Earnings Call: Q1 2021

Apr 29, 2021

Yes. Thank you, and good morning, ladies and gentlemen. Welcome to the presentation of our results for the Q1 of 2021. With me on the call today are our CEO, Carsten Spohr and our CFO, Ram Castine Dagen. Carsten Spohr will start the presentation with a a summary review of quarterly results. He'll also give you an overview of our strategic priorities for the next years. It will be followed by Rem Gustin Dagen, who will further detail our results and present some of our key initiatives to restore the strength of our balance sheet. We'll conclude today's call with 2 Q and A sessions. Similar to prior quarters, the first Q and A session will be for our financial analysts and held in English language. Afterwards, we'll hold an additional Q and A session for the press in German language. Carsten, over to you. Yes. Thank you, Dennis, and a warm welcome to all of you around the world, wherever you are, in your home offices, Maybe some on the beach. Thanks for joining this call today from our headquarter here in Frankfurt. And it's obviously, gentlemen, that Now 1 year after the beginning of the pandemic, our global air travel industry and the situation obviously still remains extremely challenging. Nevertheless, and we try to explain that today, we do look to the future with quite some confidence and optimism. So let me start with 3 messages concerning our Q1. First, yes, To be honest, the start of the year was not what we had hoped for at least last year. However, we did achieve a slightly better result than last year's Q1, when only the month of March was actually heavily impacted by the pandemic. And that I think is worth to note considering that our turnover went down from $6,400,000,000 to $2,600,000 compared to last year. So it's obvious that significant cost savings helped us to reduce The operating loss. The negative adjusted EBIT of €1,100,000,000 is obviously still an alarming number, But again, it is 6% better than last year. And more important, that proves that our cost discipline and the restructuring efforts are indeed paying off. 2nd, we can already see that the crisis has indeed allowed us to accelerate our modernization and our transformation. We at Lufthansa have never been faster in restructuring, in rightsizing the business, in bringing down cost, variable and fixed cost, in modernizing our fleet and in digitalizing our company. And this unprecedented crisis forces us to overcome our known weaknesses and it will make us stronger for the future. 3rd, I think it's Getting more obvious day by day that the return to better times is on the horizon. The destination campaigns around the world, but especially In our most important markets, the North Atlantic and Europe and Asia are showing progress in many countries and again, including our home markets. And the 1st European states are actually already lifting travel restrictions, and these developments will pick up speed within the next weeks for sure. And this gives us confidence that the worst is indeed behind us and the turnaround for global air travel will be Very soon, as we have already seen it in some parts of the world like China and the U. S. We expect the recovery of demand to gain momentum in the second half of twenty twenty one Because we all know this, people want to travel. And whenever it's possible, whenever and wherever travel restrictions are eased And travel is safe, they book and they fly. And given current developments down the road for the summer ahead, we have good reasons to be optimistic. Vaccinations for everyone in Europe are expected by June, and we appeal to the EU To swiftly launch the Green Pass, the European Health Certificates for vaccinated and negatively tested people. And we are very encouraged by comments of the EU Commission signaling a willingness to grant unrestricted access to vessel travelers from the U. S. As we just heard this week. The Lufthansa Group is prepared, obviously, for several scenarios. And even on short notice, we're able to manage a significant increase of travel demand as it recovers. We are prepared to increase operations to up to 70% this summer. And for the whole year, We now anticipate an annual average capacity of around 40% compared to pre crisis levels. Ladies and gentlemen, the Q1 results also show that we could reduce our fixed cost even more than expected. With our comprehensive renew program and a previously unimaginable redimensioning of our company. Group revenues, as just mentioned at the beginning, decreased by an enormous 60% in the Q1 to only €2,600,000,000 Nevertheless, the group's adjusted EBIT amounted to sorry, amounted to negative €1,100,000,000 which, As mentioned before, it's 6% better compared to previous year's level. So let me guide you through the performance of our business in some more detail. Revenues at the Group Airlines declined by around 80%. In the Q1 of 2021, we operated just 21% of Pre crisis capacity. In our long haul business, the contribution from cargo ensured a positive cash contribution at slightly higher capacity levels. However, this came at the expense of passenger load factors, which amounted to just 45% at the Network Airlines overall. In short haul alone and also Eurowings, they were in the mid-50s. Successful yield protection and significant cost savings once more limited operating losses. The adjusted EBIT loss The Network Airlines amounted to minus €1,300,000,000 Eurowings reduced its operating loss to minus €144,000,000,000 That reflects the progress made in the execution of Eurowings turnaround plan, which we presented to you in mid-twenty 19. Since then, overhead costs in Eurowings were reduced by more than a third. And the operations in Germany are now pulled in just one AOC following the discontinuation of flight operations at Germanwings and the liquidation of SunExpress Germany. And all non seasonal external wet leases have on top been discontinued. Again, we see how strategically important our Eurowings business is. Leisure and we have our travel picks up first and recovers faster compared to business. Hence, the start of Eurowings Discover this year will also come timely. However, besides the fact that we have a huge and growing share of leisure and VFR passengers on board of our network airlines as well, We don't share the pessimism of some regarding the future prospects for business travel. We certainly believe in the future of this important segment, Especially after talking to our corporate customers in Germany in our home markets. And basically, the smaller the companies, The more they will be requiring to have corporate travel also in the future, and Remco will come to that later in his part in more detail. The results of Aviation Services highlight 2 major trends. First, the airfreight industry continues to be decoupled from the passenger airline business Based on the ongoing shortage of capacity in the valleys of passenger aircraft, this is why yields have been continuously increasing again after a short dip at the very beginning of the year. And overall, they remained at a similarly high level compared to the Q4 last year. And Adjusted EBIT reached a new record level for Lufthansa Cargo, EUR 314,000,000 in the Q1, and we expect this strength to continue For at least the rest of 2021, because it's not only the shortage of capacity, but also the strong demand of the globalized economy, especially in our home market, which makes us very optimistic. Operating 1 of the largest and the most modern cargo freighter fleets in the world keeps indeed paying off. And we currently analyze to expand the business with regard to the utilization of even more currently unemployed aircraft from the passenger business to be used for cargo shipping. 2nd, the performance of MRO and Catering highlights the differences in industry trends between Europe on the one hand and North America and Asia on the other. The progress made in fighting the pandemic coupled with a much larger size of domestic markets, where travel restrictions have largely fallen away, allowing airlines, in particular in the U. S. And China, to fly much more than their European counterparts so far. This obviously will change in the next weeks with Europe opening up. For our MRO and Catering business though, we started to take advantage of this, Thanks to the large exposure to non European markets in those two business segments. MRO returned to a profit of EUR 16,000,000 in the first quarter, supported by significant cost savings and lower receivable write downs compared to the prior year. Losses in the Catering business were limited to €10,000,000 based on a deep restructuring, including the reduction of the workforce in its ex European business by more than a third. The European business, which had still cost an operating loss of EUR 36,000,000 in Q1 last year, which you know was sold in December. In Our last call, ladies and gentlemen, I already emphasized we will not only get through this crisis, But our current transformation will further strengthen our global role. We have sharpened our corporate strategy And I consistently aligning our actions to 3 main objectives. 