Aegean Airlines Ord

Ladies and gentlemen, thank you for standing by. I am Mina, your chorus call operator. Welcome and thank you for joining the ADN Airlines conference call to present and discuss the full year 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. Ezequiel Vasilakis, Chairman. Mr. Vasilakis, you may now proceed.

Good afternoon, everybody, and welcome to our annual results review for 23. Just to note before we start that our CFO, Mr. Kouveliotis, our Treasurer, Mrs. Dimaraki, and our Investor Relations Manager, Mrs. Catalani, are all here. with me to answer questions since you need to have more questions. Let me get on with my initial comments. I think we now know that Aegean has had a truly excellent year in terms of all aspects of both growth in passenger count, in revenues, in terms of expanding in new destinations, in terms of developing its investment toward the MRO and the training facility, and of course, very materially in terms of profitability in all aspects, and even perhaps more important than profitability, cash flows as well, to such a degree that not only the investments have been financed in an adequate way and efficient way, but also We have lower loans by the end of the year relative to the beginning, and also we have proceeded with the decision and then the repayment of the warrants of the Greek state. Therefore, all in all, a very successful year. Again, I will give you some highlights, and then we'll stop for questions. So during 23, our overall revenues increased by 27%. our passenger count increased by 26%. This is significant because the whole market increase was up by 14%. So in 23, we had a significant outperformance of the development of the Greek market, both on the domestic side where we drew 22% and on the international side where we drew 29%. In terms of passenger count, as I said, with an average – Development of traffic to Greece by old carriers of 14%. So definitely recovery in terms of growth and market share across the board. Following another very strong year, of course, for us and the Greek market, which was 22%. And to be more specific, we offered 3 million more seats overall, reaching 18.9%. million seats over the year. We got 3.2 million passengers more, so a substantial increase of load factor as well by two or three points. And of the 18.9 million seats that we actually offered to the market, around 350,000 were by our subsidiary, Anima, in part subsidiary, 51% subsidiary Anima in Romania. which we divested end of the year. So from now on, we'll consider a starting point to be around about 18.5, 18.6 million seats for GN proper and Olympic in 2023. So we did add almost 30 destinations last year. Many of those were on regular networks, some in the charter network, reaching 180 destinations in total and 49 countries. Certainly the largest network we've operated. But more than anything else, the success of the year, of course, was reflected in revenues and profitability. We reached essentially $1.7 billion of revenue. As I said earlier on, 27% higher than the year before. $400 million of EBITDA, reaching a margin of 24% for the first time for AGM, which is a very high margin for the industry, I believe. with a 46% improvement from the year before in terms of total EBITDA to 400, as I mentioned. $246 million of EBIT, with a 68% improvement relative to the year before. Again, operating margin EBIT being among the top ones in the industry. A pre-tax result of $215 million, up 52% from the year before, and an asset tax result of $168 million, up 58% from the year before. So all these extremely strong numbers, and if I might add, it is significant to say that if we look at the development of the company between 19 and 23, we see certain elements which are actually worth mentioning. One, that it is one of the few, if not the only, listed non-low-cost carrier which is actually operating at 110% of ASKs of 2019. So we've grown, and from what I've seen, we're the only listed non-low-cost carrier that is actually higher in 2019, sorry, 23 in activity, materially higher than in 2019. But also what's important to note is that our improvement in terms of revenue and profitability has come with a vast increasing from 2019 of a total of 18%. So our revenue per available city kilometer is up relative to 19 by 18%. It's actually very close to the last number we had also in 22. But what actually led or allowed us to improve our margins is the fact that we only increased our cost per ASK, including fuel costs, for all these four years between 19 and 23 by 12%. So basically what has driven the improvement in margin has been a moderate increase increase of revenue per ASK at 18% relative to what we've seen other carriers report. There's been stronger unitary revenue increases, which are yield driven by other carriers, but also they've had higher cost per ASK increases relative to 19 in these four years. And therefore, we see in a GM that comes with a substantially improved margin, improving its balance its positioning relative to other carriers in terms of margin, and that improvement of margin to come out of a moderate revenue per ASK increase with a contained cost per ASK increase, which in our view is better news because it's more defendable. And also, of course, it's important that we remain attractive to the customer in a market that is very much leisure-driven. So industry-leading, I think, at least for non-low-cost carriers, EBITDA, EBIT and earnings after tax margins, balanced in their origin relative to a few years back from revenue unit improvement