Good afternoon, ladies and gentlemen. This is Renad Alshehri from AlJazira Capital Sell-Side Research. On behalf of AlJazira Capital , I am pleased to welcome you all to Flynas earning call for Q3 2026. I am pleased to welcome our panelist on the call today, Flynas management. The format of this call will begin with a presentation from the management before opening the floor to participants for the Q&A session. Now, without further ado, I will hand the mic over to the company CEO, Mr. Bandar Almohanna. Mr. Bandar, the mic is yours.
Shukran, Renad. [Non-English content ] everyone, and thank you for joining us. I am Bandar Almohanna, the CEO and Managing Director of Flynas. With me today are Ramzi Zaroubi , the CFO, Dr. Anurag Jain, our Chief Strategy Officer, and Rania Alom, our VP of Investor Relations and Financial Planning. Before we turn to the results, I would like to acknowledge the difficult period the kingdom has been going through in recent weeks. Our thoughts are with everyone affected. The safety of our guests and our people is and remains our first priority. I also want to pay tribute to our people. They have shown courage and dedication throughout this year, and we lost one of our colleagues, a member of our cabin crew. We honor her memory, and we stand with her family.
This year has put our business model to the test in one of the most difficult operating environments we have faced. This slide sets out the milestone event of the first three quarter, the actions Flynas has taken in response, and the impact on our quarterly profitability and margins. As you all know, after a strong January and February, the regional conflict led to the suspension of part of our network, and jet fuel prices went sharply higher in March. We acted early. We cut capacity in the second quarter to protect profitability, removing frequencies and routes that no longer made financial sense. We repriced the network to recover as much of the higher fuel cost as the market would bear. In the third quarter, as conditions started to stabilize, we moved quickly to bring capacity back to last year level.
Firm pricing and management actions absorbed a large part of the higher fuel cost, and our EBITDA margin recovered to 22.6% from 9.2% in the second quarter. As a result, we returned to a net profit in the third quarter, in line with the directional indicators we gave in August. We also kept executing our strategy with the Swissport ground handling partnership and EXPRO government travel agreement, which I will come back to. However, since the end of the quarter, the operating environment has become significantly more challenging, with operations at several airports in the kingdom, including Riyadh, our largest base, were suspended or restricted for part of the month. Within days, we redeployed aircraft and crew to the airport that remained open and continued domestic and international services from there. That resilience was built, not improvised. Early in the crisis, we opened new bases in Abha and Al-Qassim.
They supported the third quarter result and carrying part of our network today. We did not wait for conditions to improve. We built the options to operate when they did not. The good news, Riyadh Airport partially reopened since 25th of October. We are gradually restoring our Riyadh schedule while continuing to operate part of our capacity from the other open airport. Financially, we moved in the first days of the disruption to protect cash, and we are working closely with our partner. I will set out each measures and where it stand in my closing remarks so you have the full picture in one place. We entered this period from a position of financial strength with SAR 3.4 billion of cash and bank deposit at the end of September. I am proud of our team. They have shown remarkable resilience and the ability to perform under pressure.
With that, let us take a closer look at our result for the third quarter and first nine month.
Okay.
As I mentioned, in the third quarter, we managed to restore ASK to the level of last year after a 15% reduction in the second quarter. We carried 3.6 million passenger, 14% fewer than a year ago, as demand remained under pressure. The decline narrowed from 27% in the second quarter. Revenue grew 6% to SAR 2.2 billion, as higher fares more than offset lower passenger volume. Adjusted EBITDA was SAR 503 million, a margin of 22.6%. More importantly, we are back in profit with a net profit of SAR 27 million compared with a loss in the second quarter. This is still below the SAR 120 million we earned a year ago, but it shows how quickly our earnings respond once capacity is restored. Next slide.
