Ladies and gentlemen, thank you for standing by. To continue, your call is called operator, Welcome, and thank you for joining the AGN Airlines conference call to present and discuss the first half twenty nineteen financial results. At this time, I would like to turn the conference over to Mr. Vasilakis' Chairman. Mr.
Vasilakis, you may now proceed.
Yes. Hello. Good afternoon, everybody, and welcome to our quarter 2 and H1, results for for 2019. Let me say at the onset that we think we have just released a very positive, set of results for this year set, for the first half of the year. Set against a backdrop of a slowdown of the European Economy and at the same time, for the first time in the last 5 years, 6 years, it slowed down in arrivals, to Greece, tourism arrivals to Greece.
So within that environment, the company has achieved to produce, 14% more revenue using essentially the same fleet of aircraft as last year. So we have no additions to our fleet, during the first half of twenty nineteen. The reason for this is because as you know, we've entered the agreement to purchase a new aircraft, and the first of them will arrive in 2020. So this is very much a transition year. A year where we have, emphasized trying to increase our
amount of activity, especially in the
second quarter. Basically, by flying earlier or building up our schedule earlier to international destinations with a dual objective of extending tourism season or supporting the extension of the tourism season to Greece, at the same time, of course, increasing our utilization. This effort has been successful. This is the reason that we were able to produce 12% more ASKs in the second the second quarter, but more importantly, on that, 20% more revenue in the second quarter. And through the performance of the second quarter, which was higher in terms of all the important metrics, EBITDAR, earnings before tax and earnings after tax.
We've managed to turn around the direction of the 1st 6 months of the year and have a small improvement on the bottom line results of H1 2019, reversing, the the lag we had in the first quarter, and making up of 2 very important, let's say burdens that we have to, to overtake. 1, was that we were hedged at a significantly higher fuel rate this year than we were hedged last year, which had a significant impact on fuel costs. And 2, the fact that this was the 1st year that we, had to apply IFRS 16 Then for the front loading of interest on our leases, I've added a 4,000,000 burden to our, to our, comparative results, which is why we've mentioned also in the press release that have some bad effect, that this delta in the results would have been significantly higher. The first second quarter of the year has brought basically, all the KPIs of the company back to a positive direction. Revenue per available CT kilometer, is is trending positively.
This is again, a very different picture in the book. We've seen more or less in in most European carriers, results. Due to the slowdown of the economy, utilization of aircraft has gone up, load factor of the aircraft has gone up and even yield which is more difficult than, than than rats because it doesn't get close to the influence by load factor is up despite the fact that we have this year from the beginning of the year, a, essentially the 1st year since we we bought Olympic in Greece in the end of 2013, but we have we face competition essentially in all of our domestic network. At the same time, has to deal foreign carriers third party carriers to to our country, also up, particularly so in in in Athens, but also overall, local carriers continue to increase their capacity degrees. So we were not at all out of focus in terms of, where these carriers have have, have emphasized their presence.
And as a result, we believe that the efforts and the outcome of the 1st, 6 months is very positive. A few more details about how how that happens. Naturally, all of our investments, was once again directed towards our international network. So it is there, but you have the most significant increases of of of activity, traffic, and revenue. For the, for the 2nd quarter, indeed, the international passenger, account was up by 16% for the, for the first half at 12.
While at the same time domestic traffic, traffic was more or less constant bringing the average to, to, Sorry. 9% 9% for the for the, 1st half and 10% for the 2nd quarter. So, in terms of what we did within the network, again, Athens was a focus of most of our development efforts. We were particularly intent on growing our share and traffic in routes up to 2 hours from Athens. But we also started some of the longer routes, both from Athens and from the regions, and converted some of our charter activity to longer rules to increase the utilization as well.
