Good day, ladies and gentlemen. I'm Erkka Salonen from Finnair IR, and it's my pleasure to welcome you all to this Finnair First Quarter 2020 Earnings Call. I have here with me Finnair's CEO, Mr. Topi Manner, and he is joined by the CFO, Mr. Mika Stirkkinen, for the Q&A session. And now I will turn this call over to Topi Manner. Please, Topi.
Thank you, Erkka, and welcome everybody, also on my behalf, to this Finnair Q1 earnings call. Thank you for putting the time aside and coming to attend this event. In terms of Q1 results, I think that this opening picture here tells the whole story. A winter has come to aviation. A cold breeze is blowing in aviation at large, and that certainly applies to Finnair as well. So our Q1 numbers are heavily impacted by the coronavirus situation, and our Q2 numbers will be even more impacted by the coronavirus situation. So if we just briefly recap how events unfolded during the Q1, the year started very well for us. January was a strong month. In retrospect, it feels almost like perfect. Then, of course, toward the end of January, the COVID-19 situation started to unfold in China, in Wuhan, in Hubei, with the lockdown measures, and in early February, we suspended our China flights. From mid-February onwards, we started to see decreasing demand on the back of the virus-related fears, also in our other traffic categories, namely Europe, domestic, and North American traffic. Come to March, then we first decreased our European network capacity with 20%.
Then the travel restrictions, border closures started to come in from different countries. On the March 18th , the U.S. closed its borders, effectively ceasing the transatlantic traffic. And during the course of that, we also announced that we will be moving into a minimum network that is less than 10% of our capacity. Aurinkomatkat also canceled all package tours until the end of June at that point. Due to this, our revenue fell with 16% during the quarter. We took decisive measures to adjust our network and our capacity. Our original plan was that during Q1, our capacity would have grown with some 10%, and now it ended up as decreasing with close to 10%. We also took decisive and timely measures to reduce our costs, basically going through all of our costs, also putting all of our staff on temporary layoffs, but due to the typical delay of these kinds of measures, our costs decreased with close to 5%, and this resulted in an operating loss of EUR 91.1 million, which is to be compared with EUR 60 million on the equivalent period during the previous year. Our passenger volumes fell with close to 16%, pretty much hand in hand with the revenue.
During this unprecedented time, the really good thing to see has been the feedback from our customers, which has been very positive, and they have appreciated our service. We have been communicating actively in all channels, not least the social media. In March, we gave the opportunity for our customers to reschedule their flights up until the end of November. We automatically extended the tier status of our Finnair Plus loyalty customers by six months because we felt that that is a fair thing to do, because these customers, under these circumstances, cannot fly and renew their tier status. We also introduced a voucher, a gift card, as an alternative for the refunds. Given the magnitude of our flight cancellations and given the magnitude of the refunds, there have been queues in our customer service, but our customer service staff has been doing exceptionally good work in terms of servicing the customers in a good and caring way, and this is certainly being acknowledged by the customers also in their feedback. And basically, this picture tells the whole story.
Our customer satisfaction, measured with Net Promoter Score, has been already on the high level vis-à-vis our peer group of airlines during the course of 2019, and now lately, we have seen the NPS improving. And in Q1, it reached the level of 43 as a quarterly average, and I think that that is just a great result. In these hardest of circumstances, our customer satisfaction is increasing. So we believe that this will be strengthening our brand in the long run. During times like this, customers' memory is long, and we also believe that this will make customers come back to fly with us as soon as it is possible, and the safety and health concerns are being addressed. So this is something that we are proud of, and I think that I'm particularly proud of the fantastic work that all of our staff have been doing in servicing the customers. This picture basically tells another story of how the events unfolded during the Q1. During the course of the Q1, we gave two profit warnings. The gray line here is our seat capacity indexed, and the blue line is our passenger numbers, effectively our demand.
