Hello, welcome to today's easyJet analyst call. My name is Dan, and I will be your coordinator for today's event. Please note this conference is being recorded, and for the duration of the call, your lines will be on listen only. However, there will be an opportunity to submit questions towards the end of the call. If you require assistance at any time, please press star zero on your telephone keypad to be connected with an operator. I will now hand you over to your host, Johan Lundgren, to begin today's conference. Thank you.
Thank you very much for that. Good afternoon, everyone. Thanks for joining us to discuss easyJet's H1 2020 results. With me on the call are Andrew Findlay, our CFO, as well as Michael and Holly from our IR team. You should have been sent the slides along with the statement, which are also available on our corporate website. We will talk you through the presentation. Then follow up with plenty of time for your questions. Starting on slide three, easyJet has been decisive in meeting the challenges of the coronavirus through driving down costs, delivering vastly reduced CapEx while retaining excellent fleet flexibility, and through having secured around GBP 2 billion in additional debt funding. We have also announced today that we are boosting our liquidity further through an equity placement, which will also strengthen our balance sheet and solidify our credit rating credentials.
easyJet's business model means that we are well-positioned for the recovery from COVID-19. We have delivered strong first half results with underlying trading ahead of expectations. History has shown that during downturns, easyJet has outperformed the market through the recovery period, and we expect that we will be leading the recovery again through the coming period. This outperformance is built on easyJet's brand, driving confidence into European travelers who are focused on trust, sustainability, and value for money. easyJet's industry-leading network, serving primary airports, provides a customer offering that cannot be matched by any other airline. We're also undertaking a cost-out program, which will deliver sustainable cost savings in all areas of the business. Before we go into these items in more detail, let me hand you over to Andrew.
Thank you, Johan. Good afternoon, everyone. Starting on slide five, our number one focus over the past few months has been to maximize liquidity. We have done this through reducing our operating cash burn during grounding by around 70% and negotiating payment term extensions with many of our major suppliers. We have deferred 24 aircraft deliveries to beyond 2025. Pre-delivery payments have been reprofiled accordingly, and we have secured GBP 1.7 billion of additional funding since the pandemic began. This GBP 1.7 billion includes GBP 1.4 billion through the CCFF, our RCFs and term loans, plus circa GBP 300 million from the sale and leaseback transactions completed so far. Final proceeds are expected to be towards the top end of the GBP 500 million-GBP 600 million range.
Our cash position at 22nd of June was GBP 2.4 billion. That's before the proceeds from the remaining planned sale and leaseback transactions and the proceeds of the equity placing announced today. Adding this additional funding will leave our cash position at around GBP 3 billion. Moving on to slide six. We have updated the scenario planning charts, which we published on the 16th of April. Compared to those earlier forecasts, under the three-month grounding scenario, our cash burn forecast has been reduced from GBP 1.2 billion to GBP 1 billion. Under a six-month grounding scenario, our proven cash burn forecast has reduced slightly from GBP 2.2 billion to GBP 2.1 billion. Under the unlikely nine-month grounding scenario, we've left the expected cash burn forecast unchanged at GBP 3 billion.
The key takeaways are that cash burn is slightly better than our April forecast. This is principally driven by the proportion of customers choosing to rebook or take a voucher rather than requesting a cash refund. We have resumed our flying program after 11 weeks of full grounding, somewhat ahead of the base case scenario of a three-month grounding. We will continue to explore additional sources of funds in order to underpin an already strong liquidity position. We've also initiated a business-wide cost-out program in order to improve future free cash flow generation. Moving on to slide seven. We announced this afternoon that we have launched an equity placing. The placing will be conducted by way of a single accelerated book build of ordinary shares.
This book build covers both a firm placing for up to 9.99% of our issued share capital, which will settle T+2, and a further up to 5% of issued share capital, which is conditional upon shareholder approval under an ordinary resolution. This approval will be sought at a general meeting to be held on the 14th of July with settlement T+14. Gross proceeds of the equity placing based on today's share price are expected to be around GBP 400 million -GBP 450 million. The proceeds will further strengthen easyJet's liquidity position and credit metrics, further underpinning one of the strongest balance sheets in European aviation. Moving on to the key performance indicators on slide eight. In the first half, our capacity decreased by 7.6%, reflecting the cancellations in March due to the coronavirus. Passenger numbers of 38.6 million were down 7.4%. Our load factor was 90.3%, up 0.2 percentage points.
On a reported basis, first half revenue per seat was up 9.6%, whilst the constant currency RPS increased by 10.2%, outperforming our guidance. Our headline cost per seat increased by 5.5% in the half, while increasing by 7.2% at constant currency. Our constant currency headline cost per seat ex fuel was up 9.5% for the half. Moving on to the income statement on slide nine. Total reported revenue increased by GBP 39 million for the half. Total headline costs, excluding fuel, increased by GBP 25 million, which was mainly driven by the cancellation due to COVID-19. I'll provide more details on our cost per seat drivers in a moment. Fuel cost decreased by GBP 68 million in the half, which reflects the impact of the lower jet fuel price.
As a result, easyJet has delivered a headline loss before tax of GBP 193 million, which is comfortably in line with our guidance of an improvement year-on-year, compared to the GBP 275 million loss in half one 2019. On a constant currency basis, the headline loss before tax of GBP 224 million is also significantly improved year-on-year. The non-headline items are driven principally by a fair value adjustment of GBP 164 million in relation to easyJet's significantly over-hedged position from both a jet fuel and FX perspective, following the full grounding of the fleet, and the lower capacity expected for several months thereafter. Moving on to the detail of our revenue per seat performance slide on slide 10. Total revenue per seat increased by 10.2% at constant currency, outperforming the guidance which we gave at the Q1 stage for mid to high single digit improvement.