1st, the successful implementation Of our renewed transformation program to create value for shareholders as quickly as possible again And the redimensioning of our operations provide the base for eventually scaling up our operations. In the future, We will initially operate with only around 650 aircraft instead of the 800 we entered the crisis with. And these aircraft, more modern aircraft, younger aircraft, by average, will be used more productively. We will capitalize on the strength Of our brands in the home markets, we will offer maximum connectivity with our tried And tested hub system, which will benefit from lower volumes overall in Europe in general, and we will connect people and economies based on our trusted partnerships we have across the industry. In addition, we are committed to capturing market opportunities. We are adapting our offer to exploit the potential in leisure and VFR travel, and we are taking advantage of our strength in structural growth markets like especially Asia Pacific. Our second objective is to enhance customer centricity. In the future, we are committed to focus even more on individual needs of our customers and especially continuously improve our communication with them in a digitalized fashion. In the end, we aim to offer our customers the best overall package as sustainable as possible and with Seamless transitions across the whole travel chain. Digitalization obviously is vital for achieving superior customer experience. This is why we continue to further push digitalization of the group to our customers, but also to drive revenue quality and Operational efficiency. And we are indeed optimizing our ways of working. We're streamlining our processes And the portfolio, as you know, supported by strong foundation of performance focus across the whole organization. We are focusing more than ever on the sustainability of our actions. And this brings me to my 3rd objective, live up even faster to our responsibility For more sustainability in Aviation, with every step we take, we want to contribute to climate and environmental protection, Not because we have to, but because we act full of conviction. We want to be a leader in our industry in this issue as well for the global society, for us, for our customers and for all of our stakeholders. Our goal is to cut our CO2 emissions in half by 2,030. By 2,050, our goal is to operate completely carbon neutral And sustainable aviation fuels bring the essential element to both. Ladies and gentlemen, Zoloft and the group has already become more focused, efficient and more sustainable. Through more digitalization, expanded synergies across the group and more efficient structures, We are convinced to make our airline group better and stronger. And obviously, financial stability will be key to our long term success. Therefore, Remco will share more details on the various and different drivers for restoring to a healthy balance sheet, And also, he will elaborate further on our Q1 results. So Remco, stage is yours. Thank you. Thank you, Carsten, and good morning to everyone. Let me start by summarizing our Q1 results. Group revenues decreased 60% compared to the Q1 of 2020, in which the crisis only started to have an effect at the end of the quarter. The operating expense decline of 51% demonstrates The extent of cost measures taken since then. As a result, we are able to limit the operating loss compared to the prior year quarter. Adjusted EBIT amounted to minus EUR 1,200,000,000 in the Q1 of 2021. The net loss amounted to slightly more than minus €1,000,000,000 That is less than half of the prior year level, reflecting the non recurrence of aircraft and goodwill impairments as well as a few over hedging losses in the 1st 3 months of 2020. Carsten already discussed the results of the different segments. The better than expected performance in our Aviation Service businesses, especially Lufthansa Cargo and MRO, meant that the average monthly operating cash drain was €235,000,000 in the 1st quarter, excluding €75,000,000 of support measures. The latter were mostly related to wage subsidies under the U. S. CARES Act, primarily at LSG. Adjusted free cash flow amounted to negative €947,000,000 Customer refund payments of almost €400,000,000 were offset by net new bookings in a similar amount, So that's liability from unflown documents remained virtually unchanged since December 2020. Additional €133,000,000 of deferred tax payments were balanced by outflows of a similar amount related to the reversal of short term liquidity measures taken in spring last year. Gross CapEx was €153,000,000 in the 1st quarter, Including the effects from a further reduction of spare parts at Wufthansa Technik and aircraft disposals, the net investing cash outflow amounted to just €87,000,000 At €10,600,000,000 available liquidity continued To be well above the €10,000,000,000 mark also at the end of the Q1. At the end of March, the group had drawn down €2,500,000,000 Government stabilization message. Euros 5,400,000,000 remain unused. This includes silent participation 1, which we will draw down flexible if and when needed until the end of this year. Capital Markets Financing Measures included issuance of a €1,600,000,000 bond in February at coupons of 2.875 percent and 3.75 percent for the tranches of 4 7 year maturities, respectively. In addition, we raised €750,000,000 with aircraft financing, primarily Jokkos and the issuance of a Schulz chain Arlin. Debt repayments amounted to €1,900,000,000 and included the €1,000,000,000 KfW loan, which was repaid in full after the bond issuance in February. This transaction also secured to the refinancing of the remaining EUR 1,700,000,000 of liabilities maturing by the end of this year. Net financial debt rose to €10,900,000,000 at the end of March. Pension provisions, however, declined by around €1,700,000,000 to €7,800,000,000 This reflects the market wide increase of interest rates, which lifted the rate using for the discounting of pension obligations by 60 basis points to 1.4%. However, this rate is significantly lower than the average return of 4.1 We earned on planned assets in the past 5 years. The pension plan will be fully funded at a discount rate of 3.2%. Ladies and gentlemen, liquidity protection continues to be at the forefront of our financial management as long as we are in this crisis. But our focus goes further. We must restore the strength of our balance sheet as quickly as possible. Financial stability is the prerequisite for long term success. Only with a strong balance sheet, we will be able to defend and expand our market position and create value for all our stakeholders. Let me go through the 3 main drivers, which are key to repairing our balance sheet. 1st and foremost, we must return to profitability as early as external and market conditions allow. The recent news flow on the quickly rising availability of Aksen makes us even more confident that we are nearing the end of the pandemic. However, You have another very a few very challenging months ahead of us, where incidence rates will remain high and borders closed. So the ramp up of capacity will only be gradual. Over summer, however, Leisure and VFR driven short haul travel should allow further capacity increases. Once we are coming closer to herd immunity in Continental Europe, We expect regulatory confidence to increase so that the 1st intercontinental markets will start to open up in autumn. Based on these trends accelerating over the course of next year, we expect to operate more than 70% of our pre crisis capacity in 2020 2% and more than 80% in 2023. By 2024, we should be back to at least between 90% 95% of pre crisis levels. By customer segment, we forecast the recovery to be driven by travel to meet friends and family as well as touristic demands, especially in the retiree age group. Bookings will likely continue to be very short term, however, based on ongoing uncertainties. Corporate travel is forecasted to only start recovering towards the end of the year. Small and midsized companies should travel earlier and more frequently than larger corporates, where internal restrictions are Expected to stay on for longer. Factoring in the behavioral changes caused by the increasing use of digital communications, We expect Corporate Travel to be back to 80% of pre crisis levels in 2024 and to at least 90% in 2025. The corporate segment contributes to 45% of our airline revenues, So it's of key importance. We are committed to remain the 1st choice for our corporate travel customers based on the connectivity we're offering and the quality of our service, which we will continue to upgrade and individualize based on a constant flow of innovations. So while we are confident that our long term market position in this segment is extremely strong, we need to respond We aim at ensuring maximum flexibility when it comes to adapting our offer. The aircraft retirements we announced, Primarily the decommissioning of our A380 and A340-six hundred fleets and the phase out of the Airbus 744 We reduced the share of 1st and business class seats in our long haul fleet by 1 third. The variability of airline configurations will allow even Further adaptions if necessary. The number of business class seats in an average 3 50, for example, can be reduced from 48 to 36 Change for more premium economy or economy class seats. Premium economy has been introduced in all network airlines in the past few years. Its contribution per square meter is 39% higher than that of a business class seat. 2nd, we will exploit the different speeds of recovery in the Corporate Travel segment. For example, expect video conferencing and