And what you see here is that after the Chinese New Year peak in the very beginning of the year, things were relatively stable. We suspended our China flights. This early February is typically the slowest period in terms of China flying, and you cannot really see the impact of that in the passenger demand because that was, at the time, compensated by a strong demand in our European flying. But then, toward the end of February, we started to see the decline of forward-looking booking curves, also in other traffic categories, especially in Europe, and that is where we gave our first profit warning. Then, after the travel ban in the U.S., after our decision to move into the minimum network, after the forward booking curves were heavily impacted after mid-March, then we gave a second profit warning, also stating that our full year will be ending up with a clear loss. So the demand effectively came off a cliff, and this is something that commercial aviation has never seen in its 100-year history. The speed in collapse of demand has been unprecedented, as you well know.
When we just look at our traffic categories, I mean, the numbers tell a story of how the events unfolded from one geography to another during the quarter. Asia traffic category was the first hit, and there our revenue fell with 25% during the quarter. Europe held up well during January and February, but was hit in March, and there the revenue decreased with 10%. In North America, that was the latest hit by the virus. Our capacity increased with 16%. Our revenue fell with only 3%. But of course, at this point of time, the virus is a global phenomenon, and all of the airlines are in the same boat, no matter whether we are speaking Asia, Europe, or North America. As you know, we are hedging our fuel, and our hedging policy has been that for the next six months, always we hedge 75% of our fuel bill, and in these extraordinary circumstances, this very good practice backfired on us for two reasons.
First of all, given the reduction of flying, we did not consume the fuel that we were hedging for in the first place, and secondly, the oil market went crazy with Saudi Arabia and Russia quarreling about supply restrictions, and the oversupply of oil basically led to these completely unreal numbers in terms of oil price. During Q1, we benefited from the volume and price decrease a bit, but that was fully compensated by the hedging deviation and the strengthening of the dollar, so therefore, on quarterly comparison, our fuel bill basically stayed the same. In terms of hedging, we are utilizing IFRS rules in our accounting, and the oversupply overhead situation that we ended up with in Q2, given the minimum amount of flying, also meant that we needed to reclassify some of the financing expenses and book an additional cost item of EUR 55 million to Q1. In this kind of situation, of course, all eyes are turned on cash. Cash is king, and we started the quarter with good cash reserves, EUR 953 million to be exact. Our working capital has been changing, especially on the back of the refunds that we have been paying out.
We have been paying altogether EUR 144 million in terms of refunds. We also acquired one Airbus 350 during the quarter. We raised new debt in the form of revolving credit facility, and with that, at the end of the quarter, we had liquid assets amounting to EUR 833 million, which is a good figure given the size and scope of our operations, and to be precise, that figure is not excluding the EUR 600 million pension premium loan that we have as a backup facility, and that is also being guaranteed by the Government of Finland. The EUR 833 million is not including also the sale and leaseback arrangements that are part of our funding plan, where we have been advancing during the past weeks and days, and currently, we are in an advanced stage in those negotiations. Coming into the crisis, we had a strong cash-to-sales ratio of 31%. If we compare that with European network airlines, the average there has been 17%. So we have been, on relative terms, we have been having almost twice as much cash. And just a couple of months back, we were accused of being too conservative in terms of cash because, of course, that is costly in a zero-interest-rate environment.
But now that is working to our benefit. There are only two airlines in Europe, namely Ryanair and Wizz Air, that have a better cash-to-sales ratio than us. In addition to cash, of course, balance sheet is part of the main focus for all stakeholders with respect to any given airline. Given the losses that we booked during Q1, our equity ratio is decreasing from 25% to less than 20%. During the second quarter, we will be making an operating loss of EUR 2 million per day, meaning that there will be a further decrease of equity once we announce Q2 results. Today, we have also announced a rights issue of EUR 500 million that will be restoring our balance sheet, and that is a key element of our plan to come through the crisis as a competitive airline, as a strong airline that can also utilize the opportunities that might arise in the competitive landscape or possibilities that might arise, for example, in the area of refleeting, making fleet investments. The EUR 500 million rights issue is underwritten by our two arranger banks, and the Government of Finland, as our main owner, has been communicating that they are participating on pro-rata basis on this rights issue.