but also cost containment. So we feel very good about achieving these levels. In terms of some other elements that are worth noticing, cash flows, As we have noted also in the press release after operating leases, operating cash flows stood at 335 million for the entire year. And this has meant that we've been able to finance, of course, without any issues and quite competitively all the aircraft we've accepted. We've actually increased during the year by circa 100 million euro our unencumbered assets, either in aircraft or engines. We've decreased by around $70 million outstanding loans during the year. And having said that, we've reached at the end of the year a cash balance of $709 million up from $530 million the year before, so plus $180 million. So if we want to adjust for the warrant payment that was made actually two days after the beginning of this current year, still a net of plus $100 million of available cash post the payment of the warrant, while we increased unencumbered assets by $100 million and repaid loans of $60 million, which I think altogether shows the health of the company. Also, during this year, we have proceeded with the development of our reconstruction and development of our MRO program, and a simulator training facility. The simulator training facility is actually operational already as of December 23, and it's great to see the efficiency of our crews now being trained or retrained on the sims right next to us as opposed to having to travel distances to other countries with their trainers and reducing their productivity. And at the same time, we've opened the doors and third parties in our JV with CAE for the training. So that part is doing well and it's already operating. The MRO facility is very near to being completed. The relocation from the current smaller facility to the larger one will take place in around a month, a month and a half. So we expect that facility to be operational as well in a very short period of time. So all in all, as we also note in the press release, a very successful year in terms of increasing our market share, in terms of improving our profitability, and doing it in a relatively sustainable manner, coming both from revenues and cost containment, and at the same time, investing in the development capacity of our, let's say, underlying market. skills whether it is on the MRO side or in the training side. So a successful year and one which we create a much stronger starting base for 424. A few other things I would like to highlight, of course, this is going to be the first year after four years where GM will be paying a dividend. And we are doing that at the 0.75. The suggestion, the proposal to the AGM that will take place in the end of April will be for the dividend to be 0.75 euro per share. This represents roughly a 40% payout ratio out of our net income. for the year, and therefore we consider that it is a sustainable level going forward where we would like to remain or even increase in the years to come. And of course, the dividend re-contribution comes after the completion of the cycle caused by the pandemic of the loans that we have to secure, the aid we receive, the warrant that had to be there, and the repayment of all these aspects, be it the loans or the warrant, and therefore we now go into our regular, I would say, I would hope, operating period where the company, again, like it had before or up to 2019, is going to be paying a significant dividend on a year-by-year basis to shareholders. Having said that, it's important for us to highlight that it's not only the shareholders that will be benefiting by this year's performance. and hopefully the continued performance of the company in the same direction, but also our employees have benefited from the profitability of the company. The staff, to a great extent, contributed to the sustainability, sorry, to the resilience of the company during the COVID period, of course, because there were many of them in reduced work schemes, they had contributed part of their income or lost part of their income during that period. And now we're happy to report that in the results that you are reviewing for the whole year of 2023, there is an overall amount of circa 24 million that refers either to extra bonus or profitability related payments made to our employees or a $6.5 million provision that's been taken versus, again, a long-term incentive plan, 22 to 24, that we now know will mature positively to the benefit of the employee's concerns. So what's important to note is that from a number which was circa $6 million in 2019, became $12 million in 2022. This year, the payout was actually $18 million, and there was a provision for an additional $6.5 million to employees in various profitability and bonus sharing and profit sharing plans, which will mature at the end of 2024. So to describe what happened there, we have roundabout now 600 people in the company that actually participate in the end-of-year bonus plans in different levels and different ways. but also during 2023 and, in fact, also during 2022. Another 2,000 employees that have been in the company for more than two years and did not participate already in the bonus plans or the profitability plans received an extra salary this year as a bonus for the extremely good performance of the company. So in a nutshell, what we'd like to communicate very clearly is that we believe that the whole ecosystem or the constituents that relate to the company, be it shareholders, be it personnel, are now back in a very specific and very positive, I'm