Earnings Call: Q1 2019

Apr 30, 2019

Ladies and gentlemen, thank you for standing by. My name is Emma, your Chorus Call operator. Welcome, and thanks for joining the conference call of Deutsche Lufthansa. Throughout today's recorded presentation, all participants will be in a listen only mode. I would now like to turn the conference over to Dennis Viva, Head of Investor Relations. Please go ahead. Good morning, ladies and gentlemen. Welcome to the presentation of Lufthansa Group's results for the first quarter of 2019. My name is Dennis Weber, and I head up Lufthansa's Investor Relations activities. In today's call, our CFO, Ulrik Svensson, will give you an update of the group's performance and outlook. He'll then answer your questions Alright, over to you. Thank you, Dennis. Ladies and gentlemen, a warm welcome from me too. The beginning of the year has been challenging for Lufthansa growth. 1st and foremost, excessive supply growth in our short haul business impacted our results. We estimate that the market wide short haul capacity in our home markets grew by around 9% during winter. A rate which clearly exceeded demand growth. As a result, price sensitivity of customers was high. Putting yields and unit revenues under pressure. In addition, fuel costs increased by a good 1,000,000. Finally, our logistics business weakened compared with stellar performance in 20172018. Solar results in long haul continued cost efficiency improvements and strong growth in our MRO business was not enough to offset these pressures. All in, the group's adjusted EBIT declined to a negative 336,000,000. Keep in mind that the contribution of the first quarter to full year profits has historically been small or even negative so that the coming summer months will have a far greater impact. Before coming to our outlook for the rest of the year, Let me discuss performance in the first quarter in more detail. Regional performance of our Network Airlines Lufthansa, SWISS and Austrian Airlines differed significantly. In Europe, seat load factors and deals were both down mainly reflecting the market dynamics I just outlined. In addition, we vigorously defended our market position in our home markets especially in our main hubs. Doing so, we accepted a short term hit on yields and unit revenues on certain routes where we are competing directly with a low cost carriers. While increased competition is the short term price to pay for long consolidation in Europe, long haul performance held up much better. Growth in North America was clearly volume driven, higher loads offset slightly weak achieved so that unit revenues remained at around prior year levels. In this context, remember that North America yields increased by almost 4% in the prior year quarter. The comparison base was clearly tough. These in South America continued to be down at double digit rates, mainly reflecting the tough economic and political situation in Brazil. Asia was a region with a best year performance, driven by strong demand in Japan, which offset the effects from slightly more muted growth in China. Finally, in the Middle East and Africa, high capacity growth and some weakness in the South African market, took its toll on load factors and ease. Overall, the revenue performance of the Network Airlines highlights demand is intact, reflected by continued volume growth. In light of the market environment in Europe, at the beginning of the year, however, this growth came at expense of yields. In Vienna, this contrast was even more striking than the other hubs in Frankfurt, Munich and Zurich. The difference in the timing of Easter, which fell into April this year, but March last year was also a net negative for unit revenue performance in up for the shift of leisure demand into April. In sum, revenues of the Network Airlines were up 2% in the 1st quarter but RASK was down 5.2 percent in currency adjusted turns. Continued unit cost reductions offset some of the unit revenue pressures. CASK ex fuel end in currency adjusted terms in the first quarter, benefiting from the ongoing modernization of our fleet and improved staff productivity. These factors more than compensated higher MRO costs, especially as a result of planned engine maintenance. Irregularity costs remained at seasonal low levels. In line with initial expectations, fuel costs that the Network Airlines were up 17% against the prior year, primarily because of the appreciation of the U. S. Dollar against the euro. Volume growth as well as the expire of no price hedges, which limited the cost increase in 2018. As a result, profits were down at all three Network Airlines. Adjusted EBIT was negative at Lufthansa and Austrian, which remained positive at Swiss, because of ongoing solid performance in long haul. In sum, adjusted EBIT of the segment declined to a negative SEK 160,000,000 in the first quarter. As expected, the feature was broadly similar at Eurowings. However, given Eurowings' disproportionate exposure to the domestic and European markets and a tough comparison base from the previous year, Shore Tools yields declined even more strongly compared to the Network Airlines. They were down 8.8%. Unit revenues in the Eurowings long haul business developed better with a yield increase of 1.4% more than offsetting a slight load factor decline. On an absolute level, however, performance is not where we want it to be. We are confident that the shift of major parts of Europe of Eurowings long haul business to Frankfurt and Munich in autumn will improve performance, especially as we expect loads to benefit from the Lufthansa feeder traffic in our 2 German hubs. In sum, unit revenues at Eurowings