easyJet plc (EZJ) Earnings Call Transcript & Summary

Good morning, everyone, and thanks so much for joining us here. Both of you who are in this room and everybody who's watching this also from the live stream. Obviously, we have to discuss the results of the company in the financial year ending 30 September, 2024. With me here on stage, I have the company for the last time, CFO, Kenton Jarvis, and we are joined here by the phenomenal team here set colleagues as well within the AMB. And also the latest addition, Jan De Raeymaeker, who is the new CFO, who will take over Kenton has left, and I think you're going to address and say a few words to everybody who's been here as well. And obviously, last but not least, also, the company's Chairman, Sir Stephen, who is here today as well. So what we're going to do? We're going to, as usual, talk through the presentation and then give plenty of time for any questions that you may have. And do make use of the opportunity to direct any questions that you feel you want to ask anybody of the team members here at DCT as well. And you should have been sent the slides alongside with the announcement that we did earlier this morning as well. And of course, they're all available also on the corporate website as usual as well. Now having said that, this is clearly also my last presentation to you being CEO of easyJet as well. And I just wanted to say that is what an absolute fantastic privilege it has been and is to lead this company with a phenomenal team of passionate people really across the network as well. And I think also, particularly in the light of the numbers that we're going to talk to you about today in the results we presented this morning. So if you go on to the next slide, it's just a little bit more actually than a year ago that we set out the medium-term targets that we're now progressing towards as well. And basically, with the result that we achieved on PBT of GBP 610 million, which is a 34% profit uplift. And I think actually, when I look through, at least, and I'm sure somebody could contradict me, but I'm not sure that's the case. I think that's an outperformance from any other European airline that we've seen so far this year. And actually, across all the metrics that we set out, and I'm not going to go through details each and every one of them, we have made really, really strong progress on that. And I think when we talk about what is underlying driving that, I think there are 3 main things about that. One is that we beat last year's record performance in the summer this summer. And also, we managed to reduce despite the challenging environment that we saw last winter, the winter losses. We reduced those in the airline and of course, also the ease holidays contribution to the profits with a pretty phenomenal GBP 190 million of profit this year. Those would be the 3 really key levers for that. Now you know that we talk about that we want to be Europe's most loved airline for really 3 stakeholder groups: consumers, customers, shareholders and people. And if I bring out and we've done it here on the right-hand side, some of the things that really speak to each and every one of those stakeholder groups. We can see that from a customer point of view, with the C sets that we have now, the customer satisfaction score is actually one of the highest that we've had in the last 10 years. So I think the last time we were hired this was back in 2014, 2015. So it's been a good year for that, but there's plenty of more things we can do also within this area. When we're looking at the shareholder side, we are now proposing a dividend of 20%. That's a GBP 92 million distribution of these profits to shareholders, up from the 10% that we did last year. And then also for the people who work in this company. We are rated as the #1 airline at Glassdoor here in the U.K., actually not only airline, but actually airline and travel company to work for. and easyJet Holidays is ranked as the best travel company in -- or actually the best company to work for in the big companies category. So however you cut this as well. It's a strong year, strong progress for where we've been. And also, because I heard some competitors coming out here to talk about their leading positions of ESG. That is fake news. We are the undisputed leader when it comes to on the rankings of this, whether you take MSCI, whether you take Sustainalytics or the CDP position as well. So I think when you're looking at this overall strong progress in the year, so I feel also very proud of the fact that what we all achieved here, the company is in a very good state on that. But there are still many more things we can do. And that's what Kenton is going to talk about as well after he has gone through the numbers, which we'll do right now to take us towards that over sustainably making GBP 1 billion of profit for this company going forward. So over to you.

Yes. Before I do the numbers, I just want to say a few words for Johan. There's no present, I've worked with Johan for on and off now for 17 years, which I've really enjoyed doing. And his passion and commitment for work is really kind of infectious, and he also is able to have good humor in kind of some of the difficult times we've had. Johan has steered the company through the 7 years -- over the last 7 years through the pandemic and together with the AMB colleagues, we've set a really clear strategy, which is working for us, and we're all very confident is the right strategy. And I think it's showing that easyJet has emerged a much stronger company than it was before. I think we can now all agree that the introduction of easyJet holidays was a very good idea. I know not everyone in the room thought that might be the case when it was first introduced. It's a brave decision, but it's a fantastic decision. And both Garry and Johan and Garry's team have executed it really well. So it's very exciting for me to take over. We've made great progress, as we'll show you in what is year 1 of delivery against our medium-term targets. But the exciting thing for me is I think there's much more to go for. But I wish you Johan all the very best for your next adventure and all the best success. As Johan said, Jan De Raeymaeker is joining us on January 20. I think every business should have a rainmaker. And I'm very glad to say that ours is here today. So Jan, I don't know if you want to say a few words to introduce yourself.

Thank you, Kenton. So first of all, good morning to everybody. I'm happy to be here today and have the opportunity to meet you all and also get acquainted delivered in my new job as CFO. Now obviously, I'm not officially yet at easyJet. So allow me not to comment anything about the full year results of 2024. I'll leave the honors to Kenton and the team to explain the results because in the end, they made the results. But if you don't mind, I will just give you a small introduction to who I am. So I'm Jan De Raeymaeker. I'm 47 years old. I'm married. I have 3 children. I have the luck to have worked, lived and studied abroad. So I speak 6 languages, which I think an international company as easyJet would definitely be helpful. Over the past almost 6 years, I've been working for Lineas. Lineas is the largest rail freight operator, where we managed an incredible turnaround in a very complex environment and also refinanced need to know that rail sector is 1 of the only liberalized sectors, which is still dominated by heavily subsidized state-owned companies. So there, we managed to turn around and hopefully, the company will be, for the first time in the history, next year, positive results. Before that, I worked for 12 years in the airline sector at Brussels Island, both directly and indirectly. For those who might know the company was merged with Virgin Express, and that also explains why the company has some low-cost DNA and is low. And so I worked there for 6 years as CFO and also there, we managed an important turnaround repositioning the company, both commercially, also from a cost position, reducing costs and also keeping the cost down, which allowed the company to profitably grow over the last years until, unfortunately, in 2016, if I don't recall well, they were the March 22 terror attacks. So spend there almost 12 years. Now happy to be here. And after, I would say, 6 years of Detour coming back to the airline sector, which is a sector once you've worked in the airline sector, you always dream of the airline sector you want to come back. But I think I'm even more delighted to be able to join easyJet because at the time when we were working at Brussels Airlines, we were always using easyJet as a benchmark and also as an aspiration. So being able to work for a company that you have always used as an inspiration, I mean, what better can you dream of. And if you then look at the mission of easyJet making low-cost travel easy Honestly, I mean it's so simple, it's so clear and it's so inspiring. So really happy to be here. And I think, hence, very happy to be here and join Kenton and the team at this moment of easyJet with a very clear strategy with all the opportunities, which are still ahead and hopefully to be able to contribute to the great future. So very happy to be here. Very happy to be here today and meet you all and listening now to Kenton and explanation of the results. Thank you very much.

