Thank you so much for coming here today. This feels almost like another sign of normality that is coming. Just to say welcome to everybody who's joining, not only the people who are here in this room, but also who's joining in on the web links as well. We're here to discuss easyJet's 2021 financial report, and I'll do that and talk you through the presentation together with Kenton Jarvis, who's our CFO. We're gonna talk you through the presentation and give plenty of time for questions that you might have. You should have been sent the slides and the material earlier in the morning. You can also find it, of course, on the corporate website as well.
Before I do so, I'm gonna introduce you to some of my colleagues that are here today. In no particular order of importance, we're starting from left to right. We have Sophie Dekkers, who is here, who is our Chief Commercial Officer. Stuart Birrell, who is our CIO. Ella Bennett, who's our HR Director. Garry Wilson, who's the CEO of easyJet Holidays. Thomas Haagensen, who's our Director for Group Markets and Marketing. Peter Bellew, who is our COO. Kenton Jarvis, as I mentioned earlier. Last but definitely not least, we also have, and it's a great pleasure to me to have Stephen Hester, who is from tomorrow starting to work in his official role as Chairman for the company, having joined the board earlier in the year.
I'm extraordinarily excited and pleased to have Stephen to come and join the company as well. I think, Stephen, you're gonna say a couple of opening remarks as well.
I guess I'll just stand here in case there's the webcast. I'm sure it's focused on that.
Yeah.
Thank you, Johan, very much for that introduction, and it's a pleasure to be here. I was wondering how many people would turn up in person versus watch us. I still don't know the balance, but it's nice to see some people here. It's particularly nice for me to be able to stand up at one of these occasions and not have to present and be able to carp from the sidelines, which I shall be doing for the rest of the rest of the morning. I am really excited about joining the team at easyJet.
When the opportunity came along, it was a brand and a customer franchise I'd loved and I've learned over many years, if you start with strength in customer demand, in inherent demand, there's a lot you can work for. I met Johan. We got on really well. The whole management team I rate. Coming in, I was excited at the opportunity for this company to be a winner in the industry. Three months later, I've done quite a lot more due diligence, met many more of the team, been out on the frontline bases, and I can say that my going-in thesis is still intact, notwithstanding some of our news flow.
I do believe that this is a company with ambition and with the wherewithal to make that ambition pay off. Now, of course, we're all very conscious that it has not been a good couple of years for airline investors in general. What I can also report to you is that there is a very strong determination in the boardroom with myself, but also in particular with Johan and the management team to put that right to the extent that is within our power, and to have easyJet positioned and doing the things necessary to have a bounce back in shareholder value and an outperformance in the coming year. We believe this company can support that, and that's what we're focused on.
At the same time, the news flow, of course, reminds us that it's a difficult industry from time to time to operate in, and reminds us that there are other stakeholders that need to be serviced. I was involved in and highly supportive of the rights issue decision. I think we can see today how protecting your downside can be important in this industry, but also in some of the detail which Johan will be going through, how we can use a stronger balance sheet to exploit upside opportunities as we move through the next few years. I strongly believe it was the right thing to do.
At the same time, although quickly forgotten perhaps in terms of the COVID news flow, COP26 was a great reminder of other important stakeholders and issues for the airline industry. easyJet is positioned, I think, as well as you can be here. We're a leader in terms of our offset programs. We're one of the first signers-uppers to the Race to Zero Charter. It's simply a reminder we'll have a busy few years ahead. I'm confident that we can come out of it well.
I'm gonna be available to shareholders as you would expect, in the coming months and indeed years, to actively engage where desired, but more particularly, to marshal the board in support of Johan, in support of the management team, and on the mission, to bounce back for shareholders and be winners in our industry. Thank you.
Very good. Thank you very much on that. Just to echo what Stephen said as well, I mean, it's clearly this has been a tough ride for shareholders in the sectors, and there's no exceptions, clearly, of easyJet as well. Everything you will see that we're gonna talk about today, every initiative that we're doing based on the strong financial platform that we have is here to deliver strong returns to our shareholder. That is the absolute focus, the most important thing that we are looking at now as we then go forward on this.
Now, I think it's also fair to say, and I would like to address this as well, that when we came out with targets earlier in the year, I know that in some quarters and some camps, it was almost regarded to be to some extent, perhaps a little bit cautious. Perhaps even that they were slightly to some extent underwhelming. Let me be clear on this. Look, we have clearly internal ambitions to deliver them faster than we have set out to do. That is what we are striving to achieve. That is what we want to achieve. Because of I think you can just take the latest development on how the virus has evolved now, there is still a lack of the speed of the recovery and when that's gonna come. Therefore, we think it is prudent to clearly to stick with those target. But you can be assured of the fact that it's myself and Kenton and the whole of the teams and the board's ambition clearly that we want to deliver them as fast as we can, and then be able to come up and give more clarity about further targets ahead. But that's not where we are today. I just want you to be clear on that. Now, okay, let's just do a couple of minutes now then to talk about Omicron.
I just did a lot of interviews here for media, and I said to Steve that I'd never done so many media on a full year where nobody had been really interested to talk about the numbers just gone by. They all wanted to hear what the effect is of the situation that we're in. We might come back and talk about that also when we come into the Q&A. Clearly, this is very early stages and it's difficult to tell to see what the impact will be. What we have seen previously at the time of the restrictions being introduced and negative news coming out, that it takes you know it takes the time before it kind of sets us into a new level.
We've seen that there has been a softening of new bookings coming in. Summer remains uninterrupted. There's no change into the bookings intake for the summer, and I come on and talk more about the summer a little bit later on. What it is, if anything, is really a transfer to some extent of bookings in the midterm, really specifically around this period up until the U.K. government has said that they're gonna review this again into the early part of next year. We're seeing that beach is holding up better than city. Like I said, it is really mostly about the short term. This is not a surprise. We always thought that this was how, you know, the virus could evolve through the variants of concern.
We have prepared ourselves for a year that's really gonna consist of two halves, where you're gonna have more uncertainty and a tougher period outside the key booking periods in the winter before we come in then to summer, where we expect in the later stages of the summer, we're gonna be back very much closer to the 2019 levels of capacity. With that in mind, let me head into the presentation and go to this slide.
This is really, you know, three key buckets that I just wanna talk to you about, and then I will go through, and me and Kent will go through later in the presentation more specific evidence proof point about what we have been doing throughout the pandemic, where we stand right now, and the opportunities that we still have ahead of ourselves. Because we have some really exciting proof points on how we can accelerate the growth that sits around ancillaries as an example, which has really meant a step change for us. Also, some great and exciting additions to our slot portfolio in Gatwick, the North, Porto, Lisbon as an example, and the fact that we have been, in many cases, transformed as a business.
We have ruthlessly been looking at the way that how we allocate the aircrafts onto bases that we know is delivering over and above the average of our contribution within the network. We'll talk more about that, the expansion of seasonal bases as an example, the step change in ancillaries, and also on the cost. You know that we have delivered GBP 512 million of cost savings in the year gone by, with almost half of that to be sustainable. This is not a program that is stopping. In fact, this is actually not a program. This is hundreds of initiatives that sits along every single cost line in the company.
What we're doing now is continue to identify further savings that we're gonna have, and not only taking the savings and initiatives to be delivered within a year, but actually making sure also that in the midterm to long term, we can continue to improve and increase the competitive advantage that we have against legacy airlines. In the cases where we have a gap and are over and above other low-cost carriers to see that we can reduce that gap, and perhaps even to some extent in certain parts, also perhaps close that out, and then take advantage of the premium revenue experiences and proof points that we can demonstrate. We're also doing this very much based on a strong financial platform that we have, which is a combination really about what we were coming into this.
As you know, we're one of the strongest airlines, and the actions that we have also then taken throughout this pandemic with access to GBP 4.4 billion of unrestricted liquidity. I think we also can say we have the lowest debt of any major airline in Europe right now. That is there for, you know, partly the reasons that Steve was mentioning earlier, to give us the protection for further downside, but also to have the availability and the flexibility to capture growth opportunities, and then also restore some of the credit metrics into our balance sheet. We're gonna talk about that, and we're also gonna talk about some very encouraging signs that we see for summer, both for the airline and then also easyJet holidays.
which in fact, just coming on to the summer, has actually booked more passengers for summer 2022 than it had booked for the whole of the full year 2019. That's an example, and that's yet another sign of that strength in the recovery we're expecting for the summer. Every action, once again, it is there to deliver the returns to shareholders, to deliver strong returns to the shareholders. That is what the focus will be of myself and the team, and we certainly, as I said to you before as well, we have, you know, certainly a high degree of ambitions also internally to do, you know, a very strong and a good job on that. Kenton, over to you to go through the numbers.
Thank you, Johan. It really is good to be here in person and see so many of you. Starting on slide five, if the slides catch up. Okay. Travel restrictions across Europe and in the U.K. clearly impacted demand significantly throughout the whole of 2021, and this compares to the prior year, where the first half of the prior year wasn't really impacted because the restrictions didn't come into force until about March 2020, and therefore last year or 2020, it really impacted H2. In response to the reduced demand and continually changing travel restrictions, easyJet maintained a flexible and disciplined approach to capacity planning. We're flying focused on generating positive contribution. As you can see, our total capacity was reduced by 48.8% to 28.2 million seats, and the passenger numbers fell to 20.4 million, a decrease of 57.6%. The average load factor for the year was 72.5%, which was down 14.7 percentage points on the previous year. We saw an average sector length increase by 4.6% as we flexed our route network to focus on a richer mix of beach destinations relative to city pairs flown. Airline RPS decreased by 6.3% at constant currency, driven entirely by the reduced load factor as both ticket and ancillary yields were ahead of the prior year. Ticket yield per passenger sold was up 2% and ancillary yield was up 44%.