For the nine-month available seat kilometer, we are up 1%, broadly in line with last year despite geopolitical situation, as our first quarter growth offset the second quarter reduction. We carried 10.2 million passengers, 11% fewer than a year ago. Revenue for the nine months was SAR 6.4 billion, up 6% year-on-year, with growth in every quarter. Adjusted EBITDA for the nine months was SAR 1.3 billion at a 19.6% margin, and we recorded a net loss of SAR 96 million, reflecting higher fuel cost and the capacity reduction in the second quarter. As I mentioned earlier, cash and deposit of SAR 3.4 billion give us solid liquidity as we manage through the current disruption. With that, let me take you through our network and fleet on the next slide. We brought capacity back to last year level in the third quarter. We continued to extend our reach.
We launched 13 new routes and five new destinations during the quarter, a mix of seasonal and year-round services, including Munich, Budapest, and Alexandria. We also shifted part of our capacity to longer international sectors. In October, as I mentioned, when airports in the kingdom were affected, we redeployed aircraft and part of our affected capacity to the airport that remained open, including Jeddah, Medina, Dammam, and Qassim, so we could keep serving our guests on both domestic and international routes as much as possible. Since Riyadh Airport partially reopened on 25th of October, we have started rebuilding the Riyadh schedule step by step, in line with the capacity available at the airport. We continue to review the schedule as conditions change, putting safety first and working closely with the authorities so we can restore operation as airports reopen and capture opportunities where they arise.
Let's now have a look at our fleet before Ramzi takes you through the detailed number.
Okay.
Before that, let me just cover some activity that we are doing to reach out to our passenger and offer our services during this difficult time. When airports in the kingdom were affected in October, we redeployed capacity within days to the airport that remained open to keep our passengers traveling. The next step was making sure passenger could use our services without difficulties. We announced routes on our website as soon as they opened from Riyadh, Qassim, and other airports. We also updated our digital channels so passengers could easily find alternatives. A search for Riyadh, for example, now also shows our flight from Qassim.
Where needed, we arranged ground transfer, such as the free buses between Riyadh City and Qassim Airport, which passengers can add when they book tickets. We kept passengers informed throughout. Our team made it easy for our guests to keep flying with us in a rapidly changing environment. Let's now have a look at our fleet before I hand over to Ramzi Zaroubi to take you through the detailed financial numbers. As you can see on the right, we ended the quarter with 69 aircraft, down from 71 at the end of 2025, as we rationalized wet lease capacity in line with reduced capacity need. Importantly, in third quarter, we completed the modernization of our new narrow-body aircraft. The last A320ceo left the fleet, and three new A320neo aircraft joined. Our narrow-body fleet now consists entirely of new generation fuel-efficient aircraft.
All three new aircraft are owned, taking our owned fleet to six, as we continue to increase the share of our owned aircraft. We also operate one of the youngest narrow-body fleets in the region, with an average age of under four years, which supports our cost competitiveness. In July, we exercised purchase option and right to firm up to 25 additional aircraft, taking our firm order book to 235 aircraft. This secures our long-term growth at a modest upfront cost. Beyond the fleet, we continued to execute our strategy during the quarter with two agreements that expand our business and strengthen our operation. In August, we signed an agreement with Expro, the Government Expenditure and Project Efficiency Authority, to provide travel services to government entities, a new customer segment for us, and one that brings additional demand to the network.
We also agreed to take a stake in Swissport Saudi Arabia, which will become our exclusive ground handler across the Kingdom from March 2027. This is a game-changer. This is a game-changer for us financially and operationally. Bringing all our domestic airport operation under one experienced partner is expected to speed up aircraft turnaround, improve service, and reduce handling cost. We are not doing this as a customer only. We are doing it as a shareholder with a seat on the board. Even in a disrupted year, we continue building our business for long term. With that, I will pass it over to Ramzi, who will take you through the financial result for the quarter and the nine months.