declined 8.5% on a currency adjusted basis in the first quarter. Keep in mind that this performance comes on the back of ASK growth of almost 10%. Owing to the fact that we did not operate the full fleet taken order from Air Berlin in the comparison period yet. The non recurrence of costs related to the integration, which amounted to around 1,000,000 in the first quarter of 2018 was the reason why unit cost ex fuel at Eurowings declined by 7.2% on a currency adjusted basis in the first quarter. We expect to make more significant progress also on an underlying basis going forward as the measures we are implementing are starting to have an effect. For example, we are making good progress as well as the stationing of our flight crews who avoid costly proceedings. In addition, the divestiture of Looft Farquicel shaft Walter means that we are making progress towards simplifying our fleet structure on just the A320 family. Considering higher fuel costs as well, The adjusted EBIT of Eurowings declined to a negative SEK 257,000,000 in the first quarter of 2019. Some 40,000,000 below the prior year level. This brings me to the Aviation Services, where performance differed significantly by business. Logistics business around Lufthansa Cargo, weakened after a very after a very strong 2018, largely because of lower demand on the routes between Europe and Asia. Looking at the moderation of economic growth and the resulting market wide declines also hit Lufthansa Cargo. Emerging market, however, continued to hold up well. Nevertheless, operating profits were twothree below the prior year level. Amounting to 1,000,000 in the first quarter. Teacher looks much brighter at our MRO business around Lufthansa Technik where profits are tracking ahead of previous year levels. Adjusted EBIT reached SEK 125,000,000 17% higher compared to 2018. This has mainly to do with an improvement in the engine division where throughput was up markedly. Finally, the catering business around LSG increased its profits to 1,000,000 in the first quarter. Benefiting from good demand in North America as well as further progress in the transformation of its European business. Which historically has been the least profitable part of LSG. Nonetheless, the centralization of the European production logistics setup, we require more work and investments in the rest of 2019. We continue to expect LSE's full year profits to be below the prior year level. A few weeks ago, we made a decision to prepare a formal sales process for our divestiture of LSG in parts or as a whole. In the further course of the process, potential advice will be invited to place their bids. While we are committed to go ahead as quickly as possible, focusing 1st and foremost on the key European business, it will be premature to discuss concrete timings or even the outcome of process at this stage. Back to 1st quarter results, adjusted EBIT in the area of Others and consolidation declined due to higher IT costs, amounting to a negative 1,000,000 in the first quarter. While the first time application of IFRS 16 only had a marginally positive impact on the group's adjusted EBIT in the quarter, amounting to EUR 8,000,000, it distorts the prior year comparison of the group's free cash flow and balance sheet performance. Investments increased by 50 percent to more than 1,000,000,000, solely due to prepayments for new aircraft, such as the 40 long haul planes, which were ordered in March, but will only be delivered between 20222027. The increase of investments was one of the key factors for the decline of free cash as well as tax payments whose increase is related to the significant earning improvement in 2017. We decided also to disclose an adjusted free cash flow, including the IFRS 16 related amortization, of operating lease obligations shown in the financing cash flow, whether you can better compare performance to the prior year. Adjusted free cash flow amounted to 1,000,000, 78% below the 2018 level. Nonetheless, net financial debt would have remained stable compared to the end of 2018, excluding the first time recognition of assets and liabilities related to operating leases in an amount of almost 1000000000. Including this IFRS 16 effect, net debt increased 67 percent to EUR 5,800,000,000. The ratio of adjusted net debt to EBITDA, which considers pension provisions as well, grew by 0.6to2.4. Tripping out the IFRS 16 effects again, the increase will have been in the mere 0.1, caused by the increase of pension provisions, following the further decline of market wide interest rates. Strong performance of planned assets could only partially offset this effect. Looking out of the next few months, we expect supply and demand in the European market to be in a better balance in summer. Our confidence is based on the expectation that market wide capacity growth will moderate significantly as many marketplace are refocusing on yields again rather than on volumes. In addition, memories of the disruptions in summer last year and the resulting compensation payments are still fresh. Where many competitors have taken a more cautious stance toward expansion. Market wide growth should moderate to 4% in the whole of Europe, and just 3% when considering departures in our home markets only. The latter will reflect an around 6 point moderation of industry growth compared to winter. Compared to our previous forecast, we also expect growth from the translactic routes to be slightly lower because of some capacity cuts amongst low cost peers. Last year, we were among the 1st carats announcing plans to curb growth in summer. So we confirm our expectations of only low single digit growth