This very strong performance was driven by a bankruptcy of Thomas Cook in September, which boosted RPS by GBP 0.56, or 1.1% on a per seat basis. Continued strength in ancillary revenue, predominantly driven by the first bag, as well as strong performance of allocated seating initiatives. These delivered a GBP 1.01 or 2% positive impact on RPS in the half. We were particularly pleased with the GBP 4.20 or 8.3% impact on RPS from strong underlying trading, driven by self-help measures such as our late yield initiative, network optimization, notably in Germany, market consolidation, and route maturity. During March, we canceled around 18,000 flights due to coronavirus. In the context of the first half, this decreased RPS by GBP 0.61 per seat or 1.2%. Finally, when including a 27% negative impact from ForEx, easyJet's reported revenue per seat for half increased by 9.6%.
Moving on to cost per seat on slide 11. Headline cost per seat increased by 7.2% at constant currency. Headline cost per seat, excluding fuel, at constant currency increased by 9.5%. The various buckets of the cost, which are heavily influenced by the impact of the reduced flying due to coronavirus. We have therefore broken out the overall impact of coronavirus in the underlying performance. The underlying increase in headline cost per seat ex-fuel at constant currency of circa 5% was in line with our guidance and was driven by ongoing regulatory and inflation cost pressures, increased ownership costs, and higher crew costs reflecting previously increased pay, as well as higher retention levels. The increase in headline cost per seat ex-fuel at constant currency of circa 4.5% due to coronavirus was driven by the disruption costs relating to the circa 18,000 flights, which we had to cancel in March.
It should be noted the furlough arrangements for government wage support only started at the beginning of April, and we were running full pilot and crew rosters through the end of the first half. There was a net benefit in the first half from FX movements of GBP 1 per seat. Now for more detail on the impact of fuel prices, currency and hedging on slide 12. The average market price for jet fuel for the half was $561 per metric ton. After taking into account our commodity and currency hedging, the sterling cost of fuel per metric ton was GBP 476, which is a GBP 17 increase compared to H1 2019. Moving on to foreign exchange, the euro rate fluctuated between EUR 1.20 and EUR 1.07 during the half.
Net net, there was a headline GBP 31 million positive impact from currency movements, which includes those within the revenue, fuel, and other cost lines. Moving on to cash flows on slide 13. easyJet continues to generate strong, sustainable cash flows in the first half. The operating loss of GBP 173 million is adjusted for depreciation and the positive net working capital reflecting our usual seasonality. GBP 174 million was returned to shareholders through the payment of the 2019 ordinary dividend, which was declared in November and approved at the beginning of February, well before coronavirus outbreak. Our investing and financing activities, including the generation of GBP 114 million by the sale and leaseback of 10 A319s. This partly funded the GBP 452 million of capital investment in the half, primarily on new aircraft. Net debt as at 31st of March stood at GBP 467 million.
On slide 14, we can see that easyJet continues to have one of the strongest balance sheets in aviation. At 31st of March, we had net debt, as said, of GBP 467 million, which comprised cash and money market deposits of GBP 1.4 billion and borrowings of GBP 1.9 billion, including GBP 0.5 billion of lease liabilities. Unearned revenue is usually significantly higher at 31st of March each year compared to 30st of September due to the seasonal nature of our booking profiles. Unearned revenues decreased by GBP 95 million since September and by GBP 752 million since last March. This decrease is explained by the significant increase in trade and other payables, which as at March included the amounts due to customers whose flights departing in April and May were canceled due to coronavirus and travel restrictions.
Since March, these balances have been refunded, or wait to refund or converted into vouchers by customers.
Trade and other payables have also increased, reflecting extended payment terms to suppliers. Moving on to our fleet on slide 15. As we announced in April, we have deferred 24 aircraft deliveries from Airbus to delivery dates beyond 2025. This means that for the first time in easyJet's history, there will be no new aircraft deliveries next year. This also drives the reprofiling of pre-delivery payments. We also have flexibility due to the 24 operating leases are due to renewal over the next coming year or so. To reflect the short-term reduction in expected customer demand, we expect not to renew these leases and reduce the fleet size to 302 aircraft next year, which compares to our base case of 353 just six months ago. Just to explain the graph, the top dotted line on this chart illustrates our current maximum arrangements with Airbus as well as current lessors.
The middle orange line represents our future contractual maximum once we have reduced to 302 in FY 2021. Note, the chart does not reflect any future potential opportunity lease additions to the fleet. Following the closing of our planned sale and leaseback transactions, we expect around 50% of the fleet to be unencumbered. The chart on slide 16 summarizes our revised expectations for gross capital expenditures over the remaining of FY 2020 and in the coming three years. As a result of the cuts we have made to CapEx, including the reprofiling of our fleet, gross CapEx has been reduced to around GBP 400 million for the second half this financial year. In FY 2021, we expect to spend just GBP 600 million, with only a very small fraction of that to be spent on new aircraft, as represented by the orange sliver in the second bar.
Maintenance expenditure includes amounts expected to be incurred on lease returns. The lease payments include the capital elements of the lease rentals relating to previous sale and leaseback transactions. Gross CapEx for FY 2022 is expected to be in the range of GBP 600 million-GBP 900 million and to be in the range of GBP 600 million-GBP 1.4 billion in financial year 2023. The broad range of CapEx outcomes reflects our aircraft order flexibility and rate of lease returns. Slide 17 summarizes our forward jet and currency hedge positions. Prior to COVID-19, our jet fuel exposure was 71% hedged at $654 per metric ton for FY 2020 and 51% hedged at $638 per metric ton for FY 2021.
In the first half of FY 2020, there was a GBP 164 million fair value adjustment due to easyJet's significantly over-hedged position from both a jet fuel and FX perspective following the full grounding of the fleet and the lower capacity expected several months thereafter. There'll be a further impact in half two FY 2020, and over-hedged amounts are likely to cause a degree of volatility in the income statement until these instruments mature. This was included as part of our scenario planning and our cash flow scenarios. To mitigate the FX of over-hedging, a number of actions have been taken to include putting jet fuel hedging on hold for the time period from April 2020 through to October 2021. Jet fuel hedging continues for later time periods in order to take advantage of the low price environment.
Our expected FY 2022 jet fuel requirement is currently around 35% hedged at $513 per metric ton. With that, I'll now hand you back to Johan.
