Wizz Air Holdings Stock

Good morning, and welcome to the Wizz Air Q1 Results Call. [Operator Instructions] Please note this call is being live streamed or webcast for a wider audience and will be recorded.

I would now like to hand over to Jozsef Varadi, Chief Executive Officer, to open the presentation. Please go ahead.

Good morning, everyone. Thank you for joining this presentation. So we are reporting the first quarter of fiscal '27, the April-June period. If I were going to title this quarter, I would say this is all about observing cost pressure and high growth. And I think we've done actually a pretty good job going through this period. We believe that what we are reporting is pretty much what we have said, what we have told you. So there shouldn't be any surprise. As far as we are concerned, this is totally in line with guidance we have provided to you previously.

But let me pick a few highlights on the quarter. Well, first of all, capacity growth. This is a high-growth period. You recall, we told you a good year ago when we renegotiated the Airbus delivery agreement that this is the last period, the first half of fiscal '27, when we are still getting the originally scheduled aircraft deliveries. After that, this is all going to be moderated down to around 10% to 12% growth. This agreement is in place. So this is kind of last period in the first half, you are seeing fleet growth more delivering the 20% growth rate as opposed to the 10% growth rate.

On top of that, we are -- and I think that's a good development for the company, we are tremendously increasing sector productivity as a result of our strategic decision to enter domestic markets, especially in Italy and later on, we will do that in Spain, too. That gives us a lot better platform, especially in terms of economic efficiency, the same asset delivering more seats to the market at lower cost at the end of the day. So you are seeing that coming through. So while ASK capacity is 15% up, seat capacity is more like 25% up. Obviously, this is a transition. It's not always going to be a deviation like this. But for so long as we are ramping up domestic production, you're going to see this kind of a distortion. But I think this is a very good thing for the company in terms of long-term economic efficiency.

Then you look at load factor, load factor is flat. So you can certainly argue that we have been able to deliver this business for 25% growth at load factor neutral. So we have not been jeopardizing our load factor production. Of course, you get some penalty when you are creating that degree of new capacity through prematurity. So we have this 8% deficiency on fares effectively. Now if you put that in context, you look at the market in Europe, I mean, the market is suggesting that intra-European traffic is down probably 3% to 5%. So the 8% should be measured against that. But we are delivering 5, 6x higher growth than what the rest of the market is achieving. And I think that's a very good revenue resilience that we are seeing over here.

We have been much focused on the cost side of the business. We think we have a very clear path to cost leadership in the industry in Europe. And as we previously elaborated on, we believe that a couple of years down the line, we are going to become the cost leader. And that cost leadership is essentially established us on 4 key pillars. One is the ungrounding of the GTF, we have made tremendous progress. A year ago, we had 41 aircraft on the ground. This time around 27. And we have a plan in place that is now pretty intact, and we believe it's going to get delivered by the end of calendar '27 when the entire GTF grounded fleet will be ungrounded.

Secondly, we are in the process of returning the CEO fleet. That's a major change. Obviously, it comes with some cost penalty at the time of returning the fleet, putting the aircraft back into a retail condition. But once it is done, we will clearly and fully benefit from the economic efficiencies the unit cost advantages of the neo aircraft. And in the meantime, this is not only renewal of the aircraft, but also the upgauging of the aircraft. So -- and especially in a higher fuel price environment, we are seeing the benefit of fuel burn by being converted into that fleet type. So that is happening, and it will be done majorly in the next 2 years or so.

Obviously, with all of that, we are ramping utilization back up to standards. We have made significant progress, but we got interfered by the war in Iran. We had to pull capacity out last minute, and we were unable to reallocate the capacity overnight. Obviously, that takes some time to allow lead time for sales. So we got a detrimental impact on that. But structurally speaking, utilization is improving in the company. And I think you're going to see some of it in Q2 and the rest of the financial year.

Now we are back into growth, and that gives us leverage for lowering our airport costs. We have made significant progress on that. Airport cost is coming down. You may not see that in the numbers because at the same time, as we are putting navigation, handling and airports all together, monopoly infrastructure charges are up. So navigation charges are up, and they offset the good work and progress we have made on airports. Nevertheless, we are in a position now to leverage growth for lowering airport costs.

Operational efficiency remains very strong in the company. We are at the top of the list of European airlines completing schedules. We actually fly what we sell, and we sell what we fly. And we are uniquely better than the rest of the industry. On-time performance has improved quite significantly. We are really in the kind of the upper pack of the airline industry in Europe. So it's a very solid operation, with a lot less disruption cost like EC261 than before, and we are clearly benefiting from that. And I also think that it kind of flows through into revenue resilience because you build a lot more confidence in the market with the customers to book this air.

Cash remains very strong. Liquidity is, as we speak today, EUR 2.3 billion. So we are holding up the level very well that translates into close to 40% liquidity ratio. That's one of the strongest in the industry globally. So we are running the business with very high liquidity and with significant cash and we believe gives us an opportunity not just how to weather the storm of challenging circumstances arising from the war, spiking fuel price, et cetera, but also that gives us strategic opportunities should there be significant market opportunities arising, especially in the winter period when we're going to be seeing more capacity adjustments by other airlines.

Maybe just a commentary on fuel. Hedge, we are well hedged. We continued our hedging activities during the past period, except for the very short term when fuel was hiked up. But for the interim period -- for the midterm period, we continue to place hedges both on fuel and FX. So we think we are well covered. And if this war continues to unfold for a longer period, we are well protected versus the rest of the industry. I would say that you probably have a lot of interest in what is happening in Q2.

In terms of capacity, it is fairly similar to the Q1 situation with one change that by Iran war made us ground some capacity that was originally allocated to the Middle East. That capacity is entirely recycled either back into Israel, especially, or into other European markets. So we don't have grounded capacity as a result of that. So that's an improvement.

And in terms of the trading environment, we are also seeing an improvement on fares. We are holding load factor. So I don't think you should be expecting any change. So we will continue to deliver the business at a flat load factor. But while we had 8% fall on fares in the Q1 period, we are only seeing low single digit in the Q2 period. So we're seeing that our resilience continues to hold. And effectively, some of the newly invested capacity matures very quickly, giving us a better room to maneuver against the market. So we are closing on the gap, notwithstanding that we are still delivering 25% seat growth in this period.

And maybe with these remarks, I will just hand over to Veronika to comment on the financial performance. Thank you.

Thank you, Joe. Good morning, everybody. If we can go to the next page, please. And I would like to show and make a couple of points about our Q1 numbers, which are very much in line with what Joe has commented. I would also reiterate 3 points that have been in focus and that have been previously said. We are growing the capacity and deploying it across the key markets. And we see that supported in the numbers in the growth of the ASKs by 15% and by seating the passengers by the 25%. We also see the lower stage lines, which is as per deployment of the capacity.

There is a focus on the cost and operational excellence and operational performance, which I will go through when we speak about the cost. And as said that we have delivered in Q1 the numbers as per guidance, as guided previously in terms of the capacity, in terms of the load factor, RASK, and we have delivered minus 2% of the ex-fuel cost.

What I would like to point out on this slide, we are finishing the quarter with the profit after tax of negative EUR 198 million. As you can see, this is -- largely about EUR 100 million of impact of that is on the fuel cost and increase in the cost, which is impacting the whole industry. I would like to again point out that we have a hedging program in place, which is mitigating the fuel prices to a high extent. We have 82% of the Q2 fuel needs hedged, 62% of the H2 F '27, and we are already hedging into the F '28, where we have a 39% of the first half of the expected consumption covered. This is as per the hedging program, which we are implementing -- which we have implemented and we continue delivering on that. That would be on this page.

If I can ask to move to the next page, please. Yes. And here, I would like to focus on some of the cost lines. You see, as I said previously, the fuel cost is up on the year-on-year basis, but we have seen the improvement of the ex-fuel costs. And I would say that this is attributed to the several factors. We can see the staff costs, which are going down, and this is in line with the crew efficiency. We are seeing improvement of the airport unit costs, which is also in line with the redeployment of the network -- of the capacity very, very efficiently. And what we see is an improvement of the other costs as well.

Now when we take a look at the other costs, what I would like to point out is that the 2 factors which were quoted previously, we have a benefit of the sale and leaseback quarter 1 to quarter 1, '26 and '27. But if you can see this is basically offset by the decrease in credits and compensation. So really the improvement of the other cost and income is in delta attributed to the decrease of the disruption costs, which is in line with the improvement of the operational performance and the decrease on nonexistence of the leases.

On the sale and leasebacks, what I would like to comment, we see a bigger benefit if we compare Q1 '26 and Q1 '27. On the full year basis, we expect a smaller benefit coming in this year than last year.

Okay. And with that, I would turn to the next page, please. Okay. And on this slide, we can see that this quarter has resulted in the positive free cash flow combined of the use of components. On the net CapEx, what I would like to point out is that we have seen 7 aircraft and 8 engines, which were part of the SLB program this quarter as opposed to 7 aircraft only in the same period as the last year. This is what I was also commenting on the previous slide. Looking forward for the full year, we expect the about 21 aircraft and 19 engines to be under this program. So the forecast receipts will be around EUR 200 million, as I was also commenting based on the full year projection.

What is important, as Joe has mentioned, we are ending the quarter with the with the EUR 2.2 billion of the cash and most recent figure is EUR 2.3 billion, which is bringing the liquidity ratio of 37%, which is one of the best in the industry and more than adequate in terms of the required liquidity levels.

That would be on the nutshell on the financials. And I would like to turn to Ian to comment on the Q1 unit revenue.

Thank you very much, Veronika. Could we please go to the next slide? So in terms of the revenue performance this quarter, there was a lot that was happening in the period. I think it's important to put some of the issues on the table so you can understand the business in the medium term once these issues are resolved. We obviously have the fuel price, the maintenance cost and the depreciation costs that Veronika talked about. Those will diffuse when the fuel price comes down and the legacy fleet leaves the business.

But in terms of the revenue side of things, we also have some, I would say, temporal factors that we're dealing with and dealing with it as best as we can. The last year's Q1 RASK was at EUR 4.41. And I think it's important to point out that the numbers this year are flattered by the shorter stage length. We increased -- sorry, we decreased stage length of roughly 8% year-on-year as a result of the reallocation of a lot of our capacity in March from the Middle East and Israel to our European strongholds. And we did so in very short -- in a short period of time. And that changes the shape of the network dramatically. We've never seen that dramatic of a shift in our network. Of course, we were compelled to under the circumstances. And so the numbers do enjoy a bit of flattery here from that stage length.

The next impact then was the growth impact. So we're growing dramatically. We're growing 25% in ASK terms this quarter, and that growth will continue for the next few quarters. And that is what it is. I mean it's something that we have to do. It's something we knew was happening. The growth wind down -- got delayed a little bit by virtue of some of these impacts, but that too will subside. But we have to digest the growth, and we have to deploy it because the alternative of parking capacity is not acceptable because we're paying for the aircraft. And so we need to make sure that we deploy them properly.

Growth has always been one of the strengths of this company. Growth equals value and growth today is value tomorrow. And so in terms of this, once we get through deploying it and deploying it sensibly, which is what we're in the process of doing, that will then allow immature capacity to convert into mature capacity. So to put it in perspective, last year, this time, we had roughly 70 to 80 routes that were less than 1-year-old. Now we have just under 300 routes that are less than 1-year-old. So 4x the number of routes that are new. Now some of them are new because of the reallocation from Middle Eastern capacity back to Europe. Some of them are new just due to organic growth. We've also embarked on some additional domestic flying in Italy and now with Spain coming online, that will, within less than a year, become more mature capacity, which means that you will see margin expansion coming from that. But there is a cost to putting that growth into the system, and that's what you see there in terms of Q1.

Then you have the April impact. April was compounded by the fact that you had a shift in Easter plus you had the impact of basically full ramp-up of the 2026 Iran war. So we had a lot of uncertainty around fuel supplies. You can remember, there's a lot of consumer sentiment. There were people that were changing their travel plans. And in fact, we showed you a slide last period that talked about the change in behavior of the consumer from booking more in advance to booking last minute, waiting to see what was happening. We have seen that that trend was reversing when we did the last quarter's results and that we were going back to more normal patterns in May and June. However, we have seen now since as we get into peak summer that, that's shifting back. So June -- so July and August are seeing more late booking, and we're actually seeing some of that behavior come through our July and August numbers. So there's some encouragement here. But we still have the rest of August and September to get through for Q2.

And then lastly, there's an element of market pricing having to stimulate again, driven by, I would say, competitive reaction into the region as we concentrate our capacity into our core Central Eastern European stronghold, our historical diaspora flows as well as moving into new markets where we can drive this productivity that Jozsef mentioned earlier. So what we're doing as a result of the shorter stage length is driving significantly more seats out of our assets. So we pay for the planes, whether we buy them or not. And so our ambition, my ambition is to create as many seats as possible out of those aircraft, so that we have more product to sell to give customers more choice, more options and ultimately become more of a preferred airline.

We have a bunch of new initiatives that we put forward this quarter. We announced Starlink, as you know, just right before the last quarter, but then we have also added some interesting new winter options for the business that we haven't had to do before. So we've expanded our program to North Africa out of Poland, in particular. We've interested -- we've introduced some new opportunities for skiing in Northern Italy, which we encourage everyone to check out. And so ultimately, we're balancing this growth, which we still see and we will always see as an opportunity with sensibility around where we fly in the summer and where we fly in the winter. And that's how we're going to get through this period and get to that ultimate profitability perspective where you see the cost excellence coming through.

In fact, the cost side, I think, is probably the easy part now because you can see the path to that. And the revenue side will come with that maturity that I talked about. So ultimately, that's how the medium term comes together.

And I'll wrap up at this point and hand it back to Jozsef to talk about any final remarks and the outlook.

Thank you, Ian. Could you please move the slide? Okay. Thank you. So with regard to Q2 outlook, with regard to capacity, the period continues to be high growth. We are expecting to deliver around 20% ASK growth, higher seats as a result of stage length reduction. Load factor is expected to be flat year-on-year. RASK, as said, it's going to be slightly down on the back of this high-growth capacity. But at the same time, we are seeing quite a significant improvement to Q1. As you recall, Q1 was 8% down. We are really expecting only a couple of percentage points down here.

With regard to cost for the period and H1 in total, we are expecting a slight increase on ex fuel cost. I think we are working hard to mitigate that and keep it flat. But to be on the safe side, that would be our best guidance to you today.

So if I just wrap it up, I would say that you should really focus on 2 avenues here. One is the efforts of the company on the cost side of the business to get to cost leadership. I think we have a pathway. I think we've got the building blocks very clear, and we have associated actions to make sure that in the foreseeable future, next 18 to 24 months, indeed, Wizz Air becomes the cost leader of Europe. And those building blocks are around the GTF ungrounding, the CEO aircraft returns, leveraging airport cost and really ramping utilization, fleet utilization back up to previous standards. I think we are well underway, and this is what you are seeing in the improvements in ex fuel cost, which I think makes us already a positive outlier in the industry.

And two, as we have been elaborating on the revenue side, this year is high capacity growth. And once we are through the year, you should be seeing a lot more moderated growth pattern coming through the business, benefiting from the negotiated act of delivery stream with Airbus, the ungrounding of GTF. So business becomes more normalized, a lot more palatable in terms of stretch to the business. But I would highlight that while you may feel a bit of a short-term pain delivering that capacity growth currently, but that is an investment into the future. And once you go through the maturity curve, you're going to see substantial benefits coming through that maturity. And we believe that we have adequate liquidity to do that to execute against that. Even beyond that, I think that we will see how the winter plays out in Europe, what happens to the industry and each of the players on the industry, but that period may represent more strategic opportunities for the company.

And with that, I would turn it over to questions and answers. Thank you.

[Operator Instructions] The first question is from Harry Gowers at JPMorgan.

I've got 2 questions. First one, you talked about wanting to take advantage of market opportunities in the release. And I think that means if other airlines potentially cut back on capacity this winter. So do you know or have you done any kind of analysis on what percentage of your competitors are unhedged or what percentage of the capacity out there you're competing with is unhedged on fuel?

And then the second question on a similar line, if the fuel price stays at current levels, would you still expect to deploy the same level of capacity growth this winter as compared to the summer, so sort of 25% to 30% seats growth? Or does fuel at the current level kind of change the equation in terms of deploying capacity?

Thank you. Maybe I'll start with the second question and leave the first one to Ian. So I think our baseline expectation is that fuel stays high because anything else is speculative. I mean we don't know. I mean the current reality is that there is a war dragging in Iran. It keeps wobbling. One day, it's peace; the other day, it's war. I mean God knows what's going to happen there. So we ought to assume that this is not going to get resolved anytime soon. If it gets resolved sooner, great, then we will take the benefits of that. But we are planning baseline on a prolonged war with continuous distress coming through the fuel pricing environment.

And I think before you ask the question what we are going to do, I think you also need to look at the context of the industry. We have EUR 2.3 billion of liquidity that translates into close to 40% liquidity cover. I mean that stands probably the best of any airline in Europe and even globally or certainly amongst the best. You have a lot of other airlines with basically no liquidity, unhedged, on fuel, flying an old fleet of airplanes, burning fuel like hell. I mean, those airlines will get distressed in an off-peak demand environment like going into the winter period.

So yes, I mean, you manage your own capacity on the one hand. But at the same time, you would also need to look at the market and see how opportunities arise from that. So I think this is to be seen. Of course, we are screening the industry. We are screening the performance of airlines. We have a pretty good understanding where the weak spots are, where the opportunities may arise. But I think you can never take it definite. We say that the entry barrier to the airline industry is high, but I think the exit barrier is probably 10x higher. Airlines tend to find money, good or bad, to continue to stay alive, to get built, either governments or private investors. So we don't know that exactly. But we think that given the scenario and a continuous distressed macro environment, that will force changes in the industry. And I think we want to be ready for the opportunities coming.

As far as we are concerned, we are doing a lot of good work in terms of de-seasonalizing the business. Last year, last winter, we ground with capacity to make sure that we manage capacity adequately to demand to avoid cash negative flying. This time around, I think we try to be smarter, and we are adding capacity by bringing a set of network opportunities for the customer actually in line with their expectation where they want to fly. So that is the concept of winter sun, and I think that is very strong. And it has been gaining a lot of traction in Central and Eastern Europe, especially with the video creation, growing GDP.

People have money to spend, not only in summer, but also in the winter period. Skiing is popular, and we think we can create opportunities for the network to serve the customer needs better. So we're going to be a lot more balanced seasonality-wise coming into this. And then you have this unknown at the moment, but I think that unknown will get clarified sooner or later what market opportunities we may have. So I think we are planning on operating the fleet. As we said, we fly what we sell, we sell what we fly. And I think we will be sticking to that even if it feels like a stretch at this point in time, but that will create tremendous benefits going into next year.

Yes. I think you covered that. I wouldn't read too closely into that statement, Harry. I mean we've always taken advantage of market opportunities for the company. We saw opportunities in the past when airlines had to reprioritize or repivot. That's how we entered into Romania, for example, a few years ago. There will be capacity allocation changes going into the winter, especially if the fuel price stays high.

Our peer group in the low-cost space, as you well know, Harry, is hedged, but not everybody is or can. It requires a level of sophistication. It requires relationships with credit institutions. It requires cash to be able to collateralize in case you don't have the credit lines. And we also know that there's a lot of activity happening in this space in Europe. You have a transaction underway in Portugal. You know that ITA is now being absorbed into the Lufthansa Group and looking at long-haul South America. We're now the second largest airline in Italy. We see something happening tomorrow, right? We just don't know what tomorrow will bring, but we know that there will be change. And we are in a position where we have capacity to be able to take advantage of gaps.

And where we operate right now, we still have 60-plus percent of our network uncontested where we have the ability to pass costs on to our -- into the fares. And as costs rise, we're going to have to do so. But what you can be sure with our cost leadership is that those increases will be lower with Wizz than anybody else. And that will create opportunity for customers to choose us based upon price. And we are in the process of delivering opportunities for customers to choose us based upon preference because we have a better aircraft. We have a newer aircraft. We have a more comfortable aircraft. It's more environmentally efficient. It's more silent. And we know that ultimately, that combination of experience as well as financial performance and operational performance is what will drive consumer preference.

The next question is from Jarrod Castle at UBS.

First question, you've obviously got very high levels of liquidity. But if you look at your net debt to EBITDA, I mean, you were making progress on that front. It's now kind of flat year-over-year. I guess the question is, what level would you get nervous? I mean is it 4.5? Is it 5? Over time, you want to get it down to 2. But just how you're thinking about that, given also seasonally, you would have got a lot of cash in at the back of the quarter. And then just coming back a little bit to kind of changes happening in terms of stage length and the adjustments of this year. But how should we think about it going forward for March '28? Is that a very much more normal year in terms of ASKs matching seats? Any color on that?

I would take the second one, and [indiscernible] the first one. So with regard to stage length, I think you should see it as a not necessarily like an overnight adjustment of the business, but you see the ramp-up of domestic operations. I mean we have reallocated a lot of long Middle Eastern capacity to shorter haul European capacity, that's not going to reverse meaningfully, maybe a little but not dramatically, and we will continue to expand domestic operations in Europe.

But if you want to take kind of good planning assumption, I would say that if you assume 1,500 kilometers as the baseline for this once this capacity evolution gets consolidated. And I think in a good year from now, you will see a more consolidated platform and ASK and seat will get aligned again at around the 1,500 kilometer mark, that would be a good assumption. Obviously, there might be some variation to that, but it's not going to be that way. I mean we are deliberately descaling medium haul like Middle Eastern operation. Those are flights of thousands of kilometers. And we are deliberately scaling up domestic flying and they are a few hundreds of kilometers. So there is a rebalancing of stage. But I think -- I mean, I would plan on 1,500 fairly stable as of the next financial year, allowing some degree of variation, but not huge.

Jarrod, on the question to net debt to EBITDA, it's the same as it was Q1 '26. This is at the more -- slightly more elevated level than what it was at the last year. There are 2 factors. One is the new aircraft and the financing, which is relevant to that. We expect the net debt to EBITDA leverage to stay slightly elevated for this year and then going down from next year also with the redeliveries and also with the growth of the EBITDA.

Yes. If I might just quickly jump in on that point to clarify. So the net -- so the gross debt number, Jarrod and everyone is going to go up as the business grows. It's just simple mathematics based upon more aircraft coming, the total size of the fleet growing and the way that those aircraft get financed end up creating more debt. What didn't happen in this period is the EBITDA growth. But as we explained, we had a war where we were more exposed than others do, and we had a fuel price spike, which created a 21% increase in our unit costs on that. So I think it's important to point out that this debt does not have a sort of bullet maturity where we are facing a wall that we are going to run into.

This debt matches the lease terms of our aircraft. We have a lot of recent aircraft lease growth happening, which means that we have 12 years to pay it off, the maturity profile of this on average, 10, 12 years in terms of our leases. So while the debt coming out of the balance sheet is instantaneous, the repayment profile is over 12 years. And so we do need to be able to recognize that there are going to be periods where things happen like a shock again, but that this business is resilient and will ride through this much like it has. So that number that you asked for is at what point do we get nervous.

I mean, sure, we're monitoring and we're nervous about every financial metric of this company. But that number is going to be changing. It's going to be going down, not up. And so we're confident that as we continue to see this cost excellence and we get these routes matured and this capacity deployed and that we're able to build the presence and market share that we want in terms of profitable market share, that will then ultimately drive the EBITDA number up and that ratio down.

