Hi, everyone. Good evening. Welcome to the call. CEO Ben will be leading the presentation. Ben, over to you.
Hey, everybody. First of all, welcome, good evening to our second quarter results. Thank you very much for joining. Without further ado, we'll go straight into your results and then we'll leave it for Q and As later as we go on. Okay? On your first page, key takeaways for the quarter. Second quarter revenue, MYR 512 million or MYR 513 million, a surge of 4x year-on-year. A good recovery rate of around 51% against 2019. Quarterly net profit, MYR 5.5 million from a net loss of MYR 653 million in Q2 2022, really driven by very strong operational performance, and also which contributes to a positive EBITDA of MYR 100.5 million and a net operating profit, which is profits from operations of about MYR 38.2 million. Okay? Average base fare still strong at MYR 533, but down from 31st quarter
As I said in earlier calls, that second quarter is seasonally a weaker quarter than usual, but remained 22% higher than Q2 20 19. Ancillary revenue remains a strong point, MYR 146.9 million, or MYR 236 per pax spent, over a 42% hike from Q2 2019's ancillary per pax. Operating expense rose MYR 412 million, in line with higher fleet utilization. Second half of 2023 remains extremely lean, still three times lower than first half 2019. Cost per seat, MYR 0.1175, performing better than MYR 0.1347 recorded in Q2 2019. Of course, as we move on every quarter, every month, fleet activation and network recovery still continues. Currently, as of this quarter, which is our second quarter, we have 11 aircraft that are operational. But of course, as of, we already have close to 13 aircraft operational already, the 14th coming in the next few days.
The sectors has grew close to 27x since year-on-year from COVID. I think the growth of ASK has grown quite considerably since then. This then leads to better fly-through connections, which goes up to either AirAsia short haul or even that also the cargo take-up rates has increased as we have more scheduled routes moving forward. Fleet growth, we're on track to have up to 17 operational by 2023. Accelerate fleet expansion to support growth and expect to reach 2019 by 2027. Strong cash position, MYR 269 million, up 40% Q-on-Q, especially with the shareholders' equity increase to MYR 90.6 million due to the MYR 50 million share placement. Associate Thai AirAsia X posted a MYR 352 million revenue, recovering over 91% compared to 2019. Their passengers also increased in line with operations, but posted a net loss of MYR 73.6 million.
But really, that is only due to unrealized forex loss. I think this is not new news, but I think in terms of the PN17 waiver application, that has been submitted to Bursa, while the AirAsia X rehabilitation plan remains at work, and that further announcement will come to that later down the road. Once that rehab plan gets finally court-sanctioned, then we expect a record share of profits from the associate over MYR 300 million in 4Q from TAAX, as we speak.
Key financial highlights, 2Q 2023. Revenue surged 51%, 4x to MYR 513 million, as I said. Scheduled flights revenue, MYR 331 million versus MYR 6.7 million in last year, same time. Ancillary revenue, MYR 146 million versus MYR 1.3 million. So revenue has recovered over 51%, despite having 11 aircraft only operational versus 24 back then. The airline's turnaround is evident with positive EBITDA of MYR 100.5 million and net operating profit of MYR 38.2 million.
The net profit, MYR 5.5 million as opposed to position loss of 2Q, even second quarter is typically charting low seasonality, in addition to foreign exchange loss amounting MYR 32.7 million. Key operating statistics, as I said earlier, the ASK has grown considerably 25 x, 42% recovery rate. This is basically just a surge of scheduled capacity. As I mentioned in previous calls, the key thing is to make sure that we go back to the pre-COVID routes that we did. We are not there at the capacity level where we operated before, but the key thing is to at least have one foot in into most of our destinations as where we were before. Numbers of sectors as well has grown 27 x. Load factor is definitely up 76%, not far off from our pre-COVID levels, which is about, I think, three points, if I recall.