So if you try to put things together, what happened in the first, half of the year, in fact, in the second quarter, bring the improved results. We started flying earlier with complete no change in aircraft. We started building up our roof capacity for international earlier on. So in April of May instead of mid June are typical, this entails a risk of yet course, increased utilization, but possibly fair dilution or revenue dilution, which which actually didn't happen. And I think Hopefully, we'll see in the third quarter also a benefit from the carryover of starting some of these sites earlier.
A word of caution. While you see a very significant increase of revenue in the first half and particularly on the second quarter, don't expect that same direction, not the same direction, but those same absolute values or some trends in quarter 3. Why? Because simply Our level of utilization every year in quarter 3 is high. The degree to which it could have been further increase is marginal.
And therefore, while we have significant increases of revenue due to improved utilization on the fleet in Q2, you should not expect that in Q3. The improvement in utilization can only be marginal. Nevertheless, I guess, as I said earlier on, against the backdrop of a more difficult year of Greek tourism. These results are quite positive, especially since we have to overcome a cost from the point of view of fuel, that on, for a sequel, like for like operational basis translated to 12,000,000 in H1. So our revenue growth was strong enough to overcome those $12,000,000 of of rate related effects to our results.
Another €4,000,000 that came from the IFRS 16 application and another €2,000,000 more or less that came from the interest of the bonds that we undertook for $200,000,000, which is basically the proceeds are those things very much in our bank. We haven't, we haven't invested it. As you know, we had announced when we, the launch of bond that is effectively, the the use of these proceeds for PDP would start mid to 20 and and proceed by saying 21.2. So, hence, a total hit of about 17,000,000 to 17,000,000 of euros, on on our statement from things that were basically set, at the beginning of the year, the improvement of revenue was strong enough to overcome all that, both in the second quarter and overall in the first half. I'm gonna leave it there and turn it over to you for questions so we can get more specific to the points that I mentioned or it was in your interest that if we're not covered in my opening statement.
Thank you.
The first question comes from the line over the line here. Just a message with European Equities. Please go ahead.
Yes, hello, and thank you for taking my questions. Firstly, on the revenue side, you are you delivered the 6% increase in yields in the second quarter, by having grown your over offered seats by 9%. You talked about increasing, utilization. Just wondering, in the press release, you referred to positive evolution of the 3rd quarter, but you talked about marginal improvement of utilization in Q3. Does this mean that the in Q3 we should anticipated, also improved load factors as in the in the second quarter.
But from a yield perspective, we should wanna dispute something more modest from, from a a yield perspective, please. Okay. The first question, I will let you respond. I think it's better here.
So once again, to avoid confusion, the the the difference between q2 and q3 is going to be on how many more ASAs how many more flights could have been generated will have been generated will be generated, and the difference is going to be much less. That the the growth in ASKs and all the capacity is going to be much less. Why? Because simply that the growth in Q2 does not come from fleet and comes from utilization and utilization is so high in summer that you cannot increase utilization very much. So, you should expect more or less half the ASKs, but we're there, as a plus on Q1 and Q2 to be there on on Q3.
It's going to be something between 4 a half 6% increase in the SKUs if if memory serves well. So the delta, the the I mentioned when the revenue was referring to the fact that we would not have 12% increase ASK again to go after a similar increase. Now without wanting to be too specific about the quarter that is not yet complete, we will not have a short fall in terms of load factor relative to last year. We will be more or less at the same levels, maybe some marginal improvements. We think there will be also marginal changes left or right in the yield.
So, all these three things point to a revenue growth and to be positive again, but lower in terms of nominal numbers, simply because of Delta in flying and Delta in ASH paid is significantly less.
Okay. I thought that was a a white fellow. Thank you so much, for the clarification. And and a couple of other questions if I may be, on the on the on the cost side. Just just wondering if there was an uptick in the in admin costs in you too.
Just wondering whether there was any one off element in there. And thirdly, would you just tell us extent of which your hedging strategy might change in the light of the, of the spike in the oil prices following the the Saudi Arabia, Thank you.
