Earnings Call: Q2 2021

Aug 5, 2021

Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the Analyst and Press Conference Call of the Second Quarter Results 20 21. Throughout today's recorded presentation, all participants will be in a listen only mode. The presentation will be followed by a question and answer session. I would now like to turn the conference over to Dennis Weber. Please go ahead. Yes. Thank you, and good morning, Ladies and gentlemen, and welcome to the presentation of our results for the Q2 and First Half Year of twenty twenty one. With me on the call today are our CEO, Carsten Spohr and our CFO, Remco Steendagen. Carsten Spohr will start the presentation with a summary review of quarterly results and the group's transformation. It will be followed by Remco Steen Wagen, who will further detail our results and the progress made in the restructuring group. Carsten Spohr will conclude our presentation with an outlook for the rest of the year and beyond. Finally, we'll have 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 Carsten, over to you. Well, thank you, Dennis, and a warm welcome to all of you also on my behalf and from my side. Thanks for joining this morning. Hopefully, all of you who have traveled over the last weeks would share my perception that, First of all, the world is slowly starting to return to normality. 2nd, people have begun to meet each other in person again. Thirdly, demand for air travel is steeply recovering. And last but not least, The Lufthansa Group in this is coming back strong. During the last quarter, which we are reporting here today, bookings have more than doubled. And by the way, if you do consider booking a Lufthansa Group airline for your summer vacation, hurry up. There's Indeed, 275 destinations available for you, which is 84% of our pre corona network And many interesting holiday destinations are sold out, so don't wait. But more important for you and for us today, Let's talk about a few KPIs which we have seen in the Q2. We more or less operate around 50% of our flights Now while we speak in or until last week in July and also of course while we speak in August ramping that up slowly. And about 50% of our passengers are back on board with us. And beyond those numbers, the Q2 of 2021 was indeed Once again an eventful one. Let me just highlight 3 key messages from it. 1, We successfully ramped up and generated improvements across all operational and financial KPIs. 2nd, we made further progress in implementing our €3,500,000,000 cost saving program and generated a positive adjusted free cash flow. And thirdly, we are very confident that the plans we outlined We will further accelerate our transformation, which will contribute to achieving strong margins and capital returns as we have guided before in our midterm targets. When we presented our half year results in 2020, so a year ago, we obviously had to talk about ramping down our airline business and we talked about how fast and how forcefully we reduced capacity and our operating costs. Fortunately, a year later today, we can now talk about the successful ramp up. We gradually expanded capacity over the course of the second quarter and reached about 30% levels compared to 2019, while maintaining a very tight grip on our cost. And this indeed enabled us to further narrow our operating loss, The adjusted EBIT in the 2nd quarter of minus €952,000,000 is significantly below the prior year level and also lower compared to the Q1 of 'twenty one. The improvements were driven by The ramp up of our airline business, the continued strength of Lufthansa Cargo, which is keeping on going strong, Our MRO and catering businesses returning to profits and very good progress in our group wide restructuring in which we have implemented measures securing already more than half of our targeted €3,500,000,000 of cost savings. And the smaller loss and the surge in new bookings led to a significant upswing in operating cash flow. Was almost €800,000,000 positive in the 2nd quarter. Progress in our recovery It goes hand in hand with our focus on the group's transformation, as mentioned before. The longer the pandemic lasts and people are not able to travel The way they are used to, the more obvious the value of air travel becomes. Our mission, which as you know is connecting people, cultures and economies in a sustainable manner has never been more relevant And true then today and we are proud of that purpose as we were before the COVID crisis, we are proud of it now. And in mid June, We outlined our plans for adjusting to a new normal and accelerate the group's transformation. And Just a few topics from this. Our leading position in our home markets, which are representing Europe's strongest economies and the strength of our various brands form a great base to capture opportunities for profitable growth again. Also we did take advantage of a window of opportunity with very favorable prices To further accelerate the modernization of our fleet. And with the order and leasing of new Airbus 350s, Boeing 787s And also an additional 7 77 freighter, we will not only reduce operating costs, but also carbon emissions. On the additional leasing of 2 Airbus 321 freighters just recently, which are dedicated to serving the growing e commerce across Europe, will also help us to tap new earning potentials in the cargo business. And we are very happy that as a group Compared to others, we kept such a strong focus in cargo throughout the last years, which is now greatly paying off. We continuously enhance our products. Customers enjoy new catering concepts, for example, on one of our network airlines, on more delights at Lufthansa, Saver at Swiss, Velozerie at Austrian Airlines were all rolled out in the Q2 and we now offer an buy on board concept in economy class Of our short range flights providing better quality of food and beverages to our customers on the one hand, at the same time Generate additional catering revenues for our group airlines. And also a new concept in the business class Catering is worked on and will be introduced early September. Also in line with that, we did decide to reopen our 1st class terminal in Frankfurt Next month, also I think symbolizing in a nice way how much we not only believe in the traffic, but also our premium focus to continue. We also create a consistent customer experience by standardizing our booking platforms. This enables customers to book flights within the entire Lufthansa Group Airlines network And Austrian Airlines actually was the 1st group airline to launch it just 3 weeks ago. Important, I think also as a news of today is that in the context of our cost cutting targets, we launched voluntary relief programs for flight crews and ground staff that will significantly reduce headcounts, especially in Germany. And Remco will give you the details in a minute. We are transforming the way we work by focusing on maximizing our synergies, reducing complexity and accelerate our decision making, another strong learning from this crisis, which we are trying to keep alive. And Obviously, we continue to focus on generating strong cash flows and capital returns to create sustainable value also for our shareholders. And for the first time, as you all know, as a front runner in our industry, We committed ourselves to ambitious midterm targets just a few weeks ago. We aim to achieve an adjusted EBIT margin of at least 8% and an adjusted ROCE excluding cash of at least 10% by 2024. And this signifies our determination to emerge from this crisis stronger than ever before, especially compared to our competitors And remain an industry leader also after this unique pandemic. But now Over to Remco for some progress reports on our return to profitability. Thank you, Carsten. As Carsten highlighted, we successfully reduced operating losses and returned to positive cash flows in the 2nd quarter. Adjusted EBIT amounted to minus €952,000,000 in the period, including €145,000,000 of personnel related restructuring expenses. In the first half of twenty twenty one, the adjusted EBIT loss was €2,100,000,000 €800,000,000 better than our prior year loss despite doubling of restructuring expenses to €265,000,000 Restructuring expenses largely related to severance and early retirement payments at Lufthansa German Airlines, at Lufthansa Technik and