Average fare is MYR 533, much upside from 2019, which is MYR 437. Okay. Ancillary performance, 53% of core ancillary revenue. In-flight meals is probably about 5%. Seat fees is 11%, baggage fees is 37%, while other items are 46%. Ancillary grew close to 100% as more flights reactivated over the past 12 months. As I said, the RPP is hitting MYR 236 due to higher take-up and optimized commercial activities. We do expect RPP to expect to grow over 30% against 2019 levels, as a lot of new initiatives are driving dynamic pricing in term and optimizing of our products. New product offerings, you can see if you do fly AirAsia X, we came out with a new menu, which was more robust duty free, F&B, and the merchandise, which will drive more take-ups.
Generally, the power of spending on AirAsia X is larger because the affordability on the Australian flights, et cetera, is quite high. Next slide, review of operating expenses versus 2019. AAX, again, just to recap, we have done quite a lot since hibernation and the restructuring and all that. Really, our goal is to rebuild its competitive strengths post-pandemic. What we have done, basically, just to keep highlighting and to remind people that why our cost structure has improved is we went through a debt restructuring, the court-sanctioned debt restructuring. We have revised lease rates, which has shelved close to about 60%. We renegotiated all our service contracts, internal and external. We cleaned up our balance sheets and did all the punitive provisions. We rationalize our fleet to ensure that it grows in line with steady growth post-COVID.
And of course, a revamped network to ensure that profitability of the routes is key. Against 2019, in 2023, we reduced close to 3x in first half 2023 at MYR 600.9 million compared to MYR 1.7 billion driven by overhaul cost structure. Lower staff costs, basically in terms of streamlining manpower. Lower lease expenses, as I mentioned earlier. Reduced fuel and maintenance expenses on the back of overhaul operations and bolstered the reversal of provisions of doubtful debts, travel vouchers, and tax loss joint venture, et cetera. Just a bit of TAAX. Their revenue is up over 5x , around MYR 352 million versus MYR 66 million. Net operating profit of MYR 34 million versus a MYR 58 million loss the year before. Last year, sorry. And net loss still of MYR 74 million, which is really driven by foreign losses.
Associates, ASK capacity, I think their demand has been very strong and achieve a load factor of 78%. The weak routes are mainly China as it's a start, a slow burner there. Number of sectors flown up 36x , while ASK capacity up 44x . Network plan. In terms of us, I think the key thing for us is we're serving now 18 destinations in June 2023, from only two last year. Focus again is to build regional dominance in North Asia-Pac, to make sure that we remain the main carrier in the organization. Massive potential from China that has yet exploded. Load factor is still fairly strong for China at the moment in terms of FIT travel, but I think once the groups gets going, I think you'll see a full explosion of that travel demand. Fly-through traffic surged to about 151 passengers from 671 in Q2 2022.
But really, those are mainly connecting routes where Indonesia, India, Australia, Thailand, and Japan reconnecting with each other. And of course, we are exploring a lot of new routes. We're still in the works. I think it's no shy that we've been mentioning about Istanbul and also Central Asia. That's something that will come once we get all the process and systems done. Network market updates. Australia, we have-
Hey, everybody. Sorry, we got cut off. I think our flooding with people coming in just like our share price. So, apologize about that. Again, just to recap, I think we were just talking about network, really, the share price-- share price. The network really in terms of Australia, we're back at pretty much most of the markets that we've flown to, Sydney at 22 times weekly. Japan, the crowd favorite. Generally, our flights for Japan is quite full now as we speak, even during seasonality. Also, Tokyo being the crowd favorites. We're back at 18 times. Seoul, Incheon being also a very strong route, and Busan, 13 weekly flights. China, as I said, we're back in Hangzhou, Shanghai, the new Daxing Airport in Beijing, and of course, Chengdu also, we started at the new airport as well, which is great.
