Wizz Air Holdings Plc

Welcome to this event. So this is reporting the first half results of fiscal 26. Could you move to the next slide, please? So I would say that we start seeing some sunshine and certainly good decisions for the future, waiting to see the impacts coming through. So with regard to the sunshine, I think what the first half results demonstrate is that under circumstances when we are near efficient actually business produces very strong results in terms of operating kpis in terms of financial outputs we are still not fully efficient given the groundings of aircraft some of the inherent inefficiencies in the in the system but we did a lot better than in previous years. As a result, you can see a significant increase on capacity, passengers, revenue, and profit. In terms of decisions made, we're seeing that we have affected the major challenges of the business for the rest of the structure. We have communicated the closing of Visar Abu Dhabi, that effectively has been happening. It is pretty much a done deal. then we communicated that we would be seeking a reset with regard to the act of delivery stream with Airbus. That deal is now in place. It has been decided and I think it's a good deal. It is appropriate to addressing a number of things. One is the deliverable growth rate of the business taking some risks out of the profile of of the setting uh reducing the growth rate to around 10 to 12 percent and let's not forget that 10 to 12 still makes wizard the fastest growing airline in europe which which we are proud of uh but it is a more manageable magnitude of growth than uh previously a set and and very importantly it takes into account the cycle of the platinum between groundings and on groundings uh because that uh created a significant hiccup to the um uh to the uh fleet count of the of the airline which we had to uh which we had to reset also we addressed the uh the xlr uh exposure that program is uh this scaled uh very significantly i would even say that exited uh to a large extent and now this is narrowed to the uh uk aoc so the xlr is seen as a visa uk initiative no longer as a corporate initiative for the uh the airline um Also, we have made commitments on aircraft finance. This is one of the significant differences to our competitors, and you will start seeing a more balanced way of financing our aircraft delivery program going forward. Now, with regard to growth, I think this is important, and you have a prime interest in that. We are looking at capacity growth of around 10% to 12%. um to be delivered through the recovery of the gtf engines uh the new aircraft delivery streams and the way we are managing uh capacity now what it really means is that uh uh we will still have some short-term challenges uh imprint in front of us arising from capacity because effectively the uh the choice uh we have on hand is either being fully efficient and fully deploy capacity but that would create an excessive growth rate which would become highly dilutive to revenue production or carry on some inefficiencies on the fleet but set the growth in accordance with what actually we can deliver we opted for the second So you're going to be seeing a moderated growth level from here on, but it will take a little time to suck up the inefficiency created. We have been shifting a lot of focus in terms of markets. We have been talking about this to Central and Eastern Europe. If you look at Central and Eastern Europe, it is now kind of bearing fruits in terms of market share we are expecting our market share to be around 29 going into the first half of calendar 26 this is up from 25 of course we have been adding significant capacity by opening new operating bases and also enhancing our incumbent footprint With all these, we are expecting a stabilized, more resilient revenue production and a longer term, lower cost production of the business and also the strengthening of the balance sheet. Maybe with that kickoff, I would hand it over to Jan and I will take it back after that. Thanks.

Thank you, Joseph. Next slide, please. Right. So in terms of H1, I would say that, you know, pleased with the outcome. And so we don't want to dwell on it too long, but at least, you know, we're here to report on it. So I'll talk about it, but then we want to make sure we look forward into H2 and beyond that. So revenue up 9%, nominal off of 8.9% ASK growth. uh rask was roughly flat uh year-on-year 4.98 cents uh so a strong rask production flat load factor so that was yield was up around 0.9 so ultimately i think a good top line number um helped also by fuel fuel was down 2.1 percent despite the 8.9 volume increase uh benefiting from the fuel efficiency and the fuel price and the impact of our hedging. EBITDA was nicely up 19% with a 29% EBITDA margin, and operating profit was up 25% with a 13% EBIT margin. So across the board, I think a strong result. We did see some things below the line that eroded some of the net profit, even though we still generated a positive year on year net profit production. And none of this was unexpected. So we have the tax charge with regards to the deferred tax asset that we created last year and the unwind that happens as the aircraft start delivering into that entity in Malta, which we structured and set up last year. Ultimately, I think where we're looking at is a satisfying result. And as Joe says, as we continue to build operational performance and operational resilience into the business, you can start to see the benefits of those flow through into the P&L. These are structural. These are things that we've invested a lot of time and effort into. And so last summer was a rather disruptive summer. And that's where you see the benefit coming into this year. You'll see less of that benefit in Q3 and Q4 just because we had better performance. But we can expect, as we're continuing to grow, that operational performance to deliver a more robust cost position and ultimately