Good morning, ladies and gentlemen. Welcome to this report. We are reporting first half fiscal 2021, which is the period ending March 2021. I would start by saying that we have been much focused on liquidity. I think as previously stated, we are managing this business for cash and liquidity, and as you can see, we've done quite well with regard, ending the period with EUR 1.6 billion of cash. If you look at the relative cash burn, especially compared to the balance of the industry, we've been containing our liquidity very well. We burned EUR 265 million of cash in the first half of our financial year, which compares very favorably with the industry, and that's been our focus. We did quite well with regard to recovery, in the summer period. In August, we reached around 80% of our last year's capacity level.
Clearly, capacity is subject to restrictions prevailing at the time in Europe, in our markets. Clearly see that following the first wave of the pandemic and corresponding restrictions imposed by governments, actually summer was a better operating environment with less restrictions. Since the end of August, we have seen a new wave of restrictions imposed by governments significantly undermining demand. As a result, we keep adjusting capacity accordingly to market conditions. It has become a rollercoaster, and you may expect more capacity to be taken out should more restrictions come into play. Also likewise, once these restrictions are getting eased, we should be back in the air with capacity. Demand is incredibly sensitive to restrictions. We are seeing it, especially in the U.K., that once a country is removed from the travel corridor, demand collapses pretty much overnight.
Once a market is put back into travel corridor, demand surges incredibly. We have continued to diversify our business by enhancing our geographical footprint. During this period, we opened 13 new operating bases, launched 260 routes. We have been incredibly agile, trying to take advantage of the situation of market vacuums left behind by other carriers and some of the commercial deals that have been made available by airports and attracted us with new capacity. These are strategic investments. Maybe not every one of these initiatives will work out in the end, but I think most of it will. Clearly that new capacity is also subject to the operating environment restrictions and demand. You can see the same kind of rollercoaster effect on that.
Clearly, once we are back into recovery, we will have a much enlarged geographical footprint to have a much more robust recovery at a quicker pace than most of the others in the industry. We are very proud of our investment grade. Following Moody's investment grade just a few days ago, Fitch Ratings also reaffirmed our investment grade. We are one of the four airlines in the world with investment-grade credit. Obviously, this is a statement on our prospects going forward, and you can imagine that these agencies fully scrutinize the current standing of the business as well as assumptions for the future, and stress-tested each of our assumptions with the worst-case scenarios. They confirmed our investment grade, I think this is a great credit that we received from the market.
As said, restrictions are a part of our life at the moment, and looking ahead, in the second half of the financial year, we think that we will have to live together with these restrictions. These restrictions will fundamentally affect capacity planning through demand and our ability to operate. We follow the news, and we are micromanaging the business to a large extent, and we keep adjusting capacity on a day-by-day basis depending on the state of restrictions. I think in this winter period, the fundamental factor driving the business will be restrictions. There is a lot of talk around testing to replace restrictions like quarantines or lockdowns, but we don't know. We have not seen any commitments made by any governments going forward with that regard. Certainly, we are embracing the concept of testing to replace these hard measures.
We shall see what's going to happen. One of the disappointments clearly is affecting the business, that after the first wave of managing the pandemic situation by government, we would have hoped that there would be a learning there to seek more European coordination, more orchestration to make the whole system more effective. None of it is happening. We are flying to 46 countries, and there are no two countries that would apply the same sets of restrictions or measures, which make Europe quite a zoo and quite an ineffective system for the purposes of managing the situation. You can clearly see that lots of politics have been playing into this now, so it has become very complicated. All in all, we believe that while a crisis obviously is testing and testifying everyone involved, and we are not immune from that.
Nevertheless, Wizz Air is emerging as a structural winner from this situation, given that we are the lowest cost producer, and we have a very resilient financial position to cope with the challenges and the situation. Post-COVID-19, we would certainly be a much stronger and much more formidable competing force coming out of this crisis. Moving on to the next slide. As you can see, this is sort of giving you a snapshot of where the business is at this point in time. What I would really read out of this chart is that we have continued to invest into our future. As said, we have been diversifying our markets by opening new markets, new countries, new operating bases, launching a significant number of new routes. Also we have continued our aircraft delivery program.
