Earnings Call: Q1 2018

Jul 19, 2017

Ladies and gentlemen, welcome to today's with Air Q1 Financial Results Conference Call. For the first part of today's call, all participants will be in listen only mode and afterward there will be a question and answer session. Please note that this conference call is being recorded I would now like to hand over to Joseph Barati, CEO of Wizz Air. Please begin your meeting. Thank you. Good morning, everyone. Thank you for attending this meeting. So let me start with highlighting some of the matters that we are reporting this time around. First of all, 1 fiscal 2018 is a very strong performance for the company. We recorded 25% passenger growth in the year that we carried 7,200,000 passengers. Revenue was up 29% with the revenue per ASK unit revenue up 3.4 I mean, obviously, to a great extent, this was influenced by the fact that we had Easter in this period by winter Easter. Last year, nevertheless, we are seeing very strong underlying unit revenue, performance as well. So this goes beyond the impact of, of Easter net profit, is up 50% to 1,000,000. So all in all, I think very strong financial metrics for the business was able to deliver. During the period, we kept expanding our operations, our network, this period mark opening up the London Luton base, we opened a number of new destinations among others, some interesting ones in Russia Kazakhstan Morocco, which is just evidencing the need for our services, the need for our fares and our ability to actually move into new markets. We secured additional 10 new Air Basis 21 COF deliveries, which will actually be delivered in 2018, 2019. The less important for delivering growth in the coming period. We are also announcing today a significant change to our baggage policy, we are eliminating charging for a cabin bag. So one bag, normal size in line with industry practices, we travel for free. I think we are reacting to customer feedback and and this is certainly something customers will like. But at the same time, we are also enhancing some other asset revenue products to compensate for the loss revenues arising from this stream. But just to put that in perspective, this is only around 2 professional and we're seeing that with some of the initiatives, we are going to be able to compensate for that, but we'll detail this later. Very importantly, today we are announcing 3 changes in executive leadership clearly. We are enhancing our capacity, to lead this organization and lead this business forward to the next stage of our business development. Mr. Steven Jones will join us from New Zealand to be the Executive Vice President and Deputy CEO, towards the end of the year. Ian Weather is promoted to a Chief 5 Officer, effective from August 1 and heiko Home is also promoted to the newly established Chief Technical Officer position also effective August 1, taking into account and reflecting on the strong performance and positive outlook as far as the summer is concerned. Now we are guiding towards the top end of the range of 2.50 to 1,000,000 on net profit for the financial year. If you look at the gross metrics, what we delivered in the first quarter, 7,500,000 passengers more than 25% growth, 83 aircraft, that's an addition of 13 aircraft year on year. We operated 141 airports, 17 more than same period last year, opened 4 countries and now operated to 42 countries, opened 3 new bases just over a year. So we've got operating basis and we are now employing over 3000 people 400 more than just a year ago. Utilization remained intact. Actually utilization went up slightly 0.1%, load factor kept improving. We were up 1.7 percentage points to 91.2% in the quarter, regularity remained intact 99.9%. So, we only had to cancel 0.1% of our flights due to various reasons outside the control of the company, punctuality came in pretty much in line with the performance of last year around 80%. Importantly, we are updating the fleet plan of the airline. As said, end of the quarter, we operated the fleet of 83 aircraft, debt free to grow to 92 aircraft towards the end of the financial year, by adding 3 AC 2020s and then AC21 CO aircraft. A year later, so March 2019, we'll have a fleet of 106 aircraft of which, a 12, new AC 21 COs, will join and AC21 neo app deliveries will start taking place and we're going to be delivering 3 of those AC21 neos. And by the end of fiscal 'twenty, March 2020, we'll have a fleet of 120 aircraft, with the addition of 3 more AC21 CO aircraft and 17 C21 neo aircraft. So as you can see, they are majorly expanding our fleet with AC21 deliveries. And in early 2019, start taking deliveries of the AC21 new aircraft, which obviously will help us, deliver this business at significantly lower cost than what an AC20 operation can achieved. So just to remind you again, an AC21 CO is a 10% lower unit cost than the AC20 CO and AC21 Neo is an additional 10% unit cost savings. So essentially, an AC 21 Neo will deliver this business at 20% lower unit cost than an AC today. And with that, I would just turn it over to Ian who's going to take you through the financial outputs of the business in the quarter. You, Joseph. Good morning, everyone. As Joseph highlighted, Wizz Air delivers a very strong set of results for the first quarter to 30th June 20 17. This