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.

Morning, Jamie Robotham from Deutsche Bank. Two from me to kick off. Maybe first one for Joseph. On-time performance was, I think, 60-ish percent, up from 50. So a good improvement, clearly helping your disruption costs, but that's still very low versus, I think, your pre-COVID standards and industry standards. Why is that? And where do you think you can get that to one year out, please? And then secondly, maybe for Jan, the situation you find yourself in, as you described on the cash flow bridge, saw that the net capex positive 190 million in H1. Now you've got the Airbus deal done. Is there more clarity you can give us on what the full year equivalent of that number might look like? Or is it still very contingent on engine sale and leasebacks, etc? Thanks.

Or maybe I start with anti-performance. So yes, it is a significant improvement. I think the difference is that we are just up against a very different supply chain context. ATC remains to be a challenge. It was less so this summer than in previous years. So we have to admit the progress that they have made, but that doesn't mean that they are virgin. So there are still lots of issues coming through ATC. um our performance relative to industry completion we are the best airline in europe on time performance we are right in the middle of the pack um so is this good yes relative to the industry's performance i think it is good uh relatives to relative to our expectations and historical performance we want to see improvement uh coming through but i think we need to see um more improvements coming through the supply chain as well now the the issue what you have and and you you probably appreciate this So you are in the summer period when demand is almost unconstrained. The more compromises you make on your operating model, what compromises do you make? I mean, you may compromise on sparing more capacity, so that will take down utilization. I mean, you are... running the airline at lower utilization rate in the middle of the peak demand period, this is going to be defeating your financial performance. So you have to kind of strike the balance here and find that kind of a sweet spot that benefits your your operating program against the revenue and demand upside of the business, without really screwing it up completely operationally. And I think previous years, in previous summers, we might have opted overly for trying to get more commercial offsides from the business and undermining operational resilience. So I think we put more efforts into the balance now that we want to have commercial offsides, but at the same time, we want to protect operational resilience as well. I mean, that's how well we could have done, but we need to see some improvements in the supply chain, to be honest, to have significant upside here. But we are not underperforming versus the industry.

Thanks, Jamie. With regards to cash flow, so the Airbus news is new, right? We announced it this week, and we are in the process of trying to identify when the right time is to do a capital markets data, walk you through the longer-term strategic direction on all these exciting topics, particularly with regards to aircraft financing and things like that. As I mentioned earlier, we should be 35 a321 neos uh and um higher higher count this second half versus last second half and um and then there's also going to be an element of engine sale these specs that happen in there these are these are the contractual obligations that we have so we're not uh doing anything above and beyond at this point other than than than upholding our contractual obligations. And so other than the three aircraft that were sold, I believe there's only one aircraft that was deferred out of fiscal year 26. So the Airbus impact is very limited to fiscal year 26. And in fact, fiscal year 27, because there's not much you can do. And so that's why we're having to manage the capacity through, as Joe said, utilization and things like that, which come with its drawbacks, which, you know, we're very utilization focused. So we need to balance the revenue dilution with regards to the capacity management. But in terms of the cash flow for the full year, so you will see cash flow benefits coming from the delivery of those aircraft. You will see cash flow benefits coming from the delivery of those engines because we still do a form of sale leaseback, whether it's an operating lease where you get the upfront gains that come to the sale leaseback line, or whether you do a Joelco or a finance lease where you also do a sale leaseback, but you don't get the same P&L impact. You get the cash benefit, but a different P&L impact. Roughly 20% of our deliveries right now are being financed through a form of ownership like Joelco or finance lease. That's effectively an ownership structure, even though there is a lease structure behind it. We plan on taking the next step, as we mentioned before, into looking at a more conventional acquisition-based approach. We're running the numbers now based on the order book to optimize where we think the earnings profile will get to over the rest of the decade. And that will then calculate how many incremental aircraft we need to buy. And then we'll look at the financing sources, whether it's a lease like a Jolko or whether it's some sort of acquisition either with cash or some sort of other kinds of financing. That's part of the capital markets day exercise. But what that will do and what these acquisitions do is take away at least back gains, which are very chunky upfront, and it will spread it out in line with the depreciation interest costs you take over the life of the asset. And there's trade-offs to that, but ultimately we've determined that over the long term, it is beneficial from a shareholder perspective, but it comes with a near-term impact. And that's what we're trying to balance is that we continue to do a bit of both. to smooth out the earnings profile of the business, ultimately towards something that's beneficial and giving a better shareholder return.