The next question is from Ruairi Cullinane at RBC Capital Markets.

First question is on other income in the full year, given you may have some visibility there. So should we expect other income to moderate from EUR 107 million in the first quarter? Would a range of EUR 300 million to EUR 400 million be a reasonable expectation? And then you show on Slide 8 the depreciation costs will fall in full year '28 due to CEO retirements. Should we expect that to continue into full year '29?

So I'll take it in the reverse order, if I may. The depreciation, yes, expected to fall down. And as we mentioned previously, the depreciation and in fact, also the maintenance line are elevated and are impacted by the redelivery of the CEO aircraft. What we have seen is that last year, we had 16 redeliveries. We expect 24 this year, and that has an impact on the depreciation and also on the maintenance for 2 factors is that the aircraft before it is returned, there is an increased maintenance, which is needed to be done. And also in the last stages of the -- basically of the aircraft before being redelivered, the depreciation is elevated. So these are the factors which are impacting the depreciation line this year as we will see the CEOs exiting the fleet. We expect a decline on the depreciation line.

And on the other income, so what we expect, as mentioned on the sale and leaseback, there is an increased benefit in the Q1 '27, which is compared to Q1 '26 that -- on the full year basis, that will be lower than the last year because of the profile of the sale and leasebacks, especially in the fourth quarter where it was higher last year than what we expect this year. So it was around EUR 260 million last year. We expect that to be around EUR 200 million this year.

The next question is from Dudley Shanley at Goodbody.

Two questions, if I may. The first one is for Ian. It's just a clarification on the comments you made about the booking curve. I thought you said it was elongating previously and had shifted back a little bit, but maybe I picked it up the wrong way. So if we could just get a bit more detail on that. Then thinking longer term, you've mentioned investing in future growth today, sector productivity is increasing, utilization is increasing. As we look forward beyond the GTF issues, do you think you have a structurally stronger business now?

Let me take the second one first. So definitely, I mean, we have done quite a lot of analysis internally to understand how the business has been affected over the last few years and what drove those refractions. I mean the biggest -- single biggest issue is the GTF grounding. If you really think about the level of disruption to the business and to what extent it has been affected the financial performance on the cost side, on the revenue side, on the balance sheet, it's been hugely, hugely disruptive. And in 18 months from now, we are out of it.

I think that one on its own merit will kind of reset the business back to where we used to be. And let's not forget that next year, next financial year, we're going to be hitting the 100 million mark on passenger numbers. I mean that will make us a very large scale business in Europe. This is pretty close to the current size of easyJet. This is a lot bigger than any of the legacy carriers. We are already bigger with that regard. So you have like the major disruption to the business eliminated by that time at a different scale versus when that happened and that started affecting the business. I think that will make us structurally a lot better airline than what we are today.

And on top of that, I think you should also kind of appreciate what is happening in the fleet renewal side of the equation. So we are converting fully into Neo. We are upgauging pretty much fully into A321s with a few exceptions, but 95% of the fleet is going to be A321s. I mean those are huge structural benefits arising from the fleet side. And I think you can expect us and you should expect us to be able to ramp up the assets what we are dealing with, airplanes as well as labor to an optimum level of productivity, fleet utilization, group productivity, et cetera. So absolutely, we're going to be a lot better business structurally speaking.

And yes, I mean, -- of course, at the moment, the revenue line is hit by the high level of capacity growth. But again, and this can be mathematically proven what you invest today is going to benefit you tomorrow through maturity, and you're going to see that maturity ramp-up happening very quickly going into the next financial years, which should also ramp up the revenue line. So you have like this elevation of your spending relative to the industry on the cost line to, we call it, a pathway to cost leadership. But at the same time, you will benefit from the metric of the revenues that you are investing into today. So yes, definitely.

And then Dudley, so on that booking curve comment, I was referring to the chart from last quarter, where we saw this shift postwar onset to short-term behavior. And then our numbers were indicating that it was shifting back following April. So May and June were showing more normal behavior similar to what we saw in January and February. What I said is that actually that has slipped again. And then going into July and now into August, we're seeing moderate short-term behavior. And we saw that with a bit of a pickup at the end of July, and we're seeing that that activity in August is still continuing. So I guess the way to read into that is that there's some late summer activity building for people doing their travels.

There are no further questions via the webinar. We will now move to written Q&A. The first 2 questions are from Conor Dwyer at Citi. The first one is, should we be modeling no grounding by end of FY '28? And if not, when? And the second question is no need to answer if already answered by point this is reached. CASK ex minus 2% in 1Q '27, H1 guides to be up [indiscernible]. Am I right this implies a run rate for Q2 back to plus [indiscernible]?

Yes. I think let me kick it off with the grounding question. So the current plan is to on ground the entire GTF forward fleet by the end of calendar year 2027. Now you also have to know that there is some yet minor degree of distress coming through the V2500 powered fleet. So the market is running dry on spare engines. So -- and of course, Pratt & Whitney is congested on maintenance work and shop capacity and parts availability with that regard.

So -- but being the largest customer of Pratt & Whitney effectively, we're saying that the plans we are having in place to be fully on grounded on engines by the end of calendar '27 has been tracked accordingly to plan. So I don't think that the risk is huge to that plan, but you cannot guarantee it until you are through the cycle. And as of then, I think you should be pretty much expecting no grounding. There should be no reason to ground unless there is another event happening in the industry that -- or around the industry or geopolitically that would force you to ground. But I think that would come as temporary as opposed to structure. So structural grounding, we should be out in 18 months from now.

I will comment on the ex-fuel CASK H1. As it was mentioned, the H1, and that's what we will see in Q2 as well is impacted by 2 factors, which are temporary, but which we will be incurring. One is the redelivery of the CEO aircraft, and that comes with the higher depreciation and the higher maintenance. So these are the factors which will be playing into a temporary cost increase -- unit cost increase in the Q2 as these events occur. As mentioned, we are very much focused on decreasing the cost, decreasing the ex-fuel cost. And we are making all the efforts to keep the cost down. This is a transitory element which is impacting the cost, and this is what we will see in Q2 as well.

The next questions are from Muneeba Kayani from Bank of America. The first is, what are your thoughts on winter capacity planning?

My thoughts on winter capacity planning is that we are, as said, de-seasonalizing the market. So we are a lot more skewed towards capacity that is less demanded in the period like winter sun skiing, et cetera. So we will do a lot more of that type of capacity than before to make sure that we are really converting underperforming capacity otherwise into performing capacity. I think we mind fleet utilization as a concept because you have to recognize differences when you lease airplanes, what we do, you have significant fixed cost observed in the business.

Should you decide to ground because of big demand, I mean, that fixed costs would spread across a narrower cost base. So that would push your unit cost up. So you would create a problem as well, but you are trying to fix. And that is quite different versus when you own the plane. I think you have a bit more flexibility for seasonal grounding, adjusting for demand. But I think we are confident that the program we are putting in place makes a lot of commercial and financial sense.

And as I said before, we expect some opportunities coming up in the winter period starting from the weakness of other airlines. So we are observing that in the market and we will act accordingly to those opportunities. So it will be still a high-growth period, probably the last one going forward and as of fiscal '28, you're going to be seeing this moderated capacity plan, moderated growth plan because this year really is kind of catching up to standards on many fronts to make sure that the maturity comes through for the benefit of the business and for the benefit of financial performance going into next financial year.

Was there a second question from Muneeba?

Yes. The next question is, what is the RASK and fair trend in your bookings for F 2Q currently? July had high 32% traffic growth. So I want to understand the price stimulation needed to achieve this capacity growth.

Yes. So we're still seeing strong demand. We're booking ahead in terms of August and September for Q2. So we have a modest buffer there on load factor. And the fare trends are in line with what we've been seeing on Q1, which is we're looking at something between sort of mid-single digits to high single digits down on fares. Although with that closed-in booking increasing, we're monitoring that closely to see if that ends up more on the high -- end up on the -- towards the middle of the sort of single-digit range. So, so far, we're seeing, I would say, okay demand and okay pricing given the fact that we're growing 5x faster than the next competitor in the period. And so we are roughly 79%, 80% call it booked for August and somewhere between 40% and 50% booked in September. So those, like I said, are trending ahead of last year, and we're now in the process of managing the peak summer period to make sure that we are able to maximize what we can in terms of our RASK performance.

The next question is CAS ex fuel was down 1.9% in F 1Q. Why do you expect F 1H CASK ex fuel to be up low single digits? Is this related to compensation and sales and leaseback in F 2Q?

I can comment. I believe that this question, I was referring to already in one of the previous questions. The main factors here are the increased depreciation and the maintenance, which is related to the redelivery of the aircraft.

Yes. I think it's really more about more volume of those sorts of returns happening in this period, plus as these aircraft exit, when you have more aircraft at the very end of their period of time with Wizz, they attract the highest amount of depreciation in their life cycle. And so you hit by this compounding effect, which as soon as they're redelivered then those costs drop off. And so this is why we keep on mentioning that in the near term to medium term, we're seeing strong cost improvement performance. And we don't see any reason why that will change because we can identify where those problems are.

In terms of the rest of the cost base, as Jozsef mentioned, bundled within the airports and handling and on-route line is airports, which is performing better as we always said it would as we get back to growth. We are seeing efficiency from the crew due to much better operational planning as well as fewer aircraft unparked, which means that we're now able to deploy the crew efficiently as opposed to having crew inefficiently waiting for aircraft to come back online. And then you have this operational excellence that's driving the disruption.

Of course, summer is always a period of challenge because we end up buying so much and there's so many different issues that we're dealing with. There was fires and weather and things like that, but we're still going to see much better improvement because the operational performance is a financial strategy. It helps us on the cost side and it helps me on the revenue side because people get more confidence in booking. So those are the drivers on the cost side. I think, Veronika, do you want to add something as well?

And I would add one more point. As I mentioned, we have to look at the -- also at the other cost and income on the sale and leaseback. There was a benefit of EUR 25 million year-on-year. This is due to the timing of the sale and leasebacks throughout the year. That was a bigger difference in the Q1 than it will be in the Q2. So that will drive the difference of the other income slower in the Q2.

So roughly EUR 75 million more in Q1 versus Q2.

In that whole basket.

And then next question was where do you see strategic opportunities with consolidation of the industry?

I think you covered that already, right? I don't think we would want to add more than what we have said with that regard. We are watching the market, observing what is happening and we follow you when we kind of -- that's when we come to it.

I think this was a written question. So we have covered it on one of the prior questions.

We now have a verbal question from Stephen Furlong at Davy.

Okay. Just 2 questions. I was wondering, and one maybe for Ian. With your assumption being with -- as you reduce the route churn that there would be better airport deals available in that case? Because I think you've had an issue in the last couple of years of massive route churn. And the second question, with -- I think this might be more Joe, but in terms of some ramp-up in domestic markets, say, Italy, Spain, how are labor relations? How -- are you happy that there's bluntly, there's no threat of unionization, et cetera?

Maybe I'll start with the second one. Look, I mean, I think contrary to some of the perceptions out there, I mean, we are incredibly labor-friendly in the company. I think we are the only airline probably on the planet that the CEO goes to see every base we have periodically twice a year to talk to the crew. So you have your pilots and cabin crew in front of you and you exchange views, they can tell you whatever they want to tell you. It's a direct dialogue.

We have an institution inside the company called the People's Council that is really trying to bridge communications further on between management and people on the ground to make sure that people's voice is heard. So we are extremely engaged with labor matters, and we are extremely friendly to our own people. Yes, we are not unionized because we've seen that our model is better than the union model. And clearly, the history of the last 22 years proves it because it's not going to be me who will unionize the company, but it's not going to be the union and outside union who will unionize the company either. It's going to be our own people to unionize or not.

And notwithstanding the rights, they have opted for maintaining the current culture, which personally I think is a lot more beneficial to the employees and every single constituent in the company. And that model works in the U.K., that model works in Italy. And you can argue that those countries are more exposed to matters like this. And I think the model will work in Spain as well. It is important that people understand what we are doing and how we are doing it and how they benefit from that. But I can tell you that I think we are through the most labor-friendly environment of any airline on the planet.

Thank you. And in terms of your question, Stephen, on airport deals and how we're going to continue to see that. So let's be clear, there's always going to be an element of churn in this -- for ULCC. And before you think there were a bunch of pussy cats that don't know how to drive negotiations with airports, we approach it from a slightly more benign perspective, but we're still trying to drive the best for our shareholders and for our stakeholders. The churn that we're talking about that we're going to reduce is the stuff that we -- sort of the own goal, the self-inflicted wounds. Major things like -- think about the reaccommodation we did out of the Middle East last year, moving everything back or the changes required from taking an XLR program and then reconverting it into a NEO program with much different profile of travel.

Looking at what we did in Austria, for example, looking at the capacity that we didn't fly last year in order to manage capacity, which is now compounding the problem this year and giving us this surge that we're digesting or even just some of the rebalancing we did in other Western markets. What we're trying to do is avoid mass impact with big swaths of change, but constantly calibrating and improving our cost base and being a partner, being a reliable partner and having airlines understand that it's much better to collaborate and reward us for the capacity than it is to use the stick. So more nuance there.

And I'm learning in this space because I'm new to the role, but I've been involved in some of the discussions with the airports and understanding exactly what their needs are. And so there's a balance there, but we're not going to shy away from driving the best bargain that we can get. That's the name of the game, and that's where the talent comes from. And we have very talented people who have years and decades of negotiating prowess, which we're going to deploy and we're going to use, especially as we start to de-seasonalize the business and think a bit more about some of the things that we need to do now with the size of this airline before -- compared to the airline before.

We are a dramatically different airline today sitting here in 2026 than we were pre-COVID, irrespective of whatever metric you want to use, whether it's revenue or seat capacity or ASK capacity or EBITDA, we're more than double on any of those metrics. And that weight is something that we now have in our favor to be able to deploy in a very sensible and cost-efficient way.

That was our final question. I will now hand over to management for closing remarks.

Well, thank you for bearing with us. I think you should see how the building blocks as we were discussing were coming into play in the period. So notwithstanding the challenges we are facing in short term, I think you will see how that will evolve structurally over time, and we can elaborate on many of these matters when we have the Capital Market Day in a few weeks from now. Thank you.

Thank you for joining. That concludes today's call. Have a nice day. Thank you.

[Audio Gap]

presentation followed by Q&A, taking questions from the room first and then anyone who's on the line, aiming to wrap up at 10:30. And with that, I will hand over to József Váradi.

All right. Good morning, everyone. Thank you for coming. So this is the report of fiscal '26 -- are we good now? Okay. Thank you.

So just a few numbers to start with. Pretax profit is up to EUR 27 million. Profit after tax is positive breakeven. This is in line with the post-close statement. We issued EBITDA is up 16% year-on-year. So we've seen that underlying terms, the business is moving in the right direction. We carried 70 million passengers. That's a 10% uplift on this metric. We are over EUR 2 billion of cash and net debt is unchanged, but leverage has come down from 4.4% to 3.7%, again, I think that showing that we are having the right direction here. [indiscernible] ratio is one of the highest in the industry globally with 36%, and that's an improvement year-on-year.

Maybe a few highlights in terms of what is underpinning the business as we speak. We see we have a good growth momentum. You report that we had to hold growth due to the engine endings around 2 years ago. We have started recovering from the situation -- you see that the number of aircraft on the ground due to the engine inspections has been coming down on 42 last year, this year. And we're also seeing that the market will be favorable for [indiscernible], especially going into the second half because we know that under the circumstances, the market will become somebody distressed the industry will come on its back [ foot ].

And what happened during the COVID recovery, actually plays a role in is today, we cover the size of what we were pre-COVID and we see to a large extent, point you to go to some market acquisition ex what we undertook at that time, and we had possibly be seeing similar opportunities here. As said, the GTF is still around. This is an issue, which we keep carrying on, but we have kind of 18 months to go with that regard.

We have been on plan to deliver the uplifting targets. And for 6 to 8 months, the plan has not changed. So we have growing confidence that this is going to get completed anticipated before. So we are still expecting that by the end of 2027, Canada '27, all aircraft, we believe will be flying. Of course, there is going to be more technical backing to the GTF operation in the forms of spare engines, but there won't be a cut on the underground.

We are much focused on managing capacity and growth in the remainder of the summer period as well as looking into the winter period, where we are not in a position to guide given all the uncertainties and we are falling in line with the industry. But when you look at growth, I think you should appreciate one nuance that ASK growth is quite different from [indiscernible] growth. And this is the result of long stage length capacity having been removed that's Middle East and we allocated in Europe, which is a lot shorter stage lens, producing more sectors.

Now the good news is that when you are growing through sector productivity, effectively, you are delivering that growth at around 30% lower cost, simply because you don't have to absorb fixed cost to that growth. So it may feel a high number, but a chunk of it is actually coming in at very low cost, a lot lower cost than otherwise. And we are at around 25, 25-plus percent growth to be delivered -- our seats.

So if you kind of break it down to ASK, you recall that we were guiding actually capacity of the first half of fiscal '27 to be around 20%. It is 53% in Q1, and it's going to be around 12%, 20% in Q2. The lower number for Q1 is the grounding of the Middle Eastern capacity. But in Q2, order grounding has been uplifted and reallocated predominantly to euro. And we have started in [indiscernible] 30% of the Tel Aviv capacity as variable but most of the Middle Eastern capacity is now flying in Europe.

Let me just reiterate the medium-term expectations from the business we have been discussing this, but I would like to reconfirm this. We are looking at 10% to 5% medium-term growth. You recall, we said that this year, we will still be high growth, but we've affected the aircraft delivery program with [indiscernible] to get this moderating growth rate to kick in as of the next financial year.

We are improving network densification. That's relevant because especially if you look at where we are growing in Europe, we create more sectors. We create more dense products that attracts more business passengers, high-yielding passengers, that also improves the revenue line, not just the network into it and the operational metrics. And we are coming to the end of the [indiscernible] CEO, cycle.

We still have roughly around 30% of the fleet to be recycled. That will get completed over the course of the next 2 years. So in a way, if you really think about this in 18 to 24 months, you will have the stars realigned again, having the whole fleet flying and having basically the whole fleet converted into new technology aircraft, A321, creating significant economic efficiency.

So next slide, please. Let me just recap where we are on the strategic initiatives. So we were discussing this around some of the underperforming parts of the business. We closed Abu Dhabi last year. We closed Vienna earlier this year and we are rigorously reviewing our performance in light of profitability as well as in light of cost of doing business, especially the high cost airport environment. So you may expect some more to come. Be that in that regard, but we are clearly addressing these structural issues in the business.

Airbus order book, we have communicated that, that it is already set for accommodating the medium-term growth expectations that will kick in as of next financial year. We have shifted the delivery lines on the existing order book. We expect to have EUR 335 back by the end of fiscal '30. So in both 3 years from now, that will deliver 7% fleet growth, around 11% [indiscernible] growth.

Now the difference, of course, is that we are lifting the audit attribute with GTFs that creates growth capacity for the business. And I think that is in line with our previous communications, how we are seeing the next few years to play out. [ SLR ] is over, to put it very simple. We are not [indiscernible] we're pursuing an [ X ] softly the next network, effectively the 11 extra aircraft into the AC21 operations. It is a little higher unit cost as a result of the weight of the era, but still lower production than the A320.

So this is not like a bad, it is a good aircraft. And it creates, as we said, operational contingencies for the business. So should we have airport closures and retooling and stuff like that, you don't have to land for fewer stock, but you can continue with the next slide because that gives you more range. But as such, [indiscernible] operation is over. So we are not talking about [indiscernible] any longer. We are not talking about an axle work with an [indiscernible] or a specific operating model for [indiscernible].

Then you look at the network realignment, quite a year behind us and kind of in front of us, we have made announcements of a number of new bases. A [ basis ] of -- new Italian basis were ready to the system like [ Torino ] and Palermo. And we continue the densification of the network, delivering more secular productivity on the one hand, but we're also creating the opportunity for tapping into higher yield demand as discussed before.

The [indiscernible] related on parking of aircraft, we are down from 42 or somewhere to 30 this year due to the [ Polymetal ] issue, recall that all of a sudden started affecting the business 2 years ago and that another 18 months to go to go [indiscernible] cycle and alter very relevant.

And with regard to free technology. As you know, we are doing 2 things in parallel. We are renewing the fleet from CEO to [indiscernible]. On the one hand, we are gauging the fleet from [ 2021 ]. Those 2 initiatives go hand-in-hand with each other and it was 3 years from now, the fleet we get converted into A321neo effectively. And with that, I will hand it over to Veronika.

Good morning, everybody. For those I did not have a pleasure to meet her. I'm Veronika Spanarova, I'm CFO of Wizz. I have been 4 months into the job, which in the dynamic world of aviation seems much longer than that, but it's great. I'm also glad that Ian is here again was in my seat for the past couple of years, has been promoted to the role of Chief Commercial Officer, but has been great help and support for me in my first weeks and months of the role.

So what I will do is I would like to summarize the F '26 financials, and then Ian will talk about our commercial initiatives, and then we'll be happy to take the questions.

So in the nutshell, what do we see in the F '26? I think that there are 2 messages that we would like to point out. We continue execution on our strategy, which is the focus on the core markets in the Central and Eastern Europe. And I also believe that you do not see any surprises in the numbers. This is what we have communicated before.

A couple of things to point out on this page, solid revenue growth year-on-year by 8%. This is a combination. We see the ASK increase of 8.5% and the seat capacity growth of 10.5%. And this is what József was alluding to as well, the difference between these 2 capacities show the impact of the higher gauge aircraft and also 1.8% reduction in our average stage length.

And again, that goes back to the deliberate network refocus to densify the routes in our core Central and Eastern European markets. RASK and the load factor were broadly flat year-on-year. This is in line with the outlook and with the guidance, which we gave before and EBITDA margin increased by 1.6 points to 23.2%. With this, this is highlighting the cash generative ability of the business.

If we go to the next page, please. I'll be talking -- let me walk you through the main messages of the costs. Again, no surprises here, and we are being consistent with what we have communicated before. A couple of highlights, which I would like to make. Total fuel costs, you see a decrease of the fuel costs and notably a decrease in the fuel unit cost by almost 10% and it has 2 factors in that.

We are talking comparison F '25, F '26. The market prices declined in that period, but also, I would say, very importantly, the increasing efficiency of our fleet and the resulting lower cash fuel burn as we are renewing our fleet, NEO aircraft is now accounting of 77% of our fleet.

You see an increase in the maintenance costs. Here, I would like to point out that this is largely due to the fact of the EUR 83 million accrual reversal, which we have seen in F '25. So that's increasing the year-on-year comparison. If we look away from this from this accrual reversal, the maintenance cost would be about 3.2% up.

Depreciation was also higher in the line with the expectation, and this is reflecting the redeliveries of the [ CO ] aircraft and the resulting capitalized costs. On the other costs, what I would like to mention 2 things. We see the higher sale and leaseback year-over-year. We saw in F '26, 33 aircraft and 18 engine sales versus 16 and 10, respectively, in the F '25 and that is helping to offset the fall in the compensation cost as our aircraft are gradually ungrounded.

What is positive? What I would like to point out here is the decrease in the disruption costs which is reflecting very well on our operating performance. And the next slide, please. So with regards to F '26, we generated almost EUR 1 billion of the free cash flow. This is 22 -- this is a 22% increase year-on-year. And this is even after the repayment of the bond of EUR 500 million, which we did in January 2026. Net CapEx benefited from the adjusted [ PDP ] schedule and the timing of the sales and leaseback. You see the improved leverage with the net debt to EBITDA going through from 4.4%.

