Air France-KLM SA (AF) Earnings Call Transcript & Summary

Good morning, and welcome to the Air France-KLM Half year 2026 Results Presentation. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Benjamin Smith, CEO and Steven Zaat, CFO. Please go ahead, sir.

Thank you. Good morning, everyone, and thank you for joining us for Air France-KLM's Second Quarter 2020 Results Presentation. As usual, I'll begin with the strategic and operational highlights of the quarter before handing over to Steven Zaat, our CFO, who will walk you through our financial performance in detail. . I will then return to take your questions together with Steven, Anne Rigail, Air France's CEO; and Marjan Rintel, KLM CEO. As the entire industry, France-KLM continued to operate in a highly volatile environment this quarter that we delivered a strong commercial performance. Good revenues increased Group revenues increased by nearly 10% to EUR 9.3 billion, supported by growth across all our businesses. Passenger demand remained robust with more than 28 million customers traveling on our network during the quarter. As anticipated during our last quarterly update, higher fuel prices weighed on Q2 profitability. Our adjusted operating profit reached EUR 484 million, representing an operating margin of 5.2%. At the same time, we continue to strengthen our financial position, recurring adjusted operating free cash flow reached EUR 920 million for the first half of the year, while our cash at hand grows to more than EUR 10 billion. Fleet renewal remains a central priority to improve our financial and environmental performance while next-generation aircraft now represent 38% of our total fleet, driving both an upgraded customer experience and higher operational efficiency. So we will spend a few minutes on the fuel situation. During the second quarter, following the escalation of the conflict in the Middle East, our fuel bill increased by approximately EUR 900 million compared to last year. However, this remained below the $1.1 billion increase we had initially projected at the start of the quarter. Thanks to our strong commercial performance, coupled with disciplined pricing and cost management, we successfully recaptured approximately 86% of that additional fuel bill. This once again demonstrates the resilience of our business model in an uncertain market. Looking ahead, while the outlook has improved relative to the assumptions we shared in April, we still expect our full year fuel build to be roughly USD 1.9 billion higher than in 2025. This reinforces the absolute necessity of maintaining the pricing agility and cost discipline that have underpinned our performance throughout the first year, first half of the year. So turning to Slide 4. Premiumization continues to be a structural driver of our commercial performance and revenue quality, underpinned by robust global demand for premium travel across all our core markets. Premium cabins now represent 38.5% of our total passenger revenues continue to expand their share within our overall revenue mix. During the first half of the year, revenues in Business and [ Lat Coniel ] grew by 11%, while premium and premium comfort revenues increased by 13% in both cases, significantly outpacing our capacity growth. This positive momentum was widespread across our global network with standard performances in India, Asia and the Americas, I'd also highlight the sustained contribution of high-yield leisure travelers who continue to provide strong structural support to this premium growth trajectory. Turning now to the next slide. Our ongoing ambition is to elevate and inspire our customers at every stage of their journey while continuing strengthening the global appeal of our brands. During the second quarter, Alphos continued to showcase the finance and French hospitality and custody, both on board and the ground in partnership with the Group iota. We launched Paris stopover a new offering that allows passengers connecting in Paris and Paris CDG airport to extend their stay by up to 4 days, providing travelers a seamless curated opportunity to explore the capital and its iconic sites through exclusive partner offerings and reaching their journey before flying onward. At the Cannes Film Festival, the iconic Allos Beach once again elevated our brand presence. While this summer, our pop-up restaurant in [ Mauseis ] bringing our long-haul business cabin dining experience to an entirely new audience and location reaffirming our presence in key French cities. We also further continue to elevate our ground product with Alphas opening a brand-new lounge at London Heathrow Terminal 4 and unveiled an enhanced Lataille to DG Terminal 2E, while Transavia inaugurated its very first lounge at Paris or the Airport Terminal 2, marking a major step forward and elevating the passenger experience across all customer segments. For KLM, the brand reinforced its regional and international visibility through its long-standing partnership with the KLM Open Golf Tournament, one of the Netherlands premier sporting events. On the fleet and operational front, I'm delighted to highlight the future entry into service of KLM's first Airbus A350 alongside KLM being named best cabin service in Europe, a distinction that reflects both the dedication of our crews and the efficiency of our product investments. Loyalty program Flying Blue also achieved exceptional recognition of the renowned Freddie Awards, earning the best program in the World Award for the second consecutive year. Fine Blue also sweat 4 out of 6 awards for the area in Europe and Africa, including best redemption ability. This award in particular, highlights the sophisticated joint work barter our revenue management and flying through teams. Finally, on the sustainability and operational efficiency front, we signed a key 5-year agreement with GE Aerospace for fuel Insight. This extends a state-of-the-art fuel optimization tool across all group airlines allowing us to further refine fuel planning and reduce emissions. Turning now to Slide 6. We continue to pursue our ambition of building a truly pan-European global champion to disciplined consolidation. As you already know, and subject to regulatory approvals, we intend to increase our stake in Scandinavian Airlines system, SAS to 60.5%. We expect this transaction to close by the end of this year further solidify our position in Northern Europe and enhancing the reach of our overall network. Furthermore, yesterday, we submitted a binding offer to acquire a strategic stake of up to 49.9% in TAP Air Portugal. If selected, Lisbon will be positioned at the group's unique hub in Southern Europe significantly expanding our connectivity to key growth markets, particularly South America, Brazil and Africa. This transaction will unlock substantial synergies for both TAP and Air France-KLM, while offering our customers even greater global choice. Both opportunities are fully aligned with our long-term vision and demonstrate our disciplined structured approach to strategic consolidation. And now with that, I'll hand over to Steven, who will walk you through our financial results in more detail.

