Ladies and gentlemen, welcome to today's Wizz Air Q1 financial results conference call. For the first part of today's call, all participants will be on listen-only mode. Afterward, there will be a question and answer session. Please note that today's conference call is being recorded. I would now like to hand over to József Váradi, CEO of Wizz Air. Please begin your meeting.
Thank you. Good morning, everyone. Thank you for attending this meeting. Let me start with highlighting some of the matters that we are reporting this time around. First of all, Q1 fiscal 2018 is a very strong performance for the company. We recorded 25% passenger growth in the period. We carried 7.2 million passengers. Revenue was up 29%, with revenue per ASK unit revenue up 3.4%. Obviously, to a great extent, this was influenced by the fact that we had Easter in this period, while we didn't have Easter last year. Nevertheless, we are seeing very strong underlying unit revenue performance as well. This goes beyond the impact of Easter. Net profit is up 50% to EUR 58 million. 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 marked the opening of 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 an additional 10 new Airbus A321ceo aircraft deliveries, which will actually be delivered in 2018, 2019. That's 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. One normal size bag in line with industry practices will travel for free. I think we are reacting to customer feedback. This is certainly something customers will like.
At the same time, we are also enhancing some other master revenue products to compensate for the loss of revenues arising from this stream. Just to put that in perspective, this is only around EUR 2 per passenger. We're seeing that with some other initiatives, we are going to be able to compensate for that. We'll detail this later. Very importantly, today we are announcing three 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. Stephen Jones will join us from Air New Zealand to be the Executive Vice President and Deputy CEO towards the end of the year.
Iain Wetherall is promoted to Chief Financial Officer, effective from August 1, and Heiko Holm is also promoted to the newly established Chief Technical Officer position, also effective from August 1. Taking into account and reflecting on the strong performance and positive outlook as far as the summary is concerned, now we are guiding towards the top end of the range of EUR 250 million-EUR 270 million on net profit for the financial year. If you look at the growth metrics, what we delivered in the first quarter, 7.2 million 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 four new countries, and now operate to 42 countries, opened three new bases just over a year.
We've got 28 operating bases, and we are now employing over 3,000 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 operate a fleet of 83 aircraft. That fleet will grow to 92 aircraft towards the end of the financial year by adding three A320s and 10 A321ceo aircraft.
A year later, so March 2019, we'll have a fleet of 106 aircraft, of which 12 new A321ceos will join, and A321neo aircraft deliveries will start taking place, and we're going to be delivering three of those A321neos. By the end of FY 2020, March 2020, we'll have a fleet of 120 aircraft, with the addition of three more A321ceo aircraft and 17 A321neo aircraft. As you can see, we are majorly expanding our fleet with A321 deliveries. In early 2019, we start taking deliveries of the A321neo aircraft, which obviously will help us deliver this business at significantly lower cost than what an A320 operation can achieve. Just to remind you again, an A321ceo is a 10% lower unit cost than the A320ceo, and the A321neo is an additional 10% unit cost savings.
Essentially, an A321neo will deliver this business at 20% lower unit cost than an A320 today. With that, I will just turn it over to Iain, who's going to take you through the financial outputs of the business in the quarter.
Thank you, József. Good morning, everyone. As József highlighted, Wizz Air delivered a very strong set of results for the first quarter to 30th June 2017. This was a quarter where we grew capacity, we grew passenger numbers, we grew load factors, we grew profitability and grew margins. It's very pleasing for my first presentation as CFO. The slide has pluses all over it. Capacity growth in terms of seats was up 22.9%. In terms of ASKs, we were up 24.5%. Passenger growth was up 25.2% higher, reflecting the higher load factors, which were 1.7 percentage points higher at a good 91.2%. We carried 7.2 million passengers in the quarter, and we'll be looking to carry around 30 million passengers this financial year. Total revenues were up 28.6% higher in the quarter to EUR 469.3 million. Margins expanded by 1.8 percentage points to 12.4%.
