Wizz Air Holdings Plc

Well, I thought today would be kind of a heated day for me, but actually this is freezing cold here, so I don't know what it means to this presentation. But if you please move the slide, I just want to kind of give my perspective of what is going on in the business. And to be totally frank, this is good news and bad news, but we are coming up with it today. The bad news is that it's been a rough and tough year for this and more costly than expected. But maybe you appreciate that I've been in this industry for 23 years and this has never happened. So we haven't had any proxies or anything to reference our business to. So we have to kind of learn our base through this process. But the good news is that the year is over. And the context of the business is totally different today than when it was a year ago. So if you look at it, a year ago, we were just about to face the Brett and Whitney GTF issues. Now the peak is behind us. And while this issue will continue to drag, but the impact on the business is going to be less and less. Secondly, we basically lost our ability to grow the business due to the groundings a year ago. But now we are regaining strength again through the supply of new aircraft, and we are back on a growth plus gain. And that's very different. And thirdly, a year ago, we actually were facing quite a hostile competitive environment, a lot of capacity thrown against us. But this time around, actually, we have the capacity to grow and our competitors will be more constrained with regard to their own supply chain issues. So we're seeing that the context of the business has become a lot more favorable for us over this period, and we are in a lot better place right now. So with regard to the report, this is Q3 fiscal 25. Revenue, actually revenue comes across as a strength of the business. You can see that we have been improving our revenue on any metrics you can look at, despite All the challenges we have been facing, revenue got stabilized and increased on a unit basis. Load factor performed better than a year ago. So we're seeing that this continuing strength of revenue is giving us a strong foundation for demand going forward, which should be turned into our benefit increasingly, given the more benign nature of the competitive landscape. that our competitors will be more constrained on their own capacity developments. Costs, on the other hand, were more challenging. And again, we have been going through a learning process here. And we were always reporting our best belief and best understanding and best knowledge of our business. But the have proved to be different here and there. If I just give you one example, So we were talking about the GTF engines and the groundings and kind of how maintenance of those engines happened, that given the constraints of shock capacity and availability of labor and availability of parts, actually the whole process got lengthened dramatically from something like 70 days to like 350 days for the GTF engine. But the problem is that actually the very same shocks, the very same engineers and mechanics deal with the V2500 engines as well. And now those engines are queuing for induction, and now those engines are running out in terms of spares in the system. So it's not only a GTF issue, but it is increasingly becoming a V2500 issue too. I mean, that comes with costs and distractions and replanning and more maintenance events and more maintenance costs. And we were not predicting it completely right before. So costs are higher than expected, and I think that kind of affects the financial results of the business. Operational metrics, we talked a lot about that a year ago, that we were challenged with regard to fleet utilization, schedule completion, and you can see that all those core sentiments are now falling in place and are becoming drivers of the business. So we feel very comfortable with our ability to stabilize operations, the range statement of operational integrity and make it a continuous driver of the business going forward. But current trading, unfortunately, the higher cost than expected forced us to revise our guidance. Is it totally chance us to achieve the previous guidance? It is not, but we're seeing that a number of adverse effects have been forcing us to to put new realities on the table. Again, just to give you an example, a week ago we learned that euro control charges will be dramatically increased and that's a monopoly kind of play with an annual impact of 60 million euros as Edward costs to the business. And we have to take those into account as well as the increase. depreciation costs and increased maintenance costs resulting from the grounding. So if you really think about it, I mean, most of the issues we are guiding for are the consequence of the groundings, bigger than expected, and some of the monopoly pricing issues happening in the marketplace. If you just look at airports, airports are becoming increasingly capacity constrained. As capacity scarcity happens, obviously that translates into increasing the monopoly pricing and increased charges, especially against the backdrop of significant inflation, especially labor inflation in the industry. Now, as said, we are returning to growth. That's a significant event. And it is important to see how we are going to deliver that growth, and we are focused on network densification as opposed to diversification. So we are going to fuel an existing backbone of the network, which we think is the safest way to grow, especially with regard to financial performance. We reschedule the act of deliveries. I know this used to be a significant concern to this community, whether we're gonna be overly exposed to a too high capacity increase and whether we can execute against that. We adjusted our delivery schedule based on two developing realities. One is Airbus' own ability to actually deliver according to contract. As you know, Airbus has not been delivering according to contract. They've been a lot better than Boeing, but they were not in line with contract. So we had to adjust for that, and we had to learn exactly what Airbus is capable of doing on the one hand, and secondly, we had to take note of the fact that 40 aircraft or so due to the GTF issues are grounded and those aircraft will be lifted back in the air at some point. And we took that kind of a profile into account for resetting the path for deliveries. And with that, I think we eased the pressure, especially on certain years where new aircraft deliveries were coinciding with significant uplift of aircraft from the ground due to the GTF issues. matters, and now we are smooth on the underpass and back to the 15 to 20% gross profile on a CAGR basis going forward. Gross will also help us mitigate some of the cost issues we were facing in 2024. I mean, airports probably are the best example that, of course, due to the labor inflation pressure A lot of drive-by airports were out there to increase charges, and they did that fairly successfully from their perspective because we didn't have growth to offset that pressure. But now we are back into growth again, and I think that will give us leverage to better mitigate these cost pressure points. We are very confident with regard to customer demand. I mean, you can see our revenue performance. We're seeing that demand is there and actually spiking that again because of the ease of the competitive environment, we can really further strive over revenue performance going forward. And with that, you should be expecting the range statement of margin performance and investment-grade balance sheet at industry-leading level in the next few years. And with that, I would hand over to Julian.

Thank you, Joseph. We can go to the next slide, please.

