Okay, thank you for joining us for easyJet's half one results for the period up to the 31st of March 2025. I'm joined today by my full management board, sat on the front row. I'd particularly like to welcome Ellie, Opal, and of course Jan, who are joining us for the first time, having joined easyJet and the leadership team earlier this year. I would also like to welcome our Chairman, Sir Stephen Hester. We recorded a kind of pre-recording, if you like, of the results presentation and loaded it to the website first thing this morning, so hopefully you've all had a chance to have a look at that. For those of you who haven't, I'll just summarize some of the key points, and then we'll go into the majority of the morning on Q&A.
We're making good progress against our ambitious strategy as we continue to drive efficiency and enhance the customer experience both in the sky and on the ground. In the first half, the group loss was GBP 394 million, which was in line with consensus and slightly ahead of last year when you factor in the timing of Easter. You'll notice we've put the value of Easter at GBP 50 million because we've now closed the book on March, so we've seen the impact it's had there. We've also closed the book in April and seen that the full amount has come back, and that's why we've upgraded the number there to GBP 50 million. In Q1, we saw a good performance. We improved the performance by GBP 65 million, more than halving our losses in this quarter. We remain very focused on taking this quarter into profit.
This is something we think we can do because of the longer summers for the couples markets into October. We're looking to add more capacity into the Christmas peaks, and we see this quarter having a good potential. Now, when you move to the second quarter, we saw losses slightly increase, and this is always a loss-making quarter for airlines. We have to do a lot of preparation work for the summer ahead. We recruit all the pilots and cabin crew extra that we'll need. We train all the new recruits, plus recurrent training for the existing ones. Of course, it's an important time to maintain, from an engineering perspective, the whole fleet. That will always run through this quarter, which is an important fact. We also added some important capacity investments into this quarter with the purpose of driving productivity. We saw those come through.
We added 8% seats into the quarter, flew longer sectors, so increased our ASKs by 14%. For the half, that helped us improve crew productivity by 6%, improve aircraft utilization by 5%, and most importantly, brought our unit costs, our CASK ex-fuel, down by 4%. With what is happening with fuel at the moment, we saw our fuel costs reduced by 8%, and we expect that to continue into the second half. From a revenue perspective, when you add these additional new routes, we expect the revenue benefits to come through next winter and beyond. That is something consistent that we have seen when we put new routes on in the past because you get route maturity benefits in kind of years two and three of establishing the new routes.
Probably what's important to remember is if you look at the four quarters, Q1, Q3, and Q4 are now above the pre-pandemic levels of production. Even post this capacity investment, Q2 is still about 6% lower than pre-pandemic in terms of seats. This is an important investment. It will structurally help us as we move forward for future winters, but obviously a bit of price stimulation needed in the first time of adding this capacity. Now, as you move through to the summer, capacity is more constrained. It's well publicized the delays from the OEMs, from Airbus and Boeing, and that's moved a lot of deliveries to the right-hand side. We're adding 1% extra seat capacity this summer. We're flying longer sectors, but it's 1% extra seats.
We're seeing, say, 2% extra seats when we look at the market for our city pairs and only really 3% in general in the market. It is a more constrained market as we come into the summer. The demand has been positive. We're ahead on Q3, which is 80% sold now, slightly ahead when it comes to that quarter. The all-important fourth quarter, July to September, we're 42% sold, so still a long way to go. The bookings are positive. We're ahead 2.2% in terms of load factor, which on 42% is more like a 5% increase in bookings relative to the position we were last year. That remains positive. When we think to easyJet Holidays, that stays on its excellent growth trajectory. We're still expecting a 25% increase in passengers there.
We're confident for an early delivery of the medium-term targets of over GBP 250 million. We'll talk about more what the next targets might look like when we come together at the year-end. With an attachment rate on international flights, i.e., when we exclude domestics, of 6.4%, there's still some roadmap in front of the holidays business. We took nine Neos into ownership, nine of the A320neo family aircraft into ownership, but retired none of the A319s in the fleet. Our average seat gauge increased by 1% to 181. The great thing here is that the real benefits are in front of us, the GBP 3 per seat benefits. The vast majority of those are in front of us because we journey from 181 seats to 191 seats by fully at 2028. That's what unlocks the cost benefit because we expect 90 deliveries in that period.