Of course, India, Delhi has always been one of the first routes that we started since COVID. This Sunday, which is great news, we are going to start our first religious flight to Amritsar. This was something that we started pre-COVID days, but we stopped. Now this is something that is going to drive our Indian expansion. Okay? Fleet activation overview. Currently, just for your information, as I said, what is disclosed, we have 17 aircraft in the system. We have 11 activated as of today . As we speak, we have 17, still at 14 flying. The 14 plane will fly on the first. Of course, December, we will have 18 planes in the system and 17 flying. All these aircraft are already here. It is just that they are my existing planes that waiting for MRO services.
One is already in, and two more will go in a bit later down the road. Okay? Okay. I think the key thing is about growth. This is just to tell you where we are in terms of our fleet. Of course, as I said, you see the graph pre-COVID, we are at 24. Reducing it is something that is in line with growth. We did not want to be in a position where we have too many aircraft over short term, and when COVID has happened and be stuck with inherent costs. So we have grown with the capacity now. As I think as we ramp close to about one to two aircraft a year, for the meantime, in anticipation of our big orders in 2026, where the Airbus 330neos come in with the XLR probably down the road.
As you can see, the order book is quite considerable, up to about 50 planes. Notes on the fleet growth, I think that is something that I think we will be announcing further down, but I think the first two to three 330neos will be coming down in 2026. Outlook for second half 2023. The key is yield building and capacity recovery. Focus on China. We expect to be close to about 27 x growth weekly flights from 8x . Building capacity across the network and activation of our remaining fleets, that is key for me. Commercial, as I said, driving ancillary. Continue to do marketing plans and motion together with AA.com Superapp while also increasing FlyThru. I guess the biggest thing as well is working closely with our only Teleport cargo company that is driving a lot of our cargos.
Cargo revenue is gaining traction, 6.7% of total revenue, which is great. Cash and equity. Again, cash position is at MYR 269 million, up approximately 40% compared to preceding quarter. That puts us in a very healthy position. Again, to highlight, shareholders equity is returned to the positive MYR 40.8 million in 1Q 2023. Of course, that has increased to MYR 96.1 million.
Again, just to update, the PN17 waivers application status has gone in, just waiting for Bursa as they go through any more queries. D7 rehab plan remains in progress, and that I expect it to complete in the next month or so from what I hear. Of course, the share profits that I mentioned earlier. So that is pretty much all I have. We can go into Q and As as we speak. Can we have questions? You can either unmute, or you can type it in the desk, and we will try to reply each of it. Sorry, hold on. Jack, Ahmad. Jack will reply you on your questions on the chat. Hold on.
Yeah. Question one, why is other operating expenses positive in 2Q and in 1Q? Technically, in 1Q itself, there is some provisions reversal. One is for the IAX, our associate. Second is on our joint venture, which is TAAX provisions. That one, I think if you see back last quarter, there is a reversal about MYR 200 million over . This quarter itself, you will see it is positive technically because we have done some reassessment on our travel vouchers, whereby we have based it on the utilization on the issued travel vouchers. Based on that, there is some reversal of the provisions amount. That is why because of that provision, this quarter two itself is also a positive balance for operating expenses. Yeah. The reversal is about MYR 90 million . Next question is, I understand that part of the restructuring with Lazard includes a profit-sharing agreement with AAX .
Can you remind us again what exactly it is?
Can you say that again, [Lavina]?
Oh, that one is actually on the restructuring one. That one is actually, we will only have that calculated, provided that based on our full year audited results, which will be next year, if provided that our EBITDAR, E-B-I-T-D-A-R, is actually more than anything, more than MYR 300 million . It's not only applicable to Air Source, but it's actually applicable to all our creditors for the scheme creditors at that time. For now, this is not confirmed yet, technically, because we have to start to reassess and monitor. Provisions are not made yet in the books. Yeah. Then third is, 2Q 2019 versus 2Q 2023, how is operating expenses reducing 118%? Means it was positive to negative. At max, it can reduce by 100% to 0%. Correct me if I'm wrong here. This one, are you referring to the effect?
