Finnair Oyj

Good day, ladies and gentlemen. I'm Erkka Salonen from Finner IR, and it's my pleasure to welcome you all to this Finner's second quarter and half year 2022 earnings call. I have here with me Finner's CEO, Mr. Topi Manner, and he is joined by the CFO, Mr. Mika Stirkkinen, for the Q&A session. I will now turn this call over to you, Topi, please.

Thank you Erkka and good day everybody. Thank you for joining the Q2 earnings call. The main headline for second quarter in Finnair was that the demand started to normalize, but the closed Russian airspace and especially The historically high fuel price burdened our profitability and that is why we were still on the red. The comparable operating profit landed at minus 84 million euros. So looking at the Q2 just quickly, the pent-up demand started to materialize as stated. During the quarter, we carried 2.4 million passengers and we operated 64% of our capacity measured by ASKs in terms of our own service. And then from the latter part of May, we started to operate VET leases for Lufthansa and British Airways. and that amounted to some six percent of capacity during the quarter. The passenger load factor started to improve in all traffic categories including Asia, but of course in Asia our overall capacity was clearly lower than it was before the pandemic. China is a case of its own as we know and we only have one weekly flight to China, and then the longer routings around the Russian airspace have had the impact that we have been decreasing our capacity to Asia, to many markets, especially to the secondary cities. And then still, especially in Japan, the COVID-related travel restrictions still play a role. June was the month when our demand started to normalize and our load factor ended around 80%, so that is somewhat normal or close to normal as a first month after the pandemic. You all are knowledgeable about the operational challenges that the European Airlines and the whole aviation system is facing at this point of time. We are not immune to those challenges, especially on our outer stations. But what needs to be stated is that our brand new home hub, the new Helsinki airport is functioning well. The queues in the security checks are manageable. and nothing like you would meet in the bigger airports in Europe. We have had very few cancellations during the summer and our on-time performance is decent at this point of time. So we are comparing well to almost any other airline in in Europe and also the transfer experience in Helsinki is very good at this point of time. And our customer satisfaction measured by Net Promoter Score is 42. So operationally we have reliability, we have stability in our business. During the quarter, we also started to sell premium economy and introduced the new gap-ins, the long-haul gap-ins, including the new business class seat that you can see in the picture. And both the new business class and the premium economy travel class have been received well by our customers, and the customer feedback is positive. The operating environment of Finnair has dramatically changed. And of course, pandemic is... a factor that is known to everybody with all of its consequences. And now during the quarter, the consequences of Russia's attack to Ukraine were very visible in our P&L. The historically high fuel price is clearly one big source of uncertainty in our business currently, especially given the fact that our hedging ratio is at this point of time around 10%. The uncertainty related to the duration of the Russian airspace closure certainly is another one. And unfortunately, there's no end in sight for the war in Ukraine. And that is why we estimate that the Russian airspace closure will prevail for quite a long time. And we are adapting to the reality of closed Russian airspace. The pandemic is not over yet so the minimum is that going forward there still will be infections and that will be impacting our operations and we will need to take the COVID pandemic into account especially in terms of higher standby levels in terms of our staffing to achieve operational reliability and stability. And still, of course, in Asia we have COVID-related travel restrictions. Impact of inflation to demand and costs is yet another uncertainty, and we estimate that that also will be present for longer. Right now we have pent-up demand, and that is definitely good to see. we would estimate that there would be a degree of cooling down in terms of demand going forward when we go into fall and winter. But it needs to be stated though that there are a lot of unrealized travel plans with customers currently and therefore we estimate that travel demand will be somewhat resilient even in an inflationary environment. And then, of course, the competitive environment is changing because of the impacts of the pandemic and the Ukrainian war. Many of our competitors are reshaping themselves. The latest is that SAS has filed for Chapter 11 and will come out from that process as a restructured company. So putting all of these things together, our conclusion is clear. And the conclusion is that we need to renew our strategy. And we have started to work during the spring after the Ukrainian war broke out. And we have been proceeding with that work during the summer. And we'll come out with further information during the course of the fall. When we look at the fuel price, you all know these curves. The dollar-based jet fuel price peaked in June. And in order to go back to the same