Thank you, Ben, and good morning, everybody. Let's start maybe with a remark about our new definition of operating profit. We have current operating income before, but we changed already to IFRS 18. So we're not only a leader and innovator in aviation, but even in accounting. . So having said that, let's start with the good news. You see that the unit revenues were up 9%. We guided view that we expected around 60% fuel recapturing and we are now at 85%. That is 1/3 is related to a lower fuel price. There's $200 million lower fuel bill in the second quarter related to the price. But the main part is coming actually from the unit revenue. We had very strong revenue in cargo. We are actually beat our cargo unit revenue with 13% as expected. On the passenger revenue it was 3% higher than what we expected. And also [indiscernible] better. At the same time, we had our unit costs under control. We are still within the guidance between 0% to 2%, and I will explain you later if you don't have all these problems with the spare parts, we would have done even better. But all in all, despite the fact that we have a lower adjusted operating profit, we are quite satisfied with this result for the moment. But there's still a lot of uncertainty in the world. If we go to Page 9, you can see per business segment, how we are performing. So as I said, and I'll come back on that later. The unit revenue is very strong on the passenger side. million but cargo is at 26.7%. So cargo is benefiting from one, the fact that people probably if they need speed, they prefer a plane above a shift given all the circumstances in the site of arms. And of course, there's also the increase of fuel price, which always impacts significantly the unit revenues at the cargo. If we go to Transavia, we increased our capacity with 7%. There was an increase of the fuel bill of EUR 100 million. That could not be fully offset. So we see that only unit revenue is up and you need around 10% to, let's say, to recapture your fee impact. So all in all, I think we could not do that on taste. I think we are not the only in the industry which are seeing that we cannot fully recapture what we have, let's say, in the low-cost market. The good news is that still the unit cost is decreasing with 2.5% for our sales in this quarter. The maintenance, we grew further our revenues. We will further our order book -- but here, we are hampered especially by -- in the [indiscernible] sector because we don't have the spare parts to perform all the shop visits, which we have in our shop. So we have a reduction in result of the ages. It's compensated by a stronger improvement on the component side, especially on KLM Engineering & Maintenance where we did much better than what we did last year. So all in all, the result is more or less flattish compared to last year, but there should be more coming when we have this spare part situation solved in the supply chain. If we then go to Page 10, then I think the good news is to see that K&N, we see the results of back on track. So actually stabilized the result. And we see that Air France was impacted by the higher fuel price, which was partly offset by passenger and cargo unit revenues. We did, of course, deeply the analysis internally about this to carriers. First, KLM is always a better Q2 than Air France. So let's say, if you look the profits of the year was made in the second quarter for KLM, where it's just 35% for Air France. Second, KLM is bigger exposed to Asia, where we benefit a lot from the higher yields in the market. So all in all, that is also one of the reasons that actually KLM puts has a higher fuel recovery than Air France calendar almost at 100% fuel recovery in this quarter. So with that, you see that it's good to see because I should also mention that the cost control is really there and that we see now a reduction of unit cost at KLM. So the back on track is becoming really effective. If we go to Page 11, you see the, let's say, the world map and our business performance on revenues. As I said, very strong performance on the long haul, more than 11% yield increase