Good morning, everyone. Thank you for coming to this meeting. Let me just start with saying that I went to Bloomberg this morning, and you are interviewed, and there is this huge screen blown into your face, and you see your numbers in red and falling during the interview, and you try to be positive. I can say rightly the market is wrong, let me just try to prove that the market is wrong and we are right. We are reporting fiscal 2019 today. We delivered 34, almost 35 million passengers. With somewhat higher unit revenues year-over-year and somewhat lower ex-fuel unit costs. I think this is quite a distinction compared to the rest of the market. I think we are in a different place versus many other airlines in Europe.
We are the highest margin business today, we are the lowest-cost airline in Europe as we speak. Passenger growth 17%, revenue grew 20%, the load factor is up 1.5%. I think we are bang on target with regard to our net profits versus our latest guidance, EUR 292 million. If we exclude Wizz Air Abu Dhabi, it's EUR 295 million. We have been controlling our costs unlike our competitors. Some of it, I think, is philosophical, that you always chase the cost of oil trinity, some of it is coming from the gauging of the fleet from A320 to A321, now the industrial and rollout of A321neo aircraft. We believe that our fleet is far superior to the ones our competitors operate in terms of gauge as well as efficiency and unit cost reduction.
We continue to invest into our people in many ways, into our customers, into our operations to make sure that we are a more resilient business together, a more resilient operating model. Especially putting that in context of the industry, how disruptive last summer was, I don't think we can expect much better this time around either. We would stand better to deal with the consequences than last year. Finally, we are back on track with regard to ancillary revenue production. We changed our cabin bag policy. I think we got it right now. It started producing ancillary revenue appropriately. I think it has also eased some of the operating processes of the airline. With that, we are guiding the market for EUR 320 million-EUR 350 million of profit. That would obviously be a record profit.
Do we think the year is challenging in front of us? Yes, it is challenging. Do we think that we are standing firm and confident with regards to delivering these numbers? Definitely yes. I think we are in a good place to deliver these numbers, the early signs after 2 months into the year is that we are well on track to meet these expectations. Back to fiscal 2019. Almost 35 million passengers. We grew the fleet to 412 aircraft. The growth mainly came on A321s. We expanded the franchise, expanded the network. We added 5 million passengers to the franchise. This is the size of an airline, actually a bigger airline, than Wizz Air. Obviously with that, we grew the organization as well. Now we are employing 4,500 people. We had a difficult year with regard to operations.
Some of it was the result of the external operating market, and some of it was internal. With regard to external factors, you all know that last summer was really difficult for industry given the ATC disruptions, airport issues. As a result, the whole industry suffered from a much greater level of cancellations and long delays. If you are looking at the first two months, or maybe the last three months in the current period, things are much safer. We are showing much improved performance. It is because we are more resilient as a business, but it's not necessarily because the external environment has changed dramatically. Actually, it has worsened. We are seeing more ATC slots coming into play than what we saw at the same time last year.
We have made changes to the business and the operating model to make sure that we are more flexible, we have more ability to recover from operational disruptions, to be more resilient as a business model. Let's not forget that last year, we were much affected by some internal matters. We created Wizz Air UK. I mean, Wizz Air UK was an investment not only from a financial standpoint but also from an operational standpoint. We had a delivery scheme of 17 aircrafts, 17 weeks, which created quite pressure on the organization. As a result, we lost some efficiency in the operating model. You can see that in utilization. We were unable to utilize the fleet to an extent we're used to. This year we are going to get back on track with that regard. We continue to build market positions in our markets.
In 62% of our capacity, we are the leading carrier. We are the number one airline in many places, not only the number one LCC, but the number one airline. In Hungary, Romania, or Macedonia, we are simply the biggest airline of the whole industry. Around a third of our capacity is in countries where we are number two or number three. Very notably, we are becoming the largest airline at London Luton, which we think is quite a significant achievement given that this is EasyJet's home base. We are still to deploy two more aircraft to Luton, and with that capacity, we are becoming structurally the largest carrier at the airport.
As he said, I will turn it over to Ian now to take you through our journey.
First, let's focus on the 12 months to March 31, 2019, the year that's just gone. I think what these numbers show is that our objective of profitable growth is shining through. With [available seats] by 15%, we saw strong demand on our load factors, I think up a fairly impressive 1.5% to 93%, and we see no abating in that as we head into FY 2020. Passenger growth was 17%, well ahead of any competition. Even though we had a higher load factor, we were able to achieve a higher RASK, +2.2%, which saw overall revenue up 20%, we achieved EUR 2.3 billion of revenue for the year 2019. On the cost side of the equation, I think it's been clear that fuel CASK was up 19%, actually, the actual liquid itself was up 22%.
That was a huge headwind, and that really set the tone of 2 halves. The first half we grew fairly aggressively, but obviously, the higher fuel cost has really impacted on the second half. That's where you saw us, I would say, scaling our growth ambition backed up. We probably grew about 5% less than we had anticipated in the second half. That actually had a negative impact on our ex-fuel CASK. Simply, you're taking ASK out of the system. We're still able to deliver a -1% on the ex-fuel CASK. CASK up 5% in an overall basis. Going on to the next slide, in terms of revenue generation, I think it's always useful to understand what happened last year. There was no ETA.
When you're looking at ETA, we always would say we lost about 1.5 Easter since last year, that's around about EUR 20 million. In terms of the bag revenues, this is what Joe referred to. I would say it's a bit of an own goal. We underestimated 2 things. One, the financial impact of changing that policy. Simply put, with high load factors on large aircraft, you physically can't get those bags on the aircraft. Customers coming to the gate, there are significant implications on the operational performance that really impacted on disruption. We won't have repeated that going into summer 2019. The financial impact was around about EUR 90 million-EUR 95 million. However, we worked very hard on the value add. Essentially, when you look at the value add, there's a slide further in this presentation.
We saw over EUR 100 million improvement on the value add. Net, we were still able to achieve a positive incremental performance on ancillary, albeit not as much as we had planned for, which is 1% tax per year. On the ticket side, 2.3% up in RASK. That's to achieve at around about EUR 50 million. That all in together gives you a RASK improvement of 2.3% year-on-year. A little bit more color on the ancillary side of the equation. It was positive, just below our plans. Ancillary still represents 41% of our total revenue. We did have a mixed performance. On the bag side, what you can see on the chart to the left, we saw €3 down on the bags, but also offset that with essentially €3 on the value add, which I think is a very good performance.