All of this translated into a healthy 50% increase in net profit to EUR 58.1 million in the first quarter. Cash generation remains strong, with total cash now well above EUR 1 billion, with free cash standing at EUR 912 million, an increase of 29%. Moving on to slide seven. Ticket and ancillary revenue performance were both strong in the quarter. Fares were up 3% on the back of a strong Easter. We saw load factors up 1.7% higher, as mentioned. The value of Easter this year is around about EUR 18 million to the company. Importantly, the proportion of ancillary revenues of total revenues continues to rise with a further increase of 1.6 percentage points to 43.5% of total revenues. Moving on to slide eight. We continue to grow our very important streams of ancillary revenue.
In the first quarter, we reported an increase of EUR 1.8 per passenger. Our target is to improve ancillary revenues by EUR 1 per passenger each year. 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 EUR 2.5 per passenger. However, the declining trend of bag fees that we highlighted over the past few years, that's continued and was down EUR 0.7 per passenger for the quarter. If you go back for the past four years, we're seeing unit bag revenues decline EUR 3.20. This is a trend that we've been highlighting, and we're certainly been looking to remedy. József will talk more on the change to our baggage policy in a moment. Moving on to slide nine.
As you know, the only way to offer the lowest possible base fares and achieve industry-leading margins is by having the lowest cost base in the industry. We reported a 2.1% CASK increase in the first quarter. We were guiding our full-year CASK 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. Ex-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 item. On to slide 10. Slide 10 gives you a flavor of the breakdown of the ex-fuel CASK 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.
Routine maintenance events tend to be scheduled more for the off-peak months, these costs always tend to trend a little bit higher in Q1. Aircraft rental costs were a bit higher due to a stronger dollar. In Q1 last year, the dollar was 113. This year it was 109. You're seeing a little bit inflation coming through from the strength of the dollar. The dollar today is around 115. If it stays where it is, this will certainly help our ex-fuel CASK on the lease item. 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.
When you look at page 12, you see how growth has been delivered. You see that we have been very busy across all markets, essentially. We are showing you the growth picture from a destination perspective. As 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 strengths of diversity of our business. We are not dependent on one or two markets, but essentially we 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 the change in bag policy.
As it has been said, we have been seeing a falling revenue stream related to bags on a per-passenger basis for three years now. Clearly, we had to shift focus in terms of ancillary revenue production. Bag-related charges only account for a third of our ancillary revenue streams, while it was around 50% just a few years back. We are reflecting now on the feedback what we have been receiving from customers on our charging for bag policy. This is an exposure to ancillary revenues in the magnitude of around EUR 2 per passenger. But by enhancing some of the other initiatives what we are having, like the refinement of the checked-in bags and also we are bringing new features to our priority boarding. We are guaranteeing the hand luggage to travel with the passenger in the cabin.
We believe will compensate us for the lost revenue on not charging for bags anymore. Moving on to page 14. This is just reflecting on the development what we have been able to deliver with regard to engaging with technology. Interestingly, wizzair.com has become the sixth most visited airline website in the world. If you look at the size of the airline by passenger number, probably would be somewhere in between 50 and 100 on the ranking of global airlines. But in terms of our website, it is the sixth most visited website in airlines. That's very significant. We are clearly attracting Europe's most mobile-savvy audience. We are getting 57% of the customer interactions on mobile phones now, 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 a billion page view a year of our website. If you look at our app, we have it on 11 languages, and we are getting 630 million screen views. We are certainly very technologically 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 Stephenson used to be playing, Kind of redefining the Executive Vice President role, and we are renaming it to Executive Vice President, Deputy CEO. Before you ask whether I'm leaving, I'm not leaving, 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, The company needs to fulfill its duties and the board simply just has to take care of that matter. I think this is what we are reflecting here. Stephen Jones comes from Air New Zealand. He's a very seasoned airline professional, having spent decades with Air New Zealand in sophisticated businesses, running the low-cost arm of the company, and also playing significant roles in the Star Alliance structure. We're seeing that Stephen will bring in a skill set which will complement the skill set, what we have in the leadership team. Great news. Iain Wetherall is promoted to Chief Financial Officer. You know Iain. He has been with you for four years. He's been with the company for over five years.
