Wizz Air Holdings Plc (WIZZ) Earnings Call Transcript & Summary

Hello, and welcome to Wizz Air Fiscal Year 2021 Results Call. Throughout this call, all participants will be in a listen-only mode, and afterwards, there will be a question-and-answer session. Just to remind you that this conference call is being recorded. Today, I am pleased to present József Váradi, CEO of Wizz Air. Please go ahead with your meeting.

Good morning, everyone. Thank you for joining this call. So this is to present the fiscal '21 annual results of the company. And with that, let me take you through the presentation we prepared for you. So moving to presentation. First, let me just give you some highlights to how we are seeing this business performing and what news we have with regard to the future. Clearly, it's been a very challenging year, the toughest year for the industry, the toughest year for Wizz in our history. But at the same time, I think as every reset, It has also created a significant number of opportunities for the airline. And we have been trying to take advantage of those opportunities. But of course, we've been dealing with issues as they arise day by day, but we have been keeping an eye on our future, and we have been strongly invested against the opportunities as we move along the lines. We believe that we are a stronger airline today than a year ago, despite the fact that our own performance was almost marginal relative to previous times. I mean, we lost 75% of our revenues during the year. But relative to the market, relative to our competitors, we believe that we are a better and a stronger business than ever before. We have been very disciplined on managing liquidity. We ended the financial year with EUR 1.6 billion of cash. This is significant, and that makes us obviously very resilient and not only resilient but kind of investable when it comes to investing into new markets, into aircraft. And those 2 strategies have been fundamental for building long-term structural competitive advantages for the airline during the pandemic. We retained our investment grade rating by both Moody's and Fitch. That is relevant not only for the feel of it and the look of it. But certainly, for financing aircraft, we have been taking significant aircraft deliveries, new aircraft deliveries during the past year, and we'll continue to do so going forward. As a matter fact, our fleet has grown 13% during this period. So we need to take out financing in quite a significant magnitude for those new aircraft deliveries. And obviously, our credit rating flows through the cost of capital deployed against our final -- of our aircraft delivery stream. So it is very important that we maintain investment-grade credit. And it's not just been the fleet that has grown during the period, but we have much broadened and enlarged our network or footprint during this period. We opened up 18 new operating basis in this period or at least announced, some of them yet to be open. And we have been trying to take advantage of the market opportunities as they arose during the period. Obviously, our capacity, our growth, have been much wanted by the market. We have one of the very few airlines in Europe who actually can deliver growth to airports. And we have been benefiting from that. We set striking good commercial deals for the long run and tapping into very attractive markets. We are ready to move. We have created a lot of flexibilities in the company. We can move back up, we can move people with the aircraft. That has made us very agile and I think we continue to be very agile going forward. Depending on the operating circumstances, we will see how restrictions will evolve, we are ready to go. And we think that the consumer is there. The consumer actually wants to fly, wants to move. There is nothing wrong with willingness to travel. If you look at the U.S., the U.S. is already at 80% versus 2019 and is expected to exceed actually 100% for domestic flying in peak summer. So we think the consumer is totally intact and want to come back into the franchise. It all goes down to travel restrictions, and Europe has not done too well with that regard. It's been a roller coaster in the last year, significant uncertainties going forward. And that kind of taints in a way our ability to guide you on fiscal '22 because I think it is actually quite a broad range of outcome that we may end up with in the end, depending on our ability to -- depending on our ability to operate within the framework of restrictions or no restrictions. So I think we need to see how markets get. Honestly, the good news, obviously, is vaccination. I mean vaccination has been rolled out more aggressively in certain countries, but now everyone I think is catching up, certainly in Europe. So that should make a significant difference. I think we also understand that various new variants could affect this whole paradigm, but this is yet to be seen. So we are cautiously bullish. We are certainly very upbeat with regard to our ability to move quickly as the market opens up, and we will do so. So if we move to the next slide. This is the footprint of the airline today. A lot of expansion during the pandemic, hundreds of new routes launched and a very significant network today. We are operating to 48 countries in total. As said, we added 18 new operating bases during the year. So this is a much enlarged and enhanced operating network, certainly a much enhanced commercial network, but we are selling them what we had a year ago. We've got a number of recognitions during the year. I would note that Wizz Air is the very first European airline, if you can think of starting as a European airline, which is certainly -- I think Wizz Air, our license number is 001. We are the first European airline licensed by EASA. We think it's a significant move, and that gives a significant path for ability to expand and scale our business not only from a commercial perspective, but also from a regulatory and operational perspective. If we move the page. As you can see, as I said at the beginning, we are a better airline than what we were a year ago relative to the market. We have gained trends pretty much in every core markets we operate from in Central and Eastern Europe, but also in select markets in Western Europe. Some of it is obviously our ability to have been able to take advantage of the pandemic and some of it, obviously, is rising from the weakness of our competitors. And clearly, what I think is going to happen post-pandemic is that we will be a much strengthened business platform, operating a newer fleet of aircraft at much lower operating cost than our competitors that we have to rely on aging aircraft and higher operating costs and this is being a commodity, obviously, triggers given around the basis of who delivers the lowest cost, lowest cost prevails. And we are just going to further enhance our low cost position in the marketplace. And with that, let me hand it over to Jourik.

