Earnings Call: Q1 2021

Apr 27, 2021

Good day, ladies and gentlemen. I'm Mertka Salonen from Finnair IR, and it's my pleasure to welcome you all to Finnair's Q1 2021 earnings call. I have here with me Finnair's CEO, Mr. Toppy Mannar, and he is joined by the CFO, Mr. Mikael Styrkinen, for the Q and A session. I will now turn this call over to you, Toppy. Please go ahead. Thank you, Hakan, and good day, everybody. Thank you for joining this quarterly earnings call once again. And this. Let's recap the Q1 this year from a Finnair perspective. This was Another pandemic month quarter for us. And the pandemic mitigation actions continued at Finnair. We adjusted costs, both temporary costs as well as permanent costs, this. And we continued the financing actions. And now on the back of the progress in vaccinations, this. You most likely noticed that during the weekend, the global vaccinations passed the milestone of 1,000,000,000 vaccinations. We see that the vaccinations are accelerating in speed, and that will be enabling a gradual lift of travel restrictions during the course of the summer, and thereby, we expect this. That a more meaningful travel recovery will gradually take place from late summer onwards. So if we look at the Q1, we flew this. Approximately 75 passenger flights per day, carrying on average 3,000 passengers. This. That is something like 10% of the pre pandemic levels. In terms of destinations, the Finnish Lapland destinations were among the most popular, and that was that traffic was effectively a bright spot in our offering. After a year of not flying to North America, We were able to reopen our flights to New York in March, and that is heavily supported by cargo demand. Since end of January, we have requested from all passengers the preflight negative COVID test in accordance with the recommendation of Finnish health authorities. We also during the quarter, we introduced one way fares, and those have been Welcome by our customers and a meaningful share of our tickets are now Soledaz one wayfares. Customer satisfaction remained at very high levels, actually record high levels, the net promoter score for the quarter being 54. This. For cargo, the quarter was very strong, while the passenger revenue remained weak. We flew 5 47 cargo only flights during the quarter. And actually, on monthly basis, the month of March was our all time best in terms of cargo revenue. The Suez Canal blockage did not have A big impact on cargo revenue during the Q1, but we see that this. The impact of that blockage to global supply change and to the cargo market overall will be supportive the next question. As we have been mentioning previously, the good cargo demand also enables long haul passenger flights. This. That is the case with New York, and that is the case with our long haul flights to Asia. The cargo development Price development per tonne has been notable during the past months and during the course of the whole pandemic. In comparison to previous quarter, the prices increased by onethree. And in comparison to pre pandemic levels, the prices have increased 200%. So very notable development taking place on that front. What we see increasingly also in cargo business that the short northern route, being also the most CO2 efficient this is a competitive advantage because our customers, for example, the Norwegian Salomon Companies and others are increasingly focused on their sustainability goals and increasingly mindful the CO2 emissions in their entire value chain. And this is something that we can leverage Cargoes business now and going forward. Altogether, during Q1, Cargo was clearly more than 50% of our total revenue as illustrated by the bars on the right hand side of the picture. When we look at the Q1 numbers, the revenue landed at €114,000,000 so a notch better than during the Q4. This. And this was clearly driven by the Cargo business, as mentioned. In terms of costs, this. We basically proceeded as expected. And our comparable operating result landed at the minus EUR 143,000,000. When comparing with the previous quarter, we will need to remember that there we had this one very sizable positive one off related to our pension arrangements. And in comparison to Q1 last year, we will need to remember that, that was the first quarter when the pandemic started to take its toll, especially during the course of March this when we needed to ramp down basically the entire network as the lockdown started across the world. We are taking good steps forward in our savings program, cost saving program that aims for permanent cost savings. And we will be reaching Our target of €140,000,000 ahead of time. And with that, we are able to increase the target to 100 €70,000,000 We have been taking significant steps forward. We have been basically revamping all of our headquarter functions, applying sort of 0 budgeting to as a method to these units. And we have been reducing during the course of the fall and winter approximately 30% of our staff in these units. As late as yesterday, we completed a significant project related to our IT infrastructure, moving all of our data this from a physical data center to a cloud based IT architecture. And that means that As of today, we are an all cloud company when it comes to data. This. We are reducing the square meters in our office premises quite significantly, to 40% reduction in these premises. This is partially driven by the decreased headcount in the