in central functions reflecting the progress made in reducing our costs. Group wide fixed costs were down 32% also in the 2nd quarter, so the Q2 operating expense increase was solely due to higher variable costs following the expansion of our higher flight schedules. Free cash flow amounted to a positive €340,000,000 in the 2nd quarter based on a much better operating cash flow, driven by improved operating performance and high customer prepayments following the search of new bookings, which Carson discussed earlier. Let me briefly discuss performance in the different segments. At the Network Airlines, strict Cost discipline and the support from short term work limited the adjusted EBIT loss, which is still significant to minus €1,200,000,000 In the Q2, this was despite the costs caused by the operational ramp up and the low C and P for most of the quarter. We expanded capacity from just 25% at the beginning of April to around 40% at quarter end, With seat load factors improving in tandem, especially in European short haul. Yields remained around 10% below pre crisis levels Also in the Q2, we consider this a very good performance relatively to the overall market, which continues to be marked by low levels of demand At a time where many airlines are ramping up capacity aggressively, success in the upselling of business class and premium economy to leisure travelers helped to partly offset the pressure from less corporate travel. The capacity ramp up at Eurowings was even faster to Network Airlines in the 2nd quarter from around 10% in April to more than 40% at quarter end. The average seat load factor in the period was 70%. And with yields being 19% below 2019 levels, Eurowings is Performing better than low cost peers. The significant traffic declines on domestic corporate travel heavy routes where frequencies Continued to be far below pre crisis levels and the route portfolio shift to leisure destinations with increased stage lengths was the primary driver for the yields decline. Supported by overhead reductions of more than 30% and the benefit of Fleet standardization and the reduction to only one AOC in Germany. Adjusted EBIT loss improved to minus €108,000,000 in the 2nd quarter and minus €252,000,000 for the first half year. Our non airline businesses are leading the recovery. All of them generated a profit in the 2nd quarter. Lufthansa continues to go from strength to strength. With yields remaining on a similar high level as in the Q1, adjusted EBIT amounted to a positive €326,000,000 in the 2nd quarter and positive €640,000,000 in the first half year, higher than ever before in the history of Lufthansa Cargo. Profits at Tufthansa Technik improved markedly amounting to positive €86,000,000 in the 2nd quarter €102,000,000 In the first half year, the components division where demand picked up, especially in international markets improved the most. In addition, lower depreciation resulting from the sharp reduction of spare parts and the non recurrence of negative onetime charges in the prior year supported earnings. A strong American market was also the key driver of the €27,000,000 adjusted EBIT, which the catering segment recorded in the 2nd quarter. Payroll support under the U. S. CARES Act contributed to the earnings improvement, partly offset by the mandatory rehiring of personnel under the scheme. In the first half year, adjusted EBIT amounted to €17,000,000 Finally, the group's other businesses and central functions recorded an adjusted EBITDA loss of €90,000,000 In the Q2, €158,000,000 in the first half year. Higher restructuring costs more than offset Cost savings in central functions in the first half year. The result of the other businesses remained largely unchanged compared to the prior year period. Average monthly operating cash drain amounted to €198,000,000 in the 2nd quarter. On a reported basis, including €59,000,000 of support measures received in the U. S, it was €178,000,000 The cash inflow from net bookings reached €962,000,000 in the quarter, while an increase in payables was Set by a comparable increase in receivables, some high restructuring provisions supported cash flow still. Total deferred tax payments amounted to €900,000,000 at the end of June. Compared With our original plans, we have decided to accelerate repayment and to return around €450,000,000 to the tax authorities In each of the 3rd and the 4th quarters. Gross capital expenditures amounted to €459,000,000 in the 2nd quarter, largely related to fleet investments. Inflows due to aircraft sales and a further reduction of spare parts at Lufthansa Technik Had a partly compensating effect, so that net capital expenditures amounted to just €356,000,000 As a result, free cash flow was positive at €340,000,000 This is the Q1 since the beginning of the crisis in which we generated Positive cash flows. At the end of the first half year, the group continued to have access to €11,100,000,000 of liquidity, virtually unchanged compared to the year end 2020 level. Financing measures offset the free cash outflow and the repayment of maturing liabilities. Balance sheet liquidity increased to €6,700,000,000 at the end of June, largely because we drew down €1,500,000,000 from the €4,500,000,000 silent participation won provided by the Economic Stabilization Fund in Germany. The remaining €3,000,000,000 will be available until year end. The issuance of a €1,000,000,000 bond in early July demonstrated once again that the group has good access to different forms of financing at very attractive rates. The resulting effect liquidity is obviously not reflected yet in the Q2 figures I just presented. When treating Silent Participation 1 as debt, which we consider prudent considering its 4% annual coupon, The group's net debt amounted to €10,400,000,000 on a pro form a basis. On a reported basis, in line with IFRS accounting for the SP1 as equity, net debt was €8,900,000,000 at the end of June. Pension provisions remained at a similar level compared to the end of March, amounting to €7,600,000,000 This is around €1,900,000,000 below the year end level, mainly because of a 40 basis points increase of the discount rate. As the decrease in pension provisions was larger than the group's loss in the first half year, shareholder equity was above the year end 2020 level, Even when excluding the effect from the drawdown of Sinon Participation 1, including it, it amounted to €3,100,000,000 at the end of June. A fast restructuring will be key to return to profitability. In the past weeks, we have accelerated the implementation of cost savings measures. As of today, we have secured more than half of the targeted €3,500,000,000 of cost savings earlier than originally planned. 42% of the targeted €1,800,000,000 of personnel cost reductions are already in the P and L, with another 20% secured by measures, which are already implemented, but did not have an effect on earnings yet. The level of implementation is similar for the targeted €1,700,000,000 of cost reductions in areas other than personnel. In Germany, another 3,000 employees left the group in 2021 via voluntary leave programs, Fluctuations and the implementations of a social plan at Germanwings. In particular, based on the strong response to voluntary leave offers For the German ground and cockpit personnel launched in the past few months, another around 2,000 colleagues will depart. In addition, we have concluded social plan for the employees of Brussels Airlines in Dusseldorf given that we're closing the base. Finally, the redimensioning of Swiss will lead to an overall reduction of around 2,000 employees by year end, including the forced dismissal of around 500 employees based on the consultation process completed at the end of May. In sum, these three measures will increase the personnel cost savings already secured to more than €1,100,000,000 The further reduction of up to 5,000 positions or an equivalent cost in Germany will contribute To the closing, the remaining GAAP of our total savings targets of €1,800,000,000 In this context, We're aiming for further reduction of positions in particularly at Lufthansa Airlines, Lufthansa Technik and Lufthansa Cargo. Let me conclude my part of the presentation with a summary of the progress we have made in strengthening our balance sheet. As I just highlighted, the implementation