That will help us retire a good majority of the 82 A319s when it comes to the fleet. In addition, we remain very focused on capital allocation, making sure that the assets we deploy meet our desired return on capital of kind of high-teen ROIC. When you roll all that together, we feel we're still very much on track for delivery of the medium-term targets. If we go to the next slide here, this one you've seen before, and I make no apologies for it. Our purpose is to make low-cost travel easy. When easyJet was founded, it was founded with the purpose of democratizing travel, making it easy, accessible, and affordable for all. The thing we're already proud of is that purpose is as true today as it was 30 years ago when the airline was founded.
We execute against that purpose with looking at the four pillars that we have up there. We believe focusing on those four key pillars of our strategic imperatives will help us deliver the medium-term targets. Of course, this is only possible with our fantastic people. We genuinely think that our people here at easyJet, both in the sky and on the ground, are the key differentiator for easyJet. Looking at the four pillars and starting with building Europe's best network, we continue to add targeted growth this year. We've added growth into the longer leisure flows. We're restoring some of the city traffic, and we're consolidating some of our domestic flows. We've opened three new bases. We've opened the base in Milan Linate, in Rome Fiumicino, and of course here in the U.K. in Southend, and that's our 10th base.
We are very excited that next year, next summer, we'll be opening Newcastle, which we're announcing today. We think that will be an excellent addition to the U.K. We haven't got great service for the communities in the northeast, so that will give better route connectivity and great affordable fares in the northeast of England. We are very excited that we're able to open that base back up in Newcastle. We remain focused on capital allocation, ensuring our capital is deployed to the markets where we see the strongest demand and therefore the strongest returns. If we're not getting those returns, we'll act decisively and reallocate the aircraft away from those bases, as we did in Toulouse and as we did in Venice. Now thinking about strengthening revenue, our digital improvement program is focused on enhancing the products and the services that our customers want.
On top of that, we continue to work progressively with our algorithms, looking to improve the way they work with ticket revenue and ancillary revenue. Also included in this pillar is the low-cost model of easyJet Holidays, which continues its excellent trajectory. With delivering ease and reliability, this is very important to us. We are very focused on building resilience into the program to reduce the number of disruptive events. We are pleased with the performance we have seen in the first half. Our on-time performance improved by 1%. It then went on to improve by 2% in April. The four key days of the Easter break actually improved by an amazing 13%. We had almost no disruption in the entire program. We continue to see that development through May. This is really important because, unfortunately, the same cannot be said of the air traffic control suppliers.
It has actually somehow deteriorated year- on- year in the year to date. We have set up, unfortunately, expecting a poor service from those coordinators. We very much ask governments to lean into that and make sure that they keep an uninterrupted service for the summer ahead. We pride ourselves on having the warmest welcome in the sky and always have done. We have extended that focus now to include the warmest welcome on the ground. We are putting more boots on the ground, and it is really good to see that investment coming through in a strengthened customer service appreciation. We are seeing our CSAT scores, when we look specifically at the airport experience, improving year- on- year. We are very pleased with that. The other thing we are focused on, whereas Robert, there is, is our fully owned and now replatformed app.
The benefit of having that replatformed is we're able to now bring new features into the market at a greater pace. Those features will be focused on enhancing the customer experience. More to come in that space. Finally, but of course not at all least, is focusing on our low-cost model. We saw H1 CASK ex-fuel reduced by 4%. We expect to carry on with a strong focus on cost. For the full year, we're kind of guiding to a broadly flat CASK ex-fuel. The fuel line itself is going down by about 8% as we journey through the year. If you look at that flat CASK ex-fuel, if we're able to deliver that by the end of this year, that will be 24 months of stable unit costs, which you do not see in many other airlines at the moment.
That's helping us close the gap or expand the gap if we're measuring ourselves against flag carriers. That's an important focus for us so we can make sure we can keep offering attractive and affordable fares. The great thing is, and Jan will tell you a little bit more, there's still a loads to do. We have AI. We have data efficiencies in front of us. We're continuing to look at productivity. As I said, we're still 6% behind where we were this time last year in Q2. There's opportunities for greater productivity and finessing the routes as they mature. Of course, we've got all of the GBP 3 per seat benefit on upgauging in front of us when we retire the A319 subfleet. In summary, the near-term outlook for easyJet is positive, with the current book position supportive of where consensus sits.
