Aegean Airlines Ord

Ladies and gentlemen, thank you for standing by. I'm Konstantinos, your course call operator. Welcome and thank you for joining the Aegean Airlines conference call to present and discuss the full year 2024 financial results. All participants will be in 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. Leftichios Vasilakis, Chairman of the Board of Directors. Mr. Vasilakis, you may now proceed.

Yes, thank you very much. Welcome, everybody, to the presentation of the results for 2024. Let me first say that I have Mr. Kouveliotis, our CFO and Deputy CEO, with us, also Stella Di Maracchi, our Deputy CFO, and Anthony Cattelani, our Investor Relations Director, with us. So we're all here for your questions. Let me start by saying that 24 has been another strong and successful year for AGM, actually concluded by probably our most successful fourth quarter. As you know, fourth quarter is typically a week one for anybody involved in the airline business, but particularly for Greek airlines since most of our demand, strong demand is in the summer. Nevertheless, this quarter, the last quarter of 24, was definitely the strongest quarter of the year by relation to the previous year and the quarters before that. We had a 10 percent increase of revenue with only a 4 percent increase of activity in terms of ASK, and this has brought up our operating profitability by circa 30 million higher than the year before. negative 6 million of EBIT to positive 27 million for the quarter. So both in terms of operating profitability and in terms of EBITDA, which actually doubled from 35 to 75 million for the quarter, a very strong quarter, which basically seems to indicate that the demand for for travel coming from either Greeks that are able through the gradual improvement of the economy, but also foreigners who are extending the duration of their visitation to Greece to winter months is giving us some more comfort during the typically weak parts of the year. So that is a very positive let's say, development for us, which comes to mitigate some of the weakness or the relative weakness we had in Q3 relative to the year before, whether it was because of our inability to fly as much as we could in the peak of the summer due to the groundings we had from the GTS issue on the engines, or the lack of ability to cover the Middle East as an effective way, particularly Israel, Beirut, and Amman, as in the past due to the geopolitical crisis that did not allow us to fly there in the summer, which reduced our operations again, and also because July across Europe seemed to be less strong than it typically is. So after, let's say, a Q3 that was strong but not at the level of the year before, Due to these three factors, a very strong last quarter comes to conclude into a year. That has brought us, again, a total revenue of $1.78 billion, 5% higher than the year before, 6% higher passengers with a 16.3 million figure of passengers reached, and the total increase of ASK of 5% relative to the year before. And remarkably, looking at the market, also a small but noticeable increase on our revenue per ASK by circa 1.5% for the whole year. So the strength of the last quarter comes and concludes a year for us that had challenges due to the Middle East issues, due to the GTS issues, which was the first full year where we had to face these groundings. And still arrives at GM at the result where our EBITDA actually reaches again in excess of 400 million, so 405 million there, operating profitability of 227 million, 8% reduced from the year before, and a total net income of 130 million euro. bringing us to our second best result in terms of final bottom line, driven also by some movements in the currency in the last four months of the year, which we're happy to discuss and analyze for you later. The important thing for us is that, again, what I said earlier on, the strength of the demand that we are looking at, which is good enough to overcome the various unit cost pressures, whether they are from the GTF-related issues or whether from the inflationary pressures that we see in services, in labor, and also in, of course, the CO2-related costs that we have to incur as part of the gradual removal of the free allowances and the increases of the unit costs of CO2. that basically the demand remains strong and that this demand actually is now, I would say, balanced in terms of relative strength to the year before by the growth of travel of Greeks and foreigners coming to Greece as well. And it's important for Aegean to achieve a result like this within a market that is continuously, let's say, visited increasingly by other airlines as well, which have dedicated a significantly higher capacity to our country also for 2024, just like in the years before us. And before that, which is why the capacity to Greece from Europe is up basically around 25% or 26% relative to pre-COVID years, when in fact the overall European capacity is around about 2% or 3% only higher than for intra-European flying than it was before COVID. So good performance within a market that shows domestic and international resilience and growth and where other carriers are also concentrating significant amounts of their capacity because of the attractiveness of the environment. Our cash flows also have remained very strong. This is demonstrated by the fact that despite the purchase of the warrants, early of the year. Our investment in Volotea, which took about $30 million, $31 million to be precise, by the end of the year. Our investment in some other non-operating items, such as shares of the Athens International Airport, which took about another $25 million. So between the warrants and the investment in Volotea and the Athens Airport listing, These together are basically 130 million, 125, 107 million of euro. And despite these non-operating investments, we still ended up the year with higher cash available by circa 60 million, 65 million from the beginning of the year. Having, of course, paid for the first time after four years a significant dividend and having also for the first time after four years paid significant income taxes since the offset of the COVID losses is now complete. So cash flow is also strong. We continue to accept new aircraft throughout the year, a total of seven aircraft. New aircraft actually joined our fleet, five Airbus 320, 321 Neos, and two ATR-72-600s also new joined our fleet. So the fleet program continues to evolve. You have also seen recently our complementary or supplementary addition to the outstanding fleet program, but we can discuss that later in Q&A. And, of course, this year was also significant for another reason. It was the first year of operation of our third-party training and maintenance center. Of course, we're very much in our early stages of the development of our capabilities there in terms of people and in terms of client base. But it's very important to note that even in this first year, we have achieved to have some of the larger airline groups in Europe to send us information could be for trial, but they sent us some aircraft for maintenance, and I think we did quite well in the serving of those first major customers, and we hope that our performance will cause them to bring us more long-term repetitive business that will validate our investment in this area as well. So, all in all, I think a successful year. We go into this current year with a somewhat more significant investment in capacity. We hope to operate this year between 8% and 9% additional ASK. Effectively, it is not dissimilar to the intention we had last year, except that the inability to fly to the Middle East in the summer took away 2%, 3% of our overall ASK growth and landed us at 5%. So it's more or less The same plan as we had the year before, it's gradual. It adds two to three aircraft to our operating capacity. It still continues to emphasize flying a little bit more relative to the year before in the edges of the season, before and after the peak of the summer, to address both our own limitations but also the overall system limitations in terms of peak operations, airports, congestion, ATC. So we definitely want to do whatever we can do outside the peak, but also it follows the result of the last quarter and the indications that we have that demand for winter months is improving. It's never going to be the same as the summer. The prices are never going to be the same as the summer, and the contribution to the year is never going to be the same as in the peak of the summer, but it's very comforting to see that things are beginning to become less uneven or less weak at least during the last part of the year. So I will actually stop here and take your questions and we'll have the chance to add different elements either to the discussion of the 24 or the coming year You're in the Q&A. 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 Sviriadi Natalia with Eurobank Equities. Please go ahead.