of our €3,500,000,000 cost savings program has continued to get a pace and we returned to positive cash flows. For the Q3, we are confident that we will be able to stop the operating cash flow and to generate a positive EBITDA. However, taking into account tax repayments I mentioned earlier, we expect operating cash flows to be negative in Q3. Despite the operational progress, we continue to consider a capital increase a key element to enable the repayment of the stabilization message as soon as possible. Preparations in this respect are ongoing. The size and timing of a capital increase Remains subject to ESF approval and market conditions. That means investor interest and the extent to which existing shareholders will Let me also reconfirm our intention to divest certain noncore assets, Such as AirPlus and LNG Rest of the World once market conditions allow realizing their full value. With regard to Lufthansa Technik, We have mandated the Investment Bank to support us in the evaluation of strategic options, primarily a partial divestiture or a partial listing. The group's executive board intends to decide on the further course of Lufthansa Technik before year end. Carsten, back to you. Well, thanks, Ramco. And let's talk a little bit about the traveling and market environment. We are very encouraged, as mentioned before, that traveling restrictions have finally started to ease over the summer And all over the world. And we are very convinced that this trend actually will continue. The steady progress of vaccination campaigns Allows obviously governments around the world to further ease restrictions. The UK has started to allow vaccinated travelers from medium risk countries Such as Germany to enter the country without any quarantine. Canada will open up for double jab visitors in early September And we expect more countries to follow. The U. S. Decision to initially not open for Europeans had been disappointing. However, we are convinced that the opening of transatlantic travel is only a question of time given its political and economic importance And we have judged the announcement of the U. S. Government tonight to open up for double JEP visitors only has another step in the opening direction. But already today, the North Atlantic is back To being our most important and most profitable intercontinental market, even though we more or less can only sell tickets on one side of the ocean. We're obviously ready to reintroduce long haul flights at a greater scale. We have implemented numerous digital measures to ensure that traveling is safe and easy, at least as easy as possible for our customers. And regular customer service confirm the effectiveness of these measures. Close to 90% of our passengers respond That they do feel comfortable when traveling with us. We obviously share this conviction Off and with our customers, demand has started to recover across the board. Let me just highlight 4 key trends. 1, demand for European leisure destinations started to pick up significantly at the end of April. Since then, bookings for July August have been so strong that we expect passenger numbers in these two months to amount to around 50% of pre crisis levels. This will of course include Eurowings Discover, which successfully operated its inaugural flight 2 weeks ago. 2, even though the holiday season appears to be extending this year, which of course we like, we expect Other segments to drive the next phase of our recovery. The VFR, people to people business, visit friends, relatives as we call it, It's gaining more and more momentum again. Corporate travel fortunately is also starting to come back. In the Q2, corporate sales increased by 2 20% compared to the previous year. And from our corporate customers, we receive almost anonymous feedback that the need to travel is becoming more and more urgent, especially to the U. S. Once this is possible again. In addition, we see small and medium sized companies leading the recovery as many have no Subsidiaries, infrastructure or offices abroad. Connectivity and flexibility, of course, So we book are more important to these travelers than price, which will also help us in the next weeks or months. Trend 3, while we are waiting for the North Atlantic to reopen for Europeans, the U. S. Point of sale benefits from very high demand, So the Transatlantic is leading the recovery of our long haul business. This is followed by some visible acceleration on routes to Africa And Central and South America as well. And last but not least, as trend number 4, thanks to the high number of U. S. Passengers, The transplanting is leading the recovery. And as I mentioned before, this in our view It's just an indicator that business travel, once it is possible, will be accelerating, including its short term bookings, which make it difficult to predict, but will create more dynamic also at the upper end of the market. In light of bookings Recovering, we can confirm our full year expectations for 'twenty one to operate at around 40% of pre crisis capacity. And we will continue to offer capacity of around 50% in the 3rd quarter and around 60% in the 4th quarter. This scenario, however, is based on a few assumptions. U. S. Reopening for Europeans no later And the end of the Q3, which I think has become somewhat more likely after tonight's announcements, The recovery in corporate travel does gain further momentum in autumn and winter, brings us back to around 40% of pre crisis levels by year end. And third, that the Asia Pacific markets start to reopen by the end of the year. As you know, global reach is key to our business model and this is not only true for our airlines, passenger airlines, but also for our air freight. If there is hardly any restrictions for the flow of goods, is on course for a new record of more than €1,000,000,000 this year, unheard of. And we expect the supply demand gap that has pushed cargo yields for over a year now to persist. Valley capacity will return only gradually, while demand will continue to grow even further. This is especially true for high yielding industries such as farmer and automotive, where we enjoy A market leading position in airfreight also of course backed up by our home market strength. And also, Luxfer Cargo will focus On the e commerce segment, more in the future, cross border shipments in Europe are expected to grow by around 20% per year. And starting in early 2022, we'll offer our cargo customers fast intra European connections with initially 3, sorry, 2, 321 passenger aircraft which we converted to freighters. And thereby, I think we are hitting right on the demand for same day solutions. In addition, by the year 2022, we will have permanently reduced Lufthansa Cargo's Cost base by €70,000,000,000 and key measures here include operating a Boeing only fleet of 14 777 Freighters. The digitalization of sales and handling processes as well as streamlining overhead functions will further contribute to what we believe will be an even more efficient Lufthansa Cargo. So let's talk about Lufthansa Technik, which is also benefiting from its global footprint. In the Americas and Asia Pacific, demand for aircraft maintenance and repair is increasing in large markets such as the U. S. And China, where activity has picked up much more than in Europe. Looking beyond the short term recovery, Globantertaining has a strong base for future profitable growth, given its leading market position and rapid industry growth as well as its strong expansion in prior years. Going forward, we will focus on turning this growth into higher margins and capital returns. And this is why we have reorganized Novartis Technik's product divisions into 5 segments instead of the 8 we had before. This will enable us to create a digital powerhouse by combining engineering, data science and our development capabilities, which are unique in the world. And we're obviously also positioning our components, Aircraft Maintenance and Engine Service divisions, sorry that we can better express specific customer needs around the globe. The result will be a leaner, less complex organization, which truly is more digital And includes more efficient processes, resulting in an additional reduction of overhead expenses by about 30% and significant personnel and material cost benefits. So let's talk about the environmental footprint