Jazeera Airways K.S.C.P. (JAZEERA) Earnings Call Transcript & Summary

Hello, everyone. This is Hatem Alaa from EFG Hermes and welcome to Jazeera Airways second quarter 2024 results call. I'm pleased to have on the call today from Jazeera, Barathan Pasupathi, CEO; Krishnan Balakrishnan, CFO. [Operator Instructions] Gentlemen, please go ahead.

Thank you, Hatem, and good afternoon to everyone on the call today. I'm joined today by our Deputy CEO and Group CFO, Krishnan Balakrishnan. We are pleased to announce that Jazeera has rebounded strongly in quarter 2 2024, after the Q1, modest results we've seen mainly as result of the EGP devaluation. This quarter, Jazeera continued the recovery momentum we have seen strongly in Q1 and delivered growth in all 3 indicators in revenue, passenger numbers and net profits by 37%. At the same time, you'll see Jazeera improve both operational efficiency while maintaining market share in Kuwait. Now let us unpack a successful quarter by referring you to the key Q2 operational and financial headlines on Slide 6. Here, you will see passenger growth at 6.5% in the quarter. This marks another consistent and successful quarter of delivering more than 1 million passengers across the network and our very own dedicated Terminal 5. And that's actually KWD 1.1 million to be more precise. This was achieved despite the marginally lower load factors seen in the quarter, and the load factors were a result of the network we designed to serve a strong directional religious market in the Hajj season that was predominated in June of Q2. Utilization in Q2 narrowed to Q1. The utilization levels of 11% in difference with Q2 2023, is a result of the trimming and adjustment that we referred to where we acted on nimbly and being agile in managing capacity in April and May and ramping it up to June 2024. We were picking destinations profitable for flying in the start of summer season. Getting into summer, our utilization will trend much higher as you'll see Q3 performance. April and May planned maintenance events resulted in the utilization level that we actually covered in Q1 webcast. The yields in Q2 2024 were marginally lower but the rate of increases we've seen between Q1 and Q2 was sharper in 2024 than in 2023. You will see this specifically when you look at the key performance metrics at the back end of our presentation today. Overall, we are very pleased with this quarter, and it was a quarter that has not only delivered good financial results, but is very well executed operationally despite a number of challenges we've had across the network in terms of airport floodings, air space impacts, which Jazeera handled very resiliently. Now shifting to the first half 2024 operational headlines on Page 7, you'll show a similar trend and importantly showed the passenger growth of 5.3%. While load factor, utilization and yields for the averages over the 6 months and the narrowing gap in Q1. The momentum of recovery is strictly intact, and we're getting better in each quarter. The second quarter financial highlights seen on Page 8. The first -- yes, second quarter financial highlights. You see here, Page 8 shows Jazeera has navigated a robust recovery from Q1. Here, you see revenue, operating profit and net profit all moving in the right direction with a good result of 37.3% robust movement in net profit Q-on-Q. On revenue, Jazeera recorded KWD 52.6 million in the quarter and established a growth of 6.2%. At operating levels, it was operating profit of KWD 6.7 million and which was a 17.6% improvement and you've seen net profit, which are covered off with a 37.3% improvement. Operating 23 aircraft in service and flying into 61 destinations, Jazeera recorded this revenue. Now looking at the first half financial highlights on Page 9. You'll see the year-on-year comparison on Page 9, which shows a positive movement in revenue of 1.1% and operating profit and net profit have narrowed compared to Q1. Now the impact you see here on the first half, net profit levels was due to the Egyptian pound devaluation that we covered off very precisely in the quarter webcast. Now let us move into ancillary revenue. Here, you'll see Jazeera has outstanding growth both on the quarter and in the halfway mark on ancillary revenue. This is due to the strong focus that we have put on the various segments and the ancillary attachment to passenger ticket sales. And this -- and we will continue to pursue multiple opportunities in this space. In Q1 -- in Q2, the growth was 18.2% and with KWD 5.2 million ancillary revenue. And in the first half, we totaled a KWD 9.6 million in ancillary revenue with a 13% growth. On the left side of this presentation, you'll see cargo revenues, which is a small percentage of our overall scheme of ancillary revenue. But as we carry more passengers and brought up more flying, you'll see a lower content on cargo. We will focus more on this in Q3 and Q4 of this year. Now moving on to Terminal performance. The T5 performance in this quarter was nothing short of outstanding. Not only in the financial metrics, which I will cover, but the operational flow and the customer experience improvements we have seen from the terminal. T5 