Earnings Call: Q4 2023

Feb 14, 2024

Summary

Q4 revenue rose 5.8% and comparable EBIT reached €23m, extending profitability to five consecutive quarters. FY comparable EBIT margin was 6.2%; 2024 capacity is planned to rise 10%, with revenue growth expected to lag capacity.

Good day, ladies and gentlemen. I am Erkka Salonen from Finnair IR, and it is my pleasure to welcome you all to this Finnair's fourth quarter and full year 2023 earnings call. I have here with me, Finnair Interim CEO, Mr. Jaakko Schildt, and he is joined by our CFO, Mr. Kristian Pullola, for the Q&A session. I will now turn this call over to you, Jaakko. Please, go ahead. Thank you, Erkka. Good afternoon from snowy Helsinki on my behalf, too, and Happy Valentine's Day for everybody. It is February 14 today. Let us start with the quarter four. In the presentation, traditionally, we touch the quarter four and also the full year 2023 development, and we have a lot of good news to share with you. Our headline for quarter four is, it was really a solid end to a strong year. The market is robust. We saw a good development in the market and also our internal efforts with strategy execution, both on the revenue area and the cost area, is really bringing results. Going back to quarter four, we had a good performance, despite the fact that we were meeting challenging winter conditions in our operations. We had a couple of days of snowstorms, and also we had a really cold weather for a couple of days. However, we were able to deal it in a very appropriate way, on time performance landing at 75% and the customer satisfaction, NPS at 32. Looking at the revenue for quarter four, the revenue increased 5.8%, and comparable EBIT landed to EUR 23 million, net result EUR 60 million. I think the highlight for the quarter four is really that this was a positive fifth consecutive quarter. I think it would be fair to say that this company, we made it. We survived from the pandemic and the double crisis, and the evidence is actually the fifth consecutive quarter being positive. Revenues stayed on an elevated level, 20%. Passengers increased. I think it really well describes the excellence of this result when I look at the ASK and the capacity. We did all this with 17% less capacity compared to 2019. It is a very good result. Load factors we saw improving in Asia and North Atlantic and Middle Eastern traffic areas. Total load factor landing to 73%. We will come back to the load factor issue little later when we talk about the capacities and so on. Looking at the full year then. There is a number of contributing factors what actually made us to land at the comparable EBIT margin 6.2. First of all, after the pandemic 2022, we had an fleet what was not fully utilized. We were really able to make the A330 aircraft, which was not fully utilized, to the full use. We have a cooperation with Qatar Airways, and Qantas operation started 2023. There will be one more aircraft going into Qantas this year, but we were really able to take the fleet into the efficient use. Through the whole year, we were able actually to purchase nine leased aircraft, leading to significant cost savings and also operational flexibilities. It is a different story when you own the aircraft versus leasing. You can really define when is your end-life and when you exit the aircraft from your fleet. Financing transactions. It is great to be in the position that we have no remaining debt instrument deemed as an equity. That is really a foundation for the healthy balance sheet. We successfully executed EUR 570 million rights issue. We are going to have a more detailed pictures and the waterfalls for the balance sheet later on in the presentation. Also, the sales channels. We were really able to shift our distribution into the more modern sales channels and also with the cost activities. That was really bringing a lot of bottom line result, and that is great to have because the cost is one of those things what is going to follow us, whether the cycle in this business is positive or if the cycle would go down. We always need the cost efficiency. Repeating again, the great result, EBIT margin 6.2%. I think the significance of this EBIT margin is that our earlier estimate and our own plan was that we would reach this target within 12, 15 months time, and we reached it earlier. So it is a very strong performance for 2023. Now we look at the quarters. We are back on the quarter 4, and we are looking at actually onto the previous kind of quarter and 2022. Repeating the success factors. There are a couple of key success factors, and I am just repeating them. It is really that we increased the capacity, and by that one made possible to create more earnings. There is a strong demand in the market. Overall, the market capacity is somehow limited, and it is actually keeping the unit revenues up. Our own activities on the sales, repeating them from the previous slide, was really giving us a positive result. We did see, actually, on the quarter that from the previous quarter, from the last year, is that the cargo revenues are declining. But I do consider this overall more as a positive