in the next 6 months As a result, full year capacity growth at the Network Airlines will be around 4%. At Eurowings, we even decided to cut our growth plans to 0, also considering ongoing capacity constraints in the European Aviation System. We expect more moderate industry growth, especially in Europe to be supportive supportive for our unit revenue performance at the Network Airlines, which we expect to return to year on year growth in the second quarter. This forecast is based on performance in April as well as bookings from May June. The latter reflects the good 2 thirds of the total traffic volume that we are expecting for these 2 months. With this in mind, we confirm our unit revenue and margin outlook for both airline groups irrespective of the slightly higher fuel cost outlook. Following the recent oil price increase, group wide fuel costs are now projected to rise by around 1,000,000 compared to the previous year, 1,000,000 at the Network Airlines and 1,000,000 at Eurowings. From an overall group perspective, the impact from the increase in fuel prices will be compensated by the other business segment. But we now expect results to be around 1,000,000 below the prior year level instead of the previously expected This reflects lower cost in headquarter functions and factoring in unchanged expectations for the remaining non passenger segment we hence confirm our guidance of an adjusted EBIT margin between 6.5% 8% in 2019. Thank you for your attention. I'll be happy to answer Ladies and gentlemen, at this time, we will begin the question and answer session. You. One moment for the first question please. First question comes from the line of Daniel Wiesca with Bernstein Research. Gentlemen, 3 if I may, you mentioned the LSG divestiture earlier. Could you share some thoughts on the board discussions on a broader level? Specifically, Is there a general sense among the executive team to continue streamlining the portfolio and possibly also looking at smaller subsidiaries? And given the experiences for Lufthansa Systems and now LSG, could you share some thoughts how the contractual relationships within the group, so for LSG to Lufthansa mainline, for example, or Swiss or Austrian impact these processes? 2nd question, you announced a new incentive and remuneration scheme for the executive board in January and it's also on the agenda for the AGM next week. Could you talk a little bit about this incentive scheme for the executive board And how and if you're thinking about kind of scaling or rolling this out across the wider organization kind of in timeline, to kind of harmonize the incentives between the executive team and the rest of management? And then last, just a technical question, there are some agenda items on the AGM next week regarding share capital and buybacks. Am I correct in assuming that this looks mostly like a routine extension of existing authorizations or is there anything substantial that you'd like to flag concerning those of the agenda items? Yes, thanks for those questions. Starting with LSG, on the heavy level, we are, as we have all noticed, describing ourselves as airline group instead of an aviation group we did 1 or 2 years ago. However, I think it's indeed too early to say are we good to see other divestitures on top of LSG going forward? I think gradually just by the size of the airlines growing much more than other business, it is going to be more an airline. But for example, if you have techniques which have been discussed many times before, there are a lot of synergies between Technics and the airlines, and we indeed are intending to keep that business going forward. In terms of contracts between LSG and the different airlines. Clearly, we are in connection with the potential sale, put it in place long term agreements, which will be, so to say, at market level between LST and the different airlines, which would be one part of clearly the sellers' perspectives. Going forward, when it comes to the executive board remuneration, we are indeed getting a more, should we call it, market up to date executive board remuneration system which includes a combination of the EBIT margin return on capital employed, which I think is very important for the aviation group and also requirements, which already exist today. Of course, we are all large shareholders, but also specifically requirements of the share ownership for all the board members. There is indeed ideas and plans to broaden the group, going forward, not only to the executive board, also to the larger partner of management, but it's too early to say exactly when that would be put in place, but that program obviously will look something similar to what is now what we're going to present at AGM. When it comes to the share capital buyback provisions, yes, that's something which we have had every time in the past and it is more to be regarded as a routine approval process. Right. You mentioned the contract between Lufthansa and LSG. That would be kind of on a market level in the perspective. Is there any meaningful shift between the business units to be expected from that? Not meaningful, but between individual products and airlines, it could be so, but not meaningful. Okay, great. Thanks. Next question comes from line of Neil Glynn with Credit Suisse. Please go ahead. Good morning everybody. If I could ask 3 quick ones, please. The first one just following on from Daniel's question on Skychef. Forgive me if I missed this part, but Can you confirm whether there's any expectation, whether Lufthansa will remain will retain a minority stake within Sky Shops? Or is everything potentially on the table at this point in