Earnings Call: Q2 2019

Jul 31, 2019

Good day, and welcome to the hy2019 Air France. KLM conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to mister Ben Smith, CEO Air France KLM and mister Faraje, CFO Air France KLM. Please go ahead. Good morning, ladies and gentlemen. I am here today with Frederic Hajde And we are very pleased to welcome you to this presentation of Alfrance KLM's 2019 first half results. Firstly, thank you for joining the call and for your flexibility on the change in schedule. I'm going to share with you a number of strategic decisions contributing to the simplification and modernization of our fleet. First, a few comments about our group's activity in the second quarter of 2019. So within a challenging environment owing to the current geopolitical tensions and economic uncertainties, Elfrontera Lam posted a robust second quarter with a 5.1% increase in passenger numbers. And a 0.9% improvement in passenger unit revenue. Execution in unit cost reduction, which enabled us to more than offset rising fuel costs, in line with the net debt over EBITDA target of below 1 point 5, the group further strengthened its financial position. The group reduced its net debt by 1,000,000, compared to the end of to take you through the detailed presentation With its Airbus A320 family aircraft, we are currently operating Airbus A320s, Airbus A319s, Airbus A3eighteens and the larger Airbus A321s. This medium haul fleet is aging and a portion is due for replacement in the coming years. I'm pleased to announce that to begin renewal of the medium haul fleet, Alphas has placed a firm order for 60. Airbus A2203 100 aircraft with an additional 30 options and 30 purchase rights. The Airbus a 220 is the ideal aircraft for the EFHA short and medium haul fleets for several reasons. 1, it's an environmentally friendly aircraft with 20% fewer CO2 emissions and a 50% reduction in noise. It's also economically and operationally efficient with low aircraft and trip cop. 2, it is the right sized aircraft. 3, it is a perfect fit for the product proposition we are currently developing. I'll start with the first point cost. Airbus A220s have a significantly lower capital cost in comparison to other next generation aircraft of comparable size. Together with Hreedharic and our strategy, fleet and network departments, we have carried out an in-depth review of financial scenarios for the fleet. Compared to other aircraft types, the Airbus A220 scenario will result in significant CapEx savings. In addition, the Airbus A220 has a lower trip cost compared to the current A320 family, mainly thanks to its fuel efficiencies. Compared to the existing fleet, it will thus generate an EBITDA improvement. Finally, if necessary, the terms of the agreement with Airbus give us the flexibility to postpone deliveries of firm orders. In addition, the 30 options plus 30 purchase rights for additional deliveries to replace remainder of the old generation aircraft in the medium haul fleet, provide us even more flexibility going forward. Another important factor on cost is the fact that the engines on the Airbus A220, the platinum Whitney gear turbofans provide the most fuel efficient engine technology. The fuel burn per seat of an Airbus A220 aircraft is 20% lower than previous generation aircraft, and the fuel burn per seat is even below the A319neo. Combined with the lower capital cost the fuel efficiency will deliver lower trip costs lower than the existing Air France fleet and other comparable aircraft. The ARbus A220 scores very well on environmental factors and is the quietest and cleanest jet aircraft of its size. These environmentally friendly aspects are due to the efficient design of the aircraft with advanced materials used in more than 50% of the primary structure, meaning both lower weight and required maintenance costs. It is a truly next generation aircraft Concerning its size, with 150 seats, the Airbus A220 300 is optimal to replace El Paso's current A318 and A319 Fleet. The range of the aircraft allows it to operate all the current routes in the Afrance medium haul network. With its unique and top of its class characteristics in terms of customer comfort, The Airbus A220 is a perfect fit for the product Ethrance offers its customers in terms of cabin layout The most noticeable feature our customers will notice is the seats. They are the widest in any single aisle aircraft currently on the market given the fiber breastfeeding configuration, while the large stowage bins allows one roller bag for every passenger. We are all very pleased this aircraft will join the El France fleet in the coming years, and we strongly believe that the Airbus A220 is going to be a key factor in making the FHA short and medium home network profitable, as well as enhancing our value proposition to our customers. During the 2018 annual results call, I mentioned the early phase out of 3, Airbus A380 aircraft whose leases were expiring and that we will be reviewing the remaining 7 A380 aircraft. As you have heard, not only from us, but also for many of the A380 operators globally, the profitable deployment of the Airbus A380 aircraft is limited due to the high cost of operations. In addition to the challenges faced in terms of operational performance. Airbus has announced a suspension in aircraft production, and we see other operators reducing their A380 fleet as well. As for the 7 remaining aircraft at Air France, A fleet of this number of aircraft is suboptimal as it will require a minimum of 1 spare or 6 operational aircraft. Which would also be faced with a major cabin refurbishment program for these a380 aircraft to upgrade their product offers. Each costing upwards of 1,000,000. In addition to required maintenance costs, meaning an investment totaling 1,000,000 per aircraft will would be required. Therefore, an early phase out of the Afrobs A380 fleet will result in a sub substantial capital savings estimated at 1,000,000. Well, that's come as no surprise and we have decided on the early phase out of the A380 aircraft. Financially speaking, there will be some one off costs and we will also be accelerating the depreciation of the aircraft. The total amount is estimated at around €400,000,000 and will be spread over the 2019 to 2022 period. New generation aircraft will replace the A380 and several types are still under consideration. Negotiations with the manufacturers are in advanced stages, and we will keep the marketing form in due course We can, however, disclose that we will require no more than 9 new wide body aircraft to replace the a 380 fleet. The early phase out of the A380 aircraft will have a profitability uplift starting from 2022 and will generate positive equity over time. We announced at the end of June 2019, another important step to simplify and rationalize the fleet of the group fleet. Alconff and KLM will swap their remaining firm Boeing 787 and Airbus A350 orders between them in order to realize fleet efficiencies through harmonization of similar aircraft at both airlines. The implementation of the swap between the airlines means that in 2021 to 2023 time frame, the 6 remaining Boeing 787 ordered for now cause will be transferred to KLM, and the current 7, Airbus A350900s on order for KLM will be transferred to our files. KLM presently operates 13 Boeing 780seven-nine and received its first Boeing 787-ten in July 2019. This fleet will further grow to a total of 21 Boeing 787s by the end of 2020 to which will be added the 6 Boeing 787 initially intended for Al Frost for a total of 27 aircraft. With regards to the medium haul fleet of KLM, we have announced in June our intention to purchase up to 35 Embraer E195 E 2 Jets with 15 firm orders and purchase rights for a further 20 aircraft of the same model for KLM Cityhopper. In order to enhance its existing network and to permit the efficient development of new routes, The Embraer 195e2 will be a welcome addition to the KLM fleet, giving greater capacity flexibility, and help to manage down costs. In addition, the environmentally friendly E-one hundred and ninety five new two also supports our sustainability goals with lower levels of noise and admission. So now I hand I will hand over to Federate for the financial presentation. Thank you, Ben. Good morning to everybody. I hope now you go to slide number 12 that comes and ends the financial result of Sea Second Quarter. As indicated