Thank you, Bandar, and good afternoon, everyone. This quarter result was mainly driven by the actions we took to restore capacity. With supply back to last year level and RASK up 11%, revenue grew 6% in the quarter. Load factor was 77.4%, which is 5.7 points lower than last year, but 6.2 points higher than the second quarter. Higher fares allowed us to recover a large part of the higher fuel cost. Adjusted CASK growth slowed to 20% as compared to 48% in the second quarter. As a result, adjusted EBITDA was SAR 503 million at a 22.6% margin, and we returned to net profit. The third quarter shows how quickly our earnings respond once capacity is back and pricing holds. The balance sheet remains solid with SAR 3.4 billion in cash and net debt to adjusted EBITDA at 2.1 times. I will come back to both later.
Moving to the nine-month results. The nine-month results were supported by profitable first and third quarters. ASKs were marginally higher year-on-year, up 1%, helped by double-digit ASK growth in the first quarter. Unit revenue improved by 8% on higher fares. Together, these lifted revenue by 6% to SAR 6.4 billion for the nine months. Load factor was 77%, down 5.5 points from last year. On the cost side, adjusted CASK increased by 18%, mainly driven by higher fuel cost. As a result, adjusted EBITDA was SAR 1.3 billion, and the nine-month net loss was SAR 96 million, reflecting the pressure of the second quarter. Now let us look at the income statement. The chart on the right shows the net profit bridge from the third quarter last year to the third quarter this year.
As we discussed, revenue was up 6% year-on-year, driven by higher fares with capacity back at last year level. This gave a positive contribution of SAR 135 million from the top line. Fuel was the single biggest driver on the cost side, adding SAR 226 million, while other cost of revenue decreased by SAR 29 million. The absence of last year's sale and leaseback gain reduced the result by SAR 33 million. As a result, net profit for the third quarter was SAR 27 million compared with SAR 120 million a year ago. Next slide, please. Here, as you can see on the left of the slide, passenger traffic was down 14% in the quarter as the regional situation kept travel demand under pressure. It is a clear improvement on the 27% decline in the second quarter. Over the nine months, traffic was down 11%.
As discussed earlier, the supply recovery in the third quarter and growth in the first quarter offset the second quarter reduction, keeping nine-month ASKs at 2025 levels. Load factor in the third quarter was 77.4%, a sequential improvement compared to the second quarter. I think it was around 71% in the second quarter. Let us now turn to the next slide to take a closer look at the top-line trends. On the left-hand side, as mentioned earlier, revenue grew by 6% for the quarter and nine months. As for the revenue split, LCC segment grew by 9% for the quarter and by 8% for the nine months, as higher fares more than compensated for fewer passengers. Hajj revenue was lower in the quarter because of timing. This year's season was completed entirely in the second quarter, while in 2025, it ran into Q3.
Over the nine months, Hajj revenue was 3% lower and remained profitable despite higher fuel cost. Turning to the chart on the right, RASK increased 11% in the third quarter to 27.8 halalas, supported by higher fares, which continued from Q2 and held well in Q3. For nine months, RASK was up 8%. Let us now look at the cost of revenue and CASK. As mentioned, fuel remained the key factor in our cost of revenue this quarter. As shown on the right, it accounted for 34% of direct cost. Therefore, cost of revenue increased 11% in the quarter to SAR 1.9 billion. Our other cost lines, taken together, were 2% lower or SAR 20 million lower, of which staff cost increased, reflecting a higher operational headcount as aircraft deliveries continue.
Rental costs were also higher as this year's short-term wet leases are recorded under rental, while last year they were capitalized. Maintenance costs decreased with fewer major scheduled checks than last year. Handling, landing, and navigation charges declined mainly reflecting fewer flights. The timing of Hajj, as last year third quarter included Hajj-related cost, while this year season was completed in the second quarter. Depreciation was 13% lower following the phase-out of the wet-leased aircraft capitalized in 2025. Turning to unit costs, adjusted CASK increased 20% in the quarter to 27.5 halalas. With ASKs broadly flat year-on-year, fuel was the main driver, while last year base also benefited from the sale and leaseback gain. For the nine months, adjusted CASK was up 18%, again reflecting higher fuel cost on flat supply. Now let us look at oil and jet fuel prices.