It's a very well-deserved promotion, Especially in light that promotion comes on the basis of a very robust external search. We wanted to make sure that we understand all options available to the company, Now we are confirming Iain in that position. 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 aircraft delivery program that we have. We are introducing the neo technology fairly shortly. We up-scaled the technical department, engineering and technical department, to a newly established position, the Chief Technical Officer position, which we are promoting Heiko Holm into it. Heiko comes from Lufthansa Technik. He spent significant time, decades, with Lufthansa Technik in various geographies. He's been with us for around four or five years.
He's going to be a great addition to the executive leadership team. Clearly, this enhanced leadership capacity will help 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 developments we are foreseeing for the summer and also reflecting on the very strong performance in Q1. On that basis, we are guiding towards the top end of the range of EUR 250 million to EUR 270 million of net profit. Slight updates on some of the other factors reflecting on the realities of the business as the business unfolds. 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 airlines are putting more capacity back into the market on the basis of the favorable macroeconomic and fuel price environment. Let me just recap quickly. Again, in this quarter, we delivered 25% passenger growth, 29% revenue growth with significant RASK improvement. Net profit went up over 50% to EUR 58 million. We've been very busy with further expanding the network marked by the London Luton base opening and other destinations. 10 more aircraft are now secured with deliveries in 2018 and 2019, Airbus A321ceo aircraft technology. We are launching a new baggage policy to make us more customer-friendly. We are updating our organization by enhancing leadership capacity with three key executive roles, and we are improving our guidance towards the top end of the range, EUR 250 million to EUR 270 million. With that, I would turn it over to questions. Thank you.
Ladies and gentlemen, we are now ready to take your questions. If you wish to ask a question, please press zero one on your telephone keypad. That's zero one on your telephone keypad if you wish to ask a question. Please stand by for the first question. The first question comes from the line of Damian Brewer, RBC Capital Markets. Please go ahead. Your line is open.
Good morning. Apologies, I've got three. If we could canter through them, that'd be great. First of all, I just wanted to get an update from you on how you think about particularly peak summer, given the limited air traffic control capacity of Europe and what measures you've been putting in place to ensure you have operational resilience through that what 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 to 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 at the Q4 full-year results, you were implying that after Q1 things might be a little bit softer into the rest of the year.
Very finally, with 25% ASK growth, that implies that at least a fifth of your route structure is very immature and therefore likely to be a drag on the yield. Could you give us some feeling of how things have progressed on the more mature parts and networks, maybe those routes and parts of network over two years old? Thank you.
Hi, Damian. It's Iain. I think in terms of the peak summer, it was only around about six weeks ago that we were doing the full year roadshow. Essentially nothing particularly has changed in terms of the outlook. Airlines tend to fly as much as they possibly can in the summer anyway. The risk of higher capacity, certainly at this stage, we haven't seen anything. 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 H2, where 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. 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. With fuel prices some 7%, 8% lower, we're seeing airlines are adding a bit more to the schedule. Whether they actually fly that is still to be seen. We are expecting to see a little bit more capacity. In fact, we ourselves are growing a little bit faster. I think there's two important factors as well if you look at how that impacts Wizz Air. In terms of who's contributing that growth, last year, 16% of that growth was Wizz Air, 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 forward to this year, we're adding 30% of the growth. As we're the number one player, that's exactly the right place to be.
We have a much more dominant position, the picture is looking better for Wizz Air in that respect, 30% versus 16%. Also the competitive intensity in certain areas, I would say, is slightly less. While we are seeing more capacity on the back of lower 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. I think if we look at Q1, the 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 flights. From that respect in Q1, it was fairly okay. We're now in the middle of July. We haven't seen any impact, we'll have to see how operations holds up on the ATC piece.
In terms of forward bookings, no real change in profile. We tend to have around about six weeks of forward bookings in the bag. 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 of our money in Q2. Given that we're only on the 19th of July today, we want to remain a little bit cautious, certainly for Q2. Also we don't have visibility for the second half. Onto the 25% ASK growth. We believe we can grow this business on average at 15%, maintain margins when the cost environment is lower, means we can grow a bit faster. If you saw in Q1, we were able to expand margins by 1.8 percentage points.