In March 2020, we had a fleet of 121 aircraft. We are going to close the financial year in March 2021 with 137 aircraft, so 16 aircraft more. In March 2022, we are expecting the fleet to be 159 aircraft, 22 more than a year before. We continue to invest into our fleet program. This is significant. You may think that short-term, it doesn't make any sense, and indeed it is somewhat stressing short-term, but it is the right thing for the medium and longer run because new technology will enable us to operate this fleet at much lower cost than our competitors who have been holding the lines by deferring aircraft deliveries or canceling aircraft orders. We'll have a significant competitive advantage rising from this on economics. Also once the industry gets more measured against sustainability, our fleet will deliver much better against that sustainability agenda, given the much reduced ecological footprint than other carriers.
Keeping the long term in our mind remains an important issue. Nevertheless, we are dealing with the crisis by managing the business day in, day out. The next slide is showing how agile we have been, and maybe you can argue that we've been agile up and down. We pushed quite significantly in the summer period when demand was less restricted by restrictions. You can see that we managed to get up to around 80% capacity level in August. Since then, we've been adjusting capacity down as more restrictions came into play, and we might actually come below the industry numbers. I think it's just showing how financially responsible we are. You can see other airlines reporting that we have contained cash much better, and we stay focused on cash much more than most of the other carriers.
We think this is the time that we need to be very focused on liquidity, on cash. Let's not forget that we are not planning on any government bailouts or anything like that. We think that we can sufficiently maneuver ourselves through these crises. That requires us to be agile going up, but it also requires us to be agile and financially responsible going down when the market becomes restricted. This is what we are expecting in the next few months. With that headline, I would like to hand it over to Jourik.
Thank you, Jó, and good morning, everyone. On slide five, you will see that our half one revenue is down 72%, with quarter two revenue down 61%. Our reported loss was EUR 243 million in half one, whilst the underlying loss for half one was EUR 145 million. The difference between reported and underlying loss was the EUR 98 million exceptional expense, which relates to our discontinued fuel hedges. You will recall that in FY 2020, we recognized discontinued fuel hedges for the month of March, April, and May 2020, whereas now in half one 2021, so the current half one, we recognize discontinued hedges for the period of June 2020 all the way to March 2021. It's a different approach, but it's obviously commensurate with the recovery pattern that we're seeing.
On slide six, you can see that our costs in half one, excluding the discontinued fuel hedges, reduced 49%, whereas the ASKs for the same period reduced 57%. In net, strong cost reduction on the total line with strong variability on obviously cost of airport handling and en route, but also distribution costs, marketing costs. Staff costs declined 38%, maintenance costs 28%. As you know, depreciation is mostly fixed, only declining 15%.
On the next slide seven, we're outlining the strength of our ancillary revenue. When you strip out the items which are more one-off in nature, for example, the cargo flights we operated in April and May, you will see that the underlying ancillary revenue is up EUR 3.8 per passenger in half one. Equally, the ancillary revenue per passenger in the second quarter was up strongly with EUR 1.7 per passenger increase year-over-year. Bags, bundles, flexibility products, they drove the strength of the ancillary. Going forward, we continue to be focused on driving more conversion and implementing dynamic pricing.
On slide eight, a bit of focus, as you know, on cash. All things considered, without the CCFF funding, we have burned EUR 265 million of cash in half one, which is roughly EUR 44 million per month. Our operations, including the cost of the leases, burned EUR 185 million, and we cash settled on top of that EUR 110 million worth of discontinued hedges in the first half. On the next slide, you will see that, again, we burned EUR 44 million per month in half one. In the last quarter, we almost broke even, burning only EUR 9 million per month. This is obviously, as Jó said, a stark contrast with the burn rate of some of our competitors.
Our ramp-up , especially over July up until mid-August, drove solid cash contribution with September obviously being a little bit weaker as we had to adjust for restrictions in the environment because of COVID-19. We're pretty much fully current with refunds within this cash balance. We only have EUR 6 million refunds balance at the end of September. We had obviously very strong cost and cash drives across all P&L and balance sheet lines. Beyond cash, as Jó mentioned, we feel very proud to say that our credit rating was affirmed by Fitch. The press release went out last Monday, I'm sure you've seen this. As Jó said, we also had discussions with Moody's over the last month, and they're maintaining our investment-grade rating as well. We have both on liquidity resilience, and we have the investment-graded balance sheet, which obviously is very important.