Final point, which I would like to make is around our hedging position, which, as you know, we have the hedging policy and program that we are executing on. At this point, as of May 29, our first half F '27 jet fuel needs were hedged 84% with a cap of $826 per metric ton and the winter hedge position for the second half of the year was -- spent at 71%, with a cap $819. Also, apart from hedging the jet fuel costs, we are also hedging the FX exposure, which is now -- loan book is now hedged up to the 83% of the U.S. dollar [ list ] exposure. So this would be the main highlights. And now I will pass over to Ian. Thank you.

Thank you, Veronika, and welcome. Good morning. On the next slide, we've spent a lot of time hearing people in the industry talk about what the change in consumer behavior has been following the Iran conflict. And people have said, people are waiting and seeing and booking later. And I thought that, that was rather anecdotal.

So I wanted to put some data just to see exactly what was happening and also to track that behavior going forward. So you can see that in January, this is a shift in RASK generation. This is not changes in RASK in absolute terms, RASK. This is when the RASK is generated through the booking curve. So in January, for example, you can see that in the dark blue bars, we were seeing almost 1% of people were booking earlier in the 3 to 8 week period and fewer people, less than 3 -- the decline of 3.3% of people booking in the last 2 weeks.

So people were booking earlier in January and February, which makes sense because people were coming out of winter and starting to think about what's happening in spring. And because of the changes and the deliberate modifications of the network that we've been making over the year -- over the last couple of years. We're seeing a bigger segment of leisure, changing demographics of people find with Wizz, those people were booking sooner, okay? So you saw that this was happening in January, February, then of course, at the end of February, early March, the Iran conflict happened, and you saw that there was a flip in the numbers.

So now people are taking a much more pronounced wait-and-see approach, a lot of instability in March and April as well. Now there's other things happening as well during this period, such as Easter and other holidays, but you can see in general, that there was a trend towards people booking later, but then May came along. And June is now 11 days into the month. And then we're actually seeing June look similar to May, where people are going back to this planning phase.

They're no longer adjusting to the new cycle, regaining confidence and looking forward to planning. So that means that for us, we can no longer -- no longer need to worry about the firefighting, which is kind of what's happening as people's behaviors change. We're trying to predict and anticipate what's happening. We can go back to a more deliberate and more measured and more strategic long-term postures.

And so that's a bit of backdrop that I wanted you to understand. And so if we believe -- which we think that notwithstanding the yesterday's news and today's news and tomorrow's news, we think that people are taking a more planned approach, then that gives us more confidence to be able to look forward and to think about how we're going to deploy this capacity that we have into this half into the next half.

Next slide, please. And so in terms of commercial initiatives and where we're putting our focus, we spend a lot of time talking about our network design and our grow better strategy. So we pulled out of the Middle East, as József mentioned. We're looking at where we can focus on airports with the right cost base to comply with our ULCC structure.

We think about productivity, in particular, how we can think about our overall network design and the KPIs that we're looking to unlock with the network. So we're seeing that -- we're seeing more aircraft on part than we anticipated last December. We're seeing more focus on [ Centuries ] and Europe, more focused on markets that give us the profile that we want.

And so we've been very active in Italy, in particular, deploying a lot of capacity there because it fits the model, we can be focusing on shorter stage lengths, generating more seats, focusing on better cost management and we'll look at other markets in Europe that have that characteristic. So we're looking -- we're hunting for those markets, and we can deploy our capacity not so much into exotic exploratory markets but into markets where we can drive efficiency and start to think more about our customer segmentation.

So who is our customer? How are they being served, if at all? How can we serve them better. And those are the sorts of questions we're asking so that we recognize the sheer of is nowadays with 266, 267 aircraft in the fleet with what we've accomplished and what we've become and how we can become less of a weekend alternative, but more of a daily choice.

And so the mere design really is the core of the cost management and the cost delivery. And I think you'll see that once we get through some of the challenges with retiring the CEO aircraft and the maintenance costs that come along with that and the higher depreciation that those aircraft carry you'll start to see some of the improvements come through, as József mentioned, into next year.

But reliability is also something that we should be acknowledging. So you can see that I pointed out what happened in May, but I also pointed out what happened in this year's fiscal year-to-date. We're no longer low on the rankings. We're at the top. We're doing very well, and that's a combination of sheer discipline when it comes to our operations team. So I want to recognize them for all the hard work that they put in there and all the lessons that we've learned over the last couple of years.

That will help us on costs. You can see that come through on the cost line F '25 to F '26 in the form of lower disruption costs. While we're doing better in terms of keeping those costs down, what we're seeing is that there's a hangover, there's claims from prior years that are still affecting current years. And so once we eliminate the poor performance and stop generating new claim opportunities and we -- and the legacy claims finally processed, then we should see that number be better.

So reliability drives cost. On top of the fact that the network design will help drive the cost because the network design gives us more opportunities to have standby crew, resources when it comes to maintenance, resources when it comes to aircraft, all that stuff we'll work together to deliver this lower cost base. But also, I think that we need to recognize is that reliability also drives the revenue line.

People will pay for performance. People will pay for schedule quality for convenience for having more options. And that's really going back to the network, thinking about how I can grow better, have more density, provide more seats, more options and become the first airline that people think of when it comes to flying out Wizz. And then lastly, we pioneered something together with Starlink with [indiscernible], in the form of what's called StarLink managed. It's a ULCC solution. And that is very exciting. We just announced it on Monday.

And I'll pause because I'm sure people are going to want to ask lots of questions around that. And so I think it's important to point out that what it is, is it's a product design for ULCC principles, right? So under the traditional model that you're familiar with, Starlink is typically offered by [ Alliance ] for free. That will be the case. There will be a cost. Starlink will be managing the sales we think StarLink are experts in managing the sales of Internet connectivity, not Wizz.

We will be managing the ancillary opportunities that come with that. The -- any notion of OpEx cost that you have in your -- in whatever you've heard from other airlines, I think you should assume that those are overstated. Again, focus on the ULCC nature of this. And when it comes to CapEx, I mean, I'll stress Wizz was part of the design of this product. So we designed it in a way to work for us. And then when it comes to the fuel burn, I think people who have put forward estimates of fuel burn have -- they were wrong in their analysis. As simple as that. We've looked at it our way. We've collaborated with SpaceX. You can see on their website with the fuel burn estimate is, and you should rely on those numbers.

So let me take advantage of the last -- next slide, please. Okay.

So this is what we are seeing for the first half of the financial year until the end of September. Capacity-wise, as we have commented on, we have with 15% ASK uplift translating to 25% more seats. And this is due to the grounding of a backdrop and more European and flights by this time in respect to the recent situation. There's a bit of a catch-up in Q2, given that the Mideastern capacity I guess we stated there. So ASKs are up 20% and a 25-plus percent see those is to be expected.

At that point, 30% of Tel Aviv capacity is back and the rest would be flown in Europe. With regard to RASK, please take into account the Easter effect in Q1. So that's a significant distortion to the other numbers. So we are expecting Q1 to be mid-single digit towards higher down. I mean we see was actually June is going to be completed. Q2 RASK is expected to be flat or flattish performance load factors are expected to stick to last year's performance across the whole of the period.

With regard to the cost, as Veronika said, we have most of our fuel requirements hedged for this period. And we are expecting cost ex fuel to be flat, maybe a little of what we are trying to do as best as we can to have to make sure that we contain that exposure. And I think that closes the presentation. So now back to you for questions.

It's Harry Gowers from JPMorgan. Maybe if I open with a Starlink question. And if you could just talk about the economics around that. I don't know what the easiest way to talk about it is, but maybe sort of cost per seat or cost per aircraft and then how you think about monetizing it or how much to charge for using it?

And then second question, your kind of capacity deceleration normalization, I think, has been pushed out by 6 to 8 months, as said on the outlook slide from winter into next summer. So the first how much capacity growth might we expect at the moment in winter year-over-year? And then why has it shifted? And under what sort of inventor fuel price might you consider having to withdraw that growth?

Maybe by Ian is thinking about the [ space ] issue. Let me comment on capacity for winter. So I would say that there are at least 3 factors affecting winter capacity. One factor is that we are expanding onshore sectors, quite a lot. This is a matter of design, and that flows through the winter period.

So January, notwithstanding that whatever ASK growth, we would be delivering that would translate into more seats, so to see growth is inflated over ASK growth just as a matter of designing the network, especially focused on short not beaten the domestic, but also a lot other short route. So that's one factor.

Second factor is that now we have the confidence how we're going to be uplifting the grounded aircraft and that will continue to happen through the winter period as well. So we have a very [indiscernible] plan to make it as much as possible because we also have to manage our own maintenance capacity and crews in order to be able to take the [indiscernible] for back. I mean you have to put the low maintenance and you have to grow the then it is gradually kind of spread across the remaining 18 months.

So that this is pre program, and that is affecting the winter capacity. And the searching, which is a bit of a flow over from last year from last winter period, we cut capacity loss in -- we've had that given the uncertainty around some of the market issues, we will be more prudent to cut capacity to avoid cash negative flying. That capacity is now coming back. And we're seeing that we are able to turn the network as such, that we are able to uplift our financial performance on that basis.

So these are the 3 sources. So winter will be a high-growth environment. But you think also need to look at the flip side of the equation. As the flip side of the acquisition is that this year 2026 is going to be a year of 2 halves. You see very different market behavior in the first half versus what you're going to be seeing going into the fourth summer period. As summer, you will see airlines sports to cut capacity and increase that.

And depending on where you are at with regard to your exposure to cost or exposure to fuel pain you were able to mitigate all of those with cash hedges and technology, you will come out differently here. We're seeing that the second half of the financial year, we have represent significant strategic opportunities for the business. We expect market vacuums. We expect airline failures. We expect significant to rise for this very similar to what happened in the COVID period in 2020, 2021.

So actually, those 2 things are getting the line. So yes, we have high capacity growth, but I think it's going to go against kind of high level of opportunities for the business given the distaste in the industry. Don't forget that from a U.S. standpoint, the bigger the crisis is, the better we are.

Okay. So in terms of Starlink, like you can appreciate the terms are confidential, but it is so exciting and so unique. I think it's first important to recognize where the world is going. People whether you like it or not, maybe if you're my age, you like it less, but you're going to be connected. We are [indiscernible] connected society. So recognizing that this is where the world is going is important.

But also I think from a differentiation perspective, having Internet no one else does is also something for attracting the new generation of travelers, those who are going to have a much more higher propensity to travel. SpaceX really wanted to work with Wizz because of our seat production capabilities because of our high utilization because of our ubiquity, our potential to put them in front of passengers. And obviously, SpaceX has other ambitions in just doing in-flight WiFi.

And so that's really appealing and creating this win-win environment that we could tailor the solution for. I'm not going to really talk about cost per seat. But what I will be able to point out is that from a position of strength, what we do well is fly is create ancillaries ancillary opportunities.

And what's basic as well is provide the fastest Internet available in the sky. And so we want to make sure that we went with the best and that we were future-proofing this business for the next decade or so. And so we have a model where, like I mentioned, SpaceX is the vendor. SpaceX manages the portal. SpaceX deals with the sessions. But the model is designed to make sure that the cost for the passenger is affordable, just like our affairs.

And so while it may not be free, like you now have seen what's happened in hotels and airports, it is designed to be affordable and is designed to put as many people as possible in front of the Internet. What that allows for us is a low-cost, ultra-low-cost solution so that we don't have the traditional operational expenses.

We do not have the traditional CapEx profiles and hardware hurdles that come with the installation. What we are able to do is create ancillaries around that. And so I think everyone is now pretty accustomed to paying by phone, tapping by phone and accessing payments through that platform, bringing that onto the plane, allows us to do all sorts of things on the plane, whether it is processing credit cards in the sky that we otherwise couldn't do and exposing ourselves to fraud.

Now we're no longer exposed because we can determine whether the customer has a balance in real time. That allows us to lift the caps on in-flight sales, which means that we can sell more and reward our crews more in terms of what they're doing, we and loan promotions on the -- in the sky, both on our own products and our own flights, but also with partners, whether it comes to our hotel bill options on our app or whether it comes to destination marketing, the innovation transfers, excursion, things like that.

We can do all sorts of new retail concepts. We can also access a lot of the inventory that is spoiled, the moment that the door has closed traditionally. So if there's empty seats and you don't fancy your seat mate, you can automatically buy that seat while in flight and move. And so that was a revenue stream that we couldn't -- couldn't access in the past. So there's all sorts of applications that we're in the process of designing.

Even we have -- one of the things we have right now is in flight order now on our app, you can do that now without WiFi. You can eat the galley cart and get your product, but you still have to pay with the POS now we integrate the payments into that, and it creates a lot more efficiency for the onboard experience as well as well as for the customer.

So that's where we're going with that is the ancillaries. SpaceX wanted us to find a model that allowed us to maximize our ancillaries so that ultimately, we're happy with the product, they're happy with the product and installations should start across the fleet in the beginning of 2027 and roll out through that year, and it will ultimately affect the whole fleet as soon as we can get the installation schedule turn down.

So I hope that answers your questions. It's very much designed for ULCC. We very much designed it with our input to make sure it works for us. It does not -- the free WiFi that other airlines, I think, is more than 30 now that have. We're the only one that has this Starlink managed approach. And we're thrilled to be able to announce this.

I would just add one with ASK, but we are a fairly large airline for purposes of SpaceX. So we're going to be closing our competition here simply because all the installation were occupied the capacity of SpaceX. So anyone else's ability to try to match or anything like that we be limited at least for a certain period of time.

So we've seen that we are building a competitive advantage here. And this is kind of the same what we did with was we ordered back in those days in Dubai, we blocked over 10% of Airbus' capacity which creates difficulties for all others to try to come in and match. And you see that what happened in case of Airbus that we got our delivery stream and then when they were talking about other airlines, they were really pushing back to delivery stream quite a bit. And asking something similar you might be expecting here as well.

I'm pretty sure that this model will not stay unique to us forever because I think it's a very good model. It's very efficient from our standpoint. So some others will be smart enough to recognize that, that is something but they are able to treat well with it because simply, we're just going to be blocking them out as a result of our scale and implementation.

Alex Irving from Bernstein. Two from me, please. First, I want to come back on the winter capacity plans. Just because we're less in the grounded aircraft, which is using cut capacity last year, doesn't mean the you have to fly the planes this year with a higher fuel price environment. Of course, every marginal flight happens at spot fuel.

The question really is what metrics are you focusing on primarily to steer of the capacity you're looking at? Is it getting cash down? Is it just cash contributing flying? Is it more of a long-term huge positioning focus? Why is the capacity growth accelerating the right move here?

Second question, once upon a time, you were keen to grow more and more in London, Gatwick. So we'll see the news on [ easyJet ] in the last couple of weeks. If slots were to become available in Gatwick over the coming months or quarters, would you expect to be able to be the highest bidder for some of those? Or is Gatwick too high cost now as an operation and the current strategic focus are no longer attractive for growth of Wizz?

Yes. So maybe I'll start with the second one first. So I don't think the gap would [ list ] too high on our priorities with regard to growth in the future because 2 issues in a way. I mean one is that it's an incredibly higher would cost a bit constraints. So that limits our ability to refine the operating model and get the maximum efficiency out of the operations at Gatwick. So I think that's one look and two, now this is top with the ABD charging business by the U.K. government, which is everything that does not -- and I understand that the government wants to rate funds for other purposes, but I'm not sure that this is the best way to achieve that.

But whatever it is, this is not our decision, of course, but we have to cross [indiscernible] of the decision. So with that, I don't think that Gatwick is going to be high on our priority for any purposes. And whether anything or nothing is going to happen to [indiscernible] you mentioned, I don't know, but I don't think that's going to change our appetite for Gatwick.

So with regard to capacity in the second half, I think it's a very good question because you have to effectively contemplate at 2 issues. One is manage the business for profitability on the one hand, but also management business for strategic fortunes on the other hand, and those 2 things may go hand-in-hand or may go against each other. And this is something to be seen.

And [indiscernible] to be sufficiently opportunistic. If you want to display that if opportunities arise, then we're going to be in a position to act on those opportunities. Remember how we got to Italy in 2020. So all of a sudden because of the COVID circumstances, the entire industry move backwards created significant panic in Italy. And that made some peers, airport is attractive to us, which these wouldn't have present in ourselves or [indiscernible] and we found that, that was a right to act on the opportunity against a very weak kind of a competitive backdrop.

So we don't know how exactly the situation is going to play out this time that we have some expectations, and of course, do some corporations and planning around those sort of matters. But I think we want to be sufficient opportunistic to see what is happening and act on the basis of the factors as opposed to just intellectual contemplation.

But in terms of managing the business for profit, I mean that's a very intact principle flowing through. But we are not seeing today, but I think we're going to be seeing it in a few months from now that you see more capacity discipline at industry level coming into play in the second half. You will see allies cutting capacity significantly. I think supply and demand video adjust to a new equilibrium, the new bars. And that will push fares up. And then the question is how each of the airlines are affected.

We are basically well hedged flying latest technology, burning to these fuel on a unit basis, and we have significant cash on hand that we can mobilize. I think that should set us aside from most of the industry. I'm not saying that we are the only one in that position. But as investors see aside from many of the other players. And in [indiscernible], we should be able to raise is needed to cover the incremental cost but also as strategic efforts rise. So I think you have this kind of 2 levers to play with.

Jaime Rowbotham from Deutsche Bank. Two from me. Firstly, Joe, the CEO of Airbus has been saying that [ Pratt and Gil ] has been so focused on the [ panda metal ] issue and the maintenance views on GTF that they're now at risk of not producing enough new ones quickly enough to then deliver their plans for ramping up A320neo production. Is that something you're keeping an eye on? Is that something that concerns you at all when you think about the path to having 100% neo fleet?

And then secondly, Veronika, I wondered if I could get a steer on maybe a couple of items. The first is sale and leaseback gains. So EUR 250 million in fiscal looks like a similar-ish number of aircraft deliveries in '27. I'm not sure where you are on the engines, but should we be expecting a headwind or a tailwind on that line item?

And then finally, CapEx Joe, you just mentioned the significant cash on hand that we have, fiscal '26 was an unusual year with a EUR 780 million credit on the net CapEx line. Should we be expecting something similar in fiscal '27 on CapEx given the various moving parts?

So maybe I'll start it off with [indiscernible] vis-a-vis Airbus. To be told [indiscernible] us, our interest is to get the existing fleet fixed before we embark on a new aircraft because that would just incur capital cost, additional capital cost to the business by grounding existing capital investments.

So that's -- I mean, if anything, we are pushing at the direction what Airbus may not like. But we do and because we think they have to fix their own issues before they move on to the next chapter online. Now prove good news is from a [ planarity ] perspective that the other guys are not doing much better either. So this is quite a problematic supply chain as we speak. But we want [indiscernible] to fix our issues in the fleet, on the ground right now before we start [indiscernible] about any other things.

But frankly, by the time we get to the end of 2027, I mean, largely, our fleet, we get converted into A321neo. The conversion at that time will be grow 90-plus percent. We probably will have like a year to go to a fully fleshed [ here ] the process of renewing the fleet from [ CO ] to neo.

I have to say that, personally, I'm not overly good it. We have our ever stated delivery stream with be by and large, Airbus has been delivering against that stream, and we don't expect major issues coming out in the future either. You may have a few weeks of delays here and there, but it's not major. So I don't say that this is going to jeopardize our ability to -- in that capacity as planned time actually fare like by that. But I understand [indiscernible] frustration.

Okay. A couple of points on the sale and leasebacks, which are in the other line. In this year, we expect the sale and leasebacks to be at a similar level year-on-year. We do expect the decrease of the compensation, which is in line with the ungrounding on the aircraft and the disruption cost also to performing very well in line of the last years.

On the net CapEx, yes, this was EUR 780 in F '26. We expect a lower number this year due to the lower number of the aircraft deliveries, it was 39 in F '26, will be 31 this year. And as such, the extent of the [ BDP ] rebates and will be lower. So this is -- this will be a lower impact in the as we said previously, over EUR 2.1 billion of the cash position, which is a comfortable level.

It's Jarrod Castle for UBS. I'll probably limit it to one just given the time. You've got your CMD coming up in September. It doesn't sound like -- or maybe I'm wrong, but there's going to be a change in how you finance between finance leases versus other forms.

But can you talk a little bit about what topics maybe you're going to cover? And especially looking forward, your -- some of your competitors, [ easyJet's ] got a PBT target packs, [ Ryanair ], obviously, 12% to 14% net income target. How do you think you stack up in, let's say, normal market by 2030? I mean, I don't know if there is a normal market for airlines. But where in terms of your ambition would you like to get to? I think somewhere around [ 5 million ] of net income you've got in the past, but yes, if you could just give any color on CMD and maybe thinking about future profitability per pax.

Maybe I'll start it off, and please be free to add. I mean just the last point you raised, I think we are looking at net income and net income for margin as a primary metric to drive. And we understand that due to worse [indiscernible] issues, we are not at a level that we would like to be, but we've seen we have the plan in place to get there. So we're going to deliver double-digit net income margin as we used to be talking about before so I don't think that has changed.

So with regard to the CMD substance, I think we have a lot talk about it kind of transitioning our steps through issues we have been facing. I mean we are geopolitically affected, we are supply chain affected and we are also fleet transition affected. And I think we will not clarify how exactly those issues were about time frame-wise and economic impact on the business.

I think we also have a lot to talk about markets that have been [ shipped ] surround that going into [indiscernible], we were Central East European, pretty much pure [ Centers ] European business. Coming out of COVID, we became a lot more diversified, some good decisions, some bad decisions. And if you want to put a face value, I would say that you certainly challenge the decision, but that's behind us. You certainly changed the [indiscernible] decision, but it's behind us now. There might be a few other things. You make challenges, and I think to go at how we are belong those lines.

We also want to give you clarity on some of the other levers, which we think are fundamentally underpinning the U.S. You see delivery of the motor like fleet utilization like title airport cost are happening and how the market evolution is kind of underpinning those ambitions to make sure that we are back to [indiscernible] standard performance with [indiscernible]. So I think the kind of how we are going through the transitionary matters and how we are solidifying ourselves in terms of underpinning performance metrics. But at in terms of some of the market issues and some of the underpinning U.S. deliveries.

Maybe coming on the sale leaseback of [indiscernible]. I think I think that under the circumstances with all the uncertainty that's going on under volatility that we'll probably be focusing on how we can best prepare the company to take advantage of the opportunities. So Joe mentioned the fleet right? We have capacity to deploy if we need to when there's gaps that create the present themselves.

We want to make sure that we have cash and we're doing things that are -- we're looking at also to ways to be able to establish the award chest to be able to go after the opportunities and they put it themselves. That, I think, is the best focus right now and also managing our leverage. You saw that our net leverage came down in the fourth quarter.

And so that's something that we want to continue to strive towards, but ultimately, we need to focus on what's right for the company in the particular circumstances. And right now, under the circumstances, we think that they're putting the company in a position of being able to act and deploy especially with this growth that we have ahead of us in terms of seat capacity, it's probably going to be the focus for the CMD.

And will you give like some financial targets over the medium term? I don't know what you use for [indiscernible]?

Net profit and net profit margin. I think that's why we are focused on.

Muneeba Kayani from Bank of America. I actually wanted to go back to your leverage comment. And you're at 3.7% now, I understand your gross cash and most of the debt is lease liabilities. But how are you thinking about your balance sheet? And where do you want to get to? And how do you plan to get there?

