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.

Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time.

One moment for the first question, please.

The first question is from the line with Ambrosia Capital. Please go ahead.

Hello, many thanks for your time on the presentation. I wanted to touch upon the yield outlook. In the press release, there is some commentary. You had a very impressive 5% growth in the second quarter, and just wanted to confirm, you're guiding for pretty much flat unchanged year-over-year yield performance, or just wanted to see if you No, no. We are guiding for a flat revenue, for a flat roughly for the Q3, which as you know is practically almost done. So we've got another 20 days to go in September. So we know against the revenue quality that we're looking for for that quarter. So this quarter, two, three, we'll have a higher ASK by 10% and roughly the same level of revenue on a quarterly basis as last year. So that will add to whatever the first two quarters are and produce whatever average comes out of that in terms of revenue. revenue per ASK or anything else. For the fourth quarter, of course, it's purely to tell, other than guiding on what our capacity will be, which will be 15% higher in Q4 relative to last year in terms of ASKs. And the reason the yield growth coming down from plus 5 to 0 is mainly base effects. Is that the right takeaway, or are you sitting in No, it's a comparison basis. I mean, you know, the peak of the summer last year was very strong. The difference is we now have a bigger activity with an equally strong, let's say, quality of revenue, gaining a little bit of load factor here, gaining a little bit of fare there, losing a little bit of fare there, but overall maintaining, as I said, the same revenue quality and revenue quality can be discussed either in revenue per flight or revenue per ASK for Q3 because the benchmark is now extremely high. The activity is bigger and of course summer months are very profitable so that should have a positive effect. but we cannot expect yield or revenue-based numbers to continue rising on a quarterly basis relative to last year's basis. Relative to 2019, of course, they are significantly higher. So, yes, no, we've said it before, actually, even in the general assembly, we already have guided that Q3 would have similar revenue quality per flight as Q3 2022. Understood. And if I could ask on the cost output, do you see any changes on a unit cost basis XTU in the second half or should we expect a similar trend? I would expect a similar trend. I don't expect something tremendously different, except to say the following. The delta in the second quarter this year up to last year was very high in the employee benefits. because in the last year, up until the beginning of May, there were some government programs, COVID support programs for people that were still partially returning or partially not fully working, and there was some compensation for them, which relieved the company. And therefore, that increase was higher in Q2 versus last year. We definitely don't expect the same trend to raise in that aspect. But on everything else, I don't think there's something drastic changing on Q3, Q2. Now, having said that, I think we have dealt extremely well with the evolution of the compensation of our employees. We have returned some variable pay that was taken away during COVID. We have provided for the inflation-led make-up and more than that for a lot of the categories of people employed in the company. And we have reconstituted our bonus structures which worked very well for last year and we're expecting to work even better for this year. So I think we have a growing number of organic staff, especially in the cocktails industry, and in the other key operational and commercial and financial areas of the company, which are highly motivated and in the same boat with the company in terms of the direction we're going and sharing the benefits from the performance. But I also think we're doing quite well in managing our overall cost there, along with everything else. Basically, what's protecting us is the gradual introduction of more new aircraft. And what's hurting us is many things, including, of course, what we see increases in the airport charges all around Europe, increases in the handling charges all around Europe, higher cost of capital, which is inescapable when you are accepting and taking delivery of new aircraft, no matter how you finance them, the interest rate to the dollar or to the euro has a significant effect. And all this is to some degree countermanded by the percent of NEOs in our overall flying, which is due to fuel efficiency, and due to lower maintenance, take away some of our benefits. We managed to get to a very good result, I think, in H1, which was actually a reduction by 2%, if memory serves, on the corporate escapes to the fuel. That was also supported by the, of course, less under-humanization of the fleet in the first half of this year over to the last. I wouldn't necessarily expect the same thing in the quarter three, but I think we're very much in control and significantly better than the average I've seen in the listed company results in unit cost evolution. Forgive me for not being super precise, but after all the volatility we see in things including fuel has to make us a little bit circumspect. And the dollar also has, the dollar-euro has significant volatility as well. So we're partially test in both, about 60%, I believe. in the fuel until the end of the year, and around about the same amount, a little bit less, for the dollar. But still, there is a space for effect by the movement of these two elements. Great. That's very helpful. Thank you.

As a reminder, if you would like to ask a question, please press star and 1 on your telephone. The next question is from the line in .

Please go ahead.