I think when you push towards the right side of the chart, that really shows the impact on ancillary per pax. We introduced a new policy from November, essentially Q3, that's why you see that washing through effect, and we've seen a very strong reaction from that. If you want to think about fiscal 2020, how that's going to manifest, we'll have a very strong performance up until the anniversary, which is in November 17th, which is where we introduce the new policy. I think it's fair to say H1, you're probably looking around about a 15% increase on ancillary per pax. H2, you're probably more around about the 5%. On an average basis, 10% increase on ancillary. On EUR 27.60, closely to EUR improvement. Moving on to the most important slide. We are an ultra low-cost business, this really takes prominence.
I think it's really, if you look at the table on the right, the fuel CASK was up EUR 0.18, and total CASK was up EUR 0.16. The way we manage our business, the way we manage our costs, essentially is through capacity. I think it's a very strong performer across pretty much all levels. The one item I would flag is staff costs. We don't expect a repeat of that going into this year. This time last year, we were guiding the crew CASK up around about 10%. We'd increased the pilot salaries on average by around about 16%. That was giving you around about 9%-10%.
We actually delivered +20%, which was disappointing, and I think this plays on to József's point, the fact that we took on an awful lot of operational challenges setting up a new airline and getting those pilots trained up accordingly under new regulations under U.K. CAA. Equally, how we source that aircraft, we close four single aircraft bases. They're inefficient bases that we didn't believe were ever going to get up to scale for WIZZ 300, we closed those. A lot of disruptions in the operations and a lot of out of base flying. That coupled with disruptions over the summer period, there was quite a lot of disruptions, challenges, aircraft on the ground, crew running out of duty time. That created an extra inflation pressure coming through the crew costs.
Where we look today, I think when you're seeing airlines fail, especially the Airbus operators, whether it's a Cobalt Air, Small Planet Airlines, Germanwings, WOW air, there is, I would say, less stress on the pilot system. I think that's a positive as we go into fiscal 2020. Certainly, probably the best tone we've seen for many years. Back to maybe ancillary piece. If you model, if you want to see where we achieve that value add. Basically, we achieve +3.1 CASK on the value add. I highlighted that we disappointed on CASK. I would say there are three areas. The WIZZ Bundle was probably about a third of that. The WIZZ Priority product, clearly, passengers want to be able to bring their bags on board. The changing in our priority, the WIZZ Priority and check-in security boarding, that was probably about another third of the increment.
With the allocated seating continues, the penetration continues. We have a third of the other revenue streams. A third of it came from the allocated seating, plus the other revenue streams. Looking ahead, we took our first two A321neo in Q4. It's a fantastic aircraft. It's delivering exactly what it should do. We're very, very excited about this aircraft. If you think about five pillars of how we're going to drive our costs even lower and widen the gap with competitors, there are five pillars to that. Number one, we have a committed order. Essentially, we have a very steady stream of A321, A320neo coming on board. These are the most fuel-efficient single aisle aircraft on the planet. If you look at in terms of the gauge, the A321neo versus an A320, that's 33% extra seat count. That's 59 extra seats.
Again, structurally, you're seeing cost savings coming through just simply because of the math. If you want to look at the next three years, that's close to around about 5% unit cost reduction structurally is just coming through. Again, think about the fuel efficiency just purely based on seat count. You have the engine efficiency. These engines are delivering around about a 15% fuel burn. The engines are delivering a 15%. We've taken delivery of the first two aircraft, and it's delivering exactly what it should be. We're very excited about the fuel efficiency of these engines. You look at the price. When you put an order of that magnitude, you know you're getting a significant price that's going to really start to manifest through lower costs. I think the final piece, the fifth piece, is our investment-grade balance sheet.
One of the disadvantages we've had, certainly on our earlier aircraft, is that we've had limited access to capital. We've resorted to the leaseback market, the leverage on getting the best financing has never always been there. Today, we have an investment-grade credit rating, the pricing we're seeing is absolutely phenomenal. What's important for us is to make sure we maintain that investment-grade credit rating, make sure we have a corporate balance sheet, and that will continue to drive our cost base even lower. When you look at this aircraft, it is a true game changer. This slide, I think it's also very important to flag, we can talk about how this is going to manifest or the cost savings or the cost efficiencies are going to manifest through the aircraft order.
I think what's very important when you look at this is just the scale. If you look at the next three years, between now and 2022-2023, we're taking an incremental 71 aircraft. We're going to be redelivering 21. We are uniquely positioned where we are completely refitting our fleet with brand-new, the latest technology, the most fuel-efficient technology in the industry. This is really going to be driving it. I think what's important is this is where you start to see the step changes on pretty much all cost lines, whether it's the fuel and whether it's the ownership and the financing. By the end of this financial year, we'll have 50% of our fleet on the A321. We focused on the NEO because of the engine efficiency, but let's not forget the gauge. It's the largest aircraft in this industry, this sector.
This is a very powerful slide. Generating EUR 407 million in cash flow from operations. I think you'll find that a very strong business is where cash will follow profitability. Cash from business, EUR 407 million. Financing activities, around about EUR 6 million. Investing activities, around about EUR 64 million. Probably slightly less than what we expect. That's a function of a couple of things. We readjusted our NEO order to get more certainty of those aircraft being delivered on time. That adjusted our PDP. If you look at the cash flow statement, there was no outflow on PDPs. Actually, there were inflows as aircraft. I think what's very important, we have a very strong cash generation. The question will be, what's the next step for this cash?
I think today, when you have to finance that magnitude of aircraft, you want to have a corporate balance sheet. Interest rates today are at a historical low. If we can lock in 11-year interest rates at around about 1.5% or even lower, then that is a very, very compelling proposition. Certainly compared to some of our older aircraft that the financing charge is north of 6%. Again, refleeting at that pace, we're going to be seeing significant cost savings coming through there. It's important to note, we no longer own any CEO assets . I think what's important is we're very keen on the NEO technology, we don't want any CEO assets . There are a couple of spare engines that we sold in the fourth quarter, that comes through some of the numbers.
We don't hold any of the residual value risk on any of the ceo technology. Maybe when we look to the in terms of the cash generation and the leverage, again, very strong cash generation. We have our investment grade balance sheet. I think where does that want to go? Where do we want to go with that? We certainly want to maintain or lower that leverage, and we want to make sure that we have all access and all routes to the most efficient and cheapest possible financing. IFRS 16 is going to be a hot topic, especially those with their spreadsheets, and I'm sure I'm going to have some conversations later on how this all flows through. One thing I would say, if you're trying to measure us on a leverage basis, the traditional mechanism of assessing leverage is seven times your rental costs.