As you can see, Brent crude, the dark line, and jet fuel, the light line, have both risen sharply since March. The gap between them, the crack spread, or the premium airlines pay over Brent, has widened as well. Our narrow-body fleet, now entirely A320neo, burns around 15% less fuel than previous generation aircraft, a strong cost advantage in this environment. We responded quickly by cutting capacity in the second quarter and lifting RASK through higher fares in the second and third quarter. This helped us offset a very large part of the higher fuel cost. In September, oil prices moved higher again on renewed regional tensions. As we noted in previous calls, we plan to resume hedging once conditions stabilize. Now let us have a brief look at SG&A before we move to leverage and liquidity.
Here on this slide, regarding SG&A was 2% lower year-on-year in the third quarter and 11% higher in the nine months of 2026. The increase was mainly due to higher professional fees related to strategic and digital projects. Next slide, please, to review debt and liquidity. Starting on the left, net debt increased 11% since year-end to SAR 3.6 billion. This was driven by lower cash, while total debt fell 7% as we continue to repay loans and lease liabilities. We ended the quarter with SAR 3.4 billion in cash, a solid buffer equivalent to 41% of last 12-month revenue. Net debt to adjusted EBITDA increased to 2.1 times. This mainly reflects lower last 12-month earnings following the fuel impact and, to a lesser extent, higher net debt.
At 2.1 times, leverage remains at a manageable level, and our balance sheet gives us the flexibility to work through the current challenges. Now let's look at the cash flow. Turning to cash flow, net cash from operating activities was SAR 989 million for the nine months, 16% lower than last year, mainly reflecting lower earnings. Interest received and the settlement of fuel hedges added SAR 190 million to operating cash flow. Net cash used in investing activities was SAR 2.4 billion, but most of this, SAR 1.5 billion, was placed in bank deposits. This is a liquidity placement, not spending, and it remains part of our SAR 3.4 billion in cash and deposits. Capital expenditure was SAR 946 million, 31% higher than last year, mainly due to higher net PDP in 2026 as compared to last year, with PDP refunded on sale and leaseback.
Financing activities were a net outflow of SAR 889 million, mainly for loan and lease repayments, compared with an inflow last year from the IPO proceeds and new borrowings. Taken together, adjusted free cash flow remains positive at SAR 158 million for the nine months. Adjusted return on invested capital was 3.2% for the nine months, down from 11.1% a year ago, reflecting this year's low earnings and a larger equity base following the IPO. With that, I'll hand back to Bandar for the closing remarks. Bandar, over to you.
Shukran, Ramzi. [Non-English content] Let me close with our current priority. As we mentioned, given the disruption we faced in October, visibility for the rest of the fourth quarter remains limited. Our fourth quarter result will be significantly affected by the situation. We are not providing indicators for the fourth quarter, and our 2026 guidance remains suspended while this uncertainty continue. In the meantime, management is focused on three priority. First, safety. Protecting our passengers and employees comes before everything else. We operate in close coordination with the relevant authorities and follow their guidance, and our insurance cover remains in place. Second, liquidity. We have taken measures to reduce cost and preserve cash. Discretionary spending is on hold. We ended this period with ample liquidity of SAR 3.4 billion, which gives us a solid buffer as we manage through this period.
In the meantime, GACA and the relevant government authorities are actively engaged with Flynas and the wider sector in support measures. The purpose is clear, to make sure the sector long-term growth plans and strategic target stay intact through this period. Those discussions are constructive and progressing. We are not in a position to share details until they are formally communicated and announced, and we will update the market the moment that happens. I will add one thing about those discussions. Aviation is central to the Kingdom's strategy, and Flynas is central to the aviation in the Kingdom. The engagement we are seeing from GACA and the authorities reflect that, and it is why I can say our growth plans have not changed. Third, schedule recovery. Redeploying our capacity to the airports that are open allows us to keep serving passengers and generating revenue through the disruption.