sustainability considerations to primarily affect short haul trips, which are less profitable for us. Customer surveys also indicate that a significant pent up demand in the German Mittelstand, which is a key customer group for us. Finally, North American routes, on which the share of corporate travelers is disproportionately high, should benefit from the faster recovery in the U. S. Based on our trends, Atlantic joint ventures with United and Air Canada And the large importance of the high yielding U. S. Point of sales for us, we expect significant financial benefits from the fast recovery of business travel in the U. S, which has gained traction on domestic routes already. Finally, the further expansion of direct distribution, which we expect to grow to 75% of bookings by 2024, will enable us to further roll out continuous pricing to drive ancillary revenues and to offer bundled services based Individual differences in demand. Of course, continued cost reductions will also and have to contribute to the mitigation of these changes in the passenger mix. In the past 12 months of the crisis, We reduced fixed cash cost by 35%. Personnel expenses, which account for more than 2 thirds of fixed cost, Declined by 36 percent or €3,000,000,000 to €5,300,000,000 Wage subsidies under short term work contributed to €1,300,000,000 to the decline, with another €600,000,000 resulting from wage reductions governed by short term work and the various crisis agreements we concluded with all relevant unions. Considering the expiry of short term work at the end of 2021, we will negotiate to turn these temporary savings into long term cost reductions. However, already today, the EUR 3,000,000,000 decline in personnel costs includes €1,200,000,000 related to permanent headcount reductions implemented since the start of the crisis, including an effect of €350,000,000 from the divestiture of the European operations of LSG. Overall, the group's workforce has shrunk by 24,000 full time equivalents in the past 12 months. Of these 24,000, around 6,500 were part of LSG Europe. Another 10,000 full time equivalents were employed in the Rest of the World Businesses 4,400 SEs primarily on natural fluctuations in combination with an hiring freeze and voluntary leave offers. An additional 3,000 full time equivalents were reduced in the remaining group businesses. The bulk of the reduction was achieved outside of Germany, even taking around 3,500 full time equivalents in North America into consideration, which will be built up once again the business picks up. We will operate with around 12,500 less FTEs going forward. This is an even larger decline than we had originally planned. In Germany, where around 8,000 have left, We continue to have a personnel surplus of around 10,000 full time equivalents. We aim to address this personnel surplus in Germany in the rest of 2021 and in 2022. It remains our preference to do so in mutual agreement with our social partners, so that the burdens are distributed fairly and more jobs can be saved by reducing costs instead of people. In this spirit, we will be negotiating new agreements with Veranikum Cockpit and Verdi. They will replace the existing agreements, which rule out forced dismissals in both work groups until the end of Q1 of 2022. In this context, we are proposing the implementation of innovative part time models, which allow keeping as many colleagues as possible on board in the short term, while providing maximum flexibility to grow the business again in the long term. In parallel, however, we are preparing for forced dismissals. We expect the necessary legal process to be completed by the end of this year, so that dismissals will be possible once the current union agreements expire. In this case, forced dismissals would add to the contributions made by voluntary measures agreed upon with employee representatives and our unions. Supported by these deep restructuring measures, we target to return to pre crisis profitability levels as quickly as possible. This will be key to achieve a more sustainable leverage ratio and to support the return to investment grade rating. The second pillar in strengthening the balance sheet is the repayment of the stabilization measures and replacing these funds with long term debt and equity measures. We're thankful for the support provided. The timely repayment will underpin the group's operational and strategic flexibility. At the Annual General Meeting next Tuesday, we'll ask our shareholders to give us authorization for this flexible execution Of its capital increase, based on the new authorization for a period of 5 years, We will have the required flexibility to conduct a capital increase as and when the markets are receptive for such measures. Once granted by the AGM, the authorization limits execution risk as we were able to act quickly to support the Market windows without having to go through a lengthy process of obtaining shareholder approval on a case by case basis, thereby creating value for both company and its shareholders. A capital increase would be a key step towards replacing the stabilization measures in Germany and returning to a fully private shareholder base. At this stage, We haven't made a decision regarding the actual execution of a capital increase. Nonetheless, we intend to be ready to act once shareholders have approved the resolutions and markets are supportive. In addition to improving profitability and potential financing measures, the divestments of non core assets We'll contribute to restore a healthy balance sheet. Today, we reconfirm that we're exploring strategic options regarding AirPlus, Our travel payments company as well as the rest of world business of LSG, our catering company. While no formal decision has been made, we target the divestiture of both assets once we are able to realize their full value. AirPlus is one of the leading international providers of solutions for daily business travel payments. With a strong international footprint, It facilitates €92,000,000 transactions and generated €337,000,000 of revenues in 2019. Based on the currently still ongoing transformation of IHT platform and a successful restructuring, AirPlus will be well positioned to benefit from the recovery of business travel and to push into new areas of growth. The Rest of the World business has historically been the most profitable part of LSG, generating €109,000,000 Adjusted EBIT in 2019, the European part of the business was sold in 2020. Let me finish my presentation with our outlook for the rest of the year. Compared to our outlook in early March, Market wide expectations for the recovery of our industry have been pushed out by a few months based on high incidence rates preventing governments around the world from opening up their countries again. At this stage, air traveling is restricted on 83% of global routes. In our home region, Europe, the share is even higher. As a result, we revised our capacity expectations too. We are only expecting a gradual increase in the Q2 now to about 30% to 35% of pre crisis capacity at the end of June. Based on the continuous ramp up in the second half year, capacity should amount to circa 60% pre crisis level at year end. However, with long haul still being down significantly and load factors being lower compared to initial expectations. Nonetheless, we are encouraged by the extent of custody amounts coming through wherever travel restrictions are lifted. When the Spanish Islands of Mallorca was taken off the list of risk regions by the German Robert Koch Institute, For example, bookings shot up within minutes. Despite the addition of new flights by Lufthansa and especially Eurowings, Available seats were filled very, very quickly. In total, bookings to Mallorca increased by up to 80% in the 2 weeks before Easter. Except for the capacity outlook, our expectations for 2021 remain unchanged. Adjusted EBIT will improve against 2020 levels. Compared to our original forecast in March, the effect from reduced capacity expansions has been largely compensated by a more optimistic outlook for Lufthansa Cargo, we expect profits to increase now even compared to the record levels of 2020. In the Q2, we expect the operating cash drain to amount Around €200,000,000 per month, a further improvement compared to Q1 levels, driven by the gradual expansion of our flight schedules, The further increase of structural cost savings and ongoing strong performance at Lufthansa Group. Finally, we expect capital expenditures to amount to €1,300,000,000 unchanged to previous expectations. Our negotiations with aircraft manufacturers are making good progress. So we're confident that we'll be able to update shortly on our plans to continue modernization our fleet, while maintaining a very strict investment discipline. But first, let us answer your questions on today's set of results. And the first question comes from the line of Roxandra Haridozer of Kepler Cheuvreux. Please go ahead. Good morning. Thank you for taking my questions and congratulations on the cost management in Q1. I have Three more general questions, please. First, the probability of the Green Party being part of the next German government has significantly increased. Based on the manifesto of the Green Party and your discussions, what risks and opportunities would you see If this was to happen. 