a more beneficial revenue environment because you'll start to deliver operational performance which um which which drives better revenue quality so we're excited about the structural changes in the resilience coming into the business so into the winter and into the cost base if you could just go to the next slide please we will see transitional inefficiencies Now, on the cost side, I would say we're pleased with the results. The cost picture really improved in Q2. And you can see that that was driven by fuel. So fuel was a tailwind there. The disruption costs, as I mentioned, the operational efficiencies generated roughly 29 million of savings in terms of disruption costs. So that was helpful. We also managed to shed some of the structural wet lease costs. So we were down 76 million in terms of wet lease costs. We still do incur wet leases, but these are not structural. These are one-offs. And actually embedded within those wet leases is also some of the short-term engine leasing that we do in order to make sure that we can operate the fleet efficiently and reliably to be able to support the better on-time performance and the avoidance of disruption costs. We also managed to deliver strong results even with lower sale-leaseback volumes. So you can see that we actually were 27.5 million short on sale-leaseback gains year on year. So had we had that, that would have been an even better picture. So those were the tailwinds. We continue to see elements of cost creep through the business. like i said none of this is a surprise so there's no there's nothing new based upon what we were expecting at the full year when we said that this year was going to be a challenging cost year this is just simply the the uh the translation of some of our actions into um into uh into the results which will then wash through and uh and move on uh going forward so you can see that for example airport and on route are up actually handling came down, but where the biggest pressure came from was on route, where we saw an increase in the tariffs year on year. And for example, places like Germany on route charges were up 29% year on year. So those really hard to unwind some of those. Maintenance is an area that we see a lot of cost pressure, but as we explained at the full year, there's a number of things happening there so we are seeing the retirement of ceos now in that period we think there were nine uh ceos that went back and so as you put those into return conditions you have to incur incremental costs not normal operating costs and so you see some of that flow through um You also are seeing pressure on terms of the vendor base, so component support contracts are increasing, and so some of that is inflationary coming through the cost line. There is an element of Abu Dhabi wind-up costs coming through the entire cost structure. In terms of Abu Dhabi costs, we remain comfortable that there won't be an adverse impact on the full year to winding up Abu Dhabi. So while you will see cost increases across all the cost lines associated with the wind up, the benefit of not operating Abu Dhabi from September onwards will offset that so that it should be at least break even, if not maybe slightly better. But we'll we'll know that when the entire business is wrapped up. We thank the team for all their efforts in terms of that operation, as well as what's happening to shut that down. Distribution was up slightly, but that was consistent with the Q1 results in that we have a return to growth. And so as you do push more volume through the business, you are incurring more costs associated with that. And so that was expected. And then, like I said, there's a bunch of cost increases happening in the others line associated with the return to growth. So there's things like crew training, crew accommodation, recruitment, things like that. Abu Dhabi costs flow through that to some extent as well. And there was also a reduction, if not even an elimination in some limited cargo revenue that we had in prior year that we didn't have this year. So that's what explains the others line within the other cost and income line. I will ask to go to the next slide. Just just quickly touching on Q2. So again, operating margin of 21 and a half percent, 35% higher year on year. We saw less benefit on FX in the quarter versus prior year due to the now continued ramp up of our of our overall least liability hedging profile and risk management profile. And we saw a very strong disruption cost reduction again. So most of that disruption improvement came through in the second quarter. And that's despite some of the challenges we have in Q2, such as the suspension of Israel operations, which resumed in August. We also had the overfly challenges around Iran. And then we had actually a lot of volatility around Abu Dhabi as we worked to come to the end of that operation at the end of August, early September, beginning of September. There were some tapering off of the operations there, and that caused some additional disruption and costs. So notwithstanding all those things, a very strong Q2. and something that we're proud of, but we're not going to rest there. So in terms of where we're going, we have obviously some guidance numbers that Joe will share at the end. And that puts us in a position where I think we're comfortable with our consensuses currently. And so we do expect there to be a higher cost position in Q3 and Q4. Like I said, nothing that's a surprise. And that's driven by a number of factors. If you look at things like the maintenance line, we're going to see older aircraft costing more to maintain. there's going to be continued retirement of CEOs in that period, which drive the costs up. Depreciation is going to see some pressure because in H2, we should be 35 more NEOs this year versus last year, H2. And that translates to roughly 20% fleet growth, whereby in that period, we should only be growing around 10% in terms of ASKs. And so our