Thanks. Alex Irving from Bernstein. Two from me, please. First of all, on your revised CASC-X guidance for the year. So full year results, you'd said, up slightly. Now we're saying up mid-single digit. Can you help me understand how much of that is the mechanical impact of taking your expected capacity growth from 20 to 10? And how much of that is, say, an underlying variance versus your prior expectations and planning? Second, you've launched a Eurobiz product recently. Is this sort of a no regret move that if it doesn't work, we can just sell the middle seat anyway? Or is there a real revenue opportunity that you're expecting to get from this? And if so, could you quantify that, please?

Sure. Want me to take the first one on the CAS? Yeah, please. So the answer is, as I said before, there's no surprises here in terms of the CAS number. So it's really more a matter of the capacity impact, where we're basically growing half of what we expected. We had sized the business and budgeted the business for a bigger business and a business that involved Abu Dhabi and things like that. We've now changed it dramatically, but still trying to manage through these costs. And so there's nothing that's caused any sort of variation on that. We do need to maintain cost discipline. And that's our focus. But as I mentioned earlier, there's distortions and all sorts of other things that are pushing pressure on that. So there's no surprises on that front.

So I think the middle seat is a shielding revenue opportunity. I mean, at the moment, effectively, we don't get the middle seat occupied. So if you look at the numbers, it's almost like no one is paying for that. Now we want people to pay for that.

Morning, it's Harry Gowers from JP Morgan. First question, maybe just how to think about growth into next year in March 2027. I think you said or mentioned that obviously the deferral of deliveries is quite back-end loaded. So how much are you expecting to grow next year and anything you can say directionally on costs yet for March 27? Second question, with the Abu Dhabi exit, Vienna-based closure as well, is this the end of... quite major airport or market movements? Or do you have any more exits or big exits in the pipeline? And then last one, just on the medium term growth, I mean, when you were negotiating down on the deliveries, how did you settle on like the 10 to 12% as the right number, uh, so just, you know, kind of what's the thinking mathematically or strategically behind that, you know, why not seven to eight, for example. Thanks.

All right. So, um, maybe I started with the last one, um, uh, the 10 to 10 to 12%. So be always. So this business is structurally designed to deliver 15% gross at 15% margin. You remember that was sort of the model of what we are promoted. Um, Now, given all the issues and hiccups, we broke down on the delivery of the model, and we tried to reinstate that model. But we're seeing that short-term, short-medium term, we need to ease the delivery of that model. So that's why we're seeing that addressing around 10% growth rate versus 15% is taking some of the risks out of the equation when it comes to capacity. Why not 7% or 8%? Because if you look at our focus markets, especially Central and Eastern Europe, Central and Eastern Europe will demand more than that. So we have been modeling this. We have been looking at GDP growth expectations in the region and how that would translate over to airline demand and how we can translate it into our own capacity versus the competitive games we are into. and our ambition to lead the market, continuously lead the market in Central and East Europe. And we're seeing that this is kind of the sweet spot. So the 10 to 12% is a bit of a sweet spot analysis from the perspective of demand in our core markets versus the deliverability of the program from an operational standpoint uh whole finance how much financial distress we are putting on the system to uh ramp ramp operations up against that uh that target With regard to Abu Dhabi, Vienna, and others, I think the way I would see this is that while Abu Dhabi is a very structural decision, Vienna is less so. I think Vienna is seen as pretty much business as usual. Maybe the magnitude is reaching a bit higher than usually. But what happened in Austria? I mean, the Austrian government decided to put excessive taxes on the aviation system, effectively making Vienna prohibitive from a cost perspective, you know, for us certainly. But we are not the only guy acting. So clearly this is not a visa issue. This is a bigger industry issue. but i would say that this is fairly exceptional in terms of magnitude now with regard to vienna i think what is easing the situation is the uh availability of bratislava which is pretty much next door uh so this is kind of fairly easy but churning the network for profit i mean that you should be expecting us to do on an ongoing uh basis um and uh and of course you know same thing goes for airport course If an airport becomes excessively expensive, then we would be churning that capacity for lower cost execution. So I would say that these are ongoing priorities. But if you ask the question whether we have made the big decisions, I would say yes. The rest would be pretty much refinement and business as usual. You want to take the growth?