for a minute. A major part of our transformation, which I mentioned before, does concern our environmental footprint and obviously our strategy to reduce it. I think you must overcome the idea that there is a contradiction between a green agenda and the aviation industry. Yes, We are part of the problem. Aviation does contribute between 2% 3% of global CO2 emissions. And yes, we do face up to that responsibility. But aviation is a much larger part of the solution Then it's part of the problem. The fight against global warming, this huge task for our generation of leaders can only be won by connected global economies and corporations among scientists, policymakers, organizations, Governments, countries, companies. Climate protection is a global goal that's impossible to achieve Without the global wealth, partly also driven by aviation. And at the same time, there is no questions We will have to lower our carbon emissions and aviation industry is fully aware and will contribute further to it. This is the reason why we have set the goal of halving our 2019 net carbon emissions by the year 2,030. By 2,050, We want to achieve net zero carbon emissions. And meeting our addiction targets will be a long journey, But we are convinced we can get there and achieve substantial progress by focusing on 3 areas. 1st, Invest in technology, because technology is by far the greatest driver for a more climate friendly aviation industry. And technology Our technological innovation is part of our Lufthansa Group DNA, our engineering DNA. We will keep modernizing our fleet and increase the share of newest generation eco efficient aircraft in our fleet to over 50% by 2,030. At the same time, we will retire no less than 9 sub fleets. Already today, the Lufthansa Group is the largest user of sustainable aviation fuels in Europe with already 11,000 tons purchased in 2021 more than anybody else. And in addition, we are contributing to the development of new production capacities and are engaged in not less than 14 Saf Pioneer Partnerships. 2nd, it's improving the infrastructure. This concerns air traffic management, operational efficiency as well as intermodality. Single European Sky, for example, with less detours, optimum flight levels and steering of airspaces based on Traffic volumes could save us up to 10% of carbon emissions. We have talked about the single European skies for decades now And I really have hope that we see now progress in the context of the intensified debate on climate change. It's one of the key measures under the Green Deal to help achieve significant aviation emissions reductions. And 3rd, it's offsetting carbon footprint. The remaining gap to the target of decarbonization will be achieved through compensation and offsetting. For some time, we have been participating in the EU ETS scheme They will be supplemented by COSEA now, the global scheme of oil industry. And in my view, very important, Our compensate platform gives both private and corporate travelers the choice between offsetting for buying sustainable aviation fuels for their flight. We will bundle all these initiatives and solutions for more sustainability Now our new Lufthansa Group Clean Tech Hub will be a strong platform to identify and accelerate innovations and partnerships. We already have more than 80 projects in this and we'll be announcing more details to the public soon. Ladies and gentlemen, the Green Deal can only work if basic guiding principles Such as a level playing field for competition and a circular financial flow with earmarked use of existing aviation taxes Otherwise, we just weaken the European carriers who are doing more for sustainable aviation And we benefit those who do less. And in detail, the Fit for 52 initiative proposes Tightening the EU Emission Trading Scheme, ETFs and setting an ambitious sustainable aviation fuel blending targets. These are great ideas, but if they are only applied in Europe, the European Air Industry would suffer huge competitive Disadvantages. We must never forget, aviation is one of the few remaining industries in which Europe still has 3 Global top players. And we should therefore support European Aviation as a key industry instead of distorting competition To Europe's significant economic disadvantage, in my view, there's too many industries already Where Europe has lost its top place and we must make sure that aviation is not the next one. But even worse than this more economic view is the fact that these competitive disadvantages Also translate into carbon leakage, which burdens the environment rather than reducing the industry's footprint. If prices for flights by European hubs rise, people will simply just fly by hubs where European rules on CO2 reductions do not apply, Flying detours that will emit even more CO2. You can see that on our slide, Our passenger would be burdened by additional costs coming from ETFs, sustainable aviation fuel blend and fuel taxation With up to an additional €60, or €0.58 to be detailed for tickets from Madrid to Frankfurt to Tokyo. It doesn't take much imagination to predict the reaction of some customers and they will just fly via hubs outside of Europe even though that the resulting cheaper route, for example, by Istanbul will approximately account for 9% more carbon emissions. Thus, taking money away from the sector to make flying more expensive is just not the right way. It's Ecological and economically counterproductive. We must just not make this mistake in Europe Ignoring reality and facts. Let me finish with our outlook for the rest of the year. That obviously remains dependent on the pandemic situation and its impact on travel restrictions and customer demand. That's why it continues to be impossible to give a detailed profit outlook for the full year other than the expectations that we will reduce our adjusted EBIT loss in 2021 compared to 2020 significantly. In the Q3, we expect to stop operating cash outflows and expect our EBITDA to be positive. Gross capital expenditures will amount to around €1,500,000,000 and will primarily be used for the continued modernization of our fleet. Ladies and gentlemen, we are hopefully in the last phase of a pandemic that has hit our industry and our company In a way nothing ever has before. And so we are still missing more than half of our former business, I am optimistic That the Q2 was a key step out of the crisis, operational and financial KPIs are improving And our transformation is progressing faster than even we had expected. From the very beginning of this pandemic, we had a fundamental goal To make Lufthansa emerge more efficient, more profitable, more customer focused and more sustainable from this crisis and at the same time to secure at least 100,000 sustainable jobs in our group's companies. And we work hard for this By following a clear agenda, first, by making our ReNu transformation program a success. 2nd, by focusing our organization even more towards our customers and third, living up to our responsibility Even faster for more sustainability in aviation. We are advancing well in all these three areas And one thing remains unchanged while we do that, even the biggest crisis in the history of aviation Does not lower the fascination of flying for our customers, for our staff, for our various stakeholders. And with that, Remco and I are looking forward to your questions. Ladies and gentlemen, at this time, we will begin the question and answer session. 