headquarter functions, but also partially driven by the fact that we estimate that people will be at least partly working more remotely going forward. And this kind of a hybrid way of working will be reducing our office space need going forward. On the maintenance and operations side, this. We have been also able to realize some significant cost savings. On that space as well as Across the board, we have been renegotiating basically all of our supplier agreements, and we have been this. So all of these measures are examples Of the kind of measures where we have been exceeding our original targets, and these this, enabling us to increase the permanent cost savings target right now. We will turn every stone in order to find these cost savings, and this. We push forward. We have been setting stretched targets for our entire organization, and we are confident that we will be reaching the new target of €170,000,000 And if and when we reach that, We are not stopping at that. We will be pushing for more as we do realize that cost competitiveness will be crucially important for us to be competitive on the marketplace post pandemic and us to be able to pay back the debts that we are accumulating by means of increased profitability. So when we look at the headline number of EUR 170,000,000 this of permanent cost savings. I think that the good comparison point would be the operating result of 2019, which was €162,000,000 in terms of EBIT. So all other things equal, this would be doubling our profitability this in comparison to 2019. When we take a closer look at the composition of the cost saving target. Euros 65,000,000 of the saving target are related to fixed costs this. And €105,000,000 are related to Maraeppol unit costs the That are of permanent nature. So that gives you an idea of the dynamics this and how that will be reflected in our P and L depending on how the volumes will be coming back. This. In terms of cash, the negative cash flow during the quarter amounted to €158,000,000 this. What we are seeing now is that the working capital impact on the cash flow is clearly stabilizing this in comparison to last fall when we still had quite a bit of the refunds to take care of. This. At the end of the quarter, we had €665,000,000 of cash at hand this. And available undrawn credit facilities amounted to EUR 575,000,000 That includes the SEK 400,000,000 hybrid loan that we have been agreeing with the government of Finland, to which we have an EU Commission approval to EUR 350,000,000 We will be seeking for the additional approval from EU Commission for the remaining €50,000,000 at a later stage. We also renegotiated our revolving credit facility, the covenant, the gearing covenant this during the quarter, and that revolver remains in our disposal. This. So altogether, putting this liquidity together, it amounts to EUR 1.2 EUR 2,000,000,000 roughly. And that would be with the burn rate of Q1, that would be this. Enough for 8 quarters to come. But as stated, we do expect that the demand will be gradually picking up from this late summer onwards. Taking a look at the balance sheet. Our equity ratio is currently at 22.7%, so still on healthy levels after more than a year this of the pandemic situation. The gearing is increasing, but what is worthwhile to note is that the SEK 400,000,000 hybrid loan increases our equity buffers, and it's not included in the numbers on this page. As stated, it is all about building the long term competitiveness this now. And cost competitiveness will be a big part of this. We have been comparing ourselves visavis the competitors this. In the Asian long haul traffic and when we look at the CASK numbers, we see that we are comparing well toward our Asian competitors and even better toward our European Competitors. Customer and Products It's another major headline for us. And here, we will be redefining and refocusing our core products, the basic product, what is included in the basic fare. And we will be creating new revenue streams to ourselves from ancillary business, and we will be focusing strongly, much more strongly than previously to direct distribution. And with the help of the retailing capabilities boost the usage of Finnair.com not only in our Nordic home markets, but internationally, gradually in Europe and in our key markets in Asia. So the distribution transformation is a big part of our agenda. We have also continued investments to in flight customer experience. And premium economy as a new travel class. We'll be part of our plans going forward. And we do think that premium leisure this as a segment will be increasingly important for an airline like us post pandemic. In terms of agility and flexibility, I think that during the pandemic, we have been really learning new ways of working. As an organization, we are less hierarchical, more entrepreneurial this now. And I'm sure that, that will be serving our purpose going forward. Committed personnel is really key to our plans. And on that front, we have been taking steps forward during the past days. We just yesterday announced that we have come to an agreement with our pilots, with our pilot union of a new collective agreement for 3.5 years to come. So the CLA is a groundbreaking agreement in many ways. It brings predictability to our business. It increases the flexibility of our business. We already have a quite seasonal demand structure, and we estimate that, that seasonality We'll be further increasing post