Thanks, József, and good morning to all. Let me just have a few financial highlights for the year and also some color on the last quarter. So on Page 5 here in the deck, you'll see that our revenue was down 73% and quarter 4 revenue decline was not different. It was down 74% given the restrictions that continues also into the entire quarter. We reported an underlying loss of EUR 482 million for the full year with a loss for quarter 4 at EUR 222 million. And the reported loss for the year was EUR 575 million with the difference between those 2 numbers being the exceptional losses linked to the discontinued hedge losses. Given where the fuel prices are and the hedge coverages of IFRS 22, we don't believe you will have major exceptional items going forward. And over time, we can just go back to one reported profit number. And sorry, József highlighted, the total cash number was EUR 1.617 billion, and we'll come back to that a little bit later. On the next slide, Page 6. You will see that the total costs were reduced with 46% and ex-fuel cost by 38% versus last year. Recall, the ASKs were down 64%, 63.5% for the period. And you will see that the costs that were almost fully variable were obviously few airport charges, distribution and marketing costs. We also reduced stock costs 43%. I mean, recall, we don't meaningfully benefit from favorable schemes in our region. We reduced growth with 19% back in April 2020 and the same month also the salaries with 14% on average. So there was a big reduction on the employee cost, on the staff cost, even though during the last quarter, quarter 4, we reversed some of those, let's say, salary reductions for the lower earning incomes cabin crew and office staff while we kept, obviously, these reductions in place for executives and pilots. Maintenance and depreciation are the 2 cost buckets that were more rigid. Obviously, we want to keep our aircraft air worthy even if we don't fly them and we also started to redeliver a certain amount of aircraft and even accelerated some of that into the year, into quarter 4. This brings us to our liquidity on the next page. If you look at liquidity here, we're finishing the year as said at EUR 1.6 billion. So it's ahead of the EUR 1.5 billion where we started the year. But of course, a lot has happened in between. We issued EUR 300 million commercial payable with the Bank of England under their CCFF program and we issued a 3-year bond in January 21 of EUR 500 million. From a cash point of view, you can see from a cash burn point of view, you can see that we've actually done, despite all the adversity, a relatively good job. With the cash burn highest in the first quarter of the fiscal year and in the first quarter of the year, making up 95% of the Q1 to Q3 cash burn with a pretty good summer cash performance even at the time when we are not back to full schedules. And also in quarter 4, I mean, it was a relatively difficult quarter in terms of operation with still a lot of restrictions. We only were EUR 84 million. Recall, our guidance in the last 6 months of the fiscal year to EUR 70 million per month in case of so burning only EUR 84 million in the quarter where we operate just over 20% of capacity is a pretty good performance. On Slide 8, you see little bit more color on the last quarter. The all-in cash burn, as mentioned, EUR 28 million per month or EUR 84 million for the quarter. As we mentioned, we maintain the investment-grade rating. We do not have overdue refunds with passengers, we've had some French cases who link to, for example, expired cards. The upsell revenue remained at the level where it was in December, so around EUR 55 million which obviously holds potential for the futures as our bookings will come back and that balance sheet account will kind of flow back up. And then the -- obviously, we continue to focus on our contribution as a key principle for the operation. On Slide 9, just to close off on the financials. Speaking a little bit on the ancillary revenue, we continue to reiterate our strong performance and capability on ancillary revenue. On a like-for-like basis, ancillary revenue is up EUR 5.7 per passenger. Of course, there are some tailwinds here because of COVID-19, both in terms of uptake on current products in the portfolio, but equally in terms of pricing because obviously pricing in the last couple of months has been relatively or at least the demand has been relatively in the last week. But still, we have strong confidence for the future to have ancillary being in line on a like-for-like basis with our long-term target of EUR 1 per passenger per year. And we just -- I mean, that clearly makes up more than the majority of our total revenue, which, again, is really critically important for model as we're trying to stimulate demand with low fares and have the partial or full offset within that period. And with that, József, back to you.