First, let me go at the end because it's simpler. I believe we are 79 or 80% heads for the remainder of the year. Yes. For 2019, we are already at, basically 80%. So the remainder of 2019, September, October, November, December on average, around 80% hedged.
So, no, we will not rush to change that, 80 to 100% because we don't think it's prudent to go over 80%. For next year, I believe we are a little over 50% already 54%, I believe is, the the level to which we are good on the fuel for next year. And now we will not watch to increase this, at the at the current, well, at today's increased levels, I'm not going to make any predictions about oil. We will continue buying, but we always buy when the market steadier, away from big spikes. So, obviously, we're not going to increase our position for next year at least next few days until the market comes down again and settles at whichever levels it, whichever levels it chooses to settle.
I think as a personal view, we always had fuel because it's prudent to have had fuel, but I think they lead concerns that airlines have going forward, is really the price of fuel in the sense that there are much more many more negatives dispointing the direction of fuel in terms of demand, in terms of, climate change, in terms of potential let's say, alternate fuels in some different industries, not aviation, not of the state, but, we don't think there's going to be significant pressure coming from there. The challenges, I think for airlines come from the side of, demand growth. And this is what has been reflected also, I believe, in this year's results and use.
I'm not sure. Yeah. I'm I I just ask a very, very technical question about the the the admin costs in Q2.
I I don't know which which line you referred to as admin costs, the ones the the the line that we published in our condensed, let's say, segment of the us to leave a further operating expenses. I believe that if there is a that's that's a 2, 3 points higher than the ASK growth. This comes mostly from IT related investments that we're trying to upgrade different parts of our commercial or technical capacity through software systems. So I think That's what's there, but, it's not a significant delta over
our ASK. So Sure. Sure. Okay. Thank you so much.
The next question comes from the line of Ernesto Voloziana with Data Securities. Please go ahead.
Yes. Hello. Good evening. I have two questions regarding your new deliveries. Is there has been any outflow regarding two payments for the for the ordering of the new fleet.
And, my second question relates to the full year effect of 2009. Of, the IFRS 16 implementation. I mean, would we expect the similar charge of run of the same margin being issued of 4,000,000 in the second far across world or we're done with the 4,000,000 of whatever they call them in there, Antoine. Thank you.
So I'll go again reverse. No. Actually, I'll go, not to flow here. We've already incurred 6 38,000,000 of, pre delivery payment, $68,000,000 of pre delivery payments for the services. And we are done for this year.
This this this money was paid either last year or this year. Next year, the bill for 2 delivery payments, for Airbus, it will be 45,000,000 for 2020. So I hope that answers your question with regards to, aircraft.
Deliver for deliveries?
Marginal ones, yes. I mean, there are production changes that we get to fight by airbag for a delay of 1 month or 2 months or things like that, but but it does not change the balance of the cash flows or something, last what it does? Does it create a requirement for us to to keep for next year, 2, 3 aircraft extra? From the old street to manage the exact delivery time of the new aircraft. So that is, let's say, some kind of transition pause because why when you're not exactly sure, when an aircraft will arrive, you you need to have another aircraft around to power the work.
So, other than that, there is no significant, uncertainty or an effect from from that uncertainty. With regard to IFRS 16, there are 22 effects. All one effect is the front loading of the interest and that's proportional to time. So the 4 months, the the, sorry, the 4,000,000 for month, yes, it'll be another 4,000,000,000 for the other 6 months because this is front loading of interest. It's marginally different than the 2nd, this month, but it's not important.
The second, possibility of effect from, IFRS 16 comes from valuing marking to market the dollar based forward obligations of the leases. There was no such effect in the 1st 6 months of the year simply because the US dollar at the opening of the year and on 30th June was basically at the same level. However, these 400,000,000 more or less, dollars that that we have exposure in forward lease obligations will get valued every quarter. So if there is a a change, now get valued every quarter. So if there's a change, between the the 30th June, which was, 113, 611370.