That gets you to EUR 2.3 billion. Under IFRS 16, a lot more technical. On a lease by lease, you do a net present value of the cash flows of that lease, and that derives a lease debt of around about EUR 1.8. When you look at our leverage of 1.4 times, 1.4 over EBITDA, net debt to EBITDA, actually under IFRS 16, that's around about half. The leverage under the IFRS 16 debt number is around about 0.7. A very strong position from a capital perspective. We feel good about fiscal 2020. I think if you look at the tailwinds that we have on the revenue side, we have a strong recovery on the bag losses. We're seeing a very strong performance on that.
If you want to model it, I would say in the first half you're looking around about a 15% increase on the ancillary, perhaps at the end of the second half, more like 5%, on average, 10%. Add that to the Easter, that's why we're seeing up low single digit on the RASK. The revenue environments are looking very strong. What we haven't talked about actually is the capacity environment. When we look at the capacity in Central Eastern Europe today or the capacity growth, the market in the summer is growing around about 6% in terms of additional seats. This time last year it was above 13%. When the market is growing, demand is growing between 6%-8% and the supply is growing at around about 6%, there is a very constructive tone to the revenue environment.
That gives us a lot of confidence going into the summer. Actually, when you look into the winter, Wizz Air represents maybe over 40% of the international seats going into Central Eastern Europe. On the cost side of the equation, IFRS 16, I have a slide on that later, for the next slide. What IFRS 16 does, this guidance is all based on IFRS 16. These are the numbers that we will be reporting in Q1 and beyond. The presentation of IFRS 16 means the lease costs disappear. Essentially what's happening is you're taking the lease cost out of the EBIT and essentially putting some interest expense below. On a like-for-like basis, fiscal 2019, we delivered an ex-fuel CASK of €2.24. By stripping out that interest, it's around about €2.19.
One of the things I like about IFRS 16 is when you compare our ex-fuel CASK to any other airline, we are below that. Today we can proudly say on an ex-fuel CASK basis, we are delivering the lowest cost in the industry. It's a bit artificial by not taking the interest. If you then take the interest, that gets us to essentially broadly flat. What we're saying today is that on an ex-fuel CASK basis, we're going to be delivering -2%, but actually on a, I would say, real basis, we're going to be delivering around about 2%. Sorry, a broadly flat on the cash side. The headwind is fuel. When you add all those together, essentially that's how we get to these numbers. I mean, the margin forms and then we compare it to last year.
That delivers a range net profit of around about $320 million-$350 million. I have one slide on IFRS 16. I could probably spend an hour on this based on some of those conversations. What this slide is designed to do is to help you build your models and walk you down it. Essentially, if you take your fiscal 2020 numbers and you do your debit and credit on an account like that, you believe it works, then this will adjust your opening balance sheet, and this will adjust your P&L. That's what this is designed to do, is designed to give you and this will help you with your models. Again, I'll be very happy to have some conversations afterwards. One of the things I would say when you look on the right, what is the P&L impact on fiscal 2020?
If you add it all together, there's a net impact of EUR 14. When you restate fiscal 2019, there's a minus EUR 26. I think it's in page 95 of the annual report. There's a reconciliation of fiscal 2019. When you look at the year-to-year movement between fiscal 2019 and fiscal 2020, actually you're seeing the negative impact of IFRS 16 of around about EUR 12 million. If we look at ex-fuel CASK conceptually, the A321 should be delivering around about -0.9% lower unit costs structured because essentially the same accounts. We are guiding flattish. Of that, you're seeing depreciation is up around about 3% year-on-year, and that's driven by the IFRS, the profile of depreciation. That's coming from there. The other headwind that we're seeing going into this year, every year has a slightly different story.
We have a lot of aircraft going back to lessors. We have a lot of heavy maintenance events. The one item that stands out is probably maintenance will be up on a unit cost basis of around about 10%. All other line items, very much in control, and will be delivering very strong performance. In fact, crew, I would expect them to be that number turning negative this year on the back of, I would say, better performance last year because it was more challenging. With that, I will pass over to József to talk about the opportunities.
Thanks again. I hope you understood IFRS 16. Back to the markets, why we are confident in Central and Eastern Europe. Central and Eastern Europe is only 16% of the European aviation market. I think it is the best 15% in terms of growth potential and its prospects going forward. If you look at 2020 estimates for GDP growth, Central Eastern Europe is far ahead of the rest of European projections. Estimates are, in fact, Hungary just reported 19th first quarter GDP, 5.3%, Poland 4.5%. The markets remain very intact, and obviously GDP growth stimulates disposable income, and with that, we are seeing more discretionary spending coming to the market. That's clearly a distinctive factor in our favor compared to the rest of the industry because we are the leading airline in Central and Eastern Europe.
You see that my capacity to our network is catching up, but it's still a long way to go. When we started in 2004, this number was 0.1. Now it's 0.5. We have been increasing capacity fivefold, but it is still just a fourth of the rest of European level. With that, we're seeing that a lot more opportunities will be created by the market itself. Also, Wizz Air as the lowest cost producer in the marketplace, we are in the best strategic position to make sure that we continue to effectively bring potential to flying and stimulate the marketplace.
At the same time, this is almost like on the sideline, we are seeing a number of airlines failing in the industry and representing some opportunities for Wizz Air. We have no interest in acquiring businesses, but we have an interest in capturing market opportunities should those be created by failure of airlines. Today, we have been growing our network. It's fairly consistent with what we have been presenting to you over the years, over the last few years at least, that over 80%, 84% of our growth capacity has been placed very safely, either by increasing frequencies of existing routes or joining existing airports. At the same time, we find it important to continue to carry the flag of ULCC, and we continue to pioneer new markets and new destinations. We put 16% of our growth capacity into new countries, new airports.
Most notably Austria was a significant market. I will talk about that a little later. If you look at the footprint of Wizz Air in Central and Eastern Europe and beyond, we believe that we are very well-positioned to continue to own Central and Eastern Europe for the purposes of the airline business. We have operating bases in 14 countries, 25, 26 operating bases across our markets. We are very well-balanced, very well-diversified to make sure that we continue to strive on market opportunities. At the same time, we are not putting all eggs in one basket. Let me just make a comment on Austria. I think Austria has been very topical, especially the Vienna market. For decades, nothing was going on in that place, and all of a sudden, everyone showed up. Ryanair, IAG, EasyJet, whoever. I think the dust started settling down.