pandemic if there will be a degree of hit in the corporate travel. And this CLA enables us to address that seasonality better going forward. We are also moving from a purely seniority based salary model into a vacancy based salary model. And therefore, we are simplifying many of the old structures in our CLA and optimizing the usage the next question of our pilot resources. So a very, very important deal and a very important building block in the rebuild efforts of Finnair. This. Looking forward, we are now preparing for a gradual increase in the traffic during the course of the summer. This. The first eligibility trainings for our flying crews have begun. The Pilots will go through simulator training. The capping crews go through their sort of travel and service related training for several days. But when the trainings are done, they will go back to furloughs. And once we start this. Flying more, then they will be called back on a relatively short notice. And that this enables us to flexibly manage the cost and manage the resourcing. We yesterday announced our summer network, the network that we are starting with, and that includes over 60 destinations. So the summer destinations include countries like Spain, Italy and Greece. And on the back of a rapidly increasing vaccine penetration in the U. S, we estimate that the travel restrictions will be lift it towards the end of June. And thereby, we are introducing and reopening Chicago and Los Angeles as new destinations, and we will be also adding frequencies to New York. This. We will be keeping a close eye on the demand development, and we stand ready to add frequencies and flights this hand in hand with demand as travel restrictions are loosened. We are continuing our comprehensive flight health and safety related measures. And last week, we also announced that we are, from 11th May onwards, accepting vaccination certificate as an alternative to negative COVID test as the vaccine coverage increases rapidly in the markets that are relevant to us. We also enabled customers to book with confidence this. So that they can transfer their bookings without any fees flexibly if the bookings are made before 1st September. Also the corona cover is extended for bookings made by end of June at the latest. And with this, we hope that customers are able to move from travel related dreaming to travel booking and then onwards to actual travel experience during the course of the summer. There has been a lot of talk of government exit plans. I guess in many countries, the Finnish government also announced its own exit plan. And while that plan is a very high level plan, very good part of it is that Finnish government is committed to EU Digital Green Certificate this as the basis for reopening travel. And EU Digital Green Certificate, Which by definition, restores free movement in EU indeed is a big part of our plans, and we expect that to promote travel across Europe from late June onwards when it is supposed to be decided. This. Getting travel arrangements and travel agreements with Countries outside of EU will be very important, and we will be working very closely with our government to get those arrangements in place, both in Asia as well as in North America. And we do understand that discussion. Especially related to U. S, EU is also taking steps forward. We have been having a joint task force with a number of local parties that are relevant to health and safety measures. And then we will be separately publishing a report on those recommendations later today. So when we look at the outlook and guidance for Q2. We are reiterating the essence of our guidance for previous quarters. And as stated, we expect that the gradual recovery of demand will take place from late summer onwards this and thereby from Q3 onwards. This. I stop at this. So thank you for listening, and then I think that it is time to go for questions. The. This. And we have a question from the line of Jaakko Tuvanin from SEB. Please go ahead. Yes. Good afternoon, everyone. A couple of questions from my side, if I may. I would like to repeat the same question I had last time and by asking you what is your current take on the long haul traffic recovery, I. E, will it lack the intra European traffic with some 2 to 3 months, which I recall was the kind of the answer last time. And a follow-up on this. Could you elaborate a bit more around the Chinese restrictions currently? And what is your take When they will accept and kind of European COVID passport or certificate in order to passengers enter the country? Or will there be additional country specific requirements in China specific, but also to other Asian countries? Thanks. Between European travel and the Asian travel. This. Then we can repeat what we commented in the last call. This. So we see the situation in similar fashion currently. When we look at the vaccination the speed in Asia. It differs quite a bit between countries. Now lately, we have been this. Hearing cautiously encouraging news from China in terms of vaccination, it seems that this. The total volume of people vaccinated in China has exceeded 200,000,000 now. And when we talk to our local sources, our local people, local research firms and, for example, to Finnish Embassy in Beijing. They are stating this. The vaccination coverage in bigger cities is actually quite high as of now. For example, in Beijing, the vaccination coverage seems to be above 40% this as of now. Now we don't