kind of sign because that means that the whole aviation business is normalizing. Cargo revenues has been really, really extremely high during the pandemic and so on, and now we can see it normalizing. However, they are still on the elevated level compared to 2019. Expense management and the cost management. The internal effort for this one has been very efficient, and we are actually very proud to be in the situation that we can now state it at the end of the quarter 4. It has been not definitely an easy journey internally, but it is really paying off. The last one on this slide is that we were actually able to recognize some of the tax assets. We can see there on the 2023 column, it is EUR 135 million in this paragraph, and that is something which is, when we compare the years and the quarters to a different, there is a big difference. We will talk a little bit later. We talk a little bit more about that, too, at the later stage. In this picture and an illustration, we are showing you our result history from 2014. As we can see that historically, 2023 was a very, very good year for Finnair. It is great to be in this position, and I am repeating and really stating is that with this result, I am very confident, and I can say that this company made it through the crisis. On the picture is, just on the net result being 255, there is a contribution. It is a bit more than a half is actually the tax asset treatment, what I talked on the earliest page. Balance sheet. Now we talk about the quarter 4 again. Let us look at first operating cash flow side of it, what is EUR -6 million. That is actually quite typical that the period of the quarter 4, the operating cash flow is little lower because basically the tickets has been bought earlier during the year, and then we are flying those flights during the quarter 4. I am not concerned about that number at all. On the next slide, we are going to look at the total operative cash flow, and that tells a good story. Back then to the quarter 4, we are looking the right part of it, right part of this waterfall chart, it is that, okay, our rights issue sits there, EUR 568 million. Because of the rights issue, we were able to repay our debt and also invest the six leased aircraft, driving actually a significant cost saving on us. We are landing at the end of the quarter 4 ending cash level EUR 922 million, which is actually very good appropriate level for of this size of the company. Then we are looking actually the whole year kind of cash issue. First, I would like you to pay an attention to the operating cash flow on the left side of it. Operating cash flow EUR 472 million, what is a very, very strong operating cash flow. On the right part of it is actually the repayments of the loans and the other activities. Overall, we were able to reduce our debt burden by EUR 1.2 billion, which is a significant number. That definitely drives our balance sheet to be much, much healthier going forward. Talking more about continuing on the balance sheet. There are a couple of KPIs and the trends actually on the equity ratio and the gearing. I think here we can see the positive trend on the both KPIs. We can see how the kind of, and on the left, we are listing the items would have been the key contributors on this one. The trend is definitely here, what is visible, that is the trend, what we are determined to kind of stay, and we have to stay even go further with our balance sheet. Okay. I talked the rights issue couple of times earlier during the call, and we set some targets to ourselves during the rights issue. It was an EBIT margin, it was a net debt divided by comparable EBITDA, and it was cash to sales, and it is cash to sales. From the picture, you can see that actually two of the KPIs we have already, I would say, reached. I am especially very kind of happy to inform and actually proud about the EBIT margin. We reached that one ahead of our initial plan and the thinking. That's a very outstanding result. This all sums up that when we look at the graph on the right side of the graph, there is the distributable equity. We can see the good, very, very positive, good trend there. We are on a track with our aims to reinstate our ability for the shareholder distribution from 2025 onwards. So definitely having positive vibes for this development, too. Going forward in 2024, first, I think we are very determined to continue on our strategy implementation, being a revenue initiative, being a cost initiative, or looking at all the things what we could do and what we are doing for the customers. The strengths what Finnair is having, it's actually the quality and reliability drives the customer satisfaction. On the top of that one, it is needless to say that all these drives the profitability. We are increasing the capacity for 2024. Next page, we're going to look at a bit more detail on our guidance, and let's talk a little bit more about the capacity. There are now all our assets and a full fleet is in efficient and profitable use. Partly, of course, thank you our oneworld partners with whom we cooperate. We are also taking the wet leases out from British Airways, and