sorry, growth path in terms of their income. And that's, of course, positive, especially when it is achieved within a – cost-contained, I would say, efficiency-driven operation, which brings the increase of margins with a balanced performance between revenue per SK development and cost per SK development, as I explained earlier. I feel I should mention a couple of things with regards to the GTS engine issue, because it takes us from the performance, the excellent performance and growth of 2023 to what's going to happen in 2024. We explained to you in our last call, I believe, quite specifically the nature of the issue. It's now very well publicized over the last six, seven months from all airlines. Triton Whitney has identified certain sensitivities in some components of the engines of the NEOs. They have, both they and the regulator, have recommended or required that the engines come for inspection early or go for inspection early. This results in a higher number of engines than what is available for spare for G.T. Trum, the manufacturer, or from the company Scott, our own, to support the aircraft while the engines are in inspection. And as a result, will cause a high number of AOGs for an extended period of time, I think we'll last for sure during 2024 and 2025, possibly going into 2026. This has been presented in our two previous, I believe, calls. There's no particularly big news there since that time, except to say that the company has now reached an agreement with Pratt & Whitney in terms of how it will be compensated for the issue. It is, of course, substantial compensation. Nobody discloses exact terms. However, what we should say is that we believe it covers a substantial part of the cost of the issue, not the full cost. And the full cost of the issue refers, of course, not only to inefficiencies from the point of view of fuel burn or seat loss or maintenance costs because we will be flying, we'll be extending some of our older aircraft to replace aircraft NEOs that will not be flying. but also, of course, to the reduced ability to grow the company forward because of the number of aircraft that will be unavailable for a significant period of time. We can go into that in the Q&A if you like. Just to say that, of course, this is an important part of the equation of what's going on for 24 in terms of growth. Because of that issue, we have taken several decisions. One, of course, to extend some of the expiring leases. Another is to divest Anima in Romania so we can repatriate two of our own aircraft back into our proper operation. A third decision is to further cut back on charter operations that are non-core for our company. A fourth decision has come to employ one or two ACMI aircraft and third operators to support the remaining charter operations so that our proper fleet can serve our main basis in our network operations. And through all that, we have managed to produce a capacity, to have a capacity, an effective capacity for 2024, which will allow the company, again, to add about 1.1 million of scheduled seats, between around 800,000 in international and 400,000 in domestic, However, the charter operation, as I said, will be cut by around 250,000 seats and with another 300,000 seats missing from the ANIMA operation in Romania, the overall growth will be smaller. But what's important is that the scheduled operation, which represents the core of AGM, will continue to grow at its regular, almost regular rate, slower than 22%. but definitely we think well enough to keep abreast of the market developments here in Greece. So what you will see and what you should expect from us is, as I said, again, around about 1.1 million scheduled seats more in 2024. These seats will be coming out, will be added mostly in Athens and Thessaloniki. that in terms of growth, the international seats out of Athens and Thessaloniki will be circa plus 10% and the domestic seats circa plus 5% for an overall ASK, scheduled ASK expectation of around 7% growth for the whole year, which will come more in the early and late stages in the year and less at peak for a variety of reasons referring to the seasonality of different operations, but also due to various congestion issues and operational issues that we faced last year that we are trying to, making a lot of effort to improve upon. And I think I should repeat here that something we've said in the past, that one of the challenges in the post-COVID environment, despite the fact that demand has recovered, is that many issues, be it in supply, be it in the operation of airports, be the operation of air traffic control, both in Europe and in Greece, for many reasons, including the closure of the Russian and the Ukraine airspace, have become more problematic, and therefore having more, what's the right word, more spare capacity, more access, a little bit of access here and there, to be able to cover for shortfalls or delays is very important, to the balance of operation and the image of the company to the customers is very important to us as we are definitely a company that tries to be at least as close to the customer as possible and we try to be with small differences and relatively short distances but also our consistency we hope in our service a customer choice and to be able to command through that a marginal increase in revenue at the same time as we labor to contain our costs. So that's what I wanted to say as a start and happy to accept for me and my colleagues to accept your questions on last year or what we're giving you as an outlook for 24. Thank you.