We believe this is something we'll constantly be tweaking. In terms of the maturity, I think we're fairly okay with that 25% 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 about right for us now.
Okay, thank you. Would it be fair to say that the core margin of the more mature route and parts of the network is probably higher than the average?
If you look at the capacity in Q1, 90% of that capacity went to the existing network. Even though some of it, I think if you remember, we have a breakdown of increasing frequencies, joining the dots. This generally forms the largest part of our capacity increase. Q1, that's when you generally launch a lot of new routes. If you look at the capacity, over the year, that's how I reflect it. 90% of our additional capacity that we're adding is to the existing network. 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. Hopefully that answers your question.
Yep, that's great. Thank you very much.
Thank you. Moving on to the line of Michael Kuhn, Société Générale. Please go ahead. Your line is open.
Good morning, gentlemen. Also three from my side. Firstly, on the change in the hand luggage policy, you mentioned you're currently generating one to two EUR per passenger from that pocket. On the 29th of October, 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 that 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 you already see some softening in the yield environment, or is this rather something for the winter?
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?
Okay. With regard to changing the bag policy, back in the times when we actually introduced charging for cabin bag, it came as a 96% cannibalization ticket revenue. You could argue that when you reverse it, you're going to get back to the same point. It may or may not happen, but there is certainly relationship between ticket revenue and ancillary revenue. This is not necessarily simply just mechanically increasing fares as a result of eliminating one revenue stream, but this is the function of the process of dynamically managing fares. We don't know how we score there. We are taking actions with regard to protect the overall ancillary revenue production of the business by, as said, we are enhancing the checked-in bag policy. I think that should result in more unit revenue as a result.
Also, we are enhancing the entire priority boarding product. We're going to be delivering more value to customers as a result. We're going to be charging more for that. I don't know how we end up exactly. Our expectation, we have been scrutinizing this initiative from left and right and bottom to top. We are fairly certain that we're going to be able to protect the overall revenue production of the company. We are aiming at protecting ancillary revenues as well, but we will see. I think if we're going to be missing out on ancillary revenues over a short period of time while we are transitioning, we're certainly going to get it back in the fares, but we might be able to protect the ancillary revenues as well.
With regard to change in guidance on revenue outlook, I think really what's driving us is we are very positive about the summer outlook based on what we are seeing right now, and we have fairly good visibility, as Iain already commented on that. Winter is still changing. Last time, around six weeks ago, when we were touring around, we were reporting that we were seeing around 13 million new seats coming to the market in Central and Eastern Europe in the winter period. That 13 million is actually 22 million. Just over six weeks, many airlines loaded significant capacity for winter. We shall see whether this all will be operated or not. We have seen this being cautious before coming to the operating period.
Clearly, as the lower fuel price environment keeps holding up, that lower input cost environment is feeding through into the fare 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. That's why we are a little more cautious on the outlook going into winter. We will see.
Michael, just to add maybe on the baggage policy. This is something that's actually been trending anyway. If you look in Q1, we delivered EUR 2.50 per passenger on the value add, and this is a trend that we have been seeing. We have been seeing outperformance in the past few quarters, and this is a function of the changing customer offering, the changing product. We're having more bundled fares, the priority product's improving. I think this is a trend, and this is a function of the changing consumer behavior. We have 40% of our customers now are 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, three days rather than five days. Passengers are now traveling more frequently.
The first time they travel, maybe they'll take their entire house in a bag, the second or third time, they'll be a bit more wise to the fact. Our changing in customer offering has been evolving over the past few years, and you have seen outperformance on the value add. The reason we haven't been able to achieve our plus EUR 1 per passenger per year is because the bag revenues have been essentially suffering. I think in terms of the overall strategy of achieving EUR 1 per passenger per year, Q1 with plus EUR 1.80 per passenger certainly sets itself up. For the full year, as we see it, we should be okay.
Great. Thank you.