the process in its early stages? The second point with respect to the better momentum in pricing and unit revenues into the 2nd quarter. Long haul market seems strong and we've heard from the U. S. Carriers through this month to date. But just interested, are you seeing meaningful changes on the short haul, unit revenue front, both for the net Airlines as well as for Eurowings where you're obviously moderating capacity growth? And then the 3rd question on the cash flow statement, obviously very, very topical cash flow generation you clearly have outlined the year on year decline in the first quarter, which I understand was earnings as well as tax and CapEx driven. But can you walk us through or at least confirm that you still expect that free cash flow should grow year on year with your underlying EBIT guidance for the year? Yes, thanks for those. When it comes to LSG and manority or not. This is indeed something where we are open. We are, as we indicated, first speaking about the European business, which is very important for us to have the right partner from an operation point of view, from a strategic point of view, there could be different ways to skin that catheter to say it could be with a minority ownership or it could be without, too early to say at this stage. In terms of revenue outlook, yes, indeed, we are seeing improvements very much in Europe as well. This is where we see the largest reduction in growth compared with what we saw in winter. And that's where indeed it has a positive impact on our RASK. Cash flow Yes. We are expecting our free cash flow to grow compared with 2018 for the full year. That we already indicated last time we spoke, we are speaking about a slight increase, but for all the reasons we went through on the first call, we are not going to repeat the 2017 numbers. Understood. And just to be doubly clear on the cash flow progression, obviously, you have earnings, so your earnings guidance speaks for itself, but should we expect meaningful changes in the cash tax as well as the year on year growth in CapEx as the year progresses? The CapEx guidance we have given is 3,600,000,000 And that still stays like that. The extra payment we made in tax now in the first quarter referring to 2017 year earnings was a one off. And after that, we have, so to say, paying all our arrears. There will be no further repetition of that going forward. We've been more normal tax payments at Next question comes from the line of Stephen Furlong with Davy. Please go ahead. Hi, over to Dennis. Can I just go back to Neil's question on short haul? Obviously, that's the the difficult kind of pricing environment in the Q1. And maybe you could just give some color why you think it's improved so much in the is it in the Q2 onwards? Is it because of moving to the summer schedule Easter just less competitor capacity, that type of thing in your own actions. And the second thing is I noticed even though the market is quite difficult kept your guidance for the logistics business in terms of revenue growth of high single digit are you expecting kind of yield improvements there or what's going on there? Thank you. Yes. So starting with the short haul, there are a number of reasons why we think short haul will improve in the summer months. Clearly, the most important one is just looking at our bookings. We see, as I mentioned in my speech, not only us reducing our growth quite dramatically into the summer months but also many of our competitors. So I think that just has a very healthy impact on our RASK booking outlook. So that's the basis for that. When it comes to guidance and logistics, Yes, indeed, we have kept that guidance intact. Clearly, there is a lot of flexibility. As you know, we have a number of MD elevens. We have already taken out a one virtual MD eleven we speak. So there's an opportunity to reduce cost on a short term basis to meet that demand, we're just not really there in the same way it was last year. But visibility, as we all know, in the cargo business, is very short. Okay. No, that's clear. Thank you, comes from the line of Jarrod Castle with UBS. Please go ahead. Obviously cutting your Eurowings plant capacity to 0. So I was just wondering in terms of medium term plans, if you can share anything on Eurowings and whether or not there's been any other maybe approaches from airlines to join the platform? Secondly, can you give an update where negotiations are with Fraport for aviation tariffs in Frankfurt? And then lastly, did you actually quantify the negative EBIT impact from Easter? Thanks for those. In terms of Eurowings capacity, yes, we have taken it down to 0 for the full year. Long term, I think Eurowings will grow in the same pace as the rest of our business, which typically has been around 3% in our home markets, but then of course, that we further outside growth out of Germany long term. It's too early to say how much that will be, but clearly, we ambition ambitions to grow Eurowings to be ultimately a pan European player. In terms of Fraport, yeah, we are continuing our discussions with Fraport. There is nothing new to, update at this stage for the discussions that are going on in a healthy and in a practical way, we will come back when we have anything meaningful to report there. EBIT impact from Easter, it is very, very difficult to say. I mean, clearly, we have had a negative impact in terms of some of the short haul traffic, which has moved into April instead. But I think the best way, ultimately, to look is, March April together. And as it looks today, those 2 are just going to mitigate each other, basically, to balance out each other. Next question comes from