was a quarter where we grew capacity, we grew passenger numbers, we grew load factors, we grew profitability and grew margins. So it's very pleasing for my first presentation as CFO, the slide has plastered all over it. Capacity growth in terms of syncs was up 22.9% terms of ASKs were up 24.5%. Passenger growth was up 25.2% higher, reflecting the high load factors, which were 1.7 percentage points higher at a good 91.2%. We carried 7,200,000 passengers in the quarter. And we'd be looking to carry around 30,000,000 passengers this financial year. Total revenues were up 28.6% higher in the quarter to 1000000, margins expanded by 1.8 percentage points to 12.4%. All of this translated into a healthy 50% increase in net profit to 1,000,000 in the first quarter. Cash generation remains strong with total cash now well above 1,000,000,000 with free cash standing at 1,000,000, an increase of 29%. Moving on to Slide 7. Ancillary revenue performance were both strong in the quarter. Fairs were up 3% on the back of a strong Easter. We saw load factors up 1.7 percent higher as mentioned. The value of Easter this year is around about 1,000,000 to the company. Importantly, the proportion of ancillary revenues of revenues continues to rise with a further increase of 1.6 percentage points to 43.5 percent of total revenues. Moving on to slide 8, we continue to grow our very important streams of ancillary revenue in the first quarter. We reported an increase of 1.8 per passenger. Our target is to improve ancillary revenues by per passenger each year, and this gives this result gives us good momentum for the start of the year, for the full year. We did have a strong performance on the value added fees. Those fees that customers want to pay. This was up an encouraging passenger. However, the declining trend of bank fees that we highlighted over the past few years, that's continued and was down per passenger for the quarter. If you go back for the past 4 years, we're seeing back unit bag revenues declined. So this is a trend that we've been highlighting and we're certainly been looking to remedy. Joseph will talk more on the to our baggage policy in a moment. Moving on slide 9, as you know, the only way to offer the lowest possible base fares and achieve industry leading margins is quarter, we were guiding our full year cash to be 3% higher year on year. However, with a lower fuel price today, we're able to report that we'll be seeing CASK, all in CASK, up 1% higher. Next fuel CASK for the full year is still expected to be broadly flat, which means you'll see progressive improvements throughout the year on this And on to line 10, Slide 10 gives you a flavor of the breakdown of the ex fuel CAS picture. This pretty much reflects what we described in May. We are seeing pressure on the depreciation line as we start our intensive program of returning aircraft back to lessors. Reaching maintenance events tend to be scheduled more for the off peak month So these costs always tend to trend a little bit higher in Q1. And aircraft rental costs were a bit higher due to a stronger dollar. In Q1 last year, the dollar was team this year was $109,000,000. So you're seeing a little bit inflation coming through from the strength of the dollar. The dollar today is around about $115,000,000. If it stays where it is. This will certainly help our ex fuel CASK on the lease item. And on that last comment, I'll reiterate my previous comment that we'd expect ex fuel CASK for the full year to be broadly flat. Okay. So then you look at page 12, you see how growth has been delivered. I mean, you see that we have been very busy across all markets essentially. So we are showing you the growth picture from a destination perspective unless you can see essentially we have been growing across the board pretty much everywhere where we operate to. This is just showing the diversity and the strength of diversity of our business. So we are not dependent on 1 or 2 markets, but essentially are managing this whole business for profitability and we are seeing strong performance everywhere, including the United Kingdom, where we grew our business 11%, which is significant given the backdrop of the market. Moving on to Page 13, this is further commenting on on the change in back policy. As it has been said, we have been seeing forwarding revenue stream related to Bex on a per passenger basis for 3 years now. I mean, clear we had to shift focus in terms of ancillary revenue production. Now back related charges on your conference of our asset revenue teams, but it was around 50% just a few years, a few years back. And we had been reflecting we are reflecting now on the feedback, but we have been receiving from customers on our charging for back, and this is an exposure to asset revenues in the magnitude of around enhancing some of the other initiatives that we are having like a refinement of the Czech impacts and also we are bringing new features to our priority boarding, actually we are guaranteeing the the hand luggage to travel with the passenger into cabin. We believe we will compensate us for gross revenue on not in products anymore. Moving on to Page 14, I think this is just reflecting on the development we have been able to, deliver with regard to, to engaging with, with