Thank you, Jan. Thank you. Okay. So let's begin with Slide 4, which outlines the key performance indicators for the full year. Total capacity rose by 8% compared to last year, reaching 100.4 million seats with passenger numbers increasing by 8% as well. Load factor and sector length was flat in the full year. The capacity growth has given us a head start on the 5% CAGR medium-term growth target, which continues to be our aim from 2023 through to 2028. This year, we expect seat capacity growth to be 3% year-on-year, with 9 aircraft deliveries expected from Airbus in full year '25, alongside 3 wet leases that we're intending to do in Italy. These are being sourced from ITA and as we're the proposed short-haul revenue taker for Milan Linate and Rome Fiumicino slots. We will, however, be looking to increase the average sector length by circa 5% next year due to an increase in longer leisure routes as we deploy capacity to where demand and therefore, returns are strongest. This means that ASK capacity will grow around 8%, which will be similar to the ASK growth in full year '24. And this should allow easyJet to continue to drive better winter utilization and expect our already strong summer utilization to be maintained. Due to the sector length increase, we're going to move to providing cost and revenue guidance on an ASK basis. In full year '24, as the sector length was flat, both the per seat and the per ASK metrics are equivalent in their movements. We saw a 2% increase in pricing across the year, with airline revenue per seat of GBP 81.35 and once again, we managed our cost base well and the cost per seat ex fuel was broadly flat year-on-year. EasyJet Holidays continued its strong performance with a profit of GBP 190 million, an increase of 56% year-on-year driven by a customer growth of 36% as well as stronger margins. As a result of this performance, the group's profit before tax was GBP 610 million, an increase of 34% or GBP 155 million year-on-year. Profit per seat increased to 6.08p, an increase of 24%. And we're also very pleased with the ROCE progression to 16%, a 3 percentage point improvement in the year. And our headline earnings per share, it was 61.3p, an increase of 35%. And our medium-term ambition is to take this to 100p per share. So if we move on to the revenue per seat bridge, the airline revenue per seat increased by 2%, both at constant currency and at reported currency, alongside the 8% capacity growth. Demand for our primary network and maturing routes supported the ticket revenue growth with ancillary revenue growth increased by 4% as a result of pricing enhancements from our improved algorithms. Now let's move to the cost per seat bridge on Slide 6. So as I said when I stood here this time last year, our aim was to keep cost per seat ex fuel broadly flat. And I'm pleased to confirm that both cost per seat and CASK ex fuel has only increased 1% year-on-year. This is a good performance, especially in the context of the macro environment and when we compare it to our peers. Airport and ground handling charges saw an increase of 54p due to inflationary pressures and increased labor costs. We actually expect those inflationary cost increases to slow down now in line with the current RPI and CPI movements as the majority of the airports we fly from are regulated. Load factor has some opportunity for growth though. And as a result, we'll proportionately increase airport fees as these are predominantly charged on a per passenger basis. Cost efficiencies will be seen on a cash basis as we spread the cost over longer sectors, which will go some way to offsetting the inflation. Crew costs increased by GBP 62p per seat. We continue to support our crew along with all of our colleagues as they are critical to the successful execution of our strategy. Through the period, we've seen new labor deals being agreed and these have been set to ensure our crew are competitively paid in all our markets. Looking into full year '25, a lower proportion of unions have labor deals expiring compared to the year just gone, but we will be annualizing the pay increases awarded during full year '24. Maintenance costs increased by GBP 19p due to increased inflationary pricing on spare parts and labor. We've now in-sourced all of our U.K. and an increasing proportion of our European line and light base maintenance. And alongside this, up to 1/4 of our heavy maintenance will be in-sourced following the purchase of facility in Malta. This helps give us certainty of supply whilst also generating cost efficiencies, which will partly offset the continued inflationary pressures and rises in costs associated with increased utilization. These cost increases have been broadly offset by a reduction in other costs by GBP 64p and which includes the impact of a reduction in disruption events, modest supplier support and fixed costs being spread over higher flying volumes. We believe there are improvements -- further improvements to be made within disruption and target a further decrease in full year '25. Maintaining cost control in the current environment continues to be our focus. I expect costs to be well controlled throughout the first half of full year with CASK ex fuel expected to reduce slightly year-on-year as we increase productivity and utilization levels. Looking to the full year, we're again focused on doing everything we can to keep CASK ex fuel broadly flat. Moving on to fuel itself. This increased by GBP 19p at constant currency, with rising fuel prices in the first half of the year and a reduction in ETF free allowances, partially being offset by lower CPS in the second half. Based on the hedge position shown on the slide in the appendix and the current spot rate, we expect H1 '25 fuel CASK will improve by circa 10% year-on-year. Our continued fleet modernization and up-gauging journey alongside our favorable hedge fuel prices more than mitigate the impact of free ETS allowances being phased out as well as the increase in the SAF mandate. This fuel tailwind will continue into the summer if forward fuel prices remain where they are helping our total cost position. Let's look at cash flow. During the year, our cash position increased by GBP 536 million, taking our cash to GBP 3.5 billion. We saw an inflow of almost GBP 400 million from financing activities. This was driven by the repayment of a EUR 500 million bond at the start of the year in October and an issuance of an EUR 850 million bond in March, which prefunds the EUR 500 million bond, which matures next year in June '25. In addition to our financing activities, we had a positive generation in cash from operations before dividends and FX of GBP 308 million. This positive cash movement is mainly as a result of operating profit in the year of GBP 1.4 billion. And this inflow exceeds CapEx, which includes lease payments pre-delivery payments and the final delivery payments for 16 new A320neo aircraft that we took in the year. We'll look to build our liquidity reserves ahead of the ramp-up in aircraft deliveries coming in the next few years as we renew the fleet and benefit from up-gauging. We'll also pay a dividend in the period of GBP 34 million for the 2023 financial year. Moving on to Slide 8 and the balance sheet. We continue to hold 1 of the best investment-grade credit ratings in the industry. Standard & Poor at easyJet with BBB and a positive outlook and Moody's rate us BAA2 with a stable outlook. At the end of the year, our net cash position was GBP 181 million, and this compares to a net cash position of GBP 41 million last year. If you remove the IFRS is, our true net cash position will be GBP 1.4 billion. Notable increases have been seen in our unearned revenue due to a higher level of forward bookings. You can also see an increase in our property, plant and equipment driven by an increase in our fleet size to 347 aircraft from 336 aircraft at September '23. On the balance sheet, also worth pointing out is GBP 650 million of ETS allowances, which have been prepurchased ahead of the April surrender date. For calendar year '24, which we've 100% covered and for calendar year '25, which we've already 96% covered. Moving on to our fleet slide. The industry is facing supply constraints with both OEMs struggling to meet their delivery schedules. Our fleet, as you know, is all Airbus A320 family aircraft powered by CFM engines. The orange line shows our current fleet plan for the next 4 years, aiming to grow our fleet to 395 aircraft by full year '28. This is based on our current understanding of likely aircraft deliveries. We have an order book out to 2034 for an additional 299 A320neo family aircraft with a further 100 purchase rights on top of this. These deliveries will drive our upgauging journey and associated cost benefits as we move our current average gauge from 181 to where it is today to the low 190s by 2028, and then into the low 200s by 2033. As shown in the appendix, for every A319 that leaves the fleet, we see circa GBP 10 cost per seat benefit if it's replaced by an A320neo or circa GBP 16 cost per seat benefit if it's replaced by an A321neo. As a group, this will deliver over GBP 3 of unit cost savings, which is one of the pillars to deliver our medium-term targets. This is a unique journey for easyJet as we retire the 82 remaining A319s, which obviously just have 156 fleets. We are working with Airbus to mitigate the impact of the notified delays in deliveries. We've been able to limit the impact to date through the A319 fleet that we have in service. In terms of deliveries, easyJet received all expected 16 aircraft in 2024 and continues to expect all 9 aircraft deliveries this year, and we've had 4 of these already delivered, and we'll get 2 more next month. We expect our gross capital expenditures to rise over the coming years, reflecting our updated expectation for aircraft deliveries. The CapEx increase is also driven by the step-up in predelivery payments in line with our delivery profile, increased investments into spares to ensure operational readiness and maintenance cost growth as the fleet expands. It's important to note that the CapEx shown in the chart is the gross CapEx position and doesn't account for any potential financing options available to us. We currently have 54% of the total fleet in ownership with 79% ownership when it comes to the younger Neo sub fleet. As set out in the capital allocation framework, we're looking to maintain the positions of NEOs we have an ownership at greater than 75% going forward. So assuming we take all the '25 and '26 deliveries into ownership through operational cash flow, then the full year 2017 net CapEx were reduced from GBP 2.3 billion to GBP 1.9 billion if we took 75 of those deliveries into ownership. If, however, we reset the total to 75% at that point in time, then that would further reduce the number to GBP 1.5 billion for the CapEx in that year. If, however, we were to take all the deliveries up to an including full year '27 into ownership through a combination of free cash flow and balance sheet strength and then reset our total Neo ownership back to 75% at that point, that GBP 3.3 billion gross CapEx will become GBP 2.1 billion. We continue -- so that's the position there. So now if we move through to the strategy out there, thanks a lot. As we said, making low-cost travel easy is our purpose. And fundamentally, that was the purpose that easyJet was founded on almost 30 years ago when Stelios set up the company to democratize travel. His purpose was to make travel affordable and easy for everyone to access. And that is really important to us at easyJet, and it's important to me and it's important to the AMB. The 4 strategic focus areas that come across are what we consider and think about every day, and this helps us deliver our ambition of generating GBP 1 billion profit before tax. With the first one, we continue to build our unrivaled European network of #1 and #2 positions in slot-constrained airports. Our improved airline revenue generation alongside the asset-light investment in easyJet holidays, continues to drive improved returns whilst ensuring we are providing customers with the products and the services that they value. And the cost advantage we have over our major competitors in the airports that we operate from means we can be focused on margin generation throughout the network effective, focusing on effective pricing management and ancillaries to drive further revenue. All of this is underpinned by our purpose and ambition to be Europe's most loved airline winning for our customers, shareholders and our people. Spending more time with our -- with my colleagues over the network over the last 3 months has really reinforced my belief that our people and everything that makes a difference at easyJet, our pilots, crew and all other staff consistently go over and beyond and they're central to the customers' experience and our success. Our commitment to supporting our people has been shown by both easyJet and easyJet Holidays being named as the Best Place to Work by Glassdoor and Sunday Times, respectively. We continue to gather feedback from employees and importantly, take actions to make improvements. So we remain an employer of choice. We've invested GBP 8 million into performance shares so that all of our people are shareholders, and all our colleagues can now share an easyJet success. And that's something I want to continue. Together, these measures helped to keep attrition low and to retain talent and