Thank you, Andrew. I am on slide 19, very pleased to say that on the 15th of June, and after 11 weeks of full grounding, easyJet has returned to the skies. There has been an enormous amount of work going on behind the scenes, while many of our people have been on furlough, so I'm extremely proud of what we have achieved. As you can see on the slide, easyJet has been one of the first airlines to commit to EASA's Aviation Industry Charter for COVID-19, which provides a framework for safe air travel within Europe. The guidance from EASA, ICAO, and all of the public health authorities have driven our new biosecurity procedures, which rolled out on the 15th of June. These biosecurity measures form the first part of the Europe with Confidence pledge, which we launched in June.
This pledge aims to reinforce some of our core brand values and encourage customers to fly again. Sustainability forms the second part of our Europe with Confidence pledge. Even though the way we operate will look different for a while, we will not be compromising on the promises we have made around the environment, and this will become more important in the future. The third and the final part of our Europe with Confidence pledge is around value. We are reminding our customers that we are proud to offer great value fares, particularly when booking early. The initial schedule for our restart on the 15th of June involved just 10 lines of flying and a mostly domestic schedule in the U.K., France, and Italy. As you can see in the chart on slide 19, we expect this to ramp up through the summer.
By the end of August, we expect to serve around 75% of our previous route network, albeit on reduced frequencies. Moving on to slide 20. I must say it was fantastic to be at Gatwick for our first restart flight and to see the excitement, not only from the customers who were flying, but also from the crew, who were absolutely delighted to be back flying again. This excitement didn't end at Gatwick either. The support and the feedback we have had from loyal easyJet customers from all parts of Europe as well as our people from right across the business has been absolutely fantastic. It was also great to see all the very positive press coverage which we received on the day, with over 800 pieces of coverage across Europe, more than 170 U.K. radio slots, and 40 U.K. national pieces in all major publications.
Moving on to slide 21. As you know, safety is always the number one priority. I'm proud of the work that has gone into ensuring we were well prepared for our restart. As I said earlier, the guidance from the EASA, ICAO, and all of the public health authorities has driven our new biosecurity procedures which were rolled out on the 15th of June. These procedures include additional deep cleaning and disinfection of our aircraft every day, all of our customers, crew, and ground staff wear masks all the time, and temporary suspension of our onboard bistro service. You may know that all of our aircraft were already equipped with HEPA air filtration system, which filters 99.97% of airborne contaminants in the cabin, including viruses and bacteria.
These systems are the same as those used in hospitals, and through them, the cabin air gets replaced every three to four minutes. We also know that traveling may feel different and perhaps daunting for younger travelers at this time, which is why we teamed up with a superhero illustrator to create comic book-inspired face mask covers to help ease the experience for both kids and parents. These masks will be available for free to children who are traveling with us over this summer from next month. These measures will remain under review and in place for as long as is needed to ensure customers and crew are able to fly safely as the world continues to recover from the impact of the coronavirus pandemic. Moving on to slide 22. easyJet is well-positioned to lead the European airlines recovery through our focused low-cost leisure and European short-haul focus.
We expect government restrictions around short-haul flying to be lifted much sooner than those on long-haul intercontinental travel. We're finding that customers are far more relaxed about booking short-haul trips, which are perceived to be less risky than long-haul trips. We also see a solid demand for leisure travel as lockdowns are lifted. We also expect our low-cost business model to drive a faster return to travel. As we saw in 2008 and 2009, easyJet tends to outperform in tougher economic conditions when customers are seeking to maximize the value they receive when they spend. easyJet offers a unique combination of low fares and leading value for money, which position us well in a weaker economy. Our recent research showed that customers' concerns are primarily focused on economic outlook. All of these trends are positive for easyJet. Moving on to slide 23.
We have a clear plan that provides a strong foundation to drive profitable growth and long-term shareholder returns. We are delivering it strategically through the strategic framework announced in 2018. Whilst in lockdown, many European airlines have been re-examining their priorities. We have also, at easyJet, reassessed our strategic priorities, and we found that our five core priorities are more relevant today than ever, with the current focus being on our network, winning our customers' loyalty, and value by efficiency. Moving on to slide 24. As we discussed before, easyJet has 67 number one and number two positions in airports across Europe, the airports which our customers actually want to fly to. These are big markets. We're number one or number two across London, Paris, Berlin, Milan, Amsterdam, Geneva, Manchester, Lyon, Basel, et cetera. This network provides a competitive advantage that is not easily replicated.
What is sometimes not appreciated is the scale of our operation in these cities. The leadership position we have in our key bases cannot be matched. For example, we have more than 30 planes touching Milan, 20 touching Paris, 15 in Geneva, and more than 100 in London. We do expect changes in the competitive landscape in these markets in the wake of the coronavirus, but we have the positions and market leadership to compete vigorously. We're also looking at these and other markets, and we'll be ready to move and capture opportunities as they arise. Moving on to slide 25. The network we have built up over time also enables us to be efficient with its network choices with an absolute emphasis on maximizing returns.
As you can see in this bar chart, a number of our less profitable bases are now under consideration for rationalization or closure as part of our plan to reduce our fleet to 302 aircraft. We will, however, maintain our strong positions in our most profitable airports and leverage the flexibility in our network to align capacity to demand. As you would have seen with news across the industry recently, the competitive landscape across Europe is likely to shift in the wake of COVID-19 presented as our competitors reduce their capacity. The scale and flexibility of our network also provide us with the opportunity to realign capacity to take advantages of these changes in the competitive landscape. In addition, as Andrew highlighted earlier, we also have the flexibility in our fleet that allows us to take advantages of opportunities in the future. Moving on to slide 26.
easyJet continues to have a leading brand and customer offer. In H1, easyJet saw improving scores on first choice brand scores across all our core markets. As an example, in the U.K., we've achieved our highest score ever to date. In this challenging environment, our research shows that in addition to value and price, brand trust is more important than ever to win, with more than 60% of our customers saying that trust and price are the two most important factors in making their airline choice. Based on a recent trust survey, we see that customers across Europe trust easyJet more than any other low-cost carrier across all of our major markets, and the gap is quite considerable, 21 percentage points in the U.K., 17 percentage points in France, and 32 percentage points in Switzerland.