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 comes from the line of Kumar Achal with HSBC. Please go ahead.

Yeah, hi. Thanks for taking my question. First of all, of course, just a quick clarification. So you mentioned you'd be adding 1.1 million seats, and that comes out to be about 20 million seats, 20.03 million seats, if I may say. But then in the statement you mentioned that you'd be offering 19.5 million seats. So which is the correct number? Is it 19.5 or is it 20.03? Okay.

They're all correct, but it depends what they're referring to. In 2023, we offered 18.9 million seats. Those seats include 350,000 seats in our subsidiary, Anima, the Romanian company, which we divested the last few days of... Was it the beginning of this year or the end of last year? February. Anyhow, February this year. So... Net of that, that's 18.5 million seats. What I said then following that is we will be adding 1.1 million scheduled seats, and we will be dropping 250,000 charter seats. So plus 1.1, minus 250, on top of 18.6 will take you where the estimate for 2,024 is, give or take 50 or 60,000, which is always variable. Okay. Yeah. Okay. It's basically we are bringing in aircraft that was not in Athens or Thessaloniki, but we're not operating on our scheduled network to protect our scheduled network. So we are trying to deal with a shortfall of aircraft by – shifting from areas that are non-core for us and, in fact, not part of our scheduled activity and also less profitable or not profitable at all relative to our scheduled activity and trying to emphasize the core.

Perfect. Thanks. Now the tail question is, if you could please discuss competitive environment in Athens and in other bases, mainly Thessaloniki, you know, how the competitive environment looks like. You're adding a lot of capacity in Athens. I mean, you're adding 7% seats in Athens. So, and if you could please suggest about the industry capacity and, you know, how the competitive environment looks like in terms of, you know, whether LCCs are coming, whether FSEs are coming, you know, and along with that, if you could also talk about how the yield environment looks like, please.