we're going to fly those airplanes by ourselves. In 2024, we're going to have a delivery of our next A350 aircraft. The aircraft will be ordered a long time ago, years ago. We postponed, actually, the delivery twice because of the crisis, and now we are getting it into the traffic late 2024. However, the arrival of the aircraft is so late that it's not contributing significantly to the capacity growth in 2024. Our outlook and guidance, I am not reading line by line of the guidance, but it's according to our policy. Probably I stop a little bit to our plans to increase total capacity by 10%. Probably highlighting that we are saying that the Finnair revenue is expected to grow at a somewhat slower pace than the capacity 2024. Key of this capacity growth is really that we use better and more efficient all the assets what we are holding currently. We are shifting the aircraft from the wet lease to our own production. This is definitely driving us a better financial bottom-line result. We have been really on a very elevated unit revenue environment. The Q4 2022 was extremely high. We saw some change to the Q4 2023. I think it's very responsible to have a statement that we kind of give the guidance that it's a somewhat slower pace, the revenue development and the capacity in 2024. Now we are kind of heading towards the end of my presentation. I guess, Erkka, now it is the time to have questions and handing over back to you. Yes, indeed. Thank you, Jaakko. If you have any questions, please follow the operator's instructions to present them. If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Pasi Väisänen from Nordea. Please go ahead. Great. Thanks. This is Pasi from Nordea. I have a couple of questions. Maybe if I just kind of go through those all, and we can actually then look at if there's something left after the answers. First of all, to start with guidance and by, let's say, assuming that the capacity growth is some 11% for this year. Are we then going to see some roughly around 7% revenue growth for the year on year basis? If it really happens that RASK is now declining as you highlighted, will the CASK decline less than RASK on this year? This delta, I would actually like to also discuss with you. Then a couple of other questions are related to kind of the investments and the amount of shares. When you actually are planning to start this renewal process of the short-haul fleet, is it going to happen on couple of years of period? Then we are going to see news regarding this investment phase and when looking at the kind of the amount of shares. Would it make actually sense to make reverse split already on this spring, or do you have any plans for that? Thanks. Okay. Thanks, Pasi. Maybe I'll take a first stab and then Jaakko will add. On your guidance question, unfortunately I need to just say that a very good question. We have deliberately not provided the detail on profitability. As Jaakko said, we are seeing that in the current environment, it makes sense for us to utilize our assets more efficiently, and through that, grow capacity. As Jaakko also said, we do see that from a yield development, we are comparing ourselves against a very high yield environment. Because of that, it's prudent to assume that things will not normalize somewhat, even if we believe that the yield environment also this year will continue to be strong. Having said all of that, we will, of course, monitor the situation, and if there is some uncertainties realizing in the demand environment, we can always course correct when it comes to the actual capacity that we end up flying for the year. The current plan is to utilize the assets that we have and to utilize them more efficiently throughout the year. When it then comes to CASK, as Jaakko also said, cost efficiency continues to be instrumental in our thinking when it comes to long-term competitiveness. We see that being cost efficient is a no regret move in any scenario, and in any kind of strategy outcome that we might have. Because of that, we are taking the good learnings that we've accumulated during the crisis and turning them into a continuous improvement way of working within the company. Through that, we hope to be able to continue to be good at developing CASK going forward. How will that relate to RASK development? Time will tell, and once we have a better understanding of how this year's profitability will develop, we'll then provide updates to the guidance during the quarters to come. When it comes to the fleet renewal for the short haul fleet, as we said in conjunction with the rights issue, that is something that we will need to address at some point. Having said that, our wide-body fleet is mainly very modern, and their investment requirements above and beyond the two aircraft that we have on delivery is going to be very limited. When it comes to the short haul fleet, also there, half of that one is still such that you can fly quite many years with it in the current environment. But then maybe the other half is such that we'll need to start dealing with it during the next years to come. The reality is, of course, that if you want to