Thank you, Jourik. So if you look at the focus of the business going forward and the focus, what we have been really putting into this business, of course, we remain very intact on our ultra-low cost model. As a matter of fact, we're seeing that given the times, given the challenges in the industry, the ultra-low cost model prevails more ever more than ever. And it is the model that is expandable, that is scalable, and we have been trying to take advantage of that and making ultra-low cost even more ultra-low cost going forward. As said, we have much focus on diversifying our network. We have a significantly enhanced and enlarged geographical footprint today than before, and we're seeing that benefits the business. I mean, clearly, we see that due to the roller coaster effect over the past 15 months, we saw certain markets performing well in the period and some others performing much weaker, and then they kind of reversed. So -- but we always had markets outperforming the rest, giving the sources for financial solid performance, liquidity performance. So clearly, the more diversified you are as a network, as in the greater your abilities to deal with issues like the current pandemic. We think sustainability is a big deal. And it will be an increasingly big deal going forward. Clearly, we are best positioned for sustainability given the aircraft we operate, the efficiency of that flowing through from a sustainability standpoint, and as well as the operating model that we have and how efficiently we are flying the passenger. So we are already leading the pack when it comes to sustainability, carbon impact of the European airline industry. And we're seeing that our continuous investment into aircraft technology will give us more scope for leadership, and we are working on exploiting that leadership profile. And we have been further digitizing our business, our operating platform many ways and I will touch base on that later on. So if you move to the next page, please. I would just like to highlight a few things here, how we are enhancing our ultra-low cost model going forward. If you look at the first chart, we are up-gauging and we are going to operate a younger fleet of aircraft going forward. And both will significantly benefit the business from an economic standpoint. Obviously, a younger fleet of aircraft delivers lower unit cost and the gauge and up-gauge fleet that delivers lower production cost. So we are going to benefit from both in the coming years, which I think is a significant source of competitive advantage going forward. Jourik touched base on ancillary revenues, ancillary revenues are a significant source of competitive advantage for the business. You can see that we have outperformed the industry and we would expect to outperform it going forward as well. So we will remain very focused on this line of business. So we'll be on secondary airports. Secondary airports are strategically important to us. We had a high utilization model. So even ], when you devote capacity to primary airports, you become more constrained. And that operationally requires more ground time. So secondary efforts are not only important because of cost, delivering a lower cost operation but also for utilization delivering a more asset utilized operating model. And we have a way to go to catch up to previous productivity levels. If you look at load factor, currently, we are performing 64% load factor. And this is a significant gap to 94% where we were in 2019. But we believe that we're going to be back to that level very quickly once the markets become unrestricted. And same with asset utilization basically dropped to [1/3] versus where we were before. And as we are ramping up and the markets become unconstrained, we're going to be revamping our operating platform to this level. So there's a significant way to improve productivity to get back to previous levels. So if we move to the next slide, please. We have talked a lot about this, how we have been diversifying our markets. We opened up 18 new operating bases during this period. And you can see that it's been very diverse. So some of it happened in -- invested some of it in our core Central Eastern European markets, and we also opened up Abu Dhabi in the East. It's a much more diversified network than before. And obviously, that gives us a significantly improved ability to deal with the headwinds coming from situations like COVID. Some of these market openings obviously are trying to take advantage of the pandemic situation. And once we gain experience, obviously, we all have to make some choices possibly. And I think we've already started making some choices. And the choices, what we have made, on the one hand, we are going for Italy very strategically. We think Italy is an investable market. And we should follow through our early investments by expanding our network, expanding our operations in the country and continue to invest by opening new operating base and bringing more aircraft, more crews into the country. So