Yes, good afternoon. Thank you for taking my questions. Congratulations on the very good results. I was wondering now that you said about fuel hedging, if you have also started hedging at all for 2024 on fuel and maybe the dollar. And I was also trying to see about the capacity, as you said, in Q3 and Q4, that you're adding 10 and 15%. Do you have an indication how peers are going? Are they going to, you know, to have less capacity as we're approaching the winter months? And the only new destination that is in the summer period probably won't be there for the, except for the, you know, for the big hubs like Athens and Thessaloniki mostly. Do you have something to share with us on that? Thank you.

I'll start from the end. Obviously, you can never take away the seasonality of how capacity develops in Greece. I mean, when we say, of course, that we are higher in the Q3 relative to last year and Q4 relative to last year, always comparing the same order to address for seasonality. So, obviously, in Greece overall, Q4 is always significantly lower than Q3 in actual capacity. In competitive capacity, we know that what is left in Q4, as you correctly said, its capacity to Athens and Thessaloniki. Now, what is happening in this winter is I believe what typically happens when things are going quite well is that there is an increase in the winter comprehensive capacity to Greece, meaning Athens and Thessaloniki, but pretty much at the level that we will be adding as well. So, If I want to compare from 2022 and I look at the October to December published capacity of scheduled carriers to Athens and Thessaloniki, I think just around 16% would be the average put by competitive carriers in the market. Obviously, it's in no way uniform across what individual carriers do. Some are at the same level, some are lower level, some are higher level. But we... we consider that to be not insignificant but also not excessive given the demand and the stretching of the season particularly for Athens that we have tended to see in the last few years what might make more of a difference because typically the summer effects carry over until mid-November so you have a week period around 20 November to 10 December and then you have the Christmas around the Christmas break, which again is strong. The effect to our results by what happens in winter usually is stronger in Q1 of next year. That's a little bit too early to call in terms of what competitors are doing because there's still a lot of room for adjustment. Generally speaking, more capacity in winter than last year, around the same level as we're investing So our capacity share will stay around constant. Now, you also asked about hedging for next year for fuel and dollar. I believe we have built around a quarter of our needs for fuel and around 50% of our needs for dollars already for next year. The current hedging of what we've done is a little bit at a lower level by 15%, 13% in terms of unit rate rather than what we were hedged at in 2023. But since the fuel has recovered, I think gradually as we build our position in the space where it is, probably our hedging levels will approximate gradually those we had this year. Now, that's a little bit looking forward, but if things stay as they are, then probably our hedging at unit levels will not be lower than what was this year, although what we've already got is lower than what we had this year by about 13%.

Okay, that's very, very clear. Thank you very much.

The next question is from the line of Kumar Achal with HSBC. Please go ahead.

Hi. Good afternoon. Thank you so much for taking my questions, and well done on the very strong results. I'm so sorry for joining late, and kindly excuse me if my question has already been discussed. But, I mean, first of all, I wanted to understand about the cost pressure building up. And so in that regard, I think Fraport says that they're going to increase the airport charges by 19% or maybe slightly higher in 14 Greek airports. So I just want to understand, do you have any – Do you have any say in that, or is it like, you know, you cannot do anything about it? And if Safford increased the airport charges by so much, do you think it could discourage the low-cost airlines like Ram Air to remove some of the capacity? So how do you see that situation, and how, I mean, would that really benefit you guys if NCCs are being discouraged by just so much of airport charges increase?