So we typically save the best for last in terms of guidance, but we're going to bring it forward today just to tackle the issue head on. So, yes, we're taking the guidance down by roughly $100 million. We're also trying to address the dramatic impact unrealized FX loss that we incurred in this quarter due to a strengthening dollar. I'll talk about that more in the next slide. But what we're trying to do is maintain consistency with the H1 guidance number of 350 to 450. And the reason why we think we should look at FX differently is because it's unrealized, it's non-cash, it's non-operating. Yes, it matters, and it ultimately counts towards a net profit number, but in terms of performance, We're asking people to disregard that for now and focus on the 250 to 300 million number. In terms of the headline parts to the guidance picture, so in terms of RASC, no change there. We think the revenue environment is robust. We've been consistently outperforming our prior year results and our peers throughout this fiscal year. In terms of revenue, we see that trend continuing into Q4. There's a bit of distortion in March just because of Easter, which we knew about, and that is extending into F26. So we're pleased with the consumer, we're pleased with the overall environment, and we're pleased with what we can drive out of that. In terms of capacity, we're bringing that back down again, slightly down to flap. We were up a little bit at the H1, and that's just simply the challenges faced from grounding aircraft. That being said, in terms of passenger count, we have been improving, and you see that in our numbers where that's the result of load factors. So we are becoming better on some of the metrics, but our capacity is still under pressure just because of the overall fleet grounding profile, which, as Joseph mentioned, will start to improve, and I'll talk about that when we talk about the cost side. We are also looking at a benefit from tax. So we continue to optimize tax planning, especially in the changing world where Global companies are faced with an evolving tax landscape, especially around pillar 2 global B developments. We have a complex tax structure across the group with four AOCs, and we're optimizing that constantly. That was always part of the overall guidance number. It's obviously now a bigger part as we bring the guidance down due to cost reasons. And in terms of ex-fuel casks, that's really the driver to the downgrade at this point. And it reflects the general inflationary pressure It reflects the inefficiency on the groundings, which I'll explain shortly. And it reflects some of the timing around the Pratt & Whitney deal. So as you saw, we published the R&S at the end of the year around how we extended the deal for two years. It is a good deal. It is the deal that is consistent with what we had prior. We had hoped that there would be other features that we could benefit from that would have impacted fiscal year. Some of them came through. Some of them didn't. This reflects partially the impact of that. As Joseph mentioned, we saw some surprising cost increases since we published the previous guidance, and that came through. And there's only so much you can do with the time you have left in the year in terms of this year, so we felt it was prudent to bring the guidance down. We spent a lot of time talking and trying to look through unrealized effects, but as the dollar strengthens, there's also an element of realized effects in the business that you don't break out in the cost lines. For certain contracts of ours are dollar-based, and as the dollar strengthens, that drives the cost up. And so that was part of the reason for the decrease in profit or the increase in cost. And then while our overall disruption costs are improving, and you can see that in the numbers in the following slides, putting aside, of course, this summer where we didn't have the best performance, but in Q1 and Q3 and Q4, we're going to have very strong disruption cost management, despite the improvements in overall operational performance, what we're seeing is that the market is becoming more efficient in terms of claiming. So higher claim ratios, the number of people that actually are entitled to claim that do claim is going up. And that's just something that we're going to have to accept as the new reality. People are going to know their rights, they should know their rights, and they should take advantage of them. And so we're reflecting that element as well. So the only way for us to reduce that number is to continue to outperform in operations or continue to perform on that. And so we'll keep our focus there. So I'll move to the next slide just to show you the bridge in terms of how we get there. So if you look at the H1 numbers, which we printed earlier in the fiscal year, The combination of Q1 and Q2 delivered €315 million in net profit. What we're trying to get people to do is to focus on the environment at the time that we issued that guidance, which was roughly a €112 rate. If all things have been equal and the FX hadn't moved, then we would have had no unrealized FX gain or FX loss. But that's not the case. So I'll come back to that in a second. We stripped out the FX from the Q3 performance, and that generated an $81 million loss, which meant that for the nine months here to date, pre-FX, we delivered $234 million pre-FX. We then are expecting to generate a profit in Q4 that will get us somewhere around $250 to $300 million. If you take the $160 million unrealized FX loss from Q3 into account, that brings you down significantly. And then we think that, you know, based upon where the FX is, and that was as of Monday, we should be somewhere around 125 to 175. We don't know what that's going to be. And frankly, it doesn't matter because, like I said, we can't control it. We have tools in place that we're going to use to try and mitigate the impact going forward, but we can't control it right now. And it's non-cash, it's non-operational. So what we want people to focus on is an apples-to-apples comparison under the conditions at the time that we issued the 350-450 guidance. And that's the 315 number, which is what we had effectively banked, and then what we need to do now in order to deliver under those conditions. So if we can go to the next slide, we'll talk about the specific numbers. So overall, we had healthy revenue growth with the ticket RASC up 15%. Ancillary RASC was up around 10%. Importantly, we're back to that one euro per pax number. So we had one euro 70 per pax on the ancillary. So that's nice to see that metric come back in line. We had very strong fuel benefit in the quarter. I think it could have been stronger at the end of the day because what we're seeing is that we're still – seeing an inefficiency on fuel due to the blend of CO aircraft versus NEO aircraft. We're also managing our cycles on our engines for the GTS appropriately to make sure that we can maximize productivity of those NEO aircraft before they go in for inspection for powder metal. Unit costs is an issue. There's a slide on that next, which we'll talk about. But overall, we managed to reduce our operating loss by more than 50%. We are showing a better EBITDA position and obviously the revenue off of the same ASK is improving due to the better operational performance. So overall, putting aside costs, we're optimistic with the environment and we expect that to continue. We expect to maximize that with the actions that we're taking on the network, which Joseph will talk about later on. I'm sure I'll get questions on the FX side of things and where we are on our overall balance sheet hedging strategy. So I'll address that quickly now. We have the policy amended that has been board approved, and that is to put in place cross-currency swaps based upon our leases. Unfortunately, the dollar moved very rapidly against us after we got that approval, and we didn't want to crystallize the unrealized FX losses by swapping our entire portfolio into euros at that point. We plan on doing that at the start of the next fiscal year with regards to the existing portfolio and with regards to any aircraft deliveries that are coming. As we speak, according to the normal delivery schedule, we will swap them at the time so we lock in the rate at the time of deliveries. And that, we think, is the least impact to the overall profitability of the business. and the most prudent approach. Obviously, with something like $2.5 to $3 billion of existing portfolio to swap, it'll take us a few months to work our way through that, but we're expecting that to happen this calendar year.

Next slide, please.