Headline CPS increased by 33% at constant currency, driven by a reduction in capacity impacting our cost per seat metrics, despite headline costs actually reducing by 33% in absolute terms on a reported basis. On slide six. Perfect. On slide six, we've broken out the key performance indicators by interquarters. During the first half of the year, strict travel restrictions, including lockdowns, were in place across much of Europe. In response to this, as I mentioned, we optimized our schedule to focus on flying, giving us a positive contribution. Our lowest point of flying was during Q2, at which point the U.K. was in full lockdown and international non-essential travel from the U.K. had been made illegal alongside a third wave of the virus spreading across Europe.
In the second half of the year, domestic travel in continental Europe started to open up, although the U.K. continued to lag behind. As restrictions were eased, we utilized our network flexibility to ramp up our capacity and pivot this to where the demand was strongest. As you can see highlighted on the slide, Q4 demonstrates this as we ramped up capacity by over 280% from Q3. Even so, this was still only 48% of full year 2019 levels, again with the U.K. lagging behind. Throughout the year, we've proactively managed our yields to ensure that easyJet remains price competitive on key routes whilst maintaining profitable flying on these routes where the demand has been more inelastic. Our revenue per seat is clearly impacted by lower load factors.
However, you can see Q4 shows the positive signs when we see continued into Q1 during the financial year. The recent rises in rates of infection throughout Europe and the emergence of a new variant of concern is, however, affecting demand again in the very short term. Moving on to the income statement on slide seven. Total revenue decreased to just under GBP 1.46 billion during 2021, and that was broken down into GBP 1 billion from passenger revenue and GBP 458 million from ancillary revenue. Our headline costs, excluding fuel, decreased 29% to just over GBP 2.22 billion, and I'll provide more detail on cost per seat drivers in a moment.
We recorded a GBP 9 million foreign exchange gain in the year arising from the retranslation of foreign currency denominated monetary assets and liabilities that were held on the balance sheet. This exchange gain was GBP 24 million at H1, so there's been a GBP 15 million loss on exchange during H2 as sterling has weakened relative to the dollar. Fuel costs decreased by 48.5% to GBP 371 million, which is broadly in line with the capacity reduction. As a result, easyJet's delivered a headline loss before tax of GBP 1.136 billion, which is at the better end of the guidance we provided in the trading update. Non-headline items were a credit of GBP 100 million in the year, and this was comprised of a GBP 65 million gain as a result from the sale and leaseback of fifty-six, of 35 aircraft and two engines. GBP 61 million credit in relation to releases from our restructuring provisions following constructive negotiations with our unions. These discussions have led to improved productivity, reduced crewing ratios, and the introduction of seasonal and part-time contracts, which has allowed easyJet to minimize our compulsory redundancies. These two credits are partly offset by a GBP 26 million net charge related to hedge discontinuation, as we were significantly overhedged for both jet fuel and currency as a result of the reduced volumes in COVID-19. This charge was primarily incurred in H1, and the overhedge position has now been corrected. The results led to a total loss, group loss before tax of GBP 1.036 billion, compared to GBP 1.273 billion in the prior year.
If we move on to the revenue per seat bridge, which you can see on slide eight. It should be noted that revenue per seat is significantly impacted by the reduced load factor year-on-year, but I'll walk you through the waterfall. Total revenue per seat decreased by 6% at constant currency, and it was driven by the following factors. The Thomas Cook's collapse in September 2019 created a strong prior year comparison. If you strip that out, that would decrease RPS in the prior year by GBP 0.92 a seat. Despite a 14.7% drop in load factor, ancillary revenue increased by GBP 2.64 per seat at constant currency, thanks to our transformed ancillary proposition, with Standard Plus fare and the new baggage policies providing a strong source of ancillary revenue.
This was demonstrated, if you look in the top left, by the yield, which was up GBP 6.37 per passenger. This is obviously really encouraging. We believe that customers traveling during the pandemic have had a higher propensity to spend and therefore purchase ancillary revenue. In addition, due to the low levels of flying in the first nine months, we've had an increase in the mix of leisure customers in between July and September weighing on the average for the year. Because of that, I wouldn't necessarily extrapolate the GBP 6.37 in your model. That said, we are confident that there's been a step change in our ancillary revenue generation, and we continue to focus on this additional stream and there are more products coming online.
The major factor, though, affecting the RPS over the year is obviously the pandemic, with a negative underlying impact of GBP 5.17 per seat. This is due to the lower load factors on the reduced capacity flown and the competitive pricing environment. Finally, after including a GBP 0.36 pence negative impact from currency, easyJet's reported revenue per seat for the year decreased by 7% to GBP 50.54. Now moving on to cost and cost per seat on slide nine. As stated earlier, headline group headline costs in absolute terms were reduced by 33% on a reported basis. This was driven by capacity reductions and savings achieved in the cost out program, which touched most areas of the business.
Analysis of on a cost per seat basis is not particularly meaningful when capacity is extremely low, as it's impacted by the relative levels of fixed costs, which are spread against the lower volumes. The mix of fixed to variable costs varies by airline, and that also makes comparability difficult, but equally becomes less important as you start returning to a fuller flying program. That's why we've highlighted at the top of the slide the absolute change in cost year-on-year in constant currency, shown in percentage terms. I'll now walk you through each of the cost buckets in turn, so we can highlight some of the great work that's been done on cost, as well as point out some of the headwinds that are coming. Okay, starting with airport charges and ground handling.
These were reduced by 53%, partly due to the reduced volumes, of course, but also due to a large number of contract renegotiations, which have been completed across the network and delivering cost savings during the year. There will, however, be cost headwinds in our airport charges going forward, especially at regulated and slot-constrained airports, where charges are increasing as we see third parties attempting to recover underlying inflation and losses from the last 18 months. These costs will be market-wide in the airports where easyJet operate, and therefore will retain our competitive cost advantage in these slot-constrained airports. I should also point out it's a similar situation with navigation charges. Crew costs were reduced by 21% due to the structural changes as a result of seasonal and part-time contracts being implemented following the successful conclusion of constructive negotiations with our unions, along with other productivity concessions.
Significant savings during the year were also made through the use of furlough schemes across the network, which have now been stopped in the U.K. and are being progressively unwound through Europe. Maintenance is reduced by 20% on an absolute basis, mainly due to the flying, the lower flying hours resulting in reduced maintenance spend as we deferred events in order to focus on preserving cash, but also due to savings on kind of line maintenance, which were insourced during the year. We continued to make structural cost savings during the year and have now insourced our line maintenance in London Gatwick, in Berlin, in Edinburgh, in Glasgow, and also in Bristol. These changes will not only save us cost, but also improve our on-time performance.
Ownership costs have increased by 7% in the year on an absolute basis. As we emerge from the pandemic, we have a higher level of gross debt on the balance sheet and therefore an increased cost of servicing this debt. This effect has been partially offset by a lower depreciation charge in the year as the impact of sale and leaseback transactions and the revision of our aircraft depreciation policy has been more than offset by lower maintenance-related depreciation as a result of reduced flying program and a release in the maintenance provisions from discounting future maintenance reserves at higher underlying interest rates and also a reduction in our fleet size.
Going forward, the charge for depreciation will increase as we get the full impact of the sale and leasebacks annually, combined with the annualized impact from the change to our useful economic life and residual value estimates, along with the impact of our aging fleet and a return to more normalized flying volumes. The average age of our A320ceo fleet is now almost eight years, and so they'll be undergoing their first engine shop visit in the next one-two years. And those will be capitalized on the balance sheet and depreciated going forward. Naturally, the cost of those is included in our CapEx guidance. Other costs decreased by 23% due to the reduced flying volumes, lower disruption costs, and lower sales and marketing spend, and the cost out program, which has seen a line-by-line review of the entire cost base.
There was a 49% reduction in fuel costs, which resulted in the cost per seat remaining broadly flat on the year, despite a one-off credit taken in the 2020 financial year of GBP 55 million, which came from the sale of EU ETS credits. As you can see in the waterfall chart, the airline's headline cost per seat at constant currency before balance sheet revaluations rose by 33% in the year. The two bars on the right of the chart illustrate the net benefit from foreign exchange movements in the year of GBP 1.41. After taking all these factors into account, the net headline cost per seat was GBP 90.41. Moving on to slide 10. This slide provides a little more detail on the impact of fuel prices, currency, and hedging.
The average market price for jet fuel for the year was $554 per metric ton, which is 4% lower than last year. After taking into account our commodity and currency hedging, the sterling cost of fuel per metric ton was GBP 469, also a 4% decrease compared to 2020. The average market rate for the U.S. dollar was GBP 1.37 , with easyJet's effective rate being GBP 1.35, so two cents above the prior year. Net-net, there was a headline GBP 24 million positive impact from currency movements, which include those in revenue, fuel, and other cost lines. Moving on to slide 11, which talks to cash management.
Throughout the 2021 financial year, easyJet maintained a disciplined approach to capacity and cash management, which has enabled us to beat the guidance of GBP 40 million per week on a fixed cost-plus capital expenditure basis. We're now ramping up flying and restarting the deliveries of the neo-order book, so we'll not be reporting on this basis going forward. It provided a useful metric in the scenario when the fleet was fully grounded, but I hope with the advanced level of vaccine rollout that this will not be a relevant scenario again. We've taken the decisive action during the year to strengthen our liquidity position, which has resulted in GBP 4.4 billion of liquidity being held at the year-end.
Our net debt has reduced to GBP 0.9 billion, 'cause obviously we had compared to GBP 2 billion at Q3, because of the effects of the rights issue. As at September 30th, we'd received GBP 1.144 billion, with a further GBP 90 million received in the first week of October after the year-end. Cash refunds to customers during the year were GBP 455 million. Unlike many competitors, easyJet sought to offer customers industry-leading booking flexibility and customer service during the pandemic. All our customer refunds are up to date, and were paid within seven days. The amount of flight vouchers currently in issuance is relatively low, with an approximate value of GBP 203 million, and we look forward to honoring these in the coming financial year.