by Benoit at the beginning of the presentation, we can consider that the second quarter is solid in the sense that you see a strong development of the and operating result of EUR 400,000,000, a margin of 5.7% and relatively significant reduction in the net debt. So all in all, it is a result which are satisfactory. Of course, when you look to the evolution compared to the last year, which is a slight improvement of the operating result. You are not too early to take into account the fact that last year's second quarter in Air France mainly was in by term by the strike with the global effect of helping us to be returned to 2.60 €1,000,000 at the EBIT level. But, by themselves, it's visible to the 2nd quarter and seasonality growth of 6%. I think can be consider us relatively satisfactory. You also see that the Voci over 12 months sliding is at 9.3, which is also the her, which is acceptable and as indicated by Benz and Waysure, additional net debt on EBITDA is below 1.5, exactly 1.4 for 12 months period finishing June 2019. I go move to the slide 13 when you have the evolution of the result activity network, including cargo, we have a good development of capacity in the passenger activity plus 3.9% positive unit revenue plus 0.9% for the passenger activity. And I will come back later on on the development of the unit revenue per networks. Can I go there? We have more negatives signal. 1 is mainly the unit for the unit is down minus 7.54%. It is a relatively important decrease. Clearly related to all the problem today in the world exchanges due to the commercial war between US and China and some economic or macroeconomic, negative evolution in some part of the world. So clearly, it was not the type of number we had seen in 2017 2017 2017. We don't know yet what would be the trend in the next quarter, but clearly, it's minus 7.54 percent of unit revenue for the cargo. Is not a good signal Transavia is developing well. Again, we have increased capacity for the combined Transavia Oil And Transavia France by 9.2 crores in spite of is relatively aggressive growth in Metro revenue is also developing positively, plus 1.3. And the margin is quite to last year, but still a very good margin, which is partly explained by the fact that we are entering the 2istic period and also by the shift of Easter during the 3rd second quarter, so we compare to last year. Magnance is increasing the margin at 4.9% and the revenue is increasing significantly at +12 percent. So we are back to an improvement of the margin of the amount after a bit more difficult year in 2018. We had already such an evolution during the first quarter of EVA. So all in all, for the group, a margin of 5.7%. Increasing compared to last year. But again, I will comment that a bit later on, but we explained, of course, by the strike effect in Air France for the year 2018. So I go to the next slide, which is the split of the unit revenue compared to the last year. So we have given to you the unit revenue during the second quarter during the 6 months. Per networks to indicate 2 things. 1st, during the presentation of the Q1, we have indicated that the unit revenue globally will be slightly positive with a good long haul and a negative shortfall due partly to the base effect of last year after the strike of the railway company in France I am happy to see that we have been relatively precise and accurate. You see that the long haul unit revenue for the quarter is in fact, what activity that I make was 2.3% with a positive number everywhere but in Latin America, in Latin America with the difficulties, mainly in, Brazil, Argentina, you'll see a drop of the unit to renew by 10 concerning the major more major more, point to point is negative minus 9, but major more hubs is neutral at this point to both ends. So let us just say that we have been, in fact, relatively precise when we have given the future or expected trend in terms of unit revenue. One remark, however, if you look at the reason for the 6 months, So the half 1, 2019, you see that the developed mark in the long haul is a bit less than a mix than what you see during the second quarter. So just to say that the second quarter is a bit exceptional and that when you are looking at the 6 months, is something which is a bit more neutral, or shy in terms of evolution of the uterine in Hong Kong, which is, had to say, slightly positive postponed it. And again, a negative in Latin America and a positive in all the subnetwork. If I go to the next slide, which is the speed of the capacity, so clearly evolution of the unit revenue has just been commented, you can also make quick calculation to show that mainly in long haul, we are, generally speaking, both an increasing load term, but also an increasing yield. So it is not only the load factor evolution, which is explaining that unit revenue trend. It is both the route factor and the yield paid by the passengers. We are also to keep in mind that the oncillary renews are in quite dynamic, plus 20% compared to last year, supported by the brand's unfair and the new distribution capability system we have put in place already 2 years ago. And not also that the premium segment is relatively resilient During the second quarter of 2019, we have a new revenue, which is up 1.54%. Unit cost. Unit cost, is relatively good in terms of poster number. So we probably charge this one percent when you correct for the currency effect and the fuel price effect, we have at constant currency and fuel unit cost decreasing by 2 pumps, 3% which is the result of a good level of productivity. Labor productivity is improving by 3.1% also the fact, which is going into the negative direction, you have to take into account the effect of the 2 which have been signed both in Air France and Karen last year, and which are clearly, influencing the evolution of the staff cost. Also, keep in mind that in Air France, following an excellent consultation study, which has been managed during the second quarter, there will be a new plan on post evaluation, simplification, efficiency of processes, which will be launched back in September. Also, the fact that last year was impacted by the strike played a role in terms of unit costs. We had last year, as you know, quite high customer session costs, which are, of course, and happily decreasing since the year 2019. I moved Slide 17, in the first quarter presentation, we show you the evolution of the operational performance of Air France. You know that is one of the priorities given by bank to the management of Air France Group. And let us say that the result foresees federal corporate are acceptable. You see that in terms of on time performance, Air France is ranked 16 in June 12th in May 14th in April, which is not too bad. And if you look more precisely amongst the European legacy carrier, France is at the top in terms of time for most number 3 in May and in June. On the right of the slide, you see the evolution of the Net Promoter Score also in Air France and KLM, the trend in Air France is positive. Coming from 12 last year and 'nineteen, twenty seventeen, and now being at 24 in Q1, twenty five in Q2. There is still a gap compared to KLM, but for Air France, the trend of evolution of Net Promoter Score is positive. In group 2018, which is speaking by itself, evolution of the EBIT between Q2 2018, Q2 2018, clearly a positive contribution of the unit cost estimated to plus 135,000,000. The negative effect of the fuel price, ex currency which is mainly explained, of course, by the hedging delta result. If you compare to 2019 to 2019, I would come back on that a bit later on. So in fact, the fuel price is a decreased declining in 2019 compared to last year with a positive impact of 70 million, but also the effect is more than compensated by the fact that the hedging is less positive in 'nineteen compared to 18, even if it is still positive during the second quarter 2019, the currency impact is almost neutral slightly negative minus EUR 18,000,000. It's positive on revenue negative on fuel and on first And when we sum up the 3 elements, we have minus 18 as a total. Next slide give a split of the group profitability between Air France and KLM. What can we see if I take the top of the slide when you look at the second quarter, Air France is improving, but by plus 130,000,000 compared to last year. But as you, of course, know, we have to take into consideration the strike