technology. Interestingly, visa.com has become the 6 most visited airline website in the world. I mean, if you look at the size of the airline, bypassenger number probably would be somewhere in between 50 and 100 on the ranking of Global Airlines. But in terms of our website, it is a 6 most visited website in the in Ireland. So that's very significant. Clearly attracting most mobile savvy audience, we are getting 57% of the customer interactions on mobile phones 43% on screens. That's a major shift and that's just been happening over a few years. If you look at our web It is with 24 languages, we are getting almost 1,000,000,000 page view a year of our website. And if you look at our app, we have it on 11 languages and we are getting 1,000,000 screen views. So we are certainly very tech advanced and very technologically engaged with our customers. And this strategy remains intact going forward. Moving on to Page 15, I would just like to comment on the leadership changes, as noted before, we are kind of refilling the position john Stevenson used to be playing kind of redefining the equity vice president role and we are renaming it to equity vice president, Deputy CEO. Before you ask whether I'm leaving, I'm not leaving, but I think the board is in charge of CEO succession planning in any event. I mean, the CEO can be hit by a tram anytime, but company needs to fulfill its duties and the board is simply just has to take care of the So I think this is what we are reflecting here. Steven Johnston comes from Air New Zealand. He's a very seasoned airline professional having spent decades with the New Zealand in sophisticated businesses running of the company and also playing significant draws in the starter alliance structure. We're seeing that Steven will bring in skill set, which will complement the skill set, what we have in the leadership team. Great news, Ian, whether it's promoted to achieve Finance Hooks, you know, Ian, he has been, with you for 4 years. He's been with the company for over 5 years. It's a very bad, reserved, promotion and especially in light that promotion comes on the basis of a very robust external search. So we will need to make sure that we understand all options available to the company and now we are confirming again in the position. So it's a great move for him, great move for the company. Also reflecting on the growth of operations and the sheer scale and size of the business as well as the robust pack of delivery program, what we have are introducing the NEEO technology fairly shortly. We off scaled the technical department, engineering and tech department to a new research position, the Chief Technical Officer position, which we are promoting Heiko, who I'm Intuit Heiko comes from Lufthansa Technik. He spent a significant time, decades with Lufthansa Technik in various geographies. He's been with us for for around 4 or 5 years, he's going to be a great addition to the SAP leadership team. So clearly, this enhanced leadership STP will have us deliver growth in the next few years and take the business to the next level. Page 16, coming to guidance, essentially, we are, reflecting on the positive development we are foreseeing for the summer and also reflecting on the very strong performance in Q1. And on that basis, we are towards the top end of the range of 1,000,000 to 1,000,000 of net profit, slight updates on some of the other factors reflecting on the realities of the businesses, the business unfolds. But overall, I think we remain positive with regard to the outlook in summer. As you know, we have very limited visibility, when it comes to the winter period. Nevertheless, we are seeing capacity creep in the market more and more side side, putting more capacity back into the market, on the basis of the favorable macroeconomic and fuel price environment. So let me just recap quickly again, in this quarter, we delivered 25 percent, passenger growth, 29% revenue growth with significant net profit went up over 50 percent to 1,000,000. We've been very busy. We further expand the network marked by the London Luton base opening and other destinations, 10 more aircraft secured the deliveries in 2018 2019, Airbus A321 COAP Technology. We are launching a baggage policy to make a small customer friendly. We are updating our organization by enhancing, leadership capacity with 3 key exited rules and we are improving our guidance towards the top end of the range, 1,000,000 to 1,000,000. And with that, I would turn it over to Thank you. And the first question comes from the line of Damian RBC Capital Markets. Please go ahead. Your line is open. Good morning. Apologies I've got 3, but, if we can can through them, that would be great. First of all, I just wanted to get an update from you on how you think about peak peak summer given the limited air traffic control capacity of Europe what measures you've been putting in place to ensure you have operational resilience through that or seemingly gets more tricky peak period? Secondly, With the visibility you have on forward bookings for the sort of and travel so far for the July through September period, could you update us on any changes you consider in the profile of the unit revenue trajectory of the company over the year? I recall that Q44 full year results, you are implying