These are our three biggest markets, and we have a significant double-digit gap between us and the nearest low-cost competitors. Combined with our focus on value, this brand trust position will help us deliver an unmatched proposition in this environment. Moving on to slide 27 and easyJet holidays. easyJet holidays was successfully launched late last year. Bookings were strong before the outbreak of the COVID-19, and were up by over 100% compared to our previous turn of year, with increased selling prices and over 50% of our customers choosing our directly contracted hotels. Clearly, cost reductions within the airline and price discounts from our hotel partner gives us the opportunity to further build on the easyJet value proposition within our holidays business going forward.
In March, we launched both our winter 2020 and summer 2021 seasons in order to offer disrupted customers a range of flexible options when amending their easyJet holidays to future seasons. We recently added holidays to Egypt, particularly for winter sun. Early sales for summer 2021 bookings are very positive. Our customers also love the great value which easyJet holidays offers. During this unprecedented period, we're delighted that 65% of bookings have been retained for future travel. easyJet holidays is well-positioned for the current environment given its flexible business model with very low fixed costs. Remember also that we do not have any fixed commitments to hotels. It is a significant competitive advantage that easyJet holidays has been created on an innovative and dynamic digital platform.
This has enabled us to be nimble throughout the coronavirus pandemic, quickly reorientating towards segments such as self-catering and capitalizing on renewed customer interest in destinations such as Turkey. We also seen a significant shift in the number of hotel partners wanting to work with easyJet, driven by the desire to have more control over the distribution, moving away from the traditional exclusive models with one tour operator partner. We can continue to keep our holiday business model lean due to the unique relationship between the airline and easyJet holidays through our highly competitive cost base, access to our existing easyJet customer base, and our trusted brand. Moving on to slide 28.
In response to the COVID-19, easyJet has launched a major restructuring program which aims to drive cash generation in order to pay down debt and to ensure that easyJet emerges from the pandemic in a more competitive position. The program includes right-sizing the organization and also proposing reducing staff numbers by up to 30%. easyJet is launching an employee consultation process on these proposals to reduce staff numbers, as well as optimizing our network and bases, improving productivity, and promoting very efficient and more efficient ways of working. In addition to the 30% reduction in headcount, which we are consulting on, we are taking a number of steps also to improve productivity. Other cost restructuring activities include seeking lower cost airport deals through simpler handling, bringing some maintenance in-house at lower costs, accelerating lease returns, and introducing a fuel efficiency program.
Our operations team is also increasing its focus on our base at London Gatwick in order to make our product there more differentiated. As part of our cost out program, we have set the stretch target for full year 2021 cost per seat ex fuel to be in line with the cost per seat ex fuel that we delivered in 2019. As I'm sure you will understand, this target is a large stretch considering the likely significant decrease in the number of seats flown in 2021. Moving on to slide 29. Even though the way we operate will look different for a while, we will not be compromising on the promises we have made around the environment. The importance of sustainability has increased following the COVID-19 pandemic, with 98% of people thinking about sustainability the same or more before.
We were the world's first major airline to operate net-zero carbon flights across our entire network by offsetting the carbon emissions from the fuel used for all our flights. We are continuing to work to minimize the carbon impact of our flying. Investing in a modern fuel efficient fleet is an important part of this. We aim to operate our aircraft as efficiently as possible, achieving high load factors, but also optimizing flight plans, climb and descent profiles, and taxiing. easyJet will also continue to support the development of new carbon innovation technologies, including hybrid and electric planes, in order to help reinvent aviation over the longer term, so that European aviation can become net-zero from carbon emissions. easyJet is also looking for more ways to take action beyond carbon, including rapidly reducing our waste and single-use plastic usage.
Our actions in these areas means that we will further establish our position as the airline of choice for those seeking to fly with less impact on the environment. Looking forward and on slide 30. It is early days as we have only just restarted flying on the 15th of June. However, our expectations are that we will ramp up our flying program as we go into the summer. Regarding capacity, we plan to fly around 30% of our usual Q4 flying program. easyJet holidays is seeing encouraging booking numbers, and easyJet cost per seat ex fuel program is expected to deliver a flat cost per seat ex fuel performance in 2021 versus 2019 levels. At this stage, given the continued level of uncertainty, it is not possible to provide financial guidance for the remainder of the full year 2020 financial year.
In summary, and on slide 31, we've taken decisive action to address the impacts of the COVID-19 pandemic, having minimized cash burn, maximized liquidity through cost reduction, fleet defers, and additional funding, and launched an equity issue as we announced today. The measures we have taken further strengthen our investment grade balance sheet, which remains one of the strongest in the industry. easyJet business model and the actions we are taking means that we are well-positioned for leading the recovery from COVID-19. We delivered a strong first half results with underlying trading ahead of expectations. The easyJet brand drives confidence in European travelers who are focused on trust, sustainability, and value for money. easyJet is the industry-leading network serving primary airports, providing a customer offering that cannot be matched by any other airline and allows for efficient approach to delivering profitable flying.
Finally, we are undertaking a cost out program which will deliver sustainable cost savings in all areas of the business. This is why we are confident that easyJet will be at the front end of the recovery from COVID-19. Thank you for listening, and we will now take questions.
Ladies and gentlemen, if you wish to submit a question, you can press star one on your telephone keypad now to enter the question queue. That is star one on your telephone keypad, if you wish to ask a question now. We do have several callers on the line so far. We will go to the first caller in the queue. The first question will come from Stephen Furlong of Davy. Stephen, when you are ready, please go ahead with your question.