effect, KLM, which is more like for a line because happiness, there were no strikes to Karim last year, you'll see that the change negative minus 70,000,000 and a reduction of the operating margin by 2.8 even if, of course, the operating margin is still at a quite high level of 8.9 The reason when you look at the first half are comparable in terms of trend to what we see on the second quarter, the prediction of the margin took care of this manner 3.7 and the margin is at 3.8, picking, of course, into account the 1st quarter. Which traditionally is with a lower margin in Air France as over the 6 months, still a negative operating margin even if it is improving compared to last year by 0.8, point in terms of the margin. Sorry. Net debt, a good evolution of the net debt, relatively high level in terms of free cash, addressed to the pertaining free cash, which is calculated excluding the IFRS. So we use all method of the receipt to consolidate its address to the pertaining free cash, as many other companies are doing is positive at 1,000,000, which is higher than last year. Where it was at +141. And in terms of evolution of the of the net debt, including IFRS 16, calculation on methodology. It was at the end of the last year at 6 point 2,000,000,000, and it is at the end of the second quarter at 5,700,000,000. So a significant decrease of the net debt, which follows the net debt on EBITDA ratio to stand at 1.4 So being below 1.5. Let's just speak now about the outlook. First, outlook comes the revenue. I am slide 22. As usual, we present you the long haul forward booking load factor for the period, August, December. First remark in July is a load factor, which will be published soon, is equivalent to last year. The no improvement in terms of load factor. But as you know, in the summer period, the load factor traditionally extremely high. For August 2019, we are for the time being minus 1. In terms of long haul for one booking load factor, but we are close, of course, to the, to the real one. Set on the first one. So which means that when you see that all together, we expect for the 2nd quarter, a unit revenue which is expected to be flat compared to last year. So I'm seeing a bit less optimistic compared to the result I showed you before concerning the second quarter. For the last part of the year, as a longwall booking load factor are clearly up compared to last year, plus 3 in October, plus 2 in November, plus 3 in December. A bit difficult to say. How it will translate in terms of unit revenue because the period, of course, is a bit farther. But let us say that it is rather a good signal, but don't, be too optimistic for the time being. We have to go a bit closer to the period before to draw any conclusion. If I move to the next slide concerning the fuel bill, No signal, we are still at +5 50 compared to last year, which is close to the number we gave at the end of the first quarter. As indicated in the slide, if you look at the last line in the figures, just to remind you that the hedge result last year was EUR 800,000,000. For 2019, We expect Absa current forward curve to have a hedging result close to 0. In fact, a EUR 50,000,000 And as explained before, the last part of the increase of the fuel bill, year over year is a spend by the fact that the hedging is less positive in 'nineteen compared to 'eighteen Page 24, the guidance for the full year. Not many chance compared to what we indicated during the first quarter presentation. One exception is the capacity in Transavia, expected in the previous guide on between +9 and +11 for something now expected between +7 and 2 +9 for South. The sure will be decreasing compared to, the lab guide outs where we indicated an increase compared to 2018 of +6.50 and now +5.50 only, so a reduction of 100,000,000. QNC FX still estimated to be neutral. Unit cost still estimated to be minus 1 to 0. But as I told already, we think that we will be by the end of the year was in the good part of the indicated range, CapEx 3.2, given in Q1, 3.2, confirm today, the net debt on EBITDA ratio below 1.5 as indicated also during the Q1 presentation. So, I have finished the presentation and with Ben and all the team, we have today Eric, the CFO of airlines, CRM, the CFO of Air France, and, of course, the queen of the financial communication. So I open the line for your questions. Thank Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. And if you find that your question has already been answered, you may remove yourself from the queue. We will now take our first question, and this comes from Jared Castle from UBS. Please go ahead. Thank you. And 3, if I may. Just firstly on, Brask, it seems like, there's a positive mix towards leisure rather than premium. So any comments if this is more a concerted effort or or if there's any softening in in in in in in business mix Secondly, just kind of related, some good performance on the North Atlantic. But can you give some color in terms of what you're seeing in July August and whether or not there's relative weakening compared to, Q2. And then lastly, balance sheet, you continue to bring down the net debt to EBITDA. Just some color on where do you stand on potentially getting towards investment grade rating and, the criteria behind that. I think the last one. First, we had some distribution to some 6 months ago with bankers and with credit analyst. And to be transparent, they consider that when you have an additional net debt on the bills closed or below 1.5, they consider that you are not too far from investment grade. Okay. That's a much of it. Yeah. But, 1.5 is something which very acceptable for bankers in terms of, in terms of investment grade. Concerning the evolution of the premium and the economy, I have to say that during the second quarter, the premium is not too bad. Now you have seen the number. If you come back to slide. Sorry. So the slide 15, you see that the premium has is at +1.8. Once the premium economic is at +.7. And when you speak with the sales a paper concerning the development of the demand, for the global contract we have with the film. For the term means there is no specific color that, the situation will be deteriorating. Of course, when you look sector of our sector, you can also change. Let me check whether the drilling is with better. Automotive is a bit more negative, but all in all, the development of the demand and the turnover when you look at the global account compared to the economies. The global account are still relatively effective in terms of the development of sales. And then just North Atlantic, any commentary around that, please? On the North Atlantic, concerning the, insurance, the number of the second quarter and what we expect from the third quarter. I would say that possibly the development of the wasp could be a bit weaker in the North Atlantic third quarter compared to what we had in the second, but it is still in the positive area. Okay. Thanks very much. Thank you. And we move on now to our next question. This comes from Steven Furlong from Davy. Please go ahead. Good morning. I'm well done on the fleet order. Just two questions maybe for Ben. Where are we with Transavia? I mean, if the scope flows go, how big do you think the transataneously could be, you know, where would those aircraft be deployed, or just broadly? And the second question, I I appreciate that the Investor Day is not from November. When I'm just thinking, in terms of Air France, obviously knowing that it has lower margins than many other airlines indeed in KLM, where do you see as the biggest opportunity over the medium term for Air France and the biggest challenge? That'd be great. Thank you. Okay. Regarding Transavia France, were today there is a scope limitation of 40 aircraft. We're at 30 aircraft today. There is a consultation, vote referendum vote that, the largest union representing the Air France pilots, is currently out. The results of that vote should be known today. And if that vote is positive, we will then have this new opportunity to grow Transavia France, where we would look to grow Transavia France would obviously be where we compete heavily. In and out of France with the low cost carriers. So these are the routes that we're looking for. How fast we would grow our friends, the Transavia portion of Air France, would depend on how we balance out the other opportunities. But I think the first item for us is to