This would deliver another positive step forward towards our medium-term target of sustainably generating over GBP 1 billion in profit. This is focused on executing against our strategy. It is supported by a disciplined approach on capital allocation, making sure we deploy our capacity where we can make a high-teen ROIC return. This is all underpinned by our investment-grade balance sheet, which is one of the strongest in the industry. We have now taken 82% of our Neos into ownership. The book value of our assets sits at GBP 4.6 billion. We expect that to grow by 60% over the next few years, so that it has done by fully at 2028. Of course, we paid a dividend of 20% of profit after tax in the half relating to the full year 2024 performance. All this means we are on track to deliver against our medium-term targets.
We have the right building blocks to generate the sustainable profit of more than GBP 1 billion PBT that we're wanting to do. I remain, and I'm confident the management team remain, very confident of easyJet's prospects in the near term. We're all very excited about the future. With that, I think I'll hand over to Q&A.
Thanks. It's James Hollins from BNP Paribas. Thank you for that. I think we're only allowed two questions, so I'll keep it to that. The first one is on near-term, and the second one's longer-term. The first one on perhaps just a little bit more detail, please, on how the Easter impact moved from GBP 30 million to GBP 50 million. Is it just a manifestation of what you're seeing in the strength of April or anything you'd like to add?
Linking to that in the short term, perhaps just discussing in any which way you want RASCO, RPS, yield, whatever you like on summer pricing. Clearly, there has been a bit of a lack of discussion around summer pricing. Maybe just whichever metric you want to choose on that one. Secondly, longer-term, I mean, clearly the statement is full of long discussion on earnings growth, which is great. If I start to think about fully at 2026, obviously a light year away from 2026, summer important period. What we can perhaps discuss is the winter losses, clearly a core part of your strategy. Maybe bring Sophie into this as well around just really discussing the sort of considerable nature of those network changes through this winter. You have talked about maturation of new routes over sort of a two to three-year period.
Perhaps how we should think about the maturity of the winter routes in winter 2025, 2026, and how that might start to impact winter losses and bring those d own. Thank you.
Thank goodness we restricted the number of questions you could ask, James. I do not know whether we would have had enough time. Happy birthday, by the way. It was James's 50th birthday yesterday. Let's start with, should I have said the number? 50 is ironically a good number to link to . We can link from that to the Easter losses. That was 50 as well. Easter, we have closed the books in March, and we have closed the books in April. What we saw was the impact that we were anticipating in January was slightly deeper in March. The good news was the strength of Easter was also stronger than anticipated.
I think the position was a couple of factors. Firstly, as you know, all airlines switched capacity away from Tel Aviv. That was done fairly late in the booking cycle. A lot of the capacity from ourselves and other airlines went into the Canaries. These are always thick routes anyway in the winter. I think what we saw and what I understand everyone saw is that those Canaries routes in particular needed some extra price stimulation. We were very pleased that April saw a particularly strong demand for Easter, which can be the case when it sits at the end of April. That is why when we are thinking about summer and the fare position in summer, we have decided to get ahead on some of the thicker routes. The load factor for Q4 is up 2.2%. Fuel is coming down.
The market feels relatively constrained, and therefore very much all to play for. We were keen to get ahead of ourselves when it came to load factor. The other thing I think, unlike recent announcements from competitors, shall I say, we had a very good year last year. We had an excellent year last year. Our full year result improved by 34% last year. That year ended with summer 2024 and the full inclusion of summer 2024. That powered the results of last year. We are anniversarying a strong performance. Myself and the management team are very focused on repeating ascent and with a bit of extra flying, which does give some potential for some maturity. I'll let Sophie talk about what we see when we put new routes on and how long it takes.
Yeah. Sure.
Okay. Yeah. Yeah.