As we came into Q4, demand picked up and flying increased. This, coupled with the momentum we saw in our forward bookings, helped us generate a positive cash movement in the quarter. Moving on to the cash flow bridge on slide 12. During the first half of the year, our net cash position, including money market deposits, increased by GBP 19 million as a result of the GBP 1.57 billion in net proceeds from financing offsetting the cash burn. easyJet continued to take decisive action on liquidity raising a net GBP 1.17 billion during the second half of the year, predominantly funded by the rights issue. In contrast to the first half of the year, our cash burn reduced to just GBP 10 million.
We've had a net increase in cash of GBP 1.16 billion during the second half of the year. This leaves us with cash and money market deposits of over GBP 3.5 billion at the year-end, which underpins easyJet's excellent liquidity position and the strength of our balance sheet as we come out of the pandemic. As highlighted in the previous slide, our disciplined approach to cash has resulted in GBP 46 million of positive cash flow in the fourth quarter. Okay, looking at the debt maturity profile on slide 13. Throughout the year, we've optimized our debt maturity profile by replacing the shorter-term RCF and term loans with longer-term facilities. The remaining GBP 300 million of the tranche of the CCFF, shown in black, has been repaid earlier in the month.
easyJet has no other debt maturities outstanding until full year 2023, excluding of course the ongoing leases which are shown in gray. We'll review the UKEF loan post Q2, when we'll have a clearer view of summer bookings. Depending on the outcome of that review, we may take the opportunity to accelerate our debt repayments and increase the number of unencumbered aircraft within the fleet, as the repayment of this facility would increase the position from 44%- 59%. The UKEF is shown in the dark orange bar. Now moving on to the balance sheet. On slide 14, we can see the balance sheet, which continues to be rated as one of the strongest in the sector. The significant change in derivative financial instruments is largely due to the maturing of derivatives and the increase in jet fuel prices.
The sale and leasebacks, which have transacted on 35 aircraft and two engines over the year, are reflected in the decrease in property, plant, and equipment, which includes right-of-use assets, and also the resulting increase in lease liabilities. Unearned revenue has increased from the same point last year, as customers have been gaining confidence to book in advance. Although, compared to pre-pandemic levels, the booking cycle still remains relatively close to departure. Trade and other payables have been increasing over the second half of the year as flying ramps up, bringing the balance within GBP 114 million of the prior year. At September 1st, we had net debt of GBP 910 million, which comprised of cash and cash equivalents of GBP 3.5 billion, borrowings of GBP 3.4 billion, and GBP 1.1 billion pounds of lease liabilities.
At the close, our liquidity position was in excess of our new liquidity target of unearned revenue plus GBP 500 million buffer. Moving on to slide 15 and our fleet. This morning, we announced our agreement with Airbus for the firm commitment of a further 19 aircraft with deliveries between 2025 and 2028. We've increased our firm orders to 118 aircraft, having converted a further 14 purchase options and five purchase rights into firm orders. This still leaves six purchase orders and 53 purchase rights from our existing agreement. While we retain the flexibility to downsize the fleet if required, we're not constrained by the fleet numbers in this graph, as we can look to externally source aircraft from the market.
Just to explain the graph, the top dotted line on this chart illustrates the current maximum arrangements with Airbus and our lessors. The solid orange line represents our base plan to the end of 2022. The lower gray line represents the contractual minimum fleet size. As I just mentioned, it should be noted that the chart does not include any future opportunistic additions to the fleet. As the A319s are leaving the fleet, they're being progressively replaced by larger A320 and A321 aircraft, allowing the fleet to upgauge. 67% of the fleet are now A320 or A321s compared to 62% in 2019, and this proportion will continue to grow. In summer 2022, we will have some wet lease aircraft, which will be used to service a portion of the additional slots that we've added at Gatwick.
Due to the timing of these slots being added to our schedule, we decided to cover the slots with a combination of reallocating aircraft from the network and wet lease aircraft. This is just a temporary measure, and from summer 2023 onwards, these slots will be flown on easyJet aircraft. Moving on to slide 16, summarizing our gross capital expenditure projections for the next three years. This is the gross CapEx and doesn't take into account any sale and leasebacks that we may choose to do. In the year, as we constantly focused on preserving cash, we cut CapEx, such that we've been able to reduce our spend levels. This has been achieved through reducing capital maintenance spend, as we were able to defer maintenance events as a result of lower flight cycles this year, coupled with a reduced spend in other areas such as project CapEx.
There were no new aircraft delivered in the year, as we paused deliveries throughout the last 18 months. These will now restart with eight neo aircraft in full year 2022, all being delivered ahead of the summer. Gross CapEx for the full year 2022 is expected to be circa GBP 900 million, and this will grow over the next three years in line with our aircraft deliveries, which will resume from 2022 as we return to growth. All the deliveries are neos, which generate 15% less carbon emissions and 50% less noise on takeoff. In the dark red, you can see the maintenance costs, which shows the engine shop visits coming through from our ceo fleet. Moving on to slide 17 to talk about FX and fuel. easyJet continues to hedge contractual exposures on leases and CapEx.
As September 1st, we were 55% hedged for fuel for the financial year ending September 3rd, 2022 at a rate of $498 per metric ton. We've updated our hedging policy to have more flexibility built in to react to changes in demand. We'll now be hedged approximately 60% on average in year one, and we'll shorten our hedging tenor from 24 months out to 18 months out. In the year, there's been a net charge of GBP 26 million in non-headline items related to hedge discontinuation, with a subsequent GBP 7 million pound gain arising in headline from the fair value movements on discontinued hedges. easyJet has continued to purchase carbon allowances for the year and our exposure.
We're now hedged 100% to the end of the calendar year to December 31st, 2021, which will be surrendered in April 2022. We remain in a strong position with hedging we have in place, especially with fuel price volatility the way it is, and some of our peers not being hedged. I'll now hand back over to Johan.
Good. Thank you very much for that, Kenton. If we're switching on to the next slide, I'm not gonna repeat what I briefed on, and I'm gonna go into more details on the things that you're seeing later on the slide. I just wanna draw your attention really to the box that we're having here on the upper right-hand side of the slide, which if I take you back and you would remember that, you know, we very much at the early start of the pandemic said that we only wanted to operate flights that was generating a positive contribution for the company. We did that because clearly, we didn't have the extent about how long this situation was gonna last.
You could also see that, you know, we started off having very, very small amount of volumes into last winter, only did about 17% then coming into the Q3. Then when we saw that restrictions were being removed, primarily in Europe, where the testing requirements went away from first of July, we saw a big pickup in the demand outside the U.K., while the U.K. still had the pre-departure test and the PCR test on day two. We had a big difference in terms of the recovery. Of course, us being more exposed to the U.K., being the U.K.'s largest airline, that also had an effect on the numbers that you saw in terms of what we were flying.
What it showed was also the flexibility, and the readiness we had to ramp up to be able to take on and act on short notices on restrictions that had an impact on the demand. Still, with flying that 17% and the 58% of 2019 levels, that still made us the second-largest airline in Europe for this winter. We saw then that there was a good momentum coming into the first quarter, and now we're seeing, and we're looking to be around 65% of 2019's capacity in the quarter that we are in.
We're planning to have over 80% load factors, and we will scale that up also then coming into the second quarter with approximately 70% of that capacity levels before we're then hitting and coming in and ready to ramp up for Q3 and Q4. At the end then of Q4, we're looking to be, as I said, in the similar position or close to the positions of capacity that we had in 2019. We're fully resourced and set up in order to do that with the flexibility that we can also react to short and quick changes into the demand following restrictions and the uncertainty that we are in.
Now, I just want to point out also that you know it's clear that you know there is a challenge for some airlines in this industry about attracting people to come and work for them, and we're seeing that when it comes to pressure when they are recruiting. We're also recruiting now. We're recruiting some 1,500 positions across the network on cabin crew for the summer, and we've had over 11,000 people sending in their applications from that. Whatever pressure there is on labor, we're not seeing anything of that. I think one testament of that is clearly the attractiveness we have as an employer. We were ranked the highest, most attractive employer in the Glassdoor rating.
We had a score of 4.2 out of a scale of five in the whole of the travel hospitality sector in the U.K. Of course, that's not only a nice thing to have, it also helps immensely when you know that there might be pressure and shortages on labor and the ability that we have to attract people to come and work for us. Very strong encouraging signs also for the summer ahead. We have more revenue booked for the airline and for the H2 in next year. As an example, the yields are higher compared to 2019, and I'll give you more information also about what we're seeing with easyJet holidays. Based on all of this as well, we believe that we have some great foundations to deliver really strong returns to our shareholders.
Moving on to the next slide as well. You know, it can't be underestimated the changes that we and Sophie primarily, who's leading this, has been doing to the network. I mean, the changes to the network, I mean, it is seismic in its proportion. We have moved and reallocated some 43 aircraft into the fleet. If you take that 43 aircraft and you put it in the context of what we would normally do, it would all be about single digits. Just, you know, I confirm that number to say that, you know, what have we done previously before I also joined as well, and it was always around, you know, seven, eight, nine aircraft.
43 aircraft has been reallocated into bases and routes that is driving, and we can demonstrate that it's giving us an above average contribution for the company. That is absolutely massive for ourself. Step change in the facilities, which I'll talk more about as well. Up gauging of the fleet as we're now starting to take deliveries of the A320s, as an example, and then A321s to come. And also, easyJet holidays, which I'll talk more about. It is still early stages on that as well, but we got some very strong encouraging signs on that. Also, this growth. This is the other thing. This comes into places where we have evidence and we got a history that we know that is performing. Seasonal base has just been one example of that.