first in business still doing very strong, as explained also by then 11% in yield, almost 2% in load factor up premium economy, we grew our capacity almost with 8%, but still the pricing is up 9% and then economy is at 6%. You see that North America is still holding strong despite the fact that we increased our capacity by 7% and of course, Asia and Middle East, where we have a yield increase of 20%. The capacity is down, but be aware that it is minus 18%, 18% for the Middle East. And the goal will be are almost, let's say, at 0% capacity. So we grew the rest of Asia at a very attractive yield in this quarter. Then on the short and medium model, you see that we increased our load factor, and we are slightly up in terms of yields. But all in all, it's not enough to actually recapture the increase of our fuel price. So very good news on the long haul. So-so news on the medium mall. And I think Transavia, they increased significantly the capacity they were able to increase also the loan factor that. So the month is there, but the pricing power in this segment is rather difficult, which we also have seen at our competitors. If we then go to the unit cost. So we are up at 1%, which is fully in line with our full year guidance. There is a 0.4% on the premiumization, which we earned back easily to our unit revenues. And it's a bit of a pity that actually the better operations is not completely visible in our results. We had less wet leases, which has a positive impact on our unit cost of 0.6%. Due to all the future renewal we gained in fewer efficiencies. So we should have gained out of the operations. But unfortunately, due to all the problems in the supply can we have higher maintenance costs. And at the same time, we have a lot of leases for engines and portables, which are included in our unit cost. So all in all, that is the bad news on our operations. And at the other side, you see that we are partly compensating the labor price increase by productivity. Then on the cash side. So on the cash side, we did actually better if you look at our recurring adjusted operating free cash flow than last year. Last year, we were around EUR 800 million. We are now above EUR 800 million to EUR 910 million the net debt is more or less flattish despite the fact that we paid EUR 250 million of deferred sales charges and wage tax and we also paid the [indiscernible] We would not have these incidentals, we would actually have reduced the debt. You see that the leverage is down compared to the beginning of the year. So all in all, the net debt is quite stabilizing despite the fact that we still have this let's say, impact of the coverages, which are still running through our cash flow. But that will end from the next year where we will see that we don't have that impact anymore only slightly on KLM, it presents for EUR 200 million on the wage tax till October. Then we go to the balance sheet. So very strong cash event, EUR 10.3 billion, much above our targeted liquidity. We put to senior bonds in the market at very accretive prices. So let's say, around 4%. I think the timing of the last bond was really, really great. If you look where we were in terms of 3D for the form and what happened afterwards. And we also put in place a new multipurpose at facility. We didn't draw that. This is a purpose to draw that. Actually, it is a way to manage the fact that at the first moment, we have to redeem the bonds and to issue renewables. So they have more flexibility and agility during the year so that you don't put a lot of cash on the bank account to secure that you can redeem bond any time. You'll see that we reduced a very expensive sustainable-linked bond, which has a coupon of over 7%. We did that just after the Ukraine war started when we had to repay the pressure in France, you see that we repaid the KLM perpetual, which has a coupon of almost 6% in Swiss fall. And we paid back this week, the hybrid of Apollo with a coupon of 7%. So all in all, you see a balance sheet simplification and reduced tender reduction of our interest cost and that has also been -- let's say, if you look at the