On the next slide 10, shifting gears to the second half of this fiscal year. It's clear that cost and cash remain our top priority, especially with restrictions and lockdowns in an increasing number of our markets, at least in the current period. We reiterate that in case of full grounding, our average burn rate is around EUR 70 million per month from an operational point of view. Given the seasonality of our business and the restricted operating environment, the cash contribution of our operation may be less significant in the next few months. The restricted level of activity could actually further unwind some of the balance sheet positions, like unflown revenue or supplier payable. I hope that is sufficient clarity on where we are on the cash side.
In the current context, obviously it's very difficult to give guidance on profit or loss after tax, or even on capacity for that matter. Our October capacity, as you've seen in the previous slides, was 45% year-over-year. November will be below, given the restrictions on travel and the lockdowns imposed in the last week. Don't forget, as Jó said, we only target to fly cash positive, capacity over the next month is anybody's guess at this point in time. The principle is very clear. As Jó said, our fleet remains our key strategic investment. Maybe this is not ideal in the short term, without question, it's widening our competitive edge on cost, on sustainability. Additionally , we're working to build in more flexibility, which will allow us, together with a strongly diverse network, to respond even more swiftly to changes in the external environment. Jó, back to you.
Thank you, Jourik. Moving on to page 11. I think we have demonstrated our agility with regard to leading the business through the crisis situation. We have moved around 20% of our capacity by trimming existing networks and reallocating that capacity for opening new bases, new markets, new routes. Clearly enhances our geographical footprint in times when other airlines are withdrawing capacity from their markets. Clearly, it gives us significant leverage for the long term, not only for times when we are effectively revamping capacity but much beyond on a structural basis. Simply, we're going to be able to occupy certain markets, which markets would not have been available to us before. At the same time, I think we've also been somewhat opportunistic, and we've gone by the flow when it comes to consumer demand. Clearly, the structure of consumer demand has evolved during these times.
One of the, I think, remarkable moves what we have made is entering domestic markets in Europe simply because cross-border travel has been locked down or usually restricted while domestic travel has been more open, less subject to restrictions. As a result, we entered two significant European domestic markets, Italy and Norway. Now we are seeing that even the Italian domestic market is now under some pressure, given the new restrictions imposed by the Italian government. Very importantly, we received AOC for Wizz Air Abu Dhabi. The airline is ready to fly. It's fully licensed, fully staffed, and now we are on a holding pattern, waiting for lifting restrictions by the Abu Dhabi government. Once that happens, then we would be putting the airline up in the air. We shall see how the country is going to open up.
Probably it's going to be a phased approach, and we've got sufficient designations now and access to markets that we can flexibly alter our network program in accordance with the opening of the country. Moving on to the next slide. Clearly, you see that this agility led to significant market share gains. We are not in a market share business, but I think this is just demonstrating that should we go high, should we be seeing demand somewhat unconstrained from the perspective of restrictions, actually, we can achieve quite a lot very quickly. If you look at just our sampling European positions, we had 16% market share in the region prior to COVID-19. That jumped up to 22% in the summer period. Again, going into winter, we are in different times. I think we have to run this business for financial disciplines, for cash contribution, positive flying.
Once we are back again into times when demand is less restricted administratively by governments, we simply can ramp up very quickly, and we can certainly repeat what we have done before to even achieve more when it comes to taking market positions in various countries. Moving on to the next slide. This is a summary to demonstrate that we are absolutely ready and well-positioned for a swift recovery. Once the market conditions allow us to move quickly, we're going to move very quickly and very robustly. We are flying the youngest fleet of aircraft in Europe, around five years. That is significant from a cost perspective, and it is also significant from an ESG, from a sustainability perspective. We are the lowest-cost producer in Europe. This is a commodity business, lowest cost prevails, so you can't be in much better position than that.
Our customer profile is very adequate to the situation. Wizz Air's customer profile has been quite geared towards VFR traffic, and VFR traffic prevails in current times. Today, over 80% of our passengers travel for purposes of VFR travel, so we are certainly benefiting from our passenger profile with that regard. We are well-positioned from a financial resilience liquidity perspective, having EUR 1.6 billion on hand. That will take us through this crisis no matter how long this is going to drag. We are very well-positioned, especially relative to the balance of the industry. Quite importantly, we fly the youngest passenger compared to other airlines in Europe. That is significant because, again, from a recovery perspective, we're seeing that the younger generations will come back to the franchise quicker than elderly generations. One, they are less impacted from a health perspective.