we made a strategic investment decision when it comes to Italy. We feel very comfortable that the market resonates very well with the Wizz products and services. And Italy has been largely constrained during the period, but when there was a bit of an easing, the market reaction was very positive to Wizz. And we also made a decision to pull out of Norway as a domestic operator. We continue to serve the market as an inbound airline flying international routes. And basically, this is the trade-off of this investing inbound market for being able to invest in another market in Italy, as we said. And also, we are quite excited about the investment what we are making in the U.K. We need to see those investments through once the market opens up, but we've already opened Gatwick and Doncaster and we are looking forward to opening Cardiff in the near future. As such, obviously, in that the U.K. remains a good investment market opportunity for Wizz Air. If you please move to the next slide. Sustainability and ESG in a broader scale are important issues, and we think that Wizz Air is very well positioned for those metrics. You can see that we are already the leading airline in terms of carbon footprint, and we continue to reduce our carbon footprint going forward. But obviously, this is the function of the aircraft age, the seat count and the efficiency of operation. Gender diversity is another important metric we are focused on, and that is important at management level as well as crew, especially pilot level. We are really making significant efforts and putting programs in place to make sure that we have our gender diversity. We are a very diverse business in terms of nationalities. We have 53 nationalities in the company, and I think our culture benefits a lot from that. And obviously, we have a lot more other measures we are looking at like NOx or other sustainability-related measures. And we're seeing that we're going to be able to do very well within our scope of influence in the industry. But obviously, we need to see other kind of bricks in the wall, how they play out in terms of technology is developing, affecting the sustainability performance of the industry and some of the other issues like sustainable aviation fuel, like the whole navigation system or how that will evolve and how that would affect the industry's performance. But we are very much focused on what we can do as an airline to operate more efficiently and more sustainably in the future. If you please move the presentation. With regard to our digital investments, a lot of investments actually have been happening in that area. As you know, we are the most digital airline. To start with, we have most of our revenues flowing through digital channels. Very interestingly, over the past few years, we are now seeing the app becoming the core channel for interactions with consumers. There is a very significant shift. So I think our investment into that platform is now bearing fruit. You can see the ancillary revenues are reaching record highs. That's important. That's totally digital channel for the company. And we think that all this digitalization is very relevant to the consumer, especially for the up-and-coming consumers coming into the franchise of flying. We don't see electronic flight back, making us totally paperless in the cockpit. So it's not only the consumer interface we are focused on, but we are also looking at the operations of the business, the operations of the company to make sure that we benefit from digitalization. And recently, we just owned, Amelia, our virtual assistant helping our customer service and helping customers with their interactions with the company. So if you please move. Talking about the outlook of the business. As said, it is difficult to give exact guidance to you, taking the uncertainties into account out there with regard to the regulatory framework and travel restrictions. But certainly, what you can see is that we have been incredibly agile during the last year. When the market opened up, we significantly outperformed the market. I think it just comes down to our ability to move very quickly. But also, when the market became highly restricted, we took more capacity out than the rest of the industry. And I think that comes on the basis of our financial responsibility. I mean, we are not sentimental with like cash contribution, positively flying. If that doesn't make sense, then we simply don't fly. So we are not going to fly for the sake of flying, as in many airlines do that. But we are financially very disciplined when it comes to operating flights under distressed, financial or regulatory environment. The good news is that, I mean, we start seeing some easing, there was an own period when every single flight we operated fell under some restriction. And now we are seeing that around 10%, 15% of our flights are becoming unrestricted. And as a result, you see immediately how the market reacts and our consumers react and want to come back to the franchise. So