Earnings Call: Q3 2020

Jan 29, 2020

Hello, and welcome to the Wizz Air full year 2020 third quarter results. For the first part of this, all participants will be missing only mode That's it. There'll be a question and answer session. I'll just remind you, this is being recorded. So today, I'm please I'm Joe Ziff Wright, CEO. Please begin. Good morning, everyone. Thank you for joining this, stress conference. So we are reporting Q3 fiscal 2020 results. So this is the October December quarter, 2019. I think we are reporting very solid set up results. In this quarter, kind of similar to previous reports and importers, very importantly, we delivered 23% of future growth in this quarter. That's only delivering, that growth. We also increased, unit revenue performance, which is a rare combination, especially with that level of growth. Cost performance was very strong. So one of the fundamental drivers of, profitability in the in the period. Exterior cost came down by almost 6% in the quarter. And as a result of an improved cost position and improved revenue position, our profitability went up by around 21,000,000, versus a breakeven result in the previous year. We continue to expand our business, across our network by launching over 100 new routes, what we've already announced for, for fiscal 20. The also made a significant announcement, to establish this at Abu Dhabi. At least airline, at least airline security, into intention, basically the, Abu Dhabi government, and we expect that initiative to, to take off, towards the end of the year in, in the current calendar year. Also, we are raising our guidance from, previously 35,350, a band to 353, 55, And this is, obviously, a reflection of improving, performance, what we've already delivered and also our view on what we are seeing for the remainder of the financial year. So moving on to the next slide, this is page 3. So you can see a summary of the of the business. So you can see that we did work over 10,000,000 passengers in the in the quarter. Our acts of count, went up 220, acts of that's 14 acts of more than, in previous years. We we kept adding airports to our franchise, by opening 10 new airports, and and support with the growth of the best also grew the number of employees, and they are nearing 5000 people in the, in the company. We added one more country to, to retrieve, let's see what we what we covered. A low feature performance was very strong. So kept improving lower. Load factor production, 92.5 percent, 1.1 percentage points more than a year before. And quite intensively, we increased utilization significantly to nearly 5 hours. So that's a 5% improvement versus the same period, last year. Regulatory was unchanged. It's at a high level of 99.8%. That's one of the highest in the industry. But importantly, we were able to increase on time performance by almost 2 percentage points to 82 points. If you recall, we have made a number of investments into improving our on time performers. So we created more operational resilience our sites and as a result, we were able to improve, the operating performance of the airline. And with these headlines, I will just turn it over to our 3M who will take us through the financial results. Good morning, everybody. Moving on to Slide 4. So in terms of the financial performance the 3 months ended 31st December 2019. As Joseph highlighted, 14 extra aircraft, that created 22% additional seat growth. All these factors were healthily up by 1.1 percentage points to 92.5. So that is additional load factor on the seat growth meant passenger growth. A very healthy 23% sort of way outstripping whatever you're seeing from the competition. A slightly higher stage length around about 20 kilometers, The ASK growth was around about 22%. In terms of financial numbers, that led to 1,000,000 of revenue for the year. On a net profit of $21,400,000 for the quarter. When you look at the building blocks of our margin, it's pleasing to see the RAS was up 1.9%. Ex fuel CASK was an impressive 5.6% lower. Fuel CASK is 5% higher. We can talk about the guidance that we're giving, which is 7% for the full year, which meant all in CASK was down 2%. So a very strong margin performance for those 3 months. Moving on to slide 5. 47 percent of our revenue in the third quarter came from ancillaries, so a very another very strong quarter in terms of ancillary revenue generation. The changing cabinet policy, the year on year effect essentially ended in November. So the third quarter was the last lapping effect but healthy to see that APAC revenue per pack was up 11% ticket per pack was down 50% but overall revenue per pack was up 1.2%. So again, echoing shows us comments that they're growing at 22%, 23% passenger growth and still delivering a plus 1.2% in revenue per pack. Is a very strong performance. A lot of you will be asking how that's going to be tracking going into the fourth quarter. The way I would model it is ticket revenue will continue around about the minus 4 percent level, but the ancillary continues to be healthy. At around about 5%. So certainly the one euro per pack looks to be fairly straightforward to achieve in the fourth quarter. So that'll give us around about a 1% increase in RASK, about 0.5% and 1% increase in RASK in the 4th quarter. A little bit more color in terms of the ancillaries on to Slide 6. Again, up to per pack, which is great to see heart 0.5 Euros came from banks. Again, a trend that's, is great to see it after 5 or 6 years of declining bag revenues. The value add was 2.5 of which around about half of it continues to come from the bundles, half of it continues to come from the prior reporting products And again, when you look at the chart on the right, it's pleasing to see, yes, we made a decision to remove the large cabin bag, over a year ago, you can see the negative drag that had on ancillaries per pack, but it's more than compensated once that policy was changed in November 2018 So good to see healthy ancillary revenue generation trending higher. And if you model for next year, I think we feel confident that plus 1 year per pack for fiscal 2021. Moving on to the most important slide, Again, as I've highlighted, that ex fuel CASK was down 5.6% and nearly 6%. The all in CASK was down 2.1%, which is great for our margins. Terms of the breakdown of that, generally speaking