at least have the flexibility to, to deploy Transavia wherever it makes sense. So this is we should know the results today, and, hopefully, it's a positive if it isn't, we have some other, some other avenues to address this, this sector. On the second question regarding, Air France, I mean, we are having just started today. We've been studying the entire team, management teams at France, have been studying how to reduce the gap, the gap in terms of operating performance, financial performance between France and the rest of its European peers. I would say the number one, item that we're focusing on is simplicity. Air traffic is a very complex, company. This, in its self, will drive cost savings. And then, of course, with all of the, negotiations that were agreed to, over the last 9 months, there's an enormous, there's an enormous flexibility now to drive productivity gains So we still have a lot of work to do, but these are 2 of the items I can share with you now. Thank you. Now we move on to our next question. This comes from Neil Glynn from Credit Suisse. Please go ahead. Oh, good morning. If I could ask you 3 quick ones, please. The first one with respect to the long haul forward booking strength, that you've highlighted, clearly, your guidance, since the 3rd quarter unit revenues will be stable, and obviously, a bit early to talk about the 4th quarter, I'm sure. But to what extent are you booking earlier at lower prices or how do you explain the disconnect between those long haul forward bookings and the guidance? Is it maybe just short haul? Second question, KOL margins peaked a couple of years ago and they're coming down quite sharply as we saw in the first half. How concerning is this at a time when you're using KLM as a benchmark and an aspiration for Air France employees to be more productive and more profitable? And then the 3rd question on 2020, the fuel bill is guided flat in euro terms certainly into next year. Just interested in terms of squaring the math on that, does that actually imply that your capacity growth will be pretty flat into next year, clearly in dollar terms, your jet fuel price looks like it'll be slightly up next year. So just interested in your capacity plans, if you could confirm them as an input to that fuel calculation. 1st, concerning the relationship, which is a long haul for our booking load factor and we need renew, I see that what we indicate is relatively consistent. You'll see that for the third quarter, we are flat if you saw that the 3 months forward looking road factor. And as a consequence of the wrong role, we are tend to use that probably the third quarter will be with a flat or flattish unit revenue. I think that it is a relatively current, I think. Yeah. So I missed something in your question or I see that we continue to apply a rule where we consider that flattish from our booking a good indication also of a flattish of a flattish unit revenue. What is true is that for the first quarter. It means that the evolution of the neutrusion in the first quarter will be a bit less positive compared to what you have seen in the going to compare where to be honest, the Reserve are extremely good, are part of the South America. You can observe that the unit's revenue in the value stream network extremely positive, which was a very good result for the second quarter. For, for KLM, if you understand your want to indicate something? Yes. I mean, the KLM performance, when you look at it relative to some of its peers, It's, is in line. So we are focused also on a simplification process there. Which will, which will help us, you know, getting rid of the last 747s, help this swap that we recently decided to do. Between the two, units, Alfros, and KLM will also help. That'll bring us down to 2 cockpit types at KLM. So we, you know, we fly the 787 and the 777 on a jewel rating, in terms of our pilots. So that puts KLM in the unique, efficient, position. And we do have, talks going on today, negotiations going on with with, some of the staff at KLM to ensure that the contracts remain productive. And so if you look at the performance of Kayon relative to some of its major peers, it's relatively in line. Concerning your last part of the SUV in 2020, to be, to be honest, if I make a reference to the page 23. This page is more to share with you first evolution of the market price for the brand situation in terms of hedging. So take that more as an indication of the hedging situation in the market. Rather than an indirect indication about the capacity concerning the year 2020, yes? So we have not yet find, of course, but could be a capacity level of next year. So look at that space more as a source of infocus and in the hedging and the fuel price. Thank you. We'll move on now to our next question. This comes from Daniel Reska from Bernstein Richard Please go ahead. Good morning, gentlemen. I'm free from it as well. Number 1 of the fleet order, am I assuming that the smaller aircraft fits with the strategy of the bench network. I think that's basically when it's taken between 18, 19, And there isn't a large change to the network strategy or the deployment, kind of compared to the 2019. So the thinking about the as a network strategy behind the 220. You already covered the old Transavia, but could you shed a little bit light on how you're looking at the French norm, Paris Metro kind of thinking about hop, the Nautex kind of your France product in there, the Transavia product, how do you envision to take kind of the non Taritz Metro forward in your strategy. And on Union to talk about Transavia, the figure coming also elaborate a little bit, what your findings are when you're thinking about the pilot contract at San and KLM. You know, are they in good shape? Do you think you're in a in a relevant range to your relevant competition? And maybe especially how you think, or what is there you would like to change on that contract on the pilots from Trail M and A firm? When you consider shortfall production and competition? So I mean, we're very, very excited about the Airbus 220, the 300 series that we've ordered, not a flexibility and the unit cost of that airplane. Will enable it, to operate any of our current, medium and short haul routes, either domestic, France, Europe. And if you look at the range, this airplane can also fly outside of Europe, in today's Air France contract, the pilot contract, there are some restrictions on the stage length of where we can fly narrow body aircraft. I think this is something that we would look to, to improve, with the Air France pilots. The relationship today, with the Air France pilots, I would say it's extremely positive. I've been here 10 months, but from what I understand from my colleagues, it's, the best we've seen in over 40 years. And so extremely respectful, a lot of trust, and an enormous amount of transparency. And I just see this increasing. I would perceive that this will only get better in the future. From the KLM side, very engaged staff at KLM throughout the organization, not only with the pilots, it's always lot of public interest when it is time for negotiations, and this is expected. But we're confident that, there will be a suitable resolution to the negotiations that are going on today at KOM. In terms of optimizing the domestic network on our NEVET shuttle, between only and some of the larger French stations, as well as potential expansion of Transavia. As well as the restructuring at HOP. This is a big exercise, a big study that is currently going on. Obviously, the result of a potential expansion of Transavia plate, a big role in this, and how we optimize our position at Health Lee when it is slot controlled. We do have more than 50% of the slots and ensuring that we get maximum profitability from, from that situation is being studied on. In terms of the point to point network that does not touch the Paris Metropolitan, here, once we have a very good understanding of what is feasible, in terms of restructuring hop, and how we rationalize that fleet and how we can, how we view moving forward in a profitable way in the domestic area of what will be the impact further impact of the TGV, what will be the further impact of some future taxes that could be imposing us all play into how we're going to move forward in this strategy. Making domestic France profitable is a huge, huge effort, and something that we must address but all these pieces are interlinked. So the A220 is a great tool. Top needs to be restructured. Our position at Allstate is key. And the future, number of aircraft we can operate at Transavia all plays into how we will optimize the French market. Thank you very much. Thank you. We now move on to our next question. This comes from Savi Syth from Raymond James. Please go ahead. Hey, good morning. Just on the fleet reconfiguration and simplification, which includes this morning's announcement. I was wondering if you could talk about how we should think about the kind of the cost benefit of just having a kind of a more simplified configuration and maybe the revenue benefit as well. If you plan on having more premium seats over the next few years as a result of these is these changes? 