Thank you. Moving on to the line of Chris Combe, JPMorgan. Please go ahead. Your line is open.
Thank you. Just two questions for me. I believe six weeks ago you commented on rather robust U.K. demand, which you made similar comments today. You also mentioned at that time an uptick in inbound demand. Is there any additional color you can report on that front since then? Then the second question, we've seen some headlines about potential interest in U.K. AOC. Can you elaborate on when you might decide on that front and what the associated costs might look like? Thanks.
In terms of the U.K. demand, London remains strong. I think in that respect, if you look at the U.K. as compared to the rest of the network, we're making money in line with the corporate average. I think it's 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're not 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 picture for the U.K. remains robust, and there's no real alarm bells there. Maybe there's a couple of pockets of weakness, but on the overall network, we're very happy with that. I think the decision last year to slow the growth down. Last year we were penciling in something like 32% growth.
We ended up delivering, I believe, 13% growth, and this year we're growing, at the moment it's 8%, but for the full year, it'll be about 11%. 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 Pristina. We're very happy with the performance of those. Certainly the U.K. remains a very important part of our network. In terms of the U.K. AOC, I think the challenge that we have with the U.K. is that nobody quite knows how the whole Brexit discussions are going to end up. As you know, the U.K. 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 U.K., and we'll make sure that we protect that operation.
If getting a U.K. AOC is the way forward, that's something that we will be doing.
Okay. Any estimate on what the cost may look like if you pursue that path?
It's not a huge cost in terms of obtaining a U.K. AOC. You are probably talking about a couple of million EUR of project cost maintaining a U.K. AOC, depending on the operating structure. It can be a few million EUR or more. This is something we are going to examine, and we're going to be business planning around that matter. You recall that we've actually got quite a bit of experience in operating multiple AOCs. We used to have a Wizz Air Bulgaria entity with a Bulgarian AOC. We used to have Wizz Air Ukraine with a Ukrainian AOC. I think we have figured out how to integrate those AOCs into a seamless operating structure, but running separate legal entities. This is something we would be certainly entertaining when it comes to the U.K. I think it's too early to discuss all these details.
Once we have a firm plan, then we'll update the market on them. This is certainly something we are looking at. That's what we can confirm.
I think in Q1, we confirm we do have substance. With the opening of the Luton base, that's certainly giving us that substance in the U.K., which would help with any decisions.
Understood. Thank you.
Thank you very much. Moving on to the line of Mark Simpson. Goodbody, please go ahead. Your line is open.
Morning, guys. Just a couple. First off, hedge position. Wonder if you could just update us on that, both on fuel and currency. Then just on the inflation risk, we've obviously seen IMF updates on GDP forecast for the CEE region. One of the surprises there is just how tight the labor market is. Wonder if you could give us an update on what that looks like for potential inflation risk across the group rather than just at the pilots' end.
Mark, on the hedging. Morning, by the way. On the hedging side of things, there's a couple of tables actually in the press release. Rather than sort of go through that in detail, essentially, we're rolling out the hedging program pretty much in 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 at full year, is that we're protecting a little bit of our British pound position. Around about 17% of our revenue is in sterling. We learned our lesson last year. Traditionally, we tend not to hedge selling currencies. The biggest lever you have is to simply move capacity. Given our commitment to the U.K., that's not something that we would do. Therefore, that's why we've decided to take a little bit of protection on our sterling.
Around about 17% of our revenue is in British pounds, but we do have cost base there of around about 6% of our cost base. That will give us a little bit more coverage. As I say, we learned our lesson from that last year. On the labor side, I think it's fair 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 inflation. That's coming through the increased discretionary spend. Of course, the cost side of the equation is that we do see a little bit of tightness coming through certainly in Hungary on the labor market.
I would just add that, if you think about this business, we are running the company with around 200 people in management and administration. The exposure is relatively limited. Even if the market is tight and the market may force us to inflate salaries, the overall impact is going to be pretty marginal.
Fair point.
Sorry. On the crew side of the equation, the A321, you're flying 50 more passengers with the same two pilots and one extra cabin crew. Structurally, we do have cost savings coming through as a result of the A321.