Since we launched Palma, we've also added Málaga and Faro as an example, and we know that they have been successful in the previous seasons, and we're looking forward also to build and expand those bases as we go forward. You know, we set out very early on, and it was, you know, something we discussed a lot as a team at the early stage of this pandemic, that what does success looks like? Well, success looks like that the things that sits within in your control, you're doing better than others. There are things and there are uncertainties in here that you can't control, but in terms of setting yourself up to make sure that you're gonna come out of this better and more competitive than your competitors, whether that is legacy carriers, whether that is other low-cost carriers.
That was always the point that we looked at very, very early on as well. We believe that we have evidence to show that we are doing that and we are progressing, we got more to come in order to do that. We're seeing that we have been able to transform the company a lot from a cost perspective. We're seeing a step change when you're looking at the ancillaries. We have the foundation to capture growth on proven area with very low risk as well. We know that others are facing both operational pressures as we speak, they're facing problems with labor costs that's gonna come our way.
You can argue and say, "Well, that's cost that we have already had in our model." That's something that's gonna hit and hurt others while we also have a huge amount of upsides that others can't take on because you could also argue that they already done them, ancillaries being one. We also have some unique propositions on where we are taking a step change, introducing dynamic pricing on the ancillaries as well. Everything we're doing is really focused on, if I can have the next slide please, on these three things. It's about the initiatives that's gonna deliver, you know, strong returns delivered by what I believe is the best people in the industry with an absolute primary focus around safety, operational, digital safety as well.
It's these six initiatives that everything we are doing, our time is being spent on this. It's about the developing of the network strategy, it's about making the customer experience as good as it possibly can. I'll talk more about that a little bit later on as well. It's about looking at the product portfolio evolution. It is looking at what we're doing within easyJet holidays, and then the cost program, and then also approach to sustainability. Let's start to talk about what we're doing at the airports. I'm very pleased to be able to announce that we have reached an agreement on additional slots in Gatwick. We got a specific slide on that one as well.
We're also adding to our slot portfolio, total aircraft worth of five, if you're looking at the combination of the Leonardo slots and then also Porto and Lisbon. These are slots that's coming in to large extent to those slot-constrained airports, which has really always been the key and one of the core parameters of the success of easyJet. We're building positions Manchester, Malpensa, Paris. With these places, we're gonna be bigger than we have ever been before. Proven bases for ourselves that we know are delivering, and also the expansion of the seasonal bases. This is big. You know, if you compare to where we were prior to the pandemic with nine aircraft, we are adding up now to 21 aircraft in these bases. We're looking to now identify more seasonal bases that can come.
We can do this because of the changes we have done in order to deal with seasonality, where we now have crew on seasonal contracts, so we can grow in the profitable summer seasons without taking on the corresponding losses that we had previously on the winter season. That's a game changer, because this has been with the company since really the start when it was founded. That change into the way we look at the labor cost from a seasonality point of view, and also the increased productivity, are things that structurally has been addressed and been removed. If you're looking at the next one specifically to talk about Gatwick.
You know that this is something we've been talking about for quite some time, that we have been interested to expand the portfolio of slots in some of the core airports. We're very pleased to say that, you know, since the start of the pandemic, we have now moved from 63 aircraft to what we estimate to be at least operating 79 aircraft in Gatwick from this summer. This is a lease agreement that we have done together with British Airways. If you take that into combination with what we have previously done on slots that we achieved from other airlines as well, it gives us a position which means that, you know, more than half of the capacity from Gatwick will actually be orange, an easyJet flight for this coming summer.
If you go on to the next slide, we have also looked at ways on how we can, as we're going through this very rigorous process of allocating aircraft into destinations where we believe there's gonna be most demand and we'll see higher yielding routes as well. We have ramped up also the capacity for the summer to Greece, to Canaries, to Turkey, to Egypt. In fact, we have never been bigger into these places as well. This is also very much reflecting and meeting up on the early signs of demands that we're seeing for the summer going forward. We also said that, you know, coming out of last year, that we had a good momentum coming into the winter.
If we take, you know, the Omicron, which I'm sure we're gonna perhaps come back to as well, you know, there's been a strong underlying demand for the key booking periods over the winter, where we always said that there were gonna be competitive pricing outside of that. We have, like I said, also still have the flexibility within the network and the changes we've done to our processes and procedures to adapt to quick changes in the demand that also can come. On to slide 25. This is another thing that I think is really worthwhile spending some time on as well. We have always set out to know that while we've been, you know, adamant in terms of doing whatever we can to reduce our cash burn, transforming the cost base of the company.
We also wanted to make sure that we looked after the customers to the extent we could throughout the pandemic, because you know when you're coming into recovery, that's gonna pay back. If you're looking at the things we have been doing, we have leading policies around the flexibility for change. As an example, we're giving within the airline customers the opportunity to change their bookings up to two hours before departure without paying a change fee. Now we're doing that because we know that that gives customers the confidence to book. We're also extending. We just announced the ability for customers to say that if their flight is impacted by travel bans, even if the flight continues to operate, they can make sure that they get cash refunds back and vouchers and other things.
We know that this matters because it gives customers the confidence to book, and it also, once again, underlines also the strength of the brand. We launched a COVID-19 travel hub, which is basically a one-stop shop where we are describing what is the latest in terms of travel restrictions. As you can imagine, these people have been very busy because of the changes we've seen around the travel restrictions. It's something that has actually been translated into nine different languages. What this has meant is that people have not had the same need to contact the contact center there was before. It's better customer experience, and also that means that we can be reducing costs in the previous setup that we had among the customer centers.
We digitalized a lot of things in the business, we helped customers to self-service even more as well. What we're seeing right now is that actually not only do we have the highest degree of returning customers to easyJet than we ever had, we also have higher customer satisfaction scores than we had in 2019, which I think is quite remarkable. We also did a study here with Kantar in September, where we asked consumers in our main core market how they rated us on the key core parameters that matter when customers choose their airline of preference. On the key core parameters that we know matters the most, we have came up as number one almost in all our markets.
When it comes to the value that we deliver, the appreciation of the network, and also one thing that is about, you know, how do they deliver in the shorter booking window in terms of your program and your prices. This is a very, very important one because we have seen a change that the period from when people book to the day of departure has shrunk throughout this period. Clearly to have a prominent and leading position in there is very, very important for ourselves. Also done a completely new change into the way we are engaging on social media that also has driven a lot of followers onto those places. Moving on to slide 26 then.
This is the slide where we're then setting out, you know, the changes we've seen from the ancillaries. It's quite remarkable. I mean, if you're looking now at the total of revenue that we've had, you know, in the previous year, and the share out of that revenue that now consists of ancillaries, we're up to that 30%, where before we were around that 21%-22% mark as well. This is driven by primarily two things. One is the number of bundles that we have come out with throughout the year, starting in January. The cabin bag proposition where you could buy that together with your premium seat in February. We launched then the second phase of that just recently, where you can buy it as a standalone product in itself.
We also introduced the Leisure fare, which is the standard seat basically with a 23 kg hold bag included as well. You can say, well, you know, this is something that some other airlines has done before. Yeah, you're absolutely right. That's why we have the upside ahead of us. You can also tell by the what this has been doing from an RPS point of view and also from the mix point of view that this is very, very encouraging. We got more to come in this area. One of the things that we are first with, that Sophie is driving very much and her team, is actually now as the first airline, we're gonna be able to dynamic pricing, price the ancillaries as well.
Not just by having some different bands in there, but actually that you can drive dynamic pricing on the ancillaries just in the same thing that you would do with the fare. We know that this is gonna gives us even greater opportunities to maximize the total value of the basket and the revenue. We got more things to come. We're gonna launch a new in-flight retail proposition here before the summer, where we're gonna do deals directly with suppliers and have a broader choice of option for the customers and better and more attractive prices from the suppliers. We believe that is also gonna be an upside. We're gonna benefit more than others from the fact that we're seeing duty-free sales coming in strongly from the U.K. market following the Brexit as well.
There's more things to come from that. Just on this cabin bag, because I think it's kind of the dream of the activity you're looking for, something that on one hand, it increases the revenue. At the same time, it's broadened the offer for the customer and it actually drives also increased customer satisfaction. The cabin bag policy that we had previously was the single largest contributing factor to disruption that we had. Because of the fact that we had to offload cabin bags from a number of flights that we were in, and it was not great from a customer experience either, that factor has now been removed from where it was previously to constitute some 13% down to now to only 1.4%.
It gives us also a much better customer experience in what we've been doing, apart from most of the additional revenue that we're seeing. Now when we throughout the winter are launching this also then with dynamic pricing, we expect further upside to come from that. To go on to the next slide, holidays. We set out earlier to you a roadmap where we believe that this can deliver a significant contribution for the company, plus GBP 100 million in the midterm. We've had some very, you know, good start into the summer as an example. Just to put this a little bit into the context of what this really is all about.
This is a low-risk way of capturing the strength of the brand on what is the most superior network on leisure travel in Europe. One of the things we always said in the beginning when we saw this opportunity was that, look, you know, easyjet.com has over 300 million of unique visitors to its website. If we can get some of those who usually just takes the flight and books their hotel accommodation somewhere else and transform that and convert that into our own model, that would represent a big opportunity. Today, out of what is already being booked right now, which is actually 40% of what we expect to sell for the full year, for the next year, means that we have had also 40% of those customers has come to us through easyjet.com.
Which means that the cost of acquisition for customers is also clearly, you know, very, very low because it's already customers that we're having. It's also been, you know, a point in time when this was set up and launched, and you would recall this was the end of 2019, just a couple of months after Thomas Cook had gone bust. You know, throughout this, we thought that was good from a point of view because we know that there was a need for other players into the market.
What we also saw happen throughout the pandemic, that a number of those hotels, they're really the most in-demand hotels that were previously tied up in exclusivity arrangements with other tour operators, became available to the market because of the pandemic, because others were struggling, or they had to focus on selling and their own assets. We have actually accelerated the journey to get to what we believe is Europe's most attractive hotel portfolio. All the hotels we're selling is four or five star on Tripadvisor rating. It's also something that is unique about this, that not only do we have a lot of, you know, like others would do, fixed costs in this. This is really built up from mobile first. You know, we have over, you know, 50% of the bookings that's coming in today has come through the mobile.