Sure. So just on the growth side, right? Like what we've done with the Everest deal and what these other deals that we're looking at is give ourselves optionality at the end of the day. So we're going to bring things down in the medium term, the 10 to 12%. But it doesn't mean that we're limited at 12%. We're still a growth stock. We're still a growth company. We're not afraid of growth. And we have 58 aircraft or so redelivering between fiscal year 27 and fiscal year 29. Most of those aircraft have extension options in them. And so if we see that there's more demand, we can exercise those extension options and capture that demand. So I want to make sure that we're not somehow thinking that we're constrained. We have optionality. That's what we've effectively negotiated for ourselves versus before we were committed to deploying that growth. But in terms of fiscal year 27, I think it's still going to be a very challenging ASK and seat. growth environment closer to 20 still as we at least in the near term and that's something that we're gonna have to manage through um um in terms of in terms of the um you know the the uh the deployment of all that it's um it will probably end up having an impact on utilization uh it also forces to to to you know to be more measured but i think with the changes that we're doing around the network and the and the market share that we want to develop it is again an investment but i don't think it'll have as adverse of a impact on costs as you might be thinking in terms of where you're going with this question so looking at the cost side in fiscal year 27 we're not guiding it's far too early to say but i would say that the worst is what the worst is behind us because we're still you know that growth will help us at the end of the day in terms of the costs um we think that you know the Changes that we're making to the airport side in particular, hard, real changes will bring down the cost side of that. So I think that looking at our cost structure, you'll see depreciation probably be the biggest benefit because we start to flush out some of these CEOs if we don't extend them. And you're going to start to see, you'll see maintenance still be one of the ones that sees the most pressure because of the heightened activity associated with redelivering and the aging of the fleet. Everything else, I would not expect there to be any challenge in terms of bringing costs, keeping costs flat or down. So I think that overall, the cost creep is where we are now. And you start to see improvement after that in fiscal year 27.

I would just add one more perspective. I mean, none of our plans at the moment contemplate Ukraine. So Ukraine is kind of an outside chance for the business. If things turn in Ukraine, all of a sudden discussion will be a change fairly fundamentally from our perspective, because we would be looking at ourselves as a genuine kind of first mover to the Ukrainian market. And we would definitely go to market as hometown airline for Ukraine. Don't forget that we were the largest non-Ukrainian airline in Ukraine prior to the board with operating basis. So we would be looking at reinstating that presence. I mean, obviously that would be through a transitionary period, but in terms of ambition, we would certainly go to Ukraine for market leadership. Thanks, Yuri.

Hi, it's James Hollins from BNP Paribas. A couple of strategic ones, Joseph. Maybe just run us through a bit more on the Western European strategy. I'll be back to where we were when you listed 10 years ago. It's all about CEE. Obviously, Vienna was very specific on taxes. Or if it's easier, maybe quantify how you're apportioning the 10% to 12% growth. How much is CEE? How much is Western Europe? Which leads us on to Abu Dhabi, which obviously you've closed as a base. Are you still going to fly quite a bit into Abu Dhabi? Was the demand actually there that you still see it as not a base, but somewhere you still want? So you still see enough demand. And then, Jan, I hate to be that person in the room, but maybe just help us on the other costs for the full year on sale and leasebacks and compensation, which we should be thinking about to get us or get you to around where consensus currently is. Thank you.