Hi, guys. Thanks for the question. Can I just talk about capital structure in terms of the equity raise, why that number? Why not a smaller one? Why not a higher one? Related to that, the capital structure post the raise. Would you just comment on how you would be happy with that type of capital structure? Just related then, sale and leaseback. I know you said, Andrew, you'd be at the top end GBP 650, but you're 50% of the fleet unencumbered. Just give me a comment on the sale and leaseback market, because we hear from others low cost it's not so good, but you've managed to be able to do deals. Thank you.
I'll go with the first part on the number in itself. Basically at the current moment, we have a cash position of GBP 2.4 billion, and that's before the proceeds from the equity placing and also conclusion of some remainder of sale and leaseback transactions that we're doing. We're looking to be in a position to be just in excess of about GBP 3 billion. We think that this is the right level for us to be at this moment in time.
When we're looking through where we stand today, where we are coming off from being grounded for these 11 weeks and starting up with albeit a small program, then the plans we have to fly about 30% of the planned capacity for Q4, we believe that this puts us in a good stead where we can underpin the balance sheet, strengthen the liquidity to take us through this period. Which in all fairness, still consists of a number of uncertainties that is out there. Fundamentally, also what this does, it's improving the credit metrics that we're having. It's very important for us to continue to have the credit rating of being investment grade. That's what this placing is doing.
Yeah. I think from a point of view of the capital structure, as Johan said, we've modeled a number of scenarios, and we've been looking at the investment grade. From our perspective, maintaining that is very important. As you know, S&P and Moody's have downgraded pretty much across the market, and we are one of the few that has retained an investment-grade credit rating. It's very important. That's one of the reasons why we've managed to access the sale and leaseback market. When COVID kicked off, we were pretty much one of the first in the queue for CCFF, and we landed that extremely quickly. We drew down the RCF and got the term loan laid up. What that did, that gave us breathing space to ensure that we could run proper RFP processes for sale and leasebacks.
Obviously, from a point of view of our assets, our assets are very attractive. The lessors know us well because we've been doing 10 sale and leasebacks pretty much every year for the last few years as managing our residual values. One of the other things that's quite attractive is the fact that our aircraft run CFM56 engines, as you know, Airbus for now, they're terminating the production of those, and that's a valuable asset to have in the aftermarket. From a point of view of price positioning has been good, interest has been strong, and we're confident that we'll get the rest of the target away, in the next few weeks and months, as indicated.
Okay. That's great. Thanks, Johan. Thanks, Andrew.
Our next caller on the line is Jarrod Castle. Jarrod, when you are ready, please go ahead with your question.
Thank you, and good evening, gentlemen. Three as well then. You're starting to ramp up with about 30% of your capacity, and you're obviously making the comment that you're going to kind of lead the pack in terms of airlines. There are some other airlines which are obviously ramping up quicker than you out there. Just to get some color, why the number 30%? Related to that, what kind of load factors would you be targeting? Just the second thing, you're talking about 2023, kind of getting back to recent levels of traffic, i.e., September 2019. Again, there's some others talking that potentially summer next year could be similar to summer 2019. Again, just your thinking on that ramp-up. Just lastly, just coming back to cost control, which, as you said, it's an aggressive target given you'll probably fly lower capacity.
Just getting an idea about even how are you thinking about next year, if it's more of a normal year relative to 2019 levels. Thanks.
Yeah. Thank you for that. In terms of the flying program, we obviously started with a very small program here in the middle of June. It's only worth about 10 aircraft flying, the big ramp-up is then coming into July, August and September. Like you said, we're estimating to do about 30% of what was planned in terms of capacity. Clearly, that's going to be a lower number in July, and then it ramps up as we then coming forward into the season. First of all, the key principle here is to do profitable lines of flying. That's absolutely clear for ourselves. We've done a fantastic job in bringing down the operational cash burn in here.
What we want to make sure is that we don't lose sight of that in our enthusiasm just to put aircraft up there and then lose some of that momentum that we have. We've been working in the commercial team and data team to work out where we can see that those profitable lines of flying will be. We see that we have a strong demand on leisure routes and the Holidays routes, as an example. We are happy with the demand that we see on new bookings outside the U.K. I think it's fair to say that U.K. is lagging behind, and we can link that back into the quarantine. Now, in all fairness, we also have flexibility to ramp up the flying if we see that there's more demand.
We have a two weeks window where we can add on additional lines of flying if we believe that that is the right thing to do. I wouldn't be hung up on the fact that you're hearing people starting and throwing around different numbers out there. This will be important for ourselves to look at the profitability of the lines of flying that we do, and we think we're going to be able to meet the demand that is out there. We're not giving any specific guidance on the load factors specifically. We are pleased with the demand that we're seeing, which we describe as solid for the program that we now have in place and we started to go into as we then ramp up in July, August and September. Question on 2023. I think we are in line with actually most airlines in the world.
They're looking at 2023 being the year where you come back to the 2019 levels of demand. Now, I would like also to stress to say that if demand comes back earlier than that, we clearly will have the flexibility and make sure that we can capture that demand. I think it is a conservative and it's a prudent way of looking at the demand. Having said that's where most airlines and IATA, as an example, are looking for demand to come back to that. Make no mistake, we will be able to capture and make sure that we can capture if we see that demand comes back earlier than that. On the cost program, it is the biggest cost program that this company has embarked upon.
For us, it's about, first of all, right-sizing the organization to a new level of demand and a new level of flying. That's something that we are now starting consultations on in the U.K. and also across the network. It is a target that is there because what it will allow us to do is to, A, be able to also compete with a different cost base also successfully going forward as we look to evolve through this process. We want to make sure that not only, as we have talked about earlier, it's about survival, but also that we can compete more and better as we manage our way through this process. Right-sizing ourselves towards the new level of demand is a very important part of that.
We're going to look across everything we do, whether that is at the head offices, at the bases, to look to see how we can be more effective and how we can be more productive as you would expect that we would do.
Okay. Thanks very much.
Thank you.
Our next caller will be Jaime Rowbotham from Deutsche Bank. Jaime, when you are ready, please go ahead with your question.