2nd question for me, just wondering how we should think about CapEx over the next few years with this new fleet order. And then lastly, the 3rd question is, with LatAm, which is weaker this quarter, weaker trend this quarter, Do you expect that to, I thought we were expecting it to bottom. Just wondering how we should think about it as we go forward if that's bottoming or any OAC or probably even going to see improvement there. Okay. So I'll start with the fleet question. I'm assuming you're referring to LCOS, just got a clarification, or are you also asking about KLM as well? Mostly Air France, but just general, the movements on the fleet side. Okay. So the the wide body fleet at El Paso is extremely complex today. We have corn. Airbus A380s, we have 2 versions of the 7 77, the 300ER, the 200 ER, of which we have 7 different configurations We have a 3 forties. We will have the first a350 coming online in September. We have 787 dash 9s, and we have a 3 32 100. So there's an not a work that has to go into simplifying this bleed. Obviously, the decision to remove the a 380 is a big one. This aircraft, as I mentioned earlier in my remarks, from a financial perspective, is becoming very difficult to, you know, to maintain and produce adequate returns and your operation performance. It's the poorest performing aircraft we had from an operational perspective. And of course, the way we plan our bank structure here at, Charles De Gaul Airport. The amount of ice we need to feed, this type of aircraft will be put a lot of strain on the airport. So that's why this decision was made. It's the right decision for half ha/lf. On the 7 77, fleet, We are going through a reconfiguration to reduce the number of variants from 7 down to 3. And that should take place over the coming years, the A340s will be removed over the next 2 years from the fleet, and we will standard standardize, the 350s to 789s and the 330s around one configuration. The 350s and the 330s will be common type rated with our pilots, and we will be able to back up from an operational perspective to 777. So the operation the operating performance of this fleet, will obviously be much improved. The costs currently incur in ensuring that we had an on time performance with a flight completion, that is adequate With this type of complexity, we greatly improved as we, as we through this simplification, when you look at the cost and LCOS, ask you, include managing this wide body, complex fleet. I believe it's a it puts us at a big disadvantage, and that's definitely unnecessary cost. So this is a major part of our simplification process going forward. Obviously, what had to start was getting labor stability at, FHAZ, which I took a lot of effort, on the part of, you know, the entire team at FHAZ, making some very, very tough decisions around what we would do with the A380s and with the A380 decision having been made, how that impact the rest of the fleet, now puts that into a clearer view. And then, of course, making the decision on the A220, we're all very, very happy and pleased with that decision because of the flexibility and the performance of the airplane that puts us in. I think the fact that we will be ahead, of all of our major competitors with an extremely, efficient airplane. I think will really help the performance of Alfonso in the future. Concerning the CapEx? Just wanted to follow-up on that. Sorry. Sorry. Just kind of curious if that was more than 2022 type savings or we should start to see it even starting next year? I would say, I mean, we are already, in terms of how we deploy the current fleet, we are immediately reducing the number of configurations on the 777 down to 5 And within the next, 9 months, we will have started an extensive program to reduce the types of configurations even further. We are isolating, the types of airplanes on specific routes. We are looking to move the bulk of our A330s onto our Africa network So there's a lot of efforts like that to reduce the spread and the impact of any disruptions we may have and the ability to back up the fleet. And that you can see started maybe less than a year. Sure. Thank you. Concerning the CapEx, 2 or 3 remarks, First, the decision of, plan, with 2 of the 380 is, is positive in terms of CapEx. First of all, we will avoid to make the cabin refurbishment, which was an extremely high CapEx estimated at 30,000,000 aircraft. And second, due to the age of this fleet, we expect now to have the engine shop visit and the airframe structural check to be extremely costly. Which means that the question for us, what do we invest around the 85,000,000 aircraft to continue to operate them? Or due to the current situation, the fact that the Ambras has stopped production. Is it not wise to stop the operation of the 380? So we do it progressively. The last one, we have been in 2022, but clearly, one element is decision was the fact that, for each of the aircraft to operate them longer, will ask a extremely high level of CapEx the aircraft. Of course, we will have to replace this aircraft. We have not yet done anything. We'll come back to you later on, and we will have taken a decision first rally, the decision was to save all the CapEx needed to maintain aircraft in operation. Concerning the 320, there's also, of course, an investment But first, keep in mind that the aircraft is cheap, cheaper than, for example, 3 20 or went to a male, which is, I think, quite important when you look at the level of, of investment. And as indicated by Ben, we expect also a return in terms of EBITDA relatively soon when we will have introduced the aircraft into the medium oil feed. Last the amount, as you know, at least it is a personal report. I like, of course, to speak about CapEx, but I really prefer after the adoption of Slide 16 to look at the adjusted net debt on EBITDA. So as you know, you can play with CapEx and free cash by changing the percentage of the lease fleet Yeah. Which means that thanks to FX 16 now, we have a global reference role to analyze the situation of the of the of the river range. Which means that, I would more focus to reduce tender debt on EBITDA, but only by itself has as the CapEx level. In any case, we will have, of course, to come back to you. Concerning the future evolution of the leverage. And it is planned to do that, of course, for the market day in November. And what I can tell you about South America, you know, Alfron has a long history of operating in South America. And what I just said recently would be, all the various fleet types that we have One of the advantages is we've got, a lot of capacity, a lot of flexibility around the size of aircraft that we use. And we do operate to several cities in South America, you know, more than daily service. So this just give us some flexibility to either up gauge or reduce, the number is to improve, result obviously difficult to do that in a very short term. But as we plan out on 6 months, 12 months schedule, we're do whatever we can to optimize around the new market conditions that we see there. Thank you. We now move on to our next question. This comes from James Collins from Exane PNP. Hi, good morning. 