2nd, also related to the environmental topic, support for railway Services has increased with all the parties. So to which extent do you see the opportunity to integrate your business with railway providers going forward? You have the advantage relative to your peers to have the main hub with a great direct connectivity to the high speed network. This is different for other hubs. So could this drive a change in the structure of your network going forward? And third, Swiss and Austrian are great brands with relative small originating markets relying strongly on transit traffic from Germany in the past. Based on the future structure of the group, what will be the main benefits for Swiss and Austrian of being part of the Lufthansa Group post COVID. Thank you very much. Yes, good morning to you. On the question regarding the Green Party, I think if you look at those states in Germany where the Green Party is in power And one of the most important German states is even run by a green mayor sorry, Governor, Martin Wurttemberg, The home of the car industry, you see that once they are in power, they very much shift their policies towards supporting the economy. And those specific topics they have in terms of Aviation, it's much more targeted against the low cost carriers That is targeted against us connecting the global economy with Germany. And you see the ideas of the greens in Austria, which Might be copied into Germany, minimum prices of €30. I think that's more what we'll see in Assuming the Green Party is part of the government in the future also on the federal level. Yes, in line with that, As you rightly said, when it comes to intermodality, we have been going a long way in this for many decades. We actually used to own trains, believe it or not, You were too young for that. In the 80s 90s, which we operated in Germany, obviously, we don't go back to that, but we have a very close cooperation with Deutsche Bahn, which we just There's now 17 cities we are connecting to our network, mainly in Frankfurt, as you rightly point out. And we are doing similar things in Austria and Switzerland. The question you're asking in terms of Frankfurt versus the other hubs, It's a good point because you see this crisis that train connectivity really helps on low passenger numbers. But when it comes to our second half in Germany, Munich, Let's not forget that the Bavarian government strongly supports that airport, and they will be one way or another part of the future government. So they will ensure That the connectivity of Munich Airport by flight is safeguarded. And therefore, I think we're not going to see significant shifts In this regard also because the distances to Munich are a little bit longer than they are to Frankfurt, there's just less likelihood of Transferring things mandatorily to train. Maybe for those of you who have been following the decision of this French government, which Make good headlines about stopping domestic flights. If that same ruling would have been adapted to Germany, Which means no domestic flights unless they are connecting passengers on board and unless it takes more than 2.5 hours Replaced that flight by train, only one domestic route in Germany would have been stopped, which is Dusseldorfstad. So it shows you There's a lot of room to maintain a system as we have it in Frankfurt and Munich even with Latest rulings on environmental decisions. But again, we support putting our flights on trains Because we save money on the FEED, which is much cheaper by airplane trains when possible. Yes. Then now the last question, Zurich and Vienna. I think Zurich, it's very obviously, it's one of the richest, maybe the richest City in Europe, we actually don't need that much transfer traffic to be profitable in Zurich at all, and it's because very high yields And a lot of international business coming out of that original market in its own. Vienna, It's a little different there. Surely, there's touristic business outside in, from the top key touristic destinations in Europe. And also historically, Austria and Vienna are the gateway into Eastern Europe. And I think the growth perspectives for Eastern Europe are quite good in the next years, and Vienna will come back to play a role there. Thank you. Great. Thank you very much. Thanks. The next question is from the line of Jarrod Castle of UBS. Please go ahead. Thank you and good morning, gentlemen. 3 as well. You gave some useful color on the capacity ramp up in 2021. What level of How should you think you need to get to, to be cash flow breakeven? That's the first one. And second, kind of Speaking a bit more positively about recovery, but we're obviously in vaccination passports and travel corridors, but what are the chances of The testing costs disappearing. I guess what I'm asking is in a post COVID world, are we still going to see testing costs? And what will the impact be Your view in terms of customer headwind. And then you kind of mentioned you're looking for a supportive market When it comes to the SEK 5,500,000,000 when you kind of use the term supportive, is that in terms of a certain share price or rather the ability to Access to market for financing. Thanks. Thank you for the question. Remco here. With regards to the The cash flow positive from an operating perspective. If you look at 2022, we expect an ASK of 50% or above 50% for 2022 To bring the operating cash flow in a breakeven situation, if you think about the second half of twenty twenty one, It might need to be a little bit higher because of the seat load factors. We're also still working on the working capital, and we have to see how that all balance out, It's one of the one time effects going negative, but equally, if the bookings are picking up, we get again Some upfront cash flow coming in. But I think the key number to keep in mind is 50% 50% for 2022. With regards to the to our question to the AGM For issuance of new share capital, as we mentioned first, I think that the €5,500,000,000 is technical by nature Because it's the sum of the SP1 and the SP2. The actual increase It will be lower than that and is really dependent on what we see the need to be at the moment we decide to issue that. In terms of market circumstances, of course, there are 2 market circumstances is that we have a good line of sight for the future, But in combination, of course, in a market where investors see that clearly happening and that there is broad support for such will increase. Yes. This is Karsten. On your second question about testing costs, I'm aware that there's a specific situation in the UK, but for almost All other markets, surely our home markets, testing is for free and the costs are taken up by the government. I think in the future, this will even be less an issue because more and more governments are coming out with the statement that destination can replace testing. And obviously, there is no such thing as vaccination costs or even if there is, it's only one time and also that in most countries is free. So I think, again, being aware of the public debate we have on this in the UK, I think it's much less an issue in the EU and surely not in our home markets. As long as testing is required in the dimensions as we see today, it's paid by the government. In the future, vaccination will be replaced. And if there ever would be testing costs, surely they would need to be taken by the passengers, not by the airlines. Thanks. I guess if the passengers are taking the testing cost to make the journey more expensive and elasticity start To play in, but But again, it's more problem of the UK than it is for the rest of the world. In the U. S, the testing is free. In Europe, it's free. Germany, Austria, Switzerland is basically free. And again, soon people will be vaccinated rather than tested and can enjoy the same freedom. Okay. Thanks very much. The next question is from the line of Stephen Furlong of Davy Research. Please go ahead. Good morning. Hi, thanks for the presentation. Very interesting and helpful. And just 3 for me. Maybe you could just elaborate a bit on the your corporate market, except you talked to your customers. Is it certain segments that are kind of more bullish about recovery? You The middle of sand or kind of industrial, I don't know, supplier businesses, all those. Just interested in Kind of detail on that because it's obviously important, 45% of the revenues. Secondly, I was just wondering about MRO was Held up quite relatively well. And I was there was talk about in the past that in terms of the Disposals or divestments that maybe a minority stake or an IPO partial in Lotte Antoinette was a Possible option down the road. Maybe just if that's still a possible option? And then just finally, I was just wondering with all the restructuring that happened, It just depends on demand recovery post COVID. But your partner in the U. S, United, talks about Having margin expansion by 2023, I'm just wondering whether pre COVID margins Is it a goal or even above that given the cost takeout? Thank you. Yes. Thank you. When I mentioned that our sales team obviously talks to our corporate customers, and I'm a little bit more positive than maybe I was a few months ago, it's based on the And the logic, especially for Lufthansa, many of our corporate customers are not just the global blue chip companies, Of course, they as well, but it's small and medium enterprises, which as you know, are big bone of the German economy. They don't have the global infrastructure