continued to benefit from the passenger growth seen in the airline and did not see any cancellations even in the recent global IT outage. With 2.3 million passengers in the terminal, the first half revenues were KWD 6.6 million. EBITDA was at KWD 5.4 million and net profit at KWD 5.1 million. This is a margin of 74% and compares favorably with the Q1 '23 margin of 65%. The quarter 2 performance is even stronger with a 77% margin. The focus on duty-free sales, launch conveniences and other adjacent passenger experience initiatives were good contributors that was -- resulted in this higher margin in Q2. We have also leased out more commercial footprint this quarter. This continues to support the T5 expansion plans we currently have in design stages to serve somewhere close to 7.5 million capacity by 2026, 2027. Now let me take you through the first quarter market share and passenger distribution. You'll see that Jazeera continues an impressive record of supporting the Kuwait hub with a dual-brand offering. In the last quarter, I shared why both national carriers play an important role in establishing direct connectivity from Kuwait to key markets and new destinations. This is complementary to the Kuwait air hub as we've seen display across in the rest of the world. For official statistics, Jazeera has maintained market share during the entire first quarter and second quarter in terms of passengers carried and aircraft movements out of Kuwait airport. In the first half, Kuwait aviation market has grown on average 3% year-on-year. Jazeera's market share stood at 28.8%. If you look at the overall passenger geographic distribution in both first half and in '23 and '24, you'll see a slight shift to the European traffic segment. This is primarily due to the seasonal capacity that we have established through summer and our launches in Kraków in Poland as well as increasing frequencies to Sarajevo and other destinations in summer. If you look at the passenger distributions for the rest of the markets they have relatively remained stable and we look forward to having -- establishing a greater leisure segment in quarter 3 during the summer season. In terms of operational updates, this summer season has been a record season for Jazeera. Jazeera achieved the highest aircraft rotation in Q2 and first half, and delivered strong terminal and operational efficiency and is seeing a very active summer booking season. The Hajj season was also exceptionally busy. And this has been one of the busiest and active Hajj seasons for Jazeera. And as I covered earlier, the load factors you see in Q2 were predominantly a result of the direct services that Jazeera established from markets outside of Kuwait and into Saudi Arabia, complementing the network loads. On-time performance was also significantly increased, improved in this quarter with operational refinements in both ground operations and in Terminal 5, this has allowed us to achieve an OTP of 88% in the quarter. Continuing our commitment to a high safety and operational standard, Jazeera renewed the IATA Operational Safety Audit certification in Q2. And just recently, we grew our fleet to 24 units when we took delivery of aircraft 24 and we plan no further increases in Q3 and Q4 as we drive further utilization in the business. In terms of new destinations, you've seen the launch of Kraków in Poland, and Batumi in Georgia. And at the same time, across the network, Jazeera has increased frequencies in a number of leisure points that have shown huge demand from the market. Now turning into the market outlook for Q3 and the rest of 2024. The revenue trend in summer remains strong and stable, but we remain cautious on the geopolitical fronts, especially in the Middle East and as recently as you've seen in Bangladesh. We do, however, expect moderate yield improvements as capacity closely aligns with demand curves. You've seen demand in Kuwait remains strong but at the same time, we have seen capacity retract marginally across a number of markets. Hence, we've been very selective in terms of our network expansion and the frequencies we built into our footprint. In terms of costs, fuel prices are relatively higher this year compared to last year. But crack spread is normalizing for us. The ongoing cost transformation efforts that Jazeera has pursued, including both operational efficiencies and other cost initiatives across all the segments of the business has allowed us to absorb this fuel price increase and deliver very good outcomes in this quarter. In terms of market condition, the oversupply in the market do persist even as we see equilibrium being achieved between demand and supply. We are managing our capacity into this market in a very agile and nimble manner as we've done in Q1 and have shown in Q2, and we'll expect to do that in Q3 and for the rest of the year. Now before I hand over to Krishnan to cover the details of the key parameters and financial highlights, I'd like to take a moment here now to acknowledge the passionate and incredible people and teams across the network at the Jazeera Airways for the outstanding efforts and the resilient performance we have seen in this quarter. Krishnan, over to you.

