Aegean Airlines Ord

Hello. Good afternoon, everybody, and welcome to our results presentation for the first six months of 2025. Just to remind that, along with me, I have Mr. Koubeliotis, our Deputy CEO and CFO, Stella Dimaraki, our Treasurer and Investor Relations Director, and also Ante Catalani, our Investors Relations Manager. So all four of us are here for you. I'm happy to answer any questions after my brief remarks. 2025, first half is again a quarter and two quarters where we had, I would say, modest growth driven by our particular restrictions in terms of how many of our NEO aircraft are actually flying versus the ones grounded for GTF. And within the confines of those restrictions, the additional challenge of around two months in the second quarter, where our important nearby markets, Israel, Lebanon, Israel in particular, Lebanon and Jordan, we were not able to fly to due to the situation there, what's going on between Israel and Iran. and the effect it had to the whole area and our inability to fly for around about two, two and a half months, which ended on the second week of July, if memory serves. So, within the restrictions that we had, I think we've achieved a very strong set of results. We've managed to provide a revenue increase of 5%, which is 1% higher than the ASK growth we put into the market, which was 4%, which meant that within an increasingly competitive environment, we have managed to actually increase our ask marginally by 1%. This was done in both quarters. In terms of growth, as you have already seen, the first quarter was significantly stronger in terms of ASK development versus the second. That is part of two things, one planned and one unplanned. First of all, we have indicated also in previous conversations and discussions with you that we see a gradual extension of the season. We also see an increasing pattern of Greeks traveling more. So within those two effects, we see ourselves operating, growing more in what used to be referred to as the lowest months, so Q1 and Q4 relative to Q2 and Q3. That is also related to restrictions in ATC and airport capacities around our country. But that's the first part. The second part is, of course, what I referred to earlier, the fact that not being able to fly to Israel, where at the peak of the season we have around about six flights to seven flights even a day from different places, plus Jordan and Lebanon that basically make the total amount of flights lost to be nine for a period of two, two and a half months. This cost us around about 100,000 passengers on these routes, and on top of that, we lost around about 35,000 passengers on connecting routes, and in a way, the connex losses are more costly in the sense that those seats are not typically, with a cancellation of flights close to departure, you're not able to redirect those lost connex seats to other to other sources. So within the confines of that, achieving a revenue increase of 5% and achieving a significant increase in our bottom line and a modest increase in our EBITDA are, I think, significant positives, as well as, of course, continuing to build to have extremely strong cash flows, where despite a payout of dividends of circa 70 million and an increase to our PDPs paid in to Airbus by another 40 million, so a total of 110 million that have been spent this way, we still had an increase of circa 60 million, 70 million, I'm sorry, in our available cash. to $840 million, and as we highlighted also on the report, on the release, this is before, of course, the issuance of our early July bond of $250 million that has further added in the beginning of July to our cash availability. It's fair to say, of course, that the development of the development in the same way that we lost passengers and capacity, both capacity and passengers, and profitability in the second quarter due to the geopolitical problem. At the same token, we did have an advantage from the development of the euro and the development also of the fuel price. So there are effects both ways, positive and negative, which we can discuss in detail if you like. But overall, we're happy what was done within the context of the restrictions that I previously announced or described. Within the difficulties that we're having with the fleet, the positive element is that gradually we are flying more and more of the 321 NEO derivative. In particular, as you know, the big delta in seat capacity and in efficiency per seat comes from increasing the mix of those aircraft of the fleet due to the fact that they have a 220 seat capacity aircraft. relative to 180 to the 320 NEO and a 174 on the 320 SEAL. The important thing for the company is that going forward, all the remaining Airbus deliveries that we are to take are indeed of the 321 NEO type. So that is going to be building our efficiency going forward. And it's also important to understand that – We are now in September of 2025 entering, I would say, the period for the next 12 to 14 months of maximum number of aircraft that will be on the ground awaiting these checks. Why? Because the aircraft that we have received up until the first quarter of 2024 were the ones affected with the initial defective or potentially defective part as a result Those 28 aircraft that were accepted until April 2024, when they reach between 20 and 2,500 hours, sorry, cycles, They need to go for their preventive checks. And that maturity level is coming at its peak from what was basically last year, 8, and what became 10 at the peak of this summer. Right now we're at 11 to 12, and we will reach 14, between 12 and 14, for the next 12 to 14 months. So we're at the maximum part of the restriction in terms of how many aircraft will be on the ground. On