Okay. Then just one subsequent one. Obviously, the 120 aircraft sort of target to end of FY 2020. You've historically given us the kind of order book out to FY 2024. The last time you gave that to us, it was 154 aircraft. I wonder if you can update us on what that longer-term fleet might look like.
I think what we can say at the moment is that we have 139 firm orders to be delivered to the company between now and 2024 as contracted. 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 2020. The 120 is not a target. This is all contracted. These aircraft will be delivered to the business. Beyond fiscal 2020, we'll have to be reviewed and updated. If you look at it, we were guiding previously on around a 15% annual 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 aircraft supply.
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 and what else we need to do. That's really in front of us. Contextually speaking, 139 aircraft to be delivered, and in terms of mid-term fleet plan, 120 aircraft will fly by the end of fiscal 2020. Beyond that, we'll have to update.
Assuming a 15% kind of growth rate sort of reverts at that point is probably the right approach for the long-term view?
I think it's a good indication. I think for modeling purposes, if you assume 15% capacity growth, I think that's a good approach.
Okay. That's great. Thanks, guys.
Thank you. Moving on to the line of James Hollins, Exane BNP Paribas. Please go ahead. Your line is open.
Hi. Good morning, everyone. Congratulations, Iain. Just two from me. The first one, do you expect Q2 unit revenue to be up or down? Second one is on regional capacities. I'm wondering if there's any particular territories where you're seeing a real rise in capacity, either in the summer or through the winter. Thanks very much.
Okay. In terms of unit revenue in Q2, we were guiding on flat unit revenue performance throughout the year pretty much across the horizon. First half flat, second half flat. Obviously, now we are having more visibility on the first half, I think we are holding that guidance, no change to it, we are sort of holding the same guidance for the second half as well, caveating 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 LCC competition, we are seeing anything spectacular other than what we would have been expecting. We continue to grow the markets, actually we have accelerated our growth. We are seeing some of our competitors, especially Ryanair, growing in Central, East Europe as expected.
As also expected, the other low-cost carriers are not overly active in the region by growing, their impact on overall market growth is fairly limited given their very slim market share position. What we are seeing is that more and more legacy carriers are throwing more capacity into the market. LOT Polish Airlines, TAROM, some others. All these airlines have been ailing and failing in recent years, pretty much have been put on state aid. As opposed to trying to preserve profitability of the business, now they are essentially just competing away the benefits what they could take from the market. We are seeing more from the legacy sector, essentially, than surprises from low-cost competitors. It's fairly across the board. I wouldn't say that this is very market specific. That's quite across the board in Central and East Europe.
Okay. Very useful. Thank you.
Thank you. Moving on to the line of Jarrod Castle, UBS. Please go ahead. Your line is open.
Thanks. Just coming back to the fleet delivery. Are you prepared to kind of give us what the capacity indications will be for 2019 and 2020? It looks like we're talking over 20% growth now. Then also by the end of, I guess March 2020, how many of the 139 new planes would you have taken up? I guess what I'm saying is, how many new planes would be left for you to take up going forward, should you want? Then just on ex-fuel unit cost, it was up about 3%. You're talking broadly flat. Can you just talk about some of the measures coming through over the remaining quarters which will help you get there? Thanks.
Okay. Of the 139, we're going to be taking up 48 airplanes by the end of fiscal 2020. Whatever the balance, 91 will be delivered beyond fiscal 2020. If you look at it from a capacity perspective, I think if you moderate 20% for fiscal 2019, fiscal 2020, you wouldn't be far from what we're going to be doing.
Okay, thanks. Just on the ex-fuel unit cost.
Oh, Jarrod, yeah, I can touch on that. I think Q1, we tend to do a little bit more maintenance events on the off-peak, so you're seeing the maintenance a little bit inflation coming through 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. There are other cost items that will be coming through. You can see we had a very strong performance on the airport and the navigation charges. What I would say is that throughout the year, we're an ultra-low-cost carrier. My job is to make sure the 200 or whatever initiatives that we have in place are carried out. You're generally seeing that will be flowing through. I wouldn't point to any specific item.