That is extraordinary numbers nobody would even be close to. While this is early on for the next summer, this is a good and very encouraging start, and we of course look to do and present this more detail also on the continued, hopefully, progress on this as we go through towards next summer. Let's go on to one more slide, and let's talk about the cost. Like I said initially, you know, the work on cost, it is not one program. It is hundreds of different initiatives where we have looked through line by line the things of how can we reduce cost in that area? If we can't reduce it in the short term, what can we set out to make sure that we stay even more competitive and efficient in the mid to long term?
It's a huge number of activities that's been done, and we will continue to do more work on this. We've had, and I addressed this before as well, you know, finally unlock some of the seasonality issues that we've had. We improved productivity around our crew. Kenton was mentioned that we insourced, you know, some of the line maintenance in some of our big bases. We added a third bay in Gatwick that was done earlier in the year in March, I think. We are now breaking ground on a four-bay hangar in Berlin, as an example. What this does is of course, that it reduces cost and it gives us more control over the events of the maintenance that we are doing, and therefore also driving better on-time performance.
Peter, you know, we'll look through some numbers. You know, you have renegotiated 132 different ground handling contracts have been reduced with lower cost, much more incentive to focus to get them also to collect and drive ancillaries and revenues, and steer them also towards incentives and penalties unless on-time performance is being made. It's been a huge job being done in this area that is giving us opportunities and better cost performance going forward as well. Now, Kenton talked about there will be, you know, costs and headwinds coming our way, and you can say there will certain costs would be things that's gonna happen to everybody. There will be certain things that is exclusive to us in terms of ownership and sale-and-leaseback transaction as well that we talked about.
There will be certain things that is, you know, a really conscious choice of the company. You know, operating from more expensive airport when you know it makes sense because you can cover up in premium revenue. It's an ongoing work that we're doing to make sure that we stay as efficient. The goal is really to make sure that the cost advantages that we currently have, and we have them, and remember also that, you know, the main competitors head-to-head are the legacy carriers. That are something that we're looking to enhance and widen the gap, and to the extent because we are able to compete with everybody, and to the extent that we have a cost gap towards other low-cost carriers to our disadvantage, how do we reduce it? How do you mitigate it?
How do we close it, and how close can we get to be there? That's what the aim is. Because what we have proven, and that will be the case, we can compete with any other airlines out there. We believe we have more upsides to come. We believe there are more pressures on other to come as well, but we're not complacent about it. That's why this is a focus on an ongoing basis to make sure we're gonna continue to do more work within the cost areas. Then coming on to some of the last slides here before I sum up as well, and Stephen once mentioned this before. You know, I think we have a clear advantage in our position when it comes to the approach we take in sustainability.
You know, we've been involved in about zero emissions technologies since 2015 together with a partnership that we have with Wright. We have reduced the carbon emission per passenger kilometer since 2000 about over 30% to where we've been, and we continue to do a lot more as well. We operate in now our first flights on SAF as an example. We are doing a trial as we speak in Bristol, where we're the first airline to work together with an airport, where we're looking how we can drive zero emission turnaround, which can reduce, and we've seen it being reduced with up to 97% of the carbon emissions, primarily because we're using electric equipment on the ground.
All the aircraft we're now taking delivery on within the context of the deal we have with Airbus is of course neo Airbus with 15% more fuel efficiency as well. Also, we were the first major airline to offset the carbon emissions in 2019. Now, it's an interesting point about this, and this was something that was debated very much when I was up at the COP26 and represented both easyJet but also in my capacity as chairman for Airlines for Europe. That, you know, we know that there has been previously, you know, some criticism about carbon offsetting because of individual projects.
If you go into the highest quality of product that is out there, which we do, the ones that are VCS and Gold Standard, you would find out that actually there is not a single government. There's not a single company out there in their goal to reach net zero that doesn't rely on some form of carbon offsetting. Whether that is avoidance or whether that is removal in the offsetting pieces, there has to be offsetting at the end of the day for governments and for companies to reach the net zero in almost all the cases. Our argument is then to say, well, if that is the case, it also needs to be recognized. It also needs to be tax exempted, as an example.
It also needs to be recognized in the same way that other measures that eases the impact on the environment should be. We know the customers like this. When people are aware about our carbon offsetting program, they are 25% more likely, like for like, to choose easyJet over another airline. 25%. You know, in normal times, we would be happy if we get 1% or 2% of this. You can argue, say, "Well, why is it low?" Well, we haven't flown that much since we launched this program. Of course, as we're now starting to fly more, we're having cabin crew and the pilots are making announcements on this.
We are using also the advertising space on the back of the seats to talk about this. We're seeing an increasing ramp-up as we're now going through with more capacity as well. We're committed to do more things. Carbon offsetting is an interim measure. It's not a final part of any solution, but it's there before you get onto a zero-emissions technology, and also as we see greater supply of cost-efficient SAFs to be available for the industry. We joined also, as Stephen mentioned, the Race to Zero, and we're gonna continue, and we're looking for in the first part of the year also to come out and talk more about what we're gonna do with the net zero roadmap to 2050.
To summarize this now on a slide, clearly on the outlook, we're looking because of the uncertainties that exist, that we can't really give much more now, than the fact that we estimate to fly around 65% of 2019's capacity. We expect to have load factors that is over the 80% limit. We intend to scale that up to 70% coming into the Q3. Before we then get on to the Q3 and Q4, then that would be close to 2019 levels as well.
What we've been trying to talk about today is to set the context on the fact that we got a strong financial platform where we are in right now, but we also have the opportunities to continue to drive a successful journey with an absolute focus on strong shareholder returns and also profitable growth as we continue throughout this next period. With that, I think we're gonna do Q&A.
Done on that, whether maybe that's involved some more base closures, and where maybe you see some more opportunities. The third one, I'm not sure if I'm allowed to ask your new chairman a question, so if someone else wants to take it, that's fine. Your statement and indeed Stephen's comments mention quite a lot of both growth and shareholder returns. Now, shareholder returns clearly comes from earnings share price, and the other form clearly is dividends. Is a return to dividends a huge priority for easyJet, or would it be largely about growth for the medium term? Thank you.
I'll do the first two, and then you can do the third question. Look, I think you have to ask them if they negotiated and who they negotiated with. It was an agreement that we had and discussions and negotiations with them on this. This is something that we're very pleased about because this is something we set out all along that we want to do. It came up pretty late in the day, hence the reason why we didn't do the wet leases on this. But like I said, this is something that is already adding to a significant, you know, position that we have in Gatwick.
It's a midterm agreement in terms of the length of it, but also with the opportunity also to extend that, and we'll wait to see what happens on that. You know, it's whenever you can get a slot, you know, at the good times that this represent and the good slots, it's different between good slots and not so good slots and, you know, whenever you can get good slots at places like this is something that we feel we're pleased about. In terms of the fleet allocation, yes, it's been a tremendous. You're sitting with the microphone there, so I'm gonna hand over to you to answer that question then.
Yeah, sure. Yeah, in terms of our plans for FY 2022, as far as we are planning, that's it. Never say never, I think, as we can in this industry. Obviously, we'll look ahead. We'll look at the performance this year, and we'll look ahead into next year and decide. We're already starting that process now to look at what we do into 2023. We will continue to, if we need to, close bases where they're not performing, reallocate aircraft where they're underperforming, and look for those growth opportunities where we're seeing strong performance. Destination bases is a really clear example of that, and I think the strategy will be to continue in that direction, but also where we can get good slot opportunities at primary airports. We'd obviously focus on those as well.
In terms of FY 2022 and our current plans, that's where we're at the moment.
Also we'll keep, you know, clearly identifying, you know, potential opportunities on a more seasonal basis, as an example as well. Yeah.
Okay. Thank you. Shareholder value and the focus there and then dividends. I mean, the entire focus is really around increasing margins at the moment. We look across our network for the contribution per block hour, and we do that at a market level, we do that at a base level, and we do that at a route level. If things aren't performing acceptably, that's when we reallocate. That's what Sophie's been very kind of vigorous on doing over the recent times. You can see that with the restructure in Berlin. You can see that with the base closures and the growth in Gatwick, which does perform at the upper end of margins. That's one point to rework the network we have in the existing metal.
Second, it's to look at kind of capital-light revenue streams. Really important to that is the work on in-cabin ancillaries. You know, it's great what we've seen in terms of take-up for the standard fare and also for the cabin bags, which was only phase I, 'cause that we were only able to sell for this financial year, those attached to premium or front row seats, which is about a third of the aircraft. The development in November brings the other two-thirds of the aircraft available to sell cabin bags. Also, we've got Leisure fares. We're looking at a new in-flight retail proposition in the second half and duty free should be a big opportunity as the U.K.'s largest airline. That's a very capital-light thing. As in fact holidays is.
When we look at expanding holidays, it's 96% variable. We're not committing to hotels, not doing any commitments. We're not doing any prepayments. It's a very variable cost base, and we're really just leveraging the leisure network that easyJet has, and we think we can drive strong incremental profit from that with a very light amount of capital around systems. Of course, reducing costs. That will all lead to the shareholder returns. When we think about investment and growth to that part, again, we want to do that with a kind of hurdle rate on capital in mind. Fleet's our most important cost, our biggest cost. When we look to roll over the fleet, you can think we've got 97 A319s. They've got 156 seats.
When we bring in the NEOs, being A320s and A321s, we get a nice upgauge, which will drive down our unit cost as that comes through. Obviously all 97 will be gone over the next three-five years because their average age is 13. Then on top of that, we get the benefit that these are more fuel efficient, so we're 15% more fuel efficient, so we'll be spending less on fuel and naturally spending less on carbon as well because of that. That's on the fleet side. Then the growth, as Sophie said, is really focused on those primary slot-constrained airports in our core markets. We know these markets. This is adding to existing traffic, so it's easier to grow. It's lower risk.