Thank you, Barathan. A very warm good afternoon to everybody on the call. Moving to the Slide #19. Bara, has touched upon all the main KPIs in this section. I just would like to add and highlight that we have been very selective in the routes that we flew in 2024. You will notice that our aircraft utilization and sector length have been lower than the previous year for the same reason. The number of destinations also is, therefore, lesser than the previous year. We have very consciously avoided nonprofitable flying in this year. The results are evident in the profit and loss, which is on Slide 20. In 2Q of '24, the operating revenues were 6% higher compared to the second quarter last year due to the increased passenger numbers. The operating costs were higher by 4.7% versus last year, driven by 7% increase in operations and 4% surge in fuel prices. Cost efficiencies, like Bara mentioned earlier, with the transformation program have obviously delivered the benefits as can be seen in this parameter. As a result, our operating margin was higher by 18% compared to the previous year. The cash balance increased in 2024 by KWD 44 million due to the increased advanced bookings and the utilization of bank facilities. After offsetting all the bank loans avail, our cash position is still KWD 10 million positive as of June 30, 2024. The fixed assets increased primarily because of some investments we did in some capital projects. Liabilities are higher due to the higher advanced bookings that we have this year from the passengers compared to last year and the bank loans avail. With this, I conclude my section. Thank you, everyone, and back to you, Bara.

Thank you, Krishnan. And I now open the floor if you have any questions. Over to you, Hatem to moderate.

[Operator Instructions] We'll take the first question from the line of Nishit Lakhotia.

Congrats on a very strong quarter. I have a couple of questions. First, on the competitive environment, Bara, you touched about that. But I just wanted to get a sense of how do we see third quarter playing in terms of yield and the UAE carriers' capacity. So how do you -- if you can just give a sense, look at the [ yield jumped ] high in the second quarter, looked very good. So how do we see that playing out in the most important quarter of the year? Some more color on that perspective would be helpful. Second question is on the fleet management. I see that you are looking at subleasing one of the aircrafts. So given that the utilization has fallen in general of the overall fleet, how do we see this going forward? Would you be open to letting go of some more of your fleet or sublease it until you have more sense of where you want to deploy profitably within the network? And third, just on the T5 update, the capacity expansion, have you got the necessary approvals for the increase in the capacity to 7 million, 7.5 million? Or is there any bottlenecks or delays that you want to update us on?

