Wizz Air Holdings Plc

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.

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.

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.

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.

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.