our fair fairly strong performance across the board, utilization in the quarter was up 5%. So when you're looking for the full year, we'll be looking at utilization up 4% around about 12.5 hours. So good to get that that metric back on track. With your CASK, up, you can see 0.0060higher. We're guiding 7% increase in, fuel gas for the full year. Half of this is coming from carbon. So of that 0.073.5% is coming from carbon costs. Around about 2% is going to come from the dollar. So the dollar has strengthened, the dollar strengthened a couple of percent. So that's coming through as a headwind of fuel cost. And the actual liquid that goes into the aircraft is up around about 1%. So that's how you get to the 7%. So overall, the increased utilization has really helped drive those unit costs lower, whether it's start costs, whether it's airborne handling, whether it's depreciation. On the net financing charge, also we benefit from interest income, which I previously highlighted that we hold the majority of our cash now in dollars, and Shell is benefiting from the interest income that's generated on that. So net net, a very strong performance on the cost side of the equation. Moving on to Slide 8. Again, I think it's very helpful just to give you a flavor of what the future holds. The first point is that we have a fantastic aircraft order. That's going to be delivering a significant cost savings going forward. It's fair to say there are challenges in the supply chain. So actually predicting to an aircraft of delivery, is a little bit difficult. In terms of fiscal 2021, we have negotiated and contracted the delivery schedule. We will be taking a few more A320s. We were the 1st LK321s, but obviously, we need to deliver the seat growth. So when modeling for fiscal 2021, I think we can confirm ASK growth. Is probably the right number. We would like to grow faster if we can secure more aircraft, but that seems to be getting harder and harder as we get into fiscal 2021. I think one thing I would highlight is that when we step change, from in the C count, if you look between fiscal 2021 and 2022, seat count with an A321 and the bidders goes from 47% to 59%. That will see a significant step change in Rx fuel CASK. And that will flow through from the margin performance. Moving on to Slide 9. Essentially, the guidance table, not a huge change. So ex fuel CASK We're now seeing minus 1 from slightly negative, slightly negative. So basically that's an improvement, I would say. Slightly negative would have been minus 0.5%. So we'll see minus 1%. Obviously, if we can do better, we will. But essentially, we're pretty much locked in now for the remainder of the financial year. In terms of the revenue per ASK, slightly positive. This has been fairly consistent, as Joe just might highlight in terms of the revenue environment, but essentially, the revenue for ASK, what we saw at the beginning of the year seems to deliver. So we're very pleased with that forecasting. Do you expect a tax rate I've indicated with which you gave slightly higher tax environments and the tax rate is starting to tick up a little bit. But with that, with with Abu Dhabi, there will be a mitigating effect on that. So in terms of modeling, maybe the step up in tax rate is not as 1 1% per year, which is what I previously indicated. But the rate to tax rate for fiscal 2020 is up by around 0.5%. So up to close to 5%. And then in terms of the net profit range, yes, we have increased that. The way I would look at it is, we sort of always highlight what could go wrong in fourth quarter, whether it's disruption costs, whether it's competitive intensity, whether it's fuel spikes, whatever, some fast liquid. You know, the 1st 9 months are in the bag. January is practically in the bag. It's a fairly mild winter. So from a cost perspective, we feel very confident and that's given us the confidence to give that fairly tight range. If there is any outperformance that will come to the revenue side, we'll have to see how that plays through in February March. So with that guidance table, I'll pass back over to Judith. Slide 10, you can see the capacity environment, how it's been changing over the years. I mean, you clearly can see that the overall capacity, environment has has become increasingly benign going into fiscal 2020, and we are expecting a similar going into fiscal 2021. As a result, essentially this area is delivering most of the growth in Japanese 0 while we we used to be around 25% of the, of the growth given, until until fiscal 2019, will be stepped up because overall capacity came down to around 60%. I think we clearly communicated that we we were trying to take advantage of the situation, and, we will need to make sure that we are growing more than what we would have planned otherwise. That's why we booked, into capacity growth. And we are now reporting 23% passenger growth in the, in this first quarter and and and something similar that we come out on the, on fourth quarter. So we are basically reinvesting on improved market position, our improved profitability, into further growth, which obviously the business will benefit from going into the next financial year. So all you have is It's just showing how we are going this business. As usual, it is a low risk growth to 5. So 86% of the incremental capacity, has been, put on increasing frequencies of existing routes and shorting existing airports. And 14%, we are putting Gulf for, bringing to Airports into the franchise. That profile has been practical assistant over the, over the year. In terms of markets to grow, Vienna, continues to be a very important market, from our standpoint. So we are delivering heavy dose, the other thing for backup in fiscal 2021. Poland is an important market as well. So you can see the other thing, there's a total of, 6 aircraft imported over these these 2 years. And the Baca region, is also important for programs. So we are growing more than India, we are growing, Romania. We are growing, Bulgaria, Macedonia. So the Coalition has been a great source of growth. In in the current financial year and going in to discuss that even as well. And we also grow Budapest Humphrey So it is a balance for us across the number of bases across a number of countries. And as a matter of fact, I would say that the business will be capable of growing