If I look at last week, we operated 30% of our 2019 capacity of the same week, but we sold 70% of the revenues versus the same reference period. So clearly, we are seeing a turn of the market consumers coming back. If you please move. Just to give you a quick outlook for so much as we can say. Travel restrictions, mobility restrictions remained the issue and we determined the pace of recovery and timing of recovery. And actually, the results of our fiscal '22 financial year. So that's why we are ready to on what guidance we can give you because If we operate in an unrestricted market, we would deliver totally different results and financial performance versus operating through a restricted market. We just need to understand how that's going to play out. What's important from our standpoint is that, I think, we are ready to do with any circumstances with any situation. As said, Q1 capacity is going to come in at around 30% capacity level. And the rest of the financial year, will really depend on the restrictions prevailing. Having said all of that, I think we have adopted the principle of cash positive flying and we're only going to be operating a cash positive flying program. So If the markets are unrestricted, we do more. If the markets are more restricted, we do less. But we stay very financially disciplined with that regard. With regard to peak summer, we are expecting 2019 levels, even higher levels than 2019, again, subject to restrictions, but this is what we are planning on. And we're seeing that sort of the second half of the financial year would kind of fall in line at least or summer to go to 2019 levels. But, again, if we are seeing an unrestricted market, we can do much better than that. We are adopting or readapting the cost disciplines of the business model to make sure that we are getting asset utilization back to standards, 12-plus hours. And we are getting productivity back to standards when it comes to personal productivity -- labor productivity of the business. We believe we continue to perform strongly on cash. Liquidity has been our most important priority. We think we have reserved liquidity quite well. And going forward, this business will be very strong on liquidity position. We are returning to some normalities with a proven model, and that is around stimulating demand, growing ancillary revenues, penetrating more and more consumers through digital platforms. So we're seeing that as the market gets somewhat normalized, our model also we operate in a much more normalized way similar to the previous experience. And with regard to fiscal '23, I mean, this is kind of long time out, certainly given the times we are in. We think we should be kind of swinging back full steam at that time certainly in capacity, but we also think that given the competitive advantages, this business will be able to deliver that time that kind of an event we have flow through the financial metrics largely as well. If you please move. So just to wrap it up, we think we are well positioned to take advantage of the pandemic It is an issue we have to deal with day in, day out. But at the same time, it is also a great opportunity for the business to reset ourselves in the new competitive landscape and we're seeing Wizz Air will come out of . We have a strong -- a very strong liquidity position, probably much stronger than the rest of the industry and balance sheet. And those are enablers of the airline to capture these market opportunities. So actually, we can invest. So we are not just surviving every day, but we are investing into our future. We are investing into markets. We are investing into aircraft, and we will follow through those investment plans going forward as well. We are totally geared for pretty much an immediate restart event, subject to market conditions, subject to regulatory restrictions. We have developed the flexibilities to move capacity, to move back up, move people with the aircraft, pilots and cabin crew as acquired by the market or as the markets allow us to move. We are well positioned for sustainability. We think it's going to be one of the strategic agenda items of the world in the next decade. And we're seeing, actually, there is no better airline in Europe to perform against ESG sustainability expectations than Wizz Air. So we think it will be another source of company to take advantage for the business going forward. As said, fiscal '22 outlook remains uncertain because it is largely subject to restrictions, prevailing restrictions imposed by governments. But as far as we are concerned, we are ready to go, and I think we are able to restore many of the operating parameters of our business model that have been making us successful in the past. And we are fairly confident in our ability to recover quickly, quicker than the industry and to start seeing kind of full swing performance standards on capacity, on our revenue and the financial metrics going into fiscal '23. Thank you. And I think that gives you the floor for questions.

