre delivery payments are a major, I mean, the timing of the aircraft affects the pre delivery payments. The size of the pre delivery payments, just like many other conditions, is one of the conditions that we will of course be discussing with Airbus cannot tell you what the conclusion of that discussion can be, because I don't have it yet. And as I said, once again, what's important is to have both sides on the table, understanding what they need. However, it's very clear to say that either because of the stretching or for any other change, there will be significantly lower PDP requirements, at least for second half, twenty twenty one. This month, we already know how much exactly when to what degree and exactly what other conditions I cannot tell you.
Thank you very much.
The next question is from the line of a financial officer with NVG Securities. Please go ahead.
Hello. Thank you very much for your call. So my first question is regarding the agreement with Airbus for the acquisition of the 42 new aircrafts in an adverse event. Part of the liabilities, both financial and legal, for both, a GM and Airbus in the event of a breach of the agreement by its party. And my second question, it is regarding the MOU with AGN signed in October 2018 with international IO engines for acquisition and maintenance of the engines, doesn't GM tend to renegotiate any of the terms of MOU.
And in the event that there's any me associated change of the terms of the aircraft purchase agreement with Airbus as well with the lease agreement. Thank you very much.
I think, well, actually, first of all, it is following the MOU with Prat. We also had an agreement with Prat. So we have a final agreement with Prat as well as with Airbus, which is why we're actually flying aircraft with the fraud engines, today. I I am not going to get into a technical discussion about the nature of his contracts. I will just say that there are many, many commercial ways that have been used many times in the past including Biogen in previous circumstances, not as, not as dire as these ones.
But have been used in the past to be able to address various items, various issues with regards to the timing and the nature and the exact conditions of the delivery of the aircraft. Therefore, I think one has to recognize that many things will have to be adjusted when a crisis like this one appears. And I believe I don't have to tell you that you may have noticed some other more vocal negotiations between other airlines and airbags that have reached the press, including the Greek press, although some of them include even Greek people in origin or Cyprus perhaps people in origin. So, I think you might see, there is a lot of excitement in a lot of these discussions. We are not discussing it in such a way, but we are also not passive and we will not accept any of our suppliers treating these prices like it does not exist.
This is the only thing I can tell you that can be really useful. And of course, we will expect all of our suppliers to have difficult or easy conversations with them and eventually to settle down to a new level of agreement, which reflects the current circumstances in a more appropriate way. This is always a compromise. This is always a compromise to both sides. This is always burden sharing to both sides.
It can never be a win only of one side. So we have to be very respect full of these processes. They will be very important. And it is very important. We don't try to agitate them, but saying too much, but we should also not, try to appease them by saying that we don't recognize there has been a very material change.
Thank you very much.
The next question is from the line of Stupol. Please go ahead.
Yes. Hello. Thank you very much for the detailed analysis provided. I would like to ask one question, please, and the other person was answered about the business travel. So my question is when do you believe that, the aviation interest will come to a normalization, and specifically for exam, do you when, actually, the 2019 figures will be revisited again.
Thank you very much.
Thank you. I mean, if you could answer that question to me, I I I would give you a lot of money.
But your estimate, I
think many, many people in the aviation industry and all industries would give you a little bit of money. I think what everybody says in the industry is that it would take 2 to 3 years to recover to previous year levels. And I cannot tell you something different. I would like to believe but eventually after adjusting, after reclaiming the flexibility that we're quite famous for, after using the time we are a company that has survived very successfully the previous crisis and came out of it, you know, two times as high as it was before the crisis, we will be able also eventually to navigate this one. But at the same time, I cannot avoid, but to repeat that this is a different animal because it does not allow you to work properly.
It does not allow you to function properly. So you have to be reliant on many other things happening that you do not control. But I am quite confident that what we do control, we will eventually do very, very well, and we will find a way to get ourselves back to what we were last year eventually and hopefully even beyond that as we have in the past. 2, 3 years is what everybody says. I cannot say something different.
I hope and pray more for Greece than for ourselves, but the brand of Greece, the strengthening of the brand of Greece that we have managed, to secure for our country will help both our country and the GM in this, recovery effort as well. Because in this time, at least the rate or the the mark that grease got was completely different than the previous one, in the previous price. Now the the mark, the rating, the score of risk, vis a vis, it's other, let's say, fellow members of the European Union was much more positive. So hopefully that should mean something for tourism and leisure recovery in the not so distant future, even though it will certainly not mean very much for the coming year.
The next question is from the line of Phyllis Lillian with IR Consulting. Please go ahead.
Hi. Yes. Hello. I would like to ask a question about your network. Can you see major adjustments in your network going forward?
Well, first first, I would like to say the following. I explained the earlier on that depending on the outcome of our discussion with the state, and the availability or the reasonable amount of state aid to the company. That's going to be a hell of a lot smaller even adjusted for our size and our capitalization than others have received. But with that, we will be able to retain, hopefully, 75 to 80 percent of our size next year. So if we have that, we will make certain network choices, which will not be particularly different than what we do today.
Possibly we will just reduce frequency in most of the places we apply for the 1st year next year. Now if the state aid is not forthcoming and we have become an airline, as I said, but flight 25 or 28 aircraft and go back 14 years. I am afraid, our network, our staff, our overall revenue, nothing will look like what we had last year or we're intending to have this year for a very, very, very long period of time. Hopefully, this will not be the outcome because if this is, the outcome, then also the tourism of Greece, the revenues of Greece overall will be affected beyond the effect to ourselves. So I think, it's too early to talk about specific changes in network.
What we first have to do is determined how what kind of size can be supported in different scenarios with state aid or in lead very negative and very risky scenario for us of no state aid.