Also, we are adding flights back as airports reopen and access improve. We have a proven track record of returning to service quickly, and we will continue to update the market as and when material developments take place. Beyond the near term, the foundations of our business remain in place. A young, fuel-efficient fleet, a network built for growth at home and abroad, and a home market with strong long-term potential. As the third quarter showed, our team responds quickly when conditions change, and we will bring the same discipline to combat future challenges. Thank you for joining us today, and we are happy to take your questions.
Thank you, management. Ladies and gentlemen, we will now commence with the Q&A session. You may raise your hand by pressing the hand icon on the bottom of your screens, or alternatively, you may drop your questions onto the Q&A chat box. However, please note that priority will be given to participants with mic participation. With that being said, please limit yourself to two questions at a time so we may satisfy as many questions as possible. However, you are more than welcome to join back the queue if you have any further follow-up. With that being said, the Q&A session is now open. If you allow me, management, to start the session with a question of my own.
Following the recent disruption that we saw in the central region, could you please give us an insight of the share or the percentage of the total capacity that has been affected, and how much of that percentage you have been able to redeploy?
Shukran, Renad. [Non-English content] Riyadh is our main base, almost like 50% of our capacity in Riyadh. Since the day Riyadh is closed, we redeploy capacity to other airport, mainly to Qassim and Dammam. Almost like 15% of the capacity in general of Flynas being redeployed in between Qassim, Dammam, and a few to Jeddah and Medina. But in general, Riyadh almost represent 50% of our capacity. If we take like 15% out of that, it is almost like 30% of Riyadh capacity been impacted. But we redeploy and recover 15%. And the second question?
Thank you. We have now a question from the line of Reem. Reem, please unmute yourself and proceed with your question.
As-salamu alaykum [Non-English content] This is Reem Alkhulayfi from Riyad Capital. Thank you, management, for the presentation. I have just two question. Mainly about the contracts. The Swissport transaction include, I think, exclusive five years ground handling. What level of handling cost saving or operational efficiencies would justify the investment? When do you expect the partnership to become earnings accretive? The second one is the EXPRO agreement was, I think, initially expected to have financial impact from 4Q, while services started, I think, in September. Was there any material revenue contribution in 3Q, and what contribution should we expect in 4Q? Also, how do the yield and payment cycle of the government traffic compare with your existing customer base? Thank you.
Let me start with the Swissport. Let me start with the Swissport. We signed with Swissport for five years, and we took 10% of Swissport Saudi Arabia. As you know, ground handling cost one of our largest cost line after fuel and people, and it has a big impact on turnaround time with efficiency of our operation. We not mention any particular numbers about the saving at this stage, but it will be reflected in Q2, starting from Q2 2027. But as I mentioned, it is a game changer, because as you mentioned, it is one of the largest cost item in our P&L. It will add a great efficiency to our operation. It also will add more revenue, which as part of the ancillary revenue. So we can offer certain products and certain services inside the terminal, which we cannot do it as of today.
This is in revenue side, but in the cost side, as I mentioned, the prices that we took, it is very competitive with fixed price for a couple of years without any increase. It is a game-changer for the airline. The second question is about EXPRO. We started the relation with EXPRO and the integration mid of September, and we see very positive demand on Flynas ticket from the government entities.
We know that mostly it is a domestic ticket for domestic travel. Unfortunately, the impact of Riyadh has a major impact on the demand from the government entity, because most of the demand, as I mentioned, it is from Riyadh to different destination inside the kingdom. We are not, again, in a position to give any indication about, let us say, the size of EXPRO, but we would rather really to wait until it gets stabilized when Riyadh open to full capacity.
We are very optimistic about that because we are selling empty seat. It has a big impact on the load factor, and we are very optimistic. The initial demand was very positive, and they continue, it is beyond our expectation.
Yeah. We are not selling at a discount as well. They are being sold at the full price.
One thing about the payment. You mentioned about the payment. I think there was something about the payment cycle.
This is regular payments. We will talk about it more as we practice, but within the agreements, they are all within 60 days.
Thank you, management. We will now take a question from the line of Abdulrahman. Abdulrahman, please unmute yourself and proceed with your question.