ensure our employees are invested in the future of easyJet so we can all achieve our full potential. Johan already talked you through the momentum we achieved in the year, which has enabled strong progress towards our medium-term targets, but we still have so much to go for. Myself and the team are focused on the medium-term plan and motivated to build on the success to date. Despite a challenging winter, the airline reduced winter losses year-on-year by GBP 40 million. We've continued to take actions to improve productivity and utilization. As a result, in the future, I believe we have the potential to be profitable in the first quarter. We're working hard to achieve this goal, and I expect we'll make another step towards this in the current year with a loss in Q1, reducing significantly as we anniversary the impact of the Hamas attacks last year. The March quarter is, however, more challenging for all airlines due to the lack of peak holiday weeks and the need to ramp up the summer -- for the summer ahead. And this is especially true this year when Easter moves out of Q2. That said, I'm confident we'll be able to reduce H1 losses further this year despite the movement of Easter and remain convinced that a strong airline should make money in 3 quarters. Last year, the 16 aircraft deliveries moved our average gauge from 179 to 181. But we'll unlock limited efficiency benefits from upgauging in full year '25 due to only receiving 9 aircraft and retaining all the A319s. But we expect to see the majority of the benefits coming through from full year '26 and beyond when aircraft deliveries are expected to increase again. Holidays will continue its excellent journey this year where it plans to grow circa 25% in customers. In this cyclical industry, there will always be factors outside our control. However, there has been progress within other initiatives as well despite the geopolitical and fuel headwinds in the year. For example, in-flight retail profit is now GBP 68p per seat, an increase of 13% compared with full year '23. Operational actions to deliver better on-time performance and less disruption events have also delivered for us in the year despite a worsening ATC environment. And we continue to make investments in this important area, and there remain plenty of opportunities within the other category that have yet been realized. Together, these are the building blocks of our ambition to sustainably deliver over GBP 1 billion in profit. Turning to Slide 14 and our focus on capital discipline. Making the highest returns from the metal that we deploy is our primary focus. We're relentless on allocating aircraft to the highest performing bases and routes whilst maintaining an optimal network. We're seeing this come through in the financial performance shown in the route return curve on the right-hand side of the graph. The number of routes have increased by 8% to 1,099 and as you can see, the curve has shifted upwards as ROCE has improved to 16% from 13% last year. Routes shown below the average ROCE of 16%, primarily new routes, not yet at maturity, and those with shorter sector lengths to provide productivity and utilization benefits. As you have seen before, alongside basing our aircraft in the right locations, I want to drive increased revenue generation on our assets. This is being achieved through easyJet holidays with its asset-light model and in the airline with revenue management enhancements and continued ancillary growth. As we invest in new capital over the coming years to deliver on our growth targets will continue to be disciplined with how we allocate these aircraft. We'll grow within our network through increased frequencies or adding new network points into existing bases and taking advantage of ad hoc opportunities as they arrive, such as Milan and Rome slots. Upgauging will provide further growth on our existing routes without any additional slot requirements whilst providing cost and sustainability benefits through reduced fuel burn and lower noise pollution. And as we bring new aircraft into the fleet, we'll see our unit cost of ownership remain broadly flat due to attractive pricing with Airbus and the fact that our new owned aircraft do not have the engine shop visits capitalized until they're incurred. Let's look at the network side. We continue to provide greater choice to our customers. And as you can see on the map, this year, we operated 30 bases to 160 airports. We launched 158 new routes for full year '24 as well as establishing our base -- our new bases in Birmingham and Alicante. These bases have been hugely successful for the airline and holidays, delivering strong returns in their first year and with 17% of international seats at Birmingham sold to easyJet Holidays customers. The expansion will continue into full year '25 where we'll be launching our tenth U.K. base in South end, further building on the U.K. leisure network and we're already seeing strong bookings at the airport for summer '25, with many customers choosing easyJet holidays. The key message here is that we're focused on bases with the higher returns, which is in line with our profitable growth strategy. And when we're not getting those returns, we have the flexibility to adapt. As mentioned earlier, we plan to open new bases in Milan Linate and Rome Fiumicino next spring and are confident this will provide us with a great growth opportunity. We expect to hear from the commission in the coming weeks. Looking ahead, in the first half of '25, we expect seat capacity growth to be around 6% and increased frequency in sector length will drive increased asset utilization, leading to a 12% ASK growth. We'll be increasing volumes into North Africa and the Canary Islands, serving strong winter sun demand. It's also worth highlighting that demand for city traffic and city brakes within easyJet holidays continues to grow. And we've added capacity in 2025 for destinations such as Athens and Zurich. All in all, we've continued to focus on optimizing our network to ensure capacity is deployed in the markets where we see the strongest demand and returns. We remain focused as well on driving the best returns, and we've implemented a number of proactive initiatives to drive better attachment rates on ancillaries, increased conversion in the booking flow and to further optimize our yields. Here we spotlight 3 areas that support this, easyJet Holidays, improved merchandising and in-flight retail. As we've already discussed, easyJet Holidays continues its excellent trajectory and is on track to achieve its medium-term target. The profit growth and increased industry-leading margins in the year coupled with excellent customer satisfaction scores, once again proving that easyJet Holidays is now a major player in the holidays market. The international attachment rate across the network is now 6%, demonstrating significant headroom for growth. In 2025, easyJet Holidays plans to attract 700,000 more customers year-on-year, which is broadly the same growth as this year as we continue to grow, but now from a higher base. We'll continue to serve our customers' growing demand for beach holidays while enhancing our city break proposition, which make up nearly half of the airlines network. We include a 23-kilogram hold bag on all beach packages. But we've removed this within the core city break product, making hold bags or cabin bags and available option as desired. And this works better for the customers and helps provide fantastic value. We continue to benefit as more hotels directly connecting to our system, allowing additional room choice and availability. We will continue to launch more destinations for holidays customers. For example, we recently put on sale Cape Verde from the U.K. as well as having opened up Egypt and Tunisia to regional U.K. We also plan to further enhance revenue for the group from merchandising. We've replatformed the app and the website, which will improve e-commerce functionality and user experience while also enhancing the book flow. We expect this to increase conversion within ancillaries as customers will have more visibility of the bundles available. Another example of increasing returns on our existing operation is in flight retail. We told you that our profit target per seat for in-flight retail is GBP 1, and that has now reached GBP 68p per seat in full year '24. We're well positioned to continue to build on this excellent trajectory through initiatives such as our recent partnership with Costa Coffee, which demonstrates our commitment to bringing customers the products they want to buy. And there's still a lot more opportunity to build on this progress. Delivering ease and reliability is central to what we do. Our purpose is to make low-cost travel easy, offering low fares to popular destinations delivered with a great customer experience. And our focus on the customer experience resulted in improved customer satisfaction scores across all touch points. Despite a worsening ATC environment across Europe, our on-time performance improved year-on-year. ATC provisions have once again been really disappointing. So they must put in place adequate resources to handle next summer's European flying volumes. Our improvement in on-time performance was driven by investments and the proactive actions we've taken to improve operational resilience. We took the decision to make changes to crew schedules, which resulted in earlier crew reporting times at our largest airport as well as maintaining scheduled gaps in the middle of the day to allow for catch up as needed. Our increased roster stability has helped to support our people while delivering operational resilience and we'll look to further invest in this area in summer '25. We're now using central simulation tools to optimize our on sale program. This enabled the team to pick up areas of high and low levels of predictive disruption and proactively manage the schedule accordingly, improving the travel experience for our customers. The significant investment we've made into spare parts doubling the value held has meant that aircraft has spent less time out of action for maintenance and ensured we're able to mitigate the impact of supply chain challenges. We're also using AI and data to aid accurate and timely decision-making to further enhance our operational performance. For example, more accurately predicting standby crew levels and locations to ensure efficiency of its best-in-class. In addition, the automation of our customer communication process has increased productivity by 46% with 68% of customer queries now served via live chat. We have a continuous focus on improving every aspect of the customer experience, working to deliver a seamless and digitally enabled customer journey at every stage. As you can see, we continue to have a cost advantage over the major competitors within the primary airport network. I've already discussed how our increased productivity and utilization delivered flat nonfuel unit costs year-on-year, which is a development a few of our peers have seen. There will be more to come in 2025, but we -- as we use data and drive efficiency. With ASK capacity growth of 8% expected in full year '25, the same as we saw in full year '24, our ambition is to keep our CASK ex fuel broadly flat this year. We'll continue to focus on our purpose of making low-cost travel easy while reducing the impact we have on the environment. Driving efficiency is key to our low-cost model for sustainability embedded. As Johan said, we've heard a few airlines claiming this, but we're both very proud that easyJet is now the #1 ESG-rated airline in Europe. The efficiencies which we have ahead of us will only strengthen this position from both a sustainability and a business model perspective. We've reduced carbon emission intensity year-on-year, and we're tracking ahead of our net 0 road map and benefiting our overall fuel costs, which are expected to further reduce in the coming year. So in summary, the outlook for 2025 is positive, and we're making strong progress towards our ambitious medium-term targets. We expect the number of seats to rise by 3% for full year '25 with an increase of around 5% on sector length as we increase our longer leisure offering. This means ASK capacity growth will again be around 8%, helping us drive utilization across the fleet. We expect further productivity and utilization benefits to deliver a reduction in winter losses, and a significant step forward is expected in Q1. However, we know that Q2 will be impacted by the timing of Easter. EasyJet Holidays is continuing to build on its strong trajectory and plans to increase customer numbers by circa 25%. There's no change to the aircraft deliveries in 2025 that we advised at half year with 9 additional NEO aircraft expected to be delivered alongside 3 wet leases. Our results demonstrate that we have the right strategy and price, focused on capital discipline and targeted capacity growth. Our investment-grade balance sheet is one of the strongest in the industry, and we now have 79% of Neos in ownership and finally, the proposed increase in dividend to 20% of profit after tax reflects our confidence in the future. This leaves us well positioned to deliver our medium-term targets providing us with the building blocks to achieve our ambition of making a sustainable profit for tax of greater than GBP 1 billion. In summary, there's still much to go for. So thank you for listening, and we'll go to questions. Cold coffee.