This is actually six months year to date, first half of the year. If you were to see that first half of 2019, your total operating expense before depreciation and finance income and cost should be about MYR 1.7 billion versus current first half of 2023 is only about MYR 600 million . Hence, the percentage wise, if you see on the drop, it will be more than 100%. This is mainly because reduce in number of fleet size. If you were to look at maintenance is already by half. Yeah. Maintenance in first half 2019 is actually about MYR 300 million versus current first half is actually about MYR 179 million .
Are you okay, Ahmad?
He cannot hear. He has issue with audio.
Oh, okay.
Your next question is, sorry, remind us also how the MYR 300 million workings is done for TAAX. That is on the share of profits. Currently what happens is that, if you read the notes to the Bursa announcement, currently we are not sharing any profits of TAAX, mainly because they have previously recognized their losses, accumulated losses, is currently about MYR 500 over million . Until unless TAAX share of profits percentages increase more than MYR 500 million , then in that case, we will be able to share back our 49% profits. After restructuring of Thai AirAsia X, there will be approximately about THB 11 billion reversal. Because of that, 49% sharing will actually lead us to about MYR 300 million share of profits in quarter four estimated. Yeah.
Okay.
I think the next question is from Sam, Maybank. Sam, you can unmute and speak if you wish.
Thanks, Jane. Jacqueline, you said the reversal of travel vouchers in the current quarter, that's MYR 90 million, is it?
Mm-hmm. Yes. It's approximately MYR 90 million. Yeah.
Okay. MYR 90 million. If we strip it out, then the-
Actually, Sam, no. Actually, Sam, we shouldn't actually treat that as one-off adjustments. Because why? If you were to look at the travel vouchers, it's actually trade in nature. Last time, we have actually fully written off the vouchers because by that time it's considered to be in sales in advance. Technically now what we have done is that we have refunded all of these so-called sales in advance to our passengers.
It became somewhat like our sales in advance. Because technically how it works is that last time, due to us not flying, we have write-off all the payable, so-called our liabilities to the passengers and also to the travel agents. Yeah. Now every quarter- And last year itself, we have actually fully provided the write-off, which is MYR 569 million. Technically now what will happen is that on a quarterly basis, we will reassess back on the utilization of these vouchers. Technically, they are not exceptional non-trade in nature. They are part of our operating expenses or income. If at any time it is not being utilized by the passengers.
Right. Okay. I am going to ask for the fare trend going into the third quarter or fourth quarter. What are some fares are we seeing?
Well, I think I cannot give you much of a head. I know what you are doing, but I think what I can say is third quarter and fourth quarter is trending higher than current.
Right. Okay, sure. Thanks. Yeah, that is all for me. Thanks. Bye.
No questions so far? Karen?
Yeah. We do have one question from Danny. Do we foresee any forex losses in coming quarters?
There will be forex losses. Undeniably, U.S. dollar, if they were to be going up, then in that case, there will be some unrealized forex gain or losses, but it will be slightly mitigated by our realized forex. Reason being because most of the things now currently we are making prepayments. So in that case, our realized forex is actually usually a gain, which we will then use it to actually net off against the unrealized. So technically, if you look at this quarter itself, the MYR 32 million is actually net of realized and unrealized. Yeah. So that is something that we can't avoid.
No questions for- Yeah. Daniel?
Hi. Can you guys hear me?
Yeah. Yeah, we can hear you.
Okay, good. First thing, maybe on, after all this, on the percentage of cargo revenue, what is the ideal percentage? Just now you mentioned it's increased to 6.0%. Eventually, what is the target or ideal revenue percentage from cargo?
Well, I think we're still short of Q2 , I mean, of pre-COVID levels. I mean, the goal is to reach there. Let me see. Let's see what I have the numbers here. Hold on. In terms of Q2 2019, we're actually higher in terms of percentage of cargo revenue. But I think in terms of total revenue, we're still not there yet. We just want to grow it. I don't have a number for that one.