And then on winter capacity. So we've heard from other airlines as well. Everyone seems to think and someone else will cut back on capacity. How do you think this will kind of work out? And what are you hearing from the EU in terms of regulation around the slots? So will there be kind some flexibility on that front to allow airlines to get capacity?

I have to pick up the second one. So with regard to the inter capacity, yes, I mean everyone is waiting for the order to bring, but I think there is more economic determination here than that. I don't think this is just a poker game. This is more than that. And you have a lot of [indiscernible] in previous circumstances, how these things kind of work out. So what do we know?

We know that situations like this will make the those are lines for first on capacity or maybe as a whole that don't have enough lucidity they are exposed to the market, so they are not hedged covered and they fly wood plans. When those airlines flying 15, 20 [indiscernible] airplanes, they are very exposed because those airplanes are [indiscernible]. They drink feel like fish and against the high fuel price environment, that's a significant exposure.

So you can scan those airlines, how much money they have, how well as they are and what kind of fleet they fly us and you can create your own categories who are most exposed. And these airlines tend to be not made by [ states ]. They tend to be small and capitalized private airlines. They don't have credit ratings, they don't access to capital, et cetera, et cetera. So that's the first category value. You should be expecting some problems to arise.

Then you have the state-sponsored carriers, the big guys. Those are the first one who we run to the German government or French government that you name them. and they will show hands that they need money to be built out, and they get built out. We learn during the COVID times that they get [indiscernible]. But we also learned that they are forced to make some rational decisions. So they will have to rationalize capacity.

So I think you should expect that category to add somewhat rationally, notwithstanding the fact that they will be [ had ] by their government. And then you probably have proven not more than 2 airlines in Europe that we take to play that gets created as a result of that. And they will jump on these vacuums created, and they will gobble up the opportunities and we are one of them.

And you look at our entire history, we step changed our positions during crisis times because there are 2 things happening in a crisis. And I think the second half of this year is going to be a crisis. Two things are happening. One is that competition as [indiscernible] to the customer downgrades from high cost logos. And this is the opportunity that gets created for an airline like us. And we want to be well positioned for that.

As I said, we will have a purchase to be able to activate. But of course, I mean, kind of the way we say it internally, that when you wonder in the forest, then you bump into aggressive. You don't have outrun the [indiscernible], you have to run faster than the guy next to you. So the reason is there, but we just have to run faster than the guy. And I think we are running faster than the guy next to us.

Yes. So that ties into the question from [ Jerry ], right? Like if we do switch the financing model that will drive leverage up and then that impacts our cost of debt and also our cash availability. So at this point, look, we're trying to get the leverage down. Our ambition is to get it back to 2, so we can regain that investment-grade because that makes a lot of things easier when it comes to talking to vendors and to describing the business [indiscernible] presenting things to the market. You simply say, here's the rating please focus on that and then makes all of our lives easier, so we can focus on running the business.

Why did it go down? Well, we had a very help cash generation helped to buy certain things but still a healthy cash generation and our EBITDA is going up. So we can continue to deliver on the cash generation, which we will because we a growing and there'll be opportunities there in terms of forward sales. But if we can continue to focus on the net debt number, then I think you'll see that progression and yes, there's also some complications that have delayed the speed of reaching that and how we have this next crisis to deal with.

But for us, it's about making sure that we are able to take the market share, own the market share. We're #1 and #2 in all of our markets. We just took #2 in Italy. And we'll be going into markets where we can quickly try and get to that positioning and deploy, most importantly, the productivity around that. The productivity will ultimately generate profitability, efficiency and cash and that should have to leverage at the end of the day.

Dudley Shanley from Goodbody. And just one question for me. Can I just ask about hedging? I noticed now that you're hedged into FY '28 with a lot of competitors so they're staying out of the market because of the elevated fuel price. Can you just talk us through your thoughts on that?

Sure. So on the hedging, as you know, I think we shared that before. We have the hedging policy which has been in place for a couple of years into which we are -- which we stick because this is the best way how to prevent the peaks and the downturn on the market. So what we do is that we gradually increase the percentages of the hedges. And we do it consistently with the policy. We have done it before the crisis. We have been doing that and taking advantage also of the downward sloping fuel curve during the spikes of the fuel prices, and we continue on that for us. This is really a security. This is the insurance against the spikes and the movements.

[indiscernible] if you're implying the other people are staying out of it and given the fuel price, that would then suggest that someone is speculating. And that's exactly why we have a policy, right, so that we're not speculating. So yes, sorry.

It's Andrew Lobbenberg from Barclays. Can you give us a bit of color around the guidance you've given for the second quarter RASK? So how much advanced load you got on the books? And how does that compare with what you saw last year?

And related to that, a really interesting slide showing the inflection of booking trends, stretching out again when you go into May and June. Can you tell us a bit about whether that is across your whole network or whether that is more weighted to Eastern Europe and you're not seeing it in Western Europe or Italy Yes. So how is that playing out?

Okay. So in terms of the guidance, we're -- you saw from the trading statement that we were building loads already. I think at that point, we said something like 2% up year-on-year when we put the early May statement out. And where we are now for Q2 is close to 4%, [ load ] factor buffer. And so now is the time, especially in the summer to make sure that we manage the yields in order to deliver the RASK. We saw for RASK at the end of the day, and so that's the approach and so...

[indiscernible]?

That's Q2. That's Q2. So yes, so that's the answer your question in terms of advanced loads. The guidance is supported by what we're seeing in Q2 at this point. And so flattish, I think, is a fair number. There is a benefit, of course, of the shorter stage that, I think, but ultimately, that's the number that we put forward for the guidance.

And then the second question was?

Eastern Europe.

Right. So that profile that was for the whole network. And I don't have the breakdown across markets available for you.

But I don't think there is a fundamental difference between market geographies. So I think it'd be much the same what we are seeing. But this is not unexpected to be ones because we like the same behavior of [ Andemori-Ukraine ] brought out that when there is uncertainty out there, people become kind of reflective on the uncertainty.

They are not taking decisions. They don't know how this is going to play out on their life and what reserves they need to build or mobilize, et cetera. I think they need to become comfortable with a new set of circumstances and once they reach that point, then they will [indiscernible] back to the normal. And it takes some time. It is typically 2, 3, 4 months, that kind of a period. And under significant crisis situations, you see the same thing happening.

And with regard to the geographical differences. As seen this word in Iran is not specific to Central and East Europe, maybe Ukraine was more specific to Central East just because of the proximity. But in terms of impact, this war is pretty much across everyone. I mean West Europe is not any better than [indiscernible] Europe.

Fuel's not cheaper in one market than the other.

Axel from Morgan Stanley. One question from my side in terms of free cash flow generation in 2027. So if we listen to you guys sort of fair should be still into negative [ 22% ] in H1, potentially positive in H2, CASK ex fuel flat to up low single digit in H1, CapEx lower year-over-year, but still elevated. D&A is still elevated as well due to the retirement, higher fuel cost, haven't done the math, but where should we end up with the cash flow generation versus the EUR 1 billion that you guys delivered in 2026?

I mean, as you can imagine, we have been doing more sort of cash flow modeling and stress testing the cash flow modeling. So we -- we think that our cash will hold pretty much where it is at this point in time. I mean we don't really see even under the worst case scenario and any significant deterioration. I mean doesn't forget that cash is a complicated matter is operating performance, financial performance of the business.

It is also the inflows of significant cash streams or the outflows of significant cash streams. It is also the onflow revenue. So it matters whether you are growing the business or not. So it's a complicated matter. But we're actually seeing that -- we have significant cash on hand and we will remain in that position going through the year.

And that's why we're seeing that in order notional building a war [ chest ] is important here because we are in a position -- we are in a position to mobilize resources against market opportunities arising. So cash remains fairly flat, I would say, over the next period pretty much holding the same level where we are at right now.

I wouldn't be surprised if it's positive.

Maybe there is upside to it, but certainly not downside, I guess, versus doing motor goes downside, but we don't see that.

No more questions.

All right. Thank you. You are released.

Thank you.

[Audio Gap] 2026. In a moment, I’ll hand over to József Váradi and Ian Malin. [Operator Instructions] With that, I’ll hand over to József.

Thank you. Good morning, everyone. Thank you for coming. So this is our Q3 results. I would just like to set up the stage for the discussion today. Could you please move the slide? Yes. So we are up on passenger numbers by good 12% on the back of capacity increase ASK terms, 11%, slightly lower RASK than last year. But I think this is pretty much in line with what we guided to the market. EBITDA is up 12% and our cash improved to EUR 2 billion. Important to note that in the meantime, we have actually repaid the EUR 500 billion (sic) [ million ] outstanding bond.

Net loss was improved to EUR 239 million by around EUR 100 million versus last year. So we’ve seen that these results are consistent with what we have told the market we would deliver. So no surprise. So with that regard, it’s a fairly benign report this time around. If you kind of dig into some of the attributes and driving factors, revenue growth came out as good 10%. Please take note of the fact that our stage length is down by about 5%. So obviously, this is somewhat affecting unit revenue performance. GTF engine recovery continues to unfold. So we are now grounding 33 aircraft versus 40 a year ago.

As you know, the plan is to uplift the aircraft completely by the end of calendar year, 2027, and I think we are on track on that. As said, liquidity strengthened to EUR 2 billion, of which we repaid the EUR 500 million outstanding bond. I think there were market speculations what would happen to that bond, extended or not, but it is behind us now. The network reshuffling has been continued. As you know, Abu Dhabi got closed a while ago, and Vienna base we are closed in March, and we have transitioned significant capacity to Central Eastern and Europe, pretty much across the whole of Central and Eastern Europe.

Reopening previous bases in Romania and opening other bases in Bratislava, Podgorica, Yerevan, or Warsaw-Modlin. A number of aircraft allocations have been announced in this period. Again, this is pretty much across the board in Central and Eastern Europe, but also in Western Europe, particularly in Italy. We are managing the fleet growth. We have not only managed the fleet growth, but we also moderated capacity going through the weaker second half of the financial year in the off-peak period. That’s why we ended up with lower utilization. But again, I think you need to consider it as kind of a transitionary period.

This is an issue at the time we are going through, but productivity and utilization will ramp back up going into the next financial year. So summer capacity, I think we are fairly clear on that by now. We are seeing ASK growth of around 24% coming through, which will translate into around 30% seat growth. Again, you recall, we guided you on this, that while we are looking at medium-term growth rate of around 10%-12%, it still takes some time to get there, given the aircraft order and the GTF uplifting process.

So the next period is still going to be high growth, and then we start moderating it down in the second half. As of the next financial year, fiscal ‘28, you’re actually going to be seeing the growth rate, what we were talking about. Accordingly, the fleet plan is adjusted for that. So again, high growth in the first half, in the summer, fiscal ‘27, and somewhat of a moderated growth, coming closer to the target in the second half of fiscal ‘27. And with that, I would hand over to Ian with regard to the numbers.

Thank you, József. Could you go to the next slide, please? So before I dive into the numbers, I just want to clarify one rumor going around. We do not have plans for scheduled service to the United States. We are -- we have applied for charter rights for the World Cup flights next year, potentially. The beauty of charter is that we have an aircraft that can do it in the form of the XLR. The competition does not, and we would only do a charter if the money makes sense. So you sell the flight in advance, you collect the cash in advance, you price it accordingly, and the profit’s locked in. So that’s not...

That’s an example of us being opportunistic and looking at ways for us to diversify our revenue stream, but I would not expect there to be a material impact to the numbers based upon that. The application allows for you to select a checkbox for scheduled, and that checkbox was selected, but I think somebody’s taken that far out of proportion. So there’s no change to the business model other than opportunistic charter costs based upon the mission that that aircraft can fly. In terms of this slide now, so we generated a EUR 139 million loss this quarter, 42% better than last year. And that was driven by, as József already summarized, 11.1% more ASKs.

I should also point out that from a seat capacity, seats grew 13.1%, giving us more units in terms of the seats to be able to sell. That means that we’re generating more sector productivity and that is driven by the lower stage length. That’s actually 1.8% decline this quarter, although we will see the stage length and the whole network come down as a result of the business densifying and fortifying into Europe. Ticket RASK was up 0.2%, but ancillary RASK was down for total RASK increase or decrease of 0.8%. That ancillary RASK reflects the shift in terms of the network, moving away from those longer stage length flights, where we were able to have a different profile of ancillary services.

Ancillary remains an area of focus, and we will continue to look at ways for us to recover that decline that we saw this quarter. But overall, 0.8% lower RASK, better than I think what people were expecting. However, I will emphasize, not as good as what we would like, and we’re going to continue to focus both on ticket and ancillary RASK going forward. Load factor was marginally down, and that is driven by, again, I think to some extent, the seat capacity. So we have a bigger gauge aircraft, which means that, I think that a 0.5 percentage point down, given the growth is, is not anything to be concerned about. We’re certainly not, other than focusing on improving that.

Which means that overall, the combination of RASK and ASKs generated just under EUR 1.3 billion in total revenue, up 10% year-on-year. EBITDA, I will emphasize, was, the EBITDA margin was the same as it was last year, 13.6%. So we were able to preserve EBITDA margin despite the growth and despite the changes coming through the business, and so that’s important to emphasize. However, we do see pressure on depreciation, which I’ll explain in the next slide when we get to the cost side of things. So overall, I would say that, you know, revenue came in probably better than expected, and costs came in probably better than expected as well.

Although, like I said, what we were expecting was anticipated and certainly is still opportunities to improve. If I can go to the next slide, please. So in terms of the cost position, we were able to keep the ex-fuel CASK growth to 2.1%. That is in line with what we were communicating throughout the year. And full CASK was up 2.3%. The fuel line was driven by, to some extent, the fuel pricing, but also the cost of the emissions credits.

We’re seeing some inflation in terms of the emission credits, which is putting some pressure on that, and we are, like everybody, receiving fewer free allowances, which means that we have to incur more cost there, although that impacts us less, given the baseline that we’re coming from. In terms of the rest of the cost structure, so I think staff costs in line so with ASK growth. And then the areas where we do need to focus on, and we are focusing on, are the ones that we’ve talked about, so maintenance and depreciation in airports.

So maintenance has gone up, again, in line with expectations and for the reasons that we know about, which is that we are planning on retiring 18 current engine option A320ceo aircraft this year. That compares to 3 last year, so a 6 times increase. And when you return those aircraft, they come with event-related costs. The event is the return, and you have to comply with the lease return conditions. And the problem with that is that that requires maintenance capacity, and maintenance capacity is scarce due to all the supply chain channels, all the supply chain troubles happening in the industry. And maintenance has just simply been higher due to inflationary pressure. So we’re having more event-related costs at a higher cost base.

However, the good news is that we are seeing that in the next 3 years, we will retire most of our CEOs, 18 this year, 19 next year, 16 in the following year, and with that, those event-related costs will reduce. Likewise, a portion of maintenance costs flow through depreciation, and we have 70% more aircraft in the sort of 8 years or older bucket in 2026 versus 2020. And so as a result, we’re attracting higher depreciation costs in the form of maintenance depreciation than we were if you want to look at us pre-COVID, which means that those costs will simply eliminate as those aircraft are returned, but it is a transition that we have to go through.

So these costs, particularly in maintenance and depreciation, are high year-over-year, but they’re driven by specific symptoms or outcomes based upon symptoms that we knew that we were going to be experiencing. Airports and handling and en route, it’s a bucket of 3 lines there. Handling is actually – we’re starting to get a handle on it, but airports and en route still are elevated. En route is due to higher pricing around navigation charges that we see across our footprint. I think many airlines are frustrated with those costs. We certainly are. That’s a network design issue to some extent, that we will be factoring into our decision making.

On airports, we did a deep analysis of the cost base from fiscal year ‘20 to where we are today, and we saw that post-COVID, when we were growing, we were able to keep airport costs under control. So certainly, we were seeing cost efficiency coming through there. But then when we were hit by the powder metal grounding and our growth went from 10% to 12% to 0%, we lost the benefit of the incentives that we had negotiated. We lost the benefit of the rebates that we were expecting to generate, and we’re now in the process of having to redeploy capacity in a way that we can get those back. And so the problem with that is that, we’ve said this a few times on these calls, it’s a timing issue.

We have to demonstrate the growth, we have to deliver the growth, we have to commit to the growth, and we have to measure it, and that takes time. But that’s the gift that we have now with capacity growth coming back. Again, 11%, 10%-11% this quarter, roughly the same next quarter, and then next year we have quite a tool to deploy when it comes to that capacity. So yes, there’s going to be a lot of pressure with that capacity in terms of deploying it. We have some exciting ambitions and plans on how we’re going to do that, but we’re also going to use that capacity sensibly to make sure that we tackle those cost lines.

In terms of the one-offs or the other income, as I like to call them, the one-offs. So we did see a higher sale-leaseback benefits this quarter. That was again anticipated. No surprises there, and we were able to keep disruption costs in line with where they were last year. We had a pretty reliable third quarter last year, and the same happened this year, and we were able to continue to improve our wet lease costs and to bring that down. So overall, I would say that the cost picture was in line, if not marginally better than expectations.

But that’s exactly what we’re trying to do now, is just to deliver expectations, and we did that this quarter, we did it the prior quarter, and that’s the plan as we march through this transitory period. If you could go to the next slide, please, just to look at the cash profile. So again, things are in line with expectations. We were basically flat on free cash flow. We ended up the quarter with just under EUR 2 billion in cash, just a smidge, and EUR 1.98 billion. That’s up EUR 400 million versus the prior year. And our liquidity ratio, so the percentage of cash to last 12 months’ revenue, increased 5 percentage points to 34%, which is one of the highest in the industry.

Now, that cash balance has of course, been reduced through the bond repayment that happened on January 19, as József said, and that was anticipated. We did, on the 23rd of December, renew the bond documentation, and so that program remains available to us, for the future. But at this point, we don’t see any requirement to raise debt, and therefore we won’t, but we have that option on hand. Our cash profile going forward is robust. We have the benefit of a earlier Easter in the beginning of April this year, which means that the cash volumes will start building as we enter into February and March. And with the growth coming in the summer period, that will deliver a large amount of unfilled revenue.

So we expect to restore the cash that we expended on repaying the bond, relatively quickly to get back to a number north of EUR 2 billion, and that will then grow, depending on how we ultimately deploy that cash into fleet or other measures. In terms of the fleet, we are -- Actually, there’s a fleet slide. I’ll let Joe talk about the XLRs. So I think that’s it for me. I will also just take a moment to thank everybody from the analyst community. This is my last call as official CFO. I welcome my predecessor, my successor, Veronika Špaňárová, who joins on Monday, and I will, of course, be in the room with the team to make sure that she is set up for success, as is the company. So thank you, all.

Thank you. Could you please move it to the, to the next slide? But maybe in the meantime, I would just want to thank Ian for the tremendous job that he’s done, contributing, in a, in a difficult, challenging period, in his intellectual capacity and professional capacity as CFO, but also playing a very good corporate citizenship in the company. I mean, we all, had to act like a team, you know, to face all these challenges arising from geopolitics, supply chain, et cetera. And I think now we are starting to see some, some sunshine, coming through, and hopefully, that you, will also be seeing it, and Ian has been instrumental to that, to the development. So thank you for that, Ian.

Thank you.

So with regard to the fleet, I would like to kind of put fleet matters into a history perspective also, to give a bit of a forward-looking view on, on that. So historically speaking, the company has celebrated 2 major milestones, fairly recently. One was the 250th aircraft delivery, 250. I don’t know what it means, but it felt, a milestone, to us. And secondly, maybe more significantly, we celebrated the 500 millionth passenger, in aggregate since inception. Now, we looked at the 500 million passengers. So what is the meaning of, of that? And we figured something out. It took us 21 years to deliver 500 million passengers. Then, this is an absolute record in Europe and probably close to a world record as well.

We didn’t look at the world, but we looked at Europe. And guess how many years it took for the second best in Europe to get to 500 million passengers and who that is? I help you, 34 years, and it’s called Ryanair. Okay? So when you think about the world in a bigger perspective than just an exporter, please recognize this, that we are at a pace which far exceeds everyone else’s pace ever in history in Europe. The second thing I would like to say is that you take a prospective view on the fleet. So imagine Wizz Air in 2 years from now. So that’s. I know this is more than a quarter, but this is not that much far out.

In 2 years, we’re going to be effectively fully converted to A321s, which is by far the most productive aircraft you can imagine in the single-aisle aircraft community. And basically, we’re going to be converted into new technology, neo technology, and all the aircraft will fly, and nothing is going to be on the ground. And what kind of an efficiency that can create, and what kind of a competitive platform that would create for this? We are 2 years away from that. And in terms of kind of navigating ourselves through the next 3 years, you see that we revamped the aircraft delivery program.

So effectively between fiscal ‘27 and fiscal ‘28, hardly any deliveries, new aircraft or there will be new aircraft deliveries, of course, but there is churn of the fleet. So, you know, most of it is going to be replenishment as opposed to net growth. So the growth will come through gauge, and uplifting the grounded aircraft and sector productivity. So basically, these are the 3 sources of growth, in that period. And you can see that if you look at the, the next 4-year CAGR forecast, effectively, we’re going to be growing the fleet by around 7%, but capacity will grow by 12%. So that’s kind of the level of efficiency that we will derive from the fleet program.

I would also want to make a comment on the XLR, because I think there is a bit of a misconception on the XLR here. So first of all, our program is scaled down from 47 to 11 aircraft. Full stop. 6 of those have been delivered, 5 to be delivered in the next 8 months or so. Now, you take the XLR. We were saying that the XLR has to be long haul. It, it doesn’t have to be. So we looked at the unit economics of the A321neo, the A321XLR, and the A321ceo. The A321ceo is an inferior aircraft to the XLR in terms of unit economics.

So if you operate the XLR as a normal A321neo operation, rotated on short, medium-haul flights, it delivers better economics than the A321ceo. A little inferior to the A321neo, of course, because of the weight penalty, but it’s fairly marginal. So we don’t have to force ourselves into long routes or unproductive almost long-haul operations. You simply just operate the XLR as an A321neo, and you get a lot of the economic benefits of that, and still far superior to the Boeing 737, and still far superior to the Airbus A320. But we are currently operating a few of those airplanes. So no stress about the XLR.

So we don’t have to make stupid decisions just because we have an aircraft called XLR, and we have to push ourselves into long route. Now, of course, if you find appropriate commercial and financial opportunities to deploy and operate the XLR, as XLR, we will do that as we are doing it from London, Gatwick. We are flying Jeddah, Medina. Those routes, I think, exceed expectations significantly. But we don’t have to fly all the 11 XLRs and XLRs. We may end up flying only half of them. We will see, but we can be, you know, a lot more measured on financial expectations with that regard. So we feel good about the fleet plan.

We think we are arriving to a shape on that that actually makes a lot of sense for the long-term ambitions of the business. Not in terms of, not only in terms of delivering growth, but also delivering financial performance through it. If you please move it to the next slide. So if you kind of put the puzzle together, what we are trying to do here, just to recap, so we have a number of strategic initiatives. We are moving. One, we have been addressing our weaknesses in terms of financial performance. We cease the Abu Dhabi-based operation, and we are ceasing the Vienna base operation as well in a few weeks from now.

That basically addresses the structural issues we have been having in the network design. Secondly, we have reset the Airbus order book, as you can see. We’re seeing that this is deliverable, this makes financial sense, and it is executable, and makes a lot of sense with regard to enhancing our market positions, and delivering enhanced competitive advantages with regard to cost performance. XLR is reset, it’s resized, but also resold. As I said, XLR doesn’t have to be XLR necessarily. And the weight penalty actually is a lot less than alternative aircraft types what we are operating, or competitors are operating at the moment.