Building on what Kenton said, in terms of what we're seeing, last winter, the winter before last, we added about 30% capacity onto U.K. domestics, for example. Actually, in year two, this winter just gone, U.K. domestics were really maturing very strongly. They were some of our strongest routes. The first year is always the heaviest hit. We always talk about a three-year maturity curve to get to at least network average performance, which is what we target. All of that growth we added this winter will be maturing into year two next year as part of that journey, as Kenton said, with Rome and Linate and Southend. Those will be new aircraft into their first winter. That will obviously still need to build as we go through. It's interesting kind of reflecting back on the first half.
We put a lot of capacity from the U.K. into beach and non-EU. That required quite a bit of stimulation. We know that will mature into next year. Interestingly, the capacity we added from Europe into non-EU, we added 39% capacity into non-EU. A lot of that was France into North Africa. That actually performed really well in the first winter. We expect that to build on there. There is price stimulation that was needed in the first half of this year. We will continue to grow into that North African flows because they do particularly well from Europe because you have your VFR traffic, which is counter-seasonal. There will be more growth into there.
As we say, the annualization of the growth aircraft this summer going into winter will be the focus for next winter rather than kind of growth on existing capacity.
Morgan, would you want to go from Pamela or Livram? A couple if I can. Firstly, could you talk a bit about how the new bases are performing? I think you've tried Rome Fiumicino in the past, admittedly in the dim and distant past. What's different about it this time? Secondly, what proportion of seats are actually sold through sort of third-party channels rather than direct? I think you charge, I think it's a GBP 12 each way markup on those third-party sales. That seems to be more than your competitors charge. How sustainable is that? Why is it a fixed charge to everyone? Why wouldn't you vary it to different providers?
Thank you, Gerald.
I'll start on the new bases, and then that feels like something that Sophie will be able to add an awful lot more color than I could. On the new bases, I mean, let's start in Southend. That has done extremely well immediately. And 25% of the traffic is coming from easyJet Holidays. It really was something that people like, flying from their local airport. That is clearly a good catchment area for easyJet and a very good start. When it comes to Milan Linate and Rome Fiumicino, I mean, Linate is a fantastic airport, and we've wanted to get into it for a long time. It's only come about because of the consolidation with ITA and Lufthansa. In the U.K., when slots come up, you buy them.
You might spend a few tens of millions to be able to place five aircraft into Linate. That is not the case in Europe. The penalty, if you like, is that you have to fly some remedy routes for a period of time before you then can remix the portfolio of routes to something that suits your overall network better. There will be an investment this summer, next winter, as we fly those routes and establish traffic. Also, the competition authority, as is their want, tend to take a long time to come to the eventual conclusion, which meant we went on sale later than we would have ordinarily liked. You have less of a booking window. Very excited to be there in Milan Linate. It is a great airport with fabulous connectivity into the center.
When you think about Rome Fiumicino, this has always been an important network point for us. I think Rome will be a great city destination for the holidays business as well when it comes to leisure breaks. Before we based aircraft with the deal that came about with Lufthansa, it was our third most important network point anyway. We were flying a lot into Rome. Now we base aircraft, we can complete the schedule and give better timings for more business traffic and some of the other flows as well. Sophie, any color on that and perhaps pick up the third-party distribution point?
Yeah, sure. Interestingly on Rome as well, we are seeing Wizz have dropped four routes that were head-to-head with us at Rome already. They have dropped Hamburg, Basel, Lyon, and Berlin.
They've dropped 14 head-to-head routes with us this summer, but interestingly, four of them are Rome. That should certainly help with the Rome performance. That's supporting the trading. I think with both Rome and Linate, the decision was made very late. We had quite a short selling window. The early sales have taken a bit of stimulation. As Kenton said, we expect that to mature going forward. If I look at distribution, in terms of distribution, we're still seeing growth of distribution through the OTAs as we are with easyJet Holidays as well. To give you a bit of a feel, on U.K. beach routes and non-EU routes, those are the kind of ones where you get a bigger proportion of indirect sales.
To give you an idea of scale, on U.K. beach routes for the first half, about 65% came direct, 18% is indirect, and 17% is easyJet Holidays. That gives you an idea of the kind of mix. That is still representing a growth of the OTAs of about 3% year- on- year on beach routes. If I take U.K. non-EU, for example, about 40% is direct, 35% indirect, 25% is on easyJet Holidays. That is a 37% growth on indirect through the OTAs. Even with the point of sale charge, they can see that we offer the right schedule, the great fares, and we offer access to certain destinations that they cannot access otherwise. We have a really positive relationship with the OTAs. It is a constructive relationship. We offer them direct connect through the API, and that is how they access it.
