Aegean Airlines S.A. (AEGN) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I am Maria, your Chorus Call operator. Welcome, and thank you for joining the Aegean Airlines Conference Call to present and discuss the first half 2023 financial results. [Operator Instructions] And the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Eftichios Vassilakis, Chairman. Mr. Vassilakis, you may now proceed.

Thank you. Good afternoon, everybody, and welcome to our first semester and second quarter call for '23. Let me first say that we have here in attendance beyond me, our CEO, Mr. Gerogiannis; our CFO, Mr. Kouveliotis; our Treasurer and Executive Board Member, Mr. Dimaraki; and Anthi Katelani, our Investor Relations responsible. So we all welcome you to our call, and we're all here for your questions. Let me start by saying that we think we've published an excellent set of results in more ways than one. Certainly, in terms of the degree of recovery, we used to say versus pre-COVID, but now we should say, degree of expansion because we've gone beyond recovery, I think, in terms of revenue quality, certainly also excellent in terms of managing our cost per unit within a high inflationary environment, both interest rates and costs going up, broadly speaking. Of course, if all these things work, then you end up having a bottom line that's very strong, exceptionally strong, as we have during this quarter, second quarter and the full first semester. And of course, last but not least, an exceptionally strong also set of cash flows, which contribute to having an excellent look in our balance sheet and our cash versus debt and profitability picture. And I think these numbers in all the dimensions compare well both with Aegean's recent and tedious history, but also they compared extremely well with the strong set of results that have been published by our peers that are listed in Europe. And I think that's also a very important metric of relative performance. So an excellent set of results, which I'm happy to share. And to go into more specifics, let me go in sort of a 5-, 7-minute description where I think we are, and then we'll take your questions, and we hope that more will come out of that. And I think now we started to improve the level even, though, the initial disclosure within our press release, so I think allowing more time for questions is probably more important than in the past. So in the second quarter, our revenues went up to EUR 450 million, 37% higher than the equivalent quarter of 2022. In terms of capacity, we put in the market 22% more seats relative to the same quarter of the previous year, but we actually managed to move 28% more passengers. [indiscernible] Q2 2022 was probably the first real normal quarter post-COVID. So in comparison, begin to be quite valid. And the load factor increased from 79% during last year's quarter, second quarter to 82.6%, also an important improvement. As a result of these improvements, the bottom line went up to EUR 51.5 million of net income, up from a net income of EUR 10.8 million in Q2 2022, which means almost 5x the number. Clearly, a very, very strong figure, which comes to complement and also from first quarter and brings a very healthy, healthy as ever, first H1 for Aegean. Please keep in mind that when we compare with others that the seasonality of anybody operating in airline in Greece is, as you know, from past experience significantly more pronounced. So our first Q1 and Q2 are typically not among our strongest quarters. Indeed, Q1 is typically the weakest one. So if we look at the whole of the 6 months, we see that altogether, we managed to increase revenue -- consolidated revenue by 51%, reaching EUR 678 million. And the -- again, the pretax profit went up to EUR 48.7 million in the first 6 months, again, by a loss of EUR 30.6 million of last year. So that's an improvement of basically EUR [ 17.7 ] million in terms of switching from a loss to a profit in the first 6 months. And the net income after taxes went up to EUR 37.1 million against a loss of EUR 27.8 million in the first 6 months of '22. Naturally, also in the first 6 months with the improvement of load factor and a significant increase of ASK relative to the previous year, but an even higher increase of RPK due to the overall load factor improvement, and again, was very material in the first half. Although here, we're contemplating more to the second quarter, of course, which is what you're actually looking at today since you already had Q1. What's also very important to recognize other than revenue, passengers, growth and bottom line is that there was a very significant and positive development in the cash flow. We did indeed repay the remainder of the COVID acquired loans, which were EUR 68 million, down to EUR 68 million. Remember, initially, totality of loans we took from commercial banks during the COVID crisis was EUR 270 million in reserves. Part of that was paid down in '21, part of it in '22. And from the EUR 270 million, there was a EUR 68 million number left at the beginning of the year, which was paid back during Q1, so during H1. Aside from that, the EUR 68 million capital repayment, we had basically another EUR 55 million of new CapEx. And on top of that, we did make 2 significant exclusive listing decisions or actions, if you like. We paid an outstanding loan for 2020 vintage 321neo, and we also purchased an additional 320neo for the first time only with cash. That was a total of another $70 million of outlay. As a result, significantly short between the EUR 68 million repaid, the EUR 55 million will be other CapEx and the EUR 70 million here, that makes a very significant investment or repayment. And at the same time, we managed to increase our cash and cash equivalents between December and June by EUR 200 million. So as we understand by a net EUR 200 million. So that means, in fact, a very strong cash flow performance in the first 6 months. Of course, that entails partially the presale of summer revenues, we know that to mitigate every year. So any comparison you can make with the past is quite valid. We stand now at the highest level of cash availability that we've had in our company historically. And we