Right. So the overall environment in Greece, if we look at 23 versus 22 and then 24 versus 23, you have basically a gradual slowdown of the overall growth of seats offered to the country. Specifically, if we look at what's out there now for the summer period of this year, for the overall international capacity to Greece, we see on Q2 something like 10% more published sheets relative to 2023, and we see 5% more seats in Q3 relative to 2023. So the overall capacity of international players towards Greece and also the Greek carriers, of course, that fly internationally, that's what characterizes the overall capacity offer that we see now that has been published. This winter that we went through, If we consider, for instance, Q4 of the year and Q1 that we're currently going through, the delta relative to the year before was around 23% for Q3, sorry, for Q4 last year, and actually 16% for the Q1 that we're now going through. So what I'm trying to say is we're coming out of a significantly higher investment into Greece to slightly a mitigation of the overall investment in the country. Not a retraction, but a lower rate of growth, pace of growth to the capacity being added. Now, if we look at Athens and Thessaloniki in particular, it's fair to say that They have been the focus of additional capacity during both 23 and 24 relative to the other destinations, and that the growth pace that we expect to see in Athens and Thessaloniki is higher than the average for the whole country, but again, lower than the numbers we saw in terms of capacity being added the year before. Now, how does this all translate to current or recent trends in yields? The first quarter that we had a small decline in revenue per available seed kilometer was Q4 of last year, maybe about 2%, I think, relative to the year before, because, quite was one where there were effectively very few carriers operating in many important routes to Athens and to Thessaloniki, particularly from Germany. This got reversed in a very aggressive way the winter of 23 to 24, and so we operated in an environment, as I said, that could be 23, 24% more capacity winters. 23-24 relative to winter at 22-23. And in that environment, during that quarter, we lost about 2% in yield. What's encouraging is that even though now in Q1, we're still in an environment which has substantially higher capacity in both Athens and Thessaloniki. Effectively, there is no capacity international to non-Athens and Thessaloniki routes early in the year. We're actually back to a small increase of revenue per ASK relative to the year before. So it looks like what has been put into the market is being absorbed nicely and revenue per SK for now is keeping up. I think all carriers are very much revenue quality driven. I think all carriers have cost increases, inflationary ones, airport related ones, fuel related ones, ATC, delay, compensation related ones, labor related ones and therefore everybody is reasonably careful with their management of revenues and the capacity being offered. So again, less than last year and less than the year before in terms of pace overall. It will be more early and late in the year rather than in the summer when things are congested and people find difficulty in operation. And again, it will be concentrated in Athens and Thessaloniki. We did see a small decline of yields in the last quarter. It has been reversed on a comparative basis, Q1 this year relative to Q1 of last year. And, of course, we need to wait to see what will happen in the summer. So far, so good, but also, Kumar, very early.

Right. Fair enough. Then my second question is about the capacity at Agen. So basically, of course, the capacity will remain tight and partly due to, of course, the BRAC engines, GTF engines. But now, how do you see the capacity in 2025 when – when probably you'll get all the planes back and then probably you'll have additional deliveries according to the schedule. And then rather it's not Aegean, of course, the whole industry, I think the patent general start coming in. So how do you see the overall capacity environment in 2025? Do you see a risk of overcapacity situation there? So, yeah, I mean, about Aegean and about the industry in terms of capacity in 2025, please.

I don't think the capacity will return in 2025. Actually, probably the specific problem that we are discussing will probably peak somewhere between the end of 2024 and mid-2025. So, actually, this is at least a two-year problem. This problem of actually addressing the early inspections of the engines for the number of aircraft that's out there, which seems to be around 1,360 aircraft, but have been affected by that. By the time this whole issue is dealt with, this will be about 30 months, I think, starting from, let's say, November last year. So it will go up to either before the summer of 26 or maybe to even include parts of the summer of 26. So in terms of when, of course, that does not mean that the whole fleet will be out, but if we assume that, let's say, one aircraft out of three, it starts with one aircraft out of four being out, then we'll go to one out of three, we'll stay to one out of three for a while, and then we'll start coming down to one out of four or five and be done with it as the whole cycle completes. So that cycle will take about two and a half years. That's response number one. Now, the other part, how will supply go two, two and a half years forward? I'm sorry, I cannot tell you that. I don't know. I don't think there's going to be a momentous jump. I think there are a lot of problems that we read and hear about that keep supply in check, including not only relating to actual aircraft. Some of them relate to congestion. Some of them relate to ACC. Some of them relate to labor. There are a bunch of issues. that keeps capacity somewhat constrained, okay? Now, I don't have a better answer than that, but I don't feel that 25 is going to be material different than 24. Beyond that, it's too far for me to say.

Right, fair enough. And then, sorry, last final two questions. First of all, in terms of Athens Airport, which has been privatized now, I mean, you know, I'm sure... infrastructure would improve and all. How do you see improvements in the overall capacity and do you see a positive impact on traffic overall? How do you see that situation? And secondly, of course, you know, after being privatized, I mean, as happened with other airports, which the airport is managing, I guess the airport charges are going up. So overall, I think the cost pressure is mounting, right? So how do you see the situation? How do you see the situation there?