And let's say, for instance, the dollar closes towards you today, 1, 10, 70, something like that, then that waiving a charge from valuation. But this second charge did not exist in the 1st 6 months simply because there was no valuation delta. Of course, that valuation delta can be positive or negative. And in a way, it's not really part of operating results at all, because all of that is it it's sort of instead of showing the Delta vaccine because when you pay the lease, you show it when it's valued. So you just bring it in advance, but there's no real change, and in a net net operating results.
And it's not capitalizing, of course, either.
Okay. That's very helpful and clear. Thank you.
The next question comes from the line of Umala with HSBC. Please go ahead.
Yeah. Hi. Thank you. I just want to understand a few things. One is about the revenue environment.
So generally, I mean, you did mention that, of course, there is a weakness to be around Germany and, parts of you. So how that that has impacted the demand and how you foresee, the demand going ahead and the overall revenue environment, if you could please explain on that or discuss on that.
Well, the reference that I made was not related to our particular revenue dynamic. Because actually, as you'll see, it's not even reflected on the yields, or or the rest of the 1st 6 months, which are actually positive. So, I was making a reference more to what we see, left and right happening in Europe. In in the case of our blended route network, I would say that if I were to take an average for the international network. I would say that the the trend is somewhere negative, somewhere positive, but overall, more or less stable.
And where we have improvement, we have improvement because we have shifted from, a, we have shifted capacity towards groups that have shown, an improved result. And if there is an improved, the revenue performance is not because the average fare has gone up but it's because the mix of of fares, the mix of revenues adopted by where we placed our capacity has helped us to improve things. That's number 1. So number 2, in the domestic market, we have the situation from basically, I would say, September last year until March, of this year where Pairs, yields were dropping month by month. Why?
Relative to the year before? Because the competitor that we mainly compete against now, a small local company has been entering, routes during 2000, 18. And therefore, 2018, in the beginning, we were competitive in a few routes and by the end of many routes. So the the benchmark for comparison comparison was changing, and this cycle was effectively complete took one full circle by 1 year from March. So from April and on, in the domestic network, because now we are comparing against, let's say, apples with apples and the same, more or less competitive, it's clear.
Our yield has shown some improvement. So, I I would say that from if if I
take Q2,
which is the main driver of our result, and to some degree, what shows us, what's coming forward. The tracking international network is just rebalancing capacity to more profitable routes without real change of average share or, or yield. I mean, the domestic network while we started the year significantly lower than last year, it has averaged out as competition has stabilized and now we're seeing some pluses. Is that adequate for you?
Yeah. I think I think that's that's very clear. While while we are discussing about the video environment, it would also be helpful. If you could please, uh-uh, please let us know about if the sort of the the revenue environment or the demand has stayed strong in business class, and you're gonna be glass or in the class that you you are filing, the demand remains strong. The and why I'm just pushing internally because I've been I've been getting this a lot of bit of response that, you know, the corporates are cutting the barriers and and in that, understood, Have you have you seen that in the business class months or or or that is not affected with with aging?
Well, the difference with the GM is that this business class is a very, very small percentage of the revenue, unfortunately, but it's more percentage of the passenger. And, if anything, we have a small, very negligible increase in, in, in the amount, let's say, of penetration of business to the total. So that is driven also by some, programs that we or people are bidding for business class or upgrades are, awkward with certain discounted rates. But, overall, I can clearly tell you there's no negative trend to business. There's a small positive trend, driven by first being in a low level, start with, by some of the programs or bidding, last minute or upgrading some costs.
But none of these things will have an executive will have a significant, effect on what we're doing. Unfortunately, as you may recall from previous discussions of where we are predominantly leisure. And therefore, these are small numbers.
Right. The other thing I wanted to understand about, about the recent news regarding the airport prioritization looks like you don't want to prioritize most quite a lot of alarm including the Athens ones. So how do you see that, would that impact your cost? And and then how do you see that, the main in the whole month and the business environment for the airlines?