Thank you, Nishit. Great questions. Let me first tackle the question on fleet. As you've heard from us in quarter 1, we're very clear in terms of how we are managing in a very agile and nimble way our capacity going into Q1 and Q2 from what we saw in Q3 and Q4. If you refer back to the transcripts in Q3 and Q4, there were a lot of questions raised by the investment community on capacity and how Jazeera has been managing yield in those quarters. Likewise, we have -- would lead to some great lessons we have learned from last year, and that's why we've managed capacity in Q1, and that has really proved very strongly in Q2 in the way Krishnan has -- you've heard from Krishnan in the way we chose profitable flying compared to flying across all destinations in the network. So now answering that question with the question on the fleet you've asked. Yes, we have gone to the market to temporarily place one aircraft out in the market as we come and capture the good yield environment, we don't want to flood the market with overcapacity. And likewise, we are also seeing that -- I'll refer the question to your first question on yield and GCC capacity. We're also seeing that play out with a number of competitors, you probably heard one competitor pulling out on direct services in Kuwait from the UAE. In totality, we have seen competitors elsewhere across the network, trim their services and frequencies into Kuwait. Now all this didn't happen by chance. It has only happened from the Q3, Q4 effects of last year and what even competition has realized coming into Q1, 2 and 3 of this year. So you've seen that -- with that, I'll answer the first question. In terms of fleet, yes, we are removing one aircraft because we've designed a network, which we will drive our utilization very hard from the utilization levels you've seen in Q1 and Q2. It's still early days, but Q3 looks very promising at this stage, and we'll comment on the quarter when we complete the quarter at the next web call. Now so that's capacity. On yield. We have seen -- as I said, we have seen retraction of capacity by competitors in the market. Our Q2 performance on yield is a combination of a very strong summer season in June and also a very well-designed Hajj season in which we really flew the highest number of Hajj sectors that Jazeera has flown. That really led to a very good spike in Q1 to Q3 yield -- Q2 yields we've seen. Now playing that out in Q3, we are -- it's still early days. You've seen some very good positive momentum in bookings. You've heard Krishnan mention about our liabilities higher this year due to the fact that we've taken a lot of advanced booking. We see bookings being very strong. We are driving high load factors across the network for the remaining months in summer and hence, we will maintain a positive momentum in yield. The only caveat output there is how the geopolitics plays out in this quarter. As you know, for a fact. I think all of you know from the fact we're watching this day by day in terms of what's going to happen with the FIR in airspace, if there are any geopolitical tensions. So I hope I've answered both those questions. And the last one in terms of Terminal 5, look, Kuwait has gone into a good political strike from what you have seen today. The political situation in Kuwait has changed. We are very encouraged by the discussions we've been having with stakeholders and policymakers in Kuwait. And likewise, we are confident that by '26, '27 we will be able to deliver more capacity in the market. It is definitely -- we are pursuing both options. We have the T5 expansion has one design activity in terms of where we can build more capacity, and we are looking at other programs as well. So both of those, I can say that we have -- we don't see any roadblocks. We have not received any road blocks we are just pursuing the procedural steps that we have to pursue in Kuwait to make sure that we have put all the required steps to complete the projects, and we are determined to build the capacity. If you look into where the aircraft orders are going to come into '26, '27, we project the level of growth that Jazeera will see, you will be clearly -- it is very visible to everyone that we need capacity of at least 7 million to 7.5 million by '26, '27. Thank you.

Thank you. I'll take a few questions from the chat. Rajat has a few questions. I'll take the first two. Can you please explain what drove the yields in Q2 versus Q1 '24? And any guidance on the yields for the rest of the year? And any update on the passenger quotas on the routes to the subcontinent in Egypt?

Let me tackle the quotas on Egypt first. And then I'll tackle the yield question because I've kind of answered your question in my first segment of questions. On quarters to Egypt, if you've seen Jazeera's network. We are spread out between 6 to 7 destinations be it winter or summer across Egypt. And in some of these destinations, we remain a single operator from Kuwait. If you look at the network and you look at the capacity, we plan to see this. Now the quarters do not affect us across the whole network into Egypt. Yes, they do affect us in the capital city of Cairo, but after Cairo, we are pretty much balanced across the rest of the network. Now if you look at Upper Egypt, we have put in a lot of capacity to Upper Egypt. If you look at Alexandria, we put in a lot more capacity into Alexandria. These are markets that are well supplemented in Jazeera by a number of customer segments. You have leisure, you have business, you've got family and relatives moving up and down both markets and Kuwait, and you have the labor traffic. So we're well positioned to basically continue taking the opportunities of growing into this market, and we don't see any limitation in doing so, except in the capital markets, which I've covered. On the yield, differences between Q1 and Q2 or '23 and '24 is the environment. I've covered the capacity retraction that we've seen in some of the markets earlier. And the other thing that we have been very clear about is the way we put capacity in the markets and chosen the footprint this year relative to last year. Of course, if -- that's only because of the learnings from Q1, 2 and 3 of 2023, that has allowed us to do that in 2024. We continue learning. We continue having our ears very close to the ground, and we continue matching supply and demand imbalances and balances where we need to achieve the yield.