Okay, so with regard to sea versus Western Europe, I mean, if I look at the picture today, what changed over 10 years is that we added Italy and London to our Central Eastern European footprint. So it was more before. So we had Vienna, we had Abu Dhabi. You all understand the changes with that regard. But we are... very upbeat on both London and Italy. As a matter of fact, looking into market shares early next year, we're going to be the second airline in Italy, and that's quite an achievement given that we are a bit of a latecomer to the market. Nevertheless, if I take those two segments, we are still talking about like 70-75% of the business being in Central East Europe, 25-30% being in West Europe. So with regard to focus, there is no change on focus. Focus will remain on Central and Eastern Europe. And you see that all these new base openings, adding aircraft on an ongoing basis to our key Central and Eastern European markets will just continue to fuel that death strategy. And I don't think that you should be expecting much of a change with that regard. You may argue that we burnt our fingers. uh uh in Abu Dhabi you're not gonna do it again um now with regard to uh flying to Abu Dhabi or the UEA I think we maintain few operations uh there uh so where we think it makes commercial sense uh from a perspective of profitability we uh we continue to operate to our Abu Dhabi uh we continue to operate um Dubai uh we continue to operate uh Jeddah That's a UK operation. We operate Medina in Saudi. So where it makes commercial sense, where we can make real money, we would continue to operate. But we are not planning on setting up bases or AOCs or anything like that. So I think we will remain somewhat opportunistic with that regard.

So in terms of H2Others performance, you could expect that to increase. So if we were at $0.27 in unit cost benefit in this fiscal half, I would expect that to probably go up like 40%. So there's quite a lot of deliveries happening in that period. And until we inform you otherwise in terms of our financing strategy, our approach is to To take advantage of the sales back market, we think that that's a very efficient way to translate the benefit of our purchase contract into shareholder return and so there's no change there that's simply part of of how we approach this.

Like. Yeah, good morning. It's Rory from RBC. Firstly, could you quantify the Abu Dhabi exit costs in the financial year? And secondly, it sounds like H2 RASC is perhaps resilient given the share of immature capacity and the capacity growth. Would you be able to talk about that at all? How that's performing across different markets or on new routes versus existing routes? Thank you.

So I'll take the first one. On the exit costs, like I said, we don't expect there to be net a detriment in terms of exiting Abu Dhabi, both in terms of a P&L perspective, but also from a cash perspective due to the arrangements that we've concluded with the joint venture partner down there. But I can't specify exactly what those costs are or we're not in a position to.

With regard to H2 ROSC, I mean, we have been making a lot of new market investments in Central and East Europe. I mean, it still takes time to mature. It's a quicker and faster maturity curve than in Western Europe, let's say, but it still has to mature. So I think the ROSC challenge in the current half of the financial year is mainly down to the maturity of new routes. But at the same time, you're going to take the benefit of that in ex-financial union.

Hi, it's Andrew Barclays. Can I ask around the fleet? Well done on getting down to 11 XLRs. That's the start. What do you do with... They're only in with UK, but I think you own with UK, don't you? So... um then can i ask the question i know you're not going to answer but i'll ask anyway um what's going to be the financial impact of deferring the aircraft um what should we be thinking about the relation pricing so how will that impact how we should be modeling capex going forward and then if i can be greedy and ask a third one staying on fleet um You seem in a hurry to get rid of the CEOs, but whilst you gave us a love letter to the NEOs, the current fuel price, the maintenance burden against the fuel price makes CEOs better aircraft than NEOs at this fuel price. And when you get rid of the CEO, you take a big penalty on the lease return costs. So why did you not go for more aggressive deferrals of new deliveries and keep hold of the CEOs for longer?

I will point out, Joe, that Andrew did ask me the second question this morning directly, which I refused to answer, so just to... Okay, so you put the burden on me.