Secondly, this is empirical that especially coming out of crisis situations, younger people tend to be more adventurous and more forthcoming. Certainly, our business will benefit from that as well. We have a very appealing engagement platform with our consumers, having or operating one of the largest airline websites in Europe, actually, even globally. We think we are really good to go, and we are well-positioned for recovery. Once these restrictions fall away, we can have a very strong ride, again, similar to what we achieved last summer, or even more. Moving on to the next slide. You can see that we are taking advantage of the times and sort of the setback of the industry, and we are investing into our customers.
We're seeing that it's not only that you need to manage the business for the short term, but you also need to continue to position yourself for the long run post-COVID-19. We've talked about the young fleet and being the greenest airline in Europe, but we've actually initiated quite a few other things as well. We launched our voluntary carbon offset program, so now this is available to customers. Should you want to take personal responsibility for your environmental footprint, then you can offset your footprint. We launched a unique interactive planner software, which helps you navigate yourself through the zoo of restrictions and COVID measures applied by country. I think this is a very good planning tool to understand what is going on in Europe in our network.
Should you want to have a travel plan, you can certainly better enable yourself by using this planning tool. We deliberately want to have an operating platform as extended as possible within the framework of being financially responsible to provide as many route connections as possible for people who want to unite and need to do essential travel. We try to maintain most of our routes, only reducing frequencies for so long as this is rational to maintain connectivity in Europe. We have never grounded the airline entirely. Obviously, we have taken capacity down quite significantly. The worst period was April this year when we were only operating 3% capacity. We intend to operate always a network, a skeleton to make sure that connectivity is presumed. Moving on to the next slide. This is just to summarize this presentation today.
As you can see, we are absolutely geared and focused on cash and cost. Liquidity is key. We are managing this business for cash, and everything else is secondary. We have taken advantage of the situation and expanded our network by diversifying capacity. That's been a significant move, and we're seeing that positions us very well for a ramping of operations once the market conditions change and giving us a structural competitive advantage in the long run. We remain financially disciplined, agile, and focused on long-term issues, not only managing the pandemic on a short-term basis. We are building competitive advantages for us through the market diversification, through new aircraft delivery programs, and through preserving liquidity to enable ourselves to continue to invest in long-term priorities. We think that with all of these, we are widening our competitive advantage to win this game structurally and emerge from COVID-19 as a structural winner. Thank you. I guess this is now your turn for questions.
Thank you very much. If you do wish to ask a question, simply press zero one on your telephone keypad. If you find that your question has been answered, you can withdraw your question by simply pressing zero two to cancel. We will have a brief pause while questions are being registered. In fact, our first question is in from Daniel Roeska of Bernstein Research. Please go ahead.
Thanks very much. Good morning, gentlemen. Three if I may, I'll be quick. Can you talk about the challenges of ramping up to 153 aircraft at the end of next financial year, specifically when we're going to a winter with skeleton schedule? At what point would you really need to start hiring and increasing your schedule to make that 153 at the year-end? Or at which point would you need to start talking to Airbus to rejig the deliveries? Number two, you mentioned dynamic pricing on ancillaries. I was wondering if you could just share a little bit of color on that. One, is kind of banding ancillaries as at Ryanair, is it something more sophisticated like a revenue management? Is that homegrown, or is that a tool you're using?
Maybe a short comment, lastly, on the leasing market, what you are seeing currently in terms of what lessors are willing to offer, and any color on the terms you have for your financing until November next year. Thanks.
Okay. Thank you. Maybe I will start with the ramp-up. Well, as said, next March we're going to have 137 aircraft in our fleet, and a year later, and this is March 2022, 159 aircraft. We have substantial capacity. Currently, we are crewed for around 100 aircraft, and this is a balance, but we have been to make sure that we are addressing current weakness of the market and capacity reduction of the flying program. At the same time to maintain capacity for ramping up our operations again once the market reopens. We will be very ready to go with 100, 120 aircraft, and obviously you can stretch your resources to some extent in the initial period. From our perspective, it takes us around three months to instruct further personal resources needed for ramping capacity up, and we have a plan for that.
We think that if market conditions permit, we could ramp up our entire capacity for summer. I don't know whether the market is going to be as good as that. We don't think that we would be constrained with that regard either from an asset perspective or a human resources perspective. We are fully financed on our aircraft delivery program until mid-2022. I think we are in very good position, and we've got very effective financing deals. Again, we are an investment-grade credit. I think the financing market has become much more selective, but we are still benefiting from very effective financing deals there. With regard to flexibilities with Airbus, of course we have an inherent degree of flexibilities in the purchase order. We are looking at ways of possibly deferring aircraft should the situation be dragging longer.