levels, we will need to go back almost 15 years back in time, back to 2008, when jet fuel prices were at the same levels measured by dollars. But during that time in 2008, euro was notably stronger. Euro dollar was something like 1.3 at the time. And therefore measured in euros, the price per ton was only a little bit above 800 euros per ton. And now in June, we were at $1,300. So when we compare to the same quarter last year the impact of the steep increase in jet fuel price for the same period was 126 million euros so a massive swing in terms of our costs in a very rapid time frame and it was not possible for us to price in to the ticket prices with the hedging levels that we have been having. With that, our revenue landed to 550, developed very much according to our expectations, supported by the RASC improvement on the back of a good degree of demand. But then the costs were especially high driven by the fuel price. We also had some additional costs driven by the additional standby buffers in terms of crew and also some extraordinary one-time costs that were booked during the quarter that amounted to some 10 million euros. When we look at the result below EBIT especially the financial income and expenses is worthwhile to note it amounted to 76 million euros and this is especially related to our USD denominated liabilities. We are hedged some 70% against currency fluctuations But even with that, the swings in terms of currencies were of the magnitude that it had this impact to our net financial expenses. In terms of income taxes, we did not recognize any benefit from the loss that was accumulated during the quarter. And we also made a write down to the deferred tax assets that we have booked during the pandemic, on the back of the pandemic losses. And this write down we made due to the fact that there's increased uncertainty related to us being able to use those tax losses. going forward and that in turn is related to Russian airspace closure and the impact of Russian airspace closure to our profitability. The bright spot of the quarter was the cash development. We started the quarter with 1.1 billion euros of cash. The operating cash flow was 182 million euros positive on the back of strong sales intake. We also made a drawdown of 290 million euros of the 400 million capital loan that we have from the state of Finland. So 110 million euros remains to be undrawn of that facility. And with that our cash balance ended at approximately 1.6 billion euros. So the liquidity is strong and if we compare to historic levels of cash at Finnair we are looking at a very strong figure. In terms of balance sheet, it's worthwhile to note that the capital loan does not imply any new covenants for Finnair. The equity ratio remains stable. 290 million euro drawdown of capital loan was evened out by the net loss of the quarter, including the write-down of the deferred tax asset. Gearing improved to 380% because of the fact that the capital loan decreased the net interest bearing liabilities while the equity remained stable. During the spring we introduced an additional cost savings program of 60 million euros, an incremental step as a first response measure to the closure of the Russian airspace. That program is proceeding as planned and during the quarter we made a landmark deal with Amadeus, a new distribution agreement, multi-year distribution agreement that will enable us to transform and continue the transformation of our distribution, but at the same time, it will result in cost savings for us. We are also making progress with Sabre to reach similar arrangements. We are continuing our strategy work and it is foreseeable that there will be new cost related elements in our new strategy. It is clear that given the Russian airspace closure, we will be operating more of our capacity on the markets where the structural profitability is less than it is on Asia flights and therefore improved cost competitiveness is critical for our new strategy. When we look at the outlook and guidance for the second half of the year, the good news is that demand has almost normalized in Europe and in North America, also in some parts of Asia, in southern parts of Asia. We estimate that during Q3 we will be operating an average of 70% of our own capacity as our own service and then during Q4 we will operate 70% or a little bit more. When we take the vet lease deals into account, then during Q3, we will be operating 80% of our capacity or a bit more. And during Q4, the capacity will fall into the range of 80 to 85%, depending on future lease agreements that we will be forming. As stated, there's significant uncertainty in our operating environment related to the Russian airspace closure, record high fuel price, the impact of inflation, both the demand and cost, and also keeping in mind that COVID-19 pandemic is not entirely over yet, even though some of the more severe impacts have been easening. And that is why we say that it is clear that this year will be the third consecutive year of heavy losses for Finnair. And we also say that these uncertainties in the operating environment will prevail for longer and we need to update our strategy, renew our strategy in order to come back to profitability and in order to strengthen our financial position. And that is exactly what we are doing and we will come back with further details during the autumn. So this was the sum up of our Q2 and I will stop at this and then Erkka probably we can move over to the Q&A. Yes.