So this is strengthening us in this very difficult situation tremendously, and as stated, is a key part of our plan to come out strong from this crisis. We have been adjusting our cost base decisively. If we take depreciations out of the equation as a non-cash flow impacting item, we have been reducing our cost with 80% and are operating with that minimum cost level currently. We have basically taken all of those costs that can be taken out from the system. The remainder, the less than 20% that we have, are related to the minimum network of flying that we are currently doing, the cargo-only operations that are profitable in their own right that we are currently doing. And then, of course, we need to take care of all of our fleet, including the grounded fleet, so have those costs in technical services. We have minimum IT premises cost and all of those things. A lot of work has gone into adjusting our cost base. Of the operating loss of approximately EUR 2 million that we have per day during Q2, roughly half is depreciations and half is operating cost. So you can do the math that what is our cash burn in terms of operating cost in this very minimum scenario.
If we look at how are we operating as of now, we operate the minimum network that consists of 20 routes in Finland and in Europe currently. We have operated repatriation flights that we have been arranging in collaboration with the Finnish Foreign Ministry. And then we are operating cargo-only flights that serve a very important societal purpose. For example, the cargo that we are flying currently includes a lot of personal protective equipment, other medical supplies, for example, Corona test samples from Finland to South Korea, and then, of course, also normal air cargo. We have something like eight widebodies, or we'll soon next week have eight widebodies flying cargo-only flights, and as stated, given the fact that the price of cargo per ton has been increasing on the global market during the coronavirus hit, these flights are profitable on their own right. Looking forward, we expect that flying will start to gradually and slowly increase from the beginning of July onwards.
This, of course, will be heavily impacted by the pace with which the countries will be lifting the travel restrictions and the border closures, and we are observing that development very closely. During May, during the next couple of weeks, we will be releasing our traffic program for the rest of the year. But at the same time, we are preparing to flexibly adjust that program as we learn more about how the development of demand unfolds during the next weeks and months. Many airlines by now, and especially during the recent days, have been announcing drastic job cuts. Lately, British Airways, SAS, and some of the others, Icelandair. In our case, our plan is that we will continue with temporary layoffs. The Finnish legislation related to temporary layoffs is actually very flexible, and it suits this situation well because we are able to adjust our cost base as needs be, and then, of course, we are able to see how the demand develops and take actions once we have more certainty about the demand when it comes to permanent jobs.
We cannot rule out that we wouldn't be doing permanent job reductions later in the game, but as stated, for the time being, we are observing how the demand develops and taking steps accordingly. Then, if we look at how the aviation will develop during the next couple of years and what is our base case scenario for that, our estimate is that the recovery of flying will be slow, and it will be taking two to three years before the passenger volumes, in our case, will be returning to the levels of 2019. So these two to three years will be effectively a rebuild period for Finnair. And we expect that the whole aviation industry is not coming back to where it was in January. We are going into a new normal, into a new place, and there will be structural changes in our industry. There will be airlines that are not making it through the crisis. Many will be entering into a form of debt restructuring. Many airlines, almost all airlines, will be cutting capacity. The competitive dynamics will change, and all of the airlines, including us, will need to put a lot of focus on cost efficiency, including structural measures to remain competitive in the new normal of aviation.
And that is why we will be updating also our strategy. We think that the main parts of the strategy will be valid also in the post-Corona world, sustainability being in the core of our strategy, us aspiring to be a modern premium airline providing choice for our customers, us putting focus on operational excellence and operational efficiency, doing even more on that space, focusing on on-time performance, all of that. But what we will be reviewing is the growth rate of Finnair over the long run. And on the back of that, we will be reviewing the size and scope of our fleet investments and also the timing of our fleet investments. What all of this will mean is that the long-term financial targets that we communicated on our Capital Markets Day in November will be pushed out in time. At the same time, our hypothesis is that after this rebuild period of two to three years, aviation will come back to growth. And the growth might be smaller than we have seen in the past, and that would be affecting the growth rate of Finnair as well. But when aviation at large returns to growth, then Finnair aims to come back to sustainable, profitable growth.