You are seeing airlines contracting capacity and pulling back from routes. We remain very committed. We are the lowest-cost producer in Vienna. We have an A321 dominating fleet in Vienna. In our first full year of operations, we are even on breakthrough in terms of financial performance. Now, put that in context of what the other guys have reported, the kind of the EUR 100 million mark of losses here or there. I think we are very well-placed, and we will be making further actions to make sure that we continue to build our presence in Vienna. As far as Wizz Air is concerned, we are very pleased with the development there. We have deployed already eight aircraft in fiscal 2020, two in the U.K., Wizz Air U.K. operation, and we also deployed aircraft across Poland, Romania, Slovakia, and Bulgaria. This is not yet a complete picture.
Further aircraft are out there to be deployed. Fairly shortly, we will be making further announcements. I think this picture gives you a view that we continue to develop our markets in a diversified way, in a balanced way, to make sure that we don't leave significant market opportunities behind. Talking about the U.K., I think Wizz Air U.K. has been a real success for Wizz Air. That airline has been profitable since day one. I think it's a very rare space in the world. By now, we have built a network of 41 routes, and at the moment, the airline operates nine aircraft and two more to come in the coming weeks. We've built a team of 460 employees there. If you look at Wizz Air since Brexit vote, we have been growing capacity in the U.K. by 34%.
We are a fairly simple business with regard to capacity management. If we are doing well in terms of profitability, we are adding capacity. If we are doing not so well, we are taking capacity out. If we are adding capacity, that's a sign of a market prosperity and good market performance. Unlike many of the others, I think we are very happy with the U.K. performance, and we remain very upbeat in the U.K. It is because we are the lowest cost producer in the United Kingdom, and this is a commodity business, and we have a fairly balanced customer mix. We are not betting on outbound U.K. traffic. We have a piece of outbound U.K. traffic, but we have a lot of inbound U.K. traffic as well. Depending on how the pound goes in terms of strength, we can balance each other out.
Maybe spend a little time on some of the operational challenges and the external environment and how we have been reacting to those challenges. Certainly last year was kind of shocking how much the external operating environment deteriorated and posed a challenge on the industry, on ATC, ground transportation, or airports and ground handlers. I don't think the environment is going to be much better. It could even be worse than last year. The early signs are not great. As I said, actually, we are seeing more ATC fluctuations in the first few months of the financial year than the same time last year. I think we have a more resilient operating model to address the challenges coming with it. We optimized block times. We created higher breaks in our schedule to make sure that if there are disruptions, we can easily recover from those.
We try to do that in a way that we are not losing out on the elasticity of the business, but to be more refined with regard to these operational disruptions for the purposes of better recovery. Clearly, we are seeing significant infrastructure constraints. The way we try to address those, we are very focused on improving boarding times. The new baggage policy Ian was commenting on has helped in a big way. It is not only helping us to have a reduction, but it's also improving operational excellence. Then we have this big issue of how aircraft is supplied to the industry. You all know the Boeing issues, but I can tell you that Airbus might be a little better, but not much. They have issues as well, and they are unable to deliver aircraft as contracted.
We had to renegotiate the delivery schedule for FY 2019, and also we are looking at FY 2020, and also we are looking at the next financial year. What we try to do is we try to secure more spare and more room to maneuver capacity in the business, and also make sure that we get Airbus skin in the game when it comes to financial penalty should they fail to deliver the aircraft as we contracted. I think we look better with it, but there are uncertainties around the supplier capacity to the industry. All in all, I think the operating environment will remain challenging going into summer, but we are significantly better set up for those challenges, to be more effective in dealing with the consequences of those.
If you look at the business from a commercial standpoint, we will be very proud of claiming that we are one of the most digital airlines in the world and indeed we are. We are within the top 10 airline websites in the world. I think we are number six at the moment, and it is quite amazing. It doesn't reflect on the size of the franchise of Wizz Air. But we had a fresh start in 2004 and we went deliberately digital, and I think we are riding the benefits of that by now. We are the number one airline on Facebook in Europe, again, despite the size disadvantage. You can see that a lot of the interactions have been converted into app. We are getting 2.2 billion views on the app compared to the web 1.6 billion.
We are highly digitalized, and we continue to focus on digitalizing our interactions with the customers as well as digitalizing the operating model of the airline. A lot has been happening with regard to operational quality and investing into our people. We created a Wizz People Council. We are a non-unionized airline, with a lot more spending, if you want to put it that way. But we are very keen on walking the talk with our employees. We have invested a lot into our people, and we try to institutionalize that relationships through the Wizz People Council to make sure that we can better address some of the issues or vulnerabilities on a structural basis. We created a Wizz Foundation, which is pretty much an emergency fund. Should something happen to our loyal employees or their families, they have a financial source to turn to.
I think this is just demonstrating how much we care about our people. It is not only internally recognizing our people, but I think we got recognized externally as well. We've got the CAPA Award for Best Cabin Crew in San Francisco. And we are very keen on that. We want to be the hometown airline in San Francisco. We want to make sure that people associate with the culture of our company, and the best reflection of that is how the cabin crew behaves when they interact with our customers. We made a major investment in pilot and cabin crew training, which is spoken about a EUR 30 million investment in the form of a training center in Budapest. This is state-of-the-art for investing in Europe. I don't think you'll find any better facilities for the purposes of crew training than what we have in Budapest.
For the first time, we got awarded with the highest Seven Star Safety rating by AirlineRatings.com that rates airlines on the basis of safety, flight safety, and Seven Star rating is how far you can go, and we are in the very top league, basically beating each of our lowest rivals in Europe. We kind of call our way going forward the WIZZ 300. This is the vision to be a fleet of 300 aircraft. And if you see the aircraft order we have on hand, that corresponds with that vision very strongly. So we're seeing around 2026, 2027, Wizz Air should be flying a fleet of 300 aircraft. At that time, we should be carrying around 100 million passengers. This year, we're going to be carrying 40 million passengers. Obviously, with that, revenues will grow and employees, the organization will grow, too.
WIZZ 300 is also important not only from an inspirational perspective, but also from the perspective of decision-making internally in the company. Every decision we are making nowadays, be it organization, be it systems, be it processes, we measure the decision against a WIZZ 300 vision. Would that decision stand should Wizz Air operate 300 aircraft today? This is kind of our way of making sure that we are investing in the future and we are making the right decisions from the standpoint of where we're going to be in a few years from now. I think 2019 was a challenging year, but within that context, we believe we built this up. I believe we will record this up on many of the KPIs, operational KPIs or financial KPIs.