acquire new aircraft in the current environment, they are not available immediately. You'll get them in a year's time. In that sense, I think this is still something we'll need to address and make decisions on at some point of time, but the implementation of it will be over many years to come. On your final question on the reverse split. As I've said after the rights issue, this is something that we have on the table, trying to work it out in terms of how such thing would be implementable in the current environment where we have a large number of also small retail owners in our shareholder base. Once we get to AGM proposals, you might hear something more on the topic. Okay, great. Thanks. I hear you. That was all from my side. The next question comes from Jaakko Tyrväinen from SEB. Please go ahead. Hi, good afternoon. Jocko from SEB. I would like to continue on your guidance. You are planning up to 10% capacity increase. How confident you are that you will find a kind of a corresponding demand for that increase, i.e., perhaps it is just me, but the 10% sounds quite a lot. Could you elaborate how you are ensuring that the capacity increase can be made without sacrificing too much load factors or the yield level? Okay. Now, we had some echo in here. Now I am back online. I am very confident, actually, about this capacity increase because it is coming from the elements what I mentioned earlier, being it is that we really do not take an external aircraft and increase the cost in the major way that they would become new tails in. We are increasing the efficiency and switching the aircraft from the BA production then to our own production and so on. The demand environment has been very strong for basically starting from 2022 through the whole of 2023. When I look at our route network and where we are adding, we have announced that we will start the Nagoya again. We are very strong in Japan, and then there are a number of destinations that we have been implementing, being it in the or actually communicating to the market, being it the North Norway or Poland or Tartu. I am actually very confident that this is the right move for Finnair to do. It is also something because we are doing it with our own fleet and we are adding tails. We have the levers and flexibilities to the move, kind of then to adjust our thinking if for some reason the demand is not picking up. Okay. Good. Thanks. Perhaps following up still on the same topic. How much more crew members you need to recruit in order to deliver the 10% capacity increase? Or will you be able to do the increase with the current staff? It is not a significant number. So we can see also the utilization efficiency that when we put the more capacity out and we increase the utilization, the major part of it, we can increase the crew utilization too. I know that the industry kind of is struggling on some other parts of the world and Europe actually to attract people and get the people. So we have a very good situation on that one when it comes to availability of the pilots, good qualified pilots and also the cabin crew. The recruitment efforts, they have been very popular and we have been really able to choose the best people out from there. We are very good on our targets with the plans actually to increase the people. Okay. Thanks. Next one on the competition environment. What is your current visibility regarding competing capacity in Helsinki-Vantaa for 2024? Are you seeing rivals adding capacity as well? Of course, the competition, that is nothing new to us, including the low-cost guys. We have always faced the competition in Helsinki, in our home base and in other places. We have an excellent network and actually schedules. We do fly to the primary airports of Europe and so on. We look after the customers first during the journey, outside of the journey, and also at the time of the disruptions. I think these are very strong assets against the competition. It is also the fact that if I just look at Helsinki's location and put that one into the operational parameters, what the low-cost guys are doing, it is probably very difficult for them to make the aircraft into the efficient use because Finland is 1.5 hours away from the big concentrated cities from Europe. When you add some of the challenges that you have during winter times here, that is most likely also one thing that competition takes into account when they think about how attractive Helsinki is vis-à-vis the other alternatives that they have for their flying. Cargo and the current yield levels. Are you seeing the yields picking up following the situation on Red Sea? No, we haven't been able to make a correlation with the situation at Red Sea to the cargo yields. No, we haven't seen a correlation there. Sea cargo is not the direct competitor of air cargo. We are talking about slightly different kind of markets here. The sea cargo timelines getting extended by 6 to 10 days doesn't change the big picture relative to air cargo. The drivers for our cargo business are others. It is about the normalized level of capacity now of flying to Asia, and then it's the overall kind of economic