also have an excellent metric in terms of debt coverage. So if we look at our trailing 12-month EBITDA versus our net debt, we have a ratio of effectively 1, if I'm not mistaken, and that's the lowest we've had since basically we've started accounting for our leases in the debt structure. Before that, if you recall and see, of course, without the leases, we are a net cash company with the cash significantly in the non-lease debt, but including the debt we have -- including the lease debt we have in that number, which is around EUR 380 million now, which is basically at the same level as our trailing 12-month EBITDA. So a very excellent result also on cash flow, and I would say, balance sheet structure. A couple of things additionally to update you on. Up till now, we have indeed taken delivery of 9 aircraft, new aircraft this year. We have reached a total of 28 aircraft in the -- of the neo family, 320 and 321. So we're right about a little bit further than half of our overall delivery having been executed to us, our overall order. So that's gradually contributing to improving our fuel efficiency, cost structure, range for some of the aircraft, and of course, overall cost. Again, of course, an inflationary environment. We have -- in terms of staff levels, exceeded our 2019 numbers. We stand in the middle of the summer at around 3,500 people. Even though part of the excess -- the biggest part of the excess is partially because of the growth of the operating crews, pilots and cabin, a part of it also has to do with the buildup of our capacity of technical employees for our -- which are effectively, to some extent, trainees, to some extent, experience staff as we're growing to develop the capacity for the MRO, which is gearing up to begin at the end of -- at the beginning of next year, but we'll have effective material operations out of '25. And in terms of network, I would like to highlight that it's been, again, a year where we've done -- actually, we've added 16 new routes in our scheduled activity, reaching a total of 161 destinations out of Greece, highest number of carriers Greece have ever served, and I think contributing greatly both to the operation of our hub in Athens and commercial operation of our hub in Athens, but also, of course, building our competitiveness and relevance vis-a-vis other people investing in our country. And as we've discussed in previous calls, the recovery of Greece, the strength of tourism in Greece, post-COVID have led to many major carriers having significantly higher capacity to Greece than before COVID. That's still there. And so I'm very happy to report that also -- in terms of market share, this year, we see ourselves growing our share overall in Greece, and more specifically in Athens, Thessaloniki, where more or most of our efforts are actually concentrated out of. So we're gaining back market share as well despite the significant investment of our peers towards our growing leisure market. I think we spent many years talking about leisure. It's important to know by incoming leisure. It's important to note that we are beginning to see a growth of travel by Greeks that actually exceeds in terms of pace, the growth of the travel of people coming into Greece. Please do not take me wrong. That does not mean there are more Greeks traveling with us than there are or coming to Greece, of course, than there are incoming leisure or tourism, but it means that the pace that the 2 different groups are growing in terms of the travel is recovering fast and now for Greeks because their economic situation, their levels of employment, their levels of salaries are beginning to recover at a faster pace after a very long weak dormant period, which, of course, was the effect of the Greek financial crisis from 2009 or '10 to 2017 or '18. So that's a very, very important picture for us. And we hope that this is going to be part of what we need to extend the season and be able to be somewhat more efficiently growing our aircraft and our people and gradually be able to mitigate the traditional weakness of some of our winter and early year quarters. Last thing I want to say before I turn it over to your questions is that I mentioned earlier, we -- I think we rank well against the results of other carriers that we have seen being published. And indeed, we see that when we compare ourselves in terms of how we've grown relative to last year, which we ranked relatively high, how we've grown relative to 2019, where we see that we are effectively the only nonlocal career that seems to be higher in terms of passengers in ASK in the first 6 months of the year relative to where we were in 2019. But also more importantly, in 2 more areas in how the evolution of our cost base per unit compared versus the year before relative to others, and how the evolution -- how the overall standing all of our profitability in terms of EBITDA or EBIT as a percentage of revenue compares with our listed peers that have published their first 6 months of results. And it is very, very [ extend, indeed ] very well among the highest positions, and this is quite important, especially during the first 6 months of the year when we have significantly higher seasonality and more pronounced weakness typically in those 6 months relative to the full year. So I think, indeed, a set of excellent results and a summer that, as we written, is progressing well relative to last year. So there's nothing right now that shows a reversal of any of the trends we've seen. Naturally, the degree of growth relative to the year before will be slower as we've indicated in the third and the fourth quarter. We've indicated indeed in our press release that we expect the offered capacity to increase by 10% in Q3 and by 16% in Q4. And we've also indicated that we expect to have around about the same revenue per flight or revenue per ASK quality in the third quarter as we did last year because it was already very high. However, we will have, as I mentioned earlier, a higher level of operation, this should lead to our benefit. I would like to stop here and start taking your questions or either I or any of my colleagues here and help you understand how we stand. Thank you very much.