Let's take it from the end. Your last assumption is wrong. There's no effect at all to what the airport can do with its charges, quote, unquote, now that it is privatized. The concession agreement has not changed at all in that aspect. The concession agreement had a limit from the date it was constituted, that has what the airport will describe as a double-tail restriction on the yield of the airport, which means what? That the return on investment that owners of the airport can get out of aeronautical charges, the regulated charges, departure taxes for the passengers, landing parking fees for the aircraft and the like, is actually capped at 15%. That remains the same and is not affected by the fact that the airport is now listed. The airport has been privately run since day one. The state, since 2001, when it was first constituted, the foreign investors, they've changed ownership a couple of times, but they've always been the ones appointing the general manager of the airport and the current CEO of the airport, and the ones that have had to adhere to the restrictions of the agreement. So we had a very expensive airport from the start, but it's not going to become more expensive because it's listed. There's absolutely no effect at all on that aspect. On the other aspect, will the listing affect the ability of the airport to invest on its development? Well, no, because it's not an IPO. It was actually a sell-down of shares by the Greek state, so there's no money going into the airport. However, Again, by the same concession agreement, they are bound to make investments in the expansion of the airport as certain passenger development targets or benchmarks are exceeded or reached. Now, they've hit that benchmark, which requires them to increase, I believe, the capacity of the airport, the terminal of the airport, to 36 million. And they've already announced that they are proceeding with plans to expand the terminal capacity of the airport in a construction effort that will take place between now and the end of 28. I think it will start somewhere in mid-25. This year is going to be more about design and then auctioning off, tendering the construction contract to different people. So, in a nutshell, do we expect charges to change? No, they will not. They are already... at the profitability limit from the aeronautical charges that the concession agreement will allow. Therefore, they cannot go up. The airport's profitability can improve by basically the non-aeronautical net revenues. They have around €9 per passenger benefits that doesn't come from regulated charges, and those, of course, go up the more passengers they have. And, of course, also, as they make more investment, then they are allowed to make more money, but not per unit, from the aeronautical side as well. So we're not worried about that. It's always been a well-run airport. It's always been a well-structured airport in terms of its operations. In the last two years, it has been somewhat restricted in terminal operations, comfort, let's call it that, because there's now more passengers and because the investment to expand has been delayed by COVID because the trigger to expand was pushed back. And therefore, we look forward to this expansion because the comfort level of our passengers, the number of boarding bridges will be expanded. However, to be clear, the airport is not restricted in terms of runway capacity or apron capacity. So there's nothing restricting us or anybody else adding more flights, but so long as the terminal is still restricted and hasn't been expanded, the experience of the customers and certain issues like the time it takes to go by bus to the plane because of no more boarding bridges will get worse, and that has some operational effects together with the air traffic control issues. I hope I've described what's going on with Athens Airport to the best of my ability. Sure. Thank you very much. Thank you.

As a reminder, if you would like to ask a question, please press star and one on your telephone. The next question comes from the line of Bouligouris Alexandros with Europe Securities. Please go ahead.

Yes, hello. Thank you for the presentation. A very good question regarding the payout ratio. You mentioned about the 40% payout ratio from 2023 earnings. And we should expect, I would presume, good free cash flow again in 2024 and hopefully in the following years. So should we consider this 40% as a flaw in the payout ratio? That's my first question. And my second question a bit regarding the the heading levels for 24, 25, if you could elaborate a bit on that. And a bit another clarification, the 7% ask growth that you mentioned, I assume this, as you said, on the seats as well, refers to the scheduled, correct?