that after Q1 things might be a little bit softer into the rest of the year. And then very fine a 25% SK growth that implies that at least a fit of your route structure is very immature and therefore like to be able to drag on the yield. Could you give us some feeling of sort of how things have progressed on the more mature parts of network? Maybe those routes and parts of over two years old? I think in terms of the peak summer, it was only around about 6 weeks ago that we we were doing the full year roadshow. Essentially nothing particularly has changed in terms of the outlook. I mean, airlines tend to fly as much as they possibly can in the summer anyway. So the risk of capacities only at this stage, we haven't seen anything. So I think when we were looking forward 12 months in May, we were comfortable with what we were seeing from a capacity perspective for the summer. I think the risk is always in H2wear Airlines tend to have that little bit more extra capacity, which they can put on, they can increase utilization. I think that picture is changing slightly. So we were pointing to, I would say, less capacity certainly versus last year. Around about half the capacity that we saw last year was coming on in H2. But with fuel prices, some 78% lower, we're seeing airlines are adding a bit more to the schedule. So when they actually fly that is still to be seen. But we are expecting to see a little bit more capacity. In fact, we ourselves are growing that a little bit faster. There's 2 important factors as well if you look at how that impacts with that. In terms of who's contributing that growth, last year, we're 16 that growth was there and that was certainly not where we should have been. That was the reason we accelerated growth in February, March, if you remember. If we look for this year, we're adding 30% of the growth. And as we're the number one player, that's exactly the right place to be. So we have a much more dominant position. So the picture is looking better for Wizz Air in that respect, 30% versus 16% and also the competitive intensity in certain areas I would say is slightly less. So while we are seeing more capacity on the back of higher fuel prices, the capacity is, I would say, a little bit more certain. In terms of ATC, if I reflect last year, last year was horrific. So I think if we look at Q1, number of cancellations we've had, not necessarily ATC, which is what you're referring to, was about the same. We had 35 cancellations this year, albeit we're flying 18.2% more slide. So from that respect in Q1, it was fairly okay. We're now in the middle of July. We haven't seen any impact, but we'll have to see how operations hold up on the ATC piece. And in terms of forward bookings, no real change in profile. We tend to have around about 6 weeks of forward bookings in the bag. So we're in July, we like what we see in the summer. We can see out to August, September is a question. I think the caution we have is that we make the majority our money in Q2. So given that we're only on 19th July today, we want to remain a little bit cautious, certainly for Q2, but also we don't have visibility for the second half. And on onto the 25% ASK growth, we believe we can grow this business on average 15% maintain margins when the cost environment is lower means we can grow a bit faster. So if you saw in Q1, we were able to expand margins by 1 8 percentage points. So we believe this is something we'll constantly be tweaking. But in terms of the maturity, I think we'd be fairly, we're fairly okay with that 5% growth. I think when fares are lower, you can stimulate markets quicker. And I think that's what you tend to see low fuel prices, low input prices, we can grow faster and 25% is, is about right for us now. Okay. But would it be fair to say that the core margin the more mature routes and parts of the network is probably higher than the average? I mean, 90, if you look at the capacity in Q1, 90% of that capacity went to the existing network So even though some of it, I think if you remember, we have a breakdown of increasing frequencies joining the dots, generally forms the largest part of our capacity increase. Q1, that's when you generally launch a lot of new routes. So if you look at the capacity, but over the year, that's how I reflect it. So but 90% of our additional capacity we're adding is to the existing network. So we have a much better idea of how that capacity is going to play out, compared to, let's say, launching a brand new route that hasn't been tested before. So hopefully that answers your question. That's great. Thank you very much. Thank you. And moving on to the line of Michael Koon Societejian Please go ahead. Your line is open. I'm also free from my side. Firstly, on the change in the hand luggage policy, you mentioned you're currently generating 1 to 2 years per passenger from that pocket on 29th. So you will abandon it from pretty much one day to the other. Do you expect a temporary dip in ancillaries or do you have plans to raise other ancillary fees at the same point of time to, let's say, flatten the effect? Secondly, on unit revenues, you're becoming a little more cautious from the low single digit increase this year now guiding for a slight increase. We have seen fuel prices coming down a bit as