20 The first question comes from the line of James Hollins with Exane BNP. Please go ahead. Hi, good morning. Thank you. I've got 3. I can't remember anyone saying wasn't allowed to, so I'll go with it. First one is on cost headwinds. I think Frapo yesterday were talking about a 4.3 Percent tariff increase in 2022 and hopefully the same again in 2023. Just your information, they said you will accept that. I I was wondering if, a, you would accept that and b, if you give a very rough quantification of what a 4% increase in the tariff would mean for you? And the second one, you talked about yields being solid. I hate to disagree. They seem a bit soft to me. If you consider capacity 29% of Q2 load factor still below 50%. I know there's a catch Chance in hell, have you given me any yield guidance? But maybe just give us a feel for how you're trending, if not on yields, but on loads, Load factor for Q3. Obviously, you're talking about very strong bookings and book capacity still only at 50%. So Anything there would be good. The final one, you had been quoted, Karsten, I think, talking about repaying the government Support before the election, which is 26th September. I was wondering maybe in chronological order your own view on Yes. Let me start with airport charges. As you probably know, we have We built our business model in the last years with a multi hub model to live with the fact that there are different charge levels in different airports. And what was announced yesterday will further accelerate our focus on those airports who either keep their charges flat or even reduce their charges as you Probably have read, at least we have read from some of our partner airports. So, there is a shift of traffic resulting from different charging levels. But legally, you are right. We don't see any legal grounds against that increase of Farport. So that is something to be Excepted for us for legal reasons, the outlook they gave us for the next years will further foster our Focus on the other hub airports as we have done in the last years. On the yield, I think it's important that we have seen a different mix over the last weeks. We have, as I reported, This huge kick up in tourism and leisure travel to European Mediterranean destinations and that mix Created a little softer yields over the last weeks than before. But overall, with yields being down only single digit, which we also expect for the Q3, I think we are outperforming others and we believe that we are creating quite a good balance between supply and demand, Which we are looking forward to continue in the Q3. Developments, some of them foreseen, some of them not yet foreseen will In the end determine our exact capacity planning, but indeed as you know we are planning on 50% for the Q3. Then on the equity chronological order, first of all, I did say that if possible, we'd like We pay before the elections. And this will depend on the financial markets and of course will depend on our discussions With the German government, which are very constructive and that will determine the outcome In terms of timing, in terms of volumes, in terms of details, but I think a capital increase is like an M and A transaction. Talk about the details when you have them And we don't guess on them. Remco, anything I forgot you could add? No. Thank you. So can I just push on just a very broad load factor expectation for Q3, even if just 10 percentage point range? As you have seen throughout the pandemic, we have maintained a very good discipline on yields and loads. And I promise you, we will not lose that focus also in the Q3. So don't expect us Losing focus and again we believe that's part of what the industry should be doing. If they all would follow our discipline, maybe the industry would be more healthy industry faster. Okay. Thanks, Joe. I think it's rather better than worse in short for the Q3 than what we have seen so far. Thank you. The next question comes from the line of Stefan Forlorn with Davy. Please go ahead. Martin Carsten, Ramco. I see in Q4, like based on the assumptions, you have 60% capacity. What would be a reasonable Assumption for next year, just for modeling purposes in terms of capacity of those assumptions, that's kind of the exit rate. And I know, Remco, you said before that Maybe 'twenty three, 'twenty four, that'd be circa €2,000,000,000 free cash flow. But I'm just wondering with 2022, Could you see positive free cash flow? And then I just want to ask about Eurowings. There's nothing here that you see that Doesn't change your view that it could be an 8% plus EBIT margin company. And I was just wondering, given that ledger ramps up quicker And also that there is the restructuring in Eurowings was a lot of it was done pre crisis, that maybe That airline recovers quicker, let's say, than the other airlines in the group. Thanks. Okay. Let me Stephan, good morning. Let me first take your First question, if it's 'twenty two, we're not able to give any guidance yet. I think that's a little bit too early. But what we clearly would hope is that in next year after Q4 being at 60%, we come to 70% levels in 'twenty two, but it's too early to confirm. That would also mean that we will target A positive EBIT and also no deteriorating adjusted free cash flow, so I. E. Free cash flow, Which is also positive, but it's too early to confirm. But that's clearly what we strive for assuming that the market will recover as it's currently planned. With regard to Eurowings, you're correct. The cost savings are quite up to speed, faster than any other airlines. There is still a bit to go and Eurowings has to deliver on that. But with business coming back quicker on Eurowings, would be then not illogical to expect that Eurowings would get faster on its feet than the network airlines. Okay. Thank you. The next question comes from the line of Muneeba Kiani with Bank of America. Please go ahead. Good morning. Firstly, just a follow-up, Remco, on your comment on the deferred taxes. If I caught If I understood you correctly, you said $900,000,000 is outstanding currently. Also, I think there were some supplier payments that were deferred. Can you give an amount if there were any supplier payments that were deferred and kind of how those would unwind in terms of timing? And then secondly, just following up on the earlier question around 3Q loads, kind of how are you thinking about load In this recovery, like at what load would you consider adding more capacity than what you have planned? And what's the ramp up from, say, July, August, September in 3Q on your capacity? And then Thirdly, please, on the Xyleen Participation 1 drawdown of $1,500,000,000 and the $3,000,000,000 remaining, how should we think about that into year end? Thank you. Okay. Let me they're good questions all. Let me first come back on the taxes. We had some taxes we had to repay. This is not to do with deferred taxes we had on balance sheet. It is Purely a tax payable amount that is €900,000,000 We have decided to repay half of that in Q3 and half in Q4 So that tax repayment disappears and is no longer applicable. For the rest of the working capital, we don't see any open We don't see any open items anymore. We are committed to manage our working capital very tight and our receivable payables in parallel. So we don't see any other outflow factors actually coming in. Actually, we try to do better on the working capital. Let me then take your last question on the drawdown. In the earlier part of the year, also When we were in April and in the AGM, we had already guided that we would likely draw $1,500,000,000 in Q2 in line with our Liquidity and financing forecast, we have done that. If we would if and when we would do a capital raise, Of course, we would repay that. That's also the technical nature of this drawdown. If we would draw the €3,000,000,000 in 2021. We would certainly hope that, that will not be the case and that we would have a capital raise and therefore that is no longer applicable, which should the capital raise not be possible, Then we will evaluate in Q4 if we will draw it. With regard to the 3rd question, we have seen an improvement over Q3 of The load factors, and of course, we expect to continue and see that continuing in 3. On the European short haul, where the seat load factors Are already above 70% at this point in time. And we have the ability to add capacity, correct, 10%, 15% with very, very short notice. Of course, we can go back to 100 percent also, but then it takes a little bit more lead time. We clearly believe that we have enough visibility To of course match all the capacity and all the demand which is out there with our capacity. And we're very, very keen of course to do that if such a Good situation will occur faster. Your question The next question comes from the line of Satish Sivakumar with Citigroup. Please go ahead. Yes, thank you. I got two questions here. Firstly, on the personal reduction of 5 ks in Germany and to 2,000 employees in Switzerland. Can you quantify the restructuring cost on the time line of recognition of those restructuring costs on the P and L? Yes. And secondly, on the short haul Europe, obviously, just a follow-up actually, what are you actually seeing in