So it's important to truly reflect on business in its current state and how it's not appropriate to compare WIS this year versus WIS last year or WIS pre-pandemic this current year. We think that the WIS that we know will be something that you recognize next year and the years beyond. But right now, we have this very interesting condition affecting us. As of last fiscal year, we had 206 total aircraft in our fleet at the end of F-24. This fiscal year, we expect to end the year with around 227 aircraft. So that's an increase of 21 aircraft year on year. As you know, not all of those aircraft are flying. We've had 40 aircraft roughly grounded at any given time. On top of that, you'll remember that we basically gobbled up every spare engine that was available on the market to make sure that we could maximize the number of aircraft flying and minimize the number of aircraft grounded. And so as a result of the additional asset base, we have to pay for those assets. And so we pay for that through lease rates. And those lease rates then find their way into the P&Ls. in the form of depreciation and interest. And so our nominal costs are going up. And you can see that in the Q3, and then obviously that will flow through to the Q4. The extent of the impact of that is only really becoming clear as we progress through the year. But if you think about it, we are maintaining flat capacity, and actually in Q3 we reduced capacity by 1.7%. But our nominal costs are going up. So the numerator is going up for the assets that we're paying, but not necessarily flying. And the ASKs are staying flat or thereabouts. So that's putting huge pressure on the overall unit cost calculation. To put that into perspective, on average, WIS is generating per plane 15.7% lower ASKs year on year. So you have this huge inefficiency, especially impacting lines that have a high fixed cost component, but putting pressure on the overall cost structure. And so the only way to deal with that is to make sure that we unpark aircraft. We are incentivized to unpark aircraft as quickly as possible because while those aircraft are, well, they're not old, but they're older aircraft. They're several years old now. They were financed in a different interest rate environment. So they're actually cheaper aircraft for us But we're paying for something that we're not using, and that is inefficient. And so as soon as we can start to get that ASP production level back up to historical levels, we start to see a huge unwind of the cost pressure that we see across, of course, the lines that have a fixed cost element, but all the lines in the business. And so that's an important point to recognize. As we progress through this inflection point, we have an environment where we're going to start – unwinding the pressure from grounding. We have a revenue environment that's holding up, and we have a competitive environment that's hopefully going to be more benign, as well as a dramatic fleet count increase, which we'll talk about on the fleet slide. So, looking at some of the other lines, if we can move to the next slide, please. There are elements of the business that that are impacted by the distortions that I mentioned, but there are elements of the business that are also unique to the situation. So in terms of airport and handling, that's, as Joseph mentioned, there's an element of cost creep coming through that airports are trying to claw back after a few years. And there's an element of inefficiency because we are paid or incentivized to bring volume to airports, volume in the form of passengers. And as we entered into an environment last year of no grounding, we didn't bring the volume, which meant that the pricing that we were expecting, the pricing benefits, because we get incentivized to bring volume, didn't come through. And that drove an increase into the passenger charge. So what we're doing there is making sure that we look at the overall network and how we design a network to maximize the opportunity now going forward, leveraging our growth, to make sure that we are able to lock in long-term deals or renegotiate the deals. As you can appreciate, we have almost 200 airports in our network, so we have to go through many cases one by one. Some of them are part of a bigger group, but there's a lot of individual discussions that happen. And as we're doing that, it takes a bit of time for the impacts to flow through. In terms of maintenance, you can't look at maintenance in isolation. You have to allocate a portion of the compensation that we get to the maintenance line because because the compensation is there to offset some of that cost. But if you look at it from a sort of year-on-year perspective, it doesn't reflect the true picture. So you'll see that there was a 55% unit cost increase in maintenance. That is not a true reflection, just given the fact that you have to tie some of the compensation to there. But maintenance is an issue because while there is inflation coming through there, there's also the fact that – we were hoping to get different pricing structure on maintenance through the Pat and Whitney deal. In terms of depreciation, we talked about that's a big element. I think crew, we're actually in pretty good shape. We've done some benchmarking and we far exceed the marketplace in terms of our crew performance, in terms of cost, but also I think the quality of our crew. And then otherwise, we need to make sure that we maintain our EC261 performance now that we've managed to bring that in line

and overall deal with inflationary issues through the growth. If I could go to the next slide, please.

So this is a chart similar to last period, which talks about the free cash flow. So we start with our EBIT in the period. We add back the depreciation and amortization that we incurred. We have an element of pre-sold tickets, which is the inflow and revenue liability. Some working capital movements, which is normal for this type of seasonality. Other operating cash flow is mostly the FX reversal. It comes back, the unrealized FX, which gets us to a positive $91 million of operating cash flow. Net capex is the combination of payments out under dual codes and finance leases as well as sale leaseback proceeds coming in, a minimal amount this year in terms of sale leasebacks. Then you have the normal lease repayments, and so you end up with a free cash flow of $189. So actually pretty, you know, slightly positive free cash flow conversions. no issues in terms of cash flow, no issue in terms of cash balances. We can move to the next slide, please. We ended up the year with $1.6 billion, I apologize, the quarter with $1.6 billion in cash. It actually would have been around $1.77, but we chose to early prepay the PDP facility, which was at that point $171 million outstanding. And that's consistent with our objective to eliminate financial debt. And I'll talk about that in a slide a couple slides later. So year on year, we're roughly the same in terms of our cash balance. And that's despite some of the pressure of not growing. So I think we're driving a better business, more efficient business when it comes to balance sheet and cash flow management.

Next slide, please. So obviously, there's a lot of Focus on the overall leverage position in the company.

It is a fact that as the fleet grows, leverage will increase, provided we continue to purchase aircraft either with financing outright or through leases because of the way that the leases are brought onto the balance sheet. So as the fleet grows, debt will increase. There's nothing we can do about that. we've talked about what are the triggers in terms of changing our ownership structure, and we continue to evaluate that. However, I think it's important to look at the second chart in the middle top, where you can see our financial debt reducing. So financial debt is what I would consider the non-lease debt, that bonds and other third-party lenders that we deal with. And so, as I mentioned, you can see the PDP facility was there at F24, it's gone at F25, and And then at the end of F26, we'll have repaid our January 26 bond and we'll have hardly any third-party debt on the balance sheet. That's by design. We think that the cash generation potential of this business will put us in a situation where we have other problems to solve, good problems to solve. Our leverage ratio is improving, but the same challenge that I discussed on some of the fixed cost elements around ASK production also impact the leverage ratio because you have assets sitting on the ground that aren't generating EBITDA. So the leverage comes with adding assets to the business. But if you can't use them to produce EBITDA, it's going to put pressure on the leverage ratio. It's as simple as that. But notwithstanding, it's coming down. And the sooner we can get aircraft on parts and the sooner we can get them up into EBITDA generation, then their leverage ratio will improve and get us towards that two times leverage that we'd like to get. In terms of our lease debt, though, so putting aside the financial – you can see that it's stable in terms of right around 3.2, 3.3. And then in terms of our rent coverage, you can see that our rent coverage is also stable. So the amount of EBITDA that we're generating versus our obligations to lessors is stable. We would expect that to increase as we move towards a larger aircraft that is capable of generating EBITDA. ultimately more margin versus a flat rental. So we're pretty pleased in terms of how that's progressing. Could it be better? Yeah. And we can control that or we can work on that by focusing on eliminating unproductive assets as quickly as possible. With that, I will hand the floor back to Joseph and be ready for any Q&A later on.

Thank you. Thank you. Could you please move the slides?