know how that will translate into lifting of the travel restrictions. So that is an open question, and that remains ECB scene. Of course, from an aviation perspective, from a global trade perspective, if you will, this. It would be well advised if the bigger cities in China this. And then that would be enabling the lifting of some of the travel restrictions during the course of the fall. This. China has communicated a target of vaccinating approximately 40% of its population this by July. And then that is something that we estimate that they can stick to. Vaccination speed in Japan has been notably slower. So that is something that we are observing closely as we speak. We also see something similar in South Korea, although very lately this. The vaccination speed in South Korea has been accelerating quite a bit. And then there are individual countries like Singapore, where the start was slower, but which have been gaining a lot of speed this in terms of vaccinations. So this would be probably how we would be seeing the Asian situation on the overall. India, obviously, it is a case of its own. This. And that is something that we will need to consider as a separate this. India's role in our entire network before the pandemic was not significant. We basically only flew to Delhi. Okay. Thank you very much. Very helpful. Then on the also on the kind of a short term demand, what is your current understanding On the level of pent up demand for leisure traveling, I. E, will the customers accept higher fares and just Want to go abroad regardless the price level. Could you elaborate a bit on the yield expectation in short term. This is, of course, an important question. And we do see a lot of pent up demand at this point of time. I mean, based on customer research, We have seen the global example. I mean, the domestic traffic in the U. S. Recovering very, very fast this during the past month or 2. And on a smaller scale, we see the The pent up demand also materializing in the bookings for our sun tours part of the business. There, the bookings have been increasing clearly during the past weeks. Some of the bookings are for summer, this. But predominantly, the bookings are for next fall and next winter. What is happening in that part of the business is That would be a small indication of customers' willingness to pay post pandemic. But at the same time, we do think that the competition will be tough once the Travel restrictions are lifted. And therefore, we will be we estimate that this. Many competitors will be deploying capacity, and that will be impacting the yield environment as well. So when it comes to a little bit more long term picture, we are not calculating on increased unit revenue. Rather, we want to be more cost competitive, and we will be pushing forward this with our permanent cost savings program. Excellent. A follow-up on the competition. Have you evidenced any new arrivals entering the Helsinki market as we know that Norwegian, at least according to their current plan. We'll basically serve just a couple of Nordic routes from Helsinki. But have you evidenced any new arrivals entering the market this. Not at this stage. So of course, this remains to be seen. And we are, of course, observant about the customers that Norwegian is leaving behind, so to speak, and we want to grab our fair share of those customers. Right. Then one technical question on the costs. I noticed your maintenance costs were on a relatively low level. What was the impact of weaker dollar and higher discount rate you have there for the reserves on this coastline. And also what will be the impact of the ramp up cost in maintenance coastline when you start to take more fleet into use. Discount rate impact in Q3 was 3,000,000 positive. This. And the maintenance cost, we will we are really cash conscious during the ramp up, so We will optimize the maintenance cost very carefully. This. So that's what I can say about the maintenance cost. Okay. Thank you very much, sir. That's all from my side at this point. And the next question call. Thank you for taking my question. First of all, so basically what I wanted to understand, just to follow-up On the trading question, so now you mentioned that you're opening the bookings in May and then you opened the flights in May June. And I believe you must have opened the flights in the system. So how the forward bookings this. Looking like at this point of time for Asia, for North Atlantic and then for America for Europe, please, if you could discuss that. As stated, it is early days because we have been having, of course, some flights published during the past months. And we have basically have we have not had any active marketing this on that one. We published our summer network yesterday, and now we will be gradually ramping up our marketing efforts. So the bookings the forward bookings this. Still subdued going forward, but as stated, we estimate this. We will be seeing gradually increasing bookings toward summer as the vaccination coverage increases. In our Santours part of the business, the booking window is notably longer. And as stated there, we have been seeing a notable pickup the off bookings during the past weeks. Right. Okay. Understood. The other thing I also wanted to understand, in terms of the slots. So previously, of course, most of airports have allowed airlines Not to lose the slots even if they're not flying, but now of course, how long you enjoyed that this