We continue to reshape the network for the better, for more fortification of strengths, and exploiting opportunities in the business. As we speak, I think we are seeing market opportunities pretty much across the board, so they are not down to 1 or 2 areas, but we are seeing fairly consistent performance, fairly consistent improvements, and fairly consistent prospective opportunities for deploying more capacity. Then, of course, you can talk about Israel, you can talk about Ukraine, and you know that our discussions in Israel are ongoing. Time to time, it becomes very topical. Ukraine, we all know the situation. We will jump on Ukraine. We’re seeing that Ukraine is a significant opportunity, but I will have a slide on that just in a moment.

Then we continue to unpark. We are 2 years away from uplifting the entire aircraft, so we are really coming down on the parked aircraft. No matter how you look at compensation, we are not in the business of compensation. Compensation is a good thing when it’s a force majeure on the business, but we should be able to better monetize the asset on hand when we fly, as opposed to when we ground and get compensated for that grounding. And as said, we continue to innovate our fleet, moving over to new technology. I would say that the Advantage engine is coming. So we are within a year from that.

Please know that Advantage has 2 applications: 1, that new aircraft will be delivered with Advantage engine; 2, existing fleet can be retrofitted with Advantage, and can do probably 80% of the improvements on the technology. So actually, that’s a big deal, and it’s a big enhancer of economic performance coming through that technology. So next slide, please. So just want to give you an update on Ukraine. We don’t have a crystal ball. Personally, I think we are coming to an end, and the guys just need to find a way to finish it. But probably pressure is now building up on all sides sufficiently to get there. Nevertheless, we are ready. We are ready for Ukraine.

We kind of phased our plans into 3 chapters, kind of the initial chapter being you know, the quick get back onto Ukraine as inbound carrier. I think we can activate that capacity imminently when the ceasefire is put in place and the system gets reopened. According to European constituents, it’s probably going to take around 6-8 weeks to reset Ukraine for purposes of air traffic control, mostly, before you can perform flights. And we will see how quick the ramp-up is going to be on the Ukrainian side. We’re going to be inducting capacity accordingly. But we have an initial plan to launch 30 inbound routes immediately when the system opens up, followed by another wave of expansions through base capacity.

You recall, at the outbreak of the war, we had 2 operating bases in Ukraine, in Kyiv and Lviv. We would be reinstating those bases, and that would give us another layer of growth opportunities next to the inbound flights. Also, we could start flying outbound. We’re seeing that at that time, we would be ramping up to roughly around 5 million seat capacity. This is a combined of around 10 aircraft, based and flown inbound, in Ukraine, at year one. And then you kind of take a year 3 approach. We’re seeing that the business is going to go to around 30 aircraft, 15 million seat capacity, by further enhancing our route network, possibly opening up new bases in Ukraine. So that’s the plan.

That plan is on the shelf and may be activated immediately when we have the opportunity to do so. So, you know, we used to be hometown airline to Ukraine. We will be hometown airline to Ukraine. We’re going to be first to go, and I know that there are other airlines with ambitions to go into Ukraine, so we don’t expect to be alone. But we are fully committed, and we have the plans. We have the aircraft. We still have ceo aircraft, actually, as a matter of fact, in Ukraine, so we have never left that country, that market, and we would need to put those aircraft also back into conditions to operate. Next slide, please.

That’s it. Q&A. Oh, sorry, go ahead.

Yes. So, just to wrap it up, so with regard to fiscal ‘26 full year outlook, as guided before, we are expecting around 10% capacity increase. You know, the fiscal ‘27 is going to be a year when we’re going to be at high growth in the first half and moderate growth closer to the assumed new normalities going forward in the second half. Load factor is expected to be flat. RASK flat. CASK total CASK to be around flat to low single digit year-on-year. I think Ian explained the attributes to that.

And net profit to be around breakeven, so we are putting it in the range of EUR -25 million to +25 million. These numbers are consistent with previous guidance and expectations, and of course, from here on, going into fiscal ‘27, as the business is going to be ramped up more, more productively, given the less exposure to grounding, stocking up the excess fleet, like coming out of Abu Dhabi, et cetera, which will be deployed by that time. We’re seeing that from there on, you should be starting seeing improvements on a structural basis. And with that, this is the end of the presentation, so questions, please.

[Operator Instructions].

It’s James Hollins at BNP Paribas. Ian, congratulations on your tenure and your new role, and thanks for everything. And on that note, I’ll start with a sustainably dull question on sale-leaseback and compensation. I was wondering, obviously, you’ve given full year ‘26 guidance. I’m wondering what you’ve included for fiscal Q4 for sale leasebacks and compensation income. And I know you prefer to fly aircraft than get compensation, but maybe a very broad figure, as we might look at it today, on how much the headwind is on the compensation line, fiscal ‘27 versus fiscal ‘26. And then probably for József, I know you’ve passionately said you’ll never do transatlantic, and I know you don’t want this question, but let’s assume you’re never going to do transatlantic as a schedule.

But just on the charter side, I was wondering if you could run through sort of what interest you’re getting on the charters, what that would mean for capacity, I guess, based on the level of interest you’ve had, and whether, you know, 30% seat growth this summer slightly scares you, and maybe you’re thinking about any other ways of reducing that in terms of, you know, moving out on wet leasing out or chartering other aircraft.

Let me start with the U.S. thing and capacity increase. I think you guys should think of very little when it comes to the U.S. matter. I think it is a good exposure communications-wise, but substantively looking at it, it is a low-profile matter to the air company. And maybe just for you to understand the history here, so about 2 months ago, we were asked by the Hungarian government to perform a charter to the U.S., taking the Hungarian government from Budapest to Washington. And Wizz Air UK performed that operation because Wizz Air UK is the entity of the group that actually is recognized for regulatory purposes, oversight purposes, by the U.S. FAA.

Because Hungary and Malta, the 2 other airlines, are under EASA governance, but EASA is not recognized by the U.S. as a governance body because they only recognize the national authorities, not like a European authority. And we saw that, you know, these sort of matters may reoccur. You know, the World Cup is around the corner. In 2 years, Olympics in Los Angeles. So let’s just be ready for inquiries like this, should they come along. And, as opposed to kind of doing last-minute ad hoc chaos with permits, we just have it on hand, and we can activate when there is a need. But that doesn’t translate into anything structural in terms of ambition to fly regular charters even, or, you know, certainly not scheduled flights.

I mean, this is really a simple regulatory contingency, what we are trying to secure. So please don’t think too much into this, because there isn’t anything to really think about it. And this is not going to move the dial on capacity, so this is not going to be 1 percentage points or 2 percentage points. It’s going to be totally different from that. But with regard to 30% seat growth, I think it depends how you look at it. I mean, of course, it’s a big number and, you know, it may be scary, although we said we would have a high growth in the first half of fiscal ‘27.

But if you look at how that growth is sourced, it is actually not coming through excessive fleet deliveries. This is all coming through by eliminating some of the inefficiencies inherent in the system at the moment. So we are lifting aircraft. We are increasing sector productivity. So using the same assets on hand, which cost us at this point in time, and you put that into a better production, yes, it will increase the growth rate, but at the same time, that comes through efficiency measures. So this is not excessive fleet growth. I mean, the fleet is effectively not growing. Hardly any growth coming through the fleet.

So I think as far as I’m concerned, this is a lots better way of delivering growth than by adding more aircraft to the system. It will put pressure on RASK, but at the same time, it also gives an upside to CASK because you increase utilization, you create more efficiency, more productivity in the system. And, you know, you look like a year or 2 ahead, it will create the opportunity for maturity of the new investments, of the new routes. But this new capacity is not going to be like brand-new capacity. We are not opening Uzbekistan. We are not opening Nigeria or anything like that. I mean, we are enhancing strongholds what we have already created.

We are fortifying some of the best-performing markets. We are joining the dots. We are improving products by increasing frequencies on existing routes. Actually, that enables us to tap into, you know, higher quality demand, business traffic, on some occasions, et cetera. So I think this is a de-risked growth profile. So it’s a big number, but it is de-risked as much as it can be.

Okay, so in terms of Q4 sale-leaseback activity, look, I mean, these things are driven by availability of assets and the delivery of assets, and so we expect to take delivery of 8 aircraft this quarter. That may shift into one quarter or the next, depending on ultimately what happens. So, you probably have heard us say that we were at one point aspiring to have our XLRs down to 6 aircraft. We’re now at 11. So there was an opportunity with 5 of those aircraft, and ultimately, as Joe said, our job is to monetize and generate profits from these assets. And the transaction became less compelling from a disposal perspective than it did to not give the benefit away to somebody else. And so when we did this analysis in terms of the operational cost, especially when it comes to marginal routes within the network. When I say marginal routes, I mean, we all know that with this armada heading towards the Middle East from the United States, there’s been some airspace closures, and that has required us to reroute some of our flights around Egypt. And depending on what time of year, especially this time of year, you end up with tech stops. Tech stops are bad for cost. They drive more cost. They’re also bad from customer experience, which means that they dilute RASK.

And so if you can deploy an XLR that still performs better than a ceo on a route that it can actually deliver on in terms of its mission, then you avoid that. And so that’s a very sensible utility of that asset. And so those are the things that we’re going to look at. Obviously, there’s some planning that needs to happen, and we don’t have unlimited XLRs, but we also don’t have too many of those routes. And so it’s an opportunity for us to bolster our reliability, which is an area of focus that I’m going to be bringing into the new job. To answer your question specifically, you know, 8 aircraft delivering, those will be a combination of mostly sale and leasebacks, some finance leases, like we’ve been doing.

There’s also going to be an element of engines that we are taking and sale-leaseback at the same time. We’re not buying any incremental engines other than what we’re contracted to under the order book with Pratt & Whitney. So we’re keeping in line with our contractual commitments. And so really, we see that as part of our normal fleet evolution. So an element of sale-leasebacks will support the full year results as it has, but nothing out of the ordinary to what you would have been aware of through your discussions with my IR team and the regular engagement. When it comes to compensation headwinds going into fiscal year ‘27, well, I mean, you know, the good news is that we’re reducing the number of aircraft parked. We went from 35 to 33.

The bad news is that we don’t get compensation for aircraft that aren’t parked. But that’s okay, because the good news is that those planes are flying. We’re not in the compensation business. So there will be a natural tapering down of compensation as the fleet unparks. The faster we unpark, the less compensation we get, the more we can return to flying. Yes, there’s a tension between where we are this year with the combination of unparking new deliveries and that fleet growth that we talked about. But ultimately, we’re focusing on that end of 2027 calendar year target.

Again, it’s subject to Pratt & Whitney at the end of the day, which we are trying to influence, but we don’t control, and we’ll continue to focus on the core business. And that’s really, that’s really, that’s really what we are trying to convince ourselves and yourselves over the last quarter and the previous quarters, that just keep the head down, work hard at addressing the areas of the business that we’ve identified and deliver the results that we have told you to expect.

May I just come back to the first half growth rate and the way that growth is delivered? Because I think this is important to understand, because we are really not talking about bringing capacity into the system from the outside to create that growth. We are saying that we are using predominantly existing capacity to deliver that growth, and that’s very different because I’m already getting a lot of costs observed, you know, in the system already. So I’m already paying for the aircraft. So I’m paying rent for the aircraft. I also pay, you know, for some maintenance of that aircraft. So I would say that probably, you know, 25% of the costs are already in the system I’m paying for.

So effectively, you are getting this capacity, what you are uplifting from the ground, but only 75% of the cost, as opposed to when you are bringing in new aircraft, then you pay 100% of the cost. I think this needs to be taken into account. And then when you look at the other source of growth through sector productivity, it’s even better from our perspective, because I’m pretty much using the same crew, the same aircraft, the same maintenance profile, and I’m gaining more productivity through that. So this is almost like a free capacity cost-wise. Of course, I pay variable cost, but I mean, a lot of the costs will be saved.

So this is a very low-cost growth compared to previous growth profiles, when actually growth was fueled by the intake of aircraft. That was the way to create capacity. But this time around, this is all pretty much within the system, within the existing parameters of the fleet. All right.

Jamie Rowbotham from Deutsche Bank. Two from me. First, just coming back to the Ukraine, József. Don’t know if you listened to Ryanair on Monday, but Michael O’Leary was talking about the airport charges in Ukraine. He seemed to be saying that the airports were stubbornly wanting to stick to tariff levels as published pre-war. Whereas they’d be looking for deep discounts on those tariffs to try and bring, you know, 5 million passengers back. If the tariffs stay as they are, maybe they’ll only look for 1 million. I just wondered where you guys stand on airport charges in Ukraine. And then the second one for Ian. Sorry to do this on your last appearance, Ian, but I just wanted to come back on James’s question about Q4 positives within the net other.

I know compensation is a sensitive one, so I’ll leave that one alone. But on the sale and leasebacks, I hear you on the eight aircraft and some engines. I mean, it’s very difficult for anyone, I think, to establish what the quantum positive benefit might be from all those things in Q4. The way I would frame it is this, you know, you’ve just guided a very narrow range for net profit in the full year, EUR -25 million to +25 million. I think the sale and leaseback gains year to date are about EUR 90 million. I think you’re looking for as much again, if not more, maybe EUR 100 million in Q4 to deliver that sort of net profit outcome. Could you comment on that?

Is that a sensible, you know, quantum for what you have in mind at the moment for those transactions and the benefit you get from them in Q4? Because without that, it’s very difficult for us to judge you on, on everything else.

Okay, maybe I answer the Ukraine question. So look, I mean, we have been in negotiations with Ukraine and airports for a long time. I mean, probably for 2 years. Even he made it to Ukraine, so he was in Kyiv. He made it back as well, so that’s good. So I think we have been very engaged with Ukraine. And you know, competitors do whatever they want to do. We will do whatever, you know, we think we should do. We are committed to Ukraine. Seriously, you know, we’re seeing that, well, Wizz Air is going to be de facto national carrier of Ukraine. And we will manage the business accordingly.

Of course, you negotiate, and you try to get the best deal out of the system. Personally, I don’t think Ukraine needs Ryanair. I mean, we’ll do it. Some others will do it. You know, those guys do whatever they want to do. We’ll be there.

Yes. In terms of the SLB, you’re right. There is going to be SLB activity. I mean, it’s unlikely that in this quarter, we’re going to see dramatic improvement to the maintenance and depreciation in airport lines. And so, yes, so I think in terms of math, there is going to be an element of SLBs that gets, that get us there. You know, we are 2 months away from the end of the year, so we have visibility as to how the year’s coming up. I mean, you know, like I said, we did have this XLR sort of pivot, and so how those ultimately get financed could end up impacting this year versus next year, but it’s a timing issue at the end of the day.

They’re going to get financed, and we just have to execute on that. But ultimately, you know, the SLBs are part and parcel to the business, and so we will take them, and we will benefit from them. We may end up financing those XLRs instead of doing SLBs because financing them allows us the flexibility to terminate the deals sooner if we decide down the road we no longer need the XLRs, and we want to move them on to a different operator. And that then will impact the amount of gain that happens, but ultimately, the SLBs are certainly an element of the Q4 numbers.

It’s Harry Gowers from JPMorgan. First question, if we could just go back on the capacity growth for summer, just in terms of what you can control. I mean, Joe, you mentioned before around that de-risked, kind of more mature capacity growth profile in the network. I mean, are there any other positive things you can do to help drive pricing when the growth is that high? And I guess, Ian, that will be something for you in your new role. And then, second question, if you could just talk about growth in the UK, actually, you know, where you’re putting aircraft and how you see the market dynamics in terms of supply versus demand at the moment for the UK?

All right. So with regard to first half capacity growth, you know, one of the things what we are doing. So I would say that, you know, this capacity growth is delivered at a lot lower cost than otherwise, because it is all from within. So pretty much by activating existing capacity, which partly we are already paying for, certainly on certain cost items. But the second thing what we are doing is that, I think we are really enhancing the proposition, the product to the market, to tap into different consumer needs. So we’re going to be coming across a lot more segmented than before. I mean, densifying is significant. We are adding frequencies on certain routes.

I mean, creating effectively a product for business travelers. I mean, you know, the business traveler has a deeper pocket. So through that, there is revenue enhancement coming through segmentations. So we’re seeing that, again, this is not just spreading the network and [Technical Difficulty] starting from [Technical Difficulty]. Some of these capacity deployments may actually be profit-enhancing, given the improvement on product quality and being able to reach high-spending customer segments. With regard to the UK, actually, we like the UK, believe it or not. And I just talked to someone yesterday, and she said that, you know, Christmas retail was disastrous in the UK. But this is not what we are seeing.

What we are seeing is that we are seeing a continuously rising demand for our products. Actually, our performance is improving very significantly in the UK after cutting some of the fashionable capacity and resizing the business at Gatwick. Now we are really into growth mode in Luton. I think we are stabilizing our Gatwick performance. So the UK, as far as I’m concerned, is an investable market. The bigger issue we have in the UK is the strains on capacity, so our ability to grow on capacity due to the infrastructure constraints. So Luton is stuck at the moment. They have all sorts of reconstruction issues and passenger limits. Gatwick just is put into the right place in terms of capacity versus demand.

But we are seeking opportunities to continue to grow our presence here and our market positions. We do a lot more inbound flying, for example, to tackle the overall slot issues at the airport. So as far as we are concerned, UK remains an investable market.

Yes, I think Joe covered it very well, but just the one point that I would emphasize is that while we’ve got this growth, we acknowledge that it’s there. We’ve also created extra growth by churning our network, which created growth inadvertently. So it’s not just new capacity, but it’s just redeploying capacity onto new within the network, which is effectively the same as growth. It creates immature capacity that we have to manage, and that’s something that we’re going to bring down. We did some analysis and some benchmarking, and in the last 12 months, we’ve churned our network 9 times more than the industry average. And so that causes all sorts of issues around the network in terms of what you can do.

In terms of price stimulation, you have to lower your prices, but also, it creates havoc with regards to the costs. And so, for example, just looking at airports, you know, why would you incentivize Wizz to bring a new route on if they know that after the incentives expire, we’re going to disappear and move on, right? So we need to be sure that we’re creating a more stable, more reliable network. And reliability, you’ve seen come through the disruption line, like this summer, where we had a huge improvement, and it’s staying stable this year. And so reliability helps from a cost perspective. It helps, not just in the disruption cost, but in crew and on airports, and it also helps in a revenue perspective. So that’s one of the key pillars of our focus going forward.

Alex Irving from Bernstein, 2 from me, please. I’ll start, again with the growth in summer 2026. You’re talking about 24% ASK, but think about the risk profile of that as it plays RASK. How does that break down into gauge frequency between existing airports and then new airports in the network? And then maybe related to that, how does that then interplay with your airport costs as we think about that development into this summer and beyond? Second question, really for a confirm or deny on this one. I’ve heard it suggested that there’s no more GTF compensation coming beyond the end of calendar 2026. Is that accurate, or as long as AOGs, you still get paid roughly a day rate per grounded engine, grounded plane?

Okay, let me start with the GTF thing, because I’ve been involved into this, personally. I think there is a Pratt & Whitney line, and there is a Wizz Air matter. So the Pratt & Whitney line is that, they don’t want to extend, compensation on a blind basis to all airlines beyond 2026, but we managed to negotiate a different agreement. You recall last year, we confirmed more aircraft to be powered, by GTF. I mean, you can imagine that that discussion was leveraged. And, we are fully covered until end of 2027. So I think you can be totally relaxed with, with that regard. But indeed, the industry line is different from that.

But Wizz Air is the single largest operator of Pratt & Whitney, and we have probably the most significant forward-looking commitment as well to Pratt & Whitney. So I think you should reasonably expect that we are treated a little differentiated versus the rest of the industry. So that’s GTF. With regard to the profile of growth, I mean, maybe you want to deep dive into it, but maybe my commentary would be that, I mean, of course, when you are growing that much, you are trying to take this leverage against the airport community. So we are looking at reshuffling some capacity according to airport deals. But at the same time, we also have to take note of certain facts.

I mean, one fact is capacity scarcity is becoming a phenomenon in many places that are new. So if you look at Central and Eastern Europe, I remember when we started, no one was thinking about slots and capacity scarcity. Now you are seeing it in Bucharest, in Warsaw, in Budapest. So whether we like it or not, what it does, obviously, it puts pressure on charges and airport charges, because when you are scarce on capacity as an airport, why the hell, you know, should you discount that capacity, because it’s a high demand? So, you know, you have these controversies that you want to have your strongholds and fortified presence, and those airports might be constrained airports, and you have kind of minimal room to maneuver.

But at the same time, you still have, given the high growth rate, what you are delivering, you know, some room to maneuver to shift capacity according to airport cost and airport deal. So you have this kind of duality we are managing. Maybe you want to comment on Ian, on the way of allocating the growth capacity.

Yes, look, I mean, you’ve seen from what we’ve put in this presentation, we are deploying capacity into our core markets where we have a cost advantage. And that’s deliberate because obviously, you know, we’re in the cost business. But if we can operate at a lower cost, then obviously that allows us to be more competitive on the fares. And as Joe said, some of those bigger airports where we have strongholds, we will continue to fortify so that we maintain leadership. But we are also seeing different flows. We have the equivalent of our sunbelt in Europe now, which is the sort of east-west across Spain to Italy, Spain, Greece, you know, those sorts of places.

And so with the Italian presence that we have, where we have invested significantly recently, we are looking at flows that we hadn’t spotted before or hadn’t taken advantage of before, maybe. And likewise, to and from Central Eastern Europe. It’s not just the export of its Eastern Europeans to Europe, but also it’s bringing people from west to east. And our focus is really on identifying those opportunities where we can generate sufficient profitability year-round so that we are less impacted by the seasonality in Europe. And so in fact, all of our aircraft now for summer are fully deployed and on sale, barring one announcement next week. And that will give us the lead time to be able to work on accelerating, accelerating the maturity profile.

We used to think that it took a year or so to get to profitability on a route, and then maybe by the second or third year, we would sort of have it be mature. That timeline doesn’t work for us anymore, and so we need to focus on this fortification, where we already have a market leadership, and then flex that market leadership in a way that we activate the base that knows what Wizz is. And then, as Joe said, expanding the Wizz franchise, so that we are more appealing to different types of passengers, and that will help offset the growth on the RASK pressure.

I would add one more perspective to those, because I think we are kind of taking it almost like an isolated issue from context. But you have to look at the context. I mean, not many airlines in Europe are growing. So when you are talking about growth, yes, it may be high on us, but when you look at it from an industry perspective, this is still not outrageous. So this is not like the whole industry is growing like hell, and we are one of the craziest to do that. I mean, we are the one growing. Effectively, we are taking advantage of our positions that we are able to grow, while others are not able to grow because of fleet constraints or whatever they have.

So, I don’t think that you should be ignoring that context. So yes, the 24% ASK is a big number, but we are pretty much the only one growing, and all others are kind of stuck with what they have at the moment, and I think that actually gives us a competitive advantage.

Muneeba Kayani, Bank of America. So continuing on the kind of quest, cost questions for fiscal ‘27. Just you mentioned, if you could help us on some of those modeling. You said depreciation costs and maintenance costs would be higher. Any way you could help us quantify that? And then we’ve had the discussion around the productivity improvements from the higher ASK, but then these higher costs as well. So net, net, where are we landing up, you think, right now? A higher unit cost ex-fuel for fiscal ‘27, while RASK goes down. Is that how to think about it, big picture? I know you don’t have guidance at this point.