You must be tired by now listening to me with regard to Pratt & Whitney and GPF and updates and all those sort of things, but let me give you the latest version of that, because no matter how tired we are or I am of this, but this is a profound factor affecting the performance of this, probably the single biggest issue we are dealing with, just to speak, if you look at all the kind of aspects of issues arising from this. So we reached agreement with Pratt & Whitney, and basically... that agreement extends the 2024 arrangement for two more years, 2025 and 2026. The merit of the agreement, commercially speaking, financially speaking, is very comparable to our previous year's agreement and very consistent with the financial support. On top of that, we managed to reinforce some more operational KPIs, more operational support from Pratt and Whitney, like spare engines and induction slots. We're seeing these are important issues. And if you don't manage them, they can make a very significant financial impact as well. So we wanted to put Pratt's skin in the game with that regard and nail them down with regard to actually legally commit to this line of support. With regard to unengined aircraft, we have 177 aircraft unengined. We have been running a very comprehensive and lengthy process with the two contenders and we would be expecting the conclusion of that negotiation in the next few months. So we shall see whether we're gonna be able to bring it to the market before the end of this financial year. In terms of planning assumptions going forward for grounding, we are still looking at this number 40, 40 aircraft to be grounded. That was kind of the number in 2024, and this is kind of the number we are looking at for 2025. However, I would say that it is subject to change. We are looking at a base of acquiring more spare engines. I mean, Jan just mentioned how important it is to uplift that capacity grounded at the moment to make it productive capacity and more spare engines while they be that cost to the system, more depreciation in a way because more capital would be deployed, but at the same time, it would be reducing the unproductive portion of the freeze. So we are looking at this. So there might be some variation, but in kind of big number terms, I would say that probably we're going to be ending up being around 35 to 40 aircraft on the ground. Now, obviously, in terms of proportion of the grounded fleet, it is going to decrease versus the over the fleet through the fleet growth of the company.

Would you please move the slide?

Now, this is important, and I know this was a significant concern for you. in the past, although we kind of expressed confidence that we're seeing this was a manageable issue on hand, but now this is all contractual. And we entered into a contract amendment with Airbus, and we were reflecting on two fundamental issues. On the one hand, you know, it is Airbus' own ability to deliver. Notwithstanding Airbus' contact show commitment, they have not been able to fulfill such commitment, and they have been slipping on aircraft deliveries actually quite significantly. Boeing became a lot more topical, given all the issues they have had. But at the same time, while Airbus was doing better, they were not perfect. They were far from being perfect. And the other issue we have to reflect on, obviously, is the grounding of the GTF, which kind of changed dramatically the capacity profile of the airline. when we get an aircraft grounded and when we update the capacity back. So we definitely wanted to avoid kind of the rollercoaster effect on capacity that one day we grow nothing and the other day we grow 30, 40, 50%. So that kind of takes into all these issues into account and resets the path for aircraft deliveries. You can see that the fleet growth on face value or nominal value will get significantly modified. But when you add the uplifted capacity from the groundings, actually that will smooth the CAGR and the growth rate of the company at a level of around 15 to 20%. And you know that that has always been the target. And we originally constructed the aircraft order back in 2017 in Dubai, that was the number we managed the aircraft deliveries and the deliveries against. And now this principle and this KPI is re-instituted through the modification of the aircraft order. And you see that basically this reset creates allowance for the retake of the grounded aircraft, especially in fiscal 27 and 28, which will be the peak of this uplift as we are going through the maintenance cycles. And you can also see that effectively, this ad is becoming a sole AC21neo operator in about five to six years from now. We already have this skewed towards the aircraft type, which we think is the best narrowbody aircraft available in the market globally. But effectively we're going to be moving towards the state almost exclusively to only operate AC21 Neos.

Would you please move the slide?

So we were doing a bit of an internal study to understand that now we have the ACOP order restated according to the new realities to also look at the market opportunities coupled up with the aircraft deliveries. And clearly what we are seeing is that if we do nothing, just deploy the net 194 aircraft to be delivered until 2030, we would do fine. So we looked at the current state of life from an aviation perspective and from a propensity to air travel perspective, and you can see that in 2023, 2024, the trips per capita, so propensity to air travel in Central and Eastern Europe is roughly a good third of the Western European level. And we expect that to increase to around 50% by 2033, 2035, which is exactly how that plays out. But clearly that number keeps coming up. And this is the function of GDP growth. I mean, some Some say that actually it's not the people who fly, but it's GDP that makes people fly. And that's true, because there is a very straight and direct correlation between propensity and GDP development. So if you start looking at that translation, how GDP translates into demand, we are seeing roughly around 100 million new passenger base to be created in the next 10 years or so. requiring roughly around 300 aircraft. Now, we have a net 190 aircraft to be delivered, so effectively, if you do nothing else, just being focused on Saint-Denisirov and kind of owning the growth in Saint-Denisirov, which has been largely the case, and you will see that that kind of a competitive dynamic is going to be even is going forward. Actually, we can deliver our entire growth through San Francisco. Now, I'm not suggesting at this point in time that we are stepping away from any other growth opportunities than San Francisco, but I just want to build the confidence in you that the base case scenario for Bizet is to grow the business in Saint-Denis. Everything else comes complementary and needs to be kind of contested against the Saint-Denis European opportunity. So, we should not be directing profitability as a result of diversified growth. Actually, we should be enhancing profitability through diversified growth.

Could you please move the slide?

So, looking at the competitive landscape in the next few years, let's say, until the end of the decade. I think the coin is flipping significantly. You recall last year especially, we were hugely disadvantaged by the groundings, losing the ability to properly compete on capacity and becoming, to some extent, at the mercy of our competitors, how they take on us, given our kind of weakness resulting from the groundings. Now, that all is going to change, and that's a significant movement in context of the business. As you can see, actually, we're going to be in the driving seat with regard to growing capacity and to take advantage of the GDP development and this translation into disposable income and propensity to air travel. You can see the numbers, as you see the kind of the net fleet movements of of ourselves and our principal competitor. So clearly, we're seeing that competition is going to be more muted in the coming years. We will be in a lot better position strategically to benefit from growth. Obviously, growth delivers side and cost benefit to the business, but also it delivers strategic benefit. And, you know, from our perspective, we're seeing that actually the competitive environment is going to be more benign going forward than what it used to be.

Could you please move the slide?