It's James Hollins from BNP Paribas. Perhaps I'd like to kick off by wishing Johan all the best. Thank you for everything. It's been a genuine honor to get to know you last 7 years, and we all wish you all and indeed welcome [indiscernible] for already providing the easiest of research note titles. Three questions, please. Probably Kenton. Very quick one on Q1. Significant improvement in PBT. Perhaps you'd like to quantify that, give a range just to make life easier. And then in terms of making life easier perhaps some feedback for you for any generalist investors on the call, perhaps just running through the rationale for moving from RPS and CPS to RASK and CASK and maybe running through how simple the maths is in reality. Third one, probably for Garry, maybe Kenton. Just the holidays, obviously, a decent performance or a very strong performance -- sorry, Garry, up 25% year-on-year. Do we assume profit the same or perhaps some margin erosion coming through as you invest in the business?

Okay. Cheers, James. Q1 significant improvement, where we're 80% sold to have decent visibility, and we're 2 percentage points up in load factor. When we talked to significant last year, our loss in Q1 was GBP 126 million and we expect to at least half of that. So that will be my definition of a significant improvement. When we think to the whole of Easter, though, in Q2, obviously, we have Easter moving out. And therefore, for the whole of H1, we still expect a slight improvement in results year-on-year despite the fact that Easter moves out and into Q2. The rationale for moving to ASK and -- well, for ASKs and therefore, RASK and CASK is because we are flying longer leisure flows now. And our sector length increase of 5% is reasonably significant in a year. So although we're increasing capacity by 3%, our ASKs are growing by 8%. And clearly, if you fly -- instead of flying from Belfast, you fly to Tunisia, you would expect not only to be charging more and therefore have higher revenues, but you'd also expect the cost to increase because of the full year spend and the pilot hours that you need to utilize and the time for the aircraft and the maintenance from the cycles and the navigation costs that you trip. So we think given the shift in sector length next year, it will be a good time to provide the analysis on ASKs in which case it's RASK and CASK. But don't worry, in each announcement, we'll also be saying what the CPS and the RPS is because our goal is still to drive profits to be GBP 7 to GBP 10 per seat in terms of profit. So we will show both, but for clarity, we'll guide on ASKs. And to give you an indication, if you think about Q1, the guidance in here is for Q1 as to be broadly flat. So for the sake of math, let's assume that's 0 and sectors to increase by 6%. And therefore, you could infer that if we were still guiding on RPS, that would look like plus 6%, which on RASK looks like 0. Now for CP -- for CASK, we said for the first half, we expect our CASK to slightly reduce year-on-year. And if we increase sector length by 6%, then it's going to increase but to the kind of lower end of mid-single digits or high low single digits type of thing. So that's the way to think about it. The sector length is driving a bunch of costs, but it's also driving an increased revenue opportunity. And that's the time we did it this year. Last year, sector length was flat year-on-year. So the metrics would have been identical. For holidays, why don't I hand it over to Garry, if you can remember the question or a there.