Hi, guys. Two from me, one for Andrew, one for Johan. Andrew, we're a week away from the end of your Q3. On slide six, I think you're effectively telling us that you'll have burnt somewhere up to around GBP 1 billion of cash in that quarter, presumably pre-financing. If we try to envisage a cash flow statement to Q3, would that start with an operating loss of around GBP 250 million in line with the gray part of the pie chart and with the other sections, so refunds, CapEx, working cap, then getting us to a Q3 free cash outflow of around GBP 1 billion? Is that the right way to think of it? Perhaps you could say as well, is depreciation in or out of that gray bit?
Secondly, Johan, the French market, a key maturing market for easyJet, yet there's been some unhelpful pieces of rhetoric coming out from the French government around banning domestic flying, around refunding taxes only to French airlines. Are you a bit concerned about these developments in France, and how is that affecting the way you're managing your return to flying? Thanks.
Hi, Jaime. We can speak to the results for Q3. We can split those out. It's fair to say we are a couple of days away from the period end. At this point in time, I think we'll come in slightly lower than the GBP 1 billion. Roughly GBP 1 billion. I think we'll come in slightly lower. In that gray box, the depreciation isn't a cash item. You won't be seeing that come through. As we said, in April 16, we've been spending our operating cost of cash burn were between GBP 35 million-GBP 40 million per week. We're at the lower end of that. As you know, that three-month grounding cash number was expected to be around GBP 1.2 billion. It's come in, obviously, a lot less. The things that have driven that have been, as I said, lower end of the operating cost burn.
The level of refunds has been less because since then we've introduced the voucher proposition and customers have taken up vouchers rather than taking refunds. We also didn't assume that we'd obviously take in much sales during this period of time. We've seen sales trickle along, albeit low, and that's helped us. A lot of those things have helped us. Clearly, during this period of time, we've had a net loss. We've had no revenue. We haven't disclosed exactly what that loss is in the quarter. I think it's fair to say all the things we've done from a cost perspective, taking maximum furlough as we can, using as much opportunity from a point of view of extending payment terms, using all of the facilities that HMRC on tax and deferrals around that, all of that has been undertaken.
You'll see that as you roll forward in the six-month grounding, we've also got a reduction in cash burn there from GBP 2.2 down to GBP 2.1. We've left the nine-month grounding scenario in there for prudence. These are the three scenarios that we used to assess the level of liquidity we needed to ensure we maintain that investment grade that we're targeting.
On France in particular, the key thing for us is to make sure that there's a level playing field in the markets and the territories in which we operate, which is something that we are constantly keeping an eye out for. In the markets, France is no exception on that, we have local terms and conditions. We pay our Social Security taxes, and we employ people locally as well. We sometimes need to remind those governments that that is what we do. I think it's more on the fact that to make sure that that is not being lost in some of the enthusiasm that some governments across Europe have to support their flagship inefficient airlines that is out there.
That's something that we're keeping a very close eye on and also engaging with the European Commission on, to make sure that that level playing field exists. It's also worthwhile to note that whilst these billions and billions of euros are being poured into now some of Europe's most inefficient airlines, it's also fair to say that these billions doesn't come completely free. You can see that there are indications of restrictions for those companies on how they can operate and how they can fly. Some of them would be touching upon what routes they can fly and not fly. In this particular case, there's nothing about the French ban on the routes that affect ourselves in terms of what we're doing there.
On contrary, I think that we can possibly see that we're having opportunities as some of these airlines are not being able to perhaps manage themselves. That would be in the complete and best interest of the companies because of these restrictions that are being put on them. That's something that we are keeping a very close eye on. I do think that a level playing field is the most important thing that we got to look out for and fight for. I have no doubt that actually what's going on there right now is something that will provide opportunities for us from a competitive point of view, and we will look to capitalize on that.
Just Jaime, to clarify, I was referring obviously to Q2, not Q3. Q3 is obviously the next quarter.
Thanks, guys.
Thank you.
The next question is going to come from Savi Syth of Raymond James. Savi, when you are ready, please go ahead with your question.
All right. Thank you. Good morning or good afternoon. Just on my two questions for me, just on the cash burn, I'm curious what the current level of cash burn is now that you have revenue coming in. Just trying to think of fiscal 3Q and what level of cash burn we should think about for that, if your projections on what the capacity level is reasonable. Second question is just, I realize this is really early, but how are you thinking about the winter? I'm just curious from a year-over-year capacity decline, should that continue to moderate as we head to the rest of the year? Do you think that it is more demand recovery in the summer and maybe not so much in the winter?
Lastly, just on your CapEx for fiscal year 2022 and 2023, just how much of that is maintenance versus aircraft, the other kind of type of CapEx? Thanks.
I can start with the second question on the winter. I think it's fair to say that this is a period where we have very little, if any, visibility going into the winter. Our focus now is to make sure that we start up flying, we do it in a safe way with health and safety being the primary priority of what we do, and at the same time that we make sure that the lines of flying that we are adding on to the program is profitable. That's where the focus is. I think it's also fair to say that the amounts of new bookings that we had throughout the period when we were grounded were hardly any.
I think that with that in mind, we will look to continue to make sure that we are as efficient as we possibly can with our flying going into the winter. The winter is normally a loss-making season. That's why it's so important also to address the costs now. One thing is that, while we're looking for profitable lines of flying, we estimate it only to be 30% of the program overall. Again, you're coming into a loss-making winter, and that's why it's important that we continue to focus on the cost as we then get into the next summer, which there are early and good indications of a demand, particularly on easyJet holidays, but it's way too early to talk about what the overall demand will be there. That's how we're going to see it.
Start up the flying right now, manage ourselves conservatively through the winter, make sure that our costs are in a good place as we hopefully then see recovery coming forward.
On the cash burn, as you said, it's very early days. The economics around flying is twofold. You've got customers that would have already booked onto those aircraft back in April, when the COVID environment started, which we would already have had the cash in and reflected in our known revenue. You have the incremental sales that we would have made once we've really released that schedule. The combination of those two, we know that covers the incremental costs associated with it. You've got the avoidance of having to pay refunds to the customers that have already booked, and we've got the incremental cash inflow of the sales. That's the mechanism you need to look at. Fundamentally, the working capital movement in Q3 will be dominated not so much by the flying as such, it will be around the booking levels.