There is a couple that are mine, what I would say is that we are looking to have a broadly flat ex-fuel CASK for the full year.
Okay. Thanks a lot.
I would just make an additional comment on the fleet. Please just know that we have 90 options available to us to drag on, should we feel the need to convert some of these options into firm orders.
Maybe one additional point is that don't forget, our entire fleet today is all leased. There will be a significant amount of aircraft going back to lessors. That also then flows into the depreciation point that obviously as we get those aircraft back into conditions of the lessors, the depreciation and the maintenance, we'll see a little bit of a bump.
Okay. Thanks very much.
Thank you. No further questions in queue. Ladies and gentlemen, as a reminder, please press zero one on your telephone keypad if you wish to ask a question. Please stand by for any next question. The next question comes from the line of Andrew Lobbenberg, HSBC. Please go ahead. Your line is opened.
Hi. Iain, many congratulations. Sorry if I don't know what took so long. Could I ask for a clarification on the EU ownership and control after we've had the placement Whilst we've discussed on potential post-Brexit situations around the AOC, how much U.K. ownership do you think you have, and how do you foresee dealing with the U.K. ownership in a post-Brexit environment? Could you just offer us some discussion of what you see happening in the Ukraine, where Ryanair looked to be coming into the market and now don't, and you're generously offering rescue fares for their poor stranded passengers.
Maybe let's start with the easier one of Ukraine. I'm not sure if you're aware, but the Ukrainians, the Europeans waived the visa restrictions for traveling back and forth to the Ukraine. 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 AOC. I think there were some bigger issues in terms of registering aircraft in Ukraine when there were the challenges with their neighbors. That's why we scaled back. We've always been very keen on Ukraine. It's a 40 million-plus population, very large country, so very attractive to low cost. We'll continue that commitment. We had press conferences last week. We added additional routes and we'll continue to grow aggressively in Ukraine. As to Ryanair, I'm not going to comment on their position.
In terms of the European ownership and control, so yes, Indigo converted some of their convertible shares into ordinary shares. That had the impact of increasing our market capitalization when measured by issued shares. That, I think, has helped liquidity. I think that was a very positive effect for general shareholders. In terms of the U.K. versus European, I think there are some challenges out there. Interestingly enough, when speaking to Polish investors, they have questions generally on U.K. in shares. What I would imagine is that there will be some sort of passporting. If that wasn't the case, then you will find that the financial institutions will start to sort the situation out. Hopefully we will benefit from that. We were seeing a very marked improvement in the European, or I'd say continental European ownership.
We're seeing a lot more German, Scandinavian, French interest, which is very pleasing. Essentially that's essentially what we'll be trying to push. We're not going to be going down the roads 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. As it stands, we take the issue very seriously. We have a number of actions. The U.K. AOC from the operational perspective is something that we're pursuing and monitoring and managing the investor base as hard as we can on the other side and staying very close to that. In terms of percentages, I wouldn't want to give a number.
Sorry. You're not going to disclose what the E.U. ownership is or what the U.K. ownership is?
No. European ownership is comfortably below the 49%. In that respect, we're absolutely fine.
Non- E.U. you mean, right?
Yes. Non-European is comfortably below 49%. Correct. In terms of the U.K., 25% is U.K. I did give you a number.
All right. Thank you.
Thank you. Moving on to the line of James Goodall, Redburn. Please go ahead. Your line is open.
Hi, guys. 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, in terms of the impact to your competitors, do you expect this to potentially improve your competitive positioning given that competitors may need to react by increasing fares? Cheers.
Yeah. No, you're right. It doesn't impact us. We've always operated without charging credit card fees. Maybe it's a function of the markets we operate in. I would say that certainly would impact, let's say, U.K. operators. In terms of competitive advantage, we'll have to see how that flows through our environment.
Okay, perfect. Thank you.
There are no more questions in queue for the moment. With that, I would like to return the conference call to the speakers.
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Ladies and gentlemen, this concludes today's conference call. Thank you very much for attending. You may now disconnect your lines.