It may not be as short-term as you may think, but certainly beyond the industry lead time like a year, I think we would have some level of flexibilities. We also have flexibilities not only on the supply of new aircraft, but also on the delivery program, because we have actually quite a lot of aircraft due for deliveries in the next two to three years. Of course, lessors want us to retain their aircraft and continue to operate at very effective commercial deals. We have a lever on hand that we actually can redeliver quite a few dozens of aircraft should we wish to.
I think this is the exercise what we are putting ourselves through on a constant basis, and we keep updating our assumptions to see how the market is evolving, how we see demand, and what capacity is required to fulfill that demand. We would take capacity decisions on that basis. Actually, we have quite significant flexibilities flexing fleet up or down in the next two years. Maybe you want to talk about ancillaries.
Yes, Daniel, on your second question. You're well aware that on tickets there are certain parameters that could basically make pricing more dynamic, like the booking window, the day of the week, the routes you fly, the load factor. We're just reapplying some of that logic, obviously, with different parameters on the ancillary. This is very much a homegrown approach. This is something that we want to keep close to the airline. In our experience, it typically beats some of the third-party vendors in terms of performance. I hope that's helpful.
With regard to the leasing market, I think the leasing market is trying to be helpful to the industry, but at a cost. What we are seeing is that lessors are accommodating liquidity requests from airlines deferring rent payments and those sorts of things, but at a significant loss. We are not really taking advantage of that. Cost remains an important issue for us, and we want to make sure that we don't get indebted in this period, that we are not taking government bailouts or anything like that. We don't want to go overboard on industry credit at a significant cost either. One of the things that we are clearly seeing is that the leasing community is very eager to retain their aircraft with operators, with credit, and expectations that they would be a survivor of this situation here. Again, I think that's our discretion to decide to continue to operate the aircraft or return aircraft after the expiry of the lease. This is exactly the exercise we are just going through as we speak.
Okay, great.
Thank you very much. The next person on the line is Bob Simpson of Goodbody. Please go right ahead.
Yep. That's Mark. Morning, guys, just in case you're confused there. Just picking up that comment you just made about crew for about 100 aircraft. Very roughly, that's 75% of your fleet. You're flying currently only about 30% of capacity. Just with a reference to maintenance and flying hours for your fleet and staff, how are you managing those to remain current so that you can deploy capacity quickly as demand recovers? Managing the existing operation, interested in that. I wonder if we have an update on CapEx with regards to progress payments, especially in FY 2023, when the bulk of the delivery deferrals are being seen.
Maybe Mark, I would start with the ramp-up of capacity. Let's not forget that back in April, we operated 3% of our capacity, and in August, we operated 80% of our capacity. I think we have demonstrated our ability to go incredibly quickly and very robustly on recovery. Here now we are in a slightly better position. As we speak, we are operating around 30% of our capacity, and we shall see how good the market will be. I think we can move very quickly on this. When I say that we have crew for about 100 aircraft, that resource can also be stretched to some extent. It can probably do more than 100 aircraft with some heavier rostering in the initial period while we are accommodating onboarding of new crew. I'm very confident that from a personal perspective, we don't have limitations here.
We keep the aircraft current through the maintenance program. We maintain aircraft. Maintenance is not as variable as you would like it to be, to be honest. In a way, it is a good thing when it comes to recovery because essentially the maintenance arrangements we have in place really keep the aircraft current, and from a technical perspective, they would be ready to be reinducted should we start flying more aircraft in the coming period.
With regards to CapEx, yes, the FY 2023 progression is slightly lower than what we previously outlined, but obviously the fleet growth is still substantial, so you should really think in that way as you look at the CapEx for predelivery payments. This said, as Jó said, we are trying to bring increased flexibility in the thinking on our fleet, and this includes also the predelivery CapEx.
Could you, Jourik, just give us a hard number in a sense of what CapEx looks like over the next two years?
Not at this point. As said, we keep working on this with our partners. We'll refrain from giving a number here.
Okay. Appreciate that. Thanks.
My apologies to you, Mr. Simpson, for getting your name wrong. Our next caller is Andrew Lobbenberg from HSBC. Please do go ahead.