What needs to be stated is that these numbers that we have been today communicated, of course, tell nothing about the underlying profitability of Finnair or the underlying competitiveness of Finnair. Our core strengths remain intact. We have fantastic people. We have a unique Finnair spirit. We have a loyal customer base. We have a strong brand. Our strategy of connecting Europe and Asia is based on sustainable geographical competitive advantage. We have a resilient culture, and we can operate in an agile fashion with the one company model that we are having. And we have a good ownership structure as witnessed by the willingness of our owners to support us with fresh capital.
So coming back to Q2 guidance, the visibility currently is low. We will be operating this minimum network of approximately 5% plus cargo-only flights. We estimate that we will be making a daily operating loss of approximately EUR 2 million. We have built various scenarios of how the development will be in aviation. You heard the base case, but we have especially operationally increased our flexibility and agility so that we can react fast when we have more clarity on the demand. And then we will be coming back with further updates in relation to our Q2 result in July. The key thing here is that we can see our way through the crisis. The capital injection that we will be receiving is a key part of that. We have a plan, and we intend to come out strong from this situation. Thank you.
And now would be a good time for questions, so please go ahead. Thank you.
If you'd like to ask a question, please signal by pressing star one on your telephone keypad. A voice prompt on the phone line will indicate when your line is open. Please state your name before posing your question. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. Again, that's star one if you'd like to ask a question. Our first questioner.
Hi, it's Jaakko Tyrväinen from SEB Helsinki. Can you hear me?
We can. Hi, Jaakko.
Yes, hi. I would love to ask you more about [audio distortion] I would like to ask more about the effective recovery in the second half of the year. I mean, it must be rather difficult also to use to start to put capacity in place with really, really uncertain demand. So what should we expect in terms of capacity for the second half of the year?
As stated, we will be releasing our traffic program in a couple of weeks. And what we will be doing now during these upcoming days is that we are really observing closely what countries will be doing in terms of lifting their travel restrictions. We, for example, saw Greece announcing their decisions just lately. And we would be expecting these kinds of news coming in now during the next couple of days and some weeks. So that will be providing more clarity to the schedule. As stated, we expect the traffic to be sort of restarted beyond this minimum network gradually from the July 1st onwards. And the way we expect things to go is that domestic flying will come back relatively soon.
The flying in the Nordics as well as in Northern Europe will be the next in line. But we also expect that we can introduce already during this summer some long-haul destinations. And what is helping us in this respect is that the cargo-only traffic, which, as stated, is profitable on its own right, is already there. And therefore, we only need to add the passenger part to the flying. And we are currently flying cargo-only flights, for example, to Tokyo, Osaka, Seoul, Shanghai, and we will be adding some individual flights to Beijing, Hong Kong, and Bangkok.
[audio distortion] Thanks. And then secondly, could you give us some kind of flavor or indicate the cases of the current cargo volumes, given that you are flying with eight aircraft, full cargo? So what are the cargo volumes, for example, in year-over-year terms?
Mika Stirkkinen, yeah. The volumes are not that great, but as such, the yields are so good that we are seeing healthy cash returns on those flights. But the volumes are not especially great.
Okay, okay. Are the eight widebodies flying daily, or is the frequency a bit lower than daily flights?
Yes. The eight widebody, I mean, if we look back now a couple of weeks, it has been increasing incrementally during the last couple of weeks and days. So the eight widebody figure is effectively the situation today and from here onwards.
Okay.
Flying daily. That would be daily.
Okay, okay. Understood. Then my last one. Given the rather long expected recovery period of the aviation, are you considering running permanently some of your oldest aircraft?
We will see how the demand will develop. And then, of course, based on this scenario, it is foreseeable that we will be a smaller airline for a while, as will so many other airlines in the world be. And we will be operating on a less-than-normal capacity during the remainder of this year. And then that capacity will gradually increase. So that means that we would need to have temporary groundings of airplanes. Yes.