To live without corporate travel. And they don't even have sometimes people on the ground in markets in Asia or in the U. S, so people need to go there themselves. So I think These entrepreneurs, small and medium companies, who will need that positive experience of corporate travel to see their customers, to see their suppliers I'm making up a bigger share of our corporate customers than people think. That's the part I'm quite optimistic for. Nevertheless, you know, we are planning with less corporate travel, Almost 10% to 20%, and we'll see how that in the end will play out. But I think it's not going to be as extreme as some people thought. And we all know the limits of videoconferencing, I think, by now as well. MRO, we as I pointed out, We are looking at LSG Rest of the World and AirPlus in the first place. And in terms of order of events, All options are on the table for MRO. We believe there's a potential also up It's a site for the business to have a partner on board. And as always, there will be no fire sales in any of our assets And surely not in the pearl of the Lufthansa portfolio, which is Lufthansa Technik. United saying that there shall be higher margins after COVID than before, we agree on everything with United and especially on that one. Margins have been too low in our industry Because of overcapacities, because of too many players in the industry, because of lack of consolidation, I think all these things, Strong Airlines will become stronger, and hopefully, margins come back to at least pre crisis margins because we need that for investments Also into new airplanes in terms of the environment. So I think once this crisis is behind us, we'll look at a more healthy industry. Perhaps Remco here to add. You asked a question on the MRO performance in Q1. Two things to keep in mind. One is that the MRO is a Global Business, so besides Europe, it's also linked to, of course, the North America situation in the Asia, And we see that faster picking up, and that is truly helping. The second is, of course, our IP business in the MRO business, we see also an uptake in those activities. Very clear. Thank you. Thanks guys. The next question is from the line of James Hollins of BNP Paribas. A few for me, please. Just on the summer outlook. I mean, you've talked about a good recovery, but the Very clear implication is you're not expecting capacity above 50% because you're not going to get to cash operating cash breakeven. I'm just wondering if you can give us an insight, because clearly you're closer to this than the most, on what you're hearing from regulators, whether it's in Europe Or indeed the U. S. On really the potential for this digital green certificate to be open and ready and up and running and usable and all that business by early summer and maybe the way that plays out for you. Secondly, I didn't see mention of 650 aircraft still being the plan. I was just wondering if that was the case. It looks like you've tweaked up your 2024 capacity From 90% to 90% to 95%. And then finally, a question I seem to have asked Since I was at school, I think, but Europe Alitalia has reared its head again and the stock of either you or Franz Kjeran doing some sort of agreement. Just checking once again, there's no plan to make a financial investment there. Thank you. Yes, thank you very much. I think there's a misunderstanding on the summer outlook. We actually said or I said even in my speech, we are ready to go up to 70%, seven-zero, if the demand is there. That's how we have taken aircraft out of deep storage or ready to take them out. This is how we have Trained pilots and flight attendants, mechanics back to standard. So we could go up to 7 0 percent. And of course, that will be cash positive if it happens. Yes, we don't know. Anything above 50%, and we pointed that other thing before, will help us. And we just think that the case for the whole year will rather be in close to 40 than close to 50. So maybe that was understandable before. The green pass, obviously, is the fastest thing ever coming out of Brussels, I think. In record time, they pushed it through the various Levels of government, including the Parliament, just Monday morning. And I think there's a huge political will to reopen Europe, And not only for economic reasons, but also for political reasons because that's what Europe is all about. Even if that doesn't mean that the green pass It's around in June as planned. There will be local solutions like I think just the UK mentioned yesterday that they will use the NHS pass For the UK, there is an element of this in Germany and other countries. And then airlines and travelers have to cope with the fact that they need maybe 1 or 2 passes to travel. So not as great as one, but in the end, Travelers will be available. And that, I think, is Great. But of course, one pass will be better than numerous. But in the end, travel will be back to Not in terms of volumes, but in terms of being able to travel to pre COVID times. And then in terms of aircraft, we stick to our plan to operate 650 plusminus aircraft in 2023, 2024. Eventually, of course, you want to have renewed growth, but these aircraft indeed will be used More efficiently, there are younger aircraft with less maintenance downtime. There will be different seatings, as Remco pointed out, less premium seats, therefore, more passengers Onboard, higher ASKs by those same aircraft harmonization of fleets will allow us to use them more efficiently. So we believe that Even though the number of aircraft is about 20% down, we will be able to operate up to only 10% less capacity with 20% less aircraft. We have already retired 115 aircraft last year, a lot of smaller aircraft where we Which we took out all the way up to DASH. So I think in the end, it's a more complex math behind this, but we stick to our guidance here. Sorry, Ed. Well, A, on Adel Italia. But just on the first point, that's kind of exactly my point is that you're talking about Summer, you're talking about DTC, British Green Certificate, Local Certificate, and yet you've removed that guidance of cash positive. Are you just being Unbelievably cautious. We actually be thinking about demand being much higher than you're estimating. I just want to square off The 2 different sort of trajectories of your sentiment? Well, I think what we have done is with the whole ramp up being somewhat delayed is that we don't believe necessarily that there will be more than 50% Of capacity in the Q3, as a base case, we are ready to bring that up to 7.0 on a more positive side. So maybe that's a misunderstanding which occurred. And as we already did when we only offer 10% of Capacity, we only fly when there is a cash contribution. At Italia, the situation for us has not changed. It is and remains our most important Foreign market after the U. S, as I said numerous times, we are number 1 in Italy in terms of intercontinental traffic and will be for sure after COVID. And if there is a way to cooperate, we'll cooperate with them. If there is a need for investments, We will not because that's not in our plan. Funny enough, while you asked that question, Alitalia 320 landed behind me. So they are still flying. Beautiful. Okay. Thanks a lot. The next question is from the line of Neil Glynn of Credit Suisse. Please go Good morning, everybody. If I could ask 3, please. The first one, that CHF 5,500,000,000 authorization, Obviously, a big number relative to your market cap and it raised a few eyebrows accordingly. But I'm just interested in If we were to have a go at estimating potential proceeds from AirPlus LSG and maybe half of Lufthansa Technik Or 49% of it. It seems definitely possible to match the level of your net debt increase seen since the end of 2019. So I'm just interested, is there any scenario where you think you could potentially even avoid raising equity or certainly raise a considerably lower level than that? So interested in your thoughts on that. The second one and I guess that's probably for Remco, but the second one also for Remco. On the direct distribution side, You've obviously been pursuing this strategy since 2015. And I've always found it quite difficult to deduce the benefits of that From the P and L, from an outsider's perspective, of course. But as the new CFO coming into the business, analyzing the business case for this strategy, I'd love to understand how you go about getting comfortable with what taking the 50% to 70% actually does to the P and L and cash If this is to become a bigger theme for the investment case. And then the third question, maybe more for Carsten. Your competitors clearly have a higher proportion of premium leisure pre the pandemic, certainly in 2019. Just interested, do you think from a premium economy perspective, was there an underserved element across your network in 2019? Or how does premium economy expand to absorb corporate traffic decline even if that is only 10% to 20% over the medium term? Now let me Neil, good morning to you. Remco here. Let me first start by saying that Equity is a very scarce, of course, level of resource, and we have to be extremely careful in the amount of equity we raise Because that causes dilution, and it's the most scarce, of course, funding we can generate. So we very carefully Look at the amount, as I said before, the SEK 5,500,000,000 is a technical number as being the sum of SP 1 and 2. And with that also To not