Yes. Yeah, so apart from the end, yes, the 7% is on the scheduled seats. The total, I'm sorry, is on the scheduled ASKs. and more or less the seats because the average segment length is not going to be significantly different year by year. And yes, all of that is going to be on schedule and not on charter, which is going to go down, not up. And the total number of seats you should expect is 19.5 million for the year 2024. You asked whether you should consider 40% as the lower limit of our payout ratio. I believe you are correct. We would be looking to be at that or somewhat above that going forward, always keeping in mind that sustainability of a specific nominal level of dividend is very important to companies as a practice. I missed the middle question. You said the hedging of 2020? Hedging, hedging, sorry, the hedging. Hedging, hedging, sorry. Okay, hedging, right. So the hedging of 2024, we seem to be hedged a little bit more than 50% for fuel, and we are at, let's say... 5% lower levels than the current spot rate in the market. It was 15% under the spot rate in the market just two weeks ago. The market is significantly volatile, particularly in jet fuel, more so than in Brent. In any case, we are about 53% hedged. And we are also around 50% hedged on the U.S. dollar at a little bit over $1.10. And the year after that, we have small positions, about 15% to 20% in fuel at market and about 25% in U.S. dollar, more or less at market or a little bit above market. So in the money. If we were to market our total hedging position, it would be positive by... six or seven million uh today looking both at dollar and and fuel um in aggregate so uh a little bit better than what the market um shows today okay got it thank you and that's uh about 10 percent of course lower in terms of hedging rates uh in terms of level at which we are hedged not percentage of hedging and what we had effectively last year uh Last year, I believe we were at 850 jet fuel, and now we're about 10% below that. But, of course, the market is different. Thanks.

The next question comes from the line of Memishonos Mamou, Zabrozhia Capital. Please go ahead.

Hello. Many thanks for your time. I just wanted to clarify, maybe I missed it. Regarding capacity growth in Q124, you mentioned 16%. Is that for the sector?

And how much are you growing? The 16% is the growth of international seats to Greece during Q1 of the year. and then it goes substantially lower, eight and five, going to Q2 and Q3. We are round about plus or minus one or two points in our own investment in international seats for the three quarters, the three respective quarters. There's one quarter, the first one, we're a couple of points below, then we're kind of a couple of points above, and then again, maybe one point below. So we're pretty much at the same level of the market quarter by quarter, which is, as I repeated, 16, 8, and 5, Q1, Q2, Q3. Q4 has not necessarily been published because November and December have not been published by anybody. This is why we don't mention it. And so our growth is similar to the overall markets on the international scheduled side.

And on the domestic side, would they be roughly half or so?

You did all right, yeah. Yes, roughly half. And we are a little bit better than market. Okay, so in general, your market share has been relatively stable is what we can... No, our market share increased significantly on the year that we passed, 23 to 22. Yes, okay. If we assume that our... capacity exploitation will be similar to our capacity investment, then our market share should be neutral. In reality, I would expect in the areas that we focus, which is basically Athens International, Thessaloniki International and domestic, to have a small increase of share out of outperforming a little bit in load factors.

Fair enough. And the second question is, again, maybe I missed this, apologies in advance, productivity compensation, any color on timing when we would know how much this will be?

We already know, but we're not telling you.

Yes, I can appreciate that.

So I'm sorry, but nobody is allowed to disclose and nobody actually of the 60 or so carriers but I'm sure have similar issues and compensation issues with Bratton Whitney, actually discloses the level of compensation. What I did say is that it is substantial, it covers a substantial part of the problem, but it does not negate the problem for us, either in overall cost effect or net cost effect after compensation, or after considering, of course, the reduction in our capacity to grow. Therefore, that is not a cost-positive equation, the effect of flying less of the newer aircraft, having to extend some of the older aircraft using ACMI for charter versus actually receiving the compensation of Tratt & Whitney. That is something that's going to take something away from our margin. But, okay, the biggest part of the shortfall is being compensated for. That's as much specificity as I can give you. But net-net is clearly a negative thing both on cost and on ability to grow.

Understood. And this will just be accounted in other operating expenses or something throughout the quarters? How will it be accounted?