[Operator Instructions] The first question is from the line of Memisoglu Osman with Ambrosia Capital.

Wanted to touch upon the yield outlook. In the press release, there is some commentary. You've had a very interesting 5% growth in the second quarter. And just wanted to confirm, you're guiding for pretty much flat unchanged year-over-year yield performance for -- just wanted to see if you want to...

No, no. We are guiding for a flat revenue per ASK or revenue per flight roughly for the Q3, which as you know, is practically almost done. So we've got another 20 days to go in September. So we know at least the revenue quality that we're looking for, for that quarter. So this quarter, Q3, will have a higher ASP by 10% and roughly the same level of revenue per ASK on a quarterly basis as last year. So that will add to whatever the first 2 quarters are and produce whatever average comes out of that in terms of revenue per ASK or anything else. For the fourth quarter, of course, it's too early to tell other than diving on what our capacity will be, which will be 15% higher in Q4 relative to last year in terms of ASK.

And the reason the yield growth coming down from plus 5% to 0% is mainly a base effect. Is that the right takeaway? Or are you seeing an...?

Comparison basis, I mean, the last summer -- the peak of the summer last year was very strong. The difference is, we now have a bigger activity with an equally strong, let's say, quality of revenue, gaining a little bit of load factor here, gaining a little bit of fare there, losing a little bit of fare there. But overall, maintaining, as I said, the same revenue quality and revenue quality can be discussed either in revenue per flight or revenue per ASK for Q3 because the benchmark is now extremely high. The activity is bigger. And of course, summer months are very profitable, so that should have a positive effect. But we cannot expect yield or revenue per ASK numbers to continue to rise on a quarterly basis relative to last year's basis, relative to 2019, of course, they are significantly higher. So yes, no, we've said it before, actually, even in the general assembly, we already have guidance, but Q3 would have similar revenue quality per flight as Q3 2022.

Understood. And if I could ask on the cost outlook? Do you see any changes on a unit cost basis still in the second half? Or should we expect a similar trend that we've seen?

I would expect a similar trend. I don't expect something tremendously different except to say the following: the delta in the second quarter this year to last year was very high in the employee benefits because in last year -- in the last year, up until the beginning of May, there were some government programs, COVID support programs, so people that were staying, partially returning or partially not fully working and there was some compensation for them, which relieved the company. And therefore, that increase was higher in Q2 versus last year. We definitely don't expect the same trend per ASK on that aspect. But on everything else, I don't think there's something drastic change in Q3 to Q2. Now, having said that, I think we have dealt extremely well with the evolution of the compensation of our employees. We have returned some variable pay that was taken away during COVID. We have provided for the inflation-led makeup and more than that for a lot of the categories that people employed in the company. And we have reconstituted our bonus structures, which worked very well for last year, and we're expecting to work even better for this year. So I think we have a growing number of organic staff, especially in the context and in the other key operational and commercial and financial areas of the company, which are highly motivated and in the same boat with the company in terms of the direction we're going and sharing the benefits from this performance. But I also think we're doing quite well in managing our overall cost there along with everything else. Basically, what's protecting us is the gradual introduction of more new aircraft. And what's hurting us is many things, including, of course, what we see is increases in the airport charges all around Europe, increases the handling charges all around Europe, higher cost of capital, which is incapable when you are accepting -- taking delivery of new aircraft, no matter how you finance them, the interest rates, the dollar or the euro has a significant effect. And all this is, to some degree, countermanded by the percent of neos in our overall flying, which due to fuel efficiency and due to lower maintenance to take away some of that benefit. We managed to get to a very good result, I think, in H1, which was actually a reduction by 2% if memory serves on the cost per ASK excluding fuel, but was also supported by the -- of course, the utilization of the fleet in the first half of this year relative to the last, so I wouldn't necessarily expect the same thing in the quarter 3. But I think we're very much in control and significantly better than the average I've seen in the listed company results in unit cost evolution. So forgive me if we're not being super precise, but after all the volatility we see in things, including fuel, has to make us a little bit circumspect. And the dollar also has -- the dollar euro has significant volatility as well. So we are partially hedged in both around 60%, I believe, in the fuel until the end of the year, and around about the same amount, a little bit less for the dollar. But still, there is a space for effect by the movement of these 2 elements.