Okay. I just want to make it clear something. The PN17, you guys have already submitted to Bursa for approval, and now it's waiting for Bursa to make further clarification, and after that, it will be done already, is it?
We hope so. That's the idea. As I said, I think the key thing is we already done the first round of queries that has been submitted back already to Bursa. On paper and on the ruling of PN17, if you look at it, we have met all the criterias of our removal of us out of PN17. It's just up to Bursa to decide and come back to us. But in terms of all the clarifications they wanted, we have provided it to them already.
Okay. This one is not included. This exiting of PN17 is nothing to do with AirAsia Capital A one, right? Is it?
No. At the moment, we are just focused on the waiver. As we come to the waiver, then once the waiver is done, we will look into what is next for AirAsia X.
Focused on the waiver. Okay. On the waiver. Okay. On the TAAX we have, is it a whole corporate restructuring or financial restructuring that result this THB 11 billion reversal?
It is similar. It is a financial restructuring. I do not know what you mean by financial and corporate, but the key thing is it is the same that we did the court-driven exercise, where they go for a percentage haircut, and basically, then they have to write back the numbers.
Okay. I see. Going back on this. Okay, I am okay. So it is a MYR 51 million reversal in other expenses in this quarter. MYR 51 million. But just now, you guided MYR 90 million reversal of this cargo vouchers adjustment. Does it mean that the other expenses on a long without this reversal, it would be roughly MYR 40 million loss? Expenses, I mean.
Yes. If you were to actually take away this reversal, then in that case, the operating expenses will be about MYR 40 odd million.
I see. May I know how much was this reversal in first quarter again?
This reversal in first quarter?
Yeah.
No. First quarter reversal was mainly on the reversal of provision of the doubtful debts from AAX and also reversal of provision for additional loss of IAAX.
Oh.
Yeah, that total is about 200 and, hold on, yeah.
50.
200-
50.
Yeah, and MYR 2 50 million.
Okay. This reversal in voucher is only happening this quarter.
As he mentioned just now, for the vouchers, every quarter will be-
Yeah, every quarter.
It will be of straight nature.
Yeah. It will be every quarter, but you only recognize this in the second quarter, not in the first quarter?
Yeah, second quarter, we have that. First quarter is not recognized, yeah.
I see.
First quarter is the first assessment, because technically it is already one year past since we have issued these vouchers. So we have done that on a quarterly basis. So quarter one trigger-
Okay
We don't-
Just now you mentioned that the full reversal, the full amount of the travel voucher was MYR 169 million, is it?
No, I think you misunderstood it. Initially in 2022, when the travel vouchers was initially so-called issued, we did a provision for travel vouchers of about MYR 569 million.
MYR 169 million or MYR 569 million?
MYR 569 million.
Yeah, MYR 569 million.
MYR 569 million.
Yeah. Of which, then after that, because it is already one year, so we start to then reassess whether this MYR 569 million, technically they are somewhat like still in advance, whereby passengers are allowed to actually utilize them now since we have fully operational, right? That is why it is straight in nature and not one-off exceptional items, technically because now we were based on whatever that is issued and then make the provision. On top of that, we will now reassess whether what we have issued, does the passengers apply and use it or not. So if they-
Okay
start using it again, yeah, the utilization rates will actually then determine the sufficiency of our provision on a quarterly basis.
I see.
Technically in quarter three itself, we reverse that. Mm-hmm.
Yeah. This travel voucher validity is for how many years? Three years?
Five years.
Five years?
Five years. Yeah, five years from two.
Oh, until 2027?
Yeah.
End of 2027? Yeah.
Yeah, quarter two of 2027.
Q2 2027. Okay. Can I check another thing? If I compare your first quarter and second quarter, I notice that there is some drastic increase in the lease charges and also on the maintenance charges. Can I-
The lease charges is basically as we take more planes in, there is increase of the leases. The other one is basically-
Maintenance also same.