activity, which is going to be the main drivers for our cargo business. That's clear. Moving to ancillary where we saw quite nice tick up in ancillary per pax. What was driving this, especially in Q4? Should we expect this level to be the new normal going forward? It was really driven our kind of approach, what we did to our kind of ticket classes and activities to drive the revenues up. We are actually very happy to see that our efforts on this area is giving the results. We definitely see that this area is going to stay on this level or even improve further. My final one. Sorry to have so many, but historically, if we think era prior to COVID, you have been loss-making in Q1. What is your visibility for this year Q1? Yeah. We are not providing any guidance for Q1, and you are right, Q1 has been a challenge. I think the only thing I can say that both guys on this call will do their utmost to ensure that the streak that we now have when it comes to six consecutive quarters of profitability would be something we could continue, but it will be a challenge during the seasonally low first quarter. Excellent. Thank you so much, all from my side. Thank you. The next question comes from Joonas Ilvonen from Evli. Please go ahead. Hi, it's Joonas from Evli. Coming back to the capacity growth question. Would it be possible to provide some color on these route areas? Let's say, do you expect maybe double-digit growth in Asia, mid-single-digit growth in Europe and maybe flat elsewhere? Some color on those. Thanks. The answer is no. It is really distributed to the network. I mentioned a couple of new destinations, what we are having there, then we are adding frequencies to some destinations and so on. We have no such detail available. All right, thanks. Another question, these recent political strikes and their possible impact on Q1 results. Will you get back to those possible impacts later on before the Q1 release? Again, I think we all know that the current situation is fluid, to say the least. We had two days of strikes impacting our operations. There is always some headwind from a profitability point of view coming from these type of actions. If that cumulative impact would become material, then, of course, we would consider if that would be something we would come out with. But as we now look at it, my earlier statement when it comes to us being focused on trying to keep the streak alive is still the valid one. All right. Thanks. That is all from me. The next question comes from Achal Kumar from HSBC. Please go ahead. Hi. Thank you, ma'am. This is Achal from HSBC. My first question is on Asia. Basically, you mentioned that your focus would be on Asia. While I can see that your yield has come down on Asia, your capacity was up 24% and your passenger revenue was up 19% in Q4 versus Q4 last year. Just want to understand, if you could please break up in terms of Asia, what makes you confident, or rather, what encourages you to grow more on Asia? What kind of growth is there? Is it more corporate? Previously, I understand that your predecessor mentioned that Asia was known for the group travels, which are discounted travel, and you were discouraging that. But now, what is it that encourages you to grow on Asia while the yield seems to be going down? And then, of course, the cargo is also going down. If you could please break up on that and help us understand that. Yeah. Thanks for the question. First observation here is that the year-on-year compare is a bit of a difficult one because still during last year and still during Q4 last year, the capacity in Asia was relatively low, and because of that, the overall yield levels were at very high levels. We have added, during 2023, a lot of capacity to Asia, we and others, and because of that, the yield levels have somewhat normalized. However, they do still take into account the higher costs of operating those flights, and in that sense, it's a good business. You should be careful when you look at the year-on-year yield developments on Asia because of the fact that the 2022 was really on exceptional levels. Then we will look at in which markets it makes sense to increase the frequencies. We are not talking about additional destinations here. We are really talking about more frequencies. Going from twice a week to 5 days a week, going from 5 days a week to 7 days a week, and so on. Asia is maybe the last place where we still, during 2023 and even during Q4, saw some impact from COVID. The travel patterns haven't normalized, and there are two specific points maybe to make there. One is China. China did free up the travel early on last year, but actually it hasn't picked up that much. Partly that is also because of the fact that there is no level playing field between Western and Chinese companies, because the Chinese ones can operate over the Russian airspace. Then the other one is Japan. Travel out from Japan has been slow to normalize to a pre-pandemic level. That's, of course, something which we are monitoring and taking into account when we then make capacity increase decisions related to Asia. But again, I don't think we said that we will specifically