Aegean Airlines Ord

Ladies and gentlemen, thank you for standing by. I am Maria, your chorus call operator. Welcome and thank you for joining VHEN Airlines conference call to present and discuss the first half 2023 financial results. All participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Mr. Eftikios Vasilakis, Chairman. Mr. Vasilakis, you may now proceed.

Thank you. Good afternoon, everybody, and welcome to our first semester and second quarter call for 23. On the first day that we have here in attendance being me, our CEO, Mr. Georgiannis, our CFO, Mr. Koudeliotis, our treasurer and board member, Mr. Timaraki, and Ante Kataliani, our investor relations responsible. So we all welcome you to our call and we're all here for your questions. Let me start by saying that we think we've published an excellent set of results in more ways than one. Certainly in terms of the degree of recovery, we used to say versus pre-COVID, but now we should say degree of expansion. because we've gone beyond recovery, I think. In terms of revenue quality, certainly also excellent. In terms of managing our costs per unit, we've been in a highly inflationary environment, both interest rates and costs going up broadly speaking. Of course, if all these things work, then you end up having a bottom line that's very strong, exceptionally strong, as we have during this quarter, second quarter, and the whole third semester. And, of course, last but not least, an exceptionally strong also set of cash flows, which contribute to having made excellent investments look in our balance sheet in our cash versus debt and profitability picture. And I think these numbers in all the dimensions compare well both with Aegean's recent and TV history, but also they compare extremely well with the strong sets of results that have been published by our peers. that are listed in Europe, and I think that's also a very important metric for relative performance. So, an excellent set of results, which I'm happy to share, and to go into more specifics, let me go into the five, seven minute description of where I think we are, and then we'll take your questions, and we hope more will come out of that, and I think now we've started to improve the level even of initial disclosure within our press releases, so I think allowing more time for questions is probably more important than the past. So in the second quarter, our revenues went up to 450 almost million euro, 37% higher than the equivalent quarter of 2022. In terms of capacity, we put in the market 22% More seats relative to the same quarter of the previous year, but we actually managed to move 28%. More passengers. Remember, please, Q2 2022 was probably the first real normal quarter post-COVID, so the comparisons begin to be quite valid. And the load factor increased from 79% during last year's quarter, second quarter to 82.6%. also an important improvement. As a result of this improvement, the bottom line went up to 51.5 million of net income, up from a net income of 10.8 million in 2022, which means almost five times the number, clearly a very, very strong figure, which comes to complement an also strong first quarter and brings a very healthy, the healthiest ever first H1 for AGM. Please keep in mind that when we compare with others that the seasonality of anybody operating an airline in Greece is, as you know, from past experience significantly more pronounced. So our first Q1 and Q2 are typically not among our strongest quarters. Indeed, Q1 is typically the weakest one. So if we look at the whole of the six months, we see that altogether we managed to increase revenue, consolidated revenue by 51%. reaching $670 million. And again, the pre-tax profit went up to $48.7 million in the first six months, against a loss of $30.6 million of last year. So that's an improvement of basically $79 million in terms of switching from a loss to a profit. in the first six months, and the net income after taxes went up to $37.1 million against a loss of $27.8 in the first six months of 2022. Naturally, also in the first six months, there was an improvement of the low factor, and it's a significant increase of various cases relative to the previous year. but an even higher increase of RPKs due to the overall load factor improvement that again was very material in the first half, although here we're concentrating more to the second quarter, of course, which is what you're actually looking at today since you already had Q1. What's also very important to recognize other than revenue, passengers, growth, and bottom line, is that there was a very significant and positive development in the cash flow. We did indeed repay the remainder of the COVID acquired loans, which were $68 million, down to $68 million. Remember, initially, the totality of loans we took from commercial banks during the COVID crisis was an entire $270 million in reserves. Part of that was paid down in 21, part of it in 22, and from the $270 million, there was a $68 million number left at the beginning of the year, which was paid back during Q1, so during H1. Aside from that, the $68 million capital repayment, we had basically another $55 million of new capex, and on top of that, We did, on top of that, we did make two significant decisions or actions, if you like. We gave an outstanding loan for a 2020 vintage 321 NEO, and we also purchased an additional 320 NEO for the first time only with cash. That was a total of another $70 million of outlay. As a result, to make the long story short, between the $68 million the other capex and the 70 million here, that makes for a very significant investment or repayment. And at the same time, we managed to increase our cash and cash equivalents between December and June by 200 million. So, as you understand, by the next 200 million, that means, in fact, a very strong cash flow performance in the first six months. Of course, that entails partially the pre-sale of summer revenues, but we know that to be the case every year, so any comparison you can make with the past is quite valid. We stand now at the highest level of cash availability that we've had in our company historically. And we also have an excellent metric in