Yes. So, so you’re right. We’re not guiding, yet. We will, as we get, to the full year results. But in terms of maintenance, yes, there’s still going to be pressure on that just because of the 19 ceos that are returning next year, and those are event-driven costs. Depreciation is one of those areas where we will start to see the turn in this year, and it’s, and I would say that that’s probably likely to be flat, just because we are starting to have the exit of the more expensive depreciation aircraft as included, including this year’s retirements. However, that, that is, that benefit is being pushed up against the fact that the GTFs in their current durability profile require more frequent maintenance than anticipated.

When you do more frequent maintenance intervals, you start to capture some of that depreciation that was historically backloaded sooner. You have the benefit of that, the new aircraft being less beneficial against the detriment of older aircraft. It’s a moving feast at this point and something that we’re analyzing. But I would say that the biggest headwind that we’re going to be seeing next year to CASK is going to be the change in one-offs, as you call them, or as I guess the accountants call them, which is on the sale leaseback gains.

So we will not benefit as much next year on sale leasebacks as we did this year, and so that will create a headwind that the rest of the cost base is going to have to overcome. So when looking at total ex-fuel CASK, I think you’re going to start to see improvements. However, there’s going to be a headwind from the falloff of sale leaseback gains, which will offset sort of core cost improvements, and so that’s where it’s tricky. So we’re not guiding it on where CASK is going to be.

Obviously, as we get through this year into fiscal year 2028, you’re going to start to see strong CASK improvements, but it’s still a transitional year, where it’s still too early to give you a view as to whether CASK will go down, up, flat, whatever the case may be. So we’re reserving the right on that for now. And in terms of RASK, yes, there’s going to be pressure on that, but I think that with some of the applications of these concepts that we just talked about in the last question, we’re less inclined to accept a stronger RASK. As strong as a RASK dilution is what you’re implying through your question.

I think if you want to kind of net it all in, we are expecting margin improvement coming through the next financial year. I think the magnitude is yet to be confirmed and yet to be guided, but we’re seeing that all in, we should deliver better results in fiscal ‘27 than in fiscal ‘26.

Conroy Gaynor from Bloomberg Intelligence. So first question, just on, on the fuel. How might you start to think about fuel going forward, just given SAF and certain environmental measures? Will there be perhaps a higher inflationary component within that, or is there now more volatile component that you have to think about? And how might that impact the way you communicate your outlook to us? And then the other 1 was on, on Saudi. Just to pick up on your comments about it essentially being a positive read across for, for entering other new markets. And some may say with Saudi, it’s a very unique market in terms of the types of traffic flows you get, including religious traffic flow. So, so what parts of it do you think actually do read across into other markets?

Yes, maybe I take the Saudi. I don’t know, maybe nothing, to be honest. I mean, I agree with you that I think Saudi is a unique market. This religious traffic is a significant driver of what we are delivering on those routes, and the applicability of that may be none for anything else. And that’s why I’m saying that we should just be relaxed on the XLR, because if we find a way to operate the XLR as XLR with proper profitability, we’ll do that. If we don’t find it, we just operate the XLR as a normal A321.

So I think that kind of takes the pressure off, from the organization to definitely deploy, these aircraft on long routes, and take the risk on financial performance. So we are not going to take risk on financial performance. Either we get ourselves convinced that this is a profitable flight pretty much from day 1, like what we are achieving in Saudi. If we are unable to define that, then we are not going to do it, and we just operate the aircraft as normal A321. So back to your first, I don’t know. I mean, maybe it’s applicable, maybe it’s not, but we are not under pressure to, to follow the Saudi route, if you, if you want to put it that way.

Look, fuel efficiency for us is extremely important because of the Wizz position of being one of the, if not the world’s most emissions-efficient airline out there. From a SAF perspective, you know, we comply with our purchase obligations, and we go through the same challenges as everybody else. Thankfully, because, you know, we are as efficient as we are, we don’t need to buy. We probably have to buy less than other people who have to consume more fuel, which is good. We continue to hold the investments in the 2 SAF production facilities or production concepts that we invested in. And those are moving forward, although we’re not going to see any meaningful benefit from that until the end of the decade in terms of, you know, having access to the offtake agreements.

But that’s something that we’re promoting and excited about. But ultimately, you know, when it comes to our volatility, we’re smoothing that out through the hedging program that has been in place since the beginning of F ‘24. We follow that religiously and, without any speculation, and we have recently conducted a benchmark of our policy against the peer group, and we’ve made some enhancements to make sure that we are remaining competitive on that, and we’ll continue to follow that. And obviously, where things are right now, we are in a favorable fuel environment, and we’re locking that in. So the combination of prudence when it comes to risk management on the fuel and the FX portion of fuel, on top of the efficiency as we get rid of the inefficient aircraft and move towards these.

And you can see that through the fuel unit cost when you benchmark it against Ryanair on a stage length adjusted basis, we are miles ahead. And I think that’s something that you need to factor in when looking at the overall aircraft ownership costs, is that if you aggregate aircraft maintenance and fuel and you compare it to the peer group, it actually looks far more compelling than if you just look at it on the raw numbers as presented.

I think that’s really an important point. And, you know, when you look at the merit of the aircraft, you know, some people say that there is no such thing as good aircraft, there’s only cheap aircraft. That’s actually not true. So if you really take a more holistic view on the aircraft cost, and you include, you know, fuel burn, you include, you know, capital cost, ownership cost, you include maintenance cost, probably these are the things you should add up, and kind of compare, and then you understand the value of the aircraft. And, you know, we are getting cleaner and cleaner on the aircraft side. So all these aircraft are superior. They represent better value than alternative aircraft.

They will be flying, as opposed to partially being grounded. So that kind of a value coming through the aircraft line, which is going to be a lot more visible and a lot more impactful on the performance of the business going forward. So I think it is important to understand, because this is the single biggest drag on the business at the moment. We don’t shine on the aircraft, and we should be shining on the aircraft because it’s a better aircraft than any of the other guys have.

Conor Dwyer from Citibank. First question was on maintenance. Obviously, a bit of a headwind this year, but into next year and the year after, still looks like quite a few redeliveries. I think it’s 25 and 14. Do you think as a result of that, that’s still going to be leading to kind of a lot of provisioning for maintenance in those years as well? And then the second question is kind of back to your comment around margins potentially being up next year. Broadly, from your comments, it seems like overall non-fuel unit costs, kind of the improvements in the underlying business being offset by sale and leaseback gains. I think a lot of models in the market are doing kind of unit revenue up slightly this coming year.

But, you know, with capacity growth at 10% this year, unit revenue flat, there’s quite an acceleration into next year. I’m wondering, how can we think about that bridge of margins coming up? Is it, is it fuel? Is that a big component? Is it financing? Any help you can give on that would be super helpful.

Okay, I’ll take the first one on the maintenance provisioning. Yes, I think you were, those numbers you were referring to were probably calendar year numbers, and so I’ve only got them committed to memory in fiscal year. So it was 18 this fiscal year, 19 next fiscal year, 16 in F ‘28, and then I think we’re basically, you know, just a handful left. And so, yeah, those will come with elevated costs. Event-related costs is how I’m referring to them. And the challenge I think that we’ve faced so far is that we were competing. Our resources, internal and external, were competing with the challenges of powder metal and redeliveries and trying to keep the fleet flying and manage whatever we could.

As every day goes by, we get better at managing the powder metal issue, and now we’re putting all of our attention on the end of lease side of things because of the huge pressure it’s putting on the maintenance line, while making sure that we have the base capacity available for the operating fleet. So I think we’ll get better at it, but there is going to be an inherent event-driven exceptional cost pressure coming through the next few years on maintenance that we will not be able to avoid. It is simply what is required in order to put these aircraft back into return conditions and to comply with the contracts. Otherwise, you pay a lot worse, which is lesser compensation, right?

So you had the option to pay the lessor or cash, which they’d love to have, but at our scale and our rates in the maintenance ecosystem, it’s better for us to do the work. But of course, it impacts all sorts of things like availability of slots at the facilities. It takes down utilization because you have to obviously take the aircraft out of the fleet in order to allow for the time that the aircraft are maintained, and so that has those pressures. But that’s just part of the transition and the cleaning up of the business. But there’s going to be elevated maintenance costs and the associated maintenance depreciation that flows through the maintenance, through the depreciation line that comes with the exiting of the aircraft.

If we didn’t have the new aircraft coming in, there’d be some opportunity to extend ceos, as our friend Andrew likes to write about, but unfortunately, that would just add more capacity at this point. And so we have to, we have to balance the trade-off of, you know, what -- but what even more growth would mean versus trying to migrate the older aircraft out and benefit from the harmonized efficiency of an A321-only fleet.

So maybe on the margin, on the margin issue. So I can tell you that we actually have quite a number of markets where we are growing 20%+, and RASK is improving, going into positive territories. And we have a few markets where we are not really growing, and RASK is down. So obviously, what you do is that you address the underperforming parts of the business, and you explore the overperforming parts of the business. And I think the way we are allocating capacity through this growth period in the first half is trying to embark on that principle.

As Ian said, yes, I mean, of course, high growth always gives you some kind of a containment on unit revenue improvement, but I think you have to look at it in context of competition. I mean, competition is pretty much benign. I mean, doing nothing. I mean, we are not really seeing any significant competitive activities pretty much anywhere in our markets. I mean, you know, we have been discussing Albania due to the other guys, that they’ve been very topical on Albania. But the fact of the matter is that we are 3 times the size of Ryanair in Tirana, and our financial performance is improving. So I mean, just because 1 guy is saying something, that doesn’t mean that there is anything close to the realities.

I think they are starting, or they are stating ambitions as opposed to actual realities. So, you know, we actually feel very comfortable with the redesigned network, and the way we are allocating new capacity there against the competitive backdrop, against the strengths of the brand and awareness of the brand, what we have been achieving. So I don’t think that RASK is going to come through as a detrimental issue to the performance of the company in terms of margin.

Now, we will have to see how exactly the cost line is going to play out, given all the issues, and we have still a few decisions we will have to make that would affect maintenance cost and, you know, when to amortize some of these maintenance lines. But we’re seeing, I said, that fiscal ‘27 is going to be an improvement on margin versus ‘26.

It’s Andrew Lobbenberg from Barclays. Can I ask about the journey to diversifying your aircraft financing structure, which I think you spoke about previously, but doesn’t seem to get a lot of profile today? How hard is it to kick the habit of the SLB gains, I guess? And then in terms of competitive pressures, Joe, you just said that there, there’s no competitive threats around the network, despite Michael’s comments. Can you talk about the big Eastern European markets and, you know, what the trading trends are like in Poland, Hungary, Romania, I guess?

All right. So let’s talk about the competition first. Well, our market share, as we speak, is up to 26%. That’s nearly a 2 percentage point improvement. And the other guys are flat or down slightly. So Andrew, the problem I’m having is that, I mean, this guy is talking a lot of rubbish, which are simply untrue. I know that the whole media nowadays is checking the facts on what Trump is saying. Maybe someone should be checking the facts of, you know, some of the other guys are saying. So this is simply not true. So we are gaining foothold in Central and Eastern Europe, you know, at the detriment of all others, including Ryanair.

So when you look at Poland in particular, the Ryanair leadership gap has been closed to a large extent. They had double-digit margin points. I think we are kind of mid single digit now, given the capacity deployments in the country. Romania, we are 50% of the market in Romania, and our market share has been growing. So again, if you fact-checked the system, I mean, you know, kind of standstill on one side and significant growth on the other side. So if you just look at Poland, what we have done recently, pretty much to every operating base, we have a nice new aircraft. We opened up secondary airport in Warsaw, Warsaw-Modlin.

If you look at what’s been happening in Romania, in the past year, we have been adding aircraft to almost every single base we have in Romania, and we opened up the secondary airport in Bucharest, Băneasa, Băneasa Airport. So, maybe we don’t bark like a dog, but we have been doing a lot in both of these markets in particular. And by the way, the other topical issue is Tirana, as in just very recently, we have been adding 2-3 aircraft to Tirana, enhancing our market leadership position. Again, we are 3 times the size of the other guys. So, Central and Eastern Europe has been going from strength to strength, as far as we are concerned, in terms of competitive dynamics.

So, I mean, some of it, of course, is an investment into the future, but these investments tend to mature actually pretty fast and quite well. So, we feel very good about the competitive strength of Wizz Air in Central and Eastern Europe. And going beyond Central and Eastern Europe, you must have noticed that we have been quite active in Italy, announcing new aircraft deployments in Italy, Milan, not far out, Venice, Rome.

Catania.

Catania. More to come next week. Actually, we are building a lot of strengths in Italy. We ended up sponsoring AS Roma, which we think is a step up in terms of stimulating brand awareness and reputation in the marketplace. So it is not just Central and Eastern Europe, but we are also picking up the pace in some of the other markets.

So in terms of the journey to diversify, so it is a journey. Not something that we feel that we need to immediately launch into, because to some extent, we’re already diversifying through the Jolcos that we do. And I think roughly 50 aircraft in our fleet are under some sort of ownership structure, whether it be Jolco or finance lease. But that’s what I think, Andrew, you’re referring to and what we’ve spoken about in the past, and certainly in material that I’ve put out there, is a more focused effort towards owned aircraft. And that is something that is certainly in our roadmap, and we plan on talking about that during the Capital Markets Day.

The good news is that we have aligned on a date, internally, Joe and I, and we’ll be communicating that date through the investor relations team to you. And it’s-- we have plenty of time to plan for that, and that’s where we’re going to, we’re going to break it down in detail. The reason why we’re less compelled to jump into it now is 2 reasons. One is that basically, the next 12-15 months’ worth of aircraft are already committed into some sort of form of financing. And so even if I said, I want to do X-- I want to buy X aircraft today, I can’t, I can’t do anything for another 15 months anyway on that. And so, so we have some time, but also, I don’t think it’s appropriate when you talk about journey, right?

We’re talking about consistency, stability, reliability, predictability, in terms of what we’re telling you we want to do and what we actually print when it comes to results. And so this quarter and the last 2 quarters have been deliberately, I would say, without fanfare. We just want to simply deliver on what we say. And if I start taking away things like, say, leasebacks, which, as we’ve discussed through the questions, this business does use as part of its profit structure, then it’s not going to deliver the consistency and the reliability that we’re so working so hard to bring, right?

The biggest takeaway that I’ve seen from the conversations I’ve had with you today is that, you know, there’s still a surprise that we’re delivering on the consistency, and we want to make sure that, you know, we eliminate that surprise and simply deliver. So I’m trying to keep as much unchanged as possible so that we can focus on the pillars of our business, which is to be, you know, ruthless on cost, and reliable when it comes to operations, reliable when it comes to the commercial decisions that we make. So there is certainly a lot of work that’s gone into that, and that’s something that we discussed as recently as yesterday with our board.

But it’s not something that we’re ready to go to market with because we think that we can do better in terms of just delivering on the expectations and making sure that we set the right expectations for the next quarter, so we can repeat what we’ve done in the last 2 quarters. Two quarters is not yet enough for a pattern.

We’ll take our first online question from Jarrod Castle.

Yes, 2 for me as well. I mean, you mentioned commercial areas, yes, and, you know, I just wanted to get some color on what your thoughts would be, I guess, yes, and József on, you know, something like Starlink. We’ve obviously seen comments from Ryanair and easyJet today, so WiFi. And secondly, you know, maintenance shops, obviously, costs there, you, you know, are, are, are impacting you, and obviously, you know, a large competitor is rolling out, maintenance shops, so, thoughts there. And then just secondly, you know, your comments on costs for ‘27. I mean, I, I assume, you know, you’re talking more constant currency, but, you know, clearly the US dollar is coming under a lot of pressure.

So, you know, any color that you want to share on that front? I mean, I can obviously see your dollar hedging, but you know, just some color there, how you see things.

Maybe I just pick up the first one. So with regard to WiFi and onboard connectivity, I can tell you that personally, I have been looking at it for 15 years, probably 6 or 7 different iterations. And you have 2 challenges with that, 1 is that you need a technology that actually performs, and 2, you need the economic model that actually makes sense from a financial standpoint. One thing, what you have learned in this industry is that people will not pay for this. If you’re seeing they do, you are naive. It’s just not going to happen. So with regard to technology, I think Starlink’s is kind of the technology that delivers what you need. But it may not deliver the economic side of the equation because you may think that this is overcharged.

And unless you find a sponsor, who is prepared to, pay for that, you know, for sure, you’re going to be ending up with the cost of, operating the system, with no visible benefit, on the revenue side because people won’t pay for it. So you have to get those 2 things right, to move forward with WiFi. I think we are, you know, very upbeat on the WiFi connectivity opportunity. I said, you know, I, I’ve been looking at it on a constant basis, pretty much. But you need to get the technology right. As the technology is coming, but you also need to get the economic model right on that.

But with regard to maintenance shop, I mean, I would just like to draw your attention to a very major difference between maintaining Pratt & Whitney engines versus maintaining CFM engines. But first of all, when you think of aircraft maintenance, you know, 70%-80% of the cost of aircraft maintenance are associated with engines. So effectively, you are talking about engine maintenance when you think about it structurally. CFM doesn’t underwrite the product. So the CFM philosophy is that, you know, we are big enough, we created a market. It’s sufficient enough, take advantage of market airline. That’s not our business. Pratt & Whitney is totally different. Pratt & Whitney underwrites the product and effectively guarantees the infrastructure for maintaining the engines.

So we are not as widely affected by market volatilities, when it comes to engine maintenance as the other guys. And I know that, you know, there is a huge inflation creeping through, labor in the maintenance space, all over. That’s a global phenomenon. So this is not down to 1 or 2 guys, but we are contractually protected, against the inflationary pressure. It doesn’t mean that we are totally isolated from that issue. So, we are not immune, but we are a lot more protected. So while you are seeing some other guys seeing 2x, 3x of maintenance cost creep, we are nowhere near to it.

I mean, we are still talking about, I don’t know, you know, some fairly nominal inflationary rate flowing through the other system. So this is a major difference. So I think this should be a competitive advantage for us going forward. Unfortunately, that competitive advantage at the moment is tainted because of the powder metal groundings, etc. But once we are clean, I think our ability to manage maintenance costs against market volatility will turn into a competitive benefit for Wizz.

So, Jarrod, with regards to the benefits of the US dollar, I mean, absolutely, you know, [ 1.20 ] is something that makes us excited. We benefit in the form of obviously our rent. Most of our rent is paid in dollars for the aircraft, although we do have a good proportion of rent that we’ve originally put in place in euro. The new aircraft that are delivering, they get swapped into euro rents through our latest evolution in our risk management, through our balance sheet hedging or our lease liability hedging. And in fact, there’s a request today for 4 more deliveries to be swapped in, so we’ll get the benefit of that.

In terms of the rest of our cost structure, it’s we’re less exposed to dollars than most airlines because we’ve been looking to contract in euro as much as possible to create a natural hedge. So for example, a lot of our maintenance we’re able to do in euros because we don’t perform maintenance too much outside of Europe. It’s mostly in Europe. So, but there is a heavy element of dollars still in this business, and so that will help us. The funny thing about this journey to ownership is that when you buy an aircraft, you establish a future residual value number. The appraisal is done in dollars because that’s what the purchase of the aircraft is done in.

And so you set some residual value number, and then you depreciate down to it over the period of time. But as the US dollar weakens, actually your depreciation grows because you’re now depreciating to a lower US dollar amount, which means you have to take more. So there’s a risk there that we have to manage, but I think that there’s ways we can deal with that through our risk management program. So overall, there’s a benefit there, but it’s not something that, Jarrod, I would be able to quantify at this point. In terms of the commercial other areas, I mean, I think Joe summarized the WiFi side. Of course, we’re in discussions with Starlink. We understand the costs of it, but we’re not prepared to incur the CASK that comes with that without somebody helping us offset that, because it would simply go against, you know, the ultimate strategy that we’re pursuing. And maybe I’ll just take the opportunity just to fill you in on some of the key themes that I’m going to be focusing on going forward. Basically, got 4 that I really just want you to hear now so that we can start to follow up on them. One is that we have to be, and we will be ruthless on the cost gap, okay? That’s something that you can see is there, and that’s something that I want to eliminate, and the way that we need to do that is by way of productivity.

So productivity means fleet utilization and crew utilization, and so making sure that we can be as productive with that. That is core to the model, especially with the kind of aircraft that we operate, and so that’s the first pillar. The second is that we’re growing, and we need to grow better. So how we grow is critical, so we need to grow better. That is, you know, establishing those fortress positions, deploying capacity into core markets where we have a cost advantage. The third is reliability, right? Everyone associates reliability with the cost benefit, so you have lower disruption costs, but you also end up with, like I said earlier, in terms of lower crew costs. But also reliability is a RASK lever.

The more reliable you are, the more confident the customer and the consumer is going to be in purchasing tickets with Wizz. And the more customers we can identify, the higher we can charge in terms of supply and demand. And the last is that we need to expand the Wizz franchise, right? Everyone associates Wizz with a certain customer profile. One of the things that Mike and I have been talking about a lot is tailoring the schedule for the specific customer segment, capture the high flyers, the high-value flyers, without sacrificing utilization. Establishing route quality metrics to align with customer needs and pushing ancillaries. And so we, you know, things like what we’re looking at, like, Wizz Class, for example. Pushing things like that, but ring-fencing them so that we keep the ULCC model.

So trying those things, squeezing more out of our flights that may have lower load factors by looking at products like that, but keeping the ULCC model, so ring-fencing them. So that’s those are the 4 areas: ruthless on cost, grow better, reliability, and expanding the Wizz franchise. That’s extremely important to us, and that’s the direction we’ll be taking this business going forward.

[Operator Instructions] There are no further questions on the webinar. I’ll now hand over to management for closing remarks.

Well, thank you. I mean, I think I would just like to close it with, with the notion of, you know, I think we are on the path to, reset this business. We don’t want to cause any new surprises. I think we’ve got enough of those, in the past few years. We are still in transition, so please don’t expect, you know, performance taking us to the moon yet. But, you know, we are not far away now from a vision, when, you know, the operating model is going to be back into where it used to be. We’re going to be clean, of many of these issues we continue to carry, like groundings. Fleet transition is going to be completed in 2 years. So, I think we are moving along the track and we are projecting performance alongside our expectations, what we were trying to reset with you previously. Thank you.

Thank you for joining today’s call. We’re no longer live. Have a nice day.

Welcome to this event. So this is reporting the first half results of fiscal '26. Could we move to the next slide, please?

So I would say that we start seeing some sunshine and certainly good decisions for the future waiting to see the impacts coming through. So with regard to the sunshine, I think what the first half results demonstrate is that under circumstances when we are near efficient, actually, the business produces very strong results in terms of operating KPIs, in terms of financial output. We are still not fully efficient given the groundings of aircraft, some of the inherent inefficiencies in the system, but we did a lot better than in previous years. As a result, you can see a significant increase on capacity, passengers, revenue and profit.

In terms of decisions made, we're seeing that we have affected the major challenges of the business for a structural reset. We have communicated the closing of Wizz Air Abu Dhabi that effectively has been happening. It is pretty much a done deal. Then we communicated that we would be seeking a reset with regard to the aircraft delivery stream with Airbus, that deal is now in place. It has been decided, and I think it's a good deal. It is appropriate to addressing a number of things. One is the deliverable growth rate of the business, taking some risks out of the profile of the setting, reducing the growth rate to around 10% to 12%. And let's not forget that 10% to 12% still makes Wizz Air the fastest-growing airline in Europe and which we are proud of. But it is a more manageable magnitude of growth than previously set.