more, shouldn't you have more effect to, to to new acts up, but you all know the, the the industry or situation, with regards to new ethical deliveries. So they are somewhat contained. But having said all of that, most of that issue has been mitigated by extending existing leases, of of of aircraft. We also added 1, 1 new concentrator franchise at Armenia, and we are very pleased with, the initial reactions of the of the market So moving on to the next slide, slide 12. So we set out the lobby. We are extremely excited about, this is a joint venture investment with, one of the actually investment terms of the Abu Dhabi government, of the development boarding company. Holds 70% of the economic interest, Avaya, Abu Dhabi holds 30% of the underlying economic interest it is a similar execution of the bees, business owners. So you would not notice any difference between this and we said, okay, we'll be that hungry. Same, same operating system, as an airline, and I think same service, how it comes across with the passengers. We expect the airline to take off towards the end of the year, around October November 9, subject to legal proceedings and, and licensing. But we believe we are we believe we are on Google track to, to deliver this initiative. Where we are at right now, we have signed a letter of intent, which we are now turning into firm, legal documentations. We have received a government history, that, declares, he said that I'll be a national carrier of the U. A. So from illegal, that perspective, Mister Abu Dhabi, we have the same standing as Etihad, Emirates, Arabia, or slide by in the UAE. So we would be a national carrier, of the UAE, and they are just going through the normal process to to make sure that we have the airline open enrolling. So on the one hand, they said they are going through the, the documentation processes and slowly but surely we will start putting people on the ground, in, you know, without the end, we will start building up the organization. Needed to start the airline towards the end of the year. So moving on to the next slide, page 13, Vienna has been very topical in the industry. I mean, I've started for decades. Nothing happened in Vienna and all of a sudden, everyone should help. Sincano is starting seeing the dust settling down. Some airlines have, started contracting in a quite significant way. Eurobank's level, rallying, it's just, they are all in concession mode in in a better and there are 3 airlines, that keep pushing the lines, loader, obviously, and airlines on our staff. This is a structural winner in Vienna. Actually, we are the only airline, not losing money in Vienna. We have been able to ramp up operations specifically to quite a significant volume, just over 18 to 24 months, but it was losing money while all others are losing their shirt. I mean, some numbers came out on, you know, being sound louder. So, they are losing tens of millions. It's not 100,000,000, by competing in Vienna. The reason we are not losing is that we're seeing that we have a, a proposition to market, which excels, in that we are flying an old A321 fleet. I mean, the A321 is the most economically efficient, act of type, today. Versus a very mixed, old fleet competition of both load and and OC and L. So we gain a lot of structural economic advantage coming through the fleet. After these are, the significant margin we had a loss of producer in the, in the market in Vienna, and obviously that that makes us very resilient from a financial standpoint. That's why all others are losing the yard. That's still breaking even on financial performance. And this is a heavy ramping of business. We ramped up capacity from nothing to 4,000,000 seats just over 18 months by launching 49 routes to, to 27 countries. I mean, that's very significant. We've never done it in a magnitude like this before. And we have been by the interest by the market reaction and the, and financial results coming out of that. And most importantly, we are the lowest emitter, amongst all the airlines in in Vienna, and we think that sustainability is is an issue, which the industry needs to, face and each of the airlines need to to do it. So we are very, very efficient structurally, to Vienna, not only short term, but also, the longer run. Moving on to the next slide, page 14, we have communicated this, but I think it is the worst reinforcing. She said it's the degree of style animal carriers in Europe, again, with a significant margin. A few months ago, we started reporting, our environmental footprint you can see that we are leading the pack, quite a big way versus, the entire industry, the more legacy you are as a business, diverse with regard to your impact to the, to the environment. We firmly believe that the industry should take certain actions, to immediately affect, the environment to a footprint, like, rendering, business costs are short for, and I was just taking a flight this morning, the two things happened on, on that side. So I was flying from Munich to, to to lose. And, business class was definitely not a single person. 8 roles were dedicated for business class, so that was not a single person sitting on business class. It was an AC-nineteen with around 146, 22 passengers set on the flight. I mean, what's the sense of performing a flight like this, just to sense of, you know, giving legroom and empty meter seats for the business first the way you have had the environment in that model is priced or three times, bigger than an economic class, best insured, we carry. So that was quite a very quick experience from, from that perspective. And if you look at our environmental performance, actually, it had been on a continuous decline on on our footprint, and we are expecting a further a further 30% CO2 reduction within the decade by 2030. But we are taking a sustainability beyond, environmental concerns to be We are heavily focused on our impact on on the economies. You know, we have created a number of airports and we have because that was fundamental aviation, fundamentally affecting the economic effect, departure prospect, the connectivity prospect of those of those regions. I mean, you can look at the regional Poland, regional, Romania, and some of the other places, that has become the comprehension of those, of those areas. We are very keen on managing people and 3 people appropriately. We