load factor? And how was that load factor actually trended, say, between June, July and And what are you seeing currently? And then on the pricing, obviously, if you listen to the low cost carriers, One key message was there is price discounting to stimulate that demand. So what are you actually Let me first take your first question on our voluntarily Programs and the related restructuring costs. In the first half of this year, we have a little bit more than €250,000,000 of restructuring costs. It was about €150,000,000 in Q2, and that relates to all the voluntarily programs we have also announced Today or give more insight in today. So that's all already in our P and L. Of course, we will and have to continue on further Reductions in the second half year and if those restructuring match the criteria and move on, We expect a similar amount of restructuring costs in the second half of the year, so around another €250,000,000 to €300,000,000 But of course, that really depends on the progress On those restructuring plans, but we're very much committed to that. On the load factors, I think what I already said before, we're running on the short to around 70% right now. So that's applicable for August, September, Assuming everything stays the same. On pricing, as Karsten said before, I think we are very, very disciplined on the pricing. We really look at our network Really from a cash perspective, very, very diligently, and I think that is very, very well done by And on through our network, of course, with certain ramp ups, we don't be carefully look at it. That also relates Pricing and I think a 10% lower yield in 2019 is when you compare it to the other carriers, I think a very, very good achievement. And that is part of our network and our 20 1. And our very good quality ability to manage and that we certainly will continue doing. Connectivity and flexibility is very, very And pricing is only a small element of that. Many other elements are much more important and that's where we're standing for as Lufthansa and that is clearly our strength In the market. Carsten, I don't know if you have anything to add to that. I think it's maybe worth to add that overlap between those Low cost carriers you are probably referring to in our network is very limited. They are not really strong in our markets. And in our markets, we believe that the idea of Eurowings to be a value carrier is a much better proposal to customers In our home markets and obviously it works. So, I think there's, yes, less overlap than people usually think To those low cost carriers you probably refer. Thanks, Carlos. Just a quick follow-up actually on the restructuring cost in H2. So this $250,000,000 to $300,000,000 you will incur if you come up with a new program, right? So it is Nothing related to the ongoing program, Jens? That's correct. It would be only related to new programs. Okay. Thank you. The next question comes from the line of Jarrod Castle with UBS. Please go ahead. Thank you and good morning everyone. Just on business travel, I mean Delta said it could be back to 60% in September in the U. S. Do you care to express a view on how strong business travel could come back Given you're talking about 60% overall capacity in 4Q, which maybe doesn't suggest that Strongly and indeed, why is there no step up between August September in terms of capacity? It seems like it's 50% for both, Mans. Then also just looking a bit further ahead, I 30,000 employees leaving the group, but more to follow. When you get back to 2024, when you hopefully close to 2019 levels Traffic, where would you see employee numbers at that point? And then Carsten, one for you. Slide 25, you're talking about Fed455 and European tax measures and Leakage. And you said, obviously, this is not the right way. So it's interesting to get your thoughts, what you would propose the EU does. Because Remember, under the ETS scheme, when they tried to expand that to a global scheme between Europe and the rest of the world, There was a large pushback, which helped, I guess, from the perspective of CorSoa. But what would you propose on that front? Thanks. Olivier, I can also start. Employee numbers in 24, Obviously, that will depend on dimensioning and it will depend on the portfolio of companies, which we either have sold by then or still own. So I cannot give you a number, but one thing is for sure, We use the current restructuring of course to become a lot more efficient. And also looking at slide crews, we shrink more On the high cost AOCs, then we shrink on the lower unit cost AOCs. We might even grow Some lower cost AOCs, where there is a higher cost AOCs. Frank, unions don't like that, but It's part of what the market requires us to do. So I think you cannot compare whatever number of employees we have in 'twenty four to The numbers we had before the crisis and I expect also the overall number again to be smaller due to the fact that the portfolio of the company probably will be reduced by that. Yes, very good question on, Jared, on the ETS or let's say on Fit455. Obviously, if you limit certain elements to domestic flights, domestic Europe and keep transfer passengers out, That alone takes away the distorting effect. You would have the level of playing field within Europe domestic, where everybody who is competing Would have to live with the fact that there is additional burdens for the environment, but those who compete with those who can also Operate from outside of Europe, which is a big part of our business, you would also have a level playing piece because you would not be affected because there is COSEA already there. And that's I think the idea. If you read the papers of the EU Commission, they really now separate between COSEA globally And ETS within Europe, but then we have to make sure that within Europe really only includes those passengers who start a trip in Europe and end a trip in Europe Not those who have a domestic flight to go somewhere else. Then if you look at the German aviation tax, of course, I don't like it in general, but the technical A year behind it, so it is with some other aviation taxes in Europe, it does make It creates the same burden for every passenger for every airline regardless of where you are hopping. If you fly from Hamburg to Singapore, It doesn't matter if you hop in Dubai or if you hop in Munich, you are paying the same aviation tax. That also obviously is a mechanism which again as much as we don't like taxes, at least it's a level playing field tax. So I think there is ideas where This could be done. And last but not least, I think the circular flow of money I mentioned, let's make sure that the money we spend as additional burns goes back to the environment. So there is indeed in our view many creative ideas. You could maintain the level playing field and do Good things for the environment, at the same time keeping the companies in Europe competitive and avoid carbon leakage hurting the environment. Yes, Gerbert, with regard to your other question, Gerbert, when we look at the U. S, Gerbert, we have to keep in mind that travel within the U. S. As a total country and a continent, it's fully possible, whereas in Europe, as you know, there are quite some Restrictions between the Europe countries. That's, I think, one thing to keep in mind. Secondly, from the U. S, there is travel possible to Europe, Which we also benefit from to a certain extent, but the other way around is still a question mark when that will open up. Now in the forecast, we have said that we expect That will open up in the end of September, and we expect and we told as well that our bookings are very, very short notice. If that all comes back much faster, if that will be fully opened up right now. Then we have, of course, to see how that develops, and we're further fully ready for that with our flexibility To take the advantage, at this moment in time, as we said, we expect that more at the end of September, and we expect with That's overall to answer around more 60% in Q4 and 40% on average for the year. Flexibility for us is key, and we will take any opportunity which comes to us. Okay. Thanks very much, gentlemen. The next question comes from the line of Andrew Lobbenberg with HSBC. Please go ahead. Hi, there. Can I ask about your assumptions on the reopening of Asia? Because I can kind of see