of late. Do already see some softening in the yield environment or is this rather something for the And then lastly, you mentioned a little more capacity coming back into the market due to the good trading environment. If you look at the winter capacity outlook, now versus a few weeks ago, what roughly has changed in terms of overall industry capacity growth? Thank you. Okay. With regard to to changing the back policy. I mean, back in the times when we actually introduced charging for having back, it came as a 96 percent cannibalization ticket revenue. Now, you could argue that when you seats, you're going to get back to the same point. It may or may not happen, but there is certain relationship between in between ticket revenue and an answer revenue. And this is not necessarily simply just mechanically increasing fares as a result of eliminating revenues team, but this is the function of the process of dynamically managing the fares. So we don't know how we score that, but we are taking actions with regard to protect the overrester revenue production of the business by, as said, we are enhancing the checked in back policy. So I think that should result in more unit revenue as a result. And also we are enhancing the entire priority boarding product. So we're going to be delivering more value to customers as a result. We're going to be charging more for that. So I don't know how we end up exactly. But our expectation, we have been scrutinizing this initiative from left right and bottom to top, we are fairly certain that we're going to be able to protect the overall revenue production of the of the company, we are aiming at, protecting, you know, asset revenues as well, but we will see, but I think if you're going to be missing gold on asset revenues over a short period of time by the transitioning, we certainly are going to get it back in the as, but we might be able to protect the asset revenues as well. If we got to change in guidance on revenue. Look, I think really what's driving us is, we are very positive with a somewhat outlook based on what we are seeing now, and we have very good visibility as Iain already commented on that. But winter is still, changing. Lots time around 6 weeks ago when we were touring ground, we were reporting that we were seeing around 13,000,000 new seats coming to the market in miss Europe in the winter period. Now that million is actually 1,000,000, such as over 6 weeks, many airlines are loaded, significant capacity for winter. Now, we shall see whether this will be operated or not. I mean, we have seen this being cautious before coming to operating period, but clearly as the lower fuel price environment keeps holding up, that lower input posting environment is feeding through into the fair environment in the form of capacity dilution. I think this is what we might be seeing. And certainly based on the data we have on hand, this is what we are expecting. So that's why we are a little bit more cautious on the will go into into winter what we will see. And Michael, just to add maybe on the baggage policy. I mean, this is something even trending anyway. If you look in Q1, we delivered 1,000,000 per passenger, on the value add. And this is a trend that we have been seeing. So have been seeing outperformance in the past few quarters. And this is a function of the changing customer offering, the changing products. So we're having more bundled sales, the priority products improving. And I think this is a trend and this is almost a, this is a function of the changing consumer behavior. So we have 40% of our customers now leisure traffic. They tend to take smaller bags. They're not staying with friends and relatives. So therefore, they're not taking large bags. They tend to stay for, let's say, 3 days rather than 5 days. Passengers are now traveling more frequently. So the first time they travel, maybe they'll take their entire house in that the second or third time, there'll be a bit more wise to the fact. So our changing in our changing in customer offering has been evolving over the past few years and you have seen out the on the value add, the reason we haven't been able to achieve our plus per passenger per year is because the bag revenues have been essentially suffering. So I think in terms of the overall strategy of achieving €1 per passenger per year, Q1 with plus per passenger certainly sets itself up. So for the full year, as we see it, we should be okay. You. And moving on to the line of Chris Comme, JP Morgan. Please go ahead. Your line is open. Thank you. Just two questions. For me, I believe 6 weeks ago you commented on rather robust UK demand, which, you you made similar months today. You also mentioned at that time an uptake in inbound demand. Is there any additional color you can report, on that front? So and then the second question, we've seen some headlines about potential interest in the UK AOC. Can you elaborate on when you might decide on that front and what the associated costs might look like? I think in that respect, the if you look at the UK as compared to the rest of the network, we're making money in line with the corporate average. I think fair to say that the regions are a little under pressure, but certainly the U. K. Network as a whole is performing very well. We seeing