[Operator Instructions] The next question is from the line of Svyrou Natalia with Eurobank Equities.

Yes. Congratulations on the very good results. I was wondering now that you said about fuel hedging, if you have also started hedging at all for 2024 on fuel and maybe the dollar. And I was also trying to see about the capacity you said in Q3 and Q4 that you're adding 10% and 15%. Do you have an indication how peers are they -- are going? Are they going to have less capacity as we're approaching the winter months? And all the new destinations added in the summer period probably won't be there for the -- except for the big hubs like Athens and Thessaloniki mostly. Do you have something to share with us on that?

I'll start. I mean, obviously, you can never take away the seasonality of how capacity develop in Greece. I mean, when we say, of course, that we are higher in the Q3 versus last year and Q4 versus last year, always comparing the same quarter to adjust for seasonality. So obviously, to Greece, overall, Q4 is always significantly lower than Q3 in actual capacity and competitive capacity. We know that what is left in Q4, as you correctly said, is capacity to Athens and Thessaloniki. Now, what is happening in the winter is I believe what typically happens when things are going quite well is that there is an increase in the winter from competitive capacity to Greece, in Athens and Thessaloniki, but pretty much at the level that we will be having as well. So if I want to compare to 2022, and I look at the October to December, published capacity of scheduled tariffs to Athens and Thessaloniki I think just around 15% would be the average put by competitive carriers in the market. So obviously, it's in no way uniform across what individual carriers do, some are at the same level, some at lower level, some at higher levels. But we consider that to be not insignificant, but also not excessive given the demand and the stretching of the season, particularly for Athens that we have tended to see in the last few years. What might make more of a difference because typically the summer effect carryover until mid-November. So you have a weak period around 20 November to 10 December and then you have the Christmas around the Christmas break, which again is strong. So the effect to our results by what happens in winter, usually stronger in Q1 of next year. So -- and that's a little bit too early to call in terms of what competitors are doing because there's still a lot of room for adjustments. Everybody has a published schedule, but there's something there. Generally speaking, more capacity in winter than last year, around the same level as we are investing. So our capacity share will pay around constant. Now, you also asked about hedging for next year for fuel and dollar. I believe we have bid around 1/4 of our needs for fuel and around 50% of our needs for dollars already for next year. The current hedging of what we've done is a little bit at a lower level by 15%, 13% in terms of unit rate rather than what we were hedged in 2023. But since the fuel has recovered, I think gradually, as we build our position in the space where it is, probably our hedging levels will approximate gradually those we had this year. Now, that's a little bit looking forward. But if things stay as they are, then probably our hedging at unit levels will not be lower than what it was this year. Although what we've already bought is lower than what we had this year by about 13%.

The next question is from the line of Kumar Achal with HSBC.

And well done on the very strong results. I'm so sorry for joining late and kindly excuse me if my question has already been discussed. But I mean, first of all, I wanted to understand about the cost pressure building up. And so in that regard, I think Fraport says that they're going to increase the airport charges by 9%, 10% or maybe slightly higher in 14 Greek airports. So just want to understand, do you have any say in that? Or is it like you cannot do anything about it? And if Fraport increase the airport charges by so much, do you think it could discourage the low-cost airlines likes of Ryanair to remove some of the capacity. So how do you see that situation? And then how -- I mean, would that really benefit you guys if [indiscernible] are being discouraged by this so much of airport charges increase?