Okay, excellent. Thank you. That was all from my side.
Thank you. Our next questioner. Questioner, your line is live. If you muted your phone, please unmute.
Hi. Sorry. This is Achal from HSBC. I wanted to understand a couple of things. So first of all, I wanted to understand what is your fleet plan looks like. Obviously, you just talked about you might be a smaller airline for a short period. But what I wanted to understand, that at the moment, of course, you have grounded many planes. So in that scenario, at the moment, are you trying to return a few lease planes earlier than originally planned? And like many other carriers across the world, are you also talking to your lessors in regards to deferring the lease payments? And what sort of changes do you see? I mean, do you expect if you need to ground some more planes or if you need to return planes, are you planning to return widebodies, or are you planning to return narrowbodies at the moment? So if you could please talk about your fleet plan broadly, that would be very helpful. Thank you.
Thank you. If you make a start with the lessor part and those negotiations. We have contacted all of our lessors. We have discussed both deferrals and actual lease rental reductions. So that's ongoing. And naturally, we have discussed with our landlords on facilities. And actually, we have discussed with all of our vendors on our terms and conditions of our agreements. As well as naturally with, well, the staff, of course, has been handled through temporary layoffs. But yes, lessors are part of the cost plan.
And generally speaking, we see an opportunity over the long run in terms of refleeting. So that is definitely part of our plans. And when it comes to the new aircraft that we are supposed to take delivery of, one Airbus A350 during the course of this year and two Airbus A350s during the course of next year, we will be negotiating the delivery timeline of those aircraft together with Airbus.
Right. The other thing I want to understand is that you said that you are doing sale and lease-back transactions, and you are in discussion. Just want to understand, given that most of the planes are grounded across the world and the demand is not there at all, how easy it is to do the sales and transactions, sale and lease-back transactions. Do you find the lessors? And then moreover, even if you do the sales and lease-back transactions, don't you think you will probably get the lower price of the aircraft, given that aircraft values have come down since January? So just want to understand your views on that.
On the sale and lease-back transactions, so we are in advanced stage with one lessor. So that's all we can say at this stage.
And when it comes to the lessor market in general, I think that in the discussions, many of the lessors, as well as many of the suppliers in general, see that Finnair is among the strong ones in an industry that is being very hard hit by the virus. We have a strong cash position on relative terms. We have a healthy balance sheet, and now we are strengthening the balance sheet with fresh equity. We have a strong ownership structure. So in the relative game that many of the suppliers in aviation are looking at, we have important strengths.
Right. The other thing I wanted to understand is about you said that the road to the recovery is slow, and it will take at least two to three years for the traffic to come back to 2019 level. Do you feel the same for the profitability also? I mean, do you think it will take two to three years for the profits to come back? And then related to that, if you think that for the profitability, that's not the case, and that means there will be some structural changes to the industry, which you just talked about, so it would be very helpful if you could please talk about what sort of structural changes you see to the industry going forward. So your profitability and then the structural changes, if you could talk about that, please.
In terms of profitability, I mean, this year, and this is no news to anybody at this point of time, will be very, very difficult to all of the airlines. So effectively a lost year. When we look at our base case scenario and the hypothesis that the demand will go back to 2019 levels in two to three years, this would be meaning that with our base case plans, we believe that it would be possible to restore profitability and come back to positive EBIT numbers already in 2021. Not significant numbers, but still positive numbers. Further improving in 2022, coming back to sort of normalized profitability levels in 2023.
The structural changes.
Yes. I mean, the structural changes, they remain to be seen. I mean, we have been seeing announcements of drastic job cuts and capacity cuts from many airlines. The jury is out that how many airlines there will be in Europe. We foresee that there will be further consolidation on the industry. It is a survival of the fittest, and we are one of the fittest. So we, of course, want to take advantage of the opportunities that might arise in the competitive landscape.