are the only airline in Europe, nonunionized and and believe that it doesn't happen incidentally. It happens because we talk to people and we have a number of initiatives in place to make sure that people are engaged, people are engaged quickly and they see prospecting their life, by, engaging with with So that brings me to the last slide, page 16, to, to give you some closing comments. As you can see, through the the presentation, it was a great quarter for this. We delivered industry leading growth and margins. Both the revenue side of the equation as well as the unit cost side of the equation performed very strongly. Despite the 23% passenger growth, we were able to improve, unit revenues by 2% and we were able to plot exterior unit cost by by around 6%. As a result, we delivered significant improvement on profitability we ended up with 21,000,000 net profit in the quarter. We made an announcement and a highly exciting, initiative for Mister Abu Dhabi, which essentially is going to shift, the center of over aviation bird from west to east, which we think is the right way to go for the long run. And we believe that this model is a unique position in the industry to deliver stability and shareholder value going forward given the free to order, free to order on hand, given the effective of the business model and the growth prospects of the business going forward. And as a result of this strong owners, we are increasing the guidance to 1,000,000 to 1,000,000. Okay. We will now open up a Q and A session. So if you have a question and you haven't already, could you please press 0 and then one on your phone keypad now in order to enter queue. And then after I announce you, just ask that question. And if you find that question has been answered before you can speak, just press 0 and then 2 to cancel. And I'll be brief pause all the questions are being registered. Our first question is over the line of Mark Simpson, and pet good body. Please go ahead. Your line is open. Yeah. Good morning, guys. Couple of questions. First one on fuel, your guidance remains at plus 7 unit costs. Your run rate for the 1st 9 months is +5.3, implying plus 12.5% in the q 4. I'm assuming there's a carbon cost component on that, but could you just, give us a bit more detail around that q 4 unit cost picture? In terms of Vienna, obviously ramp up there, can you just give us an idea of where total capacity is? I think you were looking to push aircraft in there to secure the capacity available. Is that a maturing market in terms of future growth? And then finally, early days, I know, what's the trend in terms of pricing into the summer? You've got the market wide European capacity. Obviously, looking favorable. It gives an idea of what you're seeing for your early bookings? Good morning, Mark. On the fuel CASK, and I'll pass the other few questions over to Jonas. Actually, what you're seeing in Q4, the real headwind is the dollar. So when you look at the full year, as I highlighted, it's plus 7%. 3.5% of that's coming from carbon, 2% of it's coming from dollar, and around about 1, 1.5% of it's coming purely from the fuel price or the hedged fuel price The strong gains that we made on the our FX program would have been felt in the first half. It's the 2nd half where we're less hedged than we're paying more the 110, the 112 level. So that's really the reason why you'll see the negative performance in the fourth quarter. But on an annual basis, plus 7% is as I highlighted. Half of it is the carbon, 2% of it is the dollar, and 1, 1.5% of it is the fuel price. So with regard to, Vienna capacity, the market is maturing. I'm not sure if this is because of, normal demand trends, the future, the market. I think this is more on the base of administrative burden put in place by the the airport. So, now the airport is getting stuck with, with managing the, the growth accommodating the growth of airlines. So there are some barriers coming into play, that will limit airlines' ability to, to grow Vienna. I think we would like to put more growth into Vienna. I don't know whether we can, whether we will have the slots available to to do that. So with that regard, I think Vienna is going to be a maturing market, but again, I'm not sure that it is matching on the right basis. It is going to be forced by airport capacity constraints. So with regard to summer bookings, yeah, actually, you know, we are very upbeat with but we are seeing so far, but early days, so I wouldn't jump into conclusion. But clearly, we see that the the overall capacity environment is fairly benign as it is hard, and or I think one more important thing is that many of the airlines including our service, react to the shortage of new aircraft deliveries by extending, order aircraft in in operation. As a result, unit cost, in the industry will creep up simply because, there are more, orders of being upgraded than the Novite plan. I think we are somewhat uniquely positioned in that game because we continue to, to take quite a number of new acts of deliveries So we will be able to reduce unit costs going further. And, as a result, we are simply just becoming more competitive than what we, what we used to be. So basically our improved competitiveness and the overall decline on market growth, in San Antonio, you know, seeing that the demand side of the equation is going to improve in in summer 2020 versus last summer, and we are already seeing the first reflections of that through pricing. So we are seeing prices up 5% to 6%. But again, early stage, we don't have a lot of bookings in, but whatever we are seeing, that's than expected to acquire the margin. That's very helpful. Thanks. Could I just get back to interest on the carbon costs. I mean, could you just give us an idea of how far forward you hedge and how you manage that? Because I think you can talk about another significant step up in carbon costs for the next fiscal year? Yes. So in terms of modeling, I would say that carbon bill for fiscal 2021. We're looking at it now. It's around about $100,000,000, $95,000,000 to $100,000,000, but that's a quarter of our profitability. Which is pretty, pretty shocking. And you then have across Europe, a lot of these countries raising carbon taxes or eco taxes, whereas Germany, Austria, or whatever, So quite, quite where all this money is