We're still seeing growth, so we're not seeing an impact of the point of sale fee. We keep it under review in terms of the levels and so on too. Thank you, Gerald.
Can you? Oh yeah. Connor Dwyer here from Morgan Stanley. You spoke firstly about kind of wanting to get out ahead of things on the load factor into the kind of peak summer. I guess now that you're a bit more confident about how bookings are actually developing, do you see value in basically slowing things down a little bit there, kind of trying to eke out a little bit more via yields going forward? The second question is actually for Garry.
We haven't seen a massive change this morning in terms of what you're targeting for the volume growth, but it does seem like things are developing quite well in terms of how booked you are. How realistic is it that you actually do do 250 this year?
Okay. On the kind of yield question then, that is the kind of the work of the commercial department, and you've described it perfectly. That's their daily job to look at the trade-off between yield and load. We have a sophisticated algorithm working in the background that looks at traffic coming in and demand and helps make the recommendations when it comes to pricing. We wanted to get in that position. We're in that position, and now we will see where the market runs in that respect.
Yes, we're looking obviously to optimize the performance this summer and focused on another record summer. Garry, how are you feeling about this summer?
Y eah, thank you for that one. Yeah, for this year, I think, I mean, our excitement in holidays, there's nothing really very exciting. It's all come in as we expected and as we've been talking about since the beginning. I think that if you look at the 25% growth and just kind of straight line that, we're not seeing necessarily any degradation of margin because we're a cost-plus business. So we're getting that 25% growth with the margin that we're expecting, which kind of gets you up there or thereabouts. Really, at the moment, we're as much focusing on holidays as H1 26 as we are in H2 25. That's really starting to build now for us.
What we're really kind of focusing on is getting past the 250. What is the next medium-term target, and how do we then start building that? That's something that we'll come to you in the next couple of months on. With the 250, it's not kind of if, it's when, but I think what's more exciting is what's beyond that.
Thanks. Alex Irving. Alex Irving from Bernstein. Two from me, please. First of all, looking at your calendar Q2, calendar Q3 schedules, it looks that you're cutting significant numbers of flights at Amsterdam and Charles de Gaulle. Is this true? If so, why? Are you syringing any slot sequences here or sticking just to the right side of the 80/20 rule? Second question, a bit more long-term. How are you thinking about loyalty?
Is there any value in a, say, normal frequent flyer program with points, status tiers, credit cards, something like some of the legacy airlines have? Thank you.
Okay. With Amsterdam and Charles de Gaulle, part of flying longer sectors means that the aircraft are away longer from the base. We have those first wave slots. If you're talking about Amsterdam, we've got eight aircraft based there. If they fly away for 45 minutes, they're back doing a second slot. If they fly away for two and a half hours, they're back, and you'll consume less slots through the day. That's probably a little bit of what you're seeing there. Both are very important bases to us, and both we're looking to make the offering that is right for the consumer. I mean, Amsterdam, they are making it hellishly expensive.
Longer flights is not the worst thing because you can amortize more, but it's still an important city destination. It's one of the top city break destinations that we have. It remains, obviously, and always will be, a very important place to fly into and out of. With Charles de Gaulle, the bit of the drop there will be that we had an opportunity to move an aircraft to Orly. Orly is another good base, obviously, in Paris, and therefore we'll take opportunities as they present in Orly, which has got more of a flag carrier mix and a kind of richer revenue stream behind it. When it comes to loyalty, that's really incredibly important to us, the working and to generate more loyalty from our customer base. We have easyJet Plus. It is a successful offering.
We have, I do not know, 130,000, 160,000 members, something like that. That membership is growing. Holidays have partnered with Tesco Clubcard, giving us access to 23 million households for the Holidays customers. That is really important to us. The developments I was talking about on the app, we are very keen to take a more app-centric approach here at easyJet. That gives you a certain degree of intimacy with the customer and allows a deeper relationship. Would it make sense to easyJet to do a loyalty scheme? I think it could. It has a brand that can do that, and that is something we would naturally look at, but there are no plans to introduce that this year or early next year.