the line of Damian Brewer with RBC. Please go ahead. Good morning, everybody. A couple of questions from me, please. First of all, on Eurowings, given you mentioned it in the presentation, of the losses in Q1, could you give us how much of that is long haul related So we understand the difference between the long haul and the short haul operation. And therefore, what might change as you change the operating work method of that business in the autumn? And then secondly, I think you've got cabin crew negotiations with Lufthansa mainline coming up in May, I think it is. Could you just update us on that? Has there been any early discussions and what are the key way points around that? Yes. Starting with Eurowings, we have never really gone into the detail of the long haul and short haul, but we can say as much as that are disproportionate losses in the long haul business, that is a much tougher business than the short haul And this is one of the reasons we are moving over the long haul business to a high degree over to Munich and Frankfurt where we'll get the benefit of the feed. So I think the long haul will gradually pick up in autumn this year. When it comes to UFO, well, I think there's been a bit of a speculation in the press Clearly, we are regarding the collective agreements by the termination they have done as invalid that because it's unclear who's actually representing Ruffo, the actual agreement in itself runs out at the end of June. So I think we have a number of different mechanisms where, if it really would turn out in the wrong way, we have put in a number of mechanisms where we negotiated with that last time in terms of for example, how you do an arbitration process. So I'm not so worried about that something will happen there on a short term basis. Okay. Thank you very much. The next question comes from the line of James Holland with Exane. Please go ahead. Hi, yes. 2 for me, please. Just on the, can you maybe elaborate a bit on where the million improvement versus previous guidance in the other businesses' EBIT for the full year has come from, whether it's any specific actions you've taken there or it's just a rounding error. And then just to clarify, are we talking Q2 unit revenue up for the networks and Eurowings? Yes, the $50,000,000 is basically all savings. There are savings at the headquarter levels they are savings in a number of different areas. And, that is something which is rolling through. Clearly, with the Q1 results, we are looking extra carefully at all costs in the group. When it comes to your second question, Can you just repeat that? Because I didn't get that down. I was just clarifying, are we, you're guiding to unit revenue up in Q2. I was just checking that unit revenue up for both Eurowings and the Network Airlines as your guidance? Okay, yes. No, that is what we indicated is only for the Network Airlines. Do you think Eurowings will go up? No, that would be very tough for Eurowings to go up but it will clearly be much better than it was in the first quarter. Next question comes from the line of Johannesbaum with MainFirst Bank. Slack 3 as well. Firstly, back on the Q2 unit revenue improvement that you are seeing. Can you, if you compare the April bookings, will the May and June bookings, how does that look just to get a better sense of what Easter is and what is underlying improvement? And then secondly, you obviously intend to reintegrate the maintenance work of the German Lufthansa mainline into the airline. So away from MRO, could you provide the rationale for this as it looks to create some duplication and dis synergies in my view. And then lastly, there were some statements recently in German press that you potentially spend 1,000,000,000 to 1,000,000,000 for M and A. Maybe you could give some context to that statement to what and also to that number, which looks a bit segregated to me. And also probably in relation to then an update on Condor. Yes. Starting with the booking outlook and the different numbers going forward. So there's no significant change between or difference between different months going forward. When you look at the maintenance work, Yes, indeed, we are moving a number of functions on Lufthansa Technik's maintenance into the airline. Which is already how it exists in most airlines in the world, including swiss, and we have seen a number of different benefits of that, clearly better transparency. It's easier to steering off the fleet, when these things going into maintenance and so on. So I think in the same way as we have seen the benefit of it in Swiss, we will see the same benefit out of Lufthansa German Airlines. The M and A number you have seen in the press, I would say, I have well, it surely doesn't come from us. I think it's just pure speculation in the press, So that's nothing I really would like to comment upon. Condor, well, Condor is a leisure business which is growing. All things which are potentially for sale in our home market we are looking at, we want to play an important role in the consolidation of Europe, but there's nothing more I can say at this stage. Just a clarification on the first one. So you're seeing the April year over year improvement in RASCO yield being equal to to May June, despite the Easter effect in April? That is correct, yes. The next question comes from the line of Andrew Lobbenberg with HSBC. Please go ahead. We've spoken an awful lot about unit revenue trends, going forward and focused on the capacity. But I mean, We haven't spoken a great deal about demand, and how confident are you that, corporate demand continues to be serene given the volatility in the world economy? And equally, how