give guidance what the actual amount is with actually that agenda item on the AGM. As I said before, we expect the capital raise to be lower than the SEK 5,500,000,000, but I cannot comment much more What that is, that really depends on the circumstances, but I can say rest assured, we will do that as low as possible, of course. In terms of the proceeds from some parts of our organization like the LSG and the AirPlus And the technique not being decided upon, but in the evaluation phase. You have to split that in a proceeds element, Of course. And that helps on the debt side very clearly and would allow us, of course, go faster back to investment grade. But there's also an element of equity related to that, correct? So the proceeds are not equal to the equity amount. That is, of course, to be deducted from the book value. I cannot Close that. But that is, of course, the equation that we look at then as well in the equity. But I don't see a scenario at this point in time where No equity raise would be needed. An equity raise would be needed, but the magnitude to be determined. Your question on the direct distribution, of course, the whole digitalization and the change of customers To book and the flexibility they have, we believe strongly and also when I look at the business case, the yields on this, that they can be better. And that is what I also see, and that is the whole underlying plan. And our commercial teams are, of course, clearly focused on this. The digitalization also allows with a much more fluent way of pricing, which also gives us much more flexibility and optimizing Our revenue and profitability. Neil, hello, Karsten. Thanks for the question. On we weren't quite sure if it was more about Premium Economy or Premium And as we traffic in general, so I'll just answer both. Premium Economy, as Franco pointed out, has been a great success, higher margin per square Meter or square feet, then business class or economy class or 1st class, and we're now rolling that out across the group fleet. As you probably know, even Swiss will now not even also Swiss will now have that on board. And we see a lot more upgrades from economy to premium economy than we actually saw downgrades from Premium economy, which, of course, we want to avoid. More a question focused on premium leisure, there I think the answer is that EDWWEISS in Switzerland, it's a blueprint of what we believe we can copy with Eurowings Discover in Germany. There is a demanding There's a growing demand for premium leisure traffic also due to demography and people getting older and having more money and Better Health to do take these trips. And therefore, Eurowings Discover, again, will be the German copycat Of Edelweiss, which we have successfully now operated in Zurich. I hope that answers your question either way. Hey, Jose. I guess people tend to Group the 2 together, which I accept may not be correct. But Eurowings obviously is only focused on short haul now, right? So How does that help from a premium economy long haul perspective? No, no. We were operating already 11 Eurowings long range aircraft Before COVID, they're all grounded now with exception of 1. And we go back to Eurowings long range as of the end of this summer. We call it Eurowings Discover, separately managed from Eurowings, fully integrated to our hub models, Commercial models, including the one which Venkou just pointed out, we start with 3 aircraft in the fall, late summer and bring it up to 7, Not quite the fleet we had before, but the significant fleet larger than Edelweiss in Switzerland. And we believe there's a strong business in that for the future, Focusing on indeed premium on the leisure side. Okay. Thank you, both. The next question is from the line of Jamie Rogoffin of Deutsche Bank. Please go ahead. Good morning, gentlemen, and thanks for the presentation. Two questions Both for Remco. The first one, Remco, the deferral of import sales taxes at Lufthansa Technik and Other tax payments across the group supported the operating cash flow last year by some €900,000,000 but Those deferrals you were expecting to reverse and result in outflows of about CHF 450,000,000 I think in each of 2021 2022. Yes. And I'm sure you know what's coming here, but Slide 10, I think, highlights a further CHF 133,000,000 benefit from, I think, further tax Deferrals at Technic. So could you just update us on the likely dynamics there of the stuff that you've deferred and continue to defer? And then the second one, I'm afraid also is around capital structure, but really just On the next quarter, if you can. So obviously, after a CHF 950,000,000 free cash outflow in Q1, I think it's more like SEK 1,000,000,000 if we include cash interest payments. It looks like Lufthansa could suffer a similar outflow in 2Q. Do you think you'll allow The gross cash balance to deplete a gain as you largely did in Q1? Or will you try to plug the gap? And if it's the latter, Strikes me you have 3 options really, draw on the undrawn silent participation or issue new debt or raise new equity under the authority that you'll get approved next week. How are you thinking about that specific decision, if you can share anything? Thank you. Thank you. Good questions. Indeed, if you think about the tax benefit in the MRO business From a cash perspective, they are to be reversed. We knew that upfront. As said before, 50% this year, 50% in 2022. It might also be that a little bit more will come in this year. But we have equally to see that there will be offsetting effects, Greg. We expect the liability from the inflow in tickets to increase when the bookings come up And the upfront booking will come in. That is a significant inflow, correct, which comes in and helps to offset. Secondly, There is there, of course, work I believe, further work to be done by better managing our spare parts, better managing our receivable positions, Also, our trade payables positions can be better managed. And it remains my targets to find ways of offsetting this outflow with other inflows in the course of this year. And that also means that if you think about the Q2 and your second question, yes, we expect the cash out So to be less also because of bookings picking up in June, and that should help us. With regard to How to further finance in the course of this year? I can't be concrete. We clearly have the EUR 4,500,000,000 of SP1 available, and we will draw upon that if and when needed. We will, of course, also look in the course of the year on, hey, is equity Ray is relevant or not. Can we do that? Does it make sense? We will look further on the financing side. You have seen that in Q2, the fuel channel laden came in. We have done aircraft financing. We will continue further of aircraft financing. We will consider bonds. And depending on this, we and the timing as well accordingly, we might draw on the SB1 In the course of the year. But I can't be more specific because it really depends on the individual circumstances going forward in the coming quarters. Fair enough. That's great. Thanks, Ramke. The next question is from the line of Andrew Lobbenberg of Please go ahead. Good morning, guys. Can I ask Firstly, about what your expectations are for the pickup of long haul? I think everyone's getting quite excited about the North Atlantic, but then you spoke about other long haul markets, I think coming back later in the year. So what's your expectation on the timing of the reopening of the North Atlantic and The Asian long haul market. 2nd question would be on labor. What has Change since you last spoke to us at the full year results? Have we had what would have changed with regard to the prospect of negotiations with the unions For avoiding the forced dismissal. And then a third question would just come back to Cargo. Clearly, great performance now, But you seem very confident that the high level of unit revenues will be sustained through the year. But I mean, how will that balance given that we will get some long haul machines coming back into the sky in the second half? Yes. Andrew, good morning to you. On long haul, well, as you know, at least for us, the North Atlantic is half of our long haul fleet. The rest was the other half. So if the trend lending opens up, obviously, we have a huge impact. I think others will be slightly behind In Asia, yesterday, maybe you also see that in the UK, our Chancellor met virtually, of course, with the government of China, we managed to put on their top item list the opening of travel between the EU and China, and they agreed that they will have joint Acceptance of certification for destination and investment and so on. So I think also that very important market will come back. And Mainly, Lufthansa, unnoticed, we have been very successful operationally and we continue to fly to Latin America and Africa. Maybe you saw this morning that Brussels Airlines even came out cash positive in the Q1. That's almost because of FX. So again, when it comes to the mentioning of long haul, obviously, U. S. And China drive the whole thing. And I mentioned a little delay in China, but eventually opening up there, but the rest of the world has been somewhat be operating, at least for us. Labour, not much to be added to what we explained before. We added a little chart in the AMCOS presentation, as you saw today, because we realized that This comes up every time, and I always have difficult times to explain the German