Okay. So I'll try to answer that, Kumar. It's not an exact science in answering that. First of all, I don't think this -- there are essentially 2 elements in the charges of an airport, one are per flight charges and the other are per passenger charges. I think if memory serves, the around about overall increase for Fraport was around 10% for the summer, but it was biased towards per flight charges, which had a higher increase, whereas they did not make or made a very small increase on the per passenger charges. Now, of course, the per passenger charges are not part of unit cost because they are a pass-through number. Therefore, what affects unit cost because it's not a pass-through number, charged on the biggest platform to the customer is only the per flight charges. And there, indeed, the increase might have been higher, but the overall effect to the passenger, which is what contributes to the elasticity of demand and determined together with our fares and our competition there, how many people we have is not as strong as that. Now, at the same time, because we did make a reasonably big deal about it and because I think some other people reacted as well, they did come back with a reduced set of charges for the winter period, partially not fully offsetting this effect. Can we block any effort from increasing its charges? It is inexact science. Each airport has a different concession agreement, they have different possibilities within our agreement. We would like to think that they do take into account what we say. But of course, at the same time, airports, airlines, everybody, even banks do like their pockets. So to the degree the concession agreement will allow, they will actually take the opportunity to make increases. Everybody will argue that they have cost as well, an airport will say, well, we are financed by a good amount of debt and the cost of the debt has become a lot higher. And so they base some of the increases on that. It's not untrue. It's also true that we are all interested in maintaining a high number of passengers, and so we should be very mindful of that. Do I think it's going to discourage local carriers from flying in Greece? Unfortunately, not, although I'm sure that many local carriers would actually say that. I think that the demand is more important than airport charges. And unfortunately, airport charges are not going up only in Greece. They are going up for different reasons. You can call it, there are environmental surcharges, there are inflation-related charges and many other restrictions on top of CO2 charges that are higher all around Europe. So I think the debate around that is open, but the overall effect, I think, is clear and it's definitely going in the wrong way. I don't expect Greece to fare any worse than the average of Europe, though. I have to be clear on that. I think because of the significance of travel and [indiscernible] here because of -- well, the relative weakness of local incomes as well relative to some other European countries, I think airports, authorities, everybody will be a little bit more circumspect from making wild moves like they have been taking, especially in the passenger charges in many European airports.

Right. Fair enough. And then when you said, of course, I think the costs are rising in all the airports across Europe. I mean, that's correct. And so how do you see the overall unit cost, overall ex-fuel unit cost for G&A line in rest of the -- during rest of the year or the second half, and then, of course, 2024, given that, of course, I understand that you're getting more fuel-efficient aircraft, all that is fine. But then, of course, the inflation is hurting and instead of sort of increasing employee cost, increasing all the vendor-related costs and moreover, the airport charges. How do you see -- how should we expect unit cost in the second half of this year and the next year, please?

Well, again, I will give you a guarded response on that. For this year, I don't expect any significant -- I already responded a little bit before you joined. I don't expect the trends that you see to be materially different between quarters on a unit cost basis, except to the degree, of course, that the dollar and the fuel will cause. Now, looking into '24, a lot will depend on how effective we are also in increasing our utilization. Our utilization this year, of course, is better than '22, but it's not better than '19 on a per aircraft basis. And there are several reasons for that. Some of that has to do with difficulties in operation that we face across airports in Europe regarding air traffic control, regarding staff shortages, which requires to give a higher back up. Some of it has to do with difficulties in anticipating when engines might return from MROs and needing to keep more aircraft in reserve to address that or specific engine problems that have appeared with the GTF engine of Pratt. Therefore, there are issues that affect utilization this year. Next year, we are going to try to make an effort in some of these areas with the planning of the network and the emphasis in routes that can give us more -- lower degree of seasonality, particularly around Athens and Thessaloniki to mitigate that and to have that along the high utilization, along with the, again, higher percentage of new aircraft be the second, I would say, mitigant in what's happening on cost. Now, having said that, I don't think it is prudent to expect that we will not have a low single-digit increase in ex-fuel cost by, let's say, 2% or 3% going forward for the next 12 to 18 months. And that's as close as I can cut it. Please forgive me if I cannot be too accurate because the degree to which we can address utilization depends on some planning issues, but it also depends on how demand it felt evolves because, of course, flying more in winter and flying more in early summer in all routes make sense so long as you can cover essentially the slight variable cost. So we will have to test that and see how it works out. So one thing is for sure, you should definitely expect more effort to increase capacity in winter than increase capacity in summer. Next year, we'll not be increasing our fleet so much in total numbers, partially because of some late deliveries. We expect to have something between a 7% and 9% increase of ASKs for the whole year, but that's going to be biased towards the beginning and the end of the year, [ less us speak ] in order to try to get to this higher utilization figure, which will also protect, to some degree, our cost per ASK. What I am pretty confident enough, again, looking at the comparison of how we fare versus others in this area, now basically everybody that published our numbers, I feel very comfortable because we rate very well on these trends. And I don't see why the relative will change even if the absolute is not so easy to predict.

Right. And sorry, just one clarification actually. So you mentioned that unit cost ex fuel unit cost should not change much from the first half.