Thank you, Toppi. So now would be a convenient time for any questions you may have. Please follow the operator's instructions to present them. Thank you.

Thank you. And if you do wish to ask a question, please press 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. Our first question comes from the line of Pasi Vaisanen from Nordea. Please go ahead.

Great, thanks. This is Pasi from Nordea. If I may start with the three questions. So first, what was this 10 million extra one-off cost you actually booked to second quarter? What kind of line or item that was actually and from where it came from? And secondly, could you actually please highlight some magnitude of these significant losses we are going to see in this year regarding your guidance? So are we talking about a half from the last year or similar magnitude or less than that? And is there any reason you do not anymore offer the guidance for the third quarter? And should we expect a bit better seasonal result from the third quarter than now posted from the second quarter and maybe lastly what is the current profitability of your kind of our wet lease contracts you are currently having so could that be a core part of Finneir going forward like a part of your new strategy the wet lease kind of business model we can start with these three ones thanks

Okay, thank you. So if I start from the first ones, many of these sort of extraordinary costs were related to staff costs and there were There were multiple sources for this. So it's an accumulated number that we are saying. So there's some additional pension related costs. There are some additional CLA related costs. and then some additional standby related costs. So that would be roughly what we are talking about. So I guess that was the question number one. Then the question number two related to guidance. So I think that the guidance that we have here on the page that is visible to everybody, that is the guidance that we will give to the market. So we don't elaborate on that one. What is of course perhaps noteworthy is that during the pandemic we have been guiding only one quarter forward also in terms of capacity and now in terms of capacity given that the pandemic impacts have been easing out there's a bit more visibility to the capacity capacity levels and now we will give the capacity indications for the next two quarters and as stated demand we expect it has normalized in Europe and in North America. So that was, I guess, the question number two. And then could you please remind me of the question number three? The wet lease deals and the profitability of the wet lease deals. I think that we are happy with the profitability levels of those wet lease deals. I mean, we are a quality airline and we are a reliable airline. and our vent lease customers are also the kind of quality airlines that typically have a little bit sort of high yield customers and that is reflected in the pricing of these deals. So these deals are profitable on standalone basis and that is indeed our intention for any continued deals. going forward. Then if the question is that can wet lease operations be a core part of our strategy going forward, then the answer would be that our core is to be a network airline and that is certainly what we will keep as a point of departure when we renew our strategy. Red lease deals can be an add-on to our business and we will certainly take those opportunities if we see those opportunities on the market. But then again, you will need to remember that this kind of wet lease demand that we are now experiencing during this summer, and we are also seeing for the next winter, probably some of that will continue for next summer as well, summer 23 as well. Even though that demand exists, that is not likely to be of a long-term nature.

Okay, great. That's understood. I can jump back to Kui for a while. Thanks.

And the next question comes from the line of Samu Wilhelmsson from Nordea Markets. Please go ahead.

Yes, thank you for the good presentation. Let's continue from Nordea, but from the credit research side. You said you can access the remaining funds of the capital loan once cash or equity drops below the limits defined in the facility. Does this mean that in order to strengthen your balance sheet according to your new strategy, you are more willing or even constrained to stick with the hybrid and looking for options to convert it into shares rather than using the proceeds from the capital loan to redeem the hybrid? to deliver at your balance sheet. I know you're still working on the strategy, but let's say at least in theory, is it in theory even possible for you to use the hybrids from the capital loan to redeem the hybrid, if you will, to do that?

We unfortunately can't comment anything. Well, first of all, this is Mikael Stirkkinen, CFO. So first of all, what we have stated in the quarterly report, that's the only thing we can say at this stage. So we have stated that in addition to profitability measures, including the fleet and network and so on, we will strengthen our financial position. And the strategy is we look at it as a whole, not as piecemeal. It's everything and anything we can do, so we will do. But unfortunately, we can't disclose anything more at this stage.

And if we look at our, and we discuss our strategy on the overall and the ongoing strategy update that we will come back to during the fall. I mean, in terms of strengthening our balance sheet, I mean, we of course can tap into the remaining 110 million euros of capital loan. We can make a drawdown out of that. Now our gearing improved a bit. 380% of course is a high number in terms of gearing, but it is still manageable. So the key thing in terms of the strategy is to come back to profitability and also improve the financial position through retained earnings. And then basically all the other measures follow that profitability turnaround.