going. We're not too sure. So in fiscal 'twenty one, around about $100,000,000 is the carbon cost. Two things that are happening make year. One is that Corsier is still a bit of a question mark. So we have to see how that what Corsier means is that there's non EU flight fall into scope. So that's an additional step up in costs. That may or may not be implemented. So clearly there's a little bit of upside if that's not implemented. The carbon costs are tracking higher. In terms of forward hedging, I mean, it's fairly similar to our current hedging program. We'll be around about 50% hedged for the next for the next 12 months or for fiscal 2021. That's great. Thanks. So around the current price, which is Okay. We're now over the line of Ross Harvey from Davy. Please go ahead. Your line is open. Hi. Two questions. First one is in relation to the slower growth that you spoke about, from yourselves and across the industry. TFY 21. How should we think about in terms of an impact on your own unit costs? And so I can see you've you've obviously got significant interest and components in the US dollar deposits. What duration is asked land out at and are you impacted by the lower yield curve versus what it would have been last May when we originally spoke about this? Thanks. I think with regard to growth and unit cost, we are planning on delivering around 15% growth in fiscal 21, this is a little lower than what we delivered just the last few years, but it is in line with our long term growth, projected asset. We have been always talking about 15% growth for this business is capable of of delivering on a structured basis to be took it, simply, because we decided that we have more equipment in the last few years, but I think around 15 go through something, but you can you can model. If you got unit, what I said, we have some inflation refresher on on a on a on a few items, but even the continuing conversion in 360 balance, and still bringing in quite a number of new aircraft, some of them will be based expenses. We believe that we will continue to deliver a declining unit cost extra unit cost of 4 months. So think we will get targeting around a percentage point on that. So I think that's what I would model in your case. On the interest income, in absolute terms, $44,000,000 is probably about the level RGUs this year and also next year. It's fair to say with, I think, there were 2 Fed cuts last year. So that cut was off half a percent. So essentially, we would have we would have felt that that the balances would be slightly higher. So in absolute terms, I would say year on year, it would be the same, but around about 44,000,000. Great. Thank you very much. Okay. The next question comes from the line of sharrod Castle at UBS. So please go ahead, Jared, your line. Good morning. Yeah, obviously, your your fleet car has been changing, somewhat over each quarter in terms of, you know, the total number of planes, the mix of planes. Just two questions related to that. I mean, this is kind of previous expectations of it's your unit cost control. How's that kind of impact that you're thinking over the medium term And then secondly, what does this mean for, some form of compensation or offset from Airbus? Second other question, just the recent news about Lawton Condell, how how you think about it from a competitive position, and and and kind of summer, kind of initiatives. And then just lastly, congratulations on Abu Dhabi. Just looking ahead, you know, in terms of the medium term, we're looking to do for the JVs, you know, outside of Europe, you know, could you look further field maybe like Africa or further east? Thanks. Okay. So let me take this question. So with regard to the free profile, yes, it is changing because the circumstances are changing, and the, the industry's ability to deliver aircraft, is changing. So we have here the costing the order book with, to significant impact, of that restructuring bond is that, short term, we will take more 320s, simply because we have access to AC 20s, the airbrush is in better shape with regard to the evening AC 20s and AC 21s. And medium, longer term, we have converted all about AC 20 positions into AC 21 positions. So what you are seeing is that short term, we are slowing a little bit on ASC 21 conversion, but sort of medium, longer term, so 3 years and more out. The application of the base on, on AC31, on the AC21 delivery programs. I mean, you can see structurally, we're gonna be converting 8 5% of the fleet in 20 321. So essentially, we had viewed the common AC 21 airline, and not an AC 21 airline. As we speak today, we are close to 50% of the seats. We have flown on A321. So we have slowed the A321 is hugely exciting to deposit delivers lower unit costs. And and and as so far, we have been able to convert the business very, very successfully without losing traffic as a matter of fact. Our load factor has been constantly increasing despite the, basically, 1, conversion. In regard to, compensation with Airbus, Yeah. I mean, we are we are taking compensation, but I don't think we are driven by this or driven for this. We would love to fly the aircraft. I think we we will be able to make more money by flying passengers and getting compensated by others. So this is not exciting. I think this is some image control in a way but, our motivation is to get the aircraft and fly the aircraft and, grow the franchise. Obviously, as opposed to, getting on compensation, but, yes, I mean, we are getting some compensation. But don't think of it like this is my significant driver of profitability. We would be making more money by flying the aircraft as opposed to just getting compensated. So Loth Condor, yeah, I mean, I think these are 2 North West Airlines, to be honest, I mean, Loth has been on state aid and state sponsorship for years. You may recall that they received, €400,000,000 of loans from the Kurdish government. And then call and reorganize, lot and some of the businesses into a holding company to make sure that they channel, profitability into covering loss making. And on a basis, they started expanding the business. GE was talking about market principles when it comes to state aid, but it does very little to actually, adhere countries to that. I mean, just look at the recent plants, the UK bailing out slightly, Germany's bailing out, condor, lots, you