3 for me, please. Just on the fleet, renewals or the A318 in particular, if I was a betting man, I guess the A350 is the most obvious replacement for the 380. Do you seem then to make a very, serious point about ordering more than 9 of them. They're clearly replacing 7, 500 seaters with over 300, if that were to be, where it is. Are you making any sort of indication with that statement that capacity planning within Air France, we should be thinking something around where, where we are this year, low single digit through, kind of through the longer term. And then a couple of regional ones just don't back on LatAm, actually, Brazil is certainly the largest market nearly 30% of your capacity down. I saw some comments from Iberia that but maybe Brazil is starting to look a little bit better. Now clearly, that would digit RASK decline in Q2 would suggest not yet. I was wondering if you could make a comment on that. And then on Asia, obviously, some pretty ugly terms from Lufthansa yesterday on China, you're clear to point out China is a bit bit tricky now, or does sort of hone down on what you mean by that? I think it's a 25% issue of your capacity on on Asia, but he did rask up 3.9. Is is it really strong elsewhere? Is China just starting to get a bit more funny or is China actually maybe not as bad as we think. Thanks. Sure. Okay. So on, the replacement capacity for our a 380s, you know, there are 3 aircraft that we're looking at, and I think we've already been public about that or some people have written about it, and I'll just clarify. We are looking at additional 787 dash nines. We are looking at the A330 900 neos, and we are looking at the A350 dash 900. We are being very conservative on CapEx. You know, there are several other ways for us to look at this. I think 9 aircraft would be the maximum that we would order to replace the a 380s. There are other older airplanes that are not scheduled to leave the fleet at this time, you know, worthy right, offer coverage, the right offer would have come in. Boeing or Airbus would we look to replace other aircraft. As I said, we are being very, very conservative on CapEx, but at the same time with upcoming potential reconfiguration, projects that we see in the coming medium term, would that make sense? So we're very happy to be in this situation, where we have plenty of flexibility. And we have absolutely no, you know, I would say no pressure on us, to have to make a decision immediately. So that's on the A380. And all the choices that are out there, you know, are, I think, a definite improvement for us from an EBITDA perspective. And the fact that we already have, we'll soon have 10787 dash 9 with Afras, and we have 28 a350s on order for Afras, it does, you know, put it in an position where we could order either one. Also with the KLM side of the business, now focusing on the 777 and the 787 with additional 787 requirements at KLM, we can leverage, continue to leverage the wide body requirements of both airlines. In terms of overall, long haul capacity, you know, LCOS has a very well diversified network, you know, that I think we could continue to optimize from a O and D perspective. Particularly into and out of Paris, where if you look at the top 25 markets in out of Paris, I think there are quite a few where we can perform better on an O and D basis. So that we can, I think it's important for us to really ensure that we optimize the mix of connecting and wouldn't be customers here? So that's one of our exercises that we're going through. The A380 will, obviously, the removal of the A380 will make that a little bit easier. In terms of Brazil, yes, it is our biggest market in South America. We are seeing signs of improvement and and be like, we have 2 flights a day to Sao Paulo. We have, you know, sometimes for some part of the year, we do have more than daily service to rear vision air up. We have our new service to Fort Delaser. And we do have, some partnerships in South America would help us with, feed. So we are well positioned in terms of how we can react. As I've mentioned earlier, we don't, have our largest configuring airplanes into Brazil. So we can't easily update without changing anything, and we cannot easily down gauge as well. So we are watching it very closely and obviously planning for maximum scheduling for maximum profitability. And in terms of Asia, you know, yes, it's it's somewhat tricky for us when we have one of the key words or one of the key flights operated by an a 380. One of our 2 flights to, to Shanghai operated by an A380. And this, you know, in a challenging market to have to, to have to design and plan around this aircraft into that market where the other 3 flights are operated by 777. So the amount of connecting traffic we need in a 2 different revenue management strategy that they go into place in a market that is extremely difficult, I think will become easier as we move forward. And does it make sense at this time for us to work at secondary market with some of the smaller airplanes that we have in the more efficient airplanes that are coming into the fleet. So, yes, Asia, Asia has has been a challenge continues to be a challenge, but in particular, for the Afcon side of the business within the group, the 380 does not, does not help. Can I just come back on that fleet harmonization, or your views on fleet harmonization? Because obviously, the care lands flying any A380. So replacing them, I guess, is a straight Air France decision. You're talking about the, the Boeing 787, which you just flipped to KLM. Is that actually a realistic Air France option given you're actually moving those out to Kiernan, and this is replacing these radiators in Air France. Yeah. Most definitely. Most definitely. You know, with the requirement immediately for 9, 9 aircraft to replace the A380s. You know, that is, you know, to have a fleet of 1977 is perfectly adequate. Eventually down the road, we will have to replace our a3302100, and the 787 dash 9 is smaller than the 35900 platform. So we'll have to evaluate whether you know, having a greater number of airplanes and the efficiency that that provides, if it weighs off, what some of the options, their options are, And then, of course, the 787, there is the dash 10, which, as we progressively remove our older triple sevens in the future, the 200 series, the 200 ERs. We do have 25 of those. You know, a 787 platform at Alfrance is definitely something that is an option. Okay. Thanks very much. Concerning your tour remarks on the market, yes, we agree. I believe the Spanish colleagues. In fact, when you look at the bid, the price is systems today concerning the South America, we see a very slight improvement, very, very slight slight improvement. So for the time being, we can expect some improvement mainly on Q4, but I think it will be something not impacting globally. So you need to review, but we also see this positive signal concerning China as the same. Process. It's the same story as your command. In fact, we see that there's a big amount of the war commercial war with the U. S. Evolution of consumption in China. There is a bit of slowdown. In the, in the binhounds address as a Chinese market. So I agree with both of your of your common compounding the specific markets. Is there any area where Asia is particularly strong? Sorry? Is there any area where Asia is particularly strong to offset that? Was China weakness just starting? So, look, we are quite pleased with our performance in Japan. We do serve 3 markets there. Well, 2 cities and 3 airports. Our position in Tokyo was very strong, with 3 daily flights And obviously with all that's going on, in Tokyo over the next year, and the LCOS brand, which is very, very strong in Japan. We are pleased with our performance there. We also had a strong presence, with KLM, in, in Japan. So from a group perspective, I believe that, we can continue on that and strengthen strengthen that position. If you look at the big markets, we're focusing a little bit more on our costs today. Japan is up there. And then if you look at the United States, you look at Canada, you look at Brazil, you look at Japan, these are the big markets, wearing alfalfa with an excellent position. And I think we can continue to exploit the brand as we have a stronger as we put a stronger product offering that is dependable and better understood. I can share some positive news with, with the with the people on the call today and those around the room. I've just gotten word, just got a text here that the vote has been ratified 78% of the pilots who voted on the Transavia file. Has moved forward. So we do now have, full flexibility with the Transavia project and the Transavia brand here in France. So very positive news there. We're actually all smiling in the room here. You can now tell us what number of planes you're going to. You have to give us a few minutes to digest. Okay. We'll