Hello. Hi Jó. Hi Jourik. Can I ask you about what you plan to do with the U.K. government funding of the CCFF? Do you expect to pay it back in March, or do you expect to roll it over? Can I ask, there's been some press reports about you guys operating an A330 in cargo formation for the Hungarian government. Is that right? Is it getting you any cash? Is it relevant in the accounts at all? Then can I just ask about the entry to Norway, because the trade union environment in Norway is pretty intense. Do you think you can sustain a non-union operation up there and get engagement with the Norwegian community?
Thank you, Andrew. On your first question, we do intend to apply for the rollover of the CCFF fund. Obviously, given our position in the U.K., we hope to also get a positive answer to that. As you know, it's an attractive program, and we definitely want to be part of it for another year.
With regard to the A330 operation, please don't look at it like a diversification of the business model. The Hungarian government approached us with the initiative of trying to create capacity for the country for cargo flying, learning from the COVID-19 experience, and we are accommodating them, and we are about to contract an A330 operation on behalf of the government. This is not our aircraft, we are just an operator of the aircraft. It is no cash exposure to the business, and it is no P&L exposure to the business. There is a principle agreement that everything is prepaid by the government, and we do it with a margin. This is more like an ancillary revenue opportunity, but it is totally sidelined from our perspective. Please don't get overexcited about this.
I think we are just getting involved here as an airline to operate on behalf of someone else, and this happens to be the Hungarian government. With regard to Norway, the fact of the matter is that half of the Norwegian workforce actually is non-unionized, and half of it is unionized. Yes, there is a strong push by unions. To be honest, I think it is more of a protectionism of the market. We are the insurgent intruder in Norway, and I think this is the competitive response what we are getting. This is just an angle to it, but I think this is really a response of competition or not wanting to compete with Wizz Air. The good news is that we are seeing quite a strong support by consumers. The take-up is as strong as we planned on. Clearly the market reacted very positively.
I think that we will sustain our model, our culture, our organizational model here. Yes, it is under pressure there. Again, half of the Norwegian workforce is non-unionized, and I think actually it is not some of the stakeholders' decision what they want, but it is our people's decision what they want. We fully respect the rights and regulations in every country, including Norway. We would also expect these countries to respect the culture, what we are having, which has been very effective. I think it has created a lot of well-being for our people and our stakeholders.
Lovely. Thank you.
The next caller on the line is Neil Glynn from Credit Suisse. Please go ahead.
Morning. If I could ask two questions, please. The first one, I think actually as this call was starting, U.K. government has suggested it might be about to announce some aid for the sector. Just interested whether you've had any discussions with the U.K. beyond the CCFF facility, and what your expectations or understandings would be on any forthcoming U.K. government aid, and whether it applies to you. The second question, just on the level of payables in your accounts in September. The EUR 514 million at period end. Is it possible to give us some understanding as to what proportion of that number is indeed delayed or deferred at this point, and might be relevant to think about outflows of cash in the next few months?
May I just start with the first question? If you look at our liquidity, we think we are good to go for two years, even if we don't operate a single flight in the next two years. That's a fairly unreal scenario, but we have very strong liquidity. We have been self-sufficient over the last seven months, and we think we will remain self-sufficient going forward. We are not betting on any state aid matters. We are not betting on- Actually, we would be deliberately avoiding any bailout programs affecting us. With that regard, we are not really interested in state aid. Now, obviously, we need to see whether there are genuine and generous state aid schemes coming into play.
The U.K. was actually quite strong on a furlough scheme, but that was sector-neutral, so that was not affecting aviation only. I think it went much beyond that, and we are seeing similar schemes in other countries. We try to understand each of these schemes, whether they are sectoral or not, and to see if we kind of fall into it. If your question is that whether we would indebt ourselves with government money or even include some equity measures, the answer is a definite no. If there are genuine schemes available to the industry or all industries, yes, of course, we would look at them, and we would take a position if we would want to subject ourselves to it or not. The only thing what we have done in the U.K. is really CCFF, and as said, we intend to renew that program. We think it is a good insurance policy at low cost, and it makes sense to take it, but b eyond that, we have no plans in the U.K. or in any other countries.