It is also important to look at how we are going to deliver benefits for the business. But first of all, when it comes to network development, our focus will be on densifying the network as opposed to diversifying the network. So we think we have quite an extensive backbone of a network by now. but we still need to put meat on the bones, and this is what we are going to do. I mean, you can see that we have been a lot more dense over the years when it comes to frequencies. We have been skewed a lot more towards high-frequency operations, and that's, of course, very positive because that creates market leadership, that creates brand awareness in the marketplace, and And as through that actually that enhances profitability. That is quite a direct correlation between densification and profitability. Maturity, we have been fairly active over the last few years. First, because of coming out of COVID. Second, because of the geopolitical impacts on the business. Third, because of the GTF supply chain issues we had to comprehend to keep you in capacity. closing down capacity, redeploying capacity. So basically we were going from premature capacity to new premature capacity. Now we are expecting them to settle down and to gain a lot of demands thanks and financial strengths through maturity. We are not expecting that kind of hectic external environment that would affect our capacity as it's been the case over the last four or five years. So that's another significant driver going forward. And thirdly, if you look at the profile of our passenger mix for purpose of travel, we used to be highly skewed towards VFR traffic. You see that actually the portion of that type of traffic is coming down, and our business gets diversified for other types of traffic, especially leisure and city breaks. A little bit of domestic, but I think it's fairly marginal And it is kind of building on the stance that maybe the poorest used to be the people going to Scandinavia to build ships. Maybe they used to be the people coming to the U.K. to be the plumbers, but all these people are now largely returning home because of the economic opportunities in Poland, and they are becoming the lesser spenders. So they want to enjoy the financial benefits they've been able to accumulate over the years. adjusting the network accordingly.

Would you please move the slide?

So just to sum it up, unfortunately, the Platt and Whitney GTF issues significantly distorted fiscal 25, more than expected, more than predicted, more than we planned on, hence the adjustment to guidance. But that GTF headwind is going to unwind going forward. It will be less of a proportion in our fleet. And also by going through the cycle in the next two years or so, we should be able to leave this issue behind us completely. So hopefully by this time we have learned the lessons. need to be learned and from here on this issue is going to be a lot more predictable than before. We feel that we are at an inflection point with regard to the business. We are seeing very strong fundamentals coming back. You see the revenue performance. We're seeing customer demand is there. We now are having a competitive change with regard to our own competitive strengths versus competition. A lot of it is coming from the performance of the supply chain, and maybe this time, actually, we are on the lucky side of the equation of all the black swans we've been processing over the last few years. Now we have the ability to grow and use capacity as a leverage for the business, which I think should give us the scope for better managing cost and take cost back to where it used to be, and also strategically better managing our brand, our positions vis-a-vis the competitive marketplace going forward. And from your perspective, as VR continue to nurture and mature all those positions should give you the confidence of returning to industry leading positions when it comes to performance, financial performance, balance sheet performance. and being an investable business in the future. And I would just say on a personal basis that I know that you guys are frustrated, and believe me, I'm probably ten times more frustrated than you are, because this company is working very hard, and it is not like we are a bunch of idiots that we don't understand what we are doing, but simply the issue we have been coming grips with has just been so overwhelming and unprecedented that we just really couldn't figure it out better despite all the intellectual capacity and efforts going into this business. But as I started with, I would just repeat that today we are in a very different position than where we were a year ago. Issue has just started. Now the peak is behind us with regard to the GTF. we lost our ability to grow because of the groundings. Now we regained ability again to grow and play that strategically and operationally on cost and financial performance. And we used to be in a competitive landscape of being totally disadvantaged. And now we are in a new landscape that actually is playing for our strength. So that should be translating into significant improvements on operational and financial results, as well as on strategic setting for the business going forward.

Thank you. Questions?

As a reminder, this is being broadcast. Please do wait for microphone and introduce yourself for asking your question.

Morning, gentlemen. It's Jamie Robotham from Deutsche Bank. I've got three to kick off, all a bit linked to the guidance, I'm afraid. First is on FX, the second is on the positive items in other costs, and the third is on tax. On the FX, if we look at the guidance slide four, obviously I'm sure you were disappointed to see this morning that dollar euro is back at 1.04 again. So in a way, the same thing has just happened as happened after H1, which is the FX has affected the guidance. Are you not tempted to just start guiding excluding unrealized gains and losses altogether? And in fact, would I be right in saying that if I take the pink block in the middle, Jan, of 250 to 300, and strip out the 94 million unrealized FX gain from H1, that in effect, there is Wizards guidance for full year, excluding any more unrealized FX gain loss volatility.

I'll take the first one. And I guess maybe all three. So I think there's merit to... looking at things without, you know, maybe on an operating profit level.

But what we wanted to do is maintain consistency for this year. So what we do next year, big question, obviously, we need to have a view as to what we learned from this year and what the environment looks like going forward. We have We have good visibility. We're starting to see some visibility next year, but I think that there's merit to looking at that. We don't want to change methodology halfway through, which is why we came up with this structure here to try and focus everyone on the pre-FX number at the end of the day so that you can see and track how we're performing on the things that we can control. I'm trying to speak towards the 250 to 300 number at the end of the day, not whatever it is, because like you said, it's going to go up and down, and if it goes up, And we benefit it from, I don't benefit it from in terms of the future number. And if it goes down, you know, we want to make sure that we're protected in that respect.

We do know that it's volatile and it's going to continue to be volatile. So let's just focus on the business.

Can I ask on the other costs then? So selling these back gains, obviously not many in the quarter.

Five, right?

Yeah. Yeah. big number Q4 last year. Intrigued to know what's baked in for Q4 of this fiscal year. And equally, importantly, I think, Jan, on compensation, my run rate is about 75 million a quarter.

A little bit less than that for Q4.

Okay. It's closer to what we had this quarter of 54. A bit more than 54.

Okay. Do you want to address SLBs and then I'll ask about tax?

SLBs, we had 5 million for the quarter. It's going to be a bigger number in Q4. It's not going to be big as last year, but it's going to be a bigger number. But that's just simply a function of the timing of aircraft deliveries and the return to growth. So there's nothing unique about that.

I think there are going to be five additional engines coming through, but that's not really going to be the evil.

And then I think you've preempted the question, but these tax changes you mentioned – getting this tax asset? Is that going to mean a credit in Q4? And is that baked into the guidance?

It is. Yeah, it just doesn't flow through the cask, the actual cask number.

And it's a material number, but it was always part of the plan, which is why we had that 350 to 450 number. So really the movement down is the impact on cost that we are facing between Q3 and Q4. Thanks. Hi, it's James Hollins from BNP Paribas.

I'm surprised Jamie didn't follow up. Can you quantify the tax credit in Q4 because I'm useless at tax accounting? Maybe give us a tax rate for failure 26 if possible. I'm going to carry on. So the second one would be Joseph. I genuinely have a lot of sympathy for the Pratt-Williamson issue. Clearly you're not getting anything like the compensation which you deserve. But there we go. The The issue I have is what gives you the confidence is actually behind you. I think you were quoted there saying it's behind you. JetBlue earlier this week on their call talked about the peak pain coming out towards 2027. So maybe it's a very different profile as to how we're going through this. And then the third one, again, Joseph, is there any point during board meetings, during shareholder meetings that it becomes apparent you should maybe not to try and double your fleet over the next six years, maybe grow a bit more sedately, or am I thinking about that completely wrong? It's growth at all costs. Thank you.