Sorry, last two. I'm really sorry for the long list. I have last two questions. One, if you could please talk a bit more about the cost. I mean, you have cut the cost significantly. So I wanted to understand how and which are the areas where you have cut the cost, and how do you see it sort of as you start the operations, how they'll come back? So structurally, what sort of changes you see to your operating cost? That is one. And last question, I want to understand. So you are operating about 20 routes in Finland and in Europe in Q2. So just want to understand on those 20 routes, how do you see the revenue environment? I mean, do you see the yields would continue to remain very soft on those? Or at the moment, how do you see the forward bookings taking place on those routes? Thank you.
On the cost, so first on Q2 cost, so during Q2, the costs are down a lot, as Topi stated earlier. So EBITDA cost, so operating expenses excluding depreciation, so we are down to 80% levels. Sorry, to 20% levels, i.e., 80% declines. So on some cost categories, we are down to 5% levels, i.e., 95% cuts. There are many cost categories where we are declining way more than 80%. The cost category which is actually increasing from January levels is depreciation due to the fact that we took delivery of one A350 aircraft. Another cost category which has been a bit sticky in terms of levels is IT property and so on and so forth due to the nature of those costs. But otherwise, we are really happy on the cost cuts we have been able to achieve. Going forward, it naturally depends on the level of operations. So what's the capacity utilization going forward? We are not definitely ruling out the continuation of the temporary layoffs.
And you may know that in Finland, we have a rather flexible term or law in terms of temporarily laying off people. And now the notice period is shortened to five days only. So it gives us lots of flexibility. What comes to the longer-term cost measures, so as you understand, we will be during the transition period a smaller airline. We naturally need to cut the costs of flying or flight-related costs, but on top of that, the fixed costs. Just as an example, if we were at 80% versus in terms of capacity versus the, let's say, 2019, so the fixed cost of, let's say, the head office functions should be cut to 80% levels. That's our plan, but we don't have all the details ready yet. That's what we are targeting.
To those of you who are not familiar with the temporary layoff legislation in Finland, what should be stated is that while it allows Finnair basically to cut those salary costs altogether, it is also good for the employees in a sense that employees who are members of unemployment funds, and almost all are, they will get a compensation up to 70% of their salary. This is not aviation-related. This is not coronavirus crisis-related. This system has been in place for many, many years and goes across industries. And then when it comes to the forward-looking booking curve, I mean, we have some weak signals of there being some forward-looking bookings, but I mean, those volumes are small.
Right now, there's not much to write home about around those. But we would believe that once governments give signals to societies of lifting the lockdown measures, there will be a part of clientele that would be relatively quick to come back. And what we would need is those signals from the government in terms of lifting travel restrictions, border closures. And on top of that, we are working with a plan to release measures that will enable customers to book flights with confidence and a plan for customers to fly with confidence. And then we will be releasing those measures later in May.
Perfect. Thank you so much and good luck.
Thank you. Our next questioner.
Hi, it's Andrew. Just adding to the questions from Achal. One just on the accounting of the fuel hedging. Can you just confirm the fuel hedge hit that you took in terms of inefficient hedging? Is that just for Q2, or have you marked to market your inefficient hedges out for the balance of the year?
Some 90% of those reversals or inefficient hedges, we actually reversed those hedges, so we don't have any price risk left of that EUR 55 million. So some 90% of the reversals were done for Q2 and approximately 10% for Q3 hedges. If you look at the Q1 release, on page 14, we have the hedged fuel and average price table where we have, in a very detailed manner, the quarters and the hedged tons and the average hedge price. So you can see there where the open risk is. So in that table, you can see that the hedges under hedge accounting, i.e., the hedges which are not posted through P&L yet, the total tonnage is 768,000 tons. So that's identical with the one in the notes, in the derivatives statement. And there you can see the same. That one, the derivatives, management of financial risk, page 25, there you can see the same number of tons. So I hope that answered your question. So the unposted fair value at the end of Q1 was EUR 172.4 million. That one is posted through equity already according to the IFRS rules.
Sorry, you're saying EUR 172 million has gone through equity? No?