The maintenance as well. We have to pay for the RTS and all that as such.
Maintenance.
That is why, yeah. Because the increase in the fleets, then in that case, the maintenance and overhaul will also increase.
Yeah, maintenance double from MYR 61 million to MYR 115 million, MYR 116 million. Yeah, but your fleet only increased by about three aircraft, right? If I am not mistaken.
Yeah, because this time around we did a reassessment on the maintenance and accruals to see whether sufficiency of the provisions. Also these three aircraft were actually then we have to add on is that one is deposits, we have to start making the provisions, and two is also on their engines. That's why in that case you will see the cost actually going up.
The-
Also based on utilization.
Okay, so am I supposed to use the MYR 115 million or MYR 116 million per quarter as a running rate now?
MYR 115 million per quarter.
Are we expecting even higher going forward?
Should use about MYR 90 million.
MYR 90 million.
Yeah.
We are expecting next quarter to drop to MYR 90 million from MYR 116 million?
If we don't have any additional aircraft with the current fleet, then yes.
Okay.
But with the-
Okay
Yeah. But with just now you see the fleet growth from 17 to 18. With the 18, that it would not be MYR 90 million. But quarter three will be MYR 90 million. Mm-hmm.
Okay. We are roughly looking at MYR 110 million then with this additional aircraft.
Yeah.
Okay. How about your aircraft lease expenses?
Aircraft lease expenses, technically it will be about, based on utilization, because this one is per month, I mean per quarter, it will be about MYR 12 million.
Per quarter, about MYR 12 million?
But this quarter you recognized only MYR 1.5 million.
Yeah, there is some clawback.
Clawback from first quarter, you mean?
Yes.
I see. Quarterly basis, we are looking at MYR 12 million, and then maintenance charges, we are looking at-
MYR 90 million
MYR 110 million.
MYR 90 million
MYR 90 million. But you-
Yeah, quarter three will be MYR 90 million. If there is an additional fleet, then it will be approximately MYR 115 million, MYR 114 million.
I see. Okay, these user charges dropped from MYR 66 million to MYR 40 million. I thought with your increasing number of flights, all this, your user charges are supposed to be higher QoQ basis.
This one technically, there is some adjustments that we have made this quarter. If you were to see based on user charges, quarter-to-quarter basis, as long as there is increase in number of passengers, then user charges supposed to go up.
Yeah.
But this one, there is some reversals that we have made here.
Okay.
Yeah. This one is mainly for the airport charges. We have actually some recoveries made.
Overcharge.
Yeah, for this quarter, overcharge.
Over provided.
Yeah. So they made some recovery. Yeah.
Also in the previous quarter or previous period?
Last year, previous periods.
Going rate, we should be expecting the user charges on normalized should be even higher than this MYR 65 million in first quarter.
It should be about the-- Yeah.
Growth.
Yeah. It should be about the same as quarter one.
I see. Can I check with you, I saw one of your slide mentioned that you guys want to relook into short-haul route, is it? I mean, do you mind if I-
No. Basically our focus has always been medium-haul routes. But basically on some of the routes that is high density, short-haul, and AirAsia cannot get slots anymore, and the airports are only accepting wide-bodies, we fly those. Basically the only two routes that we fly short-haul is Bali. As you know, AirAsia load factor for Bali is close to 100%, while in Bangkok as well, the load factor is very high. But for Bangkok, because Don Mueang is full, we fly to Suvarnabhumi and link up with TAAX. TAAX is flying out to Suvarnabhumi as well.
Oh.
Basically the key focus is to bring extra traffic into Bangkok. Secondly as well is to bring cargo, palletized cargo on the wide-body to wide-body as TAAX goes out to other destinations.
I see. Okay. Okay, that's all from me for now. Thank you.
Next, we have question from Zibung of Tripu Capital. Based on AAX previous experience, is second quarter usually softer season? Yes.