But the Athens airport, has essentially been privatized since day 1, 2001 when it's operated. It's always been managed by the 45% of the the the privately held part. So happens there for today is 55% government owned and 45% privately owned. But as a part of the shareholders agreement, even before the concession began back in 2001, the private side had the management. So in, in effective, terms, it's always been private and it's always been quite expensive.
Twice as expensive as the other airport to Greece, whether they are now private or, or still, stayed on. Therefore, there's no risk of increased costs from Athens airport. As a matter of fact, we would have expected in the past that the extension that was purchased by Athens Airport could have led to a a significant reduction of of, unitary costs. It did not. There was a a marginal only reduction of parking landing fees.
So the overall, let's say, might have gone down from the beginning of June by, let's call it, 4%. This is offset by some increases in the regional airports that were originally we recently privatized about 2, 3 years ago. And so we have and we're looking towards more or less a new trial environment, with pluses and minuses that are not going to make a big delta on a unit level, here in Greece, at least, looking out as far as I can, let's say, until the end of 2012. There there's some discounts in some places increase on the others, but definitely no potential increase from what we refer to as privatization to Athens airport because what this means is that the government will sell from the remaining 55 another 30%, but effectively assuming the buyer is not the same consortium who's running it now, then that other 30% will not have the management. So nothing much will change.
The only thing that changes the Greek government will put some more money on its annual revenues and privatizations.
Right. And that applies the that's been applied to other reports also as as when you say that the government is
No. No. It does not fit the listen. The Greece of the 39 Airports. Today, 14+1, Athens, 15 are privatized.
The only significant airport that is not privatized yet is, the airport of Irakian, where the government has agreed and voted into law, a contract that bills operate and transfer contract to build a new airport on, the south of the prefectural, Viracian, in Casteli, that airport will probably be operational in 20,022,256. So the the change any potential, change, of course, refers then to the 2026, time period more or less. So the the other airport, the 23 small airports, that have not been privatized, have a completely negligible effect on our total cost structure, to give you an idea, Athens, Iraqalin and the 14 that have been privatized already would would represent 90% plus of our Greek activity.
Fair enough. The the other thing I wanted to understand about the difference policy given that, given that, the recent uncertainty, honestly, has increased. I mean, of course, you've been saying that, you will maintain the dividend, for the next couple of years. But then now, given that, I mean, of course, there's a lot of uncertainty around the business and generally Europe and and and then you, the and and and then you are doing a payback also. So do you think you will maintain the policy, or is there any in the living policy, do you see?
I think we will, maintain the same policy as percents. Of, earnings after tax distributed. We have no reason to change that, but, I can tell you today of course, they that is a a percent of of of earnings after taxes, I think. So there will always be related to how profitable we are in a given year. The cash flow situation of the company actually, I would say right now is much more positive than ever before.
We we took, the the the risk or or or the decision to to issue abond, as you know, substantially before we needed the material funds for free delivery, costs secure the availability of these funds at the appropriate time and to be able to negotiate with alternate financing parties more efficiently. We we have sustained the cost of paying, interest faster. Than we should because we certainly did not need the money at the time. But I think the overall cash flow, both in terms of operating cash flow And in terms of cash availability, is very, very secure. So the percentage of of our earnings that will go out, the dividends will not change, what remains to be seen in the course, like every year is exactly what the earnings will be.
Okay. Perfect. Thank you. I have 2 more questions, and I'm so sorry for the long list of questions. I have just last week, which is one I wanted to understand about the capacity and fleet plan.
I think at the start of the year, you mentioned that, in particular of seats, you'd like to keep capacity growth of about 4%. And and now in the first half, I think we recorded 8% in green in the number of seats. So what sort of capacity are you looking at for the full year? And what is I wanted to understand about the the cost of it. So you have been you you mentioned But, you are planning to sort of reduce the current operating costs if it could be elaborate on that point.
Thank you so much, and we'll call along questions. Oh, no problem at all.