Thanks, James. We'll continue to try to a decent performance next year. On the margin, though, we don't expect at all the margin to be impacted on the 25%. The only thing that would impact the margin would be if there was a significant shift from beach into city, which we don't see. We see both of them, but very, very strong. And when we look at some of the expanded long leisure, they've got very good margin on some of like Cape Verde, we see an ASP of about GBP 1,000 a person. So that will be our highest ASP in a kind of mass destination. So we'd expect to be able to really maintain that margin. I think the other thing margin is the 36 to 56. That's largely been driven by the connectivity of the hotels and the increased room types where customers can upgrade their room type, and we're going to see more of that through '25. So that should give us the margin protection as well.

It's Jaime Rowbotham from Deutsche Bank. Two from me. Firstly, as ever in the last few weeks, there have been various developments on the positive side, the potential deescalation of the war in the Middle East. On the flip side, some potential higher U.K. and French taxes and a cabin bag fee challenge in Spain. So I just wondered how you see the impact of those on fiscal '25.

Yes, sure.

Second one, you focused on the hit to Q2 from the timing of Easter. But of course, loss will be Q3's gain. So could we get some early thoughts on next summer. I think you're planning on only growing the seats about 1% after 6% in winter -- sorry, for sticking to seats, but do that for now. That's quite modest. How do you see competitor capacity? And how do you see the prospects for the strong implied 6% rev per seat from Q1 sustaining throughout the fiscal year?

Perfect. I'll start with the, what's happening in the Middle East. Obviously, this morning's news of the ceasefire is brilliant news from a humanitarian perspective. Great to hear. Currently, we're not flying to Tel Aviv, in Israel, not flying to Jordan. We -- I mean, we very much want to fly to Israel, but we'll follow the developments and obviously wait for the situation to settle, but it's clearly good news that the -- there's a ceasefire with the Hezbollah. Anyway, I think what's happening in France, if we deal with that 1 with the increase in APD or in their equivalent of the passenger tax, clearly, very bad news for the consumer. Our view of that is it attacks on the consumer, and that's the way we'll treat it. So we will pass that on to the consumer and then see how that affects demand. I mean the good news in France, we are a low-cost provider in the airports we operate from when we compare it to Air France or the KLM Group -- Air France or the KLM Group. So we have a great offering, but it's a tax on the consumer, and we shouldn't think of it any other way. So we're looking to pass it on. I know Ryanair are talking about withdrawing off the back of it, but the easy debt approach is more. Let's see what the reaction is to demand. The Spanish legal case, of course, will be appealing. That's not really founded in EU law. In fact, it contradicts EU law. The disappointing thing about this case is EU law is consumer-friendly. It allows the consumers to choose the products they want to pay for. About 1/3 of our customers choose to fly with no ancillaries bringing on a small cabin bag. And what this law would imply is that we should be charging them for other people wanting to bring on, say, a hold bag or seating somewhere different on the plane or having overhead cabin back. And that doesn't feel just and that's why the EU is what the EU law is. And therefore, obviously, we'll be appealing that. And I would expect that they will -- they will climb down at some stage, but that will be the aligned view of airlines I would imagine. In terms of what we're seeing for growth, from an airline point of view, the visibility is largely obviously on H1. So we've got Q1 at 80% sold. Q2 is just slightly over 25%. So -- but for both of them, with the growth being 6%, we're seeing a higher load factor. So that shows that we're seeing an increase in demand, which is very pleasing. But we can see that the kind of December peaks are selling well. We can see the same also true of Easter, which as you point out, sits in Q3. So whilst it does impact H1, it obviously is a nonevent for the full year. And when we think of -- when we think of H2, we do have growth. So we have -- we're opening our tenth base in South end. We think we're very excited about that. We'll be adding more aircraft into Birmingham, into Edinburgh into Manchester into Liverpool. So we're continuing to grow in the U.K. where we're seeing strong leisure demand. And should the commission approve the -- us a remedy taker, which we would expect to hear in the next week or 2, then that will see growth in Italy with 5 aircraft going into Lumata, which I think is perfect for our network and 3 into Rome, which is an important touristic city, and therefore, we'll be grateful our city break proposition as well as the natural traffic that it has anyway. And we're looking to do longer leisure flows. So we're year rounding the growth we've got in the winter, when it comes to Tunisia when it comes to Morocco, when it comes to Egypt, we'll be year-round in that, Cape Verde and then we move off and Turkey is growing. And actually, we got 6% growth, I think, into the Greek Islands next summer. So we're placing growth where the customer wants it. And you've got to remember, we're responding to demand. So we will see some reduction in domestic traffic, particularly in the U.K. and a little bit of a reduction there, which when the government starts announcing APD. And for domestic travel, it's both ends of the flight. That's not very pro growth. So that's the impact of that.