All right. Okay, so let's go through this, because I think these are all very important questions. I mean, you probably... I take the second question, which is going to be unanswered probably, but I just want to give perspective to that. You probably appreciate that When negotiations drag for six to nine months, there is essentially one reason for that, and this is commercial. And what does commercial mean for aircraft procurement? This is pricing escalation, nothing more, really. I mean, that's the essence of the whole thing. So given that drag, that long-term settlement on that, you should be expecting that it is very favourable to be there. tell you more than that, but it is very favorable to be there. So I'm not sure I would be too much into CapEx with that regard, just kind of take the linear line on what you are seeing at this point in time. So that's a good deal. So with regard to the XLRs, yeah, I think 11 is not going to be the final number. 11 is what we are taking deliveries of, but for a portion of that, we would be looking at market solutions. So we are not going to put 11 aircraft into Wizz Air UK. It's going to be less than that. And we will see how we can kind of reconcile the gap with the market with that regard. But please don't ask more questions on this because I'm not going to be able to answer at this stage of the game because there are things happening in the background, but not yet at final closure. So there is still some kind of... flexibility when it comes to the XLR matters. So CO versus NEO, that's a good question, Andrew. And I think the way to think about this, or at least this is the way I think about this, is that there is a distinct difference between the A320 CO and the A321 CO. So if you take the A321 CO versus the A321 NEO, given the current fuel price you can argue that it's a wash when you look at the economics of the two aircraft it's pretty much a wash so you have the fuel burn benefit on the neo but that's offset by the higher capital cost and higher maintenance cost on the on the ceo but this is something which can change. I mean, if a fewer price comes down significantly, then the CEO start prevailing as an economic concept. If it goes back up again, then the NEO becomes a better aircraft. But this is given the current maturity of the technology. the moment we get to advantage we think the equation flips uh structurally so there is no more debate uh on fewer price and who is better which aircraft is better ceo neo the neo at that point will prevail at the moment you can argue that actually there is a way to compare the two and as we speak today i would say that the uh uh the economics of the two aircraft are pretty much the same now the a320 co is a different animal the ac20 co is 180 seats versus the 239 seats so no way that we could come to the economics of the uh of the ac21 neo operation uh with an ac20 co so if you um take the uh the redeemers of aircraft i think the right strategy for us is to preserve uh a321 ceos as much as it makes sense but still continue to get rid of the ac20 co so we have uh we have no appetite for extending ac20 seals i think we will continue to evaluate ac21 co versus the a321 neo so I don't know if that kind of gives you the answer, but I would definitely make a distinct difference within the CEO line between the AC21 and the AC20.

Thanks. Joel Coo from Pamela Libran. Could you talk a bit about how trading is going in the UK? Obviously, in base terms, you're losing that Gatwick. I think over the past six, 12 months, there have been some slots that have become available at those relatively slot constrained airports. And I don't know whether it was. active decision on your part to not go for those slot opportunities or whether you lost out to um new entrants but what's your thoughts in terms of taking opportunities to put more aircraft in into the london market for example yeah uh good question um and i think we have a um

an increasing nuanced view on how best to allocate capacity in London. So first of all, we remain very upbeat of the London market. We are very supportive of the growth and development of Bizair UK. And we said UK is an ever-improving platform. So we are seeing some very impressive financial improvements coming through the operation of the airline. So we remain highly committed and very supportive to the London market. Having said all of that, I think we have to look at differences between Luton and Gatwick. so the issues we are facing at Luton at the moment is capacity constrained structurally by passenger numbers I mean that's a policy decision of the of the shareholders and secondary they have some short-term runway improvements that affect the short-term capacity we can put through the system in luton but i would say that in luton we are very interested in pretty much sucking up everything that becomes available getwick i think we have been overly focused on slots uh as opposed to performance uh in the past and we ended up operating also a slot portfolio that didn't make much sense from a commercial perspective the slot portfolio became a burden as opposed to an opportunity on the business now certain parts of the portfolio are very favorable not only operationally but also commercially and we remain um very committed to operate that portfolio. That's why we are rationalizing capacity allocation between the two airports. We focus on proper slots that translate into proper commercial opportunities at Gatwick, and we are pretty much sucking up everything at Luton, which becomes available.