Yeah. So to quantify the tax rate, still something that we're working on,

But I think it's probably something you can work out pretty easily. If you take the sort of FX out, which I'm asking you to do, if you think about 250 to 300, and you roll forward the RASC in mid-single digits, which are not changing, and you take the XCO cask up to high single digits, you'll see a gap there at the end of the day.

You'll make an assumption about what we can make the Q4 and the rest of the tax benefits. That's the material amount. It's a big number. Okay, so... I'm sorry, this is for F26 tax rates. Because we're moving into a 15% global minimum tax, I think you can expect to be keeping up to that going forward. This is a one-off.

So with regard to how the cycle plays out airline by airline, I don't think that that is necessarily kind of an industry pattern. I think that it's an airline pattern. So depending on when you started flying the GTF, I mean, don't forget that this was one of the first ones flying GTF. So we are one of the first ones being affected by the GTF issues. We are a large operator, one of the largest in the world of the GTF engine. So others may have a very different profile starting later. They have a smaller scale in their business. Based on our modeling, If you think about it, so we have to ground the fleet effectively for two purposes, one being the powdered metal. This is actually a lot easier to predict issue in the business. It's painful, it's frustrating, but it's actually quite plannable, quite predictable. The bigger issue, what we are seeing is how Pratt is going to kind of navigate their global supply chain through the childhood diseases of the of the GTF technology. So just to give you an idea, today we are losing roughly on average three and a half engines per month and it has nothing to do with powdered matter. This is due to the shorter than expected engine cycles, unexpected engine removers as we call them. But we are modeling kind of the The way we're going to be grounding engines on the base of empirical evidence. And then depending on whether that is going to put that engine against a big shock return program, which basically means that it's just replacing the powdered metal if the powdered metal issue is involved. And then the engine comes back. But the issue is that there is going to be a second wave. when all the other cyclical maintenance issues will have to be addressed. And based on this model, it suggests that we're going to be sort of coming to the end of the cycle towards the back end of 27, maybe early 28. So this is still a way to go, but it is a fairly plannable, predictable pattern. Assuming, of course, that pattern is going to be able to implement that. That's why it was very important for us that we are not only addressing the financial side of the equation, but also the operational side of the equation in terms of number of slots for inductions, et cetera, as far as engines. I don't know if that gives you the answer. I don't know how that works out for Charcot, to be honest. I'm not sure that they have the same operating profile what we have. But with regard to the fleet, I mean, I don't want to create the misconception that VISA is set up for growth at any price. We are not. I mean, we are set up for creating shareholder value. Maybe it doesn't feel it that way, given the current issues we are dealing with. But we are set for creating shareholder value. If that supports 15%, 20% growth, we're going to be delivering 15%, 20% growth. If it only supports 5% to 10% growth, we're going to be delivering 5% to 10%. I think, as we have demonstrated time and time again, our ability to reset aircraft orders and deliveries in line with the financial expectations of the business, we will continue to do so. At the moment, we believe that this is the scope that we can deliver. Let's not forget that 15%, 20% is not just measurable on the basis of its own merit. that whether we can deliver it or not. We know that 15, 20 percent is the growth we actually can execute against in terms of systems, organizational capacity, what we need with regard to our own capabilities. But you also need to look at the market context. And we think we have an opportunity in the next four or five years is through the Boeing delivery issues that I think our competitive is going to be restrained. with regard to their ability to grow. I mean, this is the opportunity to jump. Now, if it turns to be problematic with regard to financial performance, we're going to be back to Airbus and renegotiate. And to be totally honest, and maybe this is going to hurt Airbus, I still doubt whether they actually can execute the current agreement that we just put in place after revision.

Yeah, morning both. It's Harry Gowers from JP Morgan. Two questions, if I can. You talk about on the slides cost actions and other benefits that are expected to be realized in Q4 and beyond. So maybe you could just talk us through the key drivers or buckets there and how we'll see that in the numbers, excluding obviously the return to growth and the impact that has on costs. And then just on your growth plans going out, Like you said, you will be growing significantly, whereas your main pier will be constrained. So are you looking to deploy capacity directly against Ryanair? Is that part of the thinking and put competitive pressure onto them? Or is it just a byproduct of where you put the aircraft?

Thanks. Let me take the second question, the growth issue. I don't think our ambition is to create or fight more than what we need. We're going to be defending, so when we are attacked, we're going to be defending hard. But I don't think that this is really, you know, we're just going to create mess all over the place just because we have capacity. But I think we want to deploy capacity against this consumer demand. I mean, as, you know, we are trying to demonstrate San Francisco as kind of the base case for genuinely increasing consumer demand through propensity to air travel. We think this is the demand that we should be attacking and we should be putting capacity against. So our objective is to continuously stimulate demand and capture that new demand opportunity as opposed to necessarily recutting the existing cakes. So I'm not overly motivated with going against existing incumbent competitors to take their passengers. I want to take the new passengers, the new demand coming to the market.

Okay, so on the cost actions and the cost situation,

So you'll notice that we deliberately did not mention black swans, boo-hoo, woe is us, right? We're dealing with all these things, right? We're making sort of the volatility of the geopolitical world and the environment that we're in into the business, building the business to be able to adapt and be resilient against whatever comes its way. We've been tested. We're comfortable with that. But we've still got to live with it because I think it's not going to get any better. I think it's just going to be the way it is. But... If you reflect on what we've been through, there's been an incredible amount of instability and volatility in this business. And the thing that we're trying to do, the thing that Mike and I talk about mostly, is how we can just drive stability into the business. So what happens when you have a problem, right, in a business? You throw money at the problem, right? That means that you're driving costs up. You've got volatility around business. what assets are going to be available. And so you're putting assets on a route, you're taking assets off a route. That's not effective from an airline because you have to take time. As you know, we sell 90% of our seats within 90 days. So you need at least 90 days to fill the flight up and get the load back to make that flight contribution positive at the end of the day. So what we're trying to do is actually, while running an airline, take a step back and plan better. and predict better, right? So if we're growing 20%, we as a business need to make sure that we're growing 25% so that we're actually ahead of the curve and not constantly scrambling. And so that means going through our capacity, planning better, having a longer horizon, using that horizon to go to the airports and say, hey, you know, we know we didn't deliver. And they're going to say, yeah, you didn't deliver. You said you were going to deliver. You had groundings. You didn't deliver. Well, here's the plan, and we'll deliver it. Evidence that, and then use that to leverage better pricing. Same with our suppliers. Taking a step back and say, okay, look, we understand you're suffering. Labor's been very high. Supply chain's a mess. Raw material is really expensive. But you're in a cycle right now, so take the aftermarket. My old background, right, in the spare parts world. Everyone's minting money right now because all the airlines are scrambling to trying to get parts, and we'll pay whatever it is just to have access to parts. But that cycle will come to an end at some point, and some of the guys are going to be there for, you know, are going to be in the business as long as we go, and they're going to look through the next cycle. So how can we match up our growth for the next five years with their ambitions to make sure that they have baseline volume to be able to benefit through the down cycle to whatever the next cycle upturn is? And so it's really about eliminating this chaos. focusing on the stability, the densification, building what we can out of what we have, and making sure that we stop running from fire to fire and really start thinking about the long term. Easier said than done, obviously, and we've been saying it for a while. But, again, I think it's really important with the benefit of the Airbus order that we've now nailed down, the combination of the unparking. You know, we have visibility. If Airbus – I think in the near term, Airbus will be pretty reliable, but obviously going forward, who knows what happens. But I think that that is something that we can look towards. We can use that to our strengths, both internally and externally. That's how we're going to do it. But it's going to involve negotiations, and we've been doing that throughout this year, sitting down with suppliers, really pushing back or coming up with creative ways so that we get better pricing and they get more certainty of volume. That's what they want at the end of the day. They want to make sure that they have an anchor tenant. to be able to run their business, and we should be that because of our size and scale and our presence.