Thank you, management. From my side, I just have one question. This is Abdulrahman from Isometry Capital. How were the third quarter deliveries financed? Is the rest of 2026 financed? Can you finance the nine 2027 deliveries? Will banks continue to lend at current conditions? Thank you.
Thank you, Abdulrahman. As you correctly mentioned, for 2026, we have six deliveries of A320neos. Financing is in place for all of them. Three are received by Q3, and the remaining three will be received by Q4. As I mentioned, financing is in place for all of them. Our banking relationship with Saudi local banks, international banks, export credit agencies, they are very strong. They like our business model. They like our balance sheet. We already had initial discussions regarding the nine aircraft delivering in half two of 2027. We will not receive any aircraft in the first half of 2027. The banks are expecting to receive our RFP in November, in this month. We have no concern whatsoever.
In addition to that, we are financing one of the best asset among all type of aircraft, which is the A320. Always there is a demand from lessors and banks to really to engage with the airline to provide financing for this type of aircraft. So it's very highly liquid asset.
Thank you. Thank you, management.
Thank you, management. We will now take a question from the line of Sarah. Sarah, please unmute yourself and proceed with your question.
Hello, management. This is Sarah Bin Mansour. Congratulations on the strong result you posted this quarter. Just a question from my side. I understand it's quite tough to say, it's a bit early and nothing is certain. However, I would really appreciate it if you could just shed some color on airport disruptions and maybe what are load factors looking like in Q4 so far. If you can also shed some color on the pricing environment in October of 2026. Thank you.
Yeah. Hello. Thank you for your question. First of all, I'll just give a very brief indication, very, very brief initial on Q4. Of course, October was a very difficult month for us, especially with the closure of Riyadh Airport. We reacted as the CEO explained, but generally, you can say that around 50% of our capacity was affected in October. We mitigated and we deployed capacity from other airports, Qassim, et cetera, and the load factors pulled significantly well. So I can tell you that for October, the load factor was around 75% on the operated flights. So that held well. Going further beyond October, our information today is that there will be more and more of opening of Riyadh Airport. We understand now that it will go to 20% very quickly, within next week. As we mentioned, we redeploy very fast.
Once the airport capacity is there, Flynas capacity is on standby, and it will be redeployed very, very quickly. So that's all, I think, what we can share at this time.
Thank you. That's very clear. Thank you, management.
There will be. It's on mute?
No, you can talk.
Also, we believe there will be a very strong pent-up demand. People, they want to travel. Unfortunately, the impact of what is happening right now, the impact like people planning. We believe once Riyadh, in particular Riyadh Airport, reopen to its full capacity and situation back to normal, there will be very strong pent-up demand, similar or more than what is happened during the COVID-19. This is what we can see from the market.
Thank you so much.
Thank you, management. We now take a question from the line of Ricardo. Ricardo, please unmute yourself and proceed with your question. Mr. Ricardo, I am sorry, we cannot hear you. Can you adjust your mic? Mr. Ricardo, I believe you have a technical problem with your mic. You can join back the queue. We will take a question from the line of Sayed. Sayed, please unmute yourself and proceed with your question.
Hello. Am I audible?
Yes.
Yeah, sure. First of all, thank you very much, management, for the presentation. I have one question regarding the company's ability to service their debt and sustain operational sustainability, given if this situation, the current situation continues, let's say, for next one or two quarters. Inshallah, it will not continue, but in worst-case scenario, just in a stress case scenario, what is the company's position, or how the company is sustainable to service their debt and operations?
Sure. Yes. As we mentioned before, we have liquidity headroom currently of SAR 3.4 billion. I would also like to point out that we closed financing first week of October for a new aircraft, so we took additional financing this October. Now, again, going back to your question, as part of the Q3 audit, we have presented to our external auditors liquidity scenarios to stress our cash flows, and also scenarios including downside but plausible scenarios, and concluded that the auditors concluded that there is no going concern, and we can service our debts, et cetera. Now, I will add to it a few things for information. Currently, we have around SAR 281 million of our syndicated Murabaha loan that is not drawn, on top of the cash that we have. We have significant unencumbered assets that could be easily financed or do sale and leaseback.