any dampening of demand on inbounds. I think maybe the British pound weakness is certainly aiding that. It's similar to what we saw last year. But generally the pitch for the UK remains robust and there's no real alarm bells there. I mean, maybe there's a couple of pockets of weakness. But on the overall network, very happy with that. I think the decision last year to slow the growth down. So last year, we were penciling something like 32% growth We ended up delivering, I believe, 13% growth in this year. We're growing. At the moment, it's 8%. But for the full year, it'll be about 11%. So in terms of the growth we're happy with that. The new routes we put on, so we're doing luton Tel Aviv. There's one to Christina. We're very happy with the performance of those. So certainly, we UK remains a very important part of our network. In terms of the UK OC, I think the challenge that we have with the UK is that, maybe quite knows how the whole Brexit discussions are going to end up. As you know, the UK is important to us. So this is essentially a contingency for us where we certainly want to secure that market, we are committed to the UK and we'll make sure that we protect that operation. If getting a UK overseas way forward about something that we will be doing. Okay. And any estimate on what the cost may look like? You proceed that path? Yes, I mean, it's not a huge cost in terms of paying a UK AOC, I mean, you have to be talking about a couple of €1,000,000 of project cost maintaining a UK AOC depending on the on the operating structure, it can be a few €1,000,000 or more. So this is something they are going to in and we're going to be a business planning around that matter. I mean, you recall that we've actually got quite a bit of experience in operating multiple AOCs. We to have a visa and an entity with a bargain and AOC. They used to have visa Ukraine with a Ukraine and AOC. And I think we have figured out how to integrate those AOCs into a seamless operating structure, but running separate legal entities. So this is something we would certainly entertaining when it comes to the UK. But I think it's too early to discuss what it is. It appears once we have a firm plan, then we update the market on them, but this is certainly something they are looking at. So that's what we can confirm. I think in Q1, I mean, we confirm that we do have substance. So with the opening of the Luton base, certainly giving us that substance in the UK, which would help with any decision. On to the line of Mark Simpson. Goodbody. Please go ahead. Your line is open. Yeah, good morning guys. Just a couple. First off, a hedge position. Well, you could just update us on that, both on fuel and currency. And then just on the inflation risk, we've obviously seen IMF updates on GDP forecast for the CE region. One of the surprises there is just how tight the labor market is. Wondering if you could give us an update on what that looks like for potential inflation risk across the group rather than just at the pilot's end? I mean, Mark, on the hedging, good morning, by the way. On the hedging side of things, there's a couple that's in the press release. So rather than sort of go through that in detail, essentially we're rolling out the hedging program pretty much line with previous years. We tend to have a little bit more fuel coverage and FX is in line. Maybe the notable change, which we did highlight actually a full year is that we're protecting a little bit of our UK British pound position around about 17% of our revenues in sterling. We looked our lesson last year. Traditionally, we tend not to hedge selling currencies. The biggest lever you have is simply move capacity, but given our commitment to the UK, you know, that's not something that we would do. So therefore, that's why we decided to take a little bit of protection on our sterling to their about 70% of our revenue is in British pounds, but we do have cost base there. We're at about 6% of our cost base. So that will give us a a bit more coverage. As I said, we learned our lesson from that last year. On the labor side, yeah, I think it's to say that the labor market is seeing a little bit of inflation. We talk about the improvement of our performance in certain markets like Hungary. That's as a result of patient that's coming through the increased discretionary spend. But of course, the cost side of the equation is that we do see a little bit of tightness coming through on certainly non gear hungry on the labor market. I would just add that, I mean, if you think about this business, we are running the company bid with around two hundred people in and administration. So the exposure is relatively limited. So even if the market is tight and the market may force us to inflate salaries the overhead impact is going to be pretty marginal for that point. Sorry. And on the cruise side of the equation, I mean the A321, you're generally you're flying 50 more passengers with the same 2 pilots and 1 extra cabin crew. So structurally, we do have savings coming through as a result of the A321. Okay. And then just one subsequent one. Obviously, the 120 aircraft sort of target to end of FY 'twenty. You've historically given us the kind of order book out to FY 'twenty four. The last time you gave to us. It was 154 