All right, thank you. So we're looking forward to some information later on, but just what I got from there. So like the remaining 110 million, that isn't like constrained to any equity or cash drops from the current levels, or that means that you are free to draw it whenever you want. Was that correct?

We have certain preconditions, but when we are, or certain KPIs, so when we are below or above those, we can draw. So under that facility.

All right. Thanks for the answer. That's enough for me. So thank you.

Our next question comes from the line of Jako Turvonen from SEB. Please go ahead.

Yes. Good afternoon, everyone. A couple of questions from my side. I'll pick them one by one, if I may. And I'll start with the yields and the yield environments. We saw yields develop nicely in all geographies in the second quarter. uh but um could we get any kind of a color looking forward for example how much stronger the yields were in june if you compare them to april level just to understand how the tailwind will continue towards the peak season

So you were right in that the yields were higher in June than in April. July looks, well, I'm not saying anything 22 specific, I'm talking in general. So this is following the seasonality pattern you see typically, however, the yields were on a network level higher in June 22 than in June 2019. That's what I can say. And also what is visible or if you read the quarterly report correctly, you can see that the The sales intake was strong and if you look at the from our notes from note 22, so the deferred income grew nicely. It grew 142 million during the quarter. So that tells you that there has been strong demand for our products in the market. And overall, what we can say is that, and this is, I guess, this is no news. So in the Atlantic market, Atlantic market has been stronger than three years ago, European market roughly at par and Asia below. in terms of passenger revenues. And that's our view also for the remaining summer season.

Okay, thanks. Still continuing on the yield, but jumping on the cargo side, which came in at least a bit below my estimate. How you are seeing the cargo yields developing forward? Are you seeing pressure there? Albeit still on a high level compared to 2019, but any comments on that?

Cargo market is a derivative of the capacity in the market, so classic supply-demand balance. What is affecting the cargo is the fact that we need to fly around Russia, so that limits the kilos we can carry. And that's one of the drivers there. So cargo is a derivative of the fuel price as well. So you need to, we or any carrier, we need to calculate what's the operating cost of a flight and then calculate which part of the revenue source is the key. So whether it's the cargo or the upper deck, i.e. the passenger side of the business. But still, we are happy with the performance of our cargo, but as you can see from the numbers, it's not as sky high as during the winter season, previous winter season.

Okay, great, thanks. I still read that you have some 73 million in tax assets and then you made the write-down, but what is the risk for that remaining part in terms of possible upcoming write-down? Are you comfortable with that, keeping that on the balance sheet?

I would advise you to read very carefully the note 12. And that's all I can say. I won't start reading it aloud. Take your time and read it through very carefully. And that's unfortunately everything. And that's all we can say at this stage.

Okay, we'll do that then. Then if I may, I'll continue. on the balance sheet side and note that the pension loan is maturing in Q4 and Q2 next year. Is it so or can you still postpone this maturity? And the follow-up question on this is looking forward, what kind of liquidity or cash position you would like to have? Are you any indication for the comfortable cash to equity ratio?

Historically we haven't, I start with the comfortable cash position. So we have had cash to sales ratio, cash to revenues ratio. And at the moment, when you look at it, so we had almost, the total liquidity was almost 1.7 billion, if you take into account the undrawn 110 million. So the cash balance is very strong at the moment and those two times 300 million repayments are the major outstanding repayments what we have in the balance sheet at the moment. Naturally then on top of those we have repayments of leases and other aircraft financing facilities. But regarding the pension loan, we don't disclose at the moment anything more on that. But naturally, liquidity is included in the financial position. So it's under that headline. So we are working on all cylinders. So the engine is working on all cylinders when we are contemplating what we do with the strategy.

What we are saying is that especially in Europe and in United States, demand has almost normalized and also the booking curve is normalizing, meaning that booking curve has gotten longer lately and that most likely will continue a bit as well.