[Operator Instructions] We have a question from the line of Daniel Roeska from Bernstein Research.

Three, if I may. One, you said your outlook for '22 is cloudy, but referenced that you're back at kind of full speed in '23. What's the min/max range you're currently considering for financial year '22, maybe in terms of passenger numbers or relating to the size you had in 2019? Following on from that, could you talk a little bit about your staffing levels and kind of since the lack of furlough schemes makes it a little bit more difficult, how do those staffing levels impact your min/max scenarios in the next 12 months? And then lastly, could you -- you mentioned the EASA AOC. I guess this was granted back in August. What's the impetus here? Are you planning more operators in Europe? What's the key advantage for you? since the U.K. AOC isn't -- kind of isn't related to the EASA AOC?

Okay. Thanks, Daniel, for the questions. On the first one, I would say, I mean, the min/max it's very difficult to call. But I would say between 60% to 100% of capacity is fine, is what we would be looking at for the remainder of the fiscal year, maybe 100% will not be there immediately yet. On your second point, from the starting level because that's where we are. At this point in time, we will gradually build up the capacity for as we see progress . But that's kind of the range you should look at for

So with regard to stocking level, I think we are able to ramp up to around 90% operation at this point in time. And obviously, with a few more months down the line, we can reinstate some formal employment with the pilots and cabin crew and we can recruit from the market. But our current capacity level allow us to ramp back up to around 90% level in a very short space of time for peak summer. So I think we are fairly direct with that issue. It is not really our ability and our internal capacity to be able to ramp up. I think it's much more down toward the restrictive nature of the regulatory frame will allow us to achieve in summer. With regard to EASA, I think the benefit of being governed by EASA is that, first of all, it is the European regulator. So you are closest to the fire with them, too. EASA has capacity to expand its regulatory oversight. Hungary is a relatively small country with somewhat constrained resources available at regulatory level and we just wanted to make sure that we don't run into bottlenecks with that regard. So being able to deal with the regulatory set, I think we have much greater influence in standards affecting some operating procedures. I think as we are learning from EASA, they also will learn from us. And certainly, we are eliminating potential bottlenecks in the future for expanding our business. But with regard to the U.K. AOC, the U.K. AOC is important because that gives us the regulatory platform for being able to serve the U.K. not only from the European Union, but also from countries where we can have operations from the U.K. to those countries. And we will be looking at expanding that network in the future. So it is important that we have the right base to [work with]. I mean, we have to recognize that U.K. is no longer a member of European Union, that requires a different level of regulatory compliance than before.

Our next question comes from the line of Mark Simpson from Goodbody.

A couple of questions, some on cash flow, maybe for Jourik and one on revenue mix. On the cash flow, deferred income, obviously, marginal at the end of March. But on the current run rate, would it be reasonable to think that deferred income would be circa EUR 350 million, EUR 400 million by the end of this quarter? Obviously, very strong presales beginning to be seen. And on the cash flow on a longer-term view, FY '22 and FY '23, can you give us a net CapEx after refund on the balances, assuming all deliveries are based on our sell and leaseback platform. So more annual data for those. And then finally, on the revenue mix. Obviously, significant progress continues on the ancillary, but pricing on the tickets within the pandemic. I'm wondering as we look into summer '22, Michael O'Leary, Ryanair, was talking about potentially price -- ticket prices being above 2019 level. So I wonder if the mix will favor some inflation on ticket prices going into summer next year?

Okay. Thanks, Mark. So on deferred income, I mean, we are indeed seeing a buildup as you've also seen from the chart that was shown right on the VT sales program. Now we're not building up to EUR 350 million levels for the quarter. It's still significantly lower. So we will see a lower cash burn in the quarter than the EUR 84 million in part, thanks to the good cash discipline but also due to deferred income, but the levels are still relatively modest because the booking window is still 50% of the booking or within 2 weeks, 80% of the bookings are within a month. So it's not yet that we're already looking here, August and September, to a large extent. On the CapEx level, I mean, this is also like our number that sometimes changes during the year, but the outflows are relatively modest, below EUR 100 million or so for F '22. So that should not be a big ticket item. And then on the revenue mix, I mean -- and the pricing more generally, I think it's clear that there will be a lot of pressure on pricing over this summer. So summer 2021, I think even more so what we see on leisure routes as they open up. There's capacity piling in very often relatively on discipline of control, which then leads to depressed pricing. I think VFR is a little bit more hedged from that point of view. So probably on a relative basis, we'll be a little bit better protected. But I think it's no -- it shouldn't be an expectation that pricing levels this summer will be strong. I mean, for next summer, in theory, so 2022, in theory, they could be higher and they should be higher because a lot of the cost structure of the other airlines have significantly gone up. I mean we're one of the only airlines that did invest in fleet, that did invest in the network. But if you look at all the other airlines, they have done, so they've continued to operate obviously. And there are some cost headwinds that they will be seeing, which we're not seeing. So yes, it could be that the pricing is higher. But again, I mean history doesn't really speak in advantage of a very rational pricing environment in this industry.

Yes, Jourik, just going back on that. It's not so much a comparison there, FY '22 summer on this summer. It would be surprising if prices didn't rise, it's more of a comparison FY '22 on the sort of summer '19 on the basis, as I say, by that stage, we should be in a full demand recovery?

Yes. So the summer of 2022 versus the summer of 2019, it could be that we're back at those levels because, rationally speaking, it should be the case. We will need to see what the capacity discipline is in that summer. But yes, I think that's a good base plan, that it will be roughly the same level as summer 2019. This summer 2021, I don't see that.