Probably most importantly, or more importantly from your perspective, we are very positive with regards to 2020. We think we had a good start into the year. Every year we have a good start, we have a good finish. Every year we have the best start, we have the best finish. We had a good start this year. Looking at the levers on hand and looking at the airline strategic position, we don't think we have been better positioned strategically than today, ever before. With the cost advantage was the key bearing, the revenue environment our business is in, and the A321 order what we have on hand helps us drive that advantage going forward. Central and Eastern Europe remains a very intact market. It is the right market for Wizz Air. It is the best quality market for the prospect of growth.
We believe that Central and Eastern Europe will continue to represent significant organic growth opportunities for Wizz Air. I think the A321 order is underestimated by the market, and I would like to draw your attention to it. I mean, just put that in context. This order was placed as the single largest aircraft order in the world. As such, it gets the very best price you can imagine. Aircraft orders are fairly simple, or you can think of the size of the order and pricing. The bigger the order is, the lower the price will become. We are benefiting from the pricing of this order. Ian was talking about financing of the aircraft. Given our credit standing, we are getting financing which has never been available to us. I mean, we are getting financing below 1.5%, even below 1%.
I mean, that makes a huge difference in terms of creating ownership value and thus shareholder value in the end. We have 253 of those aircrafts on hand going forward. If you go to an OEM today and you try to order aircraft, you will be told that the first aircraft you will deliver is 2023, 2024. Simply, you can't order aircraft today. We have the best aircraft, we have the best price ordered, and we have a secure supply chain of capacity going forward. As such, with regard to the operating market, we don't think it's going to be great, but we think we are much better to deal with the cost advances today than before. I am expecting a significantly better operating performance as well as financial performance in summer 2019 compared to last year.
With that, we are very confident in our guidance of believing that number is somewhere between EUR 320 million and EUR 350 million. There is upside to this number, but also there is downside simply because we don't have full visibility on the fuel price environment, and we don't have full visibility on the operating environment, and we don't yet see competitive capacity going into the second half of the year. What we have seen today and what we are expecting today and what we have delivered today, we are very confident in our ability to deliver this guidance. Thank you.
With that, we pass over to the room.
Thank you. It's Jarrod Castle from UBS, from UBS . You said at the start of the year seeing growth of last fall. The same thing about May and June, if you exclude excellence, what underlying pricing is doing? Secondly, is there an indication of what percentage of your summer has been booked already? I think BJ was talking about 34%, it'd be interesting to see how much of your summer has been booked. Then just one on the financial side, with tax rates going to 4%, standard rate is 80%. It will affect the rate, obviously. I don't know what's going on there and how sustainable is that rate? Thanks.
Let me take the revenue question. Philosophically, I think we are much better off driving fares down and increasing ancillary revenue and make up the difference. Basically, the way we think about this is that lower fares are there to stimulate the marketplace, and higher ancillary revenues are there to deliver profitability or deliver for the business. It is actually a favorable trend what we are seeing at the moment. We are lowering our fares, so we are seeing around 4% fare reduction. At the same time, we are getting around 10% positive ancillary revenue reduction. I think this is the right place to be from our perspective, because we are a low-cost producer, so we can sustain lower fares relative to the industry, and we are doing the best with regards to ancillary revenue production relative to the rest of the industry.
That's the pace that we want to be. We also see that actually ancillary revenues are more resilient to market volatility. Fares are much more volatile depending on competitive capacity. Certainly, we know that the lower the fares are, the better we can stimulate the marketplace. With regard to what bookings we have already in, we are around 2% ahead compared to last year same time when it comes to Q2 bookings as Ian said, I think we've been vocal about that we're going to be up around 4% in Q1.
Maybe on the RASK, if you want a little bit more color
Certainly H1 will have a stronger performance on the ancillary. Maybe some rough numbers, and this gets you to be up those single digits. The ancillary are 15% H1, H2 probably more like a 5%, 10% on a full year basis on ancillary. That suggests giving back on the ticket. You're probably seeing around about 3%-4% giving back on the ticket in the first half, down 5%. The net that will give you up five-ish in the first half, backish second half. That gives you on a full year basis between 6%-8% on a rough basis. On to tax rate. A couple of moving parts. One is there was a reduction in Swiss income tax. That was a benefit for us. That also had the impact of reducing a deferred tax liability. That's why in fiscal 2019 we had a better number.
The run rate is around about 4%. What I would say is with Wizz UK, it's a U.K. business, pay U.K. corporation tax of around 20%. As our business gets bigger and more profitable, it's still in the early days. There are some roots that will be maturing. I would say that given it's around about 10% fleet, you can assume 1% or 2% increase on the tax rate going forward. For this year, there's a bit of an upside on the Swiss income tax, but that will give back on the U.K. corporation tax.
I read a report by Harry Gowers, J.P. Morgan, sell side report some few months ago on IMO. I'd be interested in how are you preparing for the impact of IMO, and do you, like the sell side report, anticipate fuel prices might all other things being equal, up 15% as the report I read?
I think there are two pieces. One you're referring, actually, was crack side of the equation. We have a hedging program. There's a point around about 18 months where that suggests from the back to start peaking. We have a hedging program. We're constantly looking at that. The industry is saying that there will be some inflation going through that. I think European airlines are slightly different because we can hedge jet. You're capturing that. Other airlines that hedge in Brent, they then have to start looking at maybe hedging the crack. The tenure of the crack is less liquid. As long as there are jet products, then we can hedge two, three years out. The question then really is the hedging view of the world. If I look today, fuel prices go up, they go down.
When we were giving guidance this time last year, jet was at $7.30 and was making me uncomfortable. Today it's $6.30. The price of fuel will be the price of fuel. It's something that we're taking seriously. Similar comments on carbon. Carbon, when the European ETS scheme came in in 2013, we spent $1.5 million on carbon. Next year, fiscal 2020, we're spending $55 million. Again, having that added to the fuel bill. I think it's sort of distracting, but the A321neo, the fuel efficiency that's coming through that aircraft, we have the ability to absorb these inflationary. In fact, other airlines don't have that. I think to József's point, the next few years, you'll really see that gap between competitors on the fuel side and on the side really widen.
Maybe just one comment. Are we afraid of high fuel prices? Yeah, I mean, obviously, we would like to see fuel being lower. If it's a higher price, I think we are okay with the two because as a matter of fact, we are much more professional than others, and I think it will force market consolidation on the one hand and for certainly some capacity rationalization of airlines, and we would certainly benefit from that. This is a commodity, and I think in a commodity, the lowest cost prevails. For so long as we are the lowest producer, now we are the lowest unit cost in the industry. No matter what happens, whether this is geopolitics, whether this is macroeconomics or what, we should be standing that situation much better than anyone else. It must be much more painful to the other airlines who are less cost.