Morning everyone. It is Harry Gowers from JP Morgan. First question, if I can, maybe I could ask more broadly on demand.
Since all the tariff liberation day uncertainty and noise, have you seen any hesitancy at all in terms of customer bookings, or does it just feel like underlying demand is unchanged and solid on short haul versus two months ago? Then second question, maybe I can ask about cash returns to shareholders, and you could lay out in what scenario, under what framework you would maybe consider doing a share buyback over the coming years, or is that just completely off the table given the CapEx requirements which are upcoming? Thanks a lot. Okay.
Let's start with tariffs. I mean, they change every day, don't they? We're yet to see if aviation is carved out of them. I mean, the headline effect we're seeing is supportive for the industry.
It's come with lower fuel, drop in the price of the barrel of oil, which has come through into jet aviation fuel, and that is benefiting the industry. The dollar has weakened. We have a lot of dollar purchases in our sector, so that is a net benefit. The supply chains are quite complex, and we're working with the suppliers to understand if and where those impacts are. I think, to be fair, they're working as well to understand where those impacts might be. I mean, we have an all-Airbus fleet, and we buy Airbus from a European manufacturer that produces in France and Germany, and therefore that is a good position to be in. Tariffs are really in no one's interest if they start interfering with trade. At the moment, we're not seeing anything that would move us away from the cost guidance I talked about earlier.
Transatlantic demand, we do not fly transatlantic, so it is hard for us to see kind of the primary impact of that. I guess the secondary impact, should there be one, will be positive for easyJet, and we are seeing our book position for Q3 and Q4 ahead. Holidays can be a bit of a canary in the kind of mine, and let us see. I mean, it is well booked. It is probably already 77% booked for the summer, but if there is that shift of more European holidays, then we will benefit from that. Share buybacks.
Yes. From a cash perspective, we are obviously happy with how cash is developing.
We have a GBP 3.6 billion cash balance at the moment, which is GBP 161 million better than the beginning of the fiscal year, which also means that if you look at all the RCFs that we still have available, our total liquidity is GBP 5.3 billion, which is GBP 1.8 billion in excess of what our policy is, which is one year of earned revenues and GBP 500 million extra. I would say this is a comfortable position, but I think it's an important position because if you look at the CapEx that we still have in front of us, we have an order book of 291 aircraft to refleat the A319 aircraft, but also the A320 aircraft. It means that we have GBP 7.5 billion CapEx in front of us. Keeping excess liquidity to be able to pre-finance that CapEx, we believe is important.
The 1.8 excess is 60% of the two-year CapEx that we have in front of us and 30% of the three-year in front of us. Considering that our target and reaching the GBP 1 billion PBT is really one of the key, most important parameters we are looking at, and that the upgazing and the modernization of our fleet is a very important component of it, we want to materially de-risk our capacity to invest in that fleet. That is where, at the moment, we are comfortable with that excess liquidity. However, we are keeping our dividend policy, so we are still keeping the 20% dividend on the profit every year. We believe that it is meaningful and also sustainable through cycle.
Of course, if results would evolve in a positive way and ahead of that, we're obviously willing to look at any other solution to give more of that cash back to shareholders. At the moment, we're concentrating on the GBP 1 billion and making sure we can get those aircraft in.
Morning. It's Jamie Roworth from Deutsche Bank. I have a couple of questions on cost. Firstly, depreciation and maintenance costs came in a bit lower than I expected. You mentioned in the release updates to the leased aircraft maintenance provision, as well as contributions from lessors for maintenance undertaken on aircraft leased mid-life. Could you just clarify the changes there and whether there'll be any impact on H2? Secondly, pleasing to see your other costs coming down on a per-seat basis in H1. Jan, I'm sure you've been benchmarking easyJet's operating metrics against the peers since arriving.
You've probably found that high other costs seems to be partly responsible for some of the margin differential. Is that something you think you can address further going forward? Thanks.
Okay. Coming back to your first question in terms of, well, if you look at our overall CASK development, you will have seen that we have had a positive CASK development in H1 with a 4% improvement versus last year on an ex-fuel CASK basis across all lines, which is positive and mainly driven in the first quarter or in the first half of the year, sorry, because of the additional capacity that we have flown. That is just what you're finding back everywhere, whether it's on airports, on crew, on navigation, etc. On maintenance, a little bit different.