come back later. We now move on to our next question. This comes from Andrew Lobbenberg from HSBC. Please go ahead. Oh, hi there. Congratulations on that very. Can you talk a little bit about the current environmental tax and how you see that developing politically and and otherwise, how we should think about that impacting unit revenues, next year when it comes in? And then could you talk a little bit about the dynamics on the board between the, the the French and the political representatives. I think at the time of the the investment they spoke about, building together a a working group to advise and strategy If they're giving you any advice, are they going to, or are you just gonna, work with the board directly? And then just finally, can you updated on what the status is that the the partnerships that that are are building the JV with a your rate of investment into Belgium, please. Thanks. So I can bring in with Zogivi with Ariopa and Zogivi with Delta and we are seeing some of what I would say going on. As expected, we are now this pleasing with the Brazier authorities concerning the GV with ARPA, and we still expect that on from the U. S. Authority in Saudi Trust Community, for the trip up by the TV in, in 4. So there is nothing, nothing strange. I except that it is a relatively heavy administrative administrative process. Concerning the French and Dutch situations, there is no political if I met the board of headphones in Karen, the Vietnamese swaddle, some of them are friends, some of them are, our words, but seems there is no political gain by itself at the board of KLM, if I can insist a bit on that. So I'm just with the support of Mr. Ator, managing the managing the business of the group and this is the most important it has a much important task for foresees people. What we are doing, Lee, I want to advise that the working group will not give concluded. And before so, the process is that it postponed, but I have no precise information when it will be. Concerning the French environment tax. As usual, I can just repeat what we think here in the group, but I will say also in all airlines, we are preparing to pay for the cautious system, put in place by OACI. Concerning the the the fuel and the climate. We are involved in the ETS system put in place by Europe, which cost tens of 1,000,000 for the group and to, I suppose, in airlines in Europe. And now we have also to take into consideration the specific French tax, which is also impacting potentially the profitability of the group. So we just think that 3 systems is a result. And that we will see, next year, what is the impact on unit revenue for the, French market. Are we able to compensate and to transfer the cost to the passengers or not But frankly, if we want this system to be efficient, at least looking at the climate aspect, the only solution is to transfer the the cost of his tax to the passenger, you know, we have to have the impact of a price elasticity. It's just for our line to absorb that and to reduce their profitability, it will be to the inventory in terms of, of, demand for air transportation, which means that the goal will be totally missed. Thank you. And we move on to our next question. This comes from Michael Kuhn from Societe Generale. Please go ahead. Hello, good morning. A few remaining from my side. Firstly, you mentioned in the presentation, that you are currently doing further studies about the efficiency at air force and potential further measures, are further voluntary departure programs a potential option and when would we know, whether that is the case? Then secondly, you had a pretty high P and L tax burden, specifically in the second quarter. Was there was there a special reason? And is this rather recurring or nonrecurring topic? And then, last but not least, you were able to further reduce net debt to EBITDA 1.4 times. You mentioned you're close to investment grade status now, what does that mean for your thoughts about, shareholder returns and when we'll be here again about that topic? Thank you. Thank you. So I can start with the first question on the restructuring and the transformation of LCOS and what will be included in that. And so you've seen the first steps I said, getting social stability was key. This Transavia, lifting up the cap, is, is a big, big, positive for our cost. And what, buying the A220 order is a 220 with another concept, moving the a380. I'm going through repeating what you all heard already. But in terms of, you know, what else are we working on? I mean, the list is enormous. There's no alcohol significantly underperforms in Europe. And our goal is to get it up to, industry standards or even surpass that voluntary departure, programs are part of these voluntary departure programs. We we actually are We do have many employees that are pushing us to put these in place. We are not quite ready to move forward with an additional voluntary departure time. We already have one in place in the French provinces. But, I would suspect that we would have the need to do them in the future. But what is positive is we do have quite a few employees that are looking for these. So I can't be specific today about when and where. You know, the with the type of, transformation and overhaul that we are in just starting to deal with our pause. This is something that, sir, we can share with you in the future. Yeah. For for the tax, you know, why the in Q2, there is a relatively high income tax into the P and L. If you go to the first quarter, you will see that it is a contrary. And as a contact grants, if you look at the half year result, you will see that we have an income tax which is totally normal. So it is more technical issue, mainly at Air France. It was, too low in Q1. Too high in Q2, but it's not for the 6 months. Yes, sorry, and concerning the 1.5, yes, I think that you know the story of the group, where with, an mandate on EBITDA. We're sure close to 6 or 7 some years years ago. So which means that we have made a tremendous set of action allowed come back to a normal situation. I think that now is the case. And my personal feeling is that in, in fact, 1.5. I will say that, 1.5 is that extra means at this act of a level. So I will discuss that in in the November, as I said before, responding to somebody else, looking at the impact of the 220 plan in terms of CapEx. And also looking to the effect of the 380 phased out. I think that as for that and to share with you a global trajectory of the group for the next years with some targets will be done in in the market day in November. So that does mean that in November, you will also specifically inform us about your plans on future shareholder returns? We will share with you what we want to share with you, but At least we heard that there was a strong demand from that point specifically and on some others also. We move on now to our next question. This comes from Damian Brewer from Royal Bank of Canada. Please go ahead. Yes. Good morning. Thank you. Just three sort of housekeeping questions left, really. First of all, on Transavia, with the reduction in the full year growth, that kind of implies that H2 would do about 6% growth. But could you indicate that what that is? It's keep bias in terms of reduction to the 4th quarter or whether that is pretty clearly across the second half of the year? I'm just thinking if Q3 grows a similar line 10% that implies Q4 is close to flat. So I just want to understand that. Secondly, on the A220 order for the sort of additional 30 plus 30, how much of that is contingent on what happens with the French eco tax? I don't know if it's too high or allocated in a bad way, would that indicate, do you look at sort of more capital reduction after French domestic business? And then very finally, because no one's asked on the MRO business, you're up 11% incremental margin running ahead of average margin. So profitability up there in the order book up again. Is there anything special going on now or is this just a continuation of the trend we should expect to see in future? Okay, so perhaps if I know you can answer a question 1 in question 3 and I'll go with with 2. The first part of your question, let me just clarify. I think we missed part of that because of the line here. On the one about the A220, just want to understand how much of it's contingent on the additional orders and what happens with different eco tax. Okay. So