Fly Play hf. (PLAY) Earnings Call Transcript & Summary

Welcome, dear viewers, to this Q1 presentation of Fly Play. So we're here to present the financial results. Just at a glance, we operated with 10 aircraft this last quarter, a more or less 4-aircraft increase from the same period last year. And our ASK and our revenue grew significantly as a result. We had an 81.8% load factor in the first quarter, affected significantly by rather poor January and February, again, poor because of the lack of sales experienced in quarter 4 of last year, which again was in most parts due to negative media coverage because of the seismic activities happening in Iceland. We had 88% on-time performance and a good balance between from, to and VIA passengers with 30% -- 37% of them being VIA, 27% from and 36% to. We, again, always highlight our on-time performance as that is an indicator of how the operation of the company goes and to some extent, the costs we incurred due to so-called irr ops or irregular operational costs. That is always increased when the OTP is not very strong. As you can see, the OTP is fluctuating between 80% and 95% for the most parts, except in December of last year when the connecting back was moved from its original schedule because of the air traffic controller strike that had been planned. But apart from that month, we are -- in general, we have a very good OTP and are second -- significantly better than our main competitor here in Iceland in this respect. Now in 2024, we have added 5 new destinations, most of them are coming on during the summer or the fall: Madeira, a Portuguese island off the coast of Africa; Marrakech in Africa; Vilnius in Lithuania; Split in Croatia; and then just recently, we announced a series of flight to Cardiff in the fall. We are very excited to, once again, be the airline that offers new destinations for the Icelandic population, leisure destinations that we are convinced that will suit our clients. Now regarding the finances of the first quarter of this year. As mentioned previously, we grew the fleet of aircraft for the most parts from 6 aircraft to 10. So the production we had in the quarter was 63% more than in first quarter of 2023. But our revenue grew slightly more or by 66%. And we can see that even though the first quarter was heavily affected by the slump in sales in quarter 4 of last year, we can still see that every -- on every parameter, we are seeing better performances. So yield is up by $1 from quarter 1 2023. The cash is $11 million higher than it was at the same time last year. So the financial position is strong. But on the revenue and cost side, we also see improvements. The RASK or the revenue per available seat kilometers is actually stable between quarter 1 '23 and quarter 1 '24. But the ex-fuel CASK and the total CASK and the EBIT are all improving significantly year-on-year, taking into account the increased capacity. So the EBIT is slightly worse than Q1 '23, but per available seat kilometers, it's improving. The -- I mentioned that the cash is $49 (sic) [ $49 million ] at this point. It was $17 million at the end of the quarter. $32 million have been paid in since then, so we show a $49 million cash position, which will grow into the summer as it always does. And we are expecting a better financial performance this year than last. So we're expecting to have a significantly higher cash position during the low of next winter than the last one. The income statement shows an operating income of $54 million, a $22 million increase from last year or 66%, which is a little bit more than the increase in production. Operating expenses, $59 million. And with the depreciation and amortization being $15 million, the EBIT is minus $20 million. That is an EBIT percentage of minus 37.5%, which is not what we were hoping some time ago, but it is in line what we had indicated a few months ago. And it is also a very significant improvement from last year when the EBIT was negative 53%. And with the financial expenses and the income tax, the net result for the period is minus $22 million. The balance sheet and the depreciation and amortization is increased, of course, by increased number of aircraft. Operating expenses. Play prides itself for being a low-cost airline. So we are always focusing on our costs, and we want to see that trajectory moving downwards. And we see that both CASK and the ex-fuel CASK are down year-on-year between quarter 1 '23 and quarter 1 '24, the actual CASK being $0.043 versus $0.045 last year. And the fuel and then emission part of the equation is $0.015 this year versus $0.019 last year, in some part, affected by lower prices in the ETS so that we're benefiting there in this quarter. But without that, we would still be down year-on-year. The -- it's a -- the ex-fuel CASK is down 4.2%, but the total CASK down by 8%. And we are expecting the ex-fuel CASK for this year to be around $0.038 as indicated previously. The slight increase we see in CASK development from the low of last summer when it was $0.034 is due to a lesser production in the winter than in the summer. So the cost per unit goes up. This will come down again in the summer. Cash flow in the first quarter of this year, as we had already said, we had $21.6 million at the end of last year. There is negative cash from operations of around $1.3 million, whereby a little bit less than $6 million are from operating activities. There is a significant positive contribution from changes in working capital always during this period as we are selling more tickets than we are producing. And then there is repayment of lease liabilities and maintenance reserves of $17 million, which makes the net cash flow operation being negative $1.3 million. Of the $17 million repayments, $5.2 million are because of future maintenance work. That is being kept to meet future maintenance. We then have $3.4 million of investing activities, meaning that the closing balance was $17.2 million, but the lower picture shows that the capital increase of $32 million paid in April takes the pro forma cash position at the end of quarter 1 when the commitments have been made up to $49.2 million. Fuel price has been somewhat volatile in recent weeks in some part due to also volatile situation in the political world all over. Actually, the current spot price is at $837 currently, which is somewhat favorable looking back a few months or quarters. We are hedged according to our policy. So the current quarter, quarter 2 of '24, we are hedged 53%; quarter 3, 34%; quarter 4, 25%; and then a bit less heading into next year. All of the hedges, more or less, are very close to current spot prices. So all in all, we are working within our policy with regards to hedging. On the picture on the right, we can see how the monthly average price of jet fuel has been fluctuating and how the effective fuel price for us has been very similar during past quarters but more smooth because of the hedging. Now to reiterate how we view this year, we are currently operating 10 aircraft and expect to do so for the remainder of the year. The ex-fuel CASK, we are estimating to grow by roughly 3% from $0.037 to $0.038. This will take our EBIT to approximately 0 and a year-on-year cash flow improvement. We should note that when making this forecast, we are assuming that the average price of fuel and ETS will remain close to current levels and also that demand from our customers will remain somewhat steady. We would like to offer viewers the chance to ask questions and then send those to [email protected]. We will then be answering them on our website later this afternoon. I do thank you for listening in and seeing our presentation. Until next time, thank you.