Question from [ Ayla Heidel ]. Congratulations on a very strong quarter. It seems that the utilization of aircraft is lower. Does it mean that the company is reducing the utilization to counter overcapacity? Also, load factors are lower Q-on-Q, is it for the same reason or lower traffic in April and May?

Great question. The Middle East market is very interesting as I think all of you are very accustomed to. If you look at it, you have the shoulders and you have the peak now, predominantly in the prior years, and what we have done is we have applied the same schedule and capacity on the shoulders as we've done in the peak. Obviously, for seasonality it now has proven to us that is wider (sic) [wiser] to push utilization very hard and rapidly and accelerate that during the peak months and peak windows even in the shoulders while putting our aircraft down into maintenance and heavy both -- both of heavy maintenance and component checks that we have to do with the aircraft in the shoulders. So as we covered in Q1, this is all about active and nimble capacity management and deliberate maintenance planning that Jazeera has taken throughout the last 2 quarters and which we will do so after Q3. Now in Q3, our utilization levels are going to be very different from Q1 and Q2. Just looking at July and even at the tail end of June, those numbers are much better than January to May of this year. So that we will address when it comes to utilization numbers. We are not deliberately pulling down utilization or capacity throughout the season but we are only doing it in the shoulders.

Okay, a question from [ Ankit Bansal ]. The fleet size for the third quarter. Will it be 24 aircraft? Or are you planning to add wet leases temporarily for the busy third quarter?

Now when it comes to fleet, we have just collected aircraft 24. Now this came in very early in the third quarter and it is almost at the tail end of a summer season and a busy summer season. We have opportunistically utilized the aircraft in the fleet at the current point. But towards the closing half of 3Q and it's essentially the month of September onwards or late August onwards, we will not require 24 aircraft. We will only operate 23 aircraft very strongly and with high utilization levels as you will do the same in Q4.

A question from [ Faisal ]. What is the CapEx and funding required next year? And if you can provide guidance on the number of passengers and the revenue per passenger for the next couple of years?

Let me tackle the second question on passenger numbers, we do not specifically provide annual passenger numbers across the years. But if you see in my initial comment, on modeling the order book from Airbus and our terminal capacity requirements, I think you know where we are heading to in terms of growth. And growth will happen with the sheer fact that, one, we will be taking on more aircraft in the fleet over the delivery schedule we have with Airbus on the 26 firm deliveries, 18 A320neos, and 8 A321neos. And two, we are in terms of transformation efforts, we are looking on the LOPA configurations on the aircraft. We have not -- this is part of the transformation effort and drive that Krishnan the team is pursuing and we will hope to give you more clarity in Q3 at the tail end of the webcast to surprise you with a number of things that Jazeera will be doing as we look to grow capacity between now '26 and '27. In terms of CapEx, we have enough banking lines. In Kuwait and within our precious lines, we have to meet for the CapEx we need, we have funded, as we've seen most of the PDPs with cash, very little borrowings. And so that will remain true. However, when we clearly, formulate and sign off on some of the transformation activities, we will be able to give you a clear indication of our CapEx pipeline probably in the Q3 webcast if not the Q4 webcast.

A question from [ Al Lawdi ], Can you quantify the financial impact, if any, from the Microsoft IT server outage last month?

Thank you for the question. It was a tough day for Jazeera as it was for many airlines across the world who have gone through the CrowdStrike issues. Now we had almost close to 5,497 customers impacted with an average delay of 161 minutes of flight. But the good news story here at Jazeera is given the dedicated terminal facilities and the fact that we are able to control the end-to-end customer journey in the terminal in Kuwait, we did not cancel a single flight across the network. Yes, there was a small impact on financial elements. They were not significant and not significant for us to even mention on this call today.

Some follow-ups from [ Raja Pakshi, ] Any updates on the ongoing cost initiatives and the potential savings in '24 and '25? And were there any one-off items that positively impacted Q2 net profits?