Again, also our current Murabaha syndicated loan of SAR 2.25 billion is largely repaid, and we have topped it in the past, and we can top it again through Saudi banks. I think we passed all the liquidity tests with our scenario analysis, liquidity, balance sheet, et cetera.
In addition to that, what Ramzi mentioned, we already taken some action in term of how to control our cost. We control all discretionary spendings. Looking at our fleet, also engaging with the government right now, the whole sector engaging with the government. As I mentioned, there is very positive progress that will benefit from, let's say, the initiatives that will be provided by the government. But we are not in a position right now to disclose anything about that.
Okay. Thank you.
Thank you, management. We will now take a question from the line of Abdul. Abdul, please unmute yourself and proceed with your question. Mr. Abdul, please unmute yourself locally and proceed with your question.
Am I audible now?
Yes.
Perfect. I just wanted to know about the sustainability of this increase in RASK and what is the pass-through looking like? At what stage will the management be thinking that the fuel surcharge pass-through reduces to a lower level? How sustainable is the RASK? We saw an 11% increase in this quarter. How sustainable is it going forward? Do you expect levels to stay, the RASK to stay at current levels, or should we expect an increase, for instance, if oil prices drop?
Okay. I didn't hear the full question, but I think you are asking about the RASK and how sustainable is the RASK, and possibly you asked if it is covering the fuel cost, if I am not mistaken.
Yeah.
Yeah. As we mentioned before, we took measures starting from Q2, and our mitigation measures were planned on lower capacity and higher RASK, and it started to work in Q2, but then it worked extremely well in Q3. The RASK in Q3 increased by 11%, and the incremental fuel cost in Q3, as I mentioned, was around SAR 222 million. If you look at the RASK and the ASK that we have given you will realize that nearly all of it, if not more, all of it were covered by the increase in RASK in Q3. I think as long as the situation continues, average fares are expected to increase, and I am sure all of us realize that the ticket prices are increasing based on, which is very much correlated to the higher fuel price and the availability of flights from Saudi Arabia.
As you can see now, there is less and less supply, and therefore, it depends on the situation. Our plan is to keep the RASK as high as possible to recover as much as we can from the fuel cost, especially the ones that were not recovered in Q2.
Thank you, management. We will take a question from the line of Rakan. Rakan, please unmute yourself and proceed with your question.
Hello, management. I hope you are all doing well. Thank you for the presentation, and thank you, Flynas team, for the flexibility during this hard time that we will pass, Insha'Allah. [Non-English content] I have two quick questions. At what jet fuel price threshold would Flynas remove the fuel surcharge on passenger? Do you have a specific threshold on the jet fuel price? The second one, if I heard correctly, Flynas will receive nine airplanes in the second half of next year. How many of them would be A320, A330neos, and XLRs?
Yeah, sorry, I heard the first one on the jet fuel. And the second one?
I heard that next year, Flynas is going to receive nine airplanes in the second half. So how many of them would be A330neos and A321XLRs, as both of them are firm order?
All right. I will answer the second one very easy. We will have six A320neos and three A330neos. That is the line for next year. On the break-even jet fuel, we budgeted this year at a total jet fuel of $90. That was the Yeah.
Could you please unmute yourself, Rakan?
Yeah. So, we budgeted at the jet fuel of $90, and we have seen the result. As I mentioned, if jet fuel is up, we try to pass as much as we can in the ticket price. We were extremely successful in, partly successful in Q2, fully successful in Q3. So, it is a correlation between the ticket price and the jet fuel as long as it is elevated.
Thank you so much.
Thank you, management. Now take a question from the line of Raed. Raed, please unmute yourself and proceed with your question. Raed, can you please
Thank you, Renad. Am I audible?
Yes.