Yes. Yes. Because everything under hedge accounting goes through equity. So it goes first to other comprehensive income, which flows to equity.
But not through the P&L?
This EUR 172.4 million hasn't yet gone through P&L yet.
Yeah. Okay. Okay. Can I ask on another question, which is higher level? In terms of the financing and the rights issue, what was the consideration from the board to go directly for a straight equity rather than debt or some hybrid structure of a convertible or some sub-structure that might delay the dilution till a period when we've got more visibility of the recovery and thus potentially a stronger share price and a less dilution?
So our funding plan consists of various components. On the debt side, we have revolving credit facility and the pension loan together, EUR 775 million. Then we are in advanced negotiations about the sale and leaseback. That's a few hundred million. And then we have the rights issue plan, EUR 500 million. And as you might know, we have the EUR 200 million hybrid in the balance sheet. So our plan includes the hybrid as well, but we haven't disclosed yet the final plans. But naturally, we don't want to give up that EUR 200 million equity.
Yes. So it's, of course, a good question that you're putting forward, Andrew. And another consideration is that, and this is effectively a learning from financial crisis going back to 2008 and 2009, partially to 2010. I mean, those companies, many of those companies who called it early and did early rights issues, they basically came out strong from that situation, and they were able to utilize the opportunities that arose from the situation. So as stated, it is about cash. It is about balance sheet strength right now. There will be changes in the industry. And those of you who have the cash and the equity can utilize the opportunities. So obviously, this is part of the calculus that should be weighed against the dilution.
Yep. No, that makes sense. That makes sense. And can I ask just one more question? But it's a big one, and it's a general one, which is, as you make your strategic considerations on a long-term basis, and you said you thought the core strategy would stay the same. The strategy is predicated on links between North Asia and Northern Europe. How do you think the travel flows between, in particular, China and Europe will develop as we get over the major reset to everyone's cultural thinking that comes out of the virus and the tensions that might arise on a geopolitical basis between China and the rest of the world?
I mean, if you look at our main markets, the biggest market for us is Finland. The second biggest is Japan. The third biggest is China. We have growing markets in Asia, South Korea, Southeast Asia, and so forth. But our foothold in Nordics has also been increasing. We have individual cities in Europe that have been growing fast, London being one of them during the past year, growing with more than 20% in terms of number of passengers, and the same goes for Paris, for Hamburg, for Frankfurt, and so forth, so we believe that we have this sustainable competitive advantage in the short northern route, which is also the most environmentally sound, by the way, and then if you just look at on a really long term, the world population will be in Asia. That is, I guess, an indisputable fact, and there will be a lot of natural demand for flights between Europe and Asia and Europe, and therefore, we believe that over the long run, this will be one of the growing traffic categories. It will take time to recover, but eventually, it will get there. And therefore, we believe that our strategic cornerstone of connecting Europe and Asia will be a sustainable choice well into the future.
Okay. Thanks. Yeah. Echoing Achal's comments, g ood luck.
Thank you.
Thank you. And our final questioner.
Hi. I was just wondering if you would be able to give a breakdown of the customers that have taken a cash refund as opposed to a voucher down the line. And then secondly, of the EUR 2 million that you said you're burning a day, EUR 1 million of that is depreciation and amortization. Is maintenance on aircraft included within this calculation?
If I take the last question first, so maintenance is included. Maintenance is calculated for the owned aircraft. It's through depreciation, and for leased aircraft, it's through aircraft materials and overhauls. The first question was on the. Yeah. I mean, what is the share of cash refunds? What is the share of vouchers and rebookings?
Cash refunds, two-thirds.
And then the remaining one-third is exchanges. So exchange of travel date and vouchers. So those are the kind of the preferred choices for us, the exchange and voucher.
Okay. Thank you very much.
Thank you. There are no additional questions at this time.
Okay. Then from our behalf, thank you for joining this quarterly results call, and thank you for good questions. We hope to see you again when we announce the Q2 results in July. Thank you.