aircraft. I wonder if you can update us on what that longer term fleet might look like. Yeah, I think what we can say at the moment is that we have 139 firm orders to be delivered through a company between now 2024 as contract but really what's updated. So what I mean on updating is that when we're seeing that the supply side of the situation reflects on the demand side of the business is really until fiscal 20. So the 120 is not the target. This is all contracted. So these acts are clearly delivered to the business. On fiscal 2020, we'll have to be reviewed and updated. I mean, if you look at it, I mean, we were guiding previously on the round day, 15% newer growth of capacity. As a matter of fact, the business is delivering now more than 20%. That comes with more capacity which flows through into the growth profile of the business later on, especially when it comes to air for supply. So as of fiscal 2021, we have a job there to do to look at exactly what we are getting and what growth that would produce what else we need to do. So that's sitting in front of us. But contextually speaking, condominium aircraft will be delivered and and in terms of midterm free plan 120 aircraft via fly, by the end of fiscal 2020, we on that, we'll have to update. But assuming a 15% kind of growth rate sort of reverts at that point is probably the right approach for the long term view? Yes, I think it's a good indication. Yes, I think if you for modeling purposes, if you assume 50%, 15% capacity growth. I think that's a good good approach. And moving on to the line of James Holland Exane BNP Paribas. Please go ahead. Your line is open. Hi, good morning, everyone. Congratulations Ian. Just two from me. The first one, do you expect Q2 revenue, unit revenue to be up or down. Second one is on Read all capacities. I'm wondering if there's any particular territories where you're seeing a real rising capacity either in the or through the winter? Okay. In terms of unit revenue in Q2, as we were guiding on flat unit revenue performance throughout the year, pretty much across the horizon. So first half, that second half flat. Obviously, now we are having more visibility on the stuff, and I think we are awarding that, that guidance now changed to it, and we are sort of holding the same guidance the second half as well, Kabi, I think that we are seeing more capacity coming to the market. With regard to regional capacity and competition, I don't think when it comes to SCC competition, we are seeing anything spectacular other than what have been expecting. We continue to grow the markets and actually we have accelerated our growth. We are seeing some of our especially in our growing satellites is 0 as expected. And as we also expected, the other low scalriers are not overly active in the region by growing, but their impact on overall market growth is very limited given the very slim market position. But what we are seeing is that more and more legacy carriers are throwing more capacity into the market and look forward to share lines, but our own, some others. And all these airlines have been aiding and failing in recent years pretty much have been put on, on stated, but as opposed to trying to preserve visibility of the business. Now they are essentially just completing the way the benefits what they could take from the market. So we are seeing more from the legacy sector essentially, than surprises on the, from local competitors. And it's fairly across the board. I wouldn't say that this is very market specific, that's quite across in Century 0. Gerald Castle, UBS. Please go ahead. Your line is open. Thanks. Just coming back to the fleet delivery, I mean, are you to kind of give us what the capacity indications will be for 1920. I mean, we look like we're talking over 20% growth now. And then also by the end of I guess, March 2020. I mean, how how many of the 139 new planes, would you have taken up? So I guess what I'm saying is how many new would be left for you to take up going forward should you want. And then just on X Fuel unit cost, it was up about 3 percent, you're talking, broadly flat. So can you just talk about, I guess, some of the measures coming through over the remaining quarters? Which will help you get there? Thanks. Okay. So of the, of the GBP 139, we're going to be taking up 48 airplanes by the end of fiscal 'twenty. So whatever the balance, 91 beyond fiscal 'twenty. If you look at it from a capacity perspective, I think if you model a 20% for fiscal 'nineteen, fiscal 2020, you wouldn't be far from what we're going to be doing. Joe, I can touch on that. I think Q1, we tend to, we tend to do a few a little bit more maintenance events on the off peak. So you'll see the maintenance a little bit inflation into there. I think the key item there is the depreciation. This is something that we flagged at the full year. On a full year basis, that's essentially increasing fairly significantly, but there are other cost items that will be coming through. So you can see we had a very strong performance on the, on the airport, and the navigation charges. And what I would say is that throughout the year, I mean, we're at ultra low cost area. My job is to make sure the 200 or whatever initiatives that we have in place are carried out. So you're generally