know, having the export constantly by the state. Now it's raining over the modem or the HDF flying, which is a bit of a joke. I mean, a few years ago, everyone believed that Talithadia was over. Is flying. So I think the EU has kind of mapped it down on some fundamental principles and that creates some frustration in the, in the system. So this is a little side of it. The ponder side of it is that I don't understand why the German state intervened. I mean, who needs Condor? I mean, you know, Germany is a competitive market. The market would have taken care of, of Condor. Now the German government decided to, to step in. Basically, what's happening now is that 2 kind of Northlands Airlines are getting combined. None of them, neither of them, is is basically capable of surviving on on market merit. So they they they both, hot on, on state support. So I don't think this is gonna be a great business, and I don't think this is, the rise of a new, formidable, future competitor here. It reminds me to what Suisse was doing, a few decades ago about Eddie Hart, was doing in over the last 5 years, and you can see the results of each of those. With regard to Abu Dhabi, I think Abu Dhabi is a unique opportunity for a bit. I mean, structurally, you know, we are very excited about opportunities going further and we are more excited going further east than, than going west. So if you look at the west side of Europe, you see infrastructure constraints on airports on ATC. You see increasing tax burdens. You see, increasing a regulatory burden, a lot of social pressure, you know, flight chains and, you know, social pressure on, kind of planning the infrastructure development, knowing you don't get new no new infrastructure developments, in in many in many areas. And at the same time, going east, you see that, aviation is still seeing a economic tensions. That's the driver of society. That's the driver of of connectivity. And, and, you know, we are yeah, that excited about some of these opportunities. I mean, just just look at a few of them. So I would always want to think, yeah, I know the largest international airline in in Israel 5 years ago that that market was completely closed. We have a base in Ukraine. We have a base in Georgia. Now we are in Armenia. That are those between Ukraine and and view that you've been made sure in the European open skies within within 6 months. We just made announcements on, on Saint Petersburg, partially opening up to market. And San Antonio, New York continues to remain the largest source of growth for for the business. So we have plenty of growth opportunities. And at the moment, we are cherry picking because we don't have enough capacity to to take a load or growth opportunities. So I can't predict exactly what the future of being, but certainly, I see more and more initiatives that favor our business model that favor the growth that are coming up in this, and they are personally monitoring those opportunities, and we are acting on those mon on those opportunities. Whether that that means it would be doing more JVs. I don't know. I've seen time being set up, but, but we are certainly very upbeat about the opportunities arising in these Jared, maybe just a couple of other comments on your question on structural cost savings. I think it's fair to say, clearly, we would prefer to have the A321, but fleet delivery schedule has essentially 4 legs of structural cost savings coming through. Obviously, it's the gauge. We would prefer that the A321, but the A320 still a larger aircraft, 180 six seater. And it's a committed order. So in terms of a spare supply, putting an order of that magnitude, is a huge asset for for Wizz Air. So there are other 3 legs of, cost savings, the engine, the GTF. So taking the A320neo, it's far superior than operating the V2500 A320s. The price that we're currently paying for these aircraft is outstanding. It was part of the mega order that we did with the other Indigo group of airlines. So in terms of the price of the aircraft, we've got incredibly competitive pricing. And the last piece is, of course, the financing looking at the financing that we're able to achieve today, whether it's with Jobco structures, whether it's through issuing a bond, whether it's through bilateral debt, a many multiples lower than some of the existing aircraft in our fleet. So structurally, whether it's an A320 or an A321, see significant structural cost savings coming through our fleet delivery schedule. We would like the A321s, maybe we'd like to grow a little bit faster I don't think there's any other airline out there that has the delivery schedule, such as Wizz Air. And Ian, what would you say is the differential in the, the cost opportunity to, operating afterwards. So if we got the A321 rather than A320s, you're probably talking around about 0.75% improvement on ex fuel CASK. So yes, I mean, we're running the budget now. If it was an entire A321 coming into the business, you're probably seeing close to another minus 1% That's why I'm sort of drawing your gaze to 20 2, 23 when we're taking a significant amount. Hopefully, Airbus will be able to deliver those, and then you will see a real step change. Okay. Thanks very much. Okay. So we're now over to Michael Kuhn at Societe Generale. Please go ahead, Michael. Your line is now Good morning. 3 from my side as well. Firstly, on hedging, obviously, for fuel prices coming down quite substantially over the past couple of days. Wondering if you could give us a kind of real time update on where you spent some hedging wise for next year and whether you used that opportunity over the last couple of days And then secondly, Ian, you mentioned that the Abu Dhabi entity will help bringing down the tax rate, which suggests it will be a consolidated entity. And maybe you could give us some details on, how it will work your say the legal minority owner, the economic majority owner will be convoluted and once it's getting set up, what kind of capital contribution to set up the vehicle. Do you expect? And then last, at least, with the recent discussions around the coronavirus, obviously, you're not guaranteed close to China, but do you have any numbers on, Chinese or Asian passengers there in your network and what impacts, let's say, patients who's coming here up anymore. You have to receive. Thank