the other hand, As we accept more aircraft gradually, we expect to have, of course, a higher number of flying NEOs and, indeed, a higher number of flying NEO 321s, which will be contributing to our efficiency and to our competitiveness. I also need to say that I think there are adjustments that we've made in our network this year that have worked well and have allowed us to offset the effects of additional competition in several different markets and the consistence growth of the market to Greece in excess of the rate that Europe's overall shortfall is growing. So adjustments in the network have helped us retain profitability. And at the same time, I think it's encouraging to continue to see that our business class product continues to have increasing penetration. still not at the level that one would like, but certainly much higher than in previous years and much, much higher than pre-COVID. So with now, I think this is an important aspect, especially as we're going towards the direction of introducing longer distance routes with the XLRs and the LRs that are coming forward. So we believe that this will also further help in this dimension and will have a reflection on what we should refer to as a traditional network as well. And another issue I would like to refer to is that certainly there is no shortage of disruptions from air traffic control all over Europe, but also particularly in our country. We are significantly active in a hopefully constructive and consistent way over the last four or five years at least. with our local authorities and we hope that in the next months and years the amounts that have been paid in by all airlines including Aegean will finally be used in an effective way in our local market in order for the problem to be gradually mitigated because it is becoming significant for the quality of service that visitors to Greece overall experience. So we consider that a very important issue which needs to be addressed, and we have highlighted that perhaps not in an equally aggressive way as others, but we have highlighted that consistently over the last four or five years, and we have made, I believe, specific suggestions on how parts of these issues could be mitigated. Finally, before we take questions, a word about our investment in Volotea. It's now been exactly a year since we started to invest in that company. I have reiterated that in the annual results I said we got what we expected in terms of results from Volotea for 2024. I'm happy to report that it seems to be going positively and indeed in a more positive way for 2025. So we are significantly positive about the prospects of the company going forward. It is not yet beyond all possible risks and burdens because It was burdened during COVID by significant losses and significant debt. However, things seem to be evolving in a positive way. And we think that in the next six to eight months, we will be called to make some decisions together with other shareholders about some additional injections of capital in a more significant way. And depending on what exactly the outcome of these conversations and the performance in the company, in the meantime, we will also take our decisions about how to further proceed there. But overall, I think we're happy with the results, and we also think that it's possible in the future, regardless of the amount of equity that we'll know in the company, to develop a somewhat complementary service to the regions of Greece. The reason it hasn't been done actually already is mostly because Volotea, much more than Aegean, is restricted by the unavailability of aircraft in the market. We are restricted by our GTF Pratt & Whitney cycle. Therefore, we are both relatively conservative with our capacity development over the years, so we will need some more time to develop these particular commercial synergies. But overall, we're happy with the cooperation. So in a nutshell, also one more thing to say, expect our ASK development in the market to be somewhat higher, around about 3% in ASKs in Q3, and significantly higher than that, between 9% and 10% of ASKs in Q4. I think it's fair to say that there is again a mix of factors going forward affecting our expectations. Demand is strong. Competition is also strong. There are fair pressures in different markets, not everywhere. Some markets are developing positively. I think in a great extent what we have come to expect is an annual improvement year on year, particularly on the September to December period, as opposed to the June to August period, because frankly, people are gradually changing their pattern of travel, and even though families will always need to travel for leisure at peak, the rest of customers seem to be modifying their behavior more, so we begin to see a spill of potentially positive results also in the latter part of the year. So I'll stop here and listen to your questions and hopefully we'll give you a better idea of where we're at. 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 2. Please use your handset when asking your question for better quality. Anyone who has a question may press star and 1 at this time. One moment for the first question, please. The first question comes from the line of Lobenberg Andrew with Barclays. Please go ahead.

Oh, hi there. Thank you so much for the clarity on capacity for the rest of this year. What's the right way to think about what we get in 26, given the more grounding but more delivery? And then another question, could you perhaps give us more color on which markets are seeing the tougher competition and which are less? And you also spoke of doing some network adjustments that were positive. Can you remind us what those adjustments were? Thanks.