Mark, I mean, I think one thing you can certainly say is that the unit cost level of the industry in 2022, summer '22, will be higher than what it was in summer 2019. I mean, a lot of headwinds we developed for many airlines. I mean we shall see how state monopoly charges will evolve like Euro Control, et cetera. But certainly, the cost that's coming from an aging fleet will be significant. And with that regard, I think 2022 is going to be a deteriorating kind of cost platform for the entire industry. And this was really the point I was trying to make, that I think when you put our business in context of that, I mean we're going to be delivering a significant competitive advantage coming out of an up-gauge and renewed fleet of aircraft. And we should be in a really good position to benefit from that situation.

Just following that up, József, I mean looking at your forecast suggestion of 2 percentage points of Intra-European market share. I know you gave us CEE kind of originating, but on a broader basis, 2 percentage points of market share this calendar year and next, is that kind of what your fleet is suggesting?

Possibly. But to be honest, I mean, we don't really measure market share. I mean, that's not the basis of doing business for us. I mean it is more like an outcome of what we end up with. So we are not driven by market share. I think we are driven by shareholder value creation. If we look at the investment on the base of profitability, return on investment, et cetera. And if it comes with market share, great. And I think this is going to come with significant market share because, I mean, if you just apply the logic of being more cost competitive in that commodity coming out of this is a significant source of competitive advantage, and we will have a much enlarged fleet. And on the one hand, we have the new aircraft delivery program, but we also have another lever on capacity, and this is the return of aircraft, of existing leases. I mean we can extend those, and you can extend those leases basically at no cost to almost no cost at this point in time because lessors don't have alternatives to place those aircraft. So we are certainly looking at all these opportunities and try to model what we can actually do and we have levers to do it properly as very low cost competitively versus the rest of the industry.

Our next question comes from the line of Jarrod Castle from UBS.

Can you just give us a little bit of color in terms of non-EU markets in terms of travel restrictions. Obviously, the EU is trying to get off the vaccination passport by, I guess, the end of June. So how do you see things playing out in non-EU markets in terms of restrictions looking into the summer? Just coming back to the market share commentary, it's an interesting slide on Page 4, because it looks like you've taken more market share from LCC going from 40% to 46% rather than from the legacy airlines. So are the legacy airlines growing more on short haul to compensate for long haul? Or am I reading that wrong, just given the relative mixes? And then in terms of looking a bit further out, I mean, you've obviously got at the moment very, I'd say, elevated levels of accelerated revenue mix. How do you see this normalizing as traffic recovers?

All right. So let me start with the non-EU restrictions. Yes, I think it's fair to say non-EU is more [restrictive] than the EU, although the EU is also somewhat restrictive inside. But we are expecting more restrictions implied on non-EU flying than EU flying. I mean, we shall see how the green pass will evolve and what elements we really have and how this is going to get implemented. But I think it's a fair assumption that non-EU is going to be a more restrictive order. I also think it depends on the value market we are talking about. But we are planning on more restrictions when it comes to non-EU. In terms of the legacies, yes, I mean it seems like legacies are maybe doing more, especially in context of bad markets. And the markets are restricted. Legacies tend to fly more than low-cost carriers. But I think this is just a reflection of financial discipline or lack of financial discipline. Low-cost carriers are financially disciplined. So I think it's not only Wizz Air, but the rest of the low cost industry also implements cash positive flying. And if you have governments giving you EUR 10 billion, then you don't really care and you can apply the same financial discipline. But also, where you see an open market, elasticity market, legacies are hugely beaten and outperformed by low-cost carriers. I think it just comes from the [ agility ] of the model. So I'm not sure how relevant what legacies are doing. I mean they are just acting on different levels of financial discipline or lack of financial discipline. We stay focused on our core. So we're going to be flying cash-positive network, and we are not going to fly for any other purposes than really making money and contributing to cash. And the last question was?

Yes. I'll take that one, József. So on ancillary, I mean, again, so that everybody is really, really clear on this. If you look at quarter 4, our ancillary gross per passenger was up EUR 15. Our ticket fare, and this is versus 2019, our ticket fare per passenger was up EUR 10 gross fare. So you can't just extrapolate the current... [Technical Difficulty]

Please hold while we reconnect the speaker line.

So just, Jarrod, I don't know if you're still there. Picking up on your last question. So we were saying that the pricing that we've seen in the last quarter, quarter 4 are not to be extrapolated going forward. And really on ancillary, what we keep guiding is that we will be EUR 1 