Yes, as I said earlier on, you we had an increase of 12%, of ASK in the 2nd quarter and of Is it 9? Yeah. 9% 9% of ASKs in the in the first half. I said earlier on, but Q3 should be more or less at at half that growth rate, of the second quarter. So around 5 to 6%.
And the last, quarter probably is going to be around 7 or 8%, in ASK. So that should lead to a year. Coming up somewhere between, 6:7 a half percent, I think, in terms of, in terms of ASK. And and seats should be, you know, probably just a little bit under that because we do have an extension of of, stage length by 1.5% more or less. So in terms of capacity, that that's the the question that I can give you.
In terms of, other costs, well, as I said, we're pretty much hedged on on on on fuel. We're also around 60% 57% based on US dollar. For for this year, yes. 57 percent seasonal US dollar for the rest of the year. So, I don't expect a big difference from there other than the valuation issues that I discussed, earlier on.
But that is a evaluation issue, not an operating cost issue. I don't see something material changing in our unitary Both level, other than to say, of course, in the summer, when we fly more, our cost per ASK is lower simply because our utilization is higher and we can and and the the the the list cost, the personnel cost is amortized with with more production. But other than that, I I don't see any particular movement different than what you have seen already.
So you have mentioned that you were planning to reduce aircraft operating costs. So what what does that point refers to?
The reduction operating cost was referred to the period of receiving the new aircraft and beyond. You might recall that in our previous call for the for the year, I said that the improvements from, arriving aircraft was first to a very low level start to appear in 2020, but mostly it should be from the second half of twenty twenty twenty one and on. When we learn by that time, time have at least 14, 15, aircraft in our fleet. Since the first aircraft that we are receiving coming essentially in 2020, certainly there can be no unitary savings in fuel or maintenance or increased capacity that will lower the cost, proceeds coming from that direction that is completely related to the new aircraft arrival. And I believe, I'm certain that this is what I have mentioned, as as a sort of a 2, 3, 4 year perspective.
And I had actually even given you some expectations about when you would start.
Alright. Perfect.
Thank you so much. Welcome. Our next question comes from the line of Kaesamuyacob with Woodtenkol. Please go ahead.
Hey. Thanks for taking my question. This is.
I
have 2. First, I need to to follow-up on, on Kumar, with regards to competition. And, if it's possible to present the outlook as it stands for the remainder of this year and perhaps it's because of the next one. Are there kind of more more parties can increase, how do you think that the competitive landscape is going to evolve looking forward? And the second question, relates capacity, I mean, how are the delays and the view compensation, the competition for euros comparing with the past year so far?
Yeah. Thank you. As far as competition goes, I think that you know very well that the carrier that has more significantly than anybody else. This is going back to the capacity in Greece over the last five 6 years is Ryanair. Ryanair, again, year has shown a significant increase of seats towards our country for international, capacity towards Greece grown, I believe, in excess of, 15%.
The overall capacity degrees include including domestic, has grown marginally because basically they took out capacity from international, sorry, from domestic and and shifted it to international. But since the number of seat count is up and the average bank length is up, the things that they are continuing to invest towards our country, EBITDA has been more or less constant with very small increases the last few years, wins who made the foray into Greece a couple of years back. I took a step back a little bit this year, but some of the groups didn't work out. Lufthansa and, Air Francea's groups are growing towards Greece primarily to Transavia and Eurowings. Although, this year for Lufthansa group less than the year before, Transavia has been more aggressive and the accounts have been more aggressive, through Transavia.
Overall, the competitive environment happens, and for this winter from competitive parties used to be about 5 to 6% increase relative to the year before, which is indeed lower in terms of increase of capacity than what we were seeing for year for winter, which was more like 15% relative to the year to the to the winter of 2017. So looking into the winter, it it looks like a more benign, growth, like, say growth of capacity. So it's definitely not anybody pulling anything back from the competition. And we aim to to get, a little market share back. We tend to differentiate our growth rate less than our competitors because we are so, you know, really focused.