center ratings, we were reaffirmed in May and June on our [indiscernible] guiding. Then we go through the outlook. So the biggest chunk is, of course, again, the fuel bill is still very stable and stable so -- we had a EUR 200 million gain in the second quarter compared to our previous guidance in dollars. Q3, you see that we go to EUR 600 million year-over-year, which was EUR 200 million less than what we guided previously, which was EUR 800 million. In Q4, we are still at EUR 500 million. So they didn't change so much for Q4, unfortunately, because we all expected that the fuel price will come down further because of the U.S. elections. If you'll go what we did on the hedging, so we stopped at the end of Q1, our hedging policy. We did still some tactical moves if there was any news coming from the President of the U.S. regarding his view of the world. So every time there was and a drop in the jet fuel price or the oil prices. We acted on it. But in general, we restarted our hedge strategy policy during the peacekeeper in June. So we continue our hedge strategy, but we have a maximum price. So we are -- we don't do it at any price. And if you look where we are for 2027, you see that we are 40% hedged -- at the end of Q1, we were 33% hedged. Usually, we should increase it by 10% per quarter. So actually, we lost around 3% to 4% in our hedging strategy due to the pricing. We stopped all the hedging by the way, for the year 2026 because we have already a portfolio of 67%, which is close to the 70%. And we then go to the booking trends. You see that there is a drop in bookings. So it's minus 2% for the low, minus 2 for the short and medium, but Transavia is at 2%, which is very promising for this quarter. It's always a balance between yield and load factor. We see that there is, in general, a trend of labor bookings. It has probably also to do that ticket prices are higher. So people are waiting and wait that the fuel price comes down, which is not growing as we all expected. So what we see up to the first 4 weeks of July, and I talk about passenger business numbers. We see that the load factor is minus 1%, but at the same time, the yield is that 7%. And everybody can then do the math on the fuel recapturing because it all depends on what the fuel will do, but you can have an order of magnitude. And we still see strong cargo unit revenues not in the 20 ranges, but at least you should expect something with a double-digit number, but at the lowest lower side of a double-digit number. So I think I guide you more than I should actually do. If we go then to the capacity, you see that we are -- of course, we are getting into the year, so we have more visibility of the capacity because half of the year is already behind us. So for the long haul, it is around 2% for the short and medium haul, we are at minus 1% for year-over-year and on 1 half year, we have 8%. So in total, you see that we will go this year 2% to 3%, where we previously guided 2%, 4%, but we all have to see still what will happen in the winter because if you have these very high fuel prices, we probably will act further to reduce capacity. And then on the outlook, so group capacity already explained, 2% to 3% unit cost 0 to plus 2%, whether it's 0.5% coming from the premiumization CapEx below EUR 3 billion and our leverage between EUR 1.5 billion to EUR 2 billion. Before I hand over, I have -- and probably everybody knows already in the news, but Michiel Klinkers is leaving his position. He will become TP Commercial Controlling and alliances in our group entity, and we will have [indiscernible] who is currently responsible for the fleet financing in Air France. I worked with on many years when I was the head of audit -- we will miss Michiel. I think everybody will appreciate his honesty and its transparency. So we really will miss them. I think we had a very bumpy road together the last years from, let's say, the capital increases we did in 2022 up to the moment where we are. So I will whole heartly thank Michiel Klinkers for all his contribution to this company. And with this, I hand over to Ben Smith.