Yeah. I mean, I think this is quite clear. I think we've indicated in the first quarter that second quarter will be a softer season, and third quarter will be slightly stronger. But generally, the seasonality works as first and fourth is always the strongest, and then second being probably the weakest, while third will see slight improvement. That's always been the case. Has the fare No, really, I think it's just more due to driving load factors up. As you know, people are very price sensitive in this region. So by offering lower fares, you stimulate people to fly during non-peak, which is what we've seen. There's no irrational price competition out there, so so far it's been okay.
I think that's all for Tripu.
Any more questions, guys? I will give few more seconds for you to put your hands up or unmute. More seconds, a minute. We good?
Hi. Can I ask a question?
Oh, you again.
Daniel again, yeah. I just want to check.
Go ahead.
What do you mean by so-called just a message prepayment type of thingy, and then that's how you have this realized forex gain? Can you define more on this? How does this-
No, because some of the stations and some of the other operations- Because we were going back into the markets, and the credit wasn't strong, we had to prepay upfront.
Okay.
Therefore, once you go back to the quarter, this one's basically we actually paid when the currency was very strong. Now as it got weaker, there's a forex gain for us.
I see. It includes- Prepayment of all these expenses.
Correct. For example, airports, we have to prepay ground handling, we have to prepay fuel, we have to prepay. All this actually it's a blessing in disguise. Yeah.
Any update on this Indonesia operation? Indonesia AirAsia X.
Closed already.
Closed already?
We are just basically just slowly winding it up.
You mean closed, how about the tax issue?
That's ongoing. I mean, of course they will review it. As I said, I think we provided it, in our accounts, as advised by the auditors, which we don't feel it's a strong case. But the key thing is, there has never been a history in Indonesian law where the tax man comes after a foreign entity. But whatever it is, we have to leave it there until whatever. But so far, it's just in the process of winding down.
Okay, sure. Thank you. That's all from me. Thank you.
What's the outlook and the average fare currently? The average fare currently is disclosed in your quarterly numbers Q, which is, if I recall, is MYR 533. As I said earlier, we are trending higher for third and fourth. To answer your question, moving forward, yes, it would be above MYR 500.
We have question from Fifa Selase. Hi, Fifa, you can unmute.
Hello, Ben and AirAsia X team. I just got one question on one of the comments during this presentation just now. I think you mentioned that in some of those high demand slots, it is a strategy to put your foot in right now, even though capacity is not ramping up so far. Maybe, could you give us some color and-
Oh, no, that is not what I meant. What I meant is, rather than focus on individual markets and minimizing your network, I would rather put one foot in into a destination and actually have our network already going everywhere. For example, Sydney. Pre-COVID, we used to fly twice a day, 14 times a week. I do not need to do that. I did basically fly seven times first. Same as well as Japan.
We did not go as aggressive as where we used to be. China, we never go as. Basically, I just want to make sure that we fly in now, so that at least I do not have to wait one or two years, and potentially by then, I worry that potentially the slots may go away. That is the whole idea of it. But as more planes come in, we will grow that market back to pre-COVID levels.
Okay. Got it. Yeah. So right now, the constraint or the bottleneck, is it the availability of slots or actually it is the fleet? Is it-
It is availability of fleets. That is the tough part. I think slots, so far, we have not seen any issues. Some markets maybe, but so far on the D7 side, we have not had any issues getting slots. So fingers crossed.
Okay. Thank you. That is all from me.
All right. Thanks, Peter.
Yeah, I do not think we have any more questions.
Okay.
Yep.
On that note, guys, I think thanks a lot for this. As you can see, I think we are trending in the right way. Do not worry too much. Second quarter is still fairly strong. Load is strong. Fare, slightly down, but I think the good thing is third quarter and fourth quarter, we will see much better position as it is. Hopefully, in the third quarter, when we have the next call, we have good news about the PN17. But even before that, you will see that on announcements. Again, thanks for all your support and your faith. We are riding in the right direction.