On your second question, Neil, you rightfully pointed out, there's some, what we call in the slide, the other bucket that helped us, EUR 30 million in the first half in terms of cash flow. There's a lot of moving pieces, as you point out. The payables and receivables were a positive inflow. Even PDP was a positive inflow. There are also a lot of negative outflows, the refunds, currencies, the unflown revenues. All in all, with a lot of moving pieces, this led to the EUR 30 million other that you see there.
How to think about it looking forward. Again, difficult to guide, but overall, if there will be lower activity over winter, it would not be unrealistic to expect a further outflow on payables and on revenue over and above the operational cash flow.
Great. Thanks for the color.
As we move along, the next caller through is Ross Harvey of Davy Research. Please go ahead.
Hi. Morning, József and Jourik. Three questions from me, if I may. The first is on the network strategy, on the increased focus on domestic traffic, and I'm thinking of Italy and Norway. It's interesting. Can you just describe the rationale behind it from a competitive perspective, on how it might or might not complement your larger gauge aircraft? Secondly, one for Jourik. Within the other expenses, you had a EUR 25 million year-on-year swing in terms of sale-leaseback gains. You had EUR 5 million swing in terms of OEM compensation. What should we expect for H2 in terms of those items? Will they continue to be a year-on-year tailwind? Finally, on the hedging side, I'm just wondering what level of H2 capacity was assumed when you calculated the fuel and effectiveness for these sets of accounts. Thanks.
With regard to network strategy, it is fairly clear that in Europe, domestic travel is more resilient than international travel. I think this is the function of the lack of European coordination on the one hand, and secondly, obviously, there is a psychological effect on people pretty much played by governments to discourage people from traveling abroad. As a result, we are seeing a much more resilient domestic market than international market. We are very keen to add to our capacity program. I think this is all about adaptability and agility to go with the flow of the consumer. If the consumer is flying relatively more domestic than before, I think we ought to serve the consumer that way. I think that part has made domestic markets more attractive to us. Let's not forget that we are not coming out of the blue here.
If you look at Italy, we have been operating to Italy for 17 years. We have been operating to Norway for 14 years. We are the largest international airline in Norway already. We were already prior to COVID-19, and we are one of the significant players airlines in Italy as well. I think this is a fairly logical next step with regard to enhancing our market presence in these countries. This is just a timing matter, that this is the right timing because what we are seeing is that there is a shift of consumer preference on the one hand, and secondly, there is a weakness of competitors in the marketplace. I think that made us attracted to these markets. This is a strategic rationale, this is the tactical rationale why this is happening now. In terms of a strategic consideration it is a fairly logical next step versus what we have built up in these markets over the last 10 to 20 years.
On your second question, Ross. The tailwind that you outlined is going to be much less for the second half. On hedging, this is calculated based on the strategy that we have guided earlier, which was around 60% for half two. You're right, if the restrictions that were recently imposed will continue for the next month, there could be some more effective hedges going forward till the end of the year. Obviously, that's also dependent on, in the end, the fuel price.
That's very helpful. Thanks. Just one more follow-up from me. József, you mentioned dozens of lease returns over the coming years. Can you just specify how many of those are coming up in FY 2022 that you have flexibility on?
Between FY 2021 and FY 2023, we have in total 42 coming up that we could potentially not extend. We have the very large majority of those we plan to return. We still have around, as József said, a good dozen to decide on. They're kind of split mostly between FY 2022 and FY 2023.
That's great. Thank you very much.
The next caller on the line is Carolina Dores of Morgan Stanley. You have the floor. Please go ahead.
Hello. Good morning, everyone. I have three questions. I guess first one, with the opening of the 13 bases, I was wondering what is the cost? If the incremental cost is included on your cash burn on the EUR 70 million, just trying to get a sense on how much cost-cutting you actually managed to achieve versus what you have been investing in growth. Second question is, if you could give us some color on what kind of deals the airports have been offering you on the new bases, if any? The third question is, I appreciate the ample liquidity, but what is the minimal cash that you think you need to operate? Meaning, I really do hope you don't need to be grounded for two years, but at what point within those two years of full grounding you would need to tap the markets to raise more cash?
Okay. Thank you, Carolina. On the 13 bases, the cost for us is relatively limited of opening these new bases because we use several principles, and we try to use, for example, crew within our network. As said, we will operate those flights in the current environment only when they're cash positive. The investment is rather limited. We have some cost of IT investment, et cetera, when you open a new base, but it's nothing too major. We are being very disciplined on this one. With regards to the airport deals, you also read the news, right? There was a report out there that there's around 200 regional airports that are on the brink of bankruptcy. Clearly, when we move into new bases, we're trying to do a good deal and we're trying to do it for a multi-year contract.