There we have a slight increase of costs that's mainly linked because of the fact that because of the delays of Airbus, we had to prelaunch some of the leases of older aircraft, which means a higher number of findings and hence higher costs. Of course, we're not immune to the inflation, which everybody is encountering. That probably is going to continue in the second half and probably also in 2026. However, as I said earlier, the big benefit of our cost-saving plan is still in front of us with the refleat, with a big part of the saving coming from the upgazing of the 319 to NEO aircraft. I would say that that's the most important element.
Maybe just one on the depreciation, one of the reasons why, well, it went down, but one of the positive effects is also linked to the fact that we have taken one A320 back into ownership on an A320 NEO, which was one of the aircraft which we sold on leaseback at the time of the pandemic. We had the opportunity to take it back, but by taking it back, we also had the opportunity to release some of the maintenance provisions we had built up. That's one of the explanations. We're looking into two other opportunities of these, what we call dual costs. That also will have an impact in H2 on two aircraft.
When benchmarking with our other companies, I mean, having been out of the sector for a couple of years and having used easyJet back as a benchmark back in the time, it's obvious if you look at from 2010 to 2018, probably we have lost a little bit of the edge in that period. I think during the last four or five years, I think we're getting back on track and we're closing the gap. I think there is still a gap to go because we are at the moment not yet at top quartile in terms of benchmark, neither in terms of profitability nor in terms of cost position.
I'm convinced there are still opportunities to go, whether it's in terms of capital allocation, making sure we base our aircraft where we make most money, optimizing our asset productivity, optimizing the efficiency of the organization, benefiting from all the investments in the digital space we're doing today. Overall profitability improvement, we can do both in the commercial and operational domain. I think we've done a lot of good things, but I think there's still some to go. I'm convinced there are still a lot of opportunities, and especially the 1 billion target is reachable.
Hi, it's Andrew Lobb from Barclays. Can I ask about ancillaries, please, and how you can expect to drive them forward? They didn't look too chipper in 2Q.
At the same time, we've got the Spanish government and some Belgians as well trying to rule out wheelie bag fees, which are filthy and disgraceful. Yeah, how scared are you by that challenge, and how do you get these things moving in the right direction? My second question, I think that's what we're allowed. We've spoken quite a bit about U.K. demand and U.K. consumer, I think. What about continental Europe and the health of demand there? TUI sounded rather nervous about German consumers. Obviously, it's not enormous fee, but Berlin matters, but it's in Switzerland as well as the Deutschen. Thanks. Otherwise, how are the consumers for you in France
Okay.
I'll start with the Spanish buying question and then ask Sophie to think about the ancillaries, how that is developing, and we can talk a bit about the demand in the EU versus the U.K. On the Spanish bag fine, like all other airlines, we're appealing it. We think it's got no basis in law. It actually contravenes EU law, and it's a particularly consumer-unfriendly thing to do. At easyJet, we're very keen that we allow the customers to buy the services and products they want to buy.
A third of our customers choose not to buy an ancillary, choose to sit potentially towards the rear of the aircraft, bring the free bag allowance on, and a law that would encourage us to charge them more just so that someone who sits at the front, gets a cabin bag or a hold luggage, can pay less, does not feel very equitable. That is what we are really keen for. We will always defend the consumer's rights. I think it is a ridiculous charge that they are talking about, but fortunately, there is no legal basis to it, so we will let the courts do that one. Before I hand over to Sophie on the broad strokes of EU-U.K. demand, it looks identical. If you are looking at the 80% load factor and the slight ahead, that will be the case in the EU. That will be the case in the U.K.
Both are at about 80%. Both are slightly ahead for Q3. When you look to Q4, both are slightly ahead. We see strength in the U.K., but we see a good position as well in Europe, but maybe you want to unpack more the ancillary elements of the question and anything you see in Germany in particular, I think the question was.
Yeah, yeah, sure. From an ancillary perspective, I mean, the other point to add to the ancillary narrative is before we introduced the charge for cabin bags, we were offloading 7 million cabin bags a year, which impacted the operation in terms of on-time performance and impacted customer satisfaction.