confident are you on German or home market leisure demand? Then can I ask on the Eurowings capacity cut? I ask a really stupid or tacky obvious question. Why, what motivated you to make that cut? Where is that cut coming in terms of the timing or in terms of the routes? Yes, that'll do. Thanks. Excuse me, Mr. Fenton, we are not able to hear you. Well, there was a long sentence I did, Andrew, which you missed. It was good. So now I will come up with a slightly different score then. So I forgot to push the unmute. Starting on the revenue side, corporate demand and leisure. Clearly, leisure is the stronger part as we have indicated earlier. Corporate demand, however, as you might recall, there were some individual customers already last year, who started saving programs during travel, but there were others who increased their travel. So overall, it was very much a balanced picture. This is continuing into this year. There are some segments of the market, where it goes down and somewhere it's holding up very well. And of course, this is the area we have very little visibility since by definition people book short in advance. But so far, there are no large uncertainties on the corporate demand. I just tell the segments that are struggling, are they the obvious ones of auto or automotive? That's what you would say. I know typical, customers with a lot of export into China, for example. Yeah. You're in capacity cuts. Well, one element of this, of course, is further to make sure we have operation stability into the summer, which as you we will recall, was costing us quite a lot last year, both in terms of customer in nuisance and in terms of costs. So there are new specific areas where we have taken a decision to take down capacity it is very much keeping the flexibility up, which is the reason why we have taken down growth. In Eurowings. And is there any difference between Eurowings and Brussels, for example, because we never talked much about Brussell? The majority of this change from the last guidance is coming from Eurowinds alone. Yes. Okay. Thanks. Next question comes from the line of Nuala McMahon with with Goodbody. Please go ahead. Hi guys. Just one question from me. Just on the revenue improvement that you talk about in Europe, do you mean it's an improvement from Q1 for the overall group, but we should still be thinking about it as down year on year in Q2? We are speaking about an increase year on year, not comparing Q1. Okay. The next question comes from the line of Marta Schwartz with Commerzbank. Please go ahead. Hi, good morning and thank you for taking my question. Maybe can you shed a little bit light also on your expectations by region maybe a little bit particularly on the long haul side? You mentioned already something. Is there any kind of positive signs that they will see improvement in South America? Or is it the continued weakness also when you look at your forward bookings? And second also, if we look at the other segment or we mentioned that you also looked at some costs you were able to cap. Is it also something going forward where you see more room, particularly also when we think about next year, we still see a lot of room for improvement? And, finally, how do you or what's your expectations on unit cost reduction? We have talked a lot about revenue, but we haven't really talked about cost for Q2, is there any extraordinary progress to expect or anything special to keep in mind on fuel unit cost reduction? Yes, we're starting on the long haul side. It is very much driven by the, by the U. S. Side, where we see strong demand. To some extent, driven by leisure as well, but indeed strong demand coming out of the U. S. South America, however, will most likely remain a lag also, going forward in the year, driven to some extent by the economic outlook in some of those countries. Costs, yes, I think it's important with your question on costs. I mean, we are continuing our CAS production ambitions. We have reduced CASK Canal for 3 years in a row, 2019 will be the 4th year in a row, which is unheard of in the Lufthansa history, where accounts is going to be further reduced. So with an environment where indeed revenues are more volatile as we have seen in first quarter. These elements which we can fully control ourselves like the CASK is going to be extra essential and we will just continue that part. Okay. Details may be particularly on others. Is it now or do you think you're now finished there with your improvements or is it just the starting of a like year long program of a first improvement on the headquarter side or within some of the smaller units? Well, some of them are having investments in IT systems will clearly continue. But, in terms of headquarter cost, it is going to be just the continuous journey to reduce costs there as well as in the different airlines and businesses. So if your question is, can we take another $50,000,000 in Q2, then clearly the answer is no. But it is going to be no real large, one off elephants, but it's a continuous journey to continue to reduce our CASK and cost levels. There are no further questions on the line. I would like to hand to all the expenses for closing remarks. Well, thank you very much for joining today. Q1 clearly was a very difficult quarter for us, as we have heard, Q2 is indeed going to be an improvement and we are excited to invite all of you to our, Capital Markets Day, where we'll give you more meat on the bone on our medium and long term plans are to continue to improve this business. So thank you very much. Ladies and gentlemen, the conference has now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day.