Okay, so I'll try to answer that tomorrow. It's not an exact science announcement. First of all, I don't think that there are essentially two elements in the charges of an airport. One are for flight charges and the other are for passenger charges. I think if memory serves me correctly, Roundabout's overall increase was around 10% for the summer, but it was biased toward per-flight charges, which was a higher increase, whereas they did not make or make a very small increase on the per-passenger charges. Of course, the per-passenger charges are not part of unit cost, because they are a pass-through number. Therefore, what affects unit cost, because it's not a pass-through number, charged on the ticket passed on to the customer, is only the per-flight charges, and they're indeed The increase might have been higher, but the overall effect to the passenger, which is what contributes to the elasticity of demand and determines together with our fairs and our competition fairs how many people we have, is not as strong as that. Now, at the same time, because we did make a reasonably big deal about it, and because I think some other people reacted as well, they did come back with a reduced set of charges for the winter period, partially, partially, partially, not fully, offsetting this effect. Can we block any airport from increasing its charges? It is an inexact science. Each airport has a different concession agreement. They have different possibilities within an agreement. We would like to think that they do take into account what we say. But, of course, at the same time, airports, airlines, everybody, even banks, do like their pockets. So to the degree that a concession agreement will allow, they will actually take the opportunity to make increases. Everybody will argue that they have cost as well. An airport will say, well, you know, we are financed by huge amounts of debt, and the cost of the debt has become a lot higher. And so they base some of the increases on that. It's not untrue. It's also true that we are all interested in maintaining a high number of passengers, and so we should be very mindful of that. Do I think it's going to discourage local carriers from flying in Greece? Unfortunately not, although I'm sure that many local carriers would actually say that. I think that demand is more important than airport charges. And unfortunately, airport charges are not going up only in Greece. They are going up for different reasons. You can call it environmental surcharges, inflation-related surcharges, and many other restrictions on top of CO2 charges that are higher all around Europe. So I think the debate around that is open, but the overall effect I think is clear and it's definitely going the wrong way. I don't expect Greece to fare any worse. than the average of Europe, though. I have to be clear on that. I think because of the significance of travel and tourism here, because of, well, the relative weakness of local incomes as well relative to some other European countries, I think airports, authorities, everybody will be a little bit more circumspect from making wild moves like have been taking, especially in the passenger charges in many European airports. Right.

And like you said, of course, I think the costs are rising in all the airports across Europe. I mean, that's correct. So how do you see the overall unit costs, overall ex-fueling costs for AGM Airlines during the rest of the year, the second half, and then, of course, 2024. Given that, of course, I understand that you're getting more fuel-exigent aircraft. All that is fine. But then, of course, the inflation is hurting, and this is sort of, you know, increasing employee costs, increasing all the vendor-related costs, and moreover, the airport charges. How do you see, how should we expect unit costs in the second half of this year and the next year, please?

Well, again, I will give you a guarded response on that. For this year, I don't expect any significance. I already responded a little bit before you joined. I don't expect the trends that you see to be materially different between quarters on a unit-fold basis. except to the degree, of course, that the dollar and the fuel will cause. Now, looking into 24, a lot will depend on how effective we are also in increasing our utilization. Our utilization this year, of course, is better than 22, but it's not better than 19 on a per aircraft basis. And there are several reasons for that. Some of that has to do with difficulties in operation that we face across airports in Europe regarding air traffic control, regarding staff shortages, which requires a higher backup. Some of it has to do with difficulties in anticipating when engines might return from MROs and needing to keep more aircraft in reserve to address that or specific engine problems that have appeared with the DCF engine of craft. Therefore, there are issues that affect utilization this year. Next year, we're going to try to make an effort in some of these areas with the planning of a network and the emphasis in routes that can give us a lower degree of seasonality, particularly around Athens and Thessaloniki, to mitigate that and to have that along the high utilization, along with the, again, higher percentage of new aircraft, be the second, I would say, mitigant in what's happening on coast. Now, having said that, I don't think it is prudent to expect that we will not have a low single-digit increase in ex-fuel costs by let's say 2% or 3% going forward for the next 12 to 18 months. And that's as close as I can cut it. Please forgive me if I cannot be too accurate because the degree to which we can address utilization It depends on some planning issues, but it also depends on how demand itself evolves, because of course, flying more in winter and flying more in early summer in all routes makes sense. so long as you can cover essentially the flight variable cost. So we will have to test that and see how it works out. So one thing is for sure, you should definitely expect more effort to increase capacity in winter than increase capacity in summer. Next year we will not be increasing our fleet so much in total numbers, partially because of some late deliveries. We expect to have something between a 7% and 9% increase of ASKs for the whole year, but that's going to be biased towards the beginning and the end of the year, less a peak, in order to try to get to this high utilization figure, which will also protect, to some degree, our cost per ASK. What I am pretty confident at, again, looking at the comparison of how we fare versus others in this area, Now that basically everybody that's listed has published our numbers, I feel very comfortable because we rate very well on these trends, and I don't see why the relative will change, even if the absolute is not so easy to predict.

Right. Sorry, just one clarification, actually. So you mentioned that unit cost, ex-unit cost, should not change very much from the first half.

No, no, no. I think what you should keep, all of you, so that we avoid misunderstanding. Let's say that if we take a bet now, what we will see from page 223 until the end of 24 as an expectation of unit cost excluding fuel, is an increase of 2% to 3% quarter relative to the equivalent quarter one year back. This is how we expect things to be right now. It could be a little bit better or a little bit worse depending on utilization primarily and a few other figures.