Good morning. It's Harry Gowers from JPMorgan. Johan, best of luck for the future. I've got 2 questions. The first one, you have a small net cash position, profitability strong. CapEx does continue to get pushed to the right. So do you think there may be scope to think about share buybacks in 2025? Or is that quite far away in the thinking? And then the second one, just on the Winter Sun network. I mean the routes where the growth is going, so North Africa canaries, are they actually profitable versus the rest of the network in winter and the growth there is going to continue to drive the winter loss potentially down? Maybe you could just talk a little bit about that?

I'll start with the second question because the answer is easy, yes. They are more profitable. and they're good destinations to have in terms of utilization of the aircraft, but also in terms of a strong customer demand. There is a demand from our customers for these destinations, and we see that when we put them on sale. Obviously, the destinations like Tel Aviv and like Jordan were also important for the winter. We shouldn't forget that. And we're not flying there. And there aren't hundreds of places in the winter where there's strong natural demand. We're doing more on Christmas markets. We're doing more flights, for instance, for Northern Lights, we've opened up a couple of new destinations in Norway, for instance. So we're building the network with a view to how we can improve that winter profitability. But yes, very much the flattish and Egypt are good flights and in demand. So that's good. When it comes to the thinking around dividends and share buybacks, firstly, we're very pleased with the Board to be proposing that we double our dividend and take it to 20%. The view there is that is a meaningful amount and sustainable through cycle. We are consciously taking more neos into ownership, which strengthens the balance sheet because they are, obviously, by far, the younger aircraft in the fleet and therefore, give a real strength to the balance sheet and it's good to do that because that gives us flexibility. We maintain a strong liquidity. We'll always protect the customers' money that we have in terms of the revenue advance from the advanced bookings of the customer. So we'll protect that money with some security on top. And we need to prepare for the CapEx cycle. But we are staying close in contact with Airbus to see how that those deliveries develop. At the moment, though, we are talking 4 to 5 months. So it doesn't really alter the major financing of a company if aircraft come 4 to 5 months later. So we'll be looking at the usual stuff, the macroeconomic position our progress towards the medium-term targets and what's happening with aircraft deliveries. I should say as a board, all forms of capital return will be considered. But we wanted to get a decent base dividend and then we can see how we're performing in terms of cash, and we can see what's needed in terms of what's coming up for us. But yes, buybacks would be part of the armory of capital returns for sure.

It's Andrew from Barclays. Johan, it's been a great pleasure. Thank you. In terms of questions, can you talk a little bit about the potential Italy expansion, which is meant to get -- should become clear in the coming days. How -- clearly, this strategic advantage of it is plain as day. The issue of flying to the Lufthansa hubs from these cities in the short term looks plain as day as well and looks very challenging. So how do you think that will play in terms of profitability impact on you and in particular, wet leasing airplanes, that's never the cheapest way to grow is it? Second question, just picking up. I think you missed it from Jaime. The [ NIC ] increase in the U.K., so the tax burden in the U.K. how does that play on your costs? And then third question would be the LEAP engines, how are they behaving? Obviously, better to have them at the moment than a GTF, but they're not staying on wing as long as a normal engine. So how well are they behaving? And where do you see improvements coming from?

Okay. Let's take those in the order there, Andrew. So Italy, we're -- it's a great opportunity to get into Linate, and these opportunities don't come very often. That will only come from these kind of combinations and therefore remedy routes becoming available. In the short term, we will be running some routes that will be more painful than others, but it really will strengthen the network for the longer term, and that's what we're all interested in here because it's just a perfect network point for the easyJet network. And therefore, we'll live with some of the impacts of running those routes, but we have a presence in Germany. We fly into Dusseldorf and other airports from various parts of our network even if we only base aircraft in Berlin. So I think that will just help that network. But we're really looking forward to having those slots at Lenarte. The NIC increase and the minimum wage, we are not really affected by the minimum wage and easyJet. We look to pay competitively and fair. So that's not per se an impact for us. The NIC is a bit of a cost of doing business in the U.K. It will be the same if you work it next or anywhere. It would just lift inflation a little bit. But for us, in terms of numbers, it's half a year for us this year, something like GBP 7 million and then when fully annualized, something like GBP 13 million. And I guess the cost base of the U.K. will be -- so yes, it's an increase, but our cost of doing business in the U.K. And then the LEAP engine, where you kind of have 2 choices. You take the LEAP, which is 15% more fuel efficient, you can't keep taking the CFM. They're not going to be made forever or you take Pratt & Whitney, which spends longer time off wing. It is spending longer off wing than we would like. We have a spare engine pool that we operate with CFM and the efficiencies from this aircraft engine are fantastic. So it is the engine of the future, and we just have to keep working with it. But it's the most reliable choice we have when it comes to flying short-haul aircraft. I'm not sure when you go long haul gets much better with the trend.

It's Jaina Mistry from Jefferies. Three questions, if I may. First one, could you walk us through the moving parts to CASK ex fuel being down in H1? And if you're aiming for broadly flat for the full year, which cost line should be inflecting positive in Second question around pricing rationality in the market. Fuel is coming down in H1. It could be down in H2. Is there a risk that you see certain competitors lower pricing in response. And then third question on holidays. We've seen a nice tailwind from ASPs in FY '24. Should we see a similar catch up to say, your peers in terms of ASPs in FY '25 as well?