No, no. [indiscernible]. I think what you should keep all of you so that we avoid misunderstanding. Let's say that if we take a bet now what you will see from H2 '23 until the end of '24 has an expectation of unit cost, excluding fuel, is an increase of 2% to 3% quarter -- relative to the equivalent quarter, 1 year back. This is what we -- this is how we expect things to be. Right now, it could be little bit better or a little bit worse, depending on utilization primarily and a few other figures.

That's quite interesting because, I guess, if you're talking about that 2% to 3%, that means the second half, the unit cost -- ex unit cost in absolute terms could be lower than the first half because you had -- if I'm not wrong, you had some furlough benefits last year, which are no more there. So basically, in terms of base effect, if you are saying 2% to 3% increase, that means, in absolute terms, your second half.

May I advise that you continue this conversation with Stella and Anthi off-line early tomorrow or Monday as it is convenient for you. I want to make sure that by continuing to answer your questions, we do not make any misleading statements to you or to any other.

Absolutely. No, that makes sense. My next question was about -- I just want to understand about your CapEx plan. So now in today's results, you mentioned that you bought 1 aircraft. So in terms of buying, I mean, do you have plans to buy more aircraft? Or is it the only one which you planned? So how should we think your strategy around buying versus leasing going forward, please?

Yes. I think what we have indicated is that we'd like to end up owning around -- I would say, around 15 to 18 of our neo fleet eventually. So by the end of '28, which appears to be today based on some extended delivery take to come back to the aircraft for different reasons, we would expect to own a total of 15 to 18 aircraft out of the [ 15 ] neos and to have the rest leased. Now, saying the word owning in itself it has 2 different possible interpretations. One is that you get -- you can own an aircraft ultimately, by doing a full financial lease of 100% financing. You can own it by getting, we say, classic debt and equity mix, so let's say, 20%, 25% upfront by the company and 70%, 75% by the bank or you can make an exceptional move like we did for these 2 aircraft, where we actually, in one case, fully repaid existing debt. In the other case, purchased one without any equity -- sorry, without any debt. The reason that we did that is to achieve -- we have been all very conservative due to the COVID situation in terms of arriving to that mix that we were aiming to do when we started to take delivery. So we needed to catch up a little bit. And basically, by doing a situation where owning aircraft was translated to having no debt behind them, it became a way to protect ourselves against let's say, further interest cost and further escalation a little bit quicker than if we waited to structure a higher number of aircraft with portions of equity and debt. Therefore, this is why this was done. That would, of course, the excellent cash flows that we have. You shouldn't take it to mean that for the -- another 12 or 14 or 15 neos, that will mean that we will actually dispense a total of 100% equity to acquire them, the expectation would be that we would use a mix of that equity. So that's there. However, the higher you see inflation and the higher you see interest rates, certainly, we want to have ownership because the average cost of an aircraft goes up pretty high now year-on-year, number one. Then number 2, avoiding interest cost has a higher effect than it did before the crisis. So I wouldn't be surprised if you found EUR 150 million or EUR 200 million of our own money actually being in aircraft by the end of 2025 in -- on the new aircraft. So that would mean we would extend probably another EUR 100 million from what we've already spent on the neos in terms of equity. But don't forget also that our PDPs [indiscernible] paying down until that time. So part of this equity will come from the return of the PDPs. I don't know, again, hope I have not confused you. Let's not also forget that in 2023 and 2024, in aggregate, we expect to dispense around EUR 80 million in the 2 years, should be around EUR 55 million and EUR 25 million between '23 and '24 in the investments in other equipment or refurbishment and reconstruction for payments for the concession for the new MRO and simulator facility. So that's an important CapEx outlay as well for '23 and '24. Some of it has taken place already. Some of it is in front of us.

Okay. With sincere apology if you allow me, I have last 2 questions, and I promise after that, I'll shut up. So just one question on the winter this year. Of course, last year, winter -- last winter was exceptionally strong where you reported the profit, but of course, coming to this winter, the cost pressure is there. And then, of course, the base impact will be there. So how do you see the coming winter? I mean, do you think another profitable winter this year? How do you see that? And my second question is about 2024. I know the visibility is low so far. But then if you speak to any of the European airlines, I think the confidence is a bit low, not as high as it was in 2023 in terms of trading because the fuel price again is going up, the cost pressure is there, and then the yields could come down, the demand is still uncertain, and there are no further drivers. I mean, of course, in 2023, we had a lot of pent-up demand. So how do you see 2024 trading? I mean, do you think 2023 could turn out to be this peak and then we could see some drop from here on in terms of profitability? So what are your thoughts on 2024, please?