Thank you for the question. Let me refer you to Krishnan to take on this question, one moment.

To answer the second question first, there are no one-off items in the profit and loss account, which have benefited the bottom line in quarter 2. The only one-off was a hit of KWD 2.5 million that we took in quarter 1 for the devaluation of certain currencies in our network. In terms of the cost initiatives, the savings that we have initiated, all I can say is that we are on target. You are actually seeing the benefits already. We have seen the benefits in the last 2, 3 months. I'm unable to tell you the specific number, but we have set targets for ourselves internally. And by the end of the year, you will actually see the full benefit that we have done. I think it is premature right now to give you any indications of the number. But definitely, we are on track, and we have already seen the benefits so far.

Last question is another one from Rajat. If you can provide an update on T5 expansion and Terminal 6 plans?

Thank you for the question, again on the terminal. And I'll repeat myself again, as you said, in terms of the order book profile, we need terminal capacity to increase and especially with the projections of 26 aircraft coming into Jazeera from 2026 onwards. Currently, with the approval plans we have, we don't see any roadblocks. We are continuing. We are, in fact, doing a lot of brainstorming in terms of the better terminal configuration we will need between commercial footprint and passenger footprint to get the best yield mix in the terminal. We've seen fantastic results on our Duty Free product, and we will, in fact, grow adjacent businesses across our brands from the terminal experience we've had both in terminal and outside of the terminal. And that's for T5 expansion. We will need to expand the terminal within 24 months. The design -- the terminal is in the design stage. We are pending approvals that are moving. When I say approvals are moving, Kuwait has now seen a better business environment given the recent changes in the way approvals are coming forward, we have had a number of approvals in the business that is supporting the airlines. And likewise, we are waiting for the final approvals for the terminal. So that's what T5 expansion. As for T6 beyond T5 expansion, T6 will be a game changer. Just like the 321neo for the game changer for Jazeera. And we are excited to build on the plans for that, but that's one step after T5 expansion. And as you know, in Kuwait, the other terminal expansion plans going in the market, and that only bodes well for both national carriers in Kuwait.

A few more questions came through. A question from [ Muhammad Micheli ]. Could you please comment on dividend policy and by annual dividend distribution?

Sorry, I did not hear the question.

A question on the dividend distribution policy. If you can comment on the dividend distribution policy?

Krishnan, do you want to take?

Yes. So we, in the last couple of years, we have been distributing the entire profits as dividends. This year, we will look at it towards end of the year. We are not recommending an interim dividend because we want to see how the plans work out for the rest of 2024. We are quite optimistic about it. And so we hope that we can do justice to the shareholders towards end of the year.

Question from [ Shereen Nomir. ] Do you think the number of passengers using Terminal 5 would follow the same growth trend as the projected expansion to 7 million in '26 and '27?

Thank you. It's a great question and a question that we are very passionate about. We built Terminal 5 with the capacity -- holding capacity of between 2 million to 2.5 million. If you've seen what Jazeera has been able to design and engineer with security systems, baggage systems, with check in counters and even priority boarding arrangements in the terminal with two dedicated aero bridges we have in the remotes, we have been almost able to double the handling of what the terminal was built for. Now we really need the footprint as we grow forward, and we will be very pleased to allow greater conveniences in the terminal. And what some of the areas we kept looking at is would be a bigger lounge access. If any of you have gone through a terminal, you'll know that you will not be able to get lounge access because it is 99.9% full, 99.9% of times. So we will definitely build a lot more conveniences. Of course, there will be more retail footprint in the T5 expansion, but we will definitely drive a lot of volume and value out of the investments in the terminal.

Another question from [ Muhammad Micheli ]. Any update on the Saudi joint venture in the eastern province in the Dammam?

No comment on that. We have -- as I think all of you know, we have fulfilled all the obligations in terms of the filing process, and we're waiting for the outcome, but we have not heard anything.

Question from [ Usama Hamm ]. Can you please share your thoughts on the planned expansions from multiple players in the GCC region, especially those based in KSA? If you can comment on the demand and supply situation currently and in the long term?