That's quite interesting because I guess if you're talking about that 2% to 3%, that means the second half, the unit cost, absolute cost in absolute terms could be lower than the first half because you had, if I'm not wrong, you had some furlough benefits last year which are no more there. So basically in terms of base effects, If you are saying two to three percent increase, that means in absolute terms your second half.

May I advise that you continue this conversation with Stella and Dante offline early tomorrow or Monday as it is convenient for you. I want to make sure that by continuing to answer your questions, we do not make any misleading statements to you or to any others.

Absolutely. No, that makes sense. My next question was about, you know, I just want to understand about your capex plan. So now in today's results, you mentioned that you bought one aircraft. So in terms of buying, I mean, do you have plans to buy more aircraft or is it the only one which you planned? So how should we think your strategy around buying what we're losing going forward, please?

I think what we've indicated is that we'd like to end up owning around I would say around 15 to 18 of our neo-feet eventually. By the end of 28, which appears to be today based on some extended delivery case that have come back to their class for different reasons, we would expect to own a total of into an aircraft out of the 50 mils and to have the rest leased. Now, saying the word own in itself has two different possible interpretations. One is that you get, you know, you can own an aircraft ultimately by doing a full financial lease of 100% financing. You can own it by getting, let's say, classic debt and equity loans 25% upfront by the company and 70-75% by the bank. Or you can make an exceptional move like we did for these two aircraft where we actually in one case fully repaid existing debt and in the other case purchased one without any equity. Sorry, without any debt. The reason that we did that is to achieve We have been overly conservative due to the COVID situation in terms of arriving to that mix that we were aiming to do when we started to take delivery. So we needed to catch up a little bit. And basically by doing a situation where owning aircraft was translated to having no debt behind them became a way to protect ourselves against, let's say, further interest costs and further escalation. a little bit quicker than if we waited to structure a higher number of aircraft with portions of equity in debt. Therefore, this is why this was done. That and, of course, the excellent cash flows that we have. You shouldn't take it to mean that for another 12 or 14 or 15 NEOs, that would mean that we will actually... a total of 100% equity to acquire them, the expectation would be that we wouldn't use a mix of that and equity. So that's there. However, the higher you see inflation and the higher you see interest rates, certainly We want to have ownership because the average cost of an aircraft goes up pretty high now year on year, number one. And number two, avoiding interest costs has a higher effect than it did before the crisis. So I wouldn't be surprised if you found $150 million or $200 million of our own money actually being in aircrafts by the end of 2025 on the new aircraft. So that would mean we would extend probably another 100 billion from what we've already spent on the NEOs in terms of equity. But don't forget also that our PDPs will actually be paying down until that time. So part of its equity will come from the return of the PPPs. I don't know. Again, hope I have not confused you. Let's not also forget that in 2003 and 2023 and 2024, in aggregate, we expect to dispense around $80 million in two years. should be around 55 and 25 between 23 and 24 in the investments in other equipment or refurbishment and reconstruction or payments for the concessions for the new MRO and simulator facility. So that's an important topic outlay as well for 23 and 24. Some of it has taken place already. Some of it is in front of us.

Okay. Thank you. With sincere apology, if you allow me, I have last two questions and I promise after that I'll shut up. So just one question on the winter this year. Of course, you know, last winter was exceptionally strong where you reported the profit. But of course, coming to this winter, the cost pressure is there. And then and then, of course, the base impact will be there. So how do you see the coming winter? I mean, do you think another profitable winter this year? How do you see that? And my second question is about 2024. I know the visibility is low so far, but then if you speak to any of the European allies, I think the confidence is a bit low, not as high as it was in 2023 in terms of in terms of trading because the fuel price again is going up, the cost pressure is there, and then the yields could come down, the demand is still uncertain, and there are no further drivers. I mean, of course, in 2023, we have a lot of pent-up demand. So how do you see 2024 trading? I mean, do you think 2023 could turn out to be the peak, and then we could see some drop from here on in terms of profitability? So what are your thoughts on 2024, please?