exemption. I mean, so I mean, is this still the case or now I mean, if you don't fly, you will lose the slot. How is that situation in especially in Hong Kong, China? Yes. I mean if we start from the European end, the European slot regulator has been updating the slot rules. And with the updated rules, we can safeguard the important slots for summer 2022. So and with important slots, I referred to those slots on key European airports on the most congested airports that would be critical for our Europe, Asia connectivity. This. So that's where we are. This coming summer, summer 2022, I mean, the slot rules have been postponed until end of June. So the slot waiver is in place. And then this. We foresee that the pandemic still will be impacting the demand picture during this summer, and therefore, it is possible to find the slots on ad hoc basis during this summer. When it comes to key slots in Asia, this. The travel restrictions are more stringent in Asia currently in the key countries, and Therefore, there's no danger of losing key slots at this point of time in Asia. Right, right. Okay, understood. Fair enough. The other thing also, Just wanted a bit more detail about this about your deal with the pilots. So you mentioned that you have reached an agreement and that will help you to be more flexible. But could you please elaborate a bit more in terms of what kind of deal I mean how much salary you need to increase? So if you could please explain a bit more on that, that would be helpful. One part of the agreement is the so called scope that will be enabling us to use, for example, wet lease capacity, Clearly, more than previously, to address some of the seasonality in the traffic. So That's improving the operational flexibility of the company. And then the other key part of the new agreement is the new salary structure that I mentioned. Okay. Right. Okay. Other thing I also wanted to understand about the details Regarding this hybrid loan, so according to the statement, of course, you can use €350,000,000 provided Your equity falls below certain level. So just want to understand, if you could please elaborate that a bit more on the hybrid loan? This. Sorry, we can't disclose anything more what we have disclosed. So We need to follow our policy on guidance sorry, on disclosure. Okay. No worries. On the finally on the cargo, I mean, so you of course the cargo was this quarter was very strong in terms of cargo business. But how do you see cargo business going ahead? And especially once you resume your passenger business, How would that have an impact on the cargo business definitely in terms of cargo capacity, but otherwise also, I mean, how do you see the cargo business going ahead? This. Yes. We see they on the short term, we see the cargo business enjoying Of a good demand environment and good price environment. And as stated, the Suez Canal blockage and the unwinding of that in terms of cargo will most likely be supportive to the cargo business during the next couple of months. We see this this cargo momentum to continue until a more meaningful amount of passenger flights, this. Long haul passenger flights are restored. And when that happens, then of course, There will be more pelicargo capacity out there and then that will be impacting the airfreight demand environment as well as the price environment. What is the big outstanding in this one is that what obviously happens on the shipping side and then what will be the impact of that to global value change. But on that one, we really cannot speculate at this point of time. Okay. Fair enough. Fine. Thank you so much and good luck. And we have one more question On the line of Giovanni Caforio from Lexcor Capital. Please go ahead. Hi, guys. This is actually Nicolas from Giovanni I have a couple of questions really. The first one Is on I mean, you had this EBIT margin target pre COVID and pre all this mess of sort of Aiming to get to 7.5%. Now obviously, as you said, the cost savings are a big plus. But I guess against that, you have sort of CO2 prices, etcetera, fuel prices moving back up. And obviously, other airlines are also cutting costs, right? So Ultimately, what's the yield? I mean, you addressed that, I guess, earlier. But I think my question is really, do you sort of Think the 7.5% target, if you sort of think 2, 3, 4 years out, is that sort of where you think the business can be in a few years' time? Why is that sort of more difficult or maybe actually easier in a sort of post COVID world? We are currently updating our strategy, and that strategy will be building on the key cornerstones of our strategy before. So we will be all about connecting Europe and Asia. We want to be a modern premium airline, sustainability will be important for us and so forth. In connection to this strategy update, we will be also updating our long term financial targets. And We will be making that strategy public probably toward the latter part of the year end of the year. The exact timing is not decided at this point of time. But what we do want to see is that the traffic is coming back this first. And we do want to see or we do want to have a better understanding of the competitive environment and the impact of that to yields. And then I think that we will be better positioned to address this particular question. What remains clear, however, is that with the savings package of permanent cost savings. We are improving our underlying profitability parameters