Alex Owen from Bernstein. Two from me, please. First on the guide, second on the fleet. Think about the guide. Outside of FX, you've taken down the midpoint by about €125 million over the full year. Your new revenue guide has remained the same, so it's cost. What lines have you changed your view on since three months ago, and how much of that was unforecastable when you guided the market of H1 cells? On the fleet, it's kind of part A and part B to this. First of all, we've spoken before about if and when the Zuby profile moves to the right, you hope to get some compensation from Airbus. Are you getting compensation from Airbus? And when and if you can share any details of how much, please. Also within that, are you still planning on an eventual 47 XLRs or you converted some of those into regular old A320 or MEOs?

Okay. So I've tried to give you that guidance on

on how we arrive on 125 or 100 or however you want to do the maths. And it's basically on this slide two or three under the ex-field cast column. So part of it is timing. As you know, we were hoping to get the Pratt & Whitney deal done, well, as early as summertime, and then it was sort of in the autumn, and then it ended up in December. The Pratt & Whitney deal, I mean, it is a very complex deal. We're not going to get into the details of it because we can't. The headline number is that, of course, there's a day rate per grounded day, but there's all sorts of things that also come into play like induction slots, maintenance support, cost of maintenance, which categories of maintenance happen where, environmental issues and things like that in terms of where you fly the assets. So one of it was just the timing of that deal coming through and some of the features of that that we had hoped to be able to drive and we didn't. Again, you know, it's comparable to the prior deal. Would we have liked it to be better? Sure, of course. We're ambitious, but it reflects part of that. The second is that we were hit with some unforeseen costs. Some of these costs are just simply the result of a publication that comes out. I'm engaging with your control to try and understand that and what we can do around it, but, you know, it's a monopoly, so what more can we do? It affects everybody, and even Ryan there mentioned it in their Monday presentation. in the Monday release. Again, there's the realized FX portion that I talked about that hits, and this is a dollar-based industry. It's not just the fleet at the end of the day. And so those are the big drivers in terms of how we got to the 125.

Okay, so with regard to the fleet recomposition with the Airbus, of course, I cannot give you kind of details of the agreement, but kind of the course of the agreement I can explain. So When you renegotiate, you put a number of issues on the table and you try to end up with a comprehensive agreement. And in our case, this renegotiation addresses, of course, the delivery schedule, delay compensation, escalation pricing, because, you know, we were kind of pushing a number of aircraft to the back end of the delivery stream, and PDP, which is equally important. I mean, it's a lot of money. We call Airbus a bank where we are depositing our money for future act of deliveries. So this is all comprehensively negotiated. And we think we ended up with a very strong deal on our side. I also think it is good for Airbus because Airbus has its own issues in terms of being overcommitted. contractually versus their ability to deliver, so I think that's also easing their pressure. So I think it's a good deal and we are very satisfied with that. We have some level of visibility because effectively the whole industry has been negotiating delivery schedules with OEM, so I think we have some understanding how those have been happening financially, operationally, PDP-wise, and we think we come out at the high end on that. With regard to the XLRs, we have not converted any of the XLRs, but we have been rescheduling the XLRs. So we were pushing a bit more towards the back end of the delivery stream to kind of ease the pressure. I think we concluded that we want to learn how the XLR operates and how the XLR creates value, financial value and shareholder value. And we were overly front-loaded with the original schedule. so we became more even, and even I would say a little more backloaded with that, but we have not converted any of the XLRs, but all these XLRs remain subject to conversion rights.

Yes, good morning, it's Rory Cullinane from RBC. First question is, should we still expect a low single digit reduction in X fuel unit costs into full year 26, given the strengthening of the dollar, the impact on your cost base there and some of the other cost headwinds you mentioned over the quarter. Secondly, you mentioned the favourable capacity backdrop, competitive backdrop into next year. Would you be able to provide any sort of comments on yields or RASC on good state capacity?

I'll start with the first one if that's okay. Yeah, sure. And also, I think it's important to, we're the bank under the Airbus situation with PDP.

We're the one putting the money, lending it to them.

Well, I don't know if that's the way they take it. Exactly.

So, in terms of, there was a fuel cask, right? Sorry, ex-fuel cask. Ex-fuel cask. Yeah. So, yes, with 20% capacity, you can expect there to be an improvement on ex-fuel cask. Again, we are still facing this environment where you're going to have this distortion, right? We're not going to have dramatic improvement in terms of on parking. There's going to be marginal improvements, and we think you can get maybe to 35 or hopefully better than that. But you're going to have that pressure impacting us, so we're fighting that. But I would say that I would expect there to be at least 5% improvement in that respect or in that range.

Yeah, with regard to ROSC, I mean ROSC will be subject to our own capacity growth and the competitive landscape and changing consumer demand and GDP development. But based on what we are seeing at this point in time on a forward-looking basis, we are actually pretty confident. I mean we have been talking about revenue a lot over the last few years. I don't think we ever lost confidence in revenue. We ever lost confidence in our ability to stimulate demand, and I think we have proven those with numbers. We didn't really have huge issues on the revenue line, and that continues to be the case. Even to an extent, I would say that further offside to that could be potential further network enhancement. We are really rigorously addressing the underperforming part of the network to make sure that this is basically eliminated completely. So I'm actually pretty positive that you will see positive outcomes and positive numbers on the ROSC side of the equation, notwithstanding the growth of the business.