I don't want to be... I think the way you've described the mood across airlines is a prudent way to say that, listen, we are in an inflation environment and a high-interest environment. Eventually, this is going to hurt consumers, even affecting leisure to some degree, which has been resilient. Against that, there are only... Two mitigants in the case of Aegean. First, the fact that the starting base of the Greek consumer, not the incoming leisure, is significantly lower than the Europeans because we had a huge crisis in Greece between 2010, 2009, and 2018. Therefore, we are beginning to see a recovery and I said it earlier, I believe before you joined the call. We're beginning to see a recovery that drives consumer spending in Greece that follows a different path than the one that the Europeans are. So, I expect the blend between incoming and outgoing to be a bit different and support the GM to some degree. And at the same time, we are one of the airlines that is undergoing a more radical renewal, so that should continue to help. But other than these two issues, all the other issues that you have mentioned are valid. How they will blend to come out in the end, I don't know. I think it's far too early to tell, and we should not take the risk of making such forward predictive statements. After all, Omar, I think you will recognize that this is the first year we have even made a prediction about this year's results to some degree. So don't push us to extend our predictive horizon to 18 months forward because we can't do that. Now, is the winter going to be better or worse than last year? You said it all. Our expectation is that the likelihood is that it will not be as good. But the effect that this will have in the overall year this year is not very significant considering where the whole year is heading and what the numbers will be by the end of September and even I believe the strength of October and early November. So I'm not too worried about the delta that might come from Q4 because I don't think it's going to be that significant. Your questions about 2024 are more valid, and I have tried to answer to what degree we've got elements here in Greece or within Aegean that make it somewhat better, but it doesn't change the overall trend.

Thank you so much, and wish you good luck.

Thank you.

As a final reminder, if you would like to ask a question, please press star and 1 on your telephone. The next question is from the line of KSOMO, Jacob with Wood and Co. Please go ahead.

Hi, this is Jacob from Wood. Congratulations for the results and thanks for the discussion. Just three quick from my side on fuel.

Could you remind us how much free CO2 allowances do you receive? CO2 or fuel?

No, the carbon allowance. I don't remember the number by heart. How much we receive in CO2 allowances? For this year or next year? For this year, basically 50% of what we use is free, 50% of what we use is paper. Next year, obviously, it will be significantly less than 50% because we start to expire. Sure, thanks. That's clear. And roughly, how much would the unit fuel price for you increase on a fair AFK basis if you had to buy all allowances on the market now?

How much fuel price would increase if we had to buy all allowances on the market?

I believe if we had to buy all allowances on the market, that's a very good question. Yeah, I mean, if we had to buy, so when they all expire, assuming that we have the same level of operation and that they have the same unit cost as today, that would add around 85, 90, 95 million to the cost. Got it. Thank you very much. That's very helpful. And I guess that will be moderated by the modern aircraft. If you look at that in terms of revenue, that translates to around 5% more on the revenue. Lastly, could you remind me if you had fuel or oil? We had fuel. Thank you. So you are protected from the increases of the spread, which we have seen recently. We are irritated and partly protected, yes. Got it. Thanks very much. Thank you.

The next question is a follow-up question from the line of Rami Soglu. It's done with Ambrosia Capital. Please go ahead.