Do we really care about fuel price? Not really.
Well, not the same value. These are fantastic aircraft. It's the fuel.
Yeah, we are not immune. Of course, we are not immune, and we rationally react to that. If you look at the impact of an increasing fuel price, it is much less for us compared to the others.
Right. It's a relative given amount.
our competitive position is actually improving, not worse.
Sorry, just one follow-up, if I may, and it's connected. You gave the net change in CASK that was on account of the transition from the ceo to A320neo, A321neo, -10%, -10%. That's for overall CASK, fuel, everything, right? That's my understanding.
All in, yes.
All in. What is it just for the fuel and then for the other? There's a seat impact and then there's a fuel impact. I'd be curious to know how it's split out.
Sure. An A320ceo has 190 seats. An A321ceo has 230. You got 50 extra seats. That's generating around that 9.8% improvement on cost. 9.7% actually on fuel. That's the number of model. When you take into account the A321neo, two effects, an extra nine seats, so an extra 3%, so that gives you around about 3%. You've got the fuel, which is 16% fuel burn. I would break it up 10/3/7 in terms of where the difference between the seat count is 13-ish, and then you've got seven, which is the fuel burn.
Morning. It's Alex Allison from Investec. Three from me, please. Firstly, József, in your prepared remarks, you mentioned that ancillary was less cyclical or sensitive than fares. I just wondered if you could say why you thought that was. Is it that perhaps ancillary is less mature or less visible when someone's booking? What is it that makes it more or less sensitive? Secondly, again, you commented about not being unionized. Should we be the last airline standing in that respect? Should we infer from that it's a matter of time before you are unionized then? Is there any pressure to do that in the near term? Lastly, one for Ian, just on the hedging strategy. Again, your hedging percentages have increased over time. Would you expect that to continue to be the case as you get financially stronger and your hedging costs are matched with comeback?
Let me start with the first. I don't have a scientific answer to the question, [Houdan]. This is more empirical. If you look at the cyclicality of ancillary revenue production compared to the fare production, we are much more stable on ancillary revenues. I guess it's because ancillary revenues reflect on kind of the habitual behaviors of people. Once they are acquired, they are into the franchise, they kind of tend to stick to their habits. The fare is a competitive game. They can go many ways. They can go to different airlines, different modes of transportation, et cetera. Once they are in, they kind of stick to their habits, and they spend accordingly. This is totally empirical. Maybe there is a better scientific explanation. That's what I can give you.
With regard to unions, no, we just don't think philosophically, again, that unionization is the best way of handling labor relationships in the company. We have been making investments therefore with regard to management and staff to be inseparable in terms of the way we think of the business and the organization. It has never been you or me. It was always we as a team, what we can do. I'm personally spending a lot of time on visiting our bases. We have to recognize the nature of our organization. 80% to 85% of our people never see the office, never see the headquarters. They are remote compared to where decisions are made.
I think it is very important that management wants to talk with these people and see the people, and give them the opportunity to create the infrastructure and the institution to speak up and say whatever they have to say, whether that's their issues or their system of working to support the company. We have been promoting that behavior forever, since the very beginning. I think we are just now layering other institutional elements, the People Council to be more effective with that regard. I don't see a pressing need for unionization. I recognize the context. I recognize how the industry operates. I recognize that we are an outlier in that. I think we have a different organizational culture, and I hope we can stick to it.
On the hedging, we're a very data-driven organization. I think the most important thing about hedging is what's the impact on the business. There is a natural hedge in the airline business because of capacity. As fuel prices rise, you tend to see airlines taking out capacity. We're certainly seeing that in the summer, we're certainly seeing that going into the winter. Fuel prices rising, the revenue environment will follow. The converse happens when fuel prices fall. The last thing you want to be doing is hedging everything and then suddenly the price collapsing because you'll end up going the wrong way. We tend to probably make a little bit more money as the fuel price goes down rather than when the fuel price goes up. If you look across the curve, it's probably breakeven.
I think what's important is that we are able to react, that's why I think we're slightly apart from other airlines, is that we react quickly. We were adjusting capacity already in Q4. Other airlines are now starting to do that, which is maybe why they're a bit more bearish on the outlook. It's got nothing to do with far out. It's got nothing to do with hedging. Yes, it costs money. The reality is, I think we run Monte Carlo simulations on a regular basis. We keep it fresh, we test it, essentially it's proven to be a robust model.
Hi, morning. It's Catherine Miller from Citigroup. I have 3 quick questions. Just on the ancillary penetration, I was wondering if you might be able to comment. I know you talked about the contribution of incremental growth between the Bundle and the Priority and so on, but clearly, those have obviously seen a nice bump in part due to change of baggage policy. Just thinking about the sustainability of that longer term in 2021 and beyond, how you're thinking about that and maybe contribution from other products perhaps that might then accelerate that further. Then just 1 second question, just in terms of the impact in full toward on the net expenses and how maybe we should think about that FY 2021 and the proposed effect, just a little bit more detail on that would be helpful.
Thirdly, just on the Airbus deliveries, obviously you said you renegotiate your F120 and F119. Do you anticipate a negative impact on your ability to grow? How should we think about that FY 2021? What's their base case scenario on that? Thank you.
Starting with the delivery question. I think what it does is that it makes us think inaccurately when it comes to delivering those capacities to the business. We would love to have the new aircraft. We would love to have the new, more efficient capacity because it's a better capacity, it's newer aircraft, it's lower unit cost. At the same time, we have a few other options as well. We can increase utilization of the existing fleet. That's one option. Another option is to extend existing leases, or even we can go to market and lease capacity from the other markets. We are assessing each of those options in context of the aircraft delivery rescheduling. I think we are pretty confident that with regard to fiscal 2020, we will be able to deliver on 17% growth.
We shall see how the industry situation is evolving over the next period and what issues the year has to deal with going into fiscal 2021. We don't have a full understanding on that period yet. We are seeing some further need to recontract and renegotiate, especially calendar 2020 deliveries. Again, given that we have a few other levers on hand, I think you should be in a position to be able to deliver your growth. I don't think we are going to be able to go totally bullish on this because it is simply not our interest. For example, to extend old leases, old technology, or aircraft, less efficiency for a long time. I think we might be better off dropping some of those opportunities, and pick up the capacity and take this delay on delivery. That's on Airbus. With regard to Ancillary.
There was a question on Ancillary?
Penetration.