nominal that depreciation will grow faster than our volume growth. And that is why you'll start to see some pressure on that. We also have in the second half of the distortion when it comes to the the year-on-year comparable in maintenance in fiscal year 25 we had a one-off maintenance accrual release which was rather material close to 80 million and we're not going to see that again and so that's why you see some of the cost pressure flowing through but joe will comment on on why that is necessary and why the actions that we take and the costs that come with those actions set us up for not just the performance that we're delivering next year but also the the overall reprofiling of the business um I'll ask to go to the next slide, please. In terms of cash flow, I would say consistent at the end of the day, consistent with what we've been seeing. So we ended the year, sorry, ended the half around 2 billion in cash. And that puts us in a strong position going into the winter. We managed to generate a reduction in net leverage ratio, so down from 4 to 3.6. We maintain our target of 30% to 35% liquidity, actually made it go up, which is good. And that's also in anticipation of our January bond repayment, which we plan on at this point treating the same way we have the previous repayment. We are pleased with the Airbus developments and that comes with with with pros and cons. Obviously, as you defer aircraft, you generate fewer, say, at least back gains, but you also generate fewer lease liabilities as you defer capex, which means that that should be benign in terms of leverage at the end of the day. But it also releases as a benefit of releasing PDP obligations as we now no longer need to fund the development of those aircraft. And as I'm sure some of you have noticed, we've managed to sell a few aircraft as part of a deal with one of our related party airlines. And that also takes further pressure off the CapEx side of things, but overall, Nothing to be nothing jumping out in terms of this chart. And as we move into Christmas period, into the Easter, into March, we'll see that unflung liability line start to build again, as we've seen in prior periods. And so we're comfortable with the liquidity position of the company. We I will note that we rolled over our ETS facility. We had a 279 million facility that rolled over like we did in the prior year. and due to the changing prices of the emissions credits, we were able to slightly upsize that. Next slide, please. And I'll hand the floor back over to Joe.

Okay, thank you. Well, this is, I guess, a very important chart that kind of gives you a picture on fleet growth and this translation into capacity growth. So you recall that we are having 334 aircraft on hand to be delivered. uh originally set for uh a stream ending uh in 2030 now this is extended to 2033 uh so effectively that affects a 91 aircraft reduction in the original delivery period and put that across into uh into the extended period of the 91s the aircraft are sold outright and 88 are deferred into uh 3133 uh deliveries Now, what it does is it creates a more predictable picture for future growth. In terms of volume of growth, we are targeting around 10% to 12% annual growth. This is taking into account some of the issues of recent experience that given some of the inefficiencies associated with the Pratt & Whitney groundings, We want to make sure that we are de-risking the profile of the business, not only in terms of market footprint, but also in terms of challenges arising from growth. And we're seeing that the 10% to 12% growth is a more de-risk profile for the company than 15% originally targeted. And taking into account the GATF cycle of grounding and ungrounding, uh you appreciate that you know the the new free delivery program uh has to take that kind of a recovery cycle into account and recovery pass into account so if you look at it nominal terms effectively in the short term, we don't take new aircraft deliveries representing 10 to 12% growth. It's a lot less than that because we are taking into account the recovery of the current grounded aircraft and engines. We think that this is a fairly well outlined model mathematically to program the growth or reprogram the growth against a lower risk profile of execution. I'm very pleased with that and it was a long negotiation, so you can imagine that this is very thorough, not only in terms of setting or resetting the delivery stream, but also in terms of protecting the commercial terms of the deal, again, just for recalling it. This deal was actually put in place in 2017 in Dubai under very different supply chain circumstances, very different commercial and financial needs of the OEM. And obviously that gives continuously a structural benefit for Vizel versus the rest of the market. But we're seeing that now it is not going to become a burden when it comes to executing the aircraft order. In 2029, effectively, we are becoming an all-neo operator. That's good because by the time, I think you should be reasonably expecting technological maturity coming through. By the time the GTF advantage will be delivered, I mean, that's a significant technological step up and an industrial step up on durability and reliability on the engines. And the other important issue here is the XLR program, which is now taken down, rescaled and allocated to VISA UK, no longer to the European AOCs. Next slide, please. So decisions have been made, are being made, and now we are expecting the impacts coming through. So the critical decisions are set before the closure of Abu Dhabi. You heard from Jan that we expect that decision to be executed against a a fairly benign financial platform. So we are not expecting any adverse impacts in the current financial year as a result of that. And as of the next financial year, we are expecting significant upsides coming through. Just discuss the Airbus order reset again. This is very important for long-term