terms of debt coverage. So if we look at our trading 12-month EBITDA versus our net debt, we have a ratio of effectively one, if I'm not mistaken, and that's the lowest we've had since basically we've started accounting for our leases in the debt structure. Before that, if you recall, and still, of course, without Elisa, we are a net cash company with the cash significantly to the non-Elisa debt, but including the debt we have, including the Elisa debt, we have a debt number which is around $318 million now, which is basically at the same level as our trading 12-month EBITDA. So a very excellent result also on cash flow and I would say balance sheet structure. A couple of things additionally to update you on. Up till now, we have indeed taken delivery of nine aircraft, new aircraft this year. We have reached a total of 28 aircraft of the NEO family, 320 and 321. So we're right about a little bit further than half of our overall delivery having been executed to us, our overall order. So that's gradually contributing to improving our fuel efficiency, co-structure, range for some of the aircraft and, of course, overall costs against, of course, an inflationary environment. We have, in terms of staff levels, exceeded our 2019 numbers. We stand in the middle of the summer at around 3,500 people, even though part of the excess The biggest part of the excess is partially because the growth of the operating crews, pilots, and cabins. Part of it also has to do with the buildup of our capacity of technical employees, which are effectively, to some extent, trainees, to some extent, experienced staff, as we're growing to develop the capacity for the MRO, which is giving up to begin at the beginning of next year, but we'll have effective material operations as of 25. And in terms of network, I would like to highlight that it's been, again, a year where we've done actually, we've added 16 new routes in our scheduled activity, reaching a total of 161 destinations out of Greece. highest number of the minicarrier in Greece has ever served. And I think contributing greatly both to the operation of our hub in Athens and commercial operation of our hub in Athens, but also, of course, building our competitiveness and relevance vis-a-vis other people investing in our country. And as we've discussed in previous calls, the recovery of Greece, the strength of tourism through Greece, early post-COVID has led to many major carriers having significantly higher capacity to Greece than before COVID. That's still there. And so I'm very happy to report that also in terms of market share, this year we see ourselves growing our share overall increase, and more specifically in Athens and Thessaloniki, where most of our efforts are actually concentrated out of, so we're getting back market share as well, despite the significant investment of our peers towards our growing leisure market. I think that we've spent many years talking about leisure. It's important to know, incoming leisure, it's important to know that we are beginning to see a growth of travel by Greeks that actually exceeds, in terms of pace, the growth of the travel of people coming into Greece. Please do not take me wrong, that does not mean there are more Greeks traveling with us than there are, or coming to Greece, of course, than there are incoming leisure or tourism, but it means that the pace that the two different groups are growing in terms of the travel is recovering faster now for Greeks because their economic situation, their status of employment, their levels of salaries are beginning to recover at a faster pace after a very long, weak, dormant period, which of course was the effect of the Greek financial crisis from 2009 or 10 to 2017 or 18. So that's a very, very important feature for us, and we hope that this is going to be part of what we need to extend the season and be able to be somewhat more efficient in employing our aircraft than our people and gradually be able to mitigate the traditional weakness of some of our winter and early year quarters. Last thing I want to say before I turn it over to your questions is that I mentioned earlier, I think we rate well against the results of other carriers that we've seen being published. And indeed, we see that when we compare ourselves in terms of how we've grown relative to last year, which we ranked relatively high, how we've grown relative to 2019, where we see that we are effectively the only non-local carrier that seems to be higher in terms of passengers and ASK the first six months of the year relative to where we were in 2019. But also, more importantly, in two more areas, in how the evolution, how the evolution of our cost basis per unit compares versus the year before relative to others and how the evolution, how the overall standing of our profitability in terms of EBITDA or EBT, EBIT as a percentage of revenue compares with our listed peers that have published their first six months of results and it is very, very, it stands indeed very well among the highest positions and this is quite important, especially during the first six months of the year when we have significantly higher somality and more pronounced weakness typically in those six months relative to the full year. So I think indeed a set of excellent results and a summer that as we've written is progressing well relative to last year. So there's nothing right now that shows a reversal of any of the trends we've seen. Naturally, the degree of growth relative to the year before will be slower, we've indicated in the third and the fourth quarter. We've indicated in the annual press release that we expect the offer capacity to increase by 10% in Q3 and by 16% in Q4. We've also indicated that we expect to have roundabout the same revenue per flight or revenue per ASK quality in the third quarter as we did last year because it was already very high. However, we will have, as I mentioned earlier, a higher level of operation this should be to our benefit. I would like to stop here and start taking your questions to either I or any of my colleagues here and help you understand how we stand. Thank you very much.

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