Thanks, Stephen Furlong from Davey. Three, summer growth, GTF groundings, rating agencies, so maybe two for Joseph and one for Jan. On the summer growth, I didn't get that. What exactly is the growth plan for this summer in terms of, say, ASKs and et cetera? Second thing is, on the GTF groundings, I know your compensation goes out to end of 26. Clearly, you could roll it even further, but... So is the kind of working assumption that the ungrounding happens largely in FY28, but you were quoted or maybe misquoted, I'd say, at the Dublin Air Finance Conference in terms of it was going to be going on for four years, this GTF issue was just, and it was- It started from the beginning.

Yeah, maybe, yeah. It started more than a year ago.

Okay, that's what I thought it was. And then on the rating agencies, I noticed that Moody's had you on negative watch, and I just wanted to know how our discussions are now. I presume you talk to them on a regular basis. Thank you.

Okay. Well, with regard to summer growth, we've already made a actually big number of announcements for growth. significant growth in Poland in the former Yugoslavian countries, markets. But, of course, the XLR start in the U.K. and Italy. So we basically have around a dozen aircraft deployed for summer growth. So you should be expecting capacity improvement in this range of 15% to 20% coming through the first half of the financial year. So, again, we are very confident that actually each of these growth opportunities are tackled on the basis of financial upsides, competitive dynamics, and consumer demand. So they should be adding value to the business as opposed to distracting value. With regard to the GTF, I think the problem with the GTF is that a lot of problems. But as we are learning, Brett and Whitney is also learning. And that is a degree of reluctance to make kind of long-term pre-commitments on the basis of not really knowing how exactly issues are working out. So we, like a good year ago, we agreed to like a one-year approach that we would be only contracting for one year in order to see what's happening in that period. And then, if there are learnings to be addressed, that we would be addressing those going forward. And actually, that's how we arrived to spare engines in induction subsets, because we felt that those are significant issues we need to pin these guys down on. And this is the continuation of the same logic, that we kind of foresee the next two years, so let's just learn what comes up during those four, two years, and if we are not yet out of the of the ditch, then we would be taking those learnings on board and would trust the extension on that basis. That's an agreed principle, actually a contracted principle between us, so we don't think that the current extension is going to cover us until the back end of the cycle. We still have a period, probably a year, maybe a bit more than a year to still tackle, but we will tackle it on the basis of the learnings we're going to be gaining during this period.

And on the ratings agency, yeah, so we obviously were downgraded by Fitch after a couple years of maintaining and Moody's had done that already prior. Same exact issue when it comes to simply they have a model and they have metrics that you need to hit and if you don't have something that's within the next period, close period, getting to two, then it falls out. There was debate as to whether there was a downgrade or whether there was a negative watch. They understand the issues because we explained some of the topics that I discussed today, maybe with less granularity because we've been working on the analysis to really understand the impact and what we need to do. But I think that that's a good place for things to stay for a while. I should also point out that on January 17th, WIS renewed its EMTN note program-based prospectus. That's available on our website. So we've done that as a measure to give us access to the capital markets should we need to. We don't expect to because, as I mentioned, we're looking to repay but there are still things that can happen in this industry, as we know, and so having that access is something that we see valuable. And in doing that, in that process, we had to get both rating agencies to reaffirm the rating, and there was no impact as of January 17th. So we continued to focus on building an investable business and bringing back our margin metrics, And with that, the rating should come and progress.

But it's not something that's going to be fixed with a magic wand this year or next.

It's Conrad Gaynor here from Bloomberg Intelligence. So just a quick one on 4Q Rask. I think you've given us a steer on bookings, maybe trending up 8%. But of course, what that doesn't include is the Easter impact last year and the bookings that were close to Easter last year so can you just remind us how you performed on those last year and what sort of headwind maybe you'd expect to still come from that into this year and then my second one is on costs for next year again so clearly there's a lot of moving parts some adverse unexpected things happening just wonder if you get some get like a summary on some of the costs we expect to drop out next year at least as being an obvious one. Some costs you expect maybe to stay in there, but perhaps just annualise next year. But then also perhaps some of these new adverse costs that could also still flow through into next year and be a negative surprise for next year.

Maybe I'll start with Russ. So we were estimating 16% uplift on last year's March performance as a result of the fall of Easter. Now Eastern is going to fall towards the middle or second half of April this time. So this is kind of going to move over from March to April. So in that regard, we have a headwind because we won't be supported by the fall of Easter. Nevertheless, we are tracking and seeing significant improvement of revenue performance in the quarter.

Okay, so in terms of cost, obviously we'll be starting from a very high base. right, where we are right now. As you can see, our costs are going to be in the high teens currently. So, you know, that gives us part of the ammunition to think that there'll be improvement there. But as you pointed out, wet leases are gone. And that's the $113 million of immediate upside year on year, right, that we can look towards. The reason why we're a little bit cautious in terms of really being specific on CASC is because because there is a lot of inflationary pressure and there's a lot of work we need to do separate from the distortions that are happening around groundings. So we need to understand what's happening with groundings and what the improvements are we can do in terms of on parking aircraft. And we also just need to continue to work and leveraging. Like I said, there's 200 airports we have to negotiate with. There's probably a dozen suppliers, real big suppliers that require a lot of attention in terms of the maintenance side of things. the, you know, we need to maintain consistent summer disruption performance and make sure that we can see through the summer like we're doing in terms of performing like we're doing right now. So I think that, you know, we'll see improvement, but it's going to be, it's going to take some time. The point that I made on the calls with the analysts earlier today is that we don't see that this cost issue as being structural. We think that it's a combination of things that are online from crack and things that we can intervene on back to to the question around what we can do in terms of cost management and how we're going to do it and the planning and the stability that's required in this business. I mean, if we can have a stable network, it'll drive stable costs as well at the end of the day, and that will allow us to then work on improving them.

In terms of things that pop up and come in, I can't think of anything right now that I'm concerned about or afraid of.

It's been bad enough. Any closing remarks?

Are we over? No questions? Okay. Thanks for coming, first of all. We appreciate your interest. I know that this is kind of a mixed bag, what we are presenting today. And you can blame us for not being able to properly forecast, but we were trying to forecast against the unknown and unprecedented issue we've been dealing with. We continue to believe that the sentiments of the business are intact. We still need to get there, but this is a huge issue on hand, but we are trying to deal with it, but probably the worst of it has been put behind us, but we still have a way to go on it before we can clean this up, but we should be really seeing improvements coming through now. Maybe a little later than originally predicted or guided, but again, this is unfortunately part of the learning process, but we are very confident in in the sentiments of the business and in our ability to steer it. Thank you.