Okay. Well, if I may, I'll still continue with one on the strategic thinking. And there I would like to kind of understand your own kind of thinking. Could there be a business potential with the Asian carriers that are allowed to fly over Russia? uh looking forward meaning meaning that those asian carriers that are allowed to fly can can they bring you some some traffic and then you can actually act as a of a connectivity uh for those passengers from helsinki to europe looking forward

I mean, generally speaking, partnerships are very important for us. And before I address your specific question related to Asia, I would just like to remind you that one world alliance is very important for us right now. So for example, when we have been now increasing flights to United States, the distribution power that we get through our partners in US, American Airlines and Alaskan Airlines is very noteworthy for us at this point of time. The joint business that we have for the Japanese traffic, Siberian joint business, traditionally is of great importance to Finnair. So we will want to leverage partnerships on the overall going forward. And that is certainly something that we are working with as part of our new strategy. related to China in particular, because the Chinese carriers are the ones who are using the Russian airspace currently, contrary to, for example, the Japanese airlines or South Korean airlines. We have a joint business with Juniao and they are operating Shanghai Helsinki at this point of time, thereby feeding our European European network and that joint business was formed during the pandemic and that is certainly something that we are committed to develop going forward. We believe that China will eventually open up and that is a tool like any other partnership that potentially could be leveraged going forward.

Okay, excellent. Very interesting. That's all from my side. Thank you.

And the next question comes from the line of Pia Roosqvist from Carnegie. Please go ahead.

Yes, hello. It's Pia from Carnegie. I hope you hear me.

We do.

Yes, good. So a couple of questions, Bill, that are open to me. So in the report, you state that that on June the 20th you have agreed on an extension of the guarantee of the 550 million euro pension premium loan. For how long is this extension valid?

There was some interruption on the line. Could you please repeat the question and especially the report?

Sorry, so just in the report, you note that there has been an extension on the guarantee of the 550 million pension premium loan. And my question is, for how long is this extension valid?

What I can say about that 540 million, so that is a preliminary European Commission State Department's approval, but that doesn't say that the other prerequisites have been approved by any other relevant parties.

Okay, so it's still pending?

Correct. You need to distinguish between EU approval and the rest of the arrangements.

Okay. Then looking ahead into 2023 or the period until 2025. So in the report, again, you present the three scenarios which you have used to do for capacity development in relation to 2019 levels. So my question is really these scenarios you present now, do they take into account your new strategy and possibly a reduced fleet or or should we read these scenarios as not taking any possible changes into account?

This is somewhat tricky, because according to IFRS, we can include something of the potential future actions, and then we can't include some other potential actions we might be taking in the future. Unfortunately, I can only disclose or we can only disclose what's written there. And this has been very carefully went through with the external auditors and with the board. So how we prepared the calculations and what are the outcomes. But what I can say that some of the potential actions can't be included in the in the aforementioned scenario, according to the IFRS rules.

Okay. All right. Those were my questions. Thank you.

Thank you.

And we have one final question from Achal Kumar from HSBC. Please go ahead.

Yeah, hi. So I have a few questions. I'll go one by one, if I may. First of all, I wanted to understand, going back to the yield question, so where you were comparing the fuel price in 2008 versus now, and you said that you didn't get an opportunity to sort of increase the fares or pass on fuel. the burden to the customers but now going into the second half uh do you think um so how do you see the yield trend uh going into second half uh you must have got some visibility now do you think you'll be able to pass on the burden um to the to the to the customers so if you could discuss uh that a bit that would be very helpful

So to start with, I think that what we will need to remember is that the fuel price is very volatile at this point of time. It has been coming down a bit from the June peak, but it most likely continues to be very volatile. So the first question, of course, is that what the burden will be and how big a volatility and to which direction we will be seeing. so that's of course almost like stating the obvious when we look at the yield development during the Q2 you will need to remember that in April and in May the demand was coming back strongly but we had quite many seeds to sell at that point of time so our revenue management did not work normally during that point of time. June, month of June was probably the first one when our business started to normalize in terms of demand for the capacity that we were flying. The load factors were 80%. So that is when we started to see sort of normal revenue management environment, which also had the increasing impact in terms of yields. And we are seeing sort of an increasing trend for yields as we speak. But as stated, the operating environment, including the fuel and the competitive environment, will be having an impact on this during the fall.