Hi there, it's Conroy Gaynor from Bloomberg Intelligence. So I just want to touch on labour costs, Jan. You sort of alluded to the fact that maybe we shouldn't expect more cost creep in some of those type of items. So the way I'm reading that is basically as you increase your capacity, you start to, the GTF issue starts to soften, there's some sort of productivity gain to be had that will offset things like wage inflation. Now, but how do you, given that there's so many moving parts, you know, you're coming out of Abu Dhabi, putting capacity in different places, you're still going to have high capacity growth. How do you actually manage that transition and dynamic?

Yeah. So I think when it comes to labor costs, I would think of two fundamental issues. I would think of nominal inflationary pressure on pay and uh and i would think of productivity uh how much productivity we are able to get out of the labor force what we have now if you look at the current uh situation uh we are compromised on productivity we are compromised because of the volatilities the operational volatilities we are managing against the backdrop of the gtf uh groundings i mean simply you cannot refine your model as such as we used to uh in the past that you know you really mathematically kind of figured out how to deliver the highest level of productivity against um plannable uh foreseeable external factors uh you are you are broken on that uh because we don't know how many engines we will have operation available so you have to have a slack you have to have a slack with that regard and also because you are losing engines and aircraft today but you will recover tomorrow you want to make sure that you actually have a crew you have the pilot force here the cabin crew to operate that engine so as a result of that basically our productivity has been somewhat dented versus where you would want to be ideally. Now, with more predictability and more recovery of the GTF issues, the better we can plan on productivity and the more we can improve on productivity. So I think when it comes to labour costs, the improvements will come through productivity, not nominal inflationary resistance. whatever the inflationary pressure is, whatever the market does, we have to do it. I mean, we don't have a choice. I mean, we pay according to market. If the market goes 3%, we go 3%. If the market goes 0%, we go 0%. If it's 10%, it's 10%. So we don't have much choice on that. But I think we have an opportunity to do better on productivity once we are putting more credibility and more predictability across the system when it comes to input issues like, you know, GTF and those sort of things.

Cheers.

We will now begin the Q&A session for participants online. If you wish to ask a question, please use the raise hand function at the bottom of your screen. The first question is from Jared Castle at UBS. Please unmute yourself and begin with your question.

Great. Thanks very much. Good morning, everyone. Three from me. Just want to get an idea. Joseph, and how you see capacity growth in the markets you're growing in over the next two to three years, if you exclude your capacity growth. So I guess, how do you see competition? Secondly, I don't think you answered it outright, but you've obviously sold three planes outright. Sounds like you might try sell some further 321 XLRs, but how many potentially could we see in terms of deliveries being recycled in outright sales? And then just lastly, on your net debt to EBITDA, nice to see the ratio falling. When do you think we could get back to two times if you, you know, when you look at your kind of growth profile and budgeting? Thanks.