yes, the A220, as you've now heard, is 60 firm of the 300 Series and 30 options, 30 purchase rights So a couple of things here. Yes, indeed, or tax, will play, a part in, how many of these options or purchase rates we take up. We're now in no rush right now. We have a large fleet of existing Airbus and air body airplanes some of them much newer than the ones that will be exited. So we have that flexibility. You know, we're, Airbus too, introduced a larger version of the 220. That'll, of course, play into how we replace, the second half of the narrow body fleet. Now that we have this positive result, from, the main union represent South Coast pilot, the ability to fly narrow body aircraft, on a much larger portion of our network will now come into play on, how many of these airplanes, deputy will order and where we'll deploy them. And obviously the, what's how to train in France, maybe supported, and what, what changes we see there will come play as well. So quite a few different, I'd say, different items here, whether they're in our control or outside of our control, will drive our decisions on that. These are decisions we will not be making in the short term on the second half of the fleet. I'd say a big one, and I don't want to. I wanna make sure that you don't underestimate it is the fact that we can now fly, narrow body airplanes within, well, you know, within the SSENSE unit had to be wherever it was applied, you know, prior to today, you know, flying to America, let's say, with a 321000000r or 7 37, dash 8 max, not possible. Under the France current rules, windsor Beirut with a, narrow body aircraft, not possible. Quite a few will be African destinations that are within a 7 hour flight rate, not possible. So this opens up a whole new range of opportunities for us to more efficiently fly to some of these destinations. If I understood correctly, your question, it is where or what would be the capacity evolution between nowendoftheyear? So if you take where we are today for the 1st 6 months with capacity on top of that, it's up by 14% And it was a bit slightly below the budget, but it's correct that for the second part of the year, it would be lower have the result for the full year capacity will be at 10%, which is minus 6% compared to the budget. That's very easy to see this impact. For the second part of the year, which will be mainly concentrated on the Q4. For the Q3, it's still quite dynamic in terms of growth. I speak mainly for Xavier France, but, it's mainly in Q4 that we will have a reduction in capacity compared to 2018. Confirming MRO, there is nothing special. What I just say is that we share now with control the controlling of MRO, as a concern to be sure that there are more and more focus on the margin of the new contract. There is no far better controls than before concerning the X uptake control on the contract to be signed to be sure that in terms of margins, as a lever, we expect but for the rest, nothing special except that in fact, in Q1 and Q2, we are progressively improving the level of margin compared to last year. Okay, thank you. Could I just come back on Ben's response on the eightytwenty? And just to be clear, what you're saying now is that Air France potentially has the capability not just fly to 'twenty, but to look at other narrow bodies and therefore 'eighty. New markets or better frequencies into certain markets than you had before? Or just to change in the way you address some of the sort of longer distance for sub-seven hour routes, just to be clear on that. Yes. So the contracts currently in place at Elfas between the corporation and the 3 pilot unions, are, as you can imagine, quite restrictive, especially when it comes to a certain fleet deployment capabilities. So in this Transavia, a new deal or ratification, there were a number of commercial restrictions that were in place at LFrost that had nothing to do with Transavia. Number of prescriptions that were also part of the deal. And one of the most important was a removal of a, what they it's a very strange term they use here. It's a, it's called a petite weed, I'm not quite sure what the exact translation is, but it was it was, you know, it was an uneven circle around Paris, average of a 3 hour because you could say a 3 hour type mission, that would be the maximum that you could fly in narrow body aircraft. That has been removed. So wherever the, you know, a narrow body aircraft could properly fly to, this now becomes, a potential option for air cost that of course changes the business case and the strategy on where we could fly these airplanes. Obviously, this is probably part of our analysis. So when we ordered the 220, we did not know whether this is going to be, you know, feasible. That's one of the reasons why we didn't, why we ordered 60 and not 100 and not 120. So now for the second half of the replacement of the of the Aflac suite, it'll be done under these, under these new terms and new conditions. Okay. That's very clear. Thank you very much. Thank you. And we'll now move on to our final question. And this comes from Malte Scholes from Commerzbank. Please go ahead. Performance between the hubs between Amsterdam and Paris. Is there any, anywhere but particularly his arrival is a little bit I mean, the 0 point, just wondering, did you see it on various hubs, similar particularly if you adjust for the strike effect? And, related to it, do you see any impact from the kind of overcapacity see in the German market between Rhine and Lufthansa, this does not affect you at all. And, the final question is, do you also, I mean, looking that there's some more discussions of maybe some airlines doing bankrupt, do you look at also actively participating in some M and A if there's some interesting slots coming up, or would you lease it all to your competitors and say, oh, your consolidation is good, but we stay on the customer. Okay. So I mean, today, of our 3 major, airport operations where we have big operations. So we have Rishi Oahuasi, Charles DeGrow, we have Amsterdam. We also have Paris Orley Airport. So both Amsterdam and Orley are at capacity in terms of slough So in terms of, increased capacity, it can only come in the form of gauge, So this is a we don't expect any material change, in every, in the near term, on the type of competition we will be facing those 2 airports. Of course, Waseem still has capacity in the midday and later on in the afternoon where the morning is that is closed. In terms of M And A, consolidation, we have a lot of work on the air front side of the business to ensure that it has a sustainable, profitable future. That is priority number 1. KLM, we have a model that works extremely well, that needs to be, you know, further optimized to ensure it drives industry standard or superior returns, whereas the Afros model means that, you know, much bigger transformation as opposed to refinement So we are looking at every single opportunity, in the marketplace that could add shareholder value or could put a strategic entity in a position, to be in a stronger, stronger spot down the road. And if something is interesting at the right price, greater, without a major transition, risk, we would certainly consider it. As I say, the number one priority for the group is to get, a false in particular, but the whole group to get the margins up as quickly as possible. And concerning your first point, I will say that nobody's evolution when you correct first strike is is the core between the two companies, Hi, Ken. This is the last question. I do like just to inform you that Marienes is moving now, leaving the financial communication. And, she would be replaced in September by Olivia. Olivia is coming from, Alliance department I mean, he knows about the road network and I am pretty sure it will contribute positively to the, animation of the the situation, but on your behalf, if you didn't do it already directly to my, I guess, I think that we can. Thanks. Here for extremely valuable contribution vis a vis you vis a vis us complaining financial communication, financial information, etcetera, etcetera. So but she's moving, but she's still working with me, so I am extremely happy also to keep INS close to me. Yes. So I think it is the end of the conference call. And on behalf of Air France Care and myself and all the teams, we thank you for your participation. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.