And very importantly, it takes into account the cycle of the Pratt & Whitney groundings and ungroundings because that created a significant hiccup to the fleet count of the airline, which we had to reset. Also, we addressed the XLR exposure. That program is descaled very significantly, I would even say that exited to a large extent, and now this is narrowed to the U.K. AOC. So the XLR is seen as a Wizz Air U.K. initiative no longer as a corporate initiative for the airline. Also, we have made commitments on aircraft finance. This is one of the significant differences to our competitors, and you will start seeing a more balanced way of financing our aircraft delivery program going forward.

Now with regard to growth, I think this is important, and you have a prime interest in that. We are looking at capacity growth of around 10% to 12% to be delivered through the recovery of the GTF engines, the new aircraft delivery streams and the way we are managing capacity. Now what it really means is that we will still have some short-term challenges in front of us arising from capacity because effectively, the choice we have on hand is either being fully efficient and fully deployed capacity, but that would create an excessive growth rate, which would become highly dilutive to revenue production or carry on some inefficiencies on the fleet, but set the growth in accordance with what actually we can deliver.

We opted for the second. So you're going to be seeing a moderated growth level from here on, but it will take a little time to suck up the inefficiency created. We have been shifting a lot of focus in terms of markets. We have been talking about this to Central and Eastern Europe. If you look at Central and Eastern Europe, it is now kind of bearing fruits in terms of market share. We are expecting our market share to be around 29% going into the first half of calendar '26. This is up from 25%. Of course, we have been adding significant capacity by opening new operating bases and also enhancing our incumbent footprint.

With all this, we are expecting a stabilized, more resilient revenue production and a longer-term lower cost production of the business and also the strengthening of the balance sheet. Maybe with that kickoff, I would hand it over to Ian, and I will take it back after that.

Thank you, Jozsef. Next slide, please. Right. So in terms of H1, I would say that pleased with the outcome. And so we don't want to dwell on it too long, but at least we're here to report on it, so I'll talk about it, but then we want to make sure we look forward into H2 and beyond that. So revenue, up 9%, nominal off of 8.9% ASK growth. RASK was roughly flat year-on-year, EUR 0.0498. So a strong RASK production, flat load factor. So that was -- and yield was up around 0.9%. So ultimately, I think a good top line number, helped also by fuel. Fuel was down 2.1% despite the 8.9% volume increase, benefiting from the fuel efficiency and the fuel price and the impact of our hedging.

EBITDA was nicely up 19% with a 29% EBITDA margin and operating profit was up 25% with a 13% EBIT margin. So across the board, I think a strong result. We did see some things below the line that eroded some of the net profit, even though we still generated a positive year-on-year net profit production. And none of this was unexpected. So we have the tax charge with regards to the deferred tax asset that we created last year and the unwind that happens as the aircraft start delivering into that entity in Malta, which we restructured and set up last year.

Ultimately, I think where we're looking at is a satisfying result. And as Joe says, as we continue to build operational performance and operational resilience into the business, you can start to see the benefits of those flow through into the P&L. These are structural. These are things that we've invested a lot of time and effort into. And so last summer was a rather disruptive summer, and that's where you see the benefit coming into this year. You'll see less of that benefit in Q3 and Q4 just because we had better performance. But we can expect, as we're continuing to grow that operational performance to deliver a more robust cost position and ultimately, a more beneficial revenue environment because you'll start to deliver operational performance, which drives better revenue quality. So we're excited about the structural changes and the resilience coming into the business.

So into the winter and into the cost base, if you could just go to the next slide, please, we will see transitional inefficiencies. Now on the cost side, I would say we're pleased with the results. The cost picture really improved in Q2. And you can see that, that was driven by fuel. So fuel was a tailwind there. The disruption costs, as I mentioned, the operational efficiencies generated roughly EUR 29 million of savings in terms of disruption costs. So that was helpful. We also managed to shed some of the structural wet lease costs. So we were down EUR 76 million in terms of wet lease costs. Still have -- we still do incur wet leases, but these are not structural. These are one-offs. And actually embedded within those wet leases is also some of the short-term engine leasing that we do in order to make sure that we can operate the fleet efficiently and reliably to be able to support that better on-time performance and the avoidance of disruption costs.

We also managed to deliver strong results even with lower sale-leaseback volumes. You can see that we actually were EUR 27.5 million short on sale-leaseback gains year-on-year. So had we had that, that would have been an even better picture. So those were the tailwinds. We continue to see elements of cost creep through the business. And like I said, none of this is a surprise. So there's nothing new based upon what we were expecting at the full year when we said that this year was going to be a challenging cost year. This is just simply the translation of some of our actions into the results, which will then wash through and move on going forward.

So you can see that, for example, airport and on-route are up. Actually, handling came down, but where the biggest pressure came from was on on-route, where we saw an increase in the tariffs year-on-year. And for example, places like Germany on recharges were up 29% year-on-year. So those really hard to unwind some of those. Maintenance is an area that we see a lot of cost pressure. But as we explained at the full year, there's a number of things happening there. So we are seeing the retirement of ceos now in that period. We think there were 9 ceos that went back. And so as you put those into return conditions, you have to incur incremental costs, not normal operating costs. And so you see some of that flow through.

You also are seeing pressure in terms of the vendor base. So component support contracts are increasing. And so some of that is inflationary coming through the cost line. There is an element of Abu Dhabi wind-up costs coming through the entire cost structure. In terms of Abu Dhabi costs, we remain comfortable that there won't be an adverse impact on the full year to winding up Abu Dhabi. So while you will see cost increases across all the cost lines associated with the wind up, the benefit of not operating Abu Dhabi from September onwards will offset that so that it should be at least breakeven, if not maybe slightly better, but we'll know that when the entire business is wrapped up. We thank the team for all their efforts in terms of that operation as well as what's happening to shut that down.

Distribution was up slightly, but that was consistent with the Q1 results in that we have a return to growth. And so as you do push more volume through the business, you are incurring more costs associated with that. And so that was expected. And like I said, there are -- there's a bunch of cost increases happening in the others line associated with the return to growth. So there's things like crew training, crew accommodation, recruitment, things like that. Abu Dhabi costs flow through that to some extent as well. And there was also a reduction, if not even an elimination in some limited cargo revenue that we had in prior year that we didn't have this year. So that's what explains the others line within the other cost and income line.

I will ask to go to the next slide. Just quickly touching on Q2. So again, operating margin of 21.5%, 35% higher year-on-year. We saw less benefit on FX in the quarter versus prior year due to the now continued ramp-up of our overall lease liability hedging profile and risk management profile. And we saw a very strong disruption cost reduction, again. So most of that disruption improvement came through in the second quarter, and that's despite some of the challenges we have in Q2, such as the suspension of Israel operations, which resumed in August. We also had the overfly challenges around Iran, and then we had actually a lot of volatility around Abu Dhabi as we worked to come to the end of that operation at the end of August, early September, beginning of September. There were some tapering off of the operations there, and that caused some additional disruption and costs. So notwithstanding all those things, a very strong Q2 and something that we're proud of, but we're not going to rest there.

So in terms of where we're going, we have obviously some guidance numbers that Joe will share at the end. And that puts us in a position where I think we're comfortable with where consensus is currently. And so we do expect there to be a higher cost position in Q3 and Q4. Like I said, nothing that's a surprise. And that's driven by a number of factors. If you look at things like the maintenance line, we're going to see older aircraft costing more to maintain. There's going to be continued retirement of ceos in that period, which drive the costs up. Depreciation is going to see some pressure because in H2, we should be 35 more neos this year versus last year H2, and that translates to roughly 20% fleet growth, whereby in that period, we should only be growing around 10% in terms of ASKs. And so our nominal depreciation will grow faster than our volume growth, and that is why you'll start to see some pressure on that.

We also have in the second half a distortion when it comes to the year-on-year comparable in maintenance. In fiscal year '25, we had a one-off maintenance accrual release, which was rather material, close to EUR 80 million, and we're not going to see that again. And so that's why you see some of the cost pressure flowing through. But Joe will comment on why that is necessary and why the actions that we take and the costs that come with those actions set us up for not just the performance that we're delivering next year, but also the overall reprofiling of the business.

I'll ask to go to the next slide, please. In terms of cash flow, I would say, consistent at the end of the day, consistent with what we've been seeing. So we ended the year right -- sorry, ended the half around EUR 2 billion in cash. And that puts us in a strong position going into the winter. We managed to generate a reduction in net leverage ratio, so down from 4 to 3.6. We maintain our target of 30% to 35% liquidity, actually made it to go up, which is good. And that's also in anticipation of our January bond repayment, which we plan on at this point, treating the same way we have the previous repayment.

We are pleased with the Airbus developments and that comes with pros and cons. Obviously, as you defer aircraft, you generate fewer sale leaseback gains, but you also generate fewer lease liabilities as you defer CapEx, which means that, that should be benign in terms of leverage at the end of the day, but it also releases -- has a benefit of releasing PDP obligations as we now no longer need to fund the development of those aircraft. And as I'm sure some of you have noticed, we've managed to sell a few aircraft as part of a deal with one of our related party airlines, and that also takes further pressure off the CapEx side of things.

But overall, nothing to be -- nothing jumping out in terms of this chart. And as we move into Christmas period into the Easter into March, we'll see that unfunded liability line start to build again as we've seen in prior periods. And so we're comfortable with the liquidity position of the company. We -- I will note that we rolled over our ETS facility. We had a EUR 279 million facility that rolled over like we did in the prior year. And due to the changing prices of the emissions credits, we were able to slightly upsize that.

Next slide, please, and I'll hand the floor back over to Joe.

Okay. Thank you. Well, this is, I guess, a very important chart that kind of gives you a picture on fleet growth and this translation into capacity growth. So you recall that we are having 334 aircraft on hand to be delivered, originally set for a stream ending in 2030. Now this is extended to 2033. So effectively, that affects a 91 aircraft reduction in the original delivery period and put that across into the extended period. Of the 91, 3 aircraft are sold outright and 88 are deferred into '31, '33 deliveries.

Now what it does is it creates a more predictable picture for future growth. In terms of volume of growth, we are targeting around 10% to 12% annual growth. This is taking into account some of the issues of recent experience that given the -- some of the inefficiencies associated with the Pratt & Whitney groundings. We want to make sure that we are derisking the profile of the business, not only in terms of market footprint, but also in terms of challenges arising from growth. And we think that the 10% to 12% growth is a more derisked profile for the company than 15% originally targeted.

And taking into account the Pratt & Whitney GTF cycle of grounding and ungrounding, you appreciate that the new fleet delivery program has to take that kind of a recovery cycle into account and recovery cost into account. So if you look at it in nominal terms, effectively short term, we don't take new aircraft deliveries representing 10% to 12% growth. It's a lot less than that because we are taking into account the recovery of the current grounded aircraft engines. We think that this is a fairly well outlined model mathematically to program the growth or deprogram the growth against a lower risk profile of execution.

I'm very pleased with that. And it was a long negotiation. So you can imagine that this is very thorough, not only in terms of setting or resetting the delivery stream, but also in terms of protecting the commercial terms of the deal. Again, just for recalling it, this deal was actually put in place in 2017 in Dubai under very different supply chain circumstances, very different commercial and financial needs of the OEM. And obviously, that gives continuously a structural benefit for Wizz Air versus the rest of the market. But we're seeing that now it is not going to become a burden when it comes to executing the aircraft order.

In 2029, effectively, we are becoming an all-neo operator. That's good because by the time, I think you should be reasonably expecting technological maturity coming through. By the time the GTF advantage will be delivered. I mean that's a significant technological step-up and an industrial step-up on durability and reliability on the engines. And the other important issue here is the XLR program, which is now taken down -- rescaled and allotted to Wizz Air U.K. no longer to the European AOCs.

Next slide, please. So decisions have been made, are being made and now we are expecting the impacts coming through. So the critical decisions, as I said before, the closure of Abu Dhabi. You heard from Ian that we expect that decision to be executed against a fairly benign financial platform. So we are not expecting any adverse impact in the current financial year. As a result of that and as of the next financial year, we are expecting significant upsides coming through.

Just discussed the Airbus order reset, again, this is very important for longer-term predictability of the business and also discussed the XLR program, which we effectively exited other than Wizz U.K. Now there are next to this ongoing work streams. Network improvement, churning the network for profit. That's probably the most important ongoing priority of the company. We are shifting capacity into Central and Eastern Europe against high brand awareness, against a very solid financial performance and against a backdrop of disproportionately higher GDP growth in that region relative to Western Europe. And we are already seeing some of the early results by opening new bases, deploying more aircraft, how quickly the market is picking up on Wizz Air.

We are optimizing the technological platform. Maybe it's a small equation we have been discussing, but I think you should understand that when we are talking about the GTF or any new technology is the same for the CFM LEAP. There is a trade-off. And the trade-off is you get fuel burn benefit from heat in the core of the engine. So basically, the way fuel burn benefits are derived is through the higher temperature in the core of the engine. What it means is that higher temperature is more sensitive to durability of the core engine of the whole engine. So that may result in more maintenance costs. So this trade between fuel burn versus maintenance. So it's not like that you just get fuel burn as a gift. And of course, there is another element of technology improvement and that comes from the capital cost. It is simply more expensive than previous technologies.

So please just understand this trade because when you look at ex-fuel cost and fuel cost, you're going to be seeing that, okay, we are delivering a lot of improvements on fuel cost, but not as much on ex-fuel cost. But there is a trade here. So what you see coming through the fuel cost, you're going to get some of it as a penalty on non-fuel cost. So you really have to look at the 2 combined. I mean, of course, we do the breakdown and we act on the breakdown. But intellectually, I think you need to integrate those 2 if you want to fully capture that.

But we're seeing that the technological benefit is important because once the GTF is matured, the industry has no doubt that this is going to become the best engine available in the marketplace. It is kind of painful at the moment going through this cycle, but we are hopeful that one day, actually, we're going to be pacing the day when we decided to offer this engine.

And unparking the aircraft, that's a critical priority for the company. We have been discussing this. We are targeting to on ground the entire fleet by the end of '27. We are working with Pratt & Whitney. We have an understanding. We have a deal with that regard that covers induction slots that covers spare engine purchases and that covers OEMs capacity in terms of parts and in terms of shops and engineering to support that recovery program. And this is aligned at the highest level at the company, not even at Pratt & Whitney level, but at Raytheon level over there. So a lot of ongoing issues happening, but I think all for the better.

So next slide, please. I think Ian has started alluding to this that if you look at fiscal '26, it is almost like 2 halves for 1 year. So a somewhat shining first half and somewhat challenging second half. So in terms of capacity, we are looking at mid-single-digit seat capacity growth, somewhat less on ASK. You recall that we eliminated quite a number of long routes operated too hot and harsh. So that's why the ASK numbers are somewhat different from the seat numbers. So mid-single-digit capacity growth. This is in line with our ongoing growth ambitions of the company.

Really, the option we had available to us here was we are growing 30% with efficiency in terms of unit cost. Or we are going 15% with efficiency for revenue, but with some compromise on unit cost. These were the 2 choices to make. And we opted for the second one because we think that we should be allotting capacity against demand in the marketplace as opposed to allotting capacity and trying to find demand for that capacity. But that will bear some kind of a challenge in terms of short-term cost to the unit cost to the business.

Load factors, I think we are trending well on load factors. The performance is strengthening. We are expecting some upsides on load factors coming through. So with regard to RASK, again, I mean, we are too early into the winter to really make a firm position here, but we are expecting some pressure. I mean, 15% is still significant growth in the business. It's a lot ahead of the growth of other airlines. And this is the off-peak period, the kind of the weaker half of the financial year from a demand perspective. So we might be expecting some pressure on RASK capacity, although we are also seeing some good positive signs on that. So we shall see, but this is our kind of early indication.

So how would that translate into CASK performance of the business? Obviously, fuel will continue to do well, given the current fuel price in the marketplace and given the transition to neo technology and the benefit of fuel burn coming through the GTF engines. Ex-fuel cost, will be temporary on the rise as a result of this kind of capacity inefficiency we carry in this period. But over time, this is going to be sucked up. If you look at fiscal '27 when we are taking down the new aircraft deliveries and contemplating some recoveries of GTF engines in that period, this kind of inefficiency is going to be sucked up.

So all in, so it is a challenging first half -- sorry, second half, what we are into, although some of the good things, good decisions we carry through this period. And certainly, you're going to be seeing more benefits materializing in the next financial year.

I think with that, I would turn it over to questions, please.

Jaime Rowbotham from Deutsche Bank. Two for me to kick off. Maybe first one for Jozsef. On-time performance was, I think, 60%-ish, up from 50%. So a good improvement, clearly helping your disruption costs, but that's still very low versus, I think, your pre-COVID standards and industry standards. So why is that? And where do you think you can get that to 1 year out, please?

And then secondly, maybe for Ian, the situation you find yourself in, as you described on the cash flow bridge, saw the net CapEx positive EUR 190 million in H1. Now you've got the Airbus deal done. Is there more clarity you can give us on what the full-year equivalent of that number might look like? Or is it still very contingent on engine sale and leasebacks, et cetera?

All right, maybe I'll start with on-time performance. So yes, it is a significant improvement. I think the difference is that we are just up against a very different supply chain context. ATC remains to be a challenge. It was less so this summer than in previous years. So we have to admit the progress what they have made, but that doesn't mean that they are virgin. So there are still lots of issues coming through ATC. Our performance relative to industry completion, we are the best airline in Europe. On-time performance, we are right in the middle of the pack. So is this good? Yes, relative to the industry's performance, I think it is good. Relative to our expectations and historical performance, we want to see improvement coming through. But I think we need to see more improvements coming through the supply chain as well.

Now the issue what you have, and you probably appreciate this. So you are in the summer period when demand is almost unconstrained. The more compromises you make on your operating model, what compromises do you make? I mean you may compromise on sparing more capacity. So that will take down utilization. I mean you are running the airline at low utilization rate in the middle of the peak demand period. This is going to be defeating your financial performance.

So you have to kind of strike the balance here and find that kind of a sweet spot that benefits your operating program against the revenue and demand upside of the business without really screwing it up completely operationally. And I think previous years in previous summers, we might have booked it overly for trying to get more commercial upsides from the business and on the mining operational resilience. So I think we put more efforts into the balance now that we're going to have commercial upside, but at the same time, we want to protect operational resilience as well. I mean that's how well we could have done, but we need to see some improvements in the supply chain, to be honest, to have significant upside here. But we are not underperforming versus the industry.

Thanks, Jamie. With regards to cash flow, so the Airbus news is new, right? We announced it this week. And we are in the process of trying to identify when the right time is to do a Capital Markets Day to walk you through the longer-term strategic direction on all these exciting topics, particularly with regards to aircraft financing, engine financing and things like that. As I mentioned earlier, we should be 35 A321neos in higher count this second half versus last second half. And then there's also going to be an element of engine sale leasebacks that happen in there. These are the contractual obligations that we have. So we're not doing anything above and beyond at this point other than upholding our contractual obligations.

And so other than the 3 aircraft that were sold, I believe there's only 1 aircraft that was deferred out of fiscal year '26. So the Airbus impact is very limited to fiscal year '26 and in fact, fiscal year '27 because there's not much you can do. So that's why we're having to manage the capacity through, as Joe said, utilization and things like that, which come with its drawbacks, which we're very utilization focused. So we need to balance the revenue dilution with regards to the capacity, management.

But in terms of the cash flow for the full year, so you will see cash flow benefits coming from the delivery of those aircraft. You will see cash flow benefits coming from the delivery of those engines because we still do a form of sale leaseback, whether it's an operating lease, where you get the upfront gains that go into the sale leaseback line or whether you do a JOLCO or a finance lease where you also do a sale leaseback where you don't get the same P&L impact. You get the cash benefit but a different P&L impact. Roughly 20% of our deliveries right now are being financed through a form of ownership like JOLCO or finance lease. That's effectively an ownership structure, even though there is a lease structure behind it.

We plan on taking the next step, as we mentioned before, into looking at an acquisition-based -- more sort of conventional acquisition-based approach. We're running the numbers now based on the order book to optimize where we think the earnings profile we'll get to over the next -- over the rest of the decade, and that will then calculate how many incremental aircraft we need to buy, and then we'll look at the financing sources, whether it's a lease like a JOLCO or whether it's some sort of acquisition either with cash or some sort of other kinds of financing. That's part of the Capital Markets Day exercise.

But what that will do and what these acquisitions do is take away sale leaseback gains, which are very chunky upfront and it will spread it out in line with the depreciation and interest costs you take over the life of the asset. And there's trade-offs to that. But ultimately, we've determined that over the long term, it is beneficial from a shareholder perspective, but it comes with a near-term impact, and that's what we're trying to balance is that we continue to do a bit of both to smooth out the earnings profile of the business ultimately towards something that's beneficial and giving a better shareholder return.

Alex Irving from Bernstein. Two from me, please. First of all, on your revised CASK ex-guidance for the year. So full year results, you said up slightly. Now we're saying up mid-single digit. Can you help me understand how much of that is the mechanical impact of taking your expected capacity growth from 20% to 10%? And how much of that is, say, an underlying variance versus your prior expectations and planning?

Second, you've launched a euro-based product recently. Is this sort of a no regret move that if it doesn't work, we can just sell the middle seat anyway? Or is there a real revenue opportunity that you're expecting to get from this? And if so, could you quantify that, please?

Sure. You want me to take the first one on the CASK?

Yes, please.

So the answer is, as I said before, there's no surprises this year in terms of the CASK number. So it's really more a matter of the capacity impact, where we're basically growing half of what we expected. We had sized the business and budgeted the business for a bigger business and the business that involved Abu Dhabi and things like that, we've now changed it dramatically. But still trying to manage through these costs. And so there's nothing that's caused any sort of variation on that. We do need to maintain cost discipline, and that's our focus. But it goes -- as I mentioned earlier, there's distortions and all sorts of other things that are putting pressure on that. So there's no surprises on that front.

So I think the middle seat is surely a revenue opportunity. I mean, at the moment, effectively, we don't get the middle seat occupied. So if you look at the numbers, it's almost like no one is paying for that. Now, we want people to pay for that.

It's Harry Gowers from JPMorgan. First question, maybe just how to think about growth into next year in March 2027. I think you said or mentioned that obviously, the deferral of deliveries is quite back-end loaded. So how much you're expecting to grow next year? And anything you can say directionally on costs yet for March '27?

Second question, with the Abu Dhabi exit, Vienna base closure as well, is this the end of quite major airport or market movements? Or do you have any more exits or big exits in the pipeline?

And then last one, just on the medium-term growth. I mean, when you were negotiating down on the deliveries, how did you settle on like the 10% to 12% is the right number? So just kind of what's the thinking mathematically or strategically behind that? Why not 7% to 8%, for example?

All right. So maybe I'll start with the last one, the 10% to 12%. So we always saw this business is structurally designed to deliver 15% growth at 15% margin. You remember that was sort of the model what we promoted. Now given all the issues and hiccups, we broke down on the delivery of the model, and we try to reinstate that model. But we're seeing that short term -- short-, medium-term, we need to ease the delivery of that model. So that's why we're seeing that addressing around 10% growth rate versus 15% is taking some of the risks out of the equation when it comes to capacity.