The charge is there to make sure that we can manage the amount of capacity that we have on board and actually ultimately benefits the customer because you're not having that issue of having to offload so many passengers' bags and impact the operation, which we know on-time performance has the closest correlation with CSAT. That was the action that we took there. In terms of ancillary conversion, conversion is still as strong as it has been. We're working a lot on the algorithms between the hold bag and cabin bag and getting the pricing right. We're also introducing new tiers of pricing within allocated seating as well and getting more sophisticated in that space too. In-flight retail is actually doing really, really well for us as well.
The introduction of Costa Coffee last year has really gained traction, and actually, we're well on our way to hit our target. Pre-pandemic, we were about GBP 42 per seat profit. We're hoping this year to hit well above GBP 80 per seat profit and on our way to get to the pound. In-flight retail seems to be going really strongly for us. In terms of demand, as Kenton said, if we look at our load factor for EU versus U.K., both are ahead pretty much equally, and we're not seeing the same sort of softness that others have talked about in terms of specific markets within Europe. They all seem to be performing quite well.
Obviously, as we say, the Rome and the Linate new bases, load factor is slightly softer than the rest of the network because we're building it from a very short selling window, but that's probably the only space, and that's as expected in the business plan, so it's not unexpected for us. Yes, I think at the moment, we're seeing a strong Europe trading performance for the summer as well.
Thank you. It's Conrad Gaynor here from Bloomberg Intelligence. The first one from me, clearly, price stimulation was a big part of the Fiscal 2Q story. I think it's logical to infer that maybe it becomes less of a story by next winter. Perhaps you could comment on what the shape of that tapering off of price stimulation may look like. Should we still expect a reasonable amount in some markets in 3Q?
The second question is on just keen to learn if you have a particular view on the outlook for hotel bed supply in some of the various new longer route markets. Thank you.
Okay. I'll let Garry do the hotel bed suppliers in kind of North Africa, Cape Verde, and the longer markets, as you say. Q2 price stimulation was quite a March phenomenon. That was the month we saw the softest area, and it was focused around the Canaries, as I said. As you move into Q3, having added 8% there, as you move into Q3 and Q4, capacity increase definitely moderates. You're looking at 1% extra, and we are ahead. It won't be our goal to be using price stimulation.
We'll be doing the trade-off referred to in an earlier question to get the rate of sale in the appropriate place to end up with the healthy load factors that we would normally expect to end up in Q3 and Q4. The one standout being potentially Linate and Rome, which came on sale late and therefore did not have the advantage of an extra six months on sale that they missed out on through the lateness of approval from the competition authority. Garry, do you want to talk about hotel beds and longer desk services?
Yeah. On bed supply, we're actually really positive about it, and we're seeing some really positive noises from the hoteliers, I think driven by a couple of things. With the growth that we're seeing, clearly, the hoteliers are seeing us filling the beds that they're giving us, and that's really important to them.
I think we've talked previously about our seasons being flatter than some of the traditional operators. They're seeing good occupancy in the low and mid-season as well as the high season. I think the other thing that's really positive for next year, and we'll see into 2027, is on some of the competitors you'll have heard that maybe their expectations on the numbers they were expecting on packages hasn't been as high, and they've switched into flight only. Now, clearly, they would have bought the beds in order to fill those packages. There are some disappointed hoteliers out there who are coming to us and saying, "Look, would you want to take these beds?" We're more than happy to do that. We've actually found a lot more approaches from hoteliers, certainly the last six months, to increase those beds that we've got.
The last thing I'd say, without getting too technical, is I think I talked to you before about the connectivity that we have with hoteliers. That's rolled out almost to all of them. The hoteliers are able to load their inventory directly into our system and price that inventory themselves, and they will see that flowing through into the price. That's a really attractive tool for them. We're seeing increasing share coming from that channel as well. That just constantly keeps those beds in play from the hoteliers, and we see that as being a way that we can continue to scale as we go into further years.
Thank you very much for coming today. Hopefully, the new format works for you. Hopefully, you had a chance to look at the video, and it's shorter than when we stand up and do it.
I think we got it under half an hour. We'll keep working on that. Someone once said, "If I had more time, I'd be shorter." We'll work on that. Thanks for all the questions. Very good. Okay.