I think from our perspective, obviously, the working capital side is such that you build up a balance of unearned revenue, you get cash inflow, and that will be the main driver as to where our working capital lands over the coming months. As you say, it's early days, and we're keeping a very close eye on that. We're modeling some of those things through. One of the reasons why we've been so focused on really making a big deal out of the fact that we started flying when we did in June 15th. We've got all the marketing and PR because we really want to drive that demand out, the customer demand, to drive that bookings up and therefore drive incremental cash into the business and improve that working capital position.
It's early days to give you any kind of color around that, but we'll keep you posted as that progresses. With respect to CapEx, obviously we've given the split in FY 2021 of what we think that maintenance and lease payments and new aircraft spend will be. In FY 2022 and 2023, given the amount of moving parts, we've got a pretty good idea of what the range is that we're looking into for 2022 and 2023, and that's given on the chart. What the exact splits will be between maintenance, lease payments, and new aircraft, we haven't provided. Clearly, the flexibility between the base of 600 and the top-end ranges will be reflective of the variability of where if we decide to take on new aircraft and the level of deferrals that we take on. The exact split between maintenance and lease payments-
Is going to come from Muneeba Kayani of Bank of America. Muneeba, when you're ready, please go ahead.
Sorry, I think we were continuing to answer a question here.
Hello, can you hear me?
Apologies. Continue.
Sorry, we haven't finished. In that split, there might be movements between the lease payments and the maintenance because when you return leases, you've got a maintenance cost associated with that, and there might be fluctuations between the two. When we get nearer to the time, obviously we'll provide more color for you. Now we're ready for the next question.
Hi, can you hear me?
Absolutely. We have Muneeba on the line. Please go ahead.
Hi. A few questions from me. You mentioned the flat cost per seat targets for 2021 versus 2019. That's my first question. Secondly, you mentioned profitable flying. How do you define that exactly? What costs are you including in that? What level of loads would you reach when you would start adding more capacity versus the 30% that you have currently planned for 4Q? Lastly, I don't know if you can answer this, is Sir Stelios indicated if he will participate in this offering?
Right. Start with the cost per seat. Like I said, it's an aggressive, and the biggest cost program that the company has ever done. We had 331 aircraft in 2019, and as you would see on the chart on slide 15, in 2021, the plan is to go to 302 aircraft. This is really a cost program that touches every part of the company, as you would expect, in order to make sure that we are putting ourselves in the position to be able to compete in a new level of demand. Then at the same time, as we then are putting these measures in place to also make sure that as the recovery starts and we can grow from there, that these savings are also sustainable.
We, going forward, will be in a, relative to competitors, in a better place when it comes to costs. There's a big focus that sits around that, and that involves all the things that I touched upon, and no stone will go unturned in the company in order to make sure we can do that, because that's absolutely the best guarantee to be able to successfully come out of this in a better shape than others, and therefore continue on the winning journey that easyJet has been on. In terms of the profitable flying, it's basically making sure that the costs that are attached into adding on the line of flying is being covered with the revenues that we're putting into that line of flying. We are very mindful to make sure that is the case.
So far, we're very pleased with what we're seeing, and we're taking a huge number of parameters in there to make sure that is the case. We are watching this on a daily basis. As we are also then reviewing the program going forward, we still have also then the flexibility to move up if we see that the demand is there. That's important for ourselves. We don't give out specific load factor numbers and targets for where we stand right now in the remainder of the financial year. It's too early to do that. Clearly it's a mix of the metrics in order to make sure that we are seeing that the flying on what we're doing is adding positive contribution.
On Stelios, the question was on the Yes, Stelios has been treated like all the other top shareholders, being approached ahead of the public announcement that we've had, and there's no difference, like I said, in how we constructively want to work with him compared to all our other important large shareholders. Let's see. Next question.
Absolutely. The next caller is Andrew Lobbenberg of HSBC. Andrew, when you are ready, please go ahead with your question.
Thanks, evening, all. Can you talk to me about the strategic implications of the fortress strategy? If we've got the whole world aviation shrinking, and expected only to get back to 2019 levels by 2023, how do you make fortresses work with capacity melting out of places like Gatwick? I guess related to that is how important is it for you that the use it or lose it rule gets set aside for the coming winter as well? The other question I'd be curious to understand is on labor. Obviously, you're in talks with unions, so you're going to be constrained on what you can say. How hard is it to drive productivity changes when you've got a business which has differentiated itself from its major competitor with its strong and stable industrial relations?
Yes. Thanks, Andrew. The important thing when you're looking at the strategy from a network point of view, we are absolutely going to optimize the network, that means that we're not excluding base closures. We're looking at partly the bases in terms of what they're delivering on the contribution per block hour, but also the absolute number given the scale that it has. Clearly, as we now are into discussions with airports as we know that the fleet will go down to lower levels and be smaller, we get choices to make. That means that we will allocate the aircraft we have, where we're getting the best returns. It's no secret, of course, that it will matter to us what the airports can deliver to us in terms of great deals. Of course, that's something that we're now having intense discussions with.
I think also to that point, it's no doubt that the strategy we've had that has been successful in the past will continue to be successful to have leading positions at the primary airport. We'll make sure we can continue with that strategy. I think you would've also seen that some airlines have put a lot of question marks about some of these airports, whether they're going to be there or not be there. We are watching and looking at the competitive environment at these bases. We will be pretty ruthless when it comes to how we're allocating the assets and the aircraft to not only defend our position, but also to be proactively be offensive and take also the opportunities that comes and that we can capitalize on. Slot extension, you're right.
That's something that we are considering to see that we can get a further relief on that. That's discussions that we want to take place to make sure that we can see if they can go into the winter. In terms of the productivity, I think that we have room to increase productivity without changing terms and conditions necessarily. I think that's down to the fact that we are smarter in the way we crew and how we roster. At the same time, we got to make sure that, clearly, that the size of the organization is adapted to the level of demand. We believe that we have rooms for improvement to basically be more productive without going into other examples than changing terms and conditions necessarily.