K. Thank you very much.
The next question is from the line of Tomopoulos Adonis with Alta Trust. Please go ahead.
Hello. Thank you for taking my question and for providing all of this info. I would like to ask you, whether you work on plans to contain your variable costs, I mean, as a percentage of your revenue. And if so, to what extent, versus the previous year is at a decrease available. Thank you.
When you say variable costs, I I hope you don't mean flight variable costs. Because, obviously, since we're not flying very much, our flights, variable costs are being contained. We're not flying, but we also don't have revenues. But what I said earlier counts for everything, we will try to address our unit costs. Unit costs that become part of fixed costs and unit costs that become part of flight variable costs or of passenger variable costs.
I think there's only one category of cost that we cannot afford to decrease because this category of cost did not exist before. This category of cost is the cost of the protocols we will have to apply in order to fly in the given environment. So for example, as the current protocol, as applied by the Greek State and as a as a has a decrease in the way we will apply it in our aircraft. We will keep 3 of those at the end of the aircraft, empty vacant. In case we need to move in there, a passenger that is identified to be symptomatic and something that could potentially be something like COVID or indeed just the flu, but how can the crew tell, they have to have a space to isolate the customer So this costs 3 rows of seats.
3 rows of seats are, eighteen seats. 18 seats are around about 10% of the capacity of the aircraft. Therefore, That means even though the theoretical capacity of the aircraft is lower, that actually creates a unit cost increase for long as it lasts. So you will have costs like this, cost of materials that we need to procure for our customers and for ourselves. At our COVID related and for our crews, the safety of our crews.
But other than these specifics to COVID costs, everything else that is a unit cost, whether it is the lease over plane, whether it is the cost of the particular park, whether it is the distribution costs that we have, whether it is anything else, we will try to address, and we are already trying to address after all Since we're not flying, we have plenty of time to try to at least take care of our costs. So, we have quite a few people trying to fight these fights, and, hopefully, we will have a decent outcome.
Okay. Thank you very much.
The next question is a follow-up question from the line of Rajatislava with Eurobank. Please go ahead.
Hi again. Sorry. I got got cut off, before due to a power cut. Just a very quick, follow-up regarding state aid fees. What are the preconditions for you to receive, a stated or alternatively, limitations?
If I may say, for example, with respect to your cost base, retaining personnel, the future dividend distributions and products,
I I I I think, I have, I, you know, I I can have to give you a qualified answer to that. First of all, if if if you You are very welcome to try to access the document of the European Union on temporary Safe Aid routes to see what the whole rule book is because, you know, that that's that would actually possibly help you, not not only for this company, but for many other companies. Number 1. Number 2, earlier on, you asked a question about possible participation of state. And I said, no.
And the reason is very simple. It's the amount of aid that we need relative to our pre COVID capitalization relative to the needs we hear other receiving relative to the performance of the company in the past. And relative to the generation of revenues for the Greek State by the company. Because of all these factors, because we're such a big contributor to the state revenues. And because we will be asking for what I think is a very limited amount relative to others, we don't expect to have too many mitigating rules.
However, it is very clear that the state can request to have mitigating rules. It is very clear, for instance, that we did not wait for the state to ask for the rule for Mr. Yaron Yangas and myself to accept that we're not going to get any pay for this year. We did not, wait for the state to us to say it is actually obviously normal that we will not pay dividends in 2020, and we'll certainly will not pay dividends in 2021. And, if possibly even for 1 year more, These are natural restrictions caused by such conditions, but they're not really caused so much by the state aid.
Only, but also by the current predicament of the crisis. So can there be other rules? Yes. Do we have a conclusive agreement with the state? No.
When do we expect to have it? I cannot tell you, but I can tell you that it should be It must be in a short timeframe so we can make the appropriate decisions about the size and direction of this company. This is very important because all the negotiations we are having, all the discussions we're having, we need to know what size of company we are trying to sustain. And therefore, this is very important. And of course, all of our competitors are concluding these discussions in very short notice.
In many countries, these discussions have been concluded, and we hear that they will be concluded everywhere in the next 15 days or so. So this is the time frame that, we and Greece have to observe. So again, to be clear, things depends on the rule book, but things depend also on what you request. We are not going to be a company receiving or requesting several times our capitalization in age. We will not be, asking, for such amounts that will create a situation that, there will be by necessity, many rules, many restrictions, I'm sorry, applied by the state, but equally.
We fully expect to have a behavioral agreement in some areas, like I mentioned, possibly some others, that might come there. One thing is clear. We will never want to compromise our flexibility. We will never want to compromise our ability to run our people, our company in the way that is most productive also for the Greek state, which is the way we have been doing it for so many years.
Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Vasylakis for any closing comments. Thank you.
Thank you, ladies and gentlemen, for attending the call. Thank you for the patience. It has taken about 2 or 3 times more than normal. And considering it wasn't even a result call, this must speak to something. It is definitely a very difficult time for all of us but we promised to do our best for all constituencies.
We promised to there are no effort to try to recreate the ability of this company to go forward. And we hope that if every side that is involved internally and externally that this company contributes we will be gradually able to navigate our way out of this fog, out of this disruption, out of this destruction, that COVID, and the restrictions for travel have created. Visibility will never be very good for the next several months And please do not expect that everything we say is accurate in terms of numbers and forecast because we will be forced to change our direction and adjust depending on how this whole crisis unfolds. This is the main thing you have to remember This is a very different circumstance than previously. And therefore, you have to take everything we say as intentions and as directions.
And not to consider, numbers or estimates in a very, very precise way. And even direction and the plan can actually change if the cause and the nature of the crisis make you cause you to change it. So thank you very much for your patience, and have a good afternoon.
Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling. You have a pleasant evening.