Perfect. Okay. Well, I will hand the holidays one to Garry, so I'll let him have some time to think about that. CASK ex-fuel reducing, it's primarily due to the productivity that we're putting in. So this winter, we're growing the capacity by 6%, but with 6% kind of average sector link. And therefore, that's a 12% ASK growth. and that drives productivity. So yes, you get a proportionate increase in cost when it comes to cabin crew, pilots, aircraft maintenance because they're driven by the flight out of use of the block hours in production or the engine cycles. So they're quite linear with cash. But the benefit you get will be around airport fees because of take off and landing and the benefit you get is around ground handling and obviously in the fixed overheads. So driving that kind of productivity does help us reduce our CASK even though it's an inflating environment out there. And then as we move into the summer, we annualize a lot of those winter routes, which drives some longer routes there. And we are -- we're kind of just -- we have a real increased focus and cadence at easyJet when it comes to scrutinizing the costs, and we introduced that over the last 2, 3 years. And we look at every cost position, and we'll keep that focus to try and keep the cash flat because that's what our kind of goal is. And I think we've also achieved that by bringing in some of the more expensive outsourced activities. So where it makes sense to in-source certain parts of maintenance, for instance, when we do that. We're in source some heavy maintenance which will have that capability in '25 that we didn't have in '24. We've talked before about the Berlin hangar and the kind of quite sizable reduction that we see when we do an event in the Berlin how compared with when we went to, for instance, the Lufthansa Technik. So we're kind of strategic where we're in source. We've got to focus on every cost position, and we're driving productivity. That will be there 3 main levers. Pricing, let's see, we're kind of 15% sold for Q3, probably just over 5% for Q4. But we see on our network a stability in pricing. And that's what we saw in throughout full year '24, others saw prices move up and down in terms of their expectation. We were quite consistent. We said in Q3 about 1%. It was 1% in Q4, we said about 1% is 1%. We think RASK flat in Q1 now. I wouldn't extend that into Q2. It's a softer period. We're ramping up, and we have Easter disappearing from that. So soften your expectations for Q2, but I think winter itself will improve despite the fact that Easter moves forward. And some are, like I say, I mean, I think easyJet Holidays is about 30% sold now for summer. So we get much better visibility with easyJet Holidays. And because they're 30% sold for summer and probably 75% plus for the whole of winter, then their kind of stated plan of growing by 25% is informed by the fact that we have the bookings we have. So infer that, that's what we're seeing as well a continued strong demand for growth in easyJet Holidays. With that -- yes. On the average selling price for holidays. That's over to Garry.

Yes. On the ASP, it's not a measure we slavishly look at. I mean all of the costs are passed through to the customer, and we work on just a cost-plus model. So when we look at the ASP on the 30% were sold for H2, it's positive. I mean, and that's mainly driven by mix, and it will be driven by customers choosing those higher room types. But unlike our competitors, if the canaries becomes too expensive, then the customer will just move to a cheap alternative like Tunisia. And therefore, we will have the same cost plus on that. So we don't actually make less money. So the ASP isn't really something that's hugely important at an aggregate level. We'll look at a hotel level and at a destination level but not aggregately as long as we're hitting the margin and the volumes that we're looking to achieve, and we're quite happy.

Thanks, Garry. And one slight build on that because the city breaks that we're doing isn't really a competed activity. I mean, Jet2, we don't fly at any capital cities. So city breaks is at the moment, you buy your low cost there, you go with Booking.com or direct with the hotel. So when holidays grow city bikes, what you got to think about there is the average selling price is not the same as a beach destination here. When we go to beach destination, people tend to spend 7 to 10 days, and therefore, there's 7 to 10 days worth of accommodation costs that price when they go to a city destination, therefore, the price is lower. And therefore, the Easter holidays price will be a blend of those 2, whereas you said in 2, it's all beach destination or Jet2, it's all beach and they have a long haul, which is a higher ticket price because it's a higher flight cost. So kind of hard to read across. We think and we -- from our research, we just know that we're cheap at 75% of the time, but it's not material, material from the ASPs.

Gerald Khoo from Panmure Liberum. Three, if I can. Starting with other income. Obviously, quite a big credit in that line in FY '24. What should we expect going into FY '25? And what's the sort of vague split between sort of supply compensation and the other items that get dumped into that line? Secondly, what's your thoughts on Jet to launching into Luton. And finally, you talked a bit about OTP improving, I think you said by 3 points. What's OTP actually in absolute terms? And how should we sort of benchmark that against a pre-pandemic levels?

Okay. Other income first. So we had -- there's a variety of things in other income part of it only is some support from the OEMs, which was broadly in line with the -- covering the incremental costs that we incurred through extending leases, et cetera. We'll -- obviously, we have a very constructive relationship with Airbus. The next set of delays we'll be talking to them about support, but that is always going to be a confidential thing between us and Airbus. There were some other items around airport compensation and we've got in some other bits and pieces. So that other income line you would argue there's a part that's one-off related to full year '24, but I wouldn't be surprised to see other income in full year '25 for as long as we see delays in the [indiscernible]. Jet 2, I'll pass over to Sophie to give the answer on her view of Jet 2, but they're a great competitor, and we compete with them throughout the U.K. So...

Yes. Just to build on that. So Jet2 will be basing 2 aircraft in Luton versus R25 that we have there. I mean as Kenton says, we compete with them across the U.K. quite strongly in fact, in Birmingham this year on the basis of the great launch we had last year a base there. We're going to add another 2 aircraft next summer into Birmingham. And obviously, that's -- that will take our capacity significantly greater into Birmingham as well and then in all the other U.K. airports were significantly bigger than them as well. In terms of the routes they're operating, all the routes they're operating, ban that we don't operate at all, we will have significantly more capacity up to 12x more frequencies a week. So we coexist with Jet 2. We don't have a problem with them coming in, and we welcome competition.

On the OTP, I mean, the ATC environment was truly c*** last summer. They excelled themselves across Europe by beating the worst performance that they achieved the summer before. So it was a shocking performance and understaffing pretty consistently across the board. But despite that, our OTP improved by 3% and CSAT improved by 3% because of the resilience measures we invest in, and we'll continue to invest in those resilient measures because whilst we ask for improvement, I'm not sure we're going to get it. So we will work off the assumption. We don't -- in terms of OTP, I think it would still be slightly below where it was pre-pandemic because there's still 20% less air space to operate in. And therefore, we're back largely at the same volumes as an industry, almost that we were pre-pandemic, but we're operating in less airspace. So we're slightly below, but for ourselves as an airline, we're seeing a strong improvement, and we're getting very close to it. It also depends if you look at top 2 box, top 3 box and that kind of statistic, which we look at both and both saw a strong improvement. So we'll -- our focus, keep increasing OTP and keep operating the schedule.

What was [indiscernible].

76%.

76%.

It's actually very much in line with 2019.