And therefore, we have a more constant or a more, consistently better work, unless it's worthwhile. But competition, while growing at a lower pace than the last 2 years is still growing, in international. Domestic. There are today 2 Greek airlines, side express, and not top line domestically and also Volatea. That has joined the Greek domestic market since last year.
The capacity that they're putting in is being offset the with the capacity that liner has taken out. And so, in some routes, we might actually have a reduction in competitive capacity This winter overall to a year, it's going to be roundabout 0. Now how is 2020 going to look like? It's clearly settled, but considering that, everybody that is significant in Europe, Ryanair is that with And of course, the 3 large, network airline groups look outside France and VAIG, arrow here, we we don't expect any big, changes. I would say that the only trends In the last 2, 3 years, I've been for the large network carriers to also add direct connections to some of the larger island destinations.
So, the the main investments has been from the point of view of, network areas that connecting their hubs to some of the, let's say, larger islands, with their proper mainline brands. So Lufthansa, something cases or VA in some cases or air France in some cases and more frequently with their local brands, Eurowings, welling, and Transavia. The local players have been through a policy of expansion to Greece, the last, 5, 6 years. It's it's mitigating some. We have grown a lot, but it's still there.
And domestic is stable to negative in terms of capacity and capacity growth.
Excellent. Thank you. Thank you very much for this. And, let's in terms of delays and the AEC.
Oh, yeah. Sorry. Sorry. I'm I'm positive. Well, AEC delays have been the biggest problem that we have faced this here.
But this time, the origin of the ADC delays was not so much. The European airspace. It was more, local issues with the capacity of the Athens approach airspace which is the area around our hub. There has been a particular problem since, from mid June, which was more or less rectified by the second half of August, which referred to having inadequate capacity as midday between 12:4 o'clock for incoming flights, causing a chain of delays and a very negative effect to us as a hub carrier based out of Athens. This is partially due to deal, staffing and organizational problems for Greek, and partly due to some, let's call it, political maneuvering that takes place by, elements of of safe workers and and safe agencies when changes of government takes place.
In any case, we have been working very hard to, push both sides of government, the workers, the organizational elements, to invest in new hires for next year and invest in additional equipment. After all, they're only investing with the money that airlines such as ourselves are paying. This is a very much self financed process, but actually leaves a surplus for the Greek state, and they are obliged to invest that surplus in the improvement of the ATC, and this is very much what we have been, pushing them to do. Based on the experience of the summer, we see some promising signs in that direction, but it will take some time. From the point of view of costs, yeah, maybe we'll have about a couple of 1,000,000 of extra cost for the whole year relative to the year before due to hotel overnight, 2.61 compensations and whatnot.
But this cost, this additional 2,000,000 is miniscule relative to the disturbance and disruption of the actual flow of business, fatigue, of our staff. And of course, a decreased satisfaction level of our customers is for us, is a paramount issue and the one on which this airline has been based from day 1. So, we are working very hard, and we have seen some first results from positive response from the state. We'll continue to lobby very, very aggressively to ensure that next summer will not have characteristics at the July and the early August period had, which were not only negative for us, but also, of course, for other guys flying too often. And of course, for the perception of a tourism product of Greece.
Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Alexius for any closing comments. Thank you.
Thank you all for attending our first, our first half results conference. I would say I want to close on a on a positive note, but we opened in a positive note, the the increase of revenues, and the satisfactory increase of utilization employment stretching our season without cost to our yields. That allows us to overcome the overhang of the additional fuel cost and the IFRS 16 effects. It's almost into the continuation of the year, and this was better than expectations, especially within a year that, as I said, would have slow down the arrival deliveries. So I look forward to the completion of the third quarter, which is the one that, of course, every year, shape our resolve We hope we have this, this dynamic, to some degree, even a lower degree from the point of view of revenue increase, translate to to very positive, third quarter and full year results.
So, thank you very much, for, for your attendance and, see you soon.