It's not establishing necessarily brand new bases and brand new routes. It's competing where we compete. That's how we're thinking of driving the shareholder value. The question on dividends, yeah, we said at the time of the rights issue that we'll review how 2022 goes and then come back on the dividend policy at the end of the year. We fully appreciate the importance of dividends to investors, and it's been a core part of easyJet's ethos, so it's still important to us, yes.
Just to add to that, yeah, James, on the shareholder value, like I said, you know, you know, it, this has been, you know, if you're looking at, and one shouldn't comment on this specifically on, you know, one's company's share price. There's no doubt that, you know, you can have as many times discussions about, well, you have been exposed to, we have been exposed to a market who has been more restricted in terms of travel restrictions that has an impact in itself. You wanna focus on the things you can control. Hence, while we've been absolutely ruthless when it comes to how we allocate now aircraft and capital in the company to make sure that it does really drive the returns.
That is an absolute determination for myself and the whole of the team to maximize that opportunity going forward. So.
Hi. It's Andrew Lob from HSBC. Can I ask about the cost pressures that you're talking about in the context of airports? Because the dear old fellows at Schiphol have got quite some ambition to put charges up, and that's, I think, been a successful place for you recently. Things are a bit more opaque, I guess, at Gatwick, but clearly there's great ambition to put charges up at Heathrow. To what extent might they slipstream up? Can I press you a little bit, Johan, on the new leases from BA? You said they were medium term. How long is medium term? And do they dribble back to the mothership, or do they come out as a block, just in terms of managing your relevant position?
Then a final question might come round to the royalty agreement with the founder. You know, are there any plans to renegotiate it as the company becomes bigger? Are we clear whether the holidays revenues would form part of that royalty structure?
I'll start with the Gatwick and then I'll hand over to yourself. Look, it's medium term. It's a medium term. You know, we're not describing that in exact detail. It's a phased approach in terms of when the aircraft come out, so it doesn't come out in a single block. You know, like I said, you know, you never know what's gonna happen to slots. If you have access to them, that's a great thing. Sophie will tell you that we've been having slots, you know, within the portfolio that others been owning for, what? 15 years in some example as well. Very pleased about that.
I'm not so sure the British Airways would like to see us have these slots for 15 years, but let's see.
Shall I get the airport question?
Yeah.
Thanks, Andrew. Yeah. Schiphol are definitely looking to increase their airport charges. That's the pleasure of regulated airports. We see that as well in other regulated airports like Geneva and Basel as well when we come to talk to them. I guess the good thing there is it's a consistent approach to all competitors because they are regulated airports. We have a cost advantage in those slot-constrained regulated airports versus our competitors like KLM there or in Geneva in Basel. It's the same for everyone there. You mentioned London Gatwick. Whilst not a regulated airport, we have a bilateral of a long-term agreement, which we're midway through.
We are in very constructive conversations with the team at Gatwick on a weekly basis now, and we're working together to find the right new long-term deal to come out of the pandemic with. Because obviously the one we had was pre-pandemic, couple of years of dip, and then we've got different unaligned targets to our current aspirations. We're looking for the right combination to get a win-win contract. That's ongoing as we speak, that negotiation. You're right to say we're partway through quite a long-term contract with them.
There's no plan for renegotiation of the license agreement as well. It's valid from, I think it's 10 years, 40 years. There's no plan on that. You would expect also easyJet holidays to be part of that agreement.
Morning, it's Jaime Rowbotham from Deutsche Bank. Kenton, you said don't extrapolate the GBP 6 increase on ancillaries per seat. What sort of spend might be sustainable now? And how's take-up been since you introduced the phase two of the cabin bag policy a few weeks ago? Second one, I wonder if we could get further update on holidays, perhaps from Garry. Are people preferring ATOL-protected package holidays due to COVID? And how soon do you think you could deliver the GBP 100 million PBT target? And then finally, Johan, in your opening remarks, you alluded to the fact that medium term and mid-teens EBITDA margin, less the higher D&A and finance costs you're guiding to from leasing more of the fleet implies potentially a slightly lackluster PBT margin versus history, versus your peers.
You mentioned the determination internally to deliver those targets quicker. I'm not sure it's the speed of the delivery that concerns people as the virus will obviously dictate that, as you alluded to, but perhaps more the magnitude of what can be delivered. You know, now the rights issue's behind you, I wonder, could you allow us to dare to dream a bit, on a higher EBITDA margin at medium term, given all the restructuring and, you know, the very positive things you're doing to try to improve, yields and unit costs? Thanks.
Yeah. Listen, I start from that part of the question to say that, look, you know, we have to start somewhere. We've got to start somewhere. You know, there was not, you know, at this point in time, a lot of targets out there into the market, and we set out something that we believe were credible, and given the fact that, you know, we knew there were uncertainty on that. Then, of course, you want to deliver that as soon as possible, and when you get transparency on that, you want to be in a position where you can upgrade also the numbers to the next stage. I think there was something also about, look, we want to be credible.
We want to be also not taking the opportunity that I think some others might have taken in this uncertainty about filling a vacuum, of talking big and loud about targets and what you're gonna be and how big it's gonna be. I get that people wants to hear that, but I think we want to be looking that we are a credible company in the way we set our targets, but not lacking ambitions. I hear you and I recognize the point on that, but I'm not so sure that it would be entirely reasonable then to set out a very longer term on something that might people find, well, it's not really relevant because when is that gonna come?
They're not gonna be responding to the same thing to say, "Well, it depends on, you know, how quick this picks up." Now, we have some good, strong signs that, you know, that for next summer, as an example, and clearly with the things that we talked about today and the initiatives, and leading over to Kenton's point about, you know, for instance, how much of the ancillaries will stick and how can we improve that? We don't feel anything other than super confident about the initiatives, what they can deliver and do for us. But let's come back to that, and then hopefully be able to not dream, but actually show you the credibility of what we're saying rather than anything else.
Shall I pick up the others?
Yes.
In terms of ancillaries and how we should think about them, we were obviously extremely pleased with the take-up of Standard Plus fare, which at the end of the day is literally just adding up the component costs, not, you know, in entirety, and presenting it as a very simple solution to buy a product with a single click. That's what's been taken up so well. Also, the cabin bags has been exceptionally well taken up. We launched the second phase, which was opening up the rest of the aircraft, so you could, with a seat, get a cabin bag.
It was initially launched on the mobile app, and immediately bookings were very strong and also on the web now, and bookings have been very strong on that. It continues to be really pleasing. October ran exactly the way we'd seen through Q4, so it ran through. Now obviously we're coming to the end of November, so we'll wait and see how that goes. I mean, clearly in the mix, we haven't got as much city business where people can travel lighter or business traffic that's coming back. That will have a mixed effect, so we'll wait to see how that is.
All I can say is, you know, what we've seen and what we're delivering, very pleased, and coming in very strong. On your very fair point around EBITDA margins and daring to dream, it was largely based on first getting back to 2019 and then getting beyond that. 2019 was a mid-teen. It was a 15% EBITDA margin. Now, clearly the network has been restructured since 2019. We have three years' worth of inflationary pressures around some of the topics we talked around, like regulated airports. You can see from what I spoke about earlier that everything's focused on margin.
You know, pushing forward this ancillary stream, looking at what we can do from holidays, restructuring the network is about preferring the higher contributing basis and what we can get out of cost. The focus is there. Also, I'd like to say we're not, I mean, yes, medium-term, but really I want to look at fixing the long term as well. We need to get out of those 97 A319s and when we do, you know, that's a significant upgauge for us as a group because we have a relatively low gauge compared with our competitors at the moment, which is a cost disadvantage, I'd suggest. One that's in front of us to change, and we're absolutely changing.
Yeah, on the holidays question, definitely we've seen through the research we've done, the research the industry's done that, you know, customers are looking for the reassurance, and the protection that ATOL protection will give them. We're certainly seeing that in the demand and the conversations we're having both with the travel agents and with the customers directly. I think that, you know, when you think about us in the context of that piece with the debacle back in 2020 around refunds where two of the major players actually left ABTA as a result of that, I think, you know, they are in competitively a weaker position, and we've got a real opportunity to take market share there, you know, where we do have the membership of ABTA and the ATOL protection.
I think in terms of the question of how quickly do we get to the GBP 100 million, I mean, we will absolutely, you know, speed that up as quickly as we can and take every opportunity that the market presents. If you think about us versus some of the more traditional players, you know, we have a significantly lower cost base, we've got significantly lower prices to customers, and we make more margin. You know, the opportunity there for us to scale is pretty big and the over a million customers, that's a really important number for me because it's given us the opportunity within the first full year of operation to prove our business case to the hoteliers. The hoteliers gave us allocation, but they won't stick with those allocations unless you're producing for them.
That 63% of the direct hotels, that represents less than 10% of the hotels we work with. Each of those directly contracted hotels are getting several thousand customers from us, which means we're already a major player with them. That gives us security that we'll be able to Maintain those allocations as we go forward and as the market starts to ramp up. As I say, with the market dynamics of us always been able to offer the hotels cheaper, with the protection, that there is no reason that we can't ramp that up as quickly as possible.
With the flexibility of the network, that you're not tied into the seven-10 and the 14-night packages as an example.
Thanks. Alex Irving from Bernstein. Can I zero in on cost a little bit, please? We've talked a lot about some of the good work that's been done so far around labor productivity, around ground handling. You're also pointing to more opportunities going forward. Can you maybe please call out some of the more meaningful of those going forward, what we're looking for? Similarly, are there any where you're essentially done, where you're tapped out, where the further upside from transformation on cost is maybe more limited? Then as a related point, you also talked about your unit cost versus legacy carriers in slot-constrained airports as being an advantage. We are seeing them sometimes get more serious about their unit costs. Thinking about the new BA AOC down at London Gatwick, thinking about Eurowings, the unit cost targets there.