Okay. Thanks, Steven. To conclude, I want to express my sincere gratitude to all Air France-KLM employees for their hard work dedication and resilience throughout this quarter. And together with Marjan and Anne, we thank all our teams who remain on the front lines to run our operations safely intimately through this busy peak season. So thanks for your attention, and we're now happy to take your questions.

[Operator Instructions] The next question comes from Alex Irving from Bernstein.

Two for me, please. First of all, on premium revenues. These keep outgrowing economy despite premium capacity continuing to grow quite quickly. How long in that go on? And what is the risk that as competitors also or investment in their own premium products, the premium yields end up compressing -- the second question is around the recent SAS fleet order. They noted some A330s, but low A350s. I imagine you're likely involved in that decision. Why is there no more 50 order? And is this maybe a place is too large, then now you see SAS playing in the group network structure?

Thanks, Alex. On the premium cabin front, so premium economy cabins business class and first class we continue to retrofit the existing fleet with a higher percentage of premium seats, as you know, and the new aircraft coming in are equipped with the higher percentage of premium seeds as well. So the markets are really strong, especially coming inbound from other countries, in particular, the Americas. The power of the U.S. dollar is quite helpful. And the attractiveness of Harris, in particular, continues to grow. And the Alphonse brand, I think, is the image of the Air France brand, the strength of the brand is reaching I'd say, levels that were not there a few years ago. And because we were starting from a lower base, I think the numbers you're seeing from us are showing much more positively than some of our other competitors. So that's number one. And on the Canadian side, premium comfort was not there. I mean -- we -- KLM was one of the last carriers to introduce it. So here again, a very low base -- we still don't have it on the entire KLM fleet. So this will continue to improve. And as you know, with most airlines premium economy is usually the highest yielding real estate on the airplane.

So that is another, I'd say, element of what you're seeing there?

On the SAS fleet side, we're not directly involved, as you know, because we don't control the company as of today, and we don't manage the company However, the fleet on the fleet side, SAS already has Airbus A350 is more than enough to cover their long-haul network. And on the shorter international flights and shorter -- I mean, you move to 10, 12 hours very efficiently with A330neos. It's a very efficient airplane. We know the airplane quite well. We studied it extensively. We didn't buy it for the Air France-KLM group, but we were fully aware of its strength and for SAS and its geographical position and its growth opportunities. We're very happy that's the aircraft [indiscernible]

The next question comes from Jarrod Castle from UBS.

Three from me, if you don't mind. Obviously, the announcement around TAP, you have touched on it. I think the next stage is the Portuguese government comes back maybe sometime in September. Could you then see a situation where there's a next round of bids and can you give any color how you feel you've differentiated your bid compared to Lufthansa. I mean, a lot of mentioned around Delta, for instance, and MRO, but I'll leave that to you, Ben, I guess. And then secondly, you kind of highlighted, obviously, and you don't spit out cargo profits, but obviously, very good yields. I mean is it fair to assume that profitable let's see in cargo internally is going up quite nicely and there's all the pressure is in the passenger side of the business and looking forward, that's where the pressure is expected to stay. And then lastly, we saw probably 2 weeks ago, the EU changing or proposing to change the rules around the ETS scheme, which will encompass 5,000 kilometers now. I just interested to hear if you've done any math in terms of how much more of your network you think will be impacted by 2029 or potentially even what the additional cost would be for you under the expansion of the scheme.