grow on Asia. I think Jaska's answer was that we will specifically increase capacity in all markets. There is really no one place where the majority of this will be. The one exception on an overall Finnair capacity point of view is that we will double our flying to Australia for the benefit of Qantas, because we only had one airplane operating for a short period of time last year, and we will soon be operating two planes for the majority of this year. So that's, of course, from a Finnair overall capacity point of view, a big increase. But that's not our own flying. That's a wet lease operations that we do for Qantas. Yeah. The commercial risk on that one is taken by Qantas. Right. On slide 12, I thought you mentioned that this growth will mainly focus on Asia and Europe, hence the question, but anyway, I get your point. Then, of course, a second part of my question was that if you could please break up in terms of traffic profile between Finland and Asia. Do you see any traffic profile getting better? Then you just mentioned that Chinese carriers do have access to Russian airspace. Of course, that remains continue. Do you see a risk of Chinese guys taking over the share? Or do you think there could be some political intervention and probably politically Chinese carriers could be stopped from increasing capacity between Europe and China? Do you think that is possibility, or do you see that's not there, and hence, you continue to face risk from losing your share to Chinese carriers? Okay. The competition and the situation with competition is what it is. What comes to the political resolutions with the airspace, we will not speculate with these kind of things. Our approach on this one is that, okay, Finnair needs to be profitable and continue the kind of good journey what we have now started with 2022 result. We need to continue that good result development in the current environment, being the Russian airspace there or having the Chinese carriers. Having the not level playing field with the Chinese carriers. So we are eyeballing Shanghai and Beijing. Those are the two destinations. We had much more destinations prior to the pandemic in China, and if we would see there an opportunity to make a profitable business, for sure, that's where we are heading to and that's what we are eyeballing and following very closely. Okay. Sorry. Going back to the charts on page 17. So one, of course, I asked you about Asia. Second thing which quite surprised me or maybe I'm missing some point. Even on the left-hand side, you mentioned that your passenger revenue on the Middle East was up 19%, while the capacity was up almost 65% or 60%. So where is the gap and what's happening on the Middle East side? Sorry. You are referring now to What? To what? The left chart on page on slide 17. The left side on the slide 17, the Q4 versus passenger revenue versus Q4 last year, and where you mentioned the breakup of different region-wise revenue. In that chart, you mentioned that passenger revenue on the Middle East was up 19%, and then your capacity was up 60%. Was there such a big dilution in the yield or am I missing something, please? Okay. I think I am kind of understanding the question. Yes. It is because the operation, what do we do with our partner, Qatar Airways for Doha. We fly actually operations from Helsinki, Copenhagen, and Stockholm to Doha. Some of that capacity is actually at the commercial risk of ours. We are selling it, and some of is actually with our partners, Qatar Airways. That probably makes the Middle East to look kind of somehow not logical. But otherwise, in general, how do you see the yields on the Middle East, especially for the part you are flying, which is not under contract? I think we haven't seen any kind of big changes or big differences in yield development across the region. That's why I'm a bit perplexed with your question because the conclusion shouldn't be that there's a big change in yields in any of the regions in which we operate. But again, let us have a look at that with Erkka Salonen, and we can come back to you if we have a smarter answer than what we can give here on the spot. I guess you should also notice that the figure on slide 17 is actually an absolute figure, so EUR 19 million instead of 19%. Yeah. Sure. No, I get it. Well, my next question was on the cash flow. Basically, congratulations on reducing your debt by EUR 1.2 billion, which is definitely a big amount. But now, of course, you ended 2023 with a cash fund of EUR 922 million. How comfortable are you with this level of cash? Do you think you will have another activity or anything which is sort of to raise this level, EUR 922 million, or how should we look at your cash flows going forward in 2024, please? As we said in conjunction with the rights issue, we have carried a larger kind of cash balance with us during the crisis. That was appropriate, and maybe one of the reasons why we were able to, at all times, do the right thing, because we had sufficient liquidity to make decisions. But now, once we have recovered profitability, and then after the rights issue, when we have also improved the balance