seeing that will be flowing through. Guidance. I mean, there is a couple. It's a mine, but what I would say is that we are looking to have a broadly flat ex fuel CASK for the full year. Thanks a lot. Maybe I would just make an additional comment on the fleet. I mean, please just know that we have 90 options available to us to, to drag on. Should we feel the need to convert some of these options into firm orders? And maybe one additional point is that don't forget our entire fleet today is all leased. So there will be a significant amount of aircraft going back to lessors. That also then flows into the depreciation point that obviously as we those aircraft back into conditions of the lessors, the depreciation and the maintenance, we'll see a little bit of a bump. Thank you. And the next question comes from the line of Andrew Lovett from HSBC. Is open. Hi, Ian, many, many congratulations. Theresa, I don't know what took so long. Could I up for a clarification on the EU ownership and control after we've had the placement and whilst we've discussed on potential post Brexit situations around the AOC, how much you ownership do you think you have and how do you foresee dealing with the UK ownership in post Brexit environment. And then could you just offer us some discussion of what you see happening in the Ukraine where and air looked to be coming into the market and now don't, and you're generously offering rescue fares for their port stranded passengers? Let's start with the easy one on the Ukraine. I'm not sure if you're aware, but the Ukrainians they waived there or the Europeans waive the visa restrictions for traveling to back and forward to the Ukraine. So the Ukraine as a market for us has always been incredibly attractive at one point we had I think nearly 10% of our capacity when we had a Ukrainian AUC. I think there were some bigger issues in terms of registering aircraft in Ukraine when are the challenges with our neighbors. So that's why we scaled back, but we've always been very keen on Ukraine. I mean, it's a 40,000,000 plus population very large country, so very, very attractive to low cost. So we'll continue by that commitment. We had press conferences last week. We added additional routes continue to grow, grow aggressively in Ukraine. As to right now, I'm not going to comment on that position. In terms of the European ownership of controls, so yes, Indigo converted some of that convertible shares into ordinary shares. Have the impact of increasing our market capitalization when measured by issued shares, and I think it's health liquidity. So I think that was a very positive effect for the for general shareholders. In terms of the U. K. Versus European, I think there are some challenges out there. Interesting enough when speaking to Polish investors, they have questions generally on the UK and shares. So what I would imagine is that there will be some sort of transporting. I'd imagine there'd be if that wasn't the case, then you will that the financial institutions will start to sort the situation out and hopefully we will benefit from that. We were seeing a very marked improvement in the euro or say continental European ownership. So we're seeing a lot more German, Scandinavian French interest, which is very pleasing, and essentially that's essentially what we'll be trying to push. We're not going to be going down the road at this stage of changing things that some of the competition have been doing. I think that's really a function of what they don't have and what we do have. So as it stands where we take the issue very seriously, we have a number of actions. So the UK AOC from the operational perspective is something that we're pursuing and monitoring managing the investor base as hard as we can on the other side and staying very close to that. But in terms of percentage want to give a number. Sorry. So you're not going to disclose what the EU ownership is or what the UK ownership is? European leadership is comfortably below the 49%. So in that respect, we're absolutely fine. So none, you mean, right? Yes, non European is comfortably below 49% correct. But in terms of the UK, 25% is UK. So I could give you Thank you. And moving on to the line of James Goodall, Redburn. Please go ahead. Your line is open. Just a quick one from me on the recent credit card fee changes headlines that have come out. I don't believe this impacts you directly in terms of your revenue mix, if you could just confirm that, but also, I mean, in terms of the impact to your competitors, do you expect to potentially improve your competitive positioning given that competitors may need to react by increasing fares? Yes, you're right. It doesn't impact we've always, operated without charging credit card fees. Maybe it's a function of the, the markets we operating. So I would say that certainly would impact, let's say, UK operators. In terms of competitive advantage, we'll just we'll have to see how that flows through And there are no more questions in queue a moment. And with that, I would like to return the conference call to the speakers. Well, thank you very much. Thank you for your interest. There should be any further comments or questions, please feel free to contact us. But thank you for now. This concludes today's conference call.