Just following up on the engine issues and in general, I'm curious on your thoughts about supply chain issues and aircraft availability for you, for the system. I'm curious to hear your thoughts. I don't think I have something super wise to say. It is clear that supply issues have had a dual effect in the market. One is to increase costs in indirect ways. by reduced utilization or reduced speed of induction of more modern, more efficient equipment. And on the other hand, they somewhat mitigate the supply of the market to the market. So in some way, they are protective to excess capacity. Now, going forward, particularly for us, the issue of the GPS engine is not an insignificant one. We've known about this issue for the last 18-20 months. It evolves as there are different things that come up and we find out from the manufacturer. Broadly speaking, the news have not been good in the last few months and this is not news. I'm sure you've heard and seen that in many different presentations or discussions. What is the effect to us? The effect is basically we need to keep more spare aircraft. That has a utilization effect. We were super conservative with that this year. I hope we will not need to be more conservative in that next year because we were already very conservative with the amount of spare to cover that possibility, number one. It delays the introduction, as I said, of new aircraft in the fleet because Airbus is pushed back in its delivery, and therefore the speed, so that we increase the mix of news in the fleet, pushes back. And also because the aircraft are pushed back, escalation works, insulation works, and we end up paying the aircraft at a higher cost. All these issues and some others that are too detailed to address, are part of our discussions with our supplier, Pratt & Whitney, and there have been some serious discussions and there will be some more about how these can be partially mitigated by them, or fully one would hope, but it doesn't really happen that way. So certainly not as smooth as we would like, but there's nothing new that I can add that many of your colleagues have not heard in similar discussions. Understood. And maybe on a more positive note regarding the network, you've successfully have been expanding it. and stage growth. Don't take me wrong, we are in a very positive mood. Not only what we have in the past, it's also what we are experiencing during the days that we are discussing. And the stretching of the season, which is a very, very important element here in Greece, because If we manage to convert a couple of extra months on a steady basis to profitable months, that is a very substantial addition to potential profitability and also because of the ability to operate more flights in these months, it shall see the cost over time. So we are in a very good mood. in terms of what we're facing. But equally, we do need to recognize that there are positive and negative effects. Now, network, yes, we will continue to grow the network. We just announced two days ago our CEO, Mr. Yerogiannis, and the chief commercial officer of Emirates announced a very important for us We are placing our code on a transatlantic flight for the first time. We are cooperating through that with one of the largest and most successful areas in the world. We are very, very, not concerned, but rather concerned. interested to have a high product association with them because we still would like to hope that our products reflect some of the qualities that their products have. Certainly that's the way we positioned ourselves in short haul. A lot of our success does not depend only on the total numbers of people traveling with us, but on the degree to which people care about selecting us, and that's a very important driver. And that's a lot of what we've been working on, whether it's with our lounges, with our Wi-Fi service, with the improvement of our service on board, with the fact that we remain one of the few companies in Europe, if not the only one, that actually still treats its passengers even in economy to a meal in international flight. So the qualitative element of what we try to do and how we develop our loyalty structure, our network and the value that we offer our customers and how they respond to that are very important part of our efforts and I think A lot of whether we are successful or not in the future will come as a function of how successful we'll be in these things, as well as how we'll continue to be able to motivate and train and develop our people who have been always what has distinguished the company versus our competitors. That's where the service comes from. As Mr. Yereganos has said many times, more or less, most airlines write the same claim. There's only two kinds. So, you know, these things are not things we typically discuss in analyst calls. We tend to get more granular about numbers and trends in the industry. And it's good because that's what, you know, you guys need to be asking. But in effect, what distinguishes airlines is basically, I think, these two things, how they plan about what they want to do and then basically how well they execute it in terms of delivering value to their customers and collecting value from the customers. And I hope there we will continue to be as successful as we have been, especially in the last year and a half and hopefully more. And up to now, the indications in that direction are positive. Because I think you will all recognize that there are within the same industry, within Europe, within the overall trends that have been very well described by some of your colleagues in this call. There are great differences in performance and relative performance, both in revenue quality, in cost quality, and in actual development in terms of how each company is relative to the way it was before COVID. which distinguishes the standing and the level of each company and what effect the last four years have had two different companies. And I'm happy to say that I think we're one of the very few companies that is higher in all aspects than we were before COVID. So I feel quite confident about our performance, always within the context of the overall industry needs. Understood. And maybe if I can follow up on one of your earlier comments regarding the Greek consumer flying more, if I understood that correctly. Are there any numbers, let's say, I mean, what percent of the international passengers were Greek outgoing passengers last year in H1 versus H1 in 2013? The only thing I can tell you that will help you on that is that the data from the Bank of Greece For the first six months of the year, I think it indicates a 19% increase in the spending of people who travel to Greece. That's up to Aegean, please don't confuse. And a 28% of increase in the spending of people traveling out of Greece. That shows that there is a particular dynamic resurging in out of Greece, but that does not give you how these numbers reflect on Aegean. This is just an average of the whole market as statistically measured by the Bank of Greece to indicate that actually that part is being revitalized. Again, of course, to the country incoming is more important than outgoing. There's no doubt, and especially for most of our competitors, incoming is their lifeline. I think the gentlemen and ladies were taking enough questions. I would like to thank you all for your attendance. Thank you also all, many of you have taken the effort, the additional effort to develop research reports for us. We're happy that we have more reports than we had a year ago and I would like to thank many of you but also our own internal people, ASEE and CELA, for supporting that process. No matter what you say about us, it's good to have written opinions that are well supported. So we appreciate and we thank you for that. Thank you for attending our call and we hope next time we meet things will be equally positive within the context of a changing industry, but at least with always a decent to excellent AGM performance. So thank you very much and hope to talk to you soon again. Bye-bye.

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling and have a good evening.