Why not 7% or 8%? Because if you look at our focus markets, especially Central and Eastern Europe, Central Eastern Europe will demand more than that. So we have been modeling this. We have been looking at GDP growth expectations in the region and how that would translate over to airline demand and how we can translate it into our own capacity versus the competitive games we are into and our ambition to lead the market in -- continues to lead the market in Central East Europe. And we think that this is kind of the sweet spot. So the 10% to 12% is a bit of a sweet spot analysis from the perspective of demand in our core markets versus the deliverability of the program from an operational standpoint, how much financial distress we are putting on the system to ramp operations up against that target.

With regard to Abu Dhabi, Vienna and others, I think the way I would see this is that while Abu Dhabi is a very structural decision, Vienna is less so. I think Vienna is seen as pretty much business as usual. Maybe the magnitude is reaching a bit higher than usually. But what happened in Austria, I mean, the Austrian government decided to put excessive taxes on the aviation system, effectively making Vienna prohibitive from a cost perspective for us certainly. But we are not the only guy acting. So clearly, this is not a Wizz Air issue. This is a bigger industry issue.

But I would say that this is fairly exceptional in terms of magnitude. Now with regard to Vienna, I think what is easing the situation is the availability of Bratislava, which is pretty much next door. So this is kind of fairly easy. But churning the network for profit, I mean, that you should be expecting us to do on an ongoing basis. And of course, same thing goes for airport cost. So if an airport becomes excessively expensive, then we would be churning that capacity for lower cost execution. So I would say that these are ongoing priorities. But if you ask the question whether we have made the big decisions, I would say, yes, the rest would be pretty much refinement and business as usual.

Do you want to take the growth?

Sure. So just on the growth side, right, like what we've done with the Airbus deal and what these other deals that we're looking at is give ourselves optionality at the end of the day. So we -- we're going to bring things down in the medium term, the 10% to 12%, but it doesn't mean that we're limited at 12%. We're still a growth stock. We're still a growth company. We're not afraid of growth. And we have 58 aircraft or so redelivering between fiscal year '27 and fiscal year '29. Most of those aircraft have extension options in them.

And so if we see that there's more demand, we can exercise those extension options and capture that demand. So I want to make sure that we're not somehow thinking that we're constrained. We have optionality. That's what we've effectively negotiated for ourselves versus before we were committed to delivering -- deploying that growth. But in terms of fiscal year ' 27, I think it's still going to be a very challenging ASK and seat growth environment, closer to 20% still as we -- at least in the near term. And that's something that we're going to have to manage through in terms of the deployment of all that.

It's -- it will probably end up having an impact on utilization. It will also force us to be more measured. But I think with the changes that we're doing around the network and the market share that we want to develop, it is, again, an investment. But I don't think it will have as adverse of an impact on costs as you might be thinking in terms of where you're going with this question. So looking at the cost side in fiscal year '27, we're not guiding. It's far too early to say. But I would say that the worst is behind us because we're still -- that growth will help us at the end of the day in terms of the costs.

We think that the changes that we're making to the airport side, in particular, right, hard real changes will bring down the cost side of that. So I think that -- so looking at our cost structure, you'll see depreciation probably be the biggest benefit because we start to flush out some of these ceos if we don't extend them. And you're going to start to see -- you'll see maintenance still be one of the ones that see the most pressure because of the heightened activity associated with redelivering and the aging of the fleet. Everything else, I would not expect there to be any challenge in terms of bringing costs -- keeping costs flat or down, okay? So I think that overall, the cost creep is where we are now and you start to see improvement after that in fiscal year '27.

I would just add one more perspective. I mean, none of our plans at the moment contemplate Ukraine. So Ukraine is kind of an outside chance for the business. If things turn in Ukraine, all of a sudden, discussion will be a change fairly fundamentally from our perspective. Because we would be looking at ourselves as a genuine kind of first mover to the Ukrainian market, and we would definitely go to market as a hometown airline for Ukraine. Don't forget that we were the largest non-Ukrainian airline in Ukraine prior to the Board with operating basis. So we would be looking at reinstating that presence. I mean, obviously, that would be through a transitionary period. But in terms of ambition, we would certainly go to Ukraine for market leadership.

It's James Hollins from BNP Paribas. A couple of strategic ones, Jozsef. Maybe just run us through a bit more on the Western European strategy. Are we back to where we were when you listed 10 years ago? It's all about CEE? Obviously, Vienna was very specific on taxes. Or if it's easier, maybe sort of quantify how you're apportioning the 10% to 12% growth, how much is CEE, how much is Western Europe? Which leads us on to Abu Dhabi, which obviously you've closed as a base. Are you still going to fly quite a bit into Abu Dhabi? Was the demand actually there that you still see it as not a base, but somewhere you still want, so you still see enough demand?

And then, Ian, I hate to be that person in the room, but maybe just help us on the other costs for the full year on sale and leasebacks and compensation, which we should be thinking about to get us or get you to around where consensus currently is?

Okay. So with regard to CEE versus Western Europe, I mean, if I look at the picture today, what changed over 10 years is that we added Italy and London to our Central and Eastern European footprint. So it was more before. So we had Vienna, we had Abu Dhabi. You all understand the changes with that regard. But we are very upbeat on both London and Italy. As a matter of fact, looking into market shares next year, early next year, we're going to be the second airline in Italy. And that's quite an achievement given that we are a bit of a latecomer to the market.

Nevertheless, if I take those 2 segments, we are still talking about like 70%-75% of the business being in Central and Eastern Europe, 25%-30% being in Western Europe. So with regard to focus, there is no change on focus. So focus will remain on Central and Eastern Europe. And you see that all these new base openings, adding aircraft on an ongoing basis to our key Central and Eastern European markets will just continue to fuel that strategy. And I don't think that you should be expecting much of a change with that regard. You may guide that we burned our fingers in Abu Dhabi, you're not going to do it again.

Now with regard to flying to Abu Dhabi or the UAE, I think we maintain a few operations there. So where we think it makes commercial sense from a perspective of profitability, we continue to operate to Abu Dhabi. We continue to operate Dubai. We continue to operate Jeddah. That's a U.K. operation. We operate Marina in Saudi. So where it makes commercial sense, where we can make real money, we would continue to operate. But we are not planning on setting up basis or AOCs or anything like that. So I think we will remain somewhat opportunistic with that regard.

So in terms of H2 others performance, I would expect -- you could expect that to increase. So if we were at EUR 0.27 in unit cost benefit in this fiscal half, I would expect that to probably go up like 40%. So there's quite a lot of deliveries happening in that period. And until we inform you otherwise in terms of our financing strategy, our approach is to take advantage of the sale-leaseback market, we think that that's a very efficient way to translate the benefit of our purchase contract into shareholder return. And so there's no change there. That's simply part of how we approach this.

It's Ruairi Cullinane from RBC. Firstly, could you quantify the Abu Dhabi exit costs in the financial year? And secondly, it sounds like H2 RASK is perhaps resilient given the share of immature capacity and the capacity growth. Would you be able to talk about that at all, how that's performing across different markets or on new routes versus existing routes?

So I'll take the first one. On the exit costs, like I said, we don't expect there to be net a detriment in terms of exiting Abu Dhabi, both in terms of a P&L perspective, but also from a cash perspective due to the arrangements that we've concluded with the joint venture partner down there. But I can't specify exactly what those costs are or we're not in a position to.

With regard to H2, RASK, I mean, we have been making a lot of new market investments in Central and Eastern Europe. I mean it still takes time to mature. It's a quicker and faster maturity curve than in Western Europe, let's say, but it still has to mature. So I think the RASK challenge in the current half of the financial year is mainly down to the maturity of new routes. But at the same time, you're going to take the benefit of that in next financial year.

It's Andrew from Barclays. Can I ask around the fleet? Well done on getting down to 11 XLRs. That's a start. What do you do with [indiscernible] Europe, they're only with U.K., but I think you own with U.K., don't you?

Then can I ask a question, I know you're not going to answer, but I'll ask anyway. What's going to be the financial impact of deferring the aircraft? What should we be thinking about the relation pricing? So how will that impact how we should be modeling the CapEx going forward?

And then if I can be greedy and ask a third one, staying on fleet. You seem in a hurry to get rid of the ceos. But whilst you gave us a lot to the neos, the current fuel price, the maintenance burden against the fuel price makes ceos better aircraft than neos at this fuel price. And when you get rid of the ceo, you take a big penalty on the lease return costs. So why did you not go for more aggressive deferrals of new deliveries and keep hold of the ceos for longer?

I will point out, Joe, that Andrew did ask me the second question this morning directly, which I refused to answer. So just to...

Okay. So you put the burden on me. All right. Okay. So let's go through this because I think these are all very important questions. I mean you probably -- I take the second question, which is going to be unanswered probably, but I just want to give perspective to that. You probably appreciate that when negotiations drag for 6 to 9 months, there is essentially one reason for that, and this is commercial. And what does commercial mean for aircraft procurement? This is pricing escalation, nothing more really. I mean that's the essence of the whole thing.

So given that drag, that long-term settlement on that, you should be expecting that it is very favorable to Wizz Air. I cannot tell you more than that, but it is very favorable to Wizz Air. So I'm not sure I would be too much into CapEx with B2B that regard, just kind of take the linear line on what you are seeing at this point in time. So that's a good deal.

So with regard to the XLRs, yes, I see the 11 is not going to be the final number, 11 is what we are taking deliveries of. But for a portion of that, we would be looking at market solutions. So we are not going to put 11 aircraft into Wizz Air U.K. It's going to be less than that. And we will see how we can kind of reconcile the gap with the market with that regard. But please don't ask more questions on this because I'm not going to be able to answer at this stage of the game because there are things happening in the background, but not yet at final closure. So there is still some kind of flexibility when it comes to the XLR matters.

So ceo versus neo, that's a good question, Andrew. And I think the way to think about this, so that this is the way I think about this is that there is a distinct difference between the A320ceo and the A321ceo. So if you take the A321ceo versus the A321neo, given the current fuel price, you can argue that it's a wash. When you look at the economics of the 2 aircraft, it's pretty much a wash. So you have the fuel burn benefit on the neo, but that's offset by the higher capital cost and higher maintenance cost on the ceo. But this is something which can change. I mean, if fuel price comes down significantly, then the ceo start prevailing as an economic concept. If it goes back up again, then the neo becomes a better aircraft.

But this is given the current maturity of the technology. The moment we get to advantage, we think the equation flips structurally. So there is no more debate on fuel price and who is better, which aircraft is better, ceo or neo, neo at that point will prevail. At the moment, you can argue that actually there is a way to compare the 2. And as we speak today, I would say that the economics of the 2 aircraft are pretty much the same.

Now the A320ceo is a different animal. The A320ceo is 180 seats versus the 239 seats. So no way that we could come to the economics of the A321neo operation with an A320ceo. So if you take the redeliveries of aircraft, I think the right strategy for us is to preserve A321ceos as much as it makes sense, but still continue to get rid of the A320ceo. So we have no appetite for extending A320ceos. I think we will continue to evaluate the A321ceo versus the A321neo. So I don't know if that kind of gives you the answer, but I would definitely make a distinct difference within the ceo line between the A321 and the A320.

Gerald Khoo from Panmure Liberum. Can you talk a bit about how trading is going in the U.K.? Obviously, in base terms, you're losing at Gatwick. I think over the past 6-12 months, there have been some slots that have become available at those relatively slot-constrained airports. And I don't know whether it was an active decision on your part to not go for those slot opportunities or whether you lost out to new entrants. But what's your thoughts in terms of taking opportunities to put more aircraft into the London market, for example?

Yes. Good question. And I think we have an increasingly nuanced view on how best to allocate capacity in London. So first of all, we remain very upbeat of the London market. We are very supportive of the growth and development of Wizz Air U.K. And Wizz Air U.K. is an ever-improving platform. So I mean we are seeing some very impressive financial improvements coming through the operation of the airline. So we remain highly committed and very supportive to the London market.

Having said all of that, I think we have to look at differences between Luton and Gatwick. So the issues we are facing at Luton at the moment is capacity constrained structurally by passenger numbers. I mean that's a policy decision of the shareholders. And secondly, they have some short-term runway improvements that affect the short-term capacity we can put through the system in Luton. But I would say that in Luton, we are very interested in pretty much sucking up everything that becomes available.

Gatwick, I think we have been overly focused on slots, as opposed to performance in the past. And we ended up operating also a slot portfolio that didn't make much sense from a commercial perspective. The slot portfolio became a burden as opposed to an opportunity on the business. Now certain parts of the slot portfolio are very favorable, not only operationally but also commercially. And we remain very committed to operate that portfolio. That's why we are rationalizing capacity allocation between the 2 airports. We focus on proper slots that translate into proper commercial opportunities at Gatwick, and we are pretty much sucking up everything at Luton, which becomes available.

It's Conroy Gaynor from Bloomberg Intelligence. So I just want to touch on labor costs. Ian, you sort of alluded to the fact that maybe we shouldn't expect more cost creep in some of those type of items. And so the way I'm reading that is basically as you increase your capacity, you start to -- GTF issue starts to soften, there's some sort of productivity gain to be had that will offset things like wage inflation. Now -- but how do you -- given that there are so many moving parts, you're coming out of Abu Dhabi, putting capacity in different places, you're still going to have high capacity growth. How do you actually manage that transition and dynamic?

Yes. So I think when it comes to labor cost, I would think of 2 fundamental issues. I would think of nominal inflationary pressure on pay. And I would think of productivity, how much productivity we are able to get out of the labor force what we have. Now if you look at the current situation, we are compromised on productivity. We are compromised because of the volatilities, the operational volatilities we are managing against the backdrop of the GTF groundings.

I mean, simply, you cannot refine your model as such as we used to in the past that you really mathematically kind of figured out how to deliver the highest level of productivity against plannable foreseeable external factors. You are broken on that because we don't know how many engines we will have operationally available. So you have to have a slack. You have to have a slack with that regard. And also because you are losing engines and aircraft today, but you will recover tomorrow, you want to make sure that you actually have a crew, you have the pilot, also you have the cabin crew to operate that engine. So as a result of that, basically, our productivity has been somewhat dented versus where you would want to be ideally.

Now with more predictability and more recovery of the GTF issues, the better we can plan on productivity and the more we can improve on productivity. So I think when it comes to labor cost, the improvements will come through productivity, not nominal inflationary resistance. Whatever the inflationary pressure is, whatever the market does, we have to do it. I mean we don't have a choice. I mean we pay according to market. If the market goes 3%, we go 3%. If the market goes 0%, we go 0%, if it's 10%, it's 10%. So we don't have much choice on that. But I think we have an opportunity to do better on productivity once we are putting more credibility and more predictability across the system when it comes to input issues like GTF and those sort of things.

[Operator Instructions] The first question is from Jarrod Castle at UBS.

Three from me. Just want to get an idea, Jozsef, Ian, how you see capacity growth in the markets you're growing in over the next 2 to 3 years, if you exclude your capacity growth. So I guess, how do you see competition?

Secondly, I don't think you answered it outright, but you've obviously sold 3 planes outright. It sounds like you might try sell some further 321 XLRs. But how many potentially could we see in terms of deliveries being recycled in outright sales?

And then just lastly, on your net debt to EBITDA, nice to see the ratio falling. When do you think we could get back to 2x if you -- when you look at your kind of growth profile and budgeting?

So with regard to the overall market growth and growth of competition, I think in Central and Eastern Europe, the fundamental question is not -- and I know that people like entertaining this tension in the market that to what extent do you think Wizz Air can grow in light of what the other guys are doing, et cetera. But that's not the question. The question is that you can assume reasonably that both of these carriers will continue to grow. But the question is what happens to the rest of the market. And you see very clear trends.

So if you look at our market positions, as I said, now we are moving from 25% to 29% market share. The other guys are at 20%-21%. So basically, every second passenger flying in and out of Central and Eastern Europe is taking either us or the other guys, us more. And that number used to be like 30% a few years back. And I can tell you this number is going to be probably 60%, 70% in a few years down the line. So these 2 airlines will continue to take market shares in Central and Eastern Europe. And you're going to be seeing a lot of the incumbent national carriers or small-scale private carriers diminish in the marketplace. I think this is what you should be expecting.

Will the overall market grow in Central and Eastern Europe? Definitely. I mean Central and Eastern Europe is a lot better place with that regard than Western Europe in terms of GDP development and standard of living is rising relatively higher in Central and Eastern Europe [indiscernible] economic convergence and standard conversions are taking place. And that will produce more discretionary spendings in those markets. So we think that is going to be increasing market demand, and that is going to be diminishing kind of small-scale competition in the marketplace. And I don't really care how much the other guy is growing because I think this is just going to affect more the rest of the marketplace.

And to be honest that phenomenon has been the case over the last 10, 15 years. So there is nothing new here. You can go back to the history of Central and Eastern Europe. You can look at market share evolution. I mean this trend is not new. It's been happening and it's continued to unfold.

So with regard to fleet, to what extent we would be pushing for more outright sales. I think I would consider this as a short-term phenomenon, not as a structural matter. So we don't have plans to sell the aircraft. I mean these aircraft are extremely well-priced aircraft, source of competitive advantage versus other airlines. We need to put that aircraft into work, and we need to make money on the aircraft by operating the aircraft, not by selling the aircraft. But as said, short term, we are under capacity pressure. So this is only a short-term phenomenon.

And yes, I mean, you spotted that the XLR might be a candidate or some of the XLRs might be a candidate. And indeed, when we have news to spread, we will do that. But please don't look at outright aircraft dispossession as a strategy on a structural basis. This is only short term.

Yes. If I could just add to that. I mean, don't forget the inherent value of that order book and what it does for Wizz in terms of the company. That is something that we want to capture. We will capture. And we have different ways to translate that. And so that's not something that we want to impact. So that's still something that I think that the market doesn't quite properly give us credit for.

In terms of your question, Jarrod, in terms of net debt, I'm not going to tell you when we're going to hit 2x. All I can tell you is that that's something that I'm extremely focused on. I think it's extremely good discipline in the business. We want to build a business that we want to work for, other people want to work for, you want to invest in. And to do so, we know that we need to bring the balance sheet into a certain condition. We see a path to get there. The #1 way to do so is to generate operating profits -- that will generate EBITDA. That will then help us offset the -- bring down the ratio, and that's our focus. So it's a target. It will be something that we talk about at the Capital Markets Day. It ties into our fleet plan. But ultimately, profitability is what will drive that ratio, and that's what we're focused on.

The next question is from Stephen Furlong at Davy.

I was wondering, Jozsef, what's the North Star here? Would you think that FY '28 is the more normalized year? Or is it FY '29? And what would you see as the execution risks? I mean, is it the suppliers? Would you describe your relationship with your suppliers, meaning Airbus and particularly Pratt & Whitney, are they good now? I mean, obviously, the challenge of Pratt & Whitney has just been huge for the company.

Look, I mean, it's a good question. I still think that the single biggest risk is around the supply chain, probably more around the OEM side than the immediate airline execution. I think they are improving. But at the same time, I mean, you kind of look at the bigger picture, you see that it is not only Pratt & Whitney customers that are out there with grounded aircraft, but CFM customers are also grounding aircraft. So this is not like one guy is broken and everyone else is doing great. Everyone is broken, if you want to put it that way.

You can debate the magnitude of that, how bad is this guy versus the other one, but there are structural issues. I think there are structural issues with probably too quickly shortcutting technological developments. It was too much of a regulatory ease. So I'm pretty sure that the regulator will kind of toughen up with that regard. You can argue that the industrialization production have not been properly executed, and that will continue to pose risks to the operators, et cetera. So I don't think that this is going to turn any time quickly. I don't know how long this is going to take, but I personally -- what I would expect is that with the introduction of the advantage and kind of the rollout of that at industrial scale, probably we are still seeing a somewhat risky supply chain environment over the course of the next 2 to 3 years.

And you recall when we started grounding at that time, everyone believed that all this powder metal issue is going to hit the industry for up to 18 months. Now this is more like a 5-year cycle. And now this is all compounded with kind of the childhood diseases coming through with premature technology. So this is going to take time. I think what it really means in the industry is that innovation will slow down. The investment cycle for OEMs will lengthen as a result of all these hiccups. I mean just look at how much money Pratt & Whitney has to spend on this recovery. I mean this is going to put burden on the recovery of the investment. So it will just extend that investment cycle.

So I would say that long term, I'm confident that the supply chain is going to fix itself. OEMs will fix themselves. But short term, even I would say, maybe medium term, there are some risks associated with the operation of the OEMs.

The next question is from Alex Paterson at Peel Hunt.

Two questions from me, please. Firstly, the GTF engine, what's your confidence that maintenance costs will be, what you think they will be? Have we actually had enough flying hours to establish, how these behave after the inspections? Is there a risk that actually it turns out to be a bit worse? And then just in terms of your RASK guidance for the second half, again, what's your degree of confidence that you can deploy the 35 deliveries, obviously, net of anything going back? And not -- because you're concentrating the deployments into Central Eastern Europe, Italy and London, is there a risk that actually you diluted a bit worse, a bit more than you're suggesting?

Look, I mean, I will start with the second one first. All these aircraft have been deployed. So they are up for sale. Some of them have started operating. Some of them will start operating during the period. I think we, of course, still have uncertainty around how exactly revenue is going to play out. But I think we are fairly confident in what we are saying. So we are not optimistic in terms of the numbers or the perspective that we are presenting to you.

Is there a potential upside to that? Maybe. But we're going to be on the kind of conservative realistic side of the equation. So I don't think you should be expecting a huge variability to our assumptions at this point in time.

If I could just also add to that, Alex. The number is not 35 deliveries in H2. That 35 is the year-on-year increase in number of neos at the end of Q4 this year versus Q4 last year. So just to make sure that it's that we're using the right data points.

So with regard to the GTF, so the beauty, if there is such, in our case with regard to Pratt & Whitney is that we have a flight hour agreement. So effectively, we put the burden on Pratt & Whitney. Now of course, if there is no engine, there is no engine. So then you have to share the burden. But in terms of maintenance cost, the burden is on Pratt & Whitney. And that's a major difference between how CFM goes to market versus Pratt & Whitney goes to market.

CFM doesn't stand behind the product. So basically, they say, look, we are 75% of the short-haul engine market, we have a very, very established market for purposes of engine maintenance, use the market for our own benefit. Pratt & Whitney is underwriting the performance of the engine. So effectively, we have outsourced the risks, the economic risk on engine maintenance. Now that sounds simple, and this is not as simple as that. But in essence, that's what it is. So if the maintenance costs on the engines turn to be higher than expected or assumed, the burden is going to be on Pratt & Whitney, not on us. But of course, we still need to have the engine available to us to operate and fly.

And the final question is from Gabor Bukta at Concorde.

You may have heard that there are some rumors on the market that Lot may buy Smartwings, which has a significant exposure in the Czech Republic. And you may always see LOT as an efficient company like TAROM in Romania. And if such an acquisition were to happen, would you see any chance to increase your exposure in the Czech Republic? Or how would you look at this kind of transaction?

I think it's a bad idea, but that's not my goal. Look, I mean, in my mind, LOT is an airline losing on the home ground and Smartwings have ever been losing in their homeland. So when you put those 2 together, I mean, what do you expect? I think the competitive environment in Poland is pretty tough for a national carrier. Maybe it's a little more benign in the Czech Republic that can change, especially given these dynamics. But look, I mean, this is really not our business. But I think strategically, probably both airlines will get weaker as a result of this because you are putting weaknesses together, not strengths together.

All right. I think we are done. Well, ladies and gentlemen, thanks for coming. Thank you for your questions. I appreciate your interest. Thank you. Have a good day.

Thank you.