sheet position, we felt that it is appropriate to move the cash balance down to a more normal level. That is why we set the target to be 30% cash ratio to sales, and that is where the 922 approximately is. I do feel very comfortable with that level of cash. It could grow a bit if our top line grows. Other than that, we also see that our ability to generate cash flow should continue to be good, as the yield environment is strong, demand is there, our cost structure is competitive, and we then have some shield from the tax assets when it comes to being able to now operate profitably without having to pay cash taxes for some years to come, which will also be a positive lever on cash flow in the end. In that sense, 2023 was a great year cash flow-wise, and some of that positive impact came from us growing the business considerably during the year. But from here onwards, I see no reason why cash flow generation wouldn't continue on a solid level. Okay, perfect. My last question is about the current trading environment. We are only at 14th of February. I just want to understand how the trading has been so far, and in terms of forward-looking, how do you see the early summer trading? Do you see any positive movements in terms of the load factors versus how the load factors were at pre-COVID levels during the same time kind of thing? So basically, I just want to understand how the current trading looks like for the last period of winter, and then early summer, if you could please help on understand in terms of yields, in terms of load factors, whatever you can see as of now. Okay. I think during the pandemic, we saw definitely a different kind of behavior on our customers. The different behavior was that they were actually booking the trips very short to a departure date. On a positive note on this one is that we have seen that the kind of demand and the passenger behavior has been turning, relatively to very similar to what it was prior to pandemic. That is actually giving us a leverage that our prognosis and estimation models from the prior pandemic starts to, A, work, B, be more precise and so on. Currently the trading environment and condition is looking very good. I am actually expecting a very busy and profitable summer 2024 for Finnair. And of course, one needs to keep in mind that January and February, from a traveling point of view, are slow seasons. So we are now in the midst of a low season from a travel point of view, but we are in a high season when it comes to sales activity. So a lot of summer is being sold now. So if you want to fly, now is a good time to book. And that gives us confidence that while traveling activity is low because of the seasonal reasons, the sales activity is strong, both demand as well as yield wise. Thank you so much, and wish you good luck. Thank you. Thank you. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Matteo Salcedo Lopez from ODDO BHF. Please go ahead. Yes. Hello. Thanks for taking my question. I'm just trying to understand what's your plan with the bond you have maturing in 2025. Are you trying to go through a bond-to-bond financing, or are you considering some private loans? Yes, thanks for the question. When it comes to further strengthening the balance sheet, we want to make sure that we act proactively. We have, in my opinion, done the right moves here. First, putting profitability in place, then using the lever of share issue to improve the equity further. Through good cash flow, we've also been able to optimize the mix of debt. Now, yes, we will take a look at the 2025 maturities as the time is right. I do see that the primary objective would be for us to try to finance ourselves in the capital markets as much as possible. One always need to be also kind of working on alternatives because those markets are not always open. But that's the primary plan, to proactively be in the capital markets to refinance the 2025 maturities. Okay. Very clear. Thanks. My last question is regarding your profitability. You're already above your 2025 target, as you said. How confident are you on being able to keep at least that level of profitability in 2024 and 2025? Clearly, everything is up to the overall environment in which we will operate, but given the progress that we made during 2023, it gives us confidence that we have set the target at a level where we can achieve it. We will internally focus, as I said, on maintaining discipline on the cost side and establishing a continuous improvement culture where people in Finnair continue to be proud of operating the airline efficiently. Then, the improvements that we have done on the sales side, both when it comes to more often getting directly to the customer and also being good at dynamically managing prices, those things will help. In that sense, the target is as valid today as it was when we set it. That is very clear. Thanks a lot. There are no more questions at this time. I hand the conference back to the speakers for any closing comments. Okay. As there are no further questions, we can conclude the call. Thank you for joining and all the excellent questions. We wish you a nice day. Thank you.