you. Good morning, Michael. On the hedging, I think you'll see on one of the slides in the appendix that you're in terms of the hedge levels versus, fiscal It's around about 5% better. So that's certainly, quite a company start to the financial year. Yes, we have been hedging other airlines have been hedging. So, yeah, the recent dip, which are the opportunity to add a little bit of hedging. But in terms of the way I would look at it, we're currently tracking on the hedge level versus fiscal 20 around about a 5% improvement on the pure liquid. And again, the carbon cost is gobbling up some of that, some of that gain. Abu Dhabi, I mean, I think the way I would probably look at it is with UK. I mean, you need to set amount of liquidity in the early years. I mean, the beauty about the airline industry is your forward bookings tends to finance the business. So from a capital commitment perspective, you know, it doesn't really move the needle. I mean, with whiz UK, we needed 15,000,000 on day 1 just to repeat the, the regulators that we're a liquid airline. So within a fairly short space of time, that loan was repaid. So with our Abu Dhabi, we'll be in a fairly similar situation. So in terms of looking at the cash and in terms of where that cash is being deployed, you're probably looking around about 25,000,000 dollars, $30,000,000 on day 1. But the business itself should start to be able to repay that, in fairly short order. We don't really have any exposure to the, to the Asian markets. So if you're not to the Chinese market, then we hardly have any, Asian travelers with us. I mean, a few heroes there. And so far, we have not been affected. Certainly, I'm not seeing the spread of the virus in our numbers. It may come, and I just looked up what passed did to our business back in those days. And what we saw at that time was that obviously it became a global epidemic and it kind of hit the the industry for a month. And it was a bit of a fall like a stone in the 1st month, but then it's started recovering and up to 4 months, basically have this event back to Northern Ireland, the whole event, but full button. So probably, this is gonna be a better controlled issue. So I would not expect the same, kind of reaction of the market as it happened to our customers. But so far, so we are not yet seeing any impacts. Okay. We now go to the line of Robin Bide at Kansas Fitzgerald. Please go ahead. Robin, your line is now open. Good morning, guys. Thank you. Just on the improvements to aircraft utilization, can you talk about any changes, that you've made or introduced to help this performance, or is this change in utilization just about flights and routes? Thank you. I mean, basically, we addressed some of the seasonality issues 1st calendar quarter 2019, the 2, capacity outside significantly. That was our way of reacting to, to increasing course like fuel. This time around, as I said, we felt much more comfortable with our ability to perform. There's no incremental profitability coming in. So we decided to invest that incremental profitability in the form of a greater capacity growth So we deployed a lot more capacity this winter, than what we did last winter, and that pushed utilization up significantly. Also, I think the we just lost some, fine tuning of the of the operating model, you know, to make sure that we we actually maximize utilization. We also did more kind of festive flying. We flew more in, in Christmas time, new year time. And and and those sort of things. So it is some refinement, but the fundamental, move on utilization was vintage, winter utilization. Great. Thank you. Okay. Before going on to the next question, Jim, which is from the line of agent L Cassia at Bank of America. If anybody else has any further questions, please press 0 and then 1 now. We'll let you go to you. Good morning, everyone. Just a question for me. First is on RASK, why RASK continued to decline one other LCC have reported higher pricing in December quarter. And secondly is on staff cost. We continue to decline over the quarter should we expect this decline going forward further? Thank you very much. Sure. I mean, on the RASK, I think we were the 1st airline back in May last year saying that we were seeing a constructive zone. I mean, when we look at the future, we look at supply demand dynamics. And based on sort of history, we can sort of derive where we feel that RASK is going to prevail. So we were saying we were seeing a slightly positive RASK environment against all other airlines. As the year played out, Other airlines are downgraded and their profits guidance. And then they flip flopped towards the end of the year when clients took one out of business and all of a sudden they had a big shot in the arm in places like Gatwick and Manchester. So yes, you are seeing a a lot of the UK based airlines coming out and talking about a surprising bounce back on RASK, but that's more of a function of their inability to forecast and also maybe Thomas Cook going out of business, giving them that shopping on. So when we look at the full year, the airline industry, you know, there's a lot of volatility in this industry. And I look at the operating plan. It's quite scary how how accurate are forecasting our operating plan over this year. So from that respects, there hasn't really been any change from what we've ever saw back in May, going into the winter. The other thing I would highlight is that if you're an airline and you're growing at 0% to 2%, our definition, your route should be maturing and you should be printing money. So it doesn't come as a surprise. That those airlines that can't deliver any growth are starting to see all the yield increases. We're going to be delivering 26% growth in February. We're going to be delivering 25 percent growth in March. Now all of that all the benefits of that money invested in the fourth quarter will come through into the summer. So we're certainly setting ourselves up, I think, for a very strong fiscal 2021. So again, I think you need to be a little bit cyclical and cynical on what's actually been happening over the past 12 months. Essentially, Wizz Air has basically delivered exactly what we said at the beginning of the year, which I think is pretty impressive. On plus 20% growth. In terms of staff costs, what you have seen, there tends to be a little