Okay. Thanks, Jarrod. The top process and how the opportunities government looks at our bid and the other bid we understand has been submitted is we're not in control of that for us to speculate how they're going to move forward. Obviously, when these kind of bids have evolved in the past, they've all done so in different ways. So I mean in the end, we'd like to prevail between now and prevailing. I assume there's going to be lots of different iterations of how the deciding government is going to pick, but I think it's much too early to speculate on that process. What our strengths, which I think are well known by those who follow this file or those who have been following this file. -- is we are not a centralized airline with a much more group. We are much less centralized than our 2 major competitors in Europe. We have a fantastic setup with our 3 major brands, Transavia, KLM and Air France and in particular, KLM, we have a very 21-year history with the first consolidation operation that took place 21 years ago. And we have a head office for KLM in next to skill. We have -- the brand is secure, which was a big concern at the time. It's a similar concern in Portugal. We've invested a lot of money into the KLM brand, and it's paid off. We've maintained the strategic jobs and those people provide a lot of value to the strength of the group, and they are based in Amsterdam. So we have a good balance of talent throughout our network. And this -- I think this bodes well for many parties that are interested in the -- on the tap file. We also -- which is we're surprised that the Portuguese or the TAP Portugal unions have come out they are nervous about what they're seeing with the other bidder. We've had good alignment with our staff on our strategies over the last 8 years. We put a lot of effort into that. And we see a very different result to the east of us. So those, I think, with all stakeholders. Hopefully, it's going to help our bid, and we'll see how things go going forward. On the cargo, I will let Steven touch on this one.

Yes, you can imagine that, of course, this cargo contribution is helping a lot our normal network. So we don't have an integral profitability for cargo, as you know, again, we look for from contribution perspective. Of course, we look at the profits on our full failure. So it helps a lot if you compare that to last year. but we take it into account for the full contribution of our long-haul network on this cargo is indeed quite bringing a lot of value to the profitability.

And on the ECS change, a proposed change. So going up to now the destination up to 5,000 kilometers. There's pluses and minuses. Obviously, it's not going to impact on our biggest competitors. Will level a little bit the playing field. And then we also really welcome the obligation for Member States take at least 50% of EPS revenues to the decarbonization of ETS sectors. So that's a big plus. The money is going towards something that would be good for our business. And we -- I mean, we firmly believe it should be 100% and we also welcome the extension of SAP allowances and the commission's openness to a book and claim system, both of which can support in the scale-up of sustainable aviation fuels. However, we're totally opposed to any additional ETS related costs that would further burden the aviation sector and weaken its ability to finance this on transition. Ensure a global level playing field, and we've been saying this for a while as well as our partners and competitors. We believe the EU must continue working to strengthen COSIA as the global framework applicable to all airlines and not add additional burdens such as this unique European net tax. So to size the additional cost of it, it's a bit early for us I mean, net-net of what benefits we will now get from the lowering of the level playing field, and what that would bring along with this ETS charge increase to come up with the net value delivery for us, we're still calculating what that could be. And here, sorry, [indiscernible]

Yes, Jarrod come back on the cargo. If you want a number because we feel that you should give them a number in my last analyst call. So about EUR 100 million additional contribution.

The next question comes from Stephen Furlong from Davy.

Yes. And I echo comments about Michiel. Thanks for all your help. I'm assuming you're kind of -- just not mentioned, but your medium-term margins and other targets are unchanged. And I presume you kind of model out or make some assumptions about that there's a recovery in your competitor airlines in the Middle East -- that's the first question. And then the second one, just on the merger or the acquisition or the bid for top. Just want to advance in general comments on your view reference SAS where you don't -- where you did have controls and of course, it's only a minority stake in TAP, but are -- you're obviously comfortable enough that you will have a big say in that business going forward. So that would be great.

Stephen, just if you could clarify the second question and it didn't come clearly.

Yes. No. So I was basically then because you're quite -- the bid is only a minority stake. Does that -- and I'd say prevent, I guess, kind of control you'd really like to have with the company or it doesn't really change things.