I don't want to be -- I think the way you've described the move across airlines is a prudent way to say that, listen, we are in an inflation environment and a high interest environment. Eventually, this is going to hurt consumers, even affecting leisure, to some degree, which has been resilient. Against that, there are only 2 mitigants in the case of, again, first, the fact that the starting days of the Greek consumer, not the incoming leisure, is significantly lower than the Europeans because we had huge prices increase between 2010, 2009, and 2018. Therefore, we are beginning to see a recovery, and I said it earlier, I believe before you joined the call, we're beginning to see a recovery that drives consumer spending in Greece that follows a different path than the one that the Europeans are. So I expect the blend between incoming and outgoing to be a little bit different in supported Aegean to some degree. And at the same time, we are one of the airlines that is undergoing a more radical fees renewal, so that would continue to help. But other than these 2 issues, all the other issues that you have mentioned are valid. How they will plan to come out in the end? I don't know. And I think it's far too early to tell. And we should not take the risk of making such forward predictive statements. After all, Kumar, I think you will recognize that this is the first year we have even made a prediction about this year's results to some degree. So don't push us to extend our predictive horizon to 18 months forward because we can't do that. Now, is the winter going to be better or worse than last year? You said that all. We have -- our expectation is that the likelihood is that it will not be as good, but the effect that this will have in the overall year this year is not very significant, considering where the whole year is heading and what the numbers will be by the end of September and even I believe the strength of October and early November at least. So I'm not too worried about the delta that might come from Q4 because I don't think it's going to be that significant. Your questions about 2024 are more valid. And I have tried to answer to what degree we've got elements here in Greece for within Aegean that make it somewhat better, but it doesn't change the overall trend.

[Operator Instructions] The next question is from the line of Caithaml Jakub with Wood & Co.

This is Jakub from Wood. Congratulations on the results. Just 3 quick from my side on the fuel. Could you remind us how much free CO2 to allowances to deliver these?

CO2 or fuel?

No, the carbon allowances.

I don't remember the number by heart. How much we receive in CO2 allowances, Stella?

[indiscernible]

For this year or next year? For this year, basically 50% of what we use is free, 50% of what we usually pay for. Next year, obviously, it will be significantly less than 50% because they start to expire.

Sure. That's clear. And roughly, how much would the unit fuel price for you increase on a per ASK basis, if you had to buy all allowances on the market now?

How much fuel price would increase if we have to buy all allowances in the market? I believe if we have to buy all allowances in the market, [indiscernible]. Yes. I mean, if we have to buy -- so when they all expire, assuming that we have the same level of operation and they have the same unit cost as today, that would add around EUR 85 million, EUR 90 million, EUR 95 million to the cost.

Got it. That's very helpful. And I guess, the effect will be moderated by the modern aircraft.

If you look at in terms of revenues that translate to around 5% more on revenue.

Sure. Lastly, could you remind me if you hedge fuel or oil?

We hedge fuel.

So you are protected from the increases of the spread, which we have seen recently?

We are [ initiated ] and partly protected, yes.

Got it.

The next question is a follow-up question from the line of Memisoglu Osman with Ambrosia Capital.

Just following up on the engine issues. And in general, I'm curious on your thoughts about the supply chain shoes and aircraft availability for you, for the system to seeking your thoughts if you could share.

I don't think I have something super wise to say. It is clear that the supply issues have had a dual effect in the market. One is to increase costs in indirect ways by utilization or reduced speed of induction of more modern, more efficient equipment. And on the other hand, they somewhat mitigate the supply of the market to the market. So in some way, they are protected to excess capacity. Now, going forward, particularly for us, the issue of the GTF engine is not an insignificant one. We've known about this issue for the last 18, 20 months. It evolves as there are different things that come up and we signed up from the manufacturer. Broadly speaking, the news have not been good in the last few months, and this is not new. I'm sure you've heard and seen that in many different presentations or discussions. What is the effect to us? The effect is basically we need to keep more spare aircraft that has a utilization effect. We were super conservative with that this year. I hope we will not need to be more conservative than that next year because we were already very conservative with the amount of spare to cover that possibility, number one. Number 2, we -- it delays the introduction, as I said, of new aircraft in the fleet because Airbus is pushed back in deliveries, and therefore, the speed that we increase the mix of neos in the fleet pushed back. And also, because the aircraft are pushed back, de-escalation works, inflation works, and we end up paying the aircraft at a higher cost. All these issues and some other that are [indiscernible] to address are part of our discussions with our suppliers, Pratt & Whitney. And there have been some serious discussions and there will be some more about how this can be partially mitigated by them or fully one would hope, but it doesn't really happen that way. So certainly, not as smooth as we would like. But there's nothing new that I can add that many of your colleagues have not heard in similar discussions.