Thank you. Look, it's a great question. If you look at the relative growth that the KSA has seen, and you've seen Jazeera's footprint going into KSA, and KSA's investments into development, growth, leisure destinations, we have been a big benefactor from this, even policy changes in KSA from the religious market, opening up narrow windows to a wider annual basis. Yes, we have seen a number of airlines go out with order books for their respective hubs, but we're very bullish on Kuwait as a hub and how both national carriers can serve this market that is looking for direct connectivity from Kuwait to points, which will give the customers a seamless direct experience versus having a one-stop product or a multi-stock product. Yes, we have seen a lot of expansion plans across a lot of countries in GCC and elsewhere as well. But we are very focused in terms of what we need to do in terms of having the right product, the right price segment and the right value definition for our customer, including our own supply chain capacity building to cater to the Kuwait market. So we are not too distracted about what we are seeing in the external environment because we stay very focused in terms of the voids and the pockets of opportunities we have and are able to fill out of Kuwait, and the value customers are looking for direct connectivity from Kuwait to all these markets. Thank you.

Another question from Nishit Lakhotia. Any update on your own hanger for maintenance, in-sourcing of catering and when do you expect the Airbus deliveries to start and is it safe to assume that your fleet will be constant at '24 in 2025, '24 [ claims ] and '25?

Let me start with the fleet question first. In terms of fleet being at '23, '24 and 2025, you can take it as a baseline. However, when we see demand surge in the peak windows, we've done this before at Jazeera, we've taken between 2 to 3 units on wet lease basis in a very smart way of leveraging and taking -- maximizing the yield opportunity in summer months. And we were willing to do that, and will do that as we see fit and when we need it. So there's no real concern in terms of fleet. In terms of Airbus delivery schedules, of course, Airbus is talking to all customers. We have not seen anything come out definitely from Airbus to us in terms of any impacts on our delivery schedule this year. And we have a number of levers we can pull into ensuring that we have the baseline capacity with some of the initiatives we will undertake in Q3 and Q4 in ensuring a flexibility and flexing up capacity when we need this in '26 and '27. Thank you.

Last question from [Ula Gatsin ]. Will it be fair to assume that Q2 and Q3 contribution to revenue and net profit will be around 70% of this full year numbers? And do you expect to tone down utilization levels in Q1 and Q4?

Let me take the second part of the question first. In terms of utilization, Q1 coming out of Q4, if you've seen that successfully for the last number of years, except for the period post-COVID recovery, when utilization was very high because of the surge in demand and the lack of capacity, that trend will continue -- that trend continues. Well, I see that -- you -- I will also keep it that with some positivity, where we find competitors or even market retracting capacity in certain markets, we will ramp up utilization, and we are not shy about doing that. But I think next year, you'll see in terms of Q1, March has got a full month of Ramadan. And if you look in terms of forward planning window, it's only sensible in a period like that, all airlines is not only Jazeera, will adjust capacity settings to market demand in the whole month of Ramadan. Yes. And what is the other part of the question, please? The first part.

Q2 and Q3 will be 70% of full year revenue and net income.

Look, I think we cannot give you the guidance. We provide -- as we provided today, the numbers as they are through what we filed in the Boursa. In terms of outlook, we've given you an outlook on where we see Q3 and the full year trajectory going on the back of the strong momentum you've seen from Q1 and Q2. So whether it's 70%, 80% or 50%, we can't comment on any specificity in numbers, but the momentum you see in Q1 and Q2 playing out, and our initial comments on what we see in Q3 in terms of demand and what we have posted in terms of advanced booking revenues we have collected, you can basically synthesize that you're looking at a good Q3 for the year.

I think there are no more questions at this stage.

Thank you. It's exactly 4:00, and I really appreciate and thank all of you for taking part in the Q2 webcast today and look forward to connecting -- Krishnan and I look forward to connecting with all of you in Q3.

Thank you so much, Barathan, Krishnan, and thank you, everyone, for participating. And this concludes today's call. Have a good rest of the day. Thank you.

Thank you very much.