model. The German government supports short term work to allow for negotiations With the Workers' Council to eventually be ready for dismissals if needed, and that, in our case, will happen after the first Quarter 2022, but there's always room for negotiations to avoid involuntary layoffs if it is more Reasonable for the company to do so, and we are offering volunteer programs for our ground Staff, as we are planning to offer another program for our flight crews in Germany in the cabin. Pilots, again, that Legal preparation is being done while we speak, and we would be ready if we don't come to an agreement to have dismissals here again after the contract runs out in Q1 of 2022. Cargo, why are we so upbeat on cargo? There's obviously huge fleet harmonization and optimization happening, probably tying the last MV11s in September, So the cost structure will come down further. And we do believe that this positive situation will continue because even if there's more passenger aircraft Coming into the year, which there will be, also I think the global economy will pick up further and there will be the demand If stable or maybe even picking up further, overcompensating or in line with the expansion of capacity. Pharmaceuticals are very strong and will continue to be strong, if you think about what we are flying around the world lately, Also on destinations, which is just picking up because now the first world is starting to hand out those destinations to the second and third world. So overall, I think the outlook is not just based on the lack of capacity, which has been driving things so much And which we continue, of course, to a certain degree but also for the other parameters in cargo. But we never know in cargo, right? It's the most volatile business element We have, but we are, as you can tell, pretty optimistic. Okay. Thank you. The next question is from the line of Daniel Roskett of Bernstein Research. Please go ahead. 3, if I may as well. First, as you're considering the restart of the Network Airlines, will long and short haul capacity be in lockstep? Or do you need to grow short haul capacity a little bit faster than long haul to ensure the connectivity in the network? And about how much is that difference? And And again, focusing on the Network Airlines short haul flights, when do you expect to reach pre crisis unit cost In your planning, provided the labor restructuring is successful next year? And what cost reduction would you need to target To kind of compensate the mix shift between leisure and business over the next couple of years on the short haul networks. And then lastly, could you remind us Of the details of the OVO agreement, which I think lasts until 2023, and whether the 10,000 FTE you mentioned in the presentation today to be Reduced or renegotiated in Germany, does that include cabin crew from UFO? Or do you need to kind of look at the 10,000 number just To the staff numbers in Verdi and Fotze. Thanks. Well, Oscar, good morning to you. We are in a longer situation that Our short haul is indeed picking up faster than long haul, but not only to ensure minimum connectivity for the long haul, but also the demand comes Faster in short haul. So we don't need to ramp up faster just to build up the up system, but also it's Underpinned by the demand, which runs a little bit ahead on short haul. So that fits in very nicely, to be honest, that by the time this long haul demand is there, The short haul network will be back in place to provide the connectivity we need. And of course, it's an art in itself how we ramp up the various hubs, The 5 we have and that is being worked on, but what I just said is true for all 5. On the second question, obviously, our target reduction of CASK versus pre crisis levels It's in line to be or it's supposed to be in line 23, 24. Even though the capacity is lower, we believe our cost We'll get us there. And as I said, with margins to be on pre crisis levels, we obviously expect Our CASK to be somewhat lower as the RASK comes down from less premium share, but we are quite positive. If you just look at the fleet alone, How that will drive unit cost, that, that cost reduction will be in place in time. Ulf, Remco is a new expert on German labor relations. So I hand that over to Remco. Okay. I think you clearly have to see the reduction where we really hope that In the course of this year, we can come to good agreements with unions to realize these reductions are actually an equivalent in cost And therefore, don't have to go to forced dismissals, correct? That is, I think, the baseline to be set. The forced dismissals Would include all work groups, so including the cabin. Of course, the timing will be then a point of discussion. What we've been doing and I think you have seen that in the cost savings so far and also to comment a bit on your second question, Graeme. Because of the crisis starting, the company has become smaller. So we have been not hiring new people. And with that, you saw quite a reduction coming in and also the cost savings of more than SEK 1,000,000,000 there. I think when Carsten mentioned the topic of the whole Leads renewal, you have to think about lower depreciation, lower MRO, lower time the fleet is on the ground, so Can be used much more, etcetera, etcetera. That brings cost savings in. And then we have also another fixed cost category, which you saw coming down by 1 third also a large part that we want to keep. So if you would add that up, right, you would come already to quite substantial amounts. That is not enough because the SEK 1,900,000,000 benefit we still have from all the quartz abides anti crisis agreements, a substantial part of that we also want to We want to realize, and you can also link that to the equivalent of the 10,000 FT feet feet feet feet feet feet Es in Germany. An exact amount at this point in the year, we cannot give. We have to see in the course of the year how that all ends up. And we have also better feasibility 2023, 2024. But clearly, we are targeting a lower CASK in the 2023, 2024 time frame. And let's go. From my experience, And we have had providers before, as you know, and some of them, you were part of our team. In Ground and Kevin, The voluntary programs we have and the natural attrition will bring it down to what we need, including, of course, the hiring freeze. In cockpit, it's a different thing. Nobody leaves a pilot job in Lufthansa because there is no better pilot job in the world. So there, we either They move closer together, and they all go into this famous innovative part time schemes where there's a mandatory part time Or the number we have calculated will need to be forced to leave. Of course, they know that, and that's why I still believe will be constructive dialogue once they have elected their new leadership. In the end, the cost for us will be the same. Either people have to leave on voluntarily Or we keep them on board and they all work less for less money. So I think for us, in the commercial planning of the company, basically, at the slide showed, which Remco showed that It truly has an impact on the individual. And therefore, I think there will be some movement in the union. For us, in terms of our cost base, it doesn't matter. Right. So the 10,000 include kind of the entire staff body? Yes. And your comments Regarding the CASK also are valid for short haul? Absolutely. As you know, we have been bringing actually CASK Down on short haul faster than on long haul over the last years. Now the next 5 years, it will swing around because with more than fleet investments, Now the cash on long haul will come down faster than on short haul, but the answer to your question is yes. Perfect. Thanks very much. And the seat capacity Labor agreements, we have done quite a bit on short haul. And as you know, depending on the fuel price, sometimes short haul is more profitable for us than long haul, Which the last 20 years have never been the same the case, but in the years before COVID, it was. We left too early. Great. Thanks. The next question is from the line of Carolina Dors of Morgan Stanley. Please go ahead. Hi. Good morning, everyone. Thanks for taking the questions. I have 2 I guess, in the slide that you showed, the IFRS equity at SEK 2,000,000,000, Is there any issue or equity going to negative would have strict would mean you have to do a capital increase? And if so, what is the time line for you to do that? And my second question is, can you give us a bit of detail on AirPlus in terms of EBITDA book value or profits? Thank you. So we don't have a great connection with you. The first one, I think we understood about negative Potential negative equity, I hope you answered that. The second one we didn't get. Please repeat that question. The book value of Air plus Yes. I think the book value of AirPlus was the question. I have not. Okay. Let me take both the question. We cannot comment on the book value both at LSG and Air plus correct? So Do you have to do it with what is publicly communicated in the annual report? I'm really sorry about that, but That would not be the right thing to do. On the IFRS equity question, You saw that we were helped in Q1 with the pension discount rate going up again because the inflation Expectations globally came in and then the discount rate went to above the 100 basis points. That helped us With about EUR 1,700,000,000 and that is the IFRS consolidated