Does this constitute still a sustainable competitive advantage or a smaller one or maybe a larger one going forward? Sort of how you're thinking about those moving parts, please. Thanks.
Okay. Do you want to start or?
Yeah, I get. I mean, just to say that, I mean, one of the things that we're looking at, you know, other, you know, legacy carriers and what they're doing. You know, first of all, you're seeing partly sound bites coming through on what they are achieving. We are measuring and we're looking at that, and we're comparing that with ourselves. It might be that there are cases where on one pocket of the business they manage to do something that we haven't been able to actually expand our advantage on that. We can then see that when we overlay what we've been doing in other places, we are still in a good position on that. This is not about being complacent. You know, you have to monitor this very, very carefully.
As you said, you know, I think that particularly the legacy carriers overall, you've been seeing that they've been retiring a lot of their fleet. You cannot really tell the difference between what is actually related to how they allocate the costs that were there from a long-haul perspective versus the short-haul perspective. You know, we have examples also within the cases of Air France, Transavia, that it's actually just a replacement of capacities, where actually the cost doesn't move that much. In the other points, where they're actually mixing in changes of their fleet, which is something that we can address more in the mid-term to the long term.
I do think that, you know, we stand every opportunity to widen the gap, particularly in the mid to the long term, when we're then, you know, addressing some of the issues around the A319s, as an example. I think against other low-cost carriers, you know, that are there on the market. You know, we see, if anything, more opportunities because of the cost pressure that they are coming in on there as well.
On cost, Alex. Start with crew. There is more we can do on crew. We've got the potential to really reduce the crewing ratios that we have. But then when you come to reducing crewing ratios, you've always got that lovely trade-off between maximizing revenue from your commercial plan and going to the lowest crewing ratio. Right now, that's something we're working through, and I think there's tools that can better help us to really drive the most efficient crewing ratio without a kind of too big a trade-off on the commercial side. Engineering, there's a lot of smart work now going on using more data-enhanced work to look at the life cycle planning of the aircraft when life-limited parts come on and off.
We have more potentials there that we want to work through. We have automation potentials for us as a business. There's a lot of great work going on that Peter's championing on the self-service side of the app, managing disruption yourself on the app, managing, you know, you can now apply the vouchers through the app. All this stuff allows us to make considerable savings in our contact centers. I mean, that's a real win-win because it's much better for the customers. They don't want to ring a call center and be hanging on the phone. We don't want to have standby people 24/7 in a variety of countries for that reason. That's a real big opportunity and it's working very well.
The other thing as we look at those contracts and they're renegotiated with the ground handlers, et cetera, is just going through the service level agreement and making sure that the service we're acquiring is something that a customer will place value on. We're a little bit old school in what we want, but it is functioning level agreement. It's kind of a bit more longer term, and it's a bit more going into the detail, but that's what the kind of, I'm not going to call it a second wave because it is genuinely ongoing. We're just now looking to see where we can keep taking costs out through being smarter without impacting the business. Those are some examples.
Peter, do you want to add something on that?
Yeah. I think on the crew, we've managed to retain a lot of the seasonality that we had. If you take the case, we're growing in Gatwick, but we've given the crew the choice as they came back from being 50%. You know, the balance of crew have chosen to go some 100%, some 75%, some stay 50%. If we're still only operating in winter months, you know, relative to summer at 80/20, you know, the crew actually will be off in the winter, and they're not getting paid. Where we've moved the aircraft around the network, the network piece, we've worked very closely with commercial.
43 aircraft moved in the network, but all of those aircraft have actually moved to places where our costs on the crew side are about 20% lower than they were in Northern Europe. They're seasonal in many locations. There's a win-win for us on that. That's grinding that out. That's also all our internal systems. We are being much more efficient about getting productivity out of the crew. On the handling, it's kind of like in a number of levels, the costs are lower with many of the handling agents now, but they're incentivized to be on time, so that saves us cost as well. More importantly, we've incentivized them to collect the ancillary revenue, which they've been doing. They've done a fantastic job for us at the airports in collecting revenue, particularly on the bags.
On the engineering, we've brought more in-house than probably we thought we would like to, but that's as the industry has moved in that direction. I think even strategically, if we don't want to, some suppliers will drop out of the business, but every time we've done it in the last two years, the cost has been lower for us when we brought it in-house. Actually the on-time performance has been better.
More importantly, I think for everybody in the organization, there's a fairly ruthless attitude to cost now. Elbows are out, and that really is on every single thing, you know, it's like, "No." You know. It's just no is the answer, so rather than maybe. That's translating into like we'll be getting back to 100 million passengers quite soon, and if we save even GBP 0.05 here and there on different things, you know, that's GBP 5 million. That's the way we've got people thinking that GBP 0.5 pence actually does matter, and that has landed.
It is also, I mean, a different approach that we're doing and Sophie's doing, speaking about the airport. I mean, we are negotiating currently a long-term agreement with Gatwick as an example. The fact what you know, Sophie is doing is that, you know, compared to previously where, you know, we are going to the airports and basically saying that, "Look, we've got a choice here on how we are allocating aircraft." You know, we moved 43 out here lately, and we will not, you know, sit back and disregard the fact and who can give us the incentive to do so. That is something that we are being much more active with going forward as well, that's gonna, you know, help us clearly from the airport cost.
Which is a significant cost of clearly what we're doing.
Hello, it's Carolina Dores from Morgan Stanley. I have a question, one on cost and one on decarbonization and strategy. I guess on cost, it is a follow-up on Jaime, because you want to be in 2022 to be on the EBITDA margin line where you were in 2019, but your capital costs are increasing quite significantly, right? We're talking about GBP 200 million. So how do you offset that? Is it? Do you think it's on maximizing revenue, or do you have a plan on, I don't know, more owned versus leased fleet? How do you. I guess, how do you reach your cost per seat target, let's say that 2019 was the target?
On the carbon offsets, your carbon offset strategy, it's also how do you monetize that? Are you going with corporate clients to flag your advantage? It's advertising to consumers. I guess a little bit more color on that. If GBP 3 per ton is still a good guidance for the offsets cost. That from memory was the cost that you had was to a good guidance for the offset cause.
Good memory. Okay, I'll start with the carbon offset then. First of all, it's, you know, we have been working quite a lot towards the companies on this. Because many companies has been changing a lot of their travel policies to make sure that they will only allow their staff to travel on the choice that has the least impact on the environment. I think that when we launched this in 2019, and we also, in the early stages before the pandemic came along, we also were speaking to companies at that point in time. I think there was more uncertainty about, you know, the projects, and can we really take this into account?
Now, there's, like I said, it's not a single company who's trying to reach net zero, who's not gonna be, you know, dependent one way or the other on some type of offsetting mechanism. Same thing goes with the government. There's a much, you know, bigger understanding of what this is. And as you can expect, when we launched this, you know, our projects has been heavily scrutinized from NGOs, from media, and it shows that it's actually delivering exactly what it should do. I think that is what's coming through also now when we're seeing that we are taking share from business travel. You know, it's not only the fact that we see that.
There's a couple of reasons why we are growing faster in business travel than perhaps we anticipated, and we know we're taking share. One is that we have a stronger mix of SMEs within our portfolio, small, medium-sized companies. They don't have the same type of travel restrictions as larger corporations have. They have started and accelerated business travels much quicker. We also have a larger mix, for instance, of people who are, you know, physically have to go and do something. Engineers, they need to see power plants as well. You are starting to see now also the sustainability come into play. You know, that 58% of people being aware about our carbon offsetting program, of course, that's too low. We want that to be 100% of our customers to know that.
I think the activities that we started to do that happened at the same time as actually the pandemic, and then we grounded the fleet for 11 weeks. As we're now picking up, we, and you would have seen us here just recently, that we are communicating this, and we are represented at really all the major forums around this because we, one, we feel very passionate about it. It's actually not only, it's not the carbon offsetting, it's actually the approach we're taking to sustainability, that we believe there is actually an opportunity in here for companies who adapt itself to new technologies if they are also not being punished to do so because the cost is prohibited. That's one of the arguments that I'm having with a lot of decision makers in EU.
I met with multiple commissioners here just a couple of weeks ago in Brussels to talk through these arguments. We know that this is gonna generate us also, you know, competitive advantage going forward. The cost of this is also not quite that GBP 3. The cost of it that we're protected now for a couple of more years on this in the agreement we made. It's important to see where this leads to, because clearly you need to work out, you know, what is the output you're getting from the money you're investing into something, and what is the impact that that has on the environment, you know. You know, you take the discussion on SAF as an example.
I think that will be, you know, very useful once you start seeing that, particularly for long haul and medium haul, that you're getting the quantities of supplies and the cost to be more like getting closer to the cost of what kerosene is today. Today it's not a commodity today, you know. It costs three, four times more than that. My argument is to say to all the decision-makers, to say that, "Look, you gotta make sure that the amount of money everyone spends on this, whether that is government, public money or private money or company's money, does it relieve you with the pressure on the environment in the way that it's supposed to do?
What is the long-term, mid-term view on how you're gonna transition onto the new generation of fuels, as an example, the synthetic fuels? Because I don't believe in the biofuel is gonna be there as an alternative, going forward at any particular scale. Then you need to get onto the zero emissions technology that exists there as well. It's a very holistic approach we're taking on that. We're not wedded to the idea that it's only one methodology who's gonna get to somewhere. There's a huge number of things that will need to happen for us to transition to, you know, to the net zero that we're looking at to 2050. We're gonna talk more about that when we're coming out with the roadmap.
This will be in the early part of the year.