So basically, if I read it correctly, so the yield which you reported in the second quarter, I think the Q3 yield should be significantly higher since your revenue management team is working on that and you have a strong demand and all. So do you think Q3 yields could be much stronger than what you reported Q2?

As we speak, as stated, it will be volatile. Also, the yield development most likely will be volatile. But right now, if we look at the trends, then the demand has been relatively strong. There are opportunities for revenue management. So this is how I would be phrasing it.

Okay, fair enough. My second question goes around the performance of your flight. So on Asia, on North Atlantic, of course, you said that the demand is strong in all the regions, but of course, especially in Asia, when you're starting the flight, the flight lengths are significantly higher. So in that scenario, if you could please... uh share um how the flight uh how the underlying performance uh of your flights towards asia to our north atlantic and and then linked to that and now of course it looks like there is some softness in cargo versus versus previously of course so now um cargo business remains strong but then but then there's some softness so do you think that is still um able to subsidize your asian passenger business or how do you see cargo business performance, and then how that is feeding into your passenger business towards this year? So if you could please discuss this bit, that would be very helpful.

If I start with the cargo bit, so you need for passenger business, we have a 12-month booking horizon. For cargo, we have theoretically three-week booking horizon, and in practice, it's a two-week booking. we see two weeks out effectively. But naturally, the trend has continued as a rather strong one. But as I said earlier, as I told you earlier, so it's... Cargo is really about the demand supply balance and until now it has been favorable to us, but we look at the lower deck upper deck question on a practically flight by flight basis. So. So that whether certain flights are viable in terms of direct operating costs, if those are covered, then we fly. That's the basic rule of thumb. But overall, I wouldn't be saying that it was a disappointment in cargo for us. So it's still stronger than back in 2019.

And then how about the performance of of the flights towards Asia or towards North America?

The yields to capacity constraint Asian destinations have been reflected in the yields. The capacity constraints is reflected there. And there are some early signs of, for instance, Japan opening up. And that is reflected in the yields. But at the same time, The flight times to, for instance, Narita are materially longer and that there's a toll on the cost, cost of direct operating costs. And that needs to be reflected in the yields. But the overall profitability, unfortunately, for instance, to Tokyo isn't there where it was back in 2019.

The Japanese flights, as I mentioned earlier, you will need to remember that there's level playing field in a sense that no European or no Japanese carriers are using the Russian airspace in that traffic category.

Fair enough. My next question is around your um your strategy and so basically of course you've not disclosed your strategy and then you said you're working on it but um but what what are the key pillars of your strategy going ahead i mean is it more towards network is it more towards fleet uh planning is it like oh did you have something in your mind in terms of what are what are going to be key pillars of your strategy

It will be a very thorough piece of work. So we are looking at all of these elements. It all of course starts from the network. So it's clear that with the Russian airspace being closed, we will need to introduce a more balanced network geographically. less dependent on Asia increasing in markets like US and India. So that's the first part of it. On the back of the network decisions, we will be reviewing the fleet. So that's another part of it. We will be turning every stone in terms of finding new revenue sources and that's a big part of the strategy work including completely renewed distribution We have during the pandemic our share of direct distribution has been increasing from below 30% to something like 65% as we speak. We will be going through our cost base yet again. We have been doing a fair bit during the pandemic and we will yet again scrutinize our cost base and look for structural cost savings and as stated as a result of all of this we will be we will be looking to strengthen our financial position fair enough in terms of competitive landscape I think you mentioned that of course all the competitors are sort of reshaping themselves

But that's probably more to do with your close peers. But otherwise, how do you see the competitive environment in Helsinki? I guess previously mentioned that other European alliance, including Granada and all, I mean, they are deploying capacity in Helsinki. So how do you see the overall competitive environment for you?

What we have been seeing now lately is that of our competitors, Norwegian of course restructured themselves during the pandemic. So for a while during the pandemic they did not operate out of Helsinki and now during the springtime they have been back. back to Helsinki and their market share of flights to Helsinki is a little bit lower than it used to be before the pandemic. Our market share to and from Helsinki is stable at the moment. So on the overall, in the competitive landscape, I think that things are relatively stable as we see it right now.