Okay, sorry. Penetration conversion. I think we used to have kind of an unbroken line on ancillary revenue. We used to communicate to the market that we can build ancillary revenue per passenger, EUR 1 per year incremental. Not necessarily delivering EUR 1 per year, but certainly delivering like half a EUR. Then we made a bad decision on bags, that affected our ancillary revenue production big time. I think we corrected that decision. I think the way I can see it is that now we are back on track. We had a dip. I don't think it is the volatility of ancillary revenue production. I think it was just down to one single wrong decision, what we made. We hope to kind of learn from that.
I think going forward, I would still expect ancillary to rise somewhere between half a EUR to EUR 1 per passenger per year. That will come on increasing penetration on existing streams. Also we continue to look at new products to be brought to the market. I personally think that at one point, ancillaries will become mainstream and will tip over to over 50% of the revenue production of the airline. We are already at 43%, it's got to keep rising.
I suggested that the ancillary impact would be up around about 10%, that's just around about three years. Maybe we're looking at this year as two years of sort of a bag recovery, and one year is the value add. I think what's important is that we are on track to get that. Certainly as we look into the fourth quarter, if we're not going to hit the flat line, we're going to start seeing the decreased penetration coming through. On net expenses, I think this is a really good example of what József highlighted in terms of value of our NEO contract. Essentially, when we came out in Q3, the smart ones out there said, "How are you going to deliver -11% ex-fuel cash in the fourth quarter?" It's a function of a number of things.
Number one is the start of this NEO order, which we've been waiting for since 2015, since we put the first order in. The value embedded within this contract will be recurring over the next seven to eight years. The question is, where will that number be booked? Whether it's the lower depreciation because you're buying aircraft at a relatively lower price, whether it's from the interest because you're financing them at a cheaper price, or whether they'll be one-off gains through sale and leasebacks. We took two aircraft in the fourth quarter. We also got some A320ceos off our books. Essentially, it's coming through that aircraft order. If you look at our cash flow statements, you can see the gain on assets, $26 million. That gives you the flavor of what happened there. I think the question, is that going to be recurring?
The answer is yes, it is going to be recurring. The magnitude in fiscal 2020, less so. I would say probably around about a quarter, you'll be seeing that going through into fiscal 2020. The reason being is the majority of our aircraft are being financed with structures like JOLCOs as opposed to sale and leasebacks. When we do a JOLCO, the accounting treatment is slightly different. It recognizes through lower depreciation. Yes, the gains are there, but they're coming through lower depreciation rather than, let's say, other. There's a couple of sale and leasebacks. The majority of our aircraft in fiscal 2020 are through essentially owned aircraft. When we look at that number, is it going to be coming through? Absolutely. I think that's what we're very excited about going forward.
I would just like one comment. We can discuss this focus around accounting and probably the reduced one-off versus structural and IFRS, etc. If you look at the meaning of the business, I think cash must be the real indication of the strength of the business. We produced over EUR 400 million of cash from operations. This is the underlying strength of the business. You can debate how you account for that, et cetera, but we produced over EUR 400 million of cash.
Morning. Jaime Rowbotham from Deutsche Bank. Just one from me. Can you talk a bit about the opportunity in Ukraine? Your press release reminds us that whilst you have 43% at low cost, that actually only gives you 7% of the market there, 7% or 8%. How quickly can you capitalize on the opportunity in Ukraine?
Very good question. We kind of ask the same question internally. We used to be very obvious in Ukraine when EasyJet and Ryanair decided to stay in. For years and years, we were the only game in town in Ukraine, and we were building the whole low-cost approach in the Ukrainian airline market. The market became significantly affected geopolitically, and we felt that the country risk was too high to sustain an operation. We withdrew from that. We never crossed sides completely, so we maintained presence in Ukraine, but the Wizz Air Ukraine operation was fully Wizz Air Hungary-based in Kiev. Over the last year or two, I think we have regained some strength, and we kind of reconfirmed Ukraine internally. Clearly, Ukraine has become a major source of labor to Europe, especially to some of the Southeast European countries.
One of the interesting things that we are seeing is that you see a lot of Southeast Europeans coming to Western Europe, and you are seeing a lot of Ukrainians coming to Southeast Europe to replenish that workforce there. Also, as Ukraine went visa-free, obviously, that became a much more open market than before. We are looking at ways of increasing capacity, and we continue to grow Ukraine. To be totally honest, I think given the constraints of supply of aircraft to Wizz, we have to be much more selective and much more picky where we are deploying capacity. With that regard, I think we will remain a little constrained on growth in Ukraine in the coming years. Two, we will grow, but maybe we could do more than what we actually will deliver.
Once that capacity constraint is lifted on the industry, I think you're going to see us growing much more in Ukraine. We are very upbeat. The market performs well. I think it is a more stable geopolitical environment today. Certainly, given all those restrictions disappearing between the EU and Ukraine, we think it is a good source of growth going forward.
Sorry, it's a bit of a boring question, if you could just update on the whole Brexit situation as it has impact your EEA requirement on shareholding and any negotiations that have to cross along free and so on. I haven't read much about it recently, and it's obviously still a live topic. Thank you.
Maybe I give you an update that you give me an update on the Brexit situation. God knows what's going to happen to Brexit, whether it's going to happen, and in what way it's going to happen. I think what you as an airline can do, given that you are shooting a goal here, that you play contingencies on the key matters that would affect your business. I think two key matters that would affect our business are, on the one hand, success to market and the other hand, ownership and control being a European airline. With regard to success to market, I think we played contingencies timely enough with the creation of Wizz Air UK. Now we have Wizz Air Hungary, the European airline, and Wizz Air UK, the U.K. airline.
We are at both sides of the equation to make sure that we are in a position to fly if Brexit happens, in whatever way it happens. Also, we've received full approvals from the British government to be able to fly between certain countries and the U.K. post-Brexit, if it happens. I think we are really good to go with that regard. I'm not seeing any risk there. You have ownership and control, and as you know, European ownership at the moment is counted with the U.K. in, and post-Brexit, the U.K. would be counted out. At that point, we would not be meeting ownership and control standards based on our current shareholding structure. We play the contingency of disenfranchisement, and we tested that contingency with the European Commission, and the European Commission pre-approved that contingency plan.
I think we are also good to go with that regard, and it seems to me that this disenfranchisement approach is a fairly European standard because it looks like other airlines would think on the same lines. I think the way it would happen is that disenfranchisement would give you a way short-medium term and would allow you to adjust your structure over time, over probably a couple of years. That's the feedback what we received from the European Commission. We also expect that investors would be structured. Maybe what we are seeing today would not exactly be the same post-Brexit because some non-Europeans could also become European at that point. Again, we simply don't know what Brexit really means. There are all sorts of scenarios, but we try to make sure that we plan for the worst-case scenario.