where you're coming from thinking of the end of September with the comments we had from the U. S. Administration Yesterday, but how do we get any comfort or confidence that Asia reopens given the restrictions that we see There. And when you speak of the confidence of U. S. Originating bookings, I mean, I know you say they're short term. Does that I mean, is there any bookings going on into the autumn when you move from leisure to more VFR And then can I ask about these A3 Assistants that you got in from Philippine Airlines? This is sort of interesting, grabbing some used aircraft opportunistically and moving more towards leases rather than owning. Are we meant to draw any conclusions that, that is the signal that you are more willing to do leases rather than taking the aircraft on the balance sheet? And then the final one on labor. In previous quarters, you've spoken about at the start of 2022 having a twin track approach Towards the negotiated settlement or compulsory redundancies, are we meant to gather from the progress that you've made getting 5,000 out and looking for 5,000 more that you're hoping to avoid needing to go down the compulsory redundancy track? Andrew, good morning to you. Well, on Asia Pacific, just to make sure I expressed it right in my little opening comments, We expect that not before the end of the year. So and I think I said that, at least I was hoping I said it. So we see signals that by the end of the year, There could be re openings in Asia Pacific. We have very good talks going on between the German government and the Singapore government, for example, on Singapore And also on the important markets of Japan and China, we see that there is also progress in Asia now fighting the pandemic. So that's one indicator and the other one is our bilateral talks with the governments or our home governments and the governments in Asia And even India, as you see, is recovering and the demand has been very strong compared to a few weeks ago in and out of India. So And there's also people finding their ways. We have people going via the Maldives to get into the U. S. There's a lot of new O and D Your creativity on connecting, but of course, big volumes will come from opening. On the U. S, indeed, we see some good bookings for the U. S. Also from the point of sales Europe. I think there's not a single Businessman or businesswoman who does business with U. S. Who doesn't want to go there in the fall. And again, I see like you what was announced That's not as positive, but even with only basically selling tickets on the one side and don't forget this enormous cargo yields. I mean the best yields in the network Between Europe and the U. S, it's amazing. So even flights which are not full are very profitable and we are filling up Now also the passenger cabin with basically Americans or others who have passports to enter the U. S. So your answer to your question is yes, but even without a yes, I would be optimistic for the North Atlantic also in the fall. 350s, also the answer is a clear yes. We've indicated before, We will increase the share of leased aircraft in Lufthansa compared to the last years. We'll still be behind many competitors as We are starting basically from 90% owned and 10% leased. But again, the answer you asked is answered with a clear the question you answered, you can't post this answer with Yes. On our forced redundancies, we have our discussions more or less On track with all labor groups that we will have another we have enough people leaving on the ground As indicated before, so I think there we are on track. On Germany, we will probably can live without forced dismissals if we get Some more details worked out. On cabin crews in Germany, we did long term contract avoiding Force dismissals and there will be a volunteer program in the fall, which will create another probably 4 digit number of people leaving in the cabin. And on the cockpit, let's not forget, we do have agreements with the majority of our pilots in the group. It's only one pilot group we don't have agreements with yet, which is the Pilots of the main airline and the pilots of cargo, which are less than 50%. For those, we of course have now reduced the pressure by the fact that Hopefully 380 will find agreements with us, details to be worked out to leave. And then we'll see do we get what we had Offered before, mandatory part time for everybody remaining, allowing us to keep everybody on board. If we cannot agree on mandatory part time, The surplus have the 12 suburb of people will end up in forced dismissals. Again, I think there's a good chance to avoid that if we have this time The union agreeing with us, as you probably know last time, we had an agreement and the union voted veto against that, which stopped it. I don't think that will happen again. Okay, perfect. Thanks very much and have a good summer. Same to you. Make sure you fly. The next question comes from the line of Alex Irvin with Bernstein Research. Please go ahead. Hi, good morning, all as well. First question is on your fleet, please. So you still have a significant number of long haul aircraft, including types you've previously said you're planning to phase out. Can you please talk a little bit about the plan here when you're intending to do this and what is driving those timing decisions? And then second one, maybe looking a bit further out into the cycle. You talked already about wanting to keep CapEx in the near term below or basically in line with depreciation. But how are you thinking about this more strategically as we get into mid to late cycle? How will you manage free cash flow As we get into mid to late cycle, how will you manage free cash flow over time? And what does that mean for CapEx into sort of the later half of the 2020s, please? Yes. Good morning, Alex. On The fleets, as I mentioned before, we will be turning taking away 9 sub fleets over the next years. If you rather conferring to long range only, for example, the 380 obviously will not come back. The 346 will only be brought back for 2 years to make sure we have enough capacity in Munich, including the premium cabin, then is replaced by 350s. The MD-eleven will be leaving the fleet as it looks now in October. 343s will be leaving the fleet by the mid of the decade. 777s in Austrian, we are looking at and 767s we are looking to retire. So indeed we are In line with our previous announcements that we will use this crisis and the redimensioning of Lufthansa to have a major modernization, especially on the long range side. And Coming back to Andrew's questions, we are adding not only 787s, but also 350s, both owned and leased to accelerate the modernization. Overall, there is a decommission of 150 aircraft, 115 already put away sold or shredded. So we are on track with that modernization. CapEx, don't you give us 2 details? Yes. Let me take. Yes, we have clearly said that for the CapEx, we want the CapEx to be in line with the depreciation and amortization, and we have given a €2,500,000,000 number there. That is there for the foreseeable future, for at least for 2023, 2024. Afterwards, the normal value creation logic would apply, correct? And is there significant growth with value creation which require more CapEx? Then of course, we will consider because it's all about value creation. If the growth is in a normal line, we would continue the practices we would do for 'twenty three, 'twenty four. There is no reason to Go in any different modes than we will do now in the coming years. Great. Can I just follow-up on that answer, please? So you're talking about value creation. Does your assessment of that change given the severity of this crisis compared to what you would have Thoughts about prior to 2020? I think when you look, what we are Currently really looking at this getting out of this crisis as a much stronger company, as Carsten has said, to use this crisis To really transform the company to be agile faster and to be back at very good profitability levels, very good ROIC levels And have a consistent free cash flow generation. That's what we want to realize, not only for the short term, but also for the longer term. If you think about after 2025, of course, a lot of things could happen. Of course, we have Strategic plans in the background, but that is not for me to comment at all, on this point in time. But still, the Lloyd Jacob EBIT, I see and free cash flow remains also after those years, but I can't comment exactly what we're going to do in those years. That wouldn't be very smart for me. Thanks very much. The next question comes from the line of Johannes Braun with Stifel. Please go ahead. Yes. Thank you. Actually, I just have one left. So obviously, free cash flow being positive in Q2, cash burn will be stopped in Q3. 