equity. So you saw we ended up on EUR 2,000,000,000. Yes, we Expect still an operating loss in Q2 and a lower one in Q3 and Q4, right? Then of course, it's the question what So the pension discount rate do. But even in a situation where the consolidated equity would become negative For the group IFRS purposes, this would not be an issue because that is there is no legal requirement linked to it. But it, of course, undescribed The logic of why we asked for the in the AGM for the capital C because over time, we need to restore that. For a legal perspective, the equity of Deutsche Lufthansa AG, so the holding accounts is essential. And the equity at the end of December 2020 was SEK 7,600,000,000, correct? So higher than the group Solidated equity and that is the key number to take in mind. And of course, with SEK 7,600,000,000 we do not expect an issue as we see it currently now From any legal perspective. So that will not put pressure in any way on timing of an equity raise. It's purely linked To the market circumstances, etcetera. Okay. Thank you. The next question is from the line of Muneeba Kiani of Bank of America. Please go ahead. Good morning. My first question is about booking inflows. I think you mentioned they were around $400,000,000 in the first Quarter. Is it possible to get some color on how that was during January, February, March? And kind of Where the booking window is now, you'd mentioned it's quite short. And then secondly, On fuel overhead, was there any impact on that in the Q1? And then thirdly, if U. S./Europe travel opens by year end. How would you think about capacity ramping up in 2022 on that Let me Remco here. Let me take the fuel over hedging. There is no any material impact on the fuel over hedging anymore In the results, I think it's a few million. So there since we're good, still to be reminded That we started hedging for not for this year, but for 2022 and 2023. We communicated last time we spoke And the hedging, we have reduced from 85% to 65% based on a relook on our Commercial position as well on the network. But for this year, we don't expect any material impact from hedging. The comment I made during my speech on the SEK 400,000,000 of the booking inflows, you have to see separate from what is currently going in the market. When people are currently booking their flights, they do it on a really, really short term. And therefore, the whole prepayment topic is not much relevant, Correct. And of course, when travel comes back, correct, and routes are starting to open again, we expect that people will go and book Much more ahead again and hence as well that we benefit from that from a cash perspective. So The EUR 400,000,000 and say the flat provision for the inflow flight tickets is not linked to the bookings. The bookings are simply done very late because of the situation with the regulators. On your third question, first of all, you said U. S. Opening up end of the year. We surely expect it to open up in the summer, not the end of the year. And then you asked about 2022. Flexibility is key on flexibility in general and also on the North Atlantic. I mentioned the number of 70% will only be able to operate this summer, so it's obvious we can easily do that next year if needed. But if more is needed, we bring it up to more. By 2022, basically, all the capacity could be back in the air if needed. So I'm not worried about our ramp up ability. I'm more looking at the demand side, and then we'll see what it takes. Even the deep storage aircraft only takes a few weeks to be Bought into service. So in that time frame you are asking, we are indeed completely flexible. Thank you. The next question is from the line of Johannes Braun of Stifel Europe. Please go ahead. Yes. Thank you for taking my questions. First one is on CapEx. I think CapEx was very low in Q1. I think you said EUR 150,000,000 also across CapEx And obviously, euros 90,000,000 net CapEx. But for the full year, you still expect a €1,300,000,000 gross CapEx. So How do we have to think about the phasing of the gross CapEx in the rest of the year? And also how much do we have to model in terms of net CapEx as you sell more spare parts? Secondly, I think you mentioned that cargo yields have shown a dip at the start of the year, but then returns to strength. Why do you think that cargo yield dip has happened at the start of the year? Maybe it relates to the timing of Chinese New Year, But I'm just double checking here. And then lastly, I'm not sure whether I followed your logic regarding the recovery of corporate travel. I think You said you expect a stronger recovery in long haul corporate demand versus short haul corporate demand. But If corporates want to save on travel costs, why wouldn't they cut especially the long haul travel, which is obviously more expensive and do more So meetings instead of traveling long haul. Thank you. Thank you for the question. Let me first take The CapEx, indeed, euros 150,000,000 around €150,000,000 growth in the first quarter. For the full year, SEK 1,300,000,000 growth. That relates to 12 aircraft deliveries, Mainly the Airbus 320 in AO. I think that's 11 out of the 12 and then Airbus 220. Indeed, the net CapEx we expect To be below that level, same as you saw in the Q1. I think what is important and Also the opportunity for the years to come that we apply very strict CapEx regime in a sense, while still making sure that we can Renew our fleet in the right way. We communicated last time that we expect the CapEx level to be around the level of the depreciation amortization. That is still a level we target. And you know that the depreciation number and amortization number last year was about EUR 2,500,000,000. So you can draw your conclusion From that, we, of course, do that in a combination of straight CapEx, our Jokuls, we will still use and also operating losses We'll be part of this mix and included in that as well in that EUR 2,500,000,000 also that is straight Booked in the financing cash flow in the P and L. In terms of the cargo yields, Of course, the vacation regime plays a different role, but it's to be said that and you can see that from the results that the yields are very good still in the Q1. And we expect in the coming quarters, as the SK levels, capacity levels are low, to continue. And again, to be said, The fleet of cargo with the all the Airbus 777s and now in place in the course of the year, we expect that we are with our customer base and with And fleet being very good and very competitive and very, very happy with our cargo business. Yes. I think as you rightly said, well, on The way Christmas and Chinese New Year played in obviously was a little dip we saw there. But to your last question, When we talk to our corporate customers in Europe and in our home markets, it's one thing to replace the short European trip We do believe there will be a higher share of replacement of such business trips Then long range intercontinental trips, which usually don't have one single occasion. So when we fly to China, You don't do that for 1 lunch or for 1 speech or for 1 interview. Usually, it's a variety of meetings bundled together, and that We don't believe will be replaced as easily. So yes, indeed, there could be a higher share of replacement short range corporate travel versus Long range corporate trouble. Okay. Thank you. Can I just come back to the first one, the CapEx? Can you be a bit more specific on the net CapEx level for this year? I think you said similar level as Q1, but not sure if I understood that correctly. We will have you look you have to look at the gross CapEx and the delta between gross And net CapEx, and I think at this point in time, assume that, that delta will continue roughly throughout the rest of the year. The gross CapEx will indeed go up, as I said, with the procurement of the 12 planes in the course of this year. All right. Understood. Thank you. Ladies and gentlemen, we will now move on to the press Q and A session after a short 32nd break. Ladies and gentlemen, at this time, we will begin the question and answer session for the press And the first question is from the line of Jan Schreiber. Please go ahead. Thank you. The next question is from the line of Gerald Hegmann of Diebelts. Please go ahead. The next question is from the line of Iona Bisteback of Thompson Reuters. Please go ahead. Yes. Hello. If you're okay, I will answer your first question in English. The AGM where we ask Approval for the capital increase is clearly important for us, and we count on the shareholders to actually approve that. From all the proxy holders, we understand that are in favor. So we expect A positive vote on this. I think that's number 1 to be said. That means that we are then we have the approval to do so, of course, Subject to Supervisory Board approval here internally. And then we have to decide what the right timing could be. It could be this year and it could be next year. We have to leave that open depending, as I said, the market circumstances and also how the outlook Will develop over the coming months and quarters. The next question is from the line of Simon Lanzerraf of ZDF. And the next question is from the line of Timo Novak of Aerotelegraph. Please go ahead. And the next question is from the line of Lisa Schmelzer of Borsen Zaitung. Please go ahead. Your line is open. Please go ahead with your question. Let's start carry on. And there is timing