So let me come back on your question on let's say, on SCS, we have a minority stake, really a minority stake, and we didn't go to a, let's say, the merger process at the EU. So that's totally different for EAP, we talk about a much higher stake. It is up to 49% and we will go through a merger process. So we will have the synergies which we usually have on the network, on the cargo on the MRO, so we can completely work together. And that also is the reason that for SCS, we could implement immediately, let's say, the shareholding, but we could not implement all the synergies. The synergies on the part came due to the fact that they moved from the Star Alliance to the Sky teams, OFC shares and we work together, but we don't work together on the loyalty. We don't work together on network when we don't work together on pricing. So we have a lot of synergies to come from SCS. Again, it is a minority share, but we have, let's say, we can cooperate together with TMB to optimize both companies. Every win a bit, of course, and then there was a question on the Middle East for you?

What was more a comment on the midterm targets. And obviously, you're maintaining greater than 8% margins, but...

Yes, sorry. So let's say, we just come from our strategy session with our board, which we had last month. Of course, we keep our midterm target, otherwise, we should adjust it and tell you. There is, of course, uncertainty where we will be in 2027 because it's very difficult to see what will be the fuel price, et cetera that we still keep our trajectory for 2028. And you can imagine that we are let's say there's a kind of linear line where we are today and where we will end in 2028. So this is the discussions we have with our Board but there's a lot of uncertainties still to for Q4 at the moment. So in that context, it's always difficult to tell it will be the exact number in the met for 2028, we are still adhere to our targets. Thank you.

The next question comes from James Hollins from BNP Paribas.

And Michiel, I never say [indiscernible] but good luck. And then 2 questions, please. Just on the ADP announcement yesterday, maybe just get your broader thoughts, first take on that ADP proposing tariffs of CPI plus 2.1%, 27-34, whether you're comfortable with that, whether you can on challenging it, if you can. . Just had us on your thoughts there. And secondly, Steven, on unit cost ex fuel, up 0.5% Q1 up 1% in Q2, clearly flagged those maintenance costs. Maybe just on us through, I think you were hinting at a few bits, but through how we should be thinking about some of the puts and takes on -- into Q3 and in particular on MRO costs or staffing, et cetera. .

You're trying to get Anne Rigail.

Sorry, it was difficult to find a mic. Yes, you're talking about the [indiscernible] Paris proposed economic regulation agreement, we think in this increasingly competitive market environment that -- it's a strategic priority to strengthen the efficiency of our hub in Paris [indiscernible] You know that we have been working very closely with Aeroports de Paris with Connect France initiative that we launched last year at the Paris Air Show. We support indeed this long-term economic agreement because it provides the visibility that we need to deliver the investments that are required to modernize our airports. And you know that we account for around half of this airport activity. We work with Aeroports de Paris on this investment program to focus on the key priorities, which are the optimization of the passenger and aircraft flows, the simplification of the passenger journey the increasing that is really needed of the number of contact sense and also the acceleration of the decarbonization and the strengthening of the connection with the railway station or the intermodal connectivity. It's clear that the -- it's -- we need to make significant investments. Significant investments have already been made for other areas in Paris, including the full refurbishment of Terminal 1 which now offers 100% contact center and major upgrades to the terminal to AB, CD and OL3. So we've not been developed developing our hub since the opening of the hole that was in 2012. So you see a while ago and have us grown, but with capacity constraints that have emerged with several critical points, particularly on the aircraft parking stance and also the border control facilities that are quite congested. So this proposed investment plan addresses those challenges. So we fully support it.

Steven. Yes. So let's say, the trend on the maintenance costs will continue, that it's going up further, but let's say we still see an increase year-over-year in the same kind of magnitude. . I don't expect that the OEMs get their act together on this area. So we have that in our forecast, but that's still all within the guidance of the 0% to 2%. So if you take out the 0.5, you could say and 1.5%. So we offset that. We have, of course, the fuel efficiency, which you have seen in the second quarter. We still have benefits of the fleet. We have less wet leases especially in the third quarter. So that trend will also continue for the summer. And last but not least, we expect a better operation than we had last year. and that should also contribute to our unit cost and the customer compensation. So the increase of the maintenance will be offset by other operational measures.

The next question comes from Harry Gowers from JPMorgan.