bit of pressure every 3 years or so. I mean, last year, we raised up the pilot salary around about 16%. And we highlighted at the beginning of last year, when we set up WIGU K, there's quite a few additional costs coming through the system in terms of outpace flying, additional training costs, Now that with our UK is fully embedded in the organization, I think it's fair to say that the operations team has done a fantastic job in terms of crew rostering in terms of the aircraft A321 by definition, you should be seeing a 17% unit cost reduction on crew. You need one extra cabin crew member, but you still need 2 pilots. So structurally, yes, we should always continue to see cost savings coming through because of our fleet. And that should continue. It's fair to say that there is inflationary pressures. I mean, wage inflation, inventories in Europe, So the cabin crew, you know, is at the present. So that does absorb some of the structural savings. So again, we're fairly uniquely placed that we have the tools of the A321 to absorb some of the inflationary pressures. So looking forward to staff costs, I think we should be fairly set for good performance in the next financial year. Thank you. Thank you. We have time for one final question. And that final question for today is over to Jamie Robofam at Deutsche Bank. Please go ahead, Jennie. Your line is now open. Good morning, gentlemen. It's actually two questions if you have the time. The first one, can you just remind us what the initial fleet plans are for the App Storey Venture. And is there an extent to which you might be able to smooth the seasonality of trading or shifting aircraft to the Middle East during the European winter season. And then secondly, Another element in Q3 hasn't been mentioned yet, is the decision to appoint a new CFO. Joseph, could you please Philipine on the thinking behind the management change at WIS, please? Absolutely. Thank you. With regard to the Oblobby, free program, we have taken a few decisions already. Most importantly, that, Visaraba will only fly, X321 new, 2 aircrafts. So that's the significant position. We've seen that this is a way to maximize our competitive advantages, in the marketplace. And this is how to create the most shareholder value in our lobby. Initially, we're going to start with the 2 aircraft, but clearly, we are going to do them that up. Such a market development and the active deliveries. And, you know, we would be looking at Abu Dhabi as as a 50 act of opportunity over the 1st, 10 years. I mean, if you think about this, this at Hungary, so this has EU arm ramped up the business. We're on on the back of over 15 years. We're seeing that the RWW opportunities trend is similar to that. So basically, requires us to get to around 50 aircraft in 10 years and they'll be talking the following 5 years to 200 aircrafts. So that's kind of the trajectory and part of what we are foreseeing for, for Abu Dhabi. Also, you know that we have, an order book on the A321 extra large that we'll start coming in in 2023, and we're seeing that Abu Dhabi is one of the, the prospective markets for the AC 21 XR deployment. I mean, simply because, you know, the market opportunity is coming with range, are very attractive and and a certain degree of consider, VISTA Ravi to be a very strong candidate for the deployment of the, of the AC 21 extra hours as well. This is 3 years down the line, but at the same time flies very quickly. So we'll get there sooner than what we would think with regard to the organization announcement, a few things here, Bonnie's, the heavy study to make an into finance organization. Finance has been kind of left out. I mean, if you look at our leadership structure, we have, an EVP and 2 commercial officers, in commercial. We have, an EVP and 2 officers for operations and, and we had one officer for, for finance. And we're seeing that because of the of the diversification of the business, some of the investments, what we have made, into subsidiaries. And the investments calling up, with regard to aircraft. We have a significant cashback, what we need to deal with. So we're seeing that we need to take a more serious, view on on the finance function, and decide that, you know, that function also had to be brought in line with other functions in the in the company and in line with what the future requires us to, to be a bit from a finance standpoint. I mean, you know, Ian, he has done a great job and, you know, we are very, very appreciative. Ian is, you know, a fairly junior officer, and we decided to bring in an EVP, to make sure that finance comes in part with the video function. And it strengthened the financial discipline in the business, not only what we have done so far, but also what we are going to do in the future. So, and also it creates a and opportunity for the end to, to diversify his, his his career path. And, you know, I'm personally very excited about, his, his new assignment. To become the company's chief investment officer because, we just have to invest a lot. I mean, we are investing into markets. We are investing into assets. And we have significant liquidity resources. We need to deal with it. So, yeah, I think I think it's really exciting. And I think Ian, in strategic side, is very excited about the new opportunity set, the new assignment we are doing to him. But, yeah, you may even have a few words. I think, no, absolutely. I mean, on the excitement point, absolutely. I think it's, I was sort of reflecting, I've done 60 month in close, and those, I've done a month in close, it should be data process. That's that and presented to you guys 20, 25 times that's even pre IPO. And I think when we look at the, you know, the exciting opportunities ahead, you know, business development is essentially gonna be a very important pillar. So we can help to sort the business from Abu Dhabi in the UK and with their hungry. Looking at the optimal capital structure, getting the right financing vehicles, it's great that the investment is taken in finance and I'm looking forward to a change, but they may no mistake. I'll still be around causing trouble. Thanks, Scott. Thanks, Joseph, and best of luck in. Thank you. Okay. That was the final question we got time for today. This now concludes our call. Thank you all very much for attending, and you can now disconnect.