quite significantly, and we will be better equipped to tackle the competition in the post pandemic world. As stated, we are comparing well to our key competitors, both Asian and European, this in the Asian traffic part of the business. And based on what we have seen, our target of a permanent cost savings is also more ambitious this than some of the competitors are having. Thank you. Thank you very much. And I guess sort of Second question would be, so I understand that from a sort of accounting perspective, the hybrid is sort of seen largely as sort of debt sort of as equity. But I guess I'm minded to look at it a bit also as being sort of debt here as opposed to straight equity. And I guess, you have a market cap of sort of way above EUR 1,000,000,000. Again, this. The market is wide open. Isn't that sort of a temptation? Or isn't that sort of a ultimately, We're in a much stronger position to actually go for some sort of proper equity here, considering that It might be a year until next summer maybe where you have sort of proper cash flows again. That is not part of our plans. So as stated, when we look at our balance sheet and when we look at the current scenarios to the Of the demand coming back, no matter whether we are talking about the base case or whether we are talking this. About the pessimistic case, we feel that the needs of the balance sheet are addressed by this hybrid arrangement. And the key reason for us liking the hybrid instrument, and now I refer to the SEK 400,000,000 hybrid loan with the state of Finland is that We can draw on that one flexibly based on needs. So in this uncertain environment, this. That aspect of the hybrid loan comes in handy. Right. But if you think about the free cash flow, this. Do you think that the I mean, it looks to us that we probably might have to wait until next summer, meaning summer 'twenty two to get us a properly positive cash flow. Does that sort of make sense? Or do you think we could be sort of positively surprised, yes? It's that's not true. So You need to remember that operating cash flow turns positive around 2 months before the EBITDA turns positive. This. And when EBITDA is, let's say, well in black, so operating cash flow is also well in black. And this. Our upcoming investment cash flows are quite small going forward because we won't it's basically this. Some investments to our current fleet and some cabin retrofits, and that's it. This. We have only 3 wide body orders in place. The next one is already financed. This. And hence, the investment cash flow part of the equation is quite small actually. This. And as stated, the working capital impact, when we grow from this current level and we have already repaid all of the refunds unlike some of our peers. So you need to remember that we had a very negative working capital dynamics last year. But when the growth starts, it's vice versa. Right. And And when it comes to the investment cash flows, what we have been stating previously is that whereas before the pandemic, there was a discussion about narrow body investment at Finnair. We have stated that this narrow body investment is still part of our long term plans, but it is not actual for next couple of years. This. So instead, in terms of the fleet management, we will be working this. And this. And just a last question then because obviously, there's sort of operating and investing cash flow, there's also sort of financial expenses that you although, I mean, they're part of the operating cash flow, I guess. But just can you help us out here? Is this sort of Q1 financial expenses something that one should annualize at this point? Or would you sort of how do we think of what sort of annualized 2021 financial expenses of NGP. Financial expenses paid net, I. E, that part, what's in the operating cash flow, this. Slightly less during the rest of the year than during Q1. So it's not foreseen to be as high as now, but a tad that smaller than currently. There are some Sort of like €30,000,000 a quarter or something along those lines. I was now talking about cash flow, but there are quarters when it's even below that. But in terms of cash flow, as you know, when you have an interest payment, you pay a coupon. So during that quarter, you have a higher cash flow outflow. But as said, on average, smaller than the previous quarter. And because of the hybrid, would that also sort of flow through that line? Or would it sort of be more like direct It's directly from equity. Right. Okay. So effectively, We can sort of see how you account for that over the period to get a better sense of So hybrid is How it accrues basically. Hybrid is equity, and hybrid coupon is directly from out of out from equity. This. Right. So, specifically, for the balance sheet, that amount is going to be increasing from on the part of this drawn from sort of as this. That's a good point sort of flowing through the balance sheet basically. Yes. Okay. Very clear. Thank you so much, guys. Thank you. And we have just one follow-up question from the line of Achal Kumar from HSBC. Please go ahead. Yes. Hi. Sorry, I did just two questions. 