All right, thank you. So with regard to the overall market growth and growth of competition, I think the fundamental question is not, and I know that people like entertaining this tension in the market that, you know, to what extent do you think this can grow in light of what the other guys are doing, etc. But that's not the question. The question is that, you know, you can assume reasonably that both of these carriers will continue to grow. But the question is what happens to the rest of the market. And you see very clear trends. So if you look at our market positions, as I said, now we are moving from 25 to 29%. market share, the other guys are at 20, 21%. So basically every second passenger flying in and out of central Europe is taking either us or the other guys, us more. And that number used to be like 30% a few years back. And I can tell you this number is going to be probably 60, 70% in a few years down the line. so these two airlines will continue to um to take market shares uh in central east europe and you're gonna be seeing um a lot of the um incumbent uh you know national carriers or small scale private carriers diminish india in the marketplace i think this is what you should be expecting um Will the overall market grow in Central and Eastern Europe? Definitely. I mean, Central and Eastern Europe is a lot better place with that regard than Western Europe in terms of GDP development. and and and you know um um standard of living is rising um relatively higher in San Antonio it's kind of an economic convergence and standard conversions are taking place uh and you know that will produce more discussionary spendings um uh in the in those in those markets so we'll be seeing that is going to be increasing market demand uh and that is going to be diminishing um kind of small scale competition in the marketplace. And I don't really care how much the The other guy is growing because I think this is just going to affect more the rest of the market. And to be honest, that phenomenon has been the case over the last 10, 15 years. So there is nothing new here. You can go back to the history of Centro Nisidrop. You can look at market share evolution. I mean, this trend is not new. It's been happening and it's continued to unfold. So with regard to fleet, to what extent we would be pushing for more outright sales, I think I would consider this as a short-term phenomenon, not as a structural matter. So we don't have plans to sell these aircraft. I mean, these aircraft are extremely well-priced aircraft, source of competitive advantage versus other airlines. you know we need to put that aircraft into work and we need to make money on the actor by operating the aircraft not by selling the aircraft but a set short term uh they are under capacity pressure so this is this is only a short-term phenomenon and uh yeah I mean you spotted that the XLR might be might be a candidate or some of the SLIs might be a candidate. And indeed, when we have news to spread, we will do that. But please don't look at outright aircraft disposition as a strategy on a structural basis. This is only short term.

Yeah, if I could just add to that, I mean, don't forget the inherent value of that order book and what it does for Wizz in terms of the company. That is something that we want to capture. we will capture, and we have different ways to translate that. And so that's not something that we want to impact. So that's still something that I think that the market doesn't quite properly give us credit for. In terms of your question, Jared, in terms of net debt, I'm not going to tell you when we're going to hit two times. All I can tell you is that that's something that I'm extremely focused on. I think it's extremely good discipline in the business. We want to build a business that we want to work for, other people want to work for, you want to invest in. um and and and to do so we know that we need to bring the uh the balance sheet into a into a certain condition we see a path to get there the number one way to do so is to generate operating profits um that will generate ebitda that'll then uh help us um offset the the bring down the ratio and that's our focus so it's it's a target um it'll be something that we talk about at the capital markets day it ties into our fleet plan But ultimately, profitability is what will drive that ratio, and that's what we're focused on.

Thanks very much.

The next question is from Stephen Furlong at Davey. Please unmute yourself and begin with your question.

Hi there. I was wondering, Joseph, what's the North Star here? Do you think that... FY28 is the more normalized year, or is it FY29? And what would you see as the execution risks? I mean, is it a supplier's, would you describe your relationship with your suppliers, meaning Airbus and particularly Pratt & Whitney, are they good now? I mean, obviously the challenge of Pratt & Whitney has just been huge for the company. So thank you.

Look, I mean, it's a good question. I still think that the single biggest risk is around the supply chain, probably more around the OEM side than the immediate airline execution. I think they are improving, but at the same time, I mean, you kind of look at a bigger picture, you see that it is not only Brett and Whitney customers that are out there with grounded aircraft, but CFM customers are also grounding aircraft. So this is not like one guy is broken and everyone else is doing great. Everyone is broken, if you want to put it that way. You can debate the magnitude of of that, how bad is this guy versus the other one. But there are structural issues. I think there are structural issues with probably too quickly short-cutting technological developments. It was too much of a regulatory ease. So I'm pretty sure that the regulator will kind of toughen up with that regard. you can argue that the industrialization production have not been properly executed and that will continue to pose risks to the operators, etc. So I don't think that this is going to turn anytime quickly. I don't know how long this is going to take, but I personally, what I would expect is that with the introduction of the advantage and kind of the rollout of that at industrial scale, you know, probably we are still seeing a somewhat risky supply chain environment over the course of the next two to three years. And you recall when We started grounding. At that time, everyone believed that all this powdered metal issue is going to hit the industry for up to 18 months. Now, this is more like a five-year cycle. And now this is all compounded with kind of the childhood diseases coming through the premature technology. So this is going to take time. I think what it really means in the industry is that innovation will slow down. The investment cycle for OEMs will lengthen as a result of all these hiccups. I mean, just look at how much money Brett and Whitney has to spend on this recovery. I mean, this is going to put burden on the recovery of the investment. So it will just extend that investment cycle. So I would say that long term, I'm confident that the supply chain is going to fix itself, OEMs will fix themselves. But short term, even I would say, maybe medium term, there are some risks associated with the operation of the OEMs.