3. Question would be, are there any new thoughts on the sizing of the capital increase? And probably related to that, also any new Thoughts on the planned divestment, so AirPlus, LSG and then later MRO as well? Thank you. Yes. I think as we said before, we can only share details once we announce, Greg. It's the same as M and A. It's very it's not very wise to exactly lay out. It will be dependent, as we said before, on the situation of the capital market situation with WF. Clearly, some of the numbers which are out are in the press. We have also indicated we believe they are much too high, which are out there. And with that, I would like to leave that comment on the size of the capital raise. With regard to divestments, as I said in my speech, nothing changed with the direction we want to go with AirPlus and LNG Rest of the World. Once we can realize the right value for those business and equally find the right home for those businesses and the employees of those businesses, we Of those businesses, we will execute upon those. That's more likely to be next year than it's going to be this year. We also said that on Technik, We have taken on an investment bank to evaluate the options and that the decision we target to take by the end of this year If we proceed with that or not. So 100% commitment to move on and in line with also what we have said since the beginning of this year. Okay. Thank you. The next question comes from the line of Carolina Doris with Morgan Stanley. Please go ahead. Hi, good morning. I have two questions. Taking into consideration the reduction in the fleet and the employees, So, right, if the demand is there, what's the maximum capacity that we could be operating at year end? And my second question is, We've been hearing from some of the U. S. Airlines that they've been seeing some softening in bookings given the delta variance there. Have you seen anything like it? I know it's strong versus way it was in the Q2, but there's been any softness given the decreasing concerns on the delta variant there? So on the flexibility for year end, I think we can easily add another 10% to 15% if The market is there. To be honest, everybody is so eager to work here. We probably could add another 5 if we really need to. So I am not worried about that flexibility. We got the aircraft are there. We are retraining all the pilots now. By next month, we have retrained every single 320 pilot, which of course is the biggest part of fleet. So that I think flexibility is there if we need it. On bookings, they are still increasing, as we mentioned, not as Steep, of course, as they did in the early summer and it's difficult to say what's coming from the fact that people now have booked their summer holidays, what's coming from the fact that the Delta variant Has created some new restrictions, but overall I think it's visible that with double vaccination you are able to travel around the world even in the U. S. Soon hopefully. So I think that delta variant is causing less issues for our industries than it has in probably for other parts of Dealing with the pandemic. And I learned that in any pandemic, evolving variants Are part of a pandemic. So I think the world is getting used to that now and experts have expected nothing else. And in the end, it comes back to vaccination nothing Ladies and gentlemen, in the interest of time, we have to stop the Q and A session. There will now be a short break before we continue with the German Press Q and A. Thank you. Thank you. The next step will come from William Wilkes with Bloomberg News. Hello and good morning, Andy. Good morning, William. Thank you for that question. What I think I've said before, and be very consistent on this, is that we want to get our capital structure back in place Three measures. One is to get back to a profitable company because that on the long runs is a good way Secondly, we have also committed on the divestments, which both help on the capital structure on the debt, but also on the equity side. And that, as I said We are further progressing, although that will more likely happen next year than this year. You have also seen that in the beginning of This year, we were helped on the pension side on the equity that we got €1,700,000,000 to €1,800,000,000 help on the equity side, Although we never know what will happen in the future, but for the moment that does help. And again, as I said before, we have the divestment next year. So In that context, we, of course, evaluate what is needed. Equity is the most scariest, and you have the most careful way of Financing with new equity because it's not good for existing shareholders. And in that sense, we're evaluating that with our banks what The right amount is we also evaluated against the interest from the investors in that respect. And then we are looking as well at larger investors and the approval we also need from the WSF. And that in whole context we decide upon this. As before, there was in the press numbers of €3,000,000,000 4,000,000,000 mentioned. And against that number, I think it is significantly less. What the exact number is, I can't comment on. As we said before, that we will only announce that we have to decide it because that is only the right thing to do. Thank you. Thank you. Thank you, William. And we come to the next one. If I Ramko here, if I can answer that question in English. Yes, please. Thank you very much. As we have said that on the mid long We want to become again investment grade, correct? And that is a certain ratio Between the profitability and the amount of net debt, which roughly is around 3% or below 3%. That is how S and P and Moody's Look at this, and that is what we would strive, correct? So that is, of course, not only dependent on equity, it is more on the debt situation. And of course, That amount you can have relates again to equity. Then you come back to the economic and non economic principle. It has a healthy balance sheet and a healthy balance sheet is also being categorized to being an investment grade company. And that is our target. Yes. Thank you very much for giving us color on the issues. Thank you. In English, if you like, a question about your commitments about the reduction of the extra positions until 2024. When you look at United States, you have seen a quick recovery and airlines are struggling to meet operation schedules. And some airlines have announced the rehiring of staff. What is your position on the further 5,000 Positions that you plan to skip until 2023, will this be necessary if you see an extra quick recovery in the next 2 years? Yeah. Thanks for your question. By the way, also we are rehiring already. Like in the U. S, We are rehiring. We are hiring Eurowings. We are hiring Eurowings Discoverer. So it's not either or. We will be very soon Start again our pilot program and start to train pilots again. So the U. S. Fired a lot of people very quickly. So they are rehiring people. We never actually fired. So in our case, we had short term schemes or we just Kept people on the payroll even though we didn't have work for them, obviously much more social environment here than we see it in the U. S. So what they are doing to fire people and then we hire Some people in the U. S. Have been hired and rehired by the same airline 3, 4 times. We don't do that here. But the core of your question, We obviously estimate how many aircraft we will operate in 2024, how many people will be operated in the various airlines. So some of the airlines will be shrinking more than the others and that's why we are confident that the additional 5,000 people will be asking to leave is still the applicable number. But if we believe that number could be too high, we obviously would use it. So, it's always a moving target. Okay. Thank you. Thank you. Thank you very much, Richard. And we come now to the last question, the Letse Frager, Victoria Brine. Hello. Your questions,