Conroy Gaynor from Bloomberg Intelligence. So 2 from me, please. The first one, just on the reduction in the winter losses, you've given us detail already on some of the levers that you've already pulled such as the increasing utilization through longer stage lengths and more control of maintenance activities, et cetera. apart from just the bigger pain, is there any further levers still left to pull on that? Or is it just a case of the levers that you have already pulled just maturing more? And then the second one on holidays. So given the comments you've made already about profitability and the customer growth this year, it probably seems reasonable that you might -- you have been touching distance of your GBP 250 million target this year. So do you perhaps have some thoughts beyond, say, this year 2026 on the potential size of the holidays business, perhaps within the context of your overall $1 billion company profit target.

Okay. Winter losses. We said a couple of years ago, we need to drive productivity back there. Our winter capacity was low. And when we drive profitability back with more routes contributing to the fixed cost of the business. And I think that is 1 really important measure. It will be helpful when Israel, Jordan destinations like this open, they are year-round destinations, but a lot of VFR and touristic traffic happening in the winter, which clearly is not an open market for us. The kind of growth that we're seeing in North Africa is great. If you look at the -- if you look at the -- in the appendix, we've got a kind of mix of business chart that we have. And pre-pandemic, we had a far higher mix of city business. And then that reduced to about 47% in 2023. The good thing is, it's 47% in '23. Despite the growth between '23 and '24, which is 8%, is still 47% of mix. It's still going to be 47% of mix in '25 by the way. So what's happening is city demand is coming back a bit by bit, and City is a much more year-round profile of travel. We increased domestic travel a couple of years ago as we came out of the pandemic because it's pretty much the only travel you could do when you come out -- when you came out of the pandemic that is maturing all the new volume we put on there, but there's no need to grow it. And actually in the U.K. and others will slightly reduce it, which leads to much more in-demand longer leisure flows in the winter. So I think it's a combination of productivity of working the network better. Obviously, there's a lot of great work that safe and the commercial team are doing around the pricing algorithms and the way we think about the elasticity of the booking curve and those things will all generally help the full year but winter as well. And gauge will help because -- it just is GBP 10 less per seat when we take an A319. A lot of that is just the fuel efficiency. So it is a far more fuel-efficient aircraft, then you get the natural efficiencies of -- so that's the main thing there. Holidays, I think we'll have to wait and see. I mean city growth and beach growth depends how they grow in the mix. 25%, if you said there's no margin is the same, 25% on 190 , I guess, is getting 235, 237 or something like that. But -- it depends on the mix we see whether that is achieved. But at the moment, we're seeing a great demand. I think as we start approaching that Garry will tell you about those dreams and aspirations for the future. And that's obviously something we're looking at. Fundamentally, we said when we set the medium-term targets, we have 5% market share in the U.K. and GBP 122 million in terms of profit. To get to GBP 250 million, that felt like 10% market share. We got to 7% market share with GBP 190 million profit going from 5% to 7%. If we grow in line with what we're talking about, that probably gets us close to 9%, which would be a little bit shy. So 10% is that. But I think let's wait and see until we get closer to our target, and then we earn the right to tell you what the next set of ambitions is for easyJet Holidays. But our attachment rate in terms of people buying accommodation on our airline flying to those destinations. The international destinations is 6%, and it will be slightly higher, obviously, if you looked at Beach, but still an awful lot of people traveling with us to say Greek Ireland and then choosing to buy their accommodation effectively through [indiscernible] with the hotel, and we just need to grow the awareness that when you buy the combination with us, it's cheaper and more and more room types are appearing. So it's a really [indiscernible].

This will be our final question before handing back to Johan.

Of course, yes.

Conor Dwyer from Morgan Stanley. First question is back to basically just general theme of demand. Obviously, given how quickly you're growing the ASKs into the December quarter with pricing to be broadly flat. I think some people could fairly assume that's an indication demand growth is accelerating. But I wonder how much of an impact basically on the comp basis from Middle East last year? Do we really have in there and maybe kind of dampen expectations a little bit there. And then in terms of the benefit from the upgauging of the aircraft, you talked about GBP 25 million, I think, benefit this year. And then the next big benefit really to be in FY '26. I'm wondering, does FY '25 look a bit more like this current year or perhaps a little bit less? Any kind of phasing indication there would be super helpful.

Okay. Well, let's start with the gauge. We said that the impact of exiting 82 A319s we have is worth in excess of GBP 3 per seat. But that number is the fact. And that's what will happen when they exit. Now I'd like them all to have exited by '28, but the reality is we're seeing delays in aircraft deliveries and therefore, we're going to have to be more patient in the time it takes to exit the aircraft and '25 is the year where we're going to see very little movement in gauge. I think the 181 we have today will still be 181 because we're retaining all the A319s in the fleet. Those have been extended so that we can maintain our capacity, and we get 9 aircraft mix between A320 and A321, but 9 aircraft on a fleet of 350 isn't driving a massive difference. But then from '26 to '28 in those 3 years, there's 90 delivered, 9-0, and with those being delivered and let's see if Airbus to deliver them, but that's the current indication we've got from Airbus, then that does allow a sizable reduction even by 98 -- even by 2028 of that fleet and therefore, capturing the up-gauging potential plus sensible growth that we've put in, in terms of the orange line of the fleet. The question on productivity around winter, I'm not sure I entirely got it, but we do see that productivity, what we'll actually see because there is more capacity going into these longer destinations is there will be a bit of time to take that to maturity. And a lot of that capacity is coming into Q2, which is why I'm warning a bit about Q2 because it's the right thing to do. It's definitely driving productivity, but there's a little bit of time to mature that. But through -- by getting it in there towards the back of Q1 and then into Q2, it means we annualize that capacity through the summer and then have maturity for it the following winter. But did I get the question? Or is there a different one?

A little bit more basically around [indiscernible].

Yes. what -- I mean we -- it's difficult for us to say that the demand is not there still for us because Q1, Q2, both up for the airline where there is visibility by 2%, having growing capacity by 6%. And as I said, the holidays business growing at 25% or certainly with the bookings we've got to date implying that it's at least is 25% of growth there. So that's encouraging. And we keep the growth focused on the areas where it is. We're seeing a little less demand for domestic, which is why we pulled it down because we're taking a little bit of demand off there, and there's an anticipation that APD will impact it a little bit because you've got both ends of the flight, but like I said, city demand coming back, beach demand is strong, very strong demand for our kind of North African destinations that we're seeing growth of 40% in terms of those destinations. So pretty encouraging.

I just want to say also then to yourself as well, big thank you for the loyal following on these sessions and throughout the years as well on behalf of myself as well, look forward to see you at some point as well. Thank you so much for that. And I should also say congratulations to Kenton, you're going to have a fantastic time to do this job with this eminent team as well. Kenton is an amazing leader. He's been a fantastic business partner to myself for many, many years. so I'll miss working with you and you. And also I will miss working with you, Stephen. Stephen is the Chairman of the company. We had a fantastic, great working relationship as well. So thank you to you and the Board, and thank you all.