Okay, thank you.

The next question is from Alex Patterson at Pillhunt. Please unmute yourself and begin with your question. Please unmute yourself and begin with your question.

Sorry about that. Two questions from me, please. Firstly, the GTF engine, what's your confidence that maintenance costs will be what you think they will be? Have we actually had enough flying hours to establish how these behave after the inspections. Is there a risk that actually it turns out to be a bit worse? And then just in terms of your RASC guidance for the second half, again, what's your degree of confidence that you can deploy the 35 deliveries, obviously net of anything going back, and not, you know, because you're concentrating the deployments into Central, Eastern Europe, Italy and London, is there a risk that actually you diluted a bit worse, a bit more than you're suggesting?

i mean i i would start with the second one first i i you know all these all these aircraft have been deployed uh so they are up for sale some of them uh have started operating some of them will start operating during the period i think we of course still have uncertainty learned how exactly revenue is gonna gonna play out but i think we are fairly confident in uh in what we are saying so we are uh you know not we are not optimistic uh in terms of the numbers or the perspective what we are presenting to you is is there a potential upside to that maybe but we want to be on the kind of conservative, realistic side of the equation. So I don't think you should be expecting a huge variability to our assumptions at this point in time.

If I could just also add to that, Alex, the number is not 35 deliveries in H2. That 35 is the year-on-year increase in number of NEOs at the end of Q4 this year versus Q4 last year. So just to make sure that we're using the right data points.

Yes, thank you. So with regard to the GTF, so the beauty, if there is such, in our case with regard to Pratt & Whitney is that we have a flight order agreement. So effectively, we put the burden on Pratt & Whitney. Now, of course, if there is no engine, there is no engine. So then you have to share the burden. But in terms of maintenance cost, the burden is on pratt and whitney and that's a major difference between how cfm goes to market uh versus uh pratt and whitney goes to to market cfm doesn't uh stand behind the product so basically they say look we are 75 of this short full engine market we have a very very established market for purposes of engine maintenance use the market for our own benefit Pratt & Whitney is underwriting the performance of the engine. So effectively, we have outsourced the economic risk on engine maintenance. Now, that sounds simple, and this is not as simple as that. But in essence, that's what it is. So if the maintenance costs on the engines turn to be higher than expected or assumed, the burden is going to be on Pratt & Whitney, not on us. But of course, we still need to have the engine available to us to operate and fly.

Thank you.

And the final question is from Gabor Bukta at Concorde. Please unmute yourself and begin with your question.

Hi, thank you for your presentation. You may have heard that there are some rumors on the market that Lot may buy SmartWings, which has a significant exposure in the Czech Republic. You may always see Lot as an inefficient company like Tarom in Romania. And if such an acquisition were to happen, would you see any chance to increase your exposure in the Czech Republic? Or how would you look at this kind of transaction?

I think it's a bad idea, but that's not my call. Look, I mean, in my mind, LOT is an airline losing on the home ground and Smartwings have ever been losing in their homeland. So when you put those two together, I mean, what do you expect? I think the competitive environment in Poland is pretty tough for a national carrier. Maybe it's a little more benign in the Czech Republic. That can change, especially given these dynamics. But look, I mean, this is really not our business, but I think strategically probably both airlines will get weakened as a result of this because you are putting weaknesses together, not strengths together. All right, I think we are done. Ladies and gentlemen, thanks for coming. Thank you for your question. I appreciate it. Thank you. Have a good day. Thank you.