predictability of the business and also discuss the XLR program, which we effectively exited other than VCK. Now, there are, next to this, ongoing work streams. Network improvement, churning the network for profit, that's probably the most important ongoing priority of the company. We are shifting capacity into Central and Eastern Europe against high brand awareness, against very solid financial performance, and against a backdrop of disproportionately higher GDP growth in that region relative to Western Europe. And we are already seeing some of the early results by opening new bases, deploying more aircraft, how quickly the market is picking up on with that. We are optimizing the technological platform. Maybe just one equation we have been discussing, but I think you should understand that when we are talking about the GTF or any new technology, the same for the CFM leap. There is a trade-off and the trade-off is you get fuel burn benefit from heat in the core of the engine. So basically the way fuel burn benefits are derived is through the higher temperature in the core of the engine. what it means is that higher temperature is more sensitive to durability of the of the core of the engine of the of the whole engine so that may result in more maintenance costs so this trade between know fuel burn versus maintenance so it's not like that you just get fuel burn as a gift and of course there is another element of technology improvement that comes from the capital cost it is simply more expensive than previous technologies so please just understand this this trade because when you look at ex-fuel costs and fuel costs, you're going to be seeing that, okay, we are delivering a lot of improvements on fuel costs, but not as much on ex-fuel costs. But there is a trade here. So what you see coming through the fuel costs, you're going to get some of it as a penalty on non-fuel costs. So you really have to look at the two combined. I mean, of course, we do the breakdown and And we act on the breakdown, but intellectually, I think you need to integrate those two if you want to fully capture that. But we're seeing that the technological benefit is important because once the GTF is matured, the industry has no doubt that this is going to become the best engine available in the marketplace. It is kind of painful at the moment going through this cycle, but we are hopeful that one day actually we're going to be placing today when we decided uh to afford this engine and on parking the aircraft that's uh that's a critical priority for the company we have been discussing this uh we are targeting to uh uh to on ground uh the entire fleet by the end of 27. uh uh we are working with pattern Whitney we have an understanding we have a deal uh with uh with that regard that covers induction slots uh that covers um a spare engine uh purchases And that covers OEM's capacity in terms of parts and in terms of shops and engineering to support that recovery program. And this is aligned at the highest level at the company, not even at Brett and Whitney level, but at Raytheon level over there. So a lot of ongoing issues happening, but I think all for the better. So next slide, please. I think Jan has started alluding to this, that if you look at Fizz Square 26, it is almost like two hubs for one year. a somewhat shining first half and somewhat challenging uh second half so in terms of capacity uh we are looking at uh uh mid single digit seed capacity growth uh somewhat less than ASK you recall that we eliminated quite a number of long routes uh operated to hot and hot so that's why the ASK numbers are somewhat different from the the seed numbers so mid single digit uh capacity growth this is in line with our ongoing growth ambitions of the of the company really the option we had available to us here was you know we are growing 30 percent with efficiency in terms of unit cost or we are going 15 with efficiency for revenue but with some compromise on unit cost. These were the two choices to make. And we opted for the second one because we think that we should be editing capacity against demand in the marketplace as opposed to editing capacity and trying to find demand for that capacity. But that will bear some kind of a challenge in terms of short-term cost to the unit cost to the business. Load factors, I think we are trending well on load factors. The performance is strengthening. we are expecting some upsides on load factors coming through. So with regard to Rusk, again, I mean, we are too early into the winter to really make a firm position here, but we are expecting Some pressure, I mean, 15% is still significant growth in the business. It's a lot ahead of the growth of other airlines. And this is the off-peak period, the kind of the weaker half of the financial year from a demand perspective. So we might be expecting some pressure on ROS capacity, although we are also seeing some good positive signs on that. So we shall see, but this is our kind of early indication. So how would that translate into cost performance of the business? Obviously, fuel will continue to do well, given the current fuel price in the marketplace and given the the transition to NEO technology and the benefit of fuel burn coming through the GTF engines. Ex-fuel cost will be temporary on the rise as a result of this kind of capacity inefficiency we carry in this period. But over time, this is going to be sucked up. If you look at fiscal 27, when we are taking down the the new aircraft deliveries and contemplating some recoveries of GTF engines in that period, this kind of an innovation is going to be going to be sucked up. So all in. So it is a challenging first half, sorry, second half. What we are into, although some of the good things, good decisions will carry through this period. And certainly you're going to be seeing more benefits materializing in the next financial year. I think with that I would turn it over to questions, please.