Okay. In terms of vet leads, so are you trying to find out more opportunities to lead out your capacity or is it like you're done for the moment? So what's your thoughts? And if you have tried, have you got some partner? Are you in some discussions with someone?

We currently have our aircraft to Lufthansa and to British Airways. And what we see is that given the operational problems that many airlines have in Europe, and given the lack of pilots, lack of cabin crew, and to some extent lack of aircraft globally, there is demand for wet lease for the winter season. And some of that demand might even linger to next summer season. So that is the sort of overall picture on the back of strong recovery of demand in global aviation. So we have some discussions ongoing, no finalized agreements yet, but we are fairly optimistic that there will be wet lease demands for our services also for the next winter season in some shape or form. And that is visible in our guidance, especially for Q3 and Q4.

Okay. Sorry, two last questions. I'm sorry for the long list. One, your staff cost, which is at the moment about 110 million per quarter, is that the run rate we should expect going ahead? And secondly, in terms of debt maturity, if you could please share how your debt maturity looks like, when are some of the payments due over the next one or two years? That would be helpful. Thanks.

On the stuff cost, so you need to do some adjustment related to capacity naturally. So I let you to do the math. And then in terms of the maturities, debt maturities, please have a look at the note 19. So it's stated there very clearly what are the debt maturities.

Okay, perfect. Thank you so much for that. And wish you good luck. Thank you very much.

And we've just got a final question from Andrew Lovenberg from HSBC. Please go ahead.

Oh, hi there, and thanks for the presentation, and good luck with the work on the strategy that lies ahead. I was struck by the comment in perfect sense, you know, that you would need to work on cost competitiveness as you deploy into different markets rather than Asia. And yet, if we look across at the experience that poor SAS have faced trying to drive change, they've come across an extremely robust resistance, I think, from unions to change. How optimistic are you that you'll be able to bring your people with you on this, you know, on this evolving transformation of your business?

Thank you for that question, Andrew. To answer that question, I would start with the experiences that we have been having in this company during the pandemic. Of course, the pandemic has been hitting our employees hard, as it has been hitting the company as well. But we, for example, did not terminate any jobs when it comes to pilots or flying crews. So we furloughed our pilots, but we maintained all the job contracts. And that is in stark contrast to, for example, what SAS did. So that's something to make a note of. During the pandemic, A bit more than a year ago we made a new CLA contract with our pilots for three and a half years. So more than two years is still to go. of that contract. And that contract resulted in structural renewal of the CLAs, starting from the scope clause, flat salary increases, and then completely renewing the salary and seniority structure of our pilots. So there's a track record of us being able to do structural renewal with our key employee groups like pilots. We also have one and a half years to go of the CLA with our cabin crew to name another employee group. And then if you take an even longer horizon and look at the past 10 years or even more than that, we haven't had strikes nowhere near to the extent that SAS has been having. So the culture of the company is very different in this respect. These discussions when we are talking about structural cost savings, when we are talking about people related impacts are never easy. They are not easy for any airline. But we have been having quite rational discussions around these things in Finnair during the pandemic. And I think that our people also are very much aware of the changes in our operating environment, not least the Russian airspace closure and what that means to our strategy of connecting Europe and Asia. And they also know that that is a black swan event in a sense that that is out of the hands of the company and the management and yeah therefore we can adapt to that reality so what we will We will be focusing on going forward also in the context of renewing the strategies that we will have a constructive dialogue in the company, include our people to that process and include our unions to that process.

Thanks. That all sounds sensible. Yeah. So really, I mean, good luck in the work process. And just want to tell you, anyone I speak to who's flying in and out of Heathrow and happens to land on one of your planes, they will come back delighted.

Okay. Thank you. Thank you, Andrew. Thank you. Very encouraging feedback.

And as a note for the questions, I'll hand it back to the speakers.

Yes, it seems we're out of questions, so we will then conclude the call. Many thanks for your excellent questions and joining the call. Have a great day. And have a great summer as well. Thank you. Thank you. Bye bye.