Okay. To pick up the very valid point on ownership costs and partly why I'm focused on EBITDAR as a cash creation measure as well. I mean, the ownership costs fall into two big buckets, obviously. The first we have are interest costs. If you're comparing it to 2019, the kind of debt we had, excluding lease liabilities in 2019 was GBP 1.3 billion, and we've now got GBP 3.4 billion gross debt. Obviously, we've also raised GBP 2 billion over the last two years, so that's where the kind of the circle completes. We have GBP 3.4 billion debt compared with that GBP 1.3 billion debt, and the cost of servicing relative to those two billion.
Now we have a cash position also in excess of where we are. You know, when we did the rights issue, we did it for three reasons. One, to give us the security should a further downturn come, should a variant of concern come along that did prove a problem for the industry, that we would be resilient for that. We're confident, very confident that we are resilient for that. We did it to help us start restoring the balance sheet, to take some of the steps and allow us to think about deleveraging. We did this for the platform for growth. We would, during this period of uncertainty, we're confident the slots would come up the way they are coming up, and we wanted to be able to be on the front foot.
I think the reasons were good reasons. Now what I'd say is around that GBP 2 billion increase, we will now look, as we get to the end of Q2, how the turn of the year has been, how the development of Omicron has come through, and if it is something that you don't really suffer much in terms of symptoms for and the world moves on again, because at some stage we have to, then we'll see the bookings and it'll allow us to think about some of the deleveraging. The UKEF will be the obvious candidate there, because we've drawn down just over $1 billion associated with that, and it's also secured by aircraft. Our other debt isn't secured by aircraft, so that would naturally increase the amount of unencumbered aircraft in the fleet.
The second bit on debt is the leases. The 58 sale and leaseback program not only gives us a hit in depreciation, which I'll come on to, but also gives us an interest burden as well, which rolls up into that interest line of just over GBP 30 million. That needs to be considered. That takes longer to unwind. Those leases are up to 10 years, but gave us much-needed liquidity. The lease liability's gone from GBP 500 million to just over GBP 1 billion through that program. That's on the interest side. There's stuff we can do about.
We can look at our leverage, and we will look at our leverage because we're way above the liquidity threshold that we set ourselves, but we just want to make sure that the path out of this is starts becoming a little clearer. On depreciation, there are really two things. There's the cash relevant part of depreciation and there's a quite a bit is non-cash. So, the sell and leaseback will put out just over GBP 100 million through our depreciation line, and that clearly is cash because we've got sell and leaseback, we've got the leases that we're servicing and the maintenance on those leases that we're servicing that are running through depreciation. The rest I'd argue isn't. The second piece is the accelerated depreciation charge we're taking on our ceo aircraft.
Our ceo aircraft are less fuel efficient, and if we look at our fleet plan, we're looking to keep them up to a maximum, even with the lease extensions we're doing, of around 18 years. If you go beyond that, then you start having another significant maintenance event and the economics don't really work. Now, because of that, and because of IAS 16, the accounting standard for depreciation, you need to set the useful economic life according to the intended use of the entity. easyJet is the entity, and the intended use is 18 years. I'm not going to comment on other airlines, but that's what you need to do.
Therefore, by doing that, we've had constructive conversations with the valuers, and then we need to assign what the residual value will be at that point. The upshot of that is that we need to do some accelerated depreciation charges to play catch up on those ceo aircraft, and that's what we flagged in the prospectus, and that's what's gonna come through annually at about GBP 47 million per annum. It's not cash. It's accelerating the depreciation charge from the past. It'll be interesting what others do in this space because there are fuel-efficient aircraft that will last for 23 years in the fleet plan. The MAXs I'd argue, and the NEOs, and then you've got your NGs and the ceos that people aren't gonna keep for 23 years in their fleet plans. That's the accelerated depreciation part.
The other part I'd argue that's in front of us driving a bit of depreciation is, but it's not really cash, is the fact that we that the aging fleet will go through engine shop visits. Now, obviously, you pay for the engine shop visits, but everyone who owns an aircraft pays for an engine shop visit. It's just the way it works on ownership means you capitalize that and depreciate those going forward. So, it's those events that are come gonna come through a depreciation charge. But everyone with a fleet as they start hitting nine years needs to take those shop visits through. And it's just how it's just pure accounting, whether you're accruing for them if they're leased or whether you're waiting for the event and depreciating afterwards if they're owned. So that those are the things in ownership.
From a cash perspective, it's really just the SLBs and the additional debt. We'll look at deleveraging that. In answer to how do we address that, absolutely, we keep doing the things on revenue. I think we have an opportunity to unlock greater value from our primary slot network, and we do that by preferring the better margins. We've for a while showed the chart, but we kind of obsess about it internally to make sure that when we're looking at the network, we prefer the higher contributing basis. That's really important to us, and we've talked about ancillaries. Time will tell. I mean, I just think this is an open door we need to push on. We'll see.
Gary's talked about holidays, and we'll see on that as well.
This is about to be the last one. The last question coming.
Muneeba Kayani from Bank of America. Just following up on then revenue opportunities. What sort of competitive environment are you seeing into summer 2022? What do you think the industry will be? We've heard from some of your competitors that there could be something like 20% less capacity. Others have said no. Kind of what's your outlook? Secondly, on competition, and maybe for Sophie here, Italy specifically. What are you seeing there? Milan Malpensa, some of your competitors are adding quite a bit of capacity. So where do you see competition in Italy specifically, and what are your plans?
I saw Sophie was grabbing for the microphone to talk about Italy, which is very close to her. Can I just say on, in terms of the capacity in general, the truth is that unless we're seeing what will be published in the schedules at the end of January, February, nobody knows exactly the number. That's true. Look, there's been exercises we've been trying to do, and I think some others trying to do in terms of looking at, you know, what fleet is leaving European airspace on short haul, and they're trying to work backwards to see what that will actually mean.
We can see that there's a retrenchment of capacity from legacy airlines, which is then, you know, what we're doing. We're breaking down that on a route-by-route basis, and we can see that it's a pretty healthy environment for ourself. Hence, otherwise, we wouldn't have been able to get on to the additions to the slot we're seeing. The slot additions we talked about at, you know, the Gatwicks and the Linate and Porto, Lisbon, and there are potentially more to come within that area, is because that is taking place. Now, whether that is something that is there for a shorter period of time or medium, or it will stay, you know, we can all sit here for hours and speculate about.
What we're seeing on the network that we're having is that it's a pretty healthy environment for ourselves going forward for a number of years because we are operating into slot-constrained airport. It's so much better for us to just, with the changes into how we view, you know, the ruthlessness on how we're allocating our capital to go up one aircraft there, two aircraft there, three aircraft there, because there's very little risk in terms of doing that. At the same time, we know we're gonna be able to not dilute the margins to that extent, that you would, you know, recognize you could do if you did a big bang coming in somewhere.
Also just to point out, to the extent that that hasn't been noted, you know, the Berlin is a massive change. You know, we have 34 aircraft there. I don't think it's a secret that it was weighing quite heavy on the operating losses in 2018 and 2019 following the transaction in late 2017. We could argue and say, well, that would have matured over X number of years, but you know, then came the pandemic. That's now been removed with 16 aircraft with a completely rejigged schedule that Sophie's done, focusing much more on the leisure side rather than the domestic side in there as well.
Not to disclose exactly what those operating losses were, but you know, that in itself is a big upside for us. We can then use that when we're discussing with other airports on where we should place additional capacity coming through.
Can I make one quick comment on capacity? One of the things we do see is, as we've explained, nav charges going up, and nav charges go up in 2022 because EUROCONTROL and the air traffic controllers make an assessment of what they think supply will be in the market and then spread their inflated cost base on it. What that assessment is they're thinking there's gonna be 15% less capacity, and that's what they're putting their cost base on, and that's what's driving the increase in 2022. That's an opinion from another one. As Johan said, we don't get true clarity until people are actually asked to step up to their slots, and therefore they'll start handing back in January.
Yeah, if I pick up on Italy specifically. No, you're absolutely right. I think that's where we're seeing the biggest amount of growth in terms of head-to-head competition in the markets there. But at the same time, the majority of that head-to-head growth is actually on Ryanair routes rather than easyJet routes. What we are seeing is where we are seeing new head-to-head competition coming in, we have more frequency on all of those head-to-head routes than Wizz does. Actually, our load factors on those routes are still strong. We're not seeing a softening in load factor on those. We're adding those three aircraft into Malpensa for next summer. We've got those new slots in Linate for this winter. We've added the Amsterdam, the Paris CDG extra daily rotations on those.
We've just announced that we're launching Barcelona, Linate, with additional winter slots that we've got for this winter as well. All of those network points are where we've got strong presence already. Schiphol and CDG doesn't have that sort of low-cost competition. We can really grow and continue to grow with Italy touching the rest of the network into those primary airports, which other competitors can't do because they don't have that primary network that we do, so we can get that premium on those. As I say, we're getting strong loads on those still. We're looking at things from a revenue management perspective that we can do slightly differently to make sure that we are competitive on cost.
We are looking in terms of pricing and where we can be more aggressive than maybe we've ever been before at pricing because we know we're getting more ancillary upside than we've been able to do before as well. I think we're kind of looking at it from a network perspective, a revenue perspective, and in terms of those slot opportunities at primary airports, which the other low-cost carriers don't have that opportunity. Yes, it is a busy market, but actually we're seeing much more of the competitiveness being the EUR 5 fares you've got on head-to-heads with Wizz and Ryanair that aren't really impacting us. At the same time, we're actually seeing some retraction of Wizz capacity on some of our head-to-heads this quarter. We've actually seen some retraction on some of those.
They've either temporarily stopped those routes or completely canceled some head-to-head routes already. That's positive. I think that the signs of what we are doing seems to be working.
On that note, I'm gonna thank you so much for coming here, everybody to join us here physically and everybody who's on the call as well. I hope to see you soon flying with us again. Thank you very much for joining. Thank you.