1, in terms of capacity, So although I understand that the situation is very fluid and there is a high uncertainty. But What will be your best guess in terms of your capacity? I mean is it fair to assume that your 2020 capacity in terms of ASK Would be about 50% of 2019? Or what is your best guess in case you need to talk about that? This. We're not speculating on that one. As stated, there are uncertainties related to How the demand will be coming back during the course of this year. And then we will be adapting our offering and deploying our capacity hand in hand with demand. This. So that is what we can say about that when we speak of this year. Okay. Right. And second question was about the CapEx and liquidity. So what is what will be the what will be your CapEx guidance for this year. I know it's too small, but what is the CapEx guidance for this year? And what is the cash burn rate you are expecting this year? CapEx for the full year was including Q1 was SEK 119,000,000. This. And as stated, the cash flows related to CapEx are this weighted towards the latter part of the year. So that's what I can say. This. So now during the Q1, the investment cash flow was extremely small. Now during the next 3 quarters. It will be a tad higher than that. Right. And then what will be your cash burn rate? Sorry. Please continue. No, sorry. I was just saying that and what will be your cash burn rate for this year? This. As said earlier, I start with the operating cash flow. So operating cash flow this. In our projection, it's seen to turn positive approximately 2 months before the EBITDA turns positive. And we See in our projections that EBITDA would turn positive in 1 of the summer months, Depending on the growth rate and how the traffic comes back. And then we in our projections, we have positive operating cash flow quarter. So but once again, it really depends on which scenario materializes. And then as stated earlier, year. So investment cash flow totaled a tad higher than SEK 100,000,000 for the year. And when we had a really small investment cash flow quarter after us so you can calculate roughly where the investment cash flow per quarter lands. This. Thank you so much. And we have another follow-up question from Jaakko Turvinen from SEB. Please go ahead. Yes. Another technical cost related question from my side. Your depreciation declined notably from the Q4 levels. Could you elaborate a bit more on what was behind this And where there's some exceptional items in the Q4. Also remember that you retired a couple of your old the 39s. Did those have some kind of impact on the comparison here? On the depreciation, We had some lease agreements for the right of where you capitalize the leases. This. And hence, when you do that and you, for instance, extend the lease and decrease the monthly lease cash payment so that when you do the IFRS 16 accounting treatment. So then you end up with a smaller depreciation. So That was visible there. But on the other hand, the depreciation of Q4 was abnormally high. So it was a this one off there. So when you look at the a bit longer term, so it was actually the other way around. So Q4 was a tad high compared to the kind of the run rate. Right. Thanks. And so should we expect the Q1 level to be a good proxy for going forward. Correct. However, as I said earlier, if We are looking for savings on the lease side. And if and when we are finalizing those, let's say, lower lease rates. Then when this right of use methodology is applied, then potentially, this. The depreciations would be lower, but we will report on those in due course. Excellent. Thank you very much. And we have just one more question from Richard Schumann from Evonci. Please go ahead. Good afternoon. I see on your Page 9 when you talk about the fleet renewal That you also mentioned the review of the short haul, medium haul fleet. And on Page 9, you say the time horizon of the remaining fleet investment plan will be reassessed, but you add the company will, in particular, follow the rapidly evolving aircraft market. What's exactly your time schedule when it comes to the renewal of the A320ceo family fleet. When we have been discussing about the narrow body campaign. Before the pandemic, we have been especially talking about the Airbus 320s and neos and similar aircraft from other providers. But as stated, this. Now on the back of the pandemic, narrow body investment is not this actual for us during the next couple of years. We still keep that as part of our long term plans, but then the time horizon is beyond this next couple of years that I mentioned. May I add a question? What do you mean exactly by the rapidly evolving aircraft market? Do you see opportunities to jump on When Raj offer may come along? Well, we talk in general about the aircraft market. There might be opportunities this. In the shorter term lease market, but it could also mean that we could use, for instance, leased engines because there might be opportunities there that it might make more sense to this. Instead of a major overhaul for an engine to lease an engine and stuff like that, so we are constantly this. Optimizing the cost of the fleet, and that's part of the equation. So we might end up I mean, theoretically speaking, we might end up leasing an aircraft or leasing an engine or then this buying an aircraft or buying an engine or doing an overhaul or maintenance event. So we are looking at the big picture and optimizing the cash flow. Okay. Thank you. And as there are no further questions, I'll hand it back for any closing remarks. This. Okay. As there are no further questions, I guess it's time to end the call. So we would like to thank you for the excellent questions and joining the call. We wish you a great day. Thank you for joining. Bye bye. Thank you.