I think for the time being, and this is all approved by the relevant authorities, we are good to go on any score. I don't think Brexit poses any risk for us at this point in time.
Thank you. Are there any questions anybody by telephone?
Thank you. Just a reminder to the participants on the phones, if you wish to ask a question, please dial 01 on your telephone keypads now. Our first question comes from the line of Mark Simpson from Goodbody. Please go ahead. Your line is open.
Yeah. Morning. A couple of questions. First off, just a question really on the quality of earnings being guided for this year. On a reported base, rather than restating FY 2019, IFRS 16 is given as a positive EUR 14 million.
Your shift of treasury to a U.S. dollar deposit base is going to add about EUR 36 million. You've got a EUR 50 million like for like benefit. You've got the change in the non-repeat of the other operating expenses in terms of maybe a EUR 30 million shift negative. EUR 20 million of your guidance looks to be coming from non-operating. I suppose the question is, do you make decisions around, say, pricing, knowing that you're getting these tailwinds derived from non-operating items? That's question one. Question two is, in terms of the fact that you're getting, let's say, EUR 30 million of benefits, which you've taken through the other expense line, but you're guiding broadly flat CASK ex-fuel. I'm just wondering if you can tell us where you're seeing the sense the offset to recoup on that flat guidance. Is it coming through such items as labor?
Should we be expecting unit cost reductions in those lines? I'm just trying to square the various guidance you've given to some of those individual items.
Sure. Thanks. Morning, Mark. I'm trying to get my head around what the first question was, your math was right. Keep on saving.
The first question was whether we are making decisions based on savings that we are ensuring from the accounting change. I would say yes and no. I think we are keen on delivering the financial metrics. I think we've always said that we are here for profit and we are here for creating shareholder value. At the same time, I think long-term shareholder value is also derived from the growth pattern of the business, and we are also keen to continue to grow this business. We are planning on 17% growth, again, putting it into perspective of the industry. Our industry is much more down than that. We would be premium with regard to our ability to grow the business. We also want to make sure that we are premium in terms of the margin performance and the profitability of the business.
This is something you try to strike a balance on. Yes, I think we want to take advantage of the EUR 20 million savings. At the same time, we don't want to go crazy and forget about profitability and financial performance.
Yeah, maybe. I suppose also taking a step back and the way we manage the business. I mean, IFRS 16, we have the benefit of a couple of years of understanding what this does to the business, what the financial impact is going to be for the business, and sort of adjusting and making certain decisions so that flow through, because we want to deliver sustainable profitability, sustainable growth. When you are fundamentally changing your risk management structure, fundamentally changing, bringing on EUR 1.8 billion worth of liability, that requires a lot of planning. A lot of the decisions that we've been making that were manifesting up until the end of the financial year in the first quarter. If you take a step back, I mean, there's almost an elegant step from fiscal 2019 to fiscal 2020.
Our having a broadly flat CASK when you're fundamentally changing the way you're reporting the numbers, essentially was the target. It's not as if we just let things run and made adjustments. We made a number of decisions, including the risk management policy, which you highlighted. With IFRS 16, we're going to be facing EUR 1.8 billion of lease liability on the balance sheet. That's a monetary asset, whereas the asset that you're bringing on balance sheet is not a monetary asset, so you introduce a lot of FX translation risk. For the first time, we're able to actually capitalize on our cash. It's been very painful to sit on EUR 1.2 billion, EUR 1.3 billion of cash earning negative interest rates. like I realized now, we can actually earn solid interest income on that.
The reality is that we have fundamentally changed the risk management policy, and that will be a pickup. The timing of that event also works very well with the one-off in Q4. Again, I think the way we manage the business is possible growth, so that we make good money from this target.
That net EUR 20 million win, kind of half of your implied PAT growth this year. Potentially that allows you to maybe be more aggressive on pricing just to drive that growth at a time when other people are actually having a tough time with it.
Yeah, absolutely. I think one of the key questions really is the second half growth. I think we're very well set for the first half, and again, today the fuel prices are around about EUR 630. If fuel prices stay where they are today, that suggests there's maybe a little bit of gunpowder to drive up the second half. Let's see where we are. It's still very early.
Just as a sort of derivation of that, with the view that you do have that change in the cost base because you're not getting the net other expenses being sort of reduced by those sale and leaseback transactions. Where are you delivering the big unit cost wins to then deliver that broadly flat guidance?
I think as I indicated that you are seeing the value coming through the aircraft because you're seeing lower depreciation because the value of coming through lower depreciation and lower interest expense side. In terms of the ownership of that where the value manifests. The timing of that or the bumps, so to speak, depends on the type of financing. As I indicated, I think the majority of those A320 because that's how we usually go ahead.
I mean, basically, we are seeing the benefits of the Occasion Act of flowing through. Because of the occasional rates, it benefits very well. We will have more new routes applying, obviously. As Ian indicated before, I think we got really prudent on labor expenses last year because of the complexities we had to manage, and we are much more dialed out on that side. You will see a fall of labor costs as a result.
Okay, that's great. If I could, as I'm online, just one last question. How do you read Ryanair's exploration of the Buzz fleet? Is it substituting Ryanair for Buzz or is this actually suggesting growth competition?
We wish good luck to Ryanair. As you speak, we are a lower cost producer than Ryanair, and we are a higher margin business than Ryanair. They do whatever they will do, but I think they are driving their business into more complexities and structural costs going forward.
I think we're going to have to start accelerating. Maybe one more call.
Good morning, guys. Adrian Janaszek from Berenberg. Couple of quick ones. One based into your latest unit cost guidance. Is there any uptick in utilization just knowing the spare capacity? Second one, very brief one on carbon costs of up to EUR 50 million run rate in FY 2020. Do you have any price risk or have you hedged that out?
Yeah. I can take both of those. In terms of utilization, again, we managed capacity last year and we got down to around about 12 block hours a day. That's not the level we want to be at, and that's not where we want to get back ever again. Yes, you will certainly see utilization rising again. In terms of the carbon price, there are hedging capabilities. We have hedged a little bit of that. I think in terms of your numbers, I would assume it's down spot price. Okay. With that, I think is it time to wrap up? Great. All right. Many thanks again, everybody, for joining us. Thanks for listening to our story for the last year and the guidance ahead. Thank you.