Understood. And maybe on a more positive note regarding the network, you've successfully have been expanding it and stage growth?

Don't take me wrong, we are in a very positive mood. I mean, it's not only what we have in the past. It's also what we are experiencing during the base that we are discussing and the stretching of the season, which is a very, very important element here in Greece because if we manage to -- again, managed to convert a couple of extra months on a same basis to profitable months, that is a very substantial addition to potential profitability and also because of [indiscernible] ability to operate more flights in these months, that unit cost over time. So we are in very good mood in terms of what we're facing. But equally, we do recognize that there are positive and negative effects. Now, network, yes, we will continue to grow the network. We just announced -- 2 days ago, our CEO, Dimitrios Gerogiannis, and the Chief Commercial Officer of Emirates announced a very important for us cooperation. We are placing our [indiscernible] in a transatlantic flight for the first time. We are cooperating through that. We're one of the largest and most successful carriers in the world. We have very, very [ less ] concerned, but rather interested to have a high product association with them because we still like to hope that our products reflect some of the quality that their products have. Certainly, that's the way we positioned ourselves in short haul. A lot of our success does not depend only on the total number of people traveling with us, but on the degree to which improve care about selecting us, and that's a very important driver. And that's a lot of what we've been working on, whether it's with our lounges, with our Wi-Fi service, with the improvements of our service and work. But the fact that we remain one of the few companies in Europe, if not the only one, that actually still treats its passengers even in economy to a meal in international flights. So the quality development of what we try to do and how these develop our loyalty structure, our network and the value that we offer our customers and how they respond to that are a very important part of our efforts. And I think a lot of whether we are successful or not in the future will come as a function of how successful we'll be in these things as well as how we'll continue to be able to motivate to train and develop our people who have been always what has distinguished the company versus our competitors [ does not where ] the service comes from, as Mr. Gerogiannis has said many times, more or less, most airlines are at the same plane. There's only 2 kinds. So these things are not things we typically discussed. If memory recalls, we tend to get more granular about numbers and trends in the industry, and it's good because that's what you guys need to be asking. But in effect, what distinguishes airlines is basically, I think, 2 things, how they plan about what they want to do and then basically how well they execute it in terms of delivering value to their customers and collecting value from the customers. And I hope there, we will continue to be as successful as it has been, especially in the last 1.5 years and hopefully more. And up to now, the indications in that direction are positive because I think you will all recognize that there are within the same industry within Europe, within the overall trend that I've been very well inscribed by some of your colleagues in this call, there are great differences in performance and relative performance, both in revenue quality, in cost quality and in actual development in terms of how each company is relative to the way it was before COVID, which distinguishes the standing and the level of each company and what affects the last 4 years have had 2 different companies. And I'm happy to say that I think we're one of the very few companies that is higher in all aspects than we were before COVID. So I feel quite confident about our performance, always within the context of the overall industry.

Understood. And maybe if I can follow up on one of your earlier comments regarding the Greek consumers flying more, if I understood that correctly. Are there any numbers, let's say, I mean, what percent of your international passengers were Greek outgoing passengers last year in H1 versus H1 of '23?

The only thing I can tell you that will help you on that is that the data from the Bank of Greece for the first 6 months of the year, I think, indicated the 19% increase in the spending of people travel to Greece and [indiscernible] and please don't conclude. And a 28% of increase in the spending of people flying out of Greece. That shows that there is a particular dynamic [indiscernible] out of Greece, but that does not give you how these numbers reflect. And again, there is a certain average of the whole market as statistically measured by the Bank of Greece to indicate that actually, that part has been revitalized. Again, of course, to the country incoming is more important than not outgoing, there's no doubt, and especially for most of our competitors, incoming is the lifeline. I think, gentlemen and ladies, we have taken enough questions. I would like to thank you all for your attendance. Thank you also many of you have taken the effort -- the additional effort to develop research reports for us. We're happy that we have more reports than we had a year ago, and I would like to thank many of you, but also our own internal people, Anthi and Stella for supporting that process. No matter what to say about that, it's good to have written opinions that are well supported. So we appreciate and we thank you for that. Thank you for attending our call, and we hope next time we meet, things will be equally positive within the context of a changing industry, but at least with always a decent to excellent Aegean performance. So thank you very much, and hope to talk to you soon again. Goodbye.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good evening.