Thank you, Renad. First of all, congratulations on the strong results. I have a question regarding jet fuel prices. What are your expectations going forward? Also, did you have any specific strategy in place to manage potential changes in jet fuel prices following the U.S. elections, considering the different energy policies of the Democratic and Republican parties? Thank you.
All right. We will not go to the politics of that, but I will tell you how we think of jet fuel and hedging. Well, the future prices are available in the market, so people can look at what the future expectation on the jet fuel. I will talk specifically about Flynas. Flynas, we had a fuel hedging policy in place. We closed our hedging positions in April. We booked SAR 54 million. We internally had a look at the hedging, whether we need to hedge in the future Brent or jet fuel. We are internally, I think us and other airlines, are looking how to mitigate in the future. In the future, once the market stabilize, I am confident that Flynas will again start the hedging program. My thinking that it will be a bit different.
We will be either looking at jet fuel directly or we will be looking at linking our implementation of Brent hedging when being closely linked to risk assessments. Meaning, if let's say, had we known early, let's say in Jan, we had some risk assessment that there will be geopolitical events, then we would have not hedged for 50%, maybe would have taken 120% of Brent, something like that. So, us and other airlines are going to reflect on their hedging policies and lessons learned. They will come up with whatever solutions suits them best. This is what I can tell you about Flynas and how we're thinking of you.
Clear. Thank you very much. Thank you, Renad. Thank you, management.
Thank you, management. While waiting for participants, if I may, I have a follow-up. Can you please just shed some light on your expectation about the restoring the full operating schedule? If you may just also clarify what are the main constraint that would limit the pace of recovery?
Go ahead.
All right. I will ask this. I think we cannot give directional guidance as in Q2, as there is no clarity on additional external factors such as the main airport closure. In Q2, we were able to make assumptions on fuel, a little bit recovery of demand, et cetera, and we gave directional guidance. Now, the situation is totally different. We have airport closures. The airport is opened by the government, by the situation, external factors, and that is why it is very difficult for us to give guidance on the full Q4. All I can tell you is that October was difficult. I gave some small indicators on October. I can assure you that we can recover to full capacity in a very, very short period of time once Riyadh Airport is fully restored.
To add to what Ramzi mentioned, in August, when we published our guidance for Q3, the uncertainty was about mainly it is about fuel prices, but we gave directional guidance. Today, the uncertainty is about capacity and capacity of the major base, which is Riyadh. As I mentioned, it is almost like half of our capacity, but the pace at which it retain is decided by the authority and based on certain measures week by week. We expect this to accelerate in the next few days. We are very close and part of, in fact, of the committee in charge of reviewing the capacity that can be deployed in Riyadh. But it is at burden on us in giving an indication or directional guidance for Q4.
However, if the situation really improved and becomes more feasible, we will be more than pleased to come back to the market and to provide more insight on Q4.
Thank you very much, management. All clear. Ladies and gentlemen, before we conclude our call today, I would like to give back the mic to the management for closing remarks.
Shukran, Renad. [Non-English content] I would like to leave you with, frankly, three very important elements to take away. First, Flynas has proven that it can recover quickly from major shocks. We went from double-digit capacity cut in 2Q to capacity back at 2025 levels in the 3Q. in October, we redeployed our aircraft and crew to operating airport in a matter of days to restore part of the impacted capacity. I can confidently state that Flynas is fully prepared for business recovery once conditions normalize. Second, our balance sheet is strong. We ended 3Q with SAR 3.4 billion in cash and deposit. This cash cushion, along with the measures taken to cope with the current disruption, give us a long cash runway. Third, the long-term opportunity for Flynas is unchanged. Aviation is central to Saudi Arabia development and future vision.
With six domestic bases, a fast-growing network, and one of the youngest fleet in the region, Flynas is perfectly positioned to capture this structural demand growth. At the end, I would like really to thank you all for joining us today, and we look forward to updating you on our progress.
Thank you very much, management. On behalf of AlJazira Capital , I would like to extend our sincere thanks to Flynas management for their time and presentation, and to our guests for taking the time to join the call. Thank you, everyone, and the meeting is now over.