These are things that we are, as you would expect, we want to discuss with our unions on and consult with them upon.
Lovely. Thanks very much, Johan.
Thank you.
Next question, please.
The next question comes from Carolina Dores of Morgan Stanley. Carolina, when you're ready, please go ahead.
Hi, good evening, everyone. I have just one. Your comment on bookings are encouraging. Can you comment, I know it's early days, but what does pricing look like? Thank you.
Clearly, it is early on. The flying we've been doing here for the first couple of weeks, and the new bookings intake we're seeing is promising, as you see, and the pricing is quite positive. Clearly, there are some very attractive lead-in prices, but the curves on the pricing isn't necessarily that different from what you would normally see, apart from the fact that the booking window clearly is closer to departures. As I said earlier, we are pleased, and we are quite positive about both the pricing levels we're seeing. One should also be mindful of the fact that, look, this is a peak season that we're coming into, July and August, and there is definitely less capacity out there as you would expect.
I think that there has been a pent-up demand for people who want to go on holiday in particular, and we're seeing a good demand on the leisure routes. Now we just want to make sure that we also can get the quarantine removed and lifted and replaced with something else here in the U.K. If that is the case, and we are optimistic that something will happen along that, if I hear the mood music from the government correctly. That means that we will have an even better and more positive impact from what we had originally planned here in July, as an example. Mind you, like I said earlier it's a two weeks window we have for where we can add online for flying, which means that we got flexibility to scale up if we see that that is needed. Okay.
Next question, please.
The next question will come from Malte Schulz of Commerzbank. Malte, when you are ready, please go ahead with your question.
Hi, good evening, and thanks for taking my question. Mostly focusing, also, you said you want to even strengthen your hubs where you have your biggest bases. Do you also plan with BA maybe leaving Gatwick mostly altogether or at least to large degree to reconsolidate all your operations in London and Gatwick? Do you also see in other places some more opportunities, and how should we take on that, going forward, particularly if we're looking at 2021, 2022 or so?
Yeah, I think in alluding to what I said earlier as well, we're going to have an absolute focus to optimize the network, to maximize the returns of what we're doing. In that process, we don't exclude base closures, as an example. The input we're getting from the airports in terms of the conditions clearly plays a big role into that. That is something that we are looking at very carefully, and focused on at this moment in time. I think that there will be a combination of capitalizing on opportunities where we potentially can see that competitors are leaving or reducing capacity, particularly where we go head to head with them on. At the same time, our focus is on maximizing our own returns. The strategy we've had success to date about having leading positions at the prime airport, that hasn't changed.
Clearly the situation we are in means that with the now less of assets available to allocate from an aircraft point of view, that means that that is a dimension and a leverage into the negotiations that we're having with the airports currently. That's going to matter.
Do you also look to grab new markets in the recovery or to make a move into a country where you are not yet as present?
Like I said, we're not ruling out anything at this moment in time, but the key thing is to maximize the return and optimize what we are doing. That's the focus, and I can't really comment anything more on that for the time being.
Okay. Thank you.
Okay. Any more questions?
Yes, we have one more question. This question is going to come from Alex Paterson of Peel Hunt. Alex, when you're ready, please go ahead with your question.
Hi, it's Peter Land, actually, but there we are. Evening, everybody. Could I just ask three quick questions, please? Firstly, sorry, you may have commented, but I didn't catch it if you did. Can you just say how you're simplifying your airport handling? Secondly, slightly following on from the last question, you're looking at hub and base closures, potentially. Should we see airport cost savings as an upside opportunity? You've not mentioned it on slide 28. If you sort of look ahead from FY 2021, if you were to show fleet growth, would you expect cost per seat to show a declining trend? Thank you.
Yeah. Hi there. From a point of view of ground handling, what we've done, we've used this as an opportunity to really look at the product from a handling perspective. There's been some seepage around add-on products that some of our ground handlers provide to us, and we've been really robust and ruthless in looking at the product we've got and the efficiency around it. By taking out activity by ground handlers, we've managed to negotiate better terms and better working practices, which is reflected in their cost base. Peter Bellew has been instrumental in leading that, and we're in the process of finalizing that position. I think on the airport costs, absolutely. That is one of the things that plays a big part for us from our input costs and those are discussions that we are doing now together with the airports.
Clearly, we want to make sure that the offers that we're getting are also sustainable, and we can keep going for a longer period of time. Those ones who can do that and offers good deals for us going forward, clearly has an advantage in the discussions that we're currently having. You're absolutely right. We have flexibility within the fleet. I'd also like to point out that if we see that demand is coming back earlier than we anticipate, on slide 15, when you look at the fleet numbers, we still have the opportunities to add on additions to the fleet and operating leases if we choose to do so. That's not where we are at this moment in time.
Clearly, if that happens, we would look for that cost per seat to go down because the program we're doing now is also looking to address that we get sustainable cost savings that we will carry with us as we go forward, and then also benefit from if we are then increasing the size of the fleet more from 2021 and onwards.
Just to put that another way, do you think you can get to a declining cost per seat trend beyond FY 2021 if you were to grow your fleet slightly, in absolute terms from FY 2021?
Well, the target we're talking about now and what we come out with is to be flat on 2021 versus 2019. Of course, costs have been and will be incredibly important for us going forward because it allows us to compete successfully in everything we do. We come out with the target from where we stand today, and that work continues all the time. That's not something that we're giving up. We also want to make sure that we have as attractive cost per seat as possible, and that's what we're going to continue to focus on.
Thank you.
Thank you. Anything else? Yeah, I think we could draw a line there. I think, Dan?
Yeah. No further callers. I'll return the call to you.
Brilliant. Thank you. Okay. Listen, thank you all very much for joining with short notice and have a continued great afternoon and evening. Thank you.
Thank you all for joining today's conference. You may now disconnect your lines.