The way we will use the amount, assuming our auditors agree to that, is basically offsetting the effects in maintenance, in fuel burn, and lease costs. That's what we want proposed to our auditors. We are not sure yet how we will agree to disclose it, but we will make sure that once we have the agreement with our auditors, that will be communicated by individual relations so that analysts can know where the offset will be and where to expect things to be in excess and where they expect things to be in balance. We will try to put it in what gets hit. so you see it gets hit less. And what gets hit is basically fuel burn, maintenance costs, newer versus younger, versus older aircraft, and, of course, lease costs because we have aircraft that are idle, and we have to have a higher fleet count for the same number of aircraft flying. So these are the three main areas where the offset will go, unless our auditors suggest otherwise. Correct, Mr. Cuballote? Correct. Correct for now, says the CFO. It's not correct.

Understood. Final question, labor cost trends. Are you seeing any cost issues there, and how are those trending?

Well, I mean, you know, it's very clear in our country especially, you know, that salaries are on a rebounding trend, which is not only – the post-COVID inflation environment, but also, you know, finally an economy that comes closer to full employment. We're still some part away from that, but we're a lot closer to full employment than we were six, seven years back. For us, that has two sides. It has the side of Greek consumers being stronger as more of them are employed. Their real estate is worth more and their activities are more profitable now on the average than they were five, six, seven years back. So that's a good thing on the balance for a GM. On the side of how we deal with it on the employee side, we do two things. We do one, of course, we have increases in the fixed salaries of people, but also we have the profit sharing schemes that affect a high number of our higher value or higher level staff. And I'm not talking about one or two people. It's actually 600 people in the company that participates in the profit-sharing or end-of-year bonus plans, and those include senior captains, senior technical engineering staff, marketing, sales, everybody, administration, management. So it has a high number of people. And having said all that, the most important thing to maintain control of our costs is is continuing to have a modest but steady growth rate that allows us to introduce people in the company on junior levels and then upgrade them, be it in the cabin, be it in the cockpit, be it in the technical side or in the commercial side. Because the growth of the company allows people to graduate to higher levels of responsibility in operations and otherwise, and that creates a productivity-positive environment personally positive and cost per ASK neutral or even positive trend because you understand if you consider yourself today when you enter as a pilot that has received a co-pilot that has received a scholarship from Aegean two years ago you enter today as a co-pilot if you become a pilot four to five years down the line your salary is going to change materially so in the course of seven or eight years you've gone from applying for a scholarship to to somebody paying for your scholarship, to having a decent but not so high salary as a junior co-pilot, and then to be a pilot five years down the line, a captain five years down the line. Therefore, that kind of evolution in different levels of the company, and this is now growing also in our technical department with the third-party facility, but also continues to grow within different areas, that mobility is a very, very important part of developing not only the salaries but also the loyalty of the people and maintaining that even as you pay people more, your productivity and your cost per SK will stay reasonably unaffected or affected in a more reasonable balanced way. So that's what we're doing in the company, it's a mix of yes, the market expects Higher pay, the inflation is higher as well, so we need to do that. We do much more profit sharing. I explained earlier on that the $6 million of 2019 was $18 million in payout for profit sharing schemes in 2023, and that we made a provision of another $6.5 million for the long-term plan. This kind of thing helps, and the evolution of people as you introduce them to the company and then gradually upgrade them if they deserve it, is what keeps things going in a positive direction for us. But there's no doubt that we do have a fuller employment economy, and that, of course, is both positive on the one side of demand and also more challenging as you try to develop your people in the future. But we feel happy with how we are today.

Understood. Thank you very much.

As a final reminder, to register for a question, please press dial 1 on your telephone. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Vassiliakis for any closing comments. Thank you.

Thank you all for attending our call. I hope and I believe that we'll keep going forward in an equally positive way as this year has been. Certainly a very good year for us behind us. Our general assembly is going to be on April 30th, I believe, on the Tuesday before Easter. And that's when we will also determine the cutoff date for the dividend, which should be sometime after Easter. Thank you very much for attending and all the best for the year. Thank you.

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