Yes, we are getting some of those good deals when we move into new places. Then on the liquidity question, we're kind of in a luxury position at this point in time to see what winter will bring. And then still be in a very good position in spring, and we'll see what the environment is like in spring and summer. Then we can have a good discussion amongst ourselves what we need to do. But for the time being, we're relatively comfortable while still being disciplined on managing the crisis.
Thank you.
Carrying on. Our next question is from Alexander Paterson of Peel Hunt. Please go ahead.
Morning, everybody. I've just got two questions actually relating to your airports. You were just saying about you getting good deals for new places. Can you say how long those agreements are? Is that a sort of longer-term agreement? Is it seasonal? Where you were previously flying for, have you also been able to make savings there, and how long do they last? Secondly, there's been some press commentary recently about your potential interest of expanding at Gatwick. Could you just tell us what you're thinking about there? Do you think you need to buy slots or do you think that they're not going to get flown and that you could be awarded them? What should we expect in that respect, please?
With regard to airports, you can imagine that we are not acting on the moment. We are taking advantage of the moment, but the deals are long-lived, affecting our costs for five years or so. We are only entering into structural deals here. We are somewhat opportunistic on the time, but we are certainly not opportunistic on the structure and the impact of these deals on our ability to operate on our cost base. These are all long-term deals, and you can also imagine that we are reviewing every single contract that we have with airports and other suppliers to see how to enhance our standing to get better deals out of these suppliers, whether this is cost or payment terms, managing liquidity. We are scrutinizing everything that we are doing as we speak.
With regard to Gatwick, I think it will be an interesting situation, as you know, that there is an effective slot waiver out there at the moment until the end of March, and that's a European initiative. It is becoming increasingly clear that this industry as a whole will not be able to recover to 2019 capacity levels anytime soon. You can debate whether this is going to take three years, four years or 10, but certainly, this is not going to be imminent. I think this whole slot question will have to be fundamentally reviewed, because I think this is totally against the public interest. Should the incumbent carriers be protected for years and years with even no intention to operate those slots? I think we will have to see how the system evolves and what outcomes that evolution will produce.
We are looking at various options to expand at Gatwick, and we have the interest in expanding at Gatwick. We just don't know how the system is going to unfold with that regard. My personal expectation is that I think the system is going to be reviewed, and I would be very surprised if we are not seeing some of these slots being occupied today with no intention to be operated, would not come back to the market free of charge.
Thank you.
I do apologize beforehand. The next caller through is from Kite Lake Capital, I believe Mr. [Brosky]. Please go ahead.
Hey, guys. Thanks for taking my questions. Two from my side. First one, you're saying your operational cash burn is EUR 70 million a month. Could you just let me know what is not included in there? I assume the fleet investment is not in, but is there anything else that's not in there? The second one is you say the winter cash contribution is minimal, so you're expecting to be roughly cash flow neutral over the next six months?
Yeah. On the operational cash burn, what is included is, or what is not included rather, is indeed the investing cash flow elements like CapEx for redelivery payments, but also working capital movements like if we would have an unwind for unflown revenue or payable. That is not included this time around. On the winter cash contribution, I think that you need to take into account, sometimes people forget, airlines typically make more than 100% of their profits or their cash for that matter, over summer. This is going to be even more so in this season if you overlay that with all the flight restrictions.
The flights that we operate, we do target to operate them cash positive first with the burn rate, but g iven the environment we're in with the restrictions, et cetera, that cash contribution is not going to be as much as it was in summer. Right? I think you just need to take that into account, and we wanted to be very transparent on that.
Okay. That's helpful. Thank you very much.
We have time. Gentlemen, do we have time for one more question?
Yes. Maybe last question.
We have Ms. Savjani from Barclays. You have the floor. Please go ahead. Hello, Ms. Savjani, are you there from Barclays? You have the floor.
Let's have another-
No, it doesn't seem like she's there. There are no further questions in the queue at the moment.
Okay. Well, thank you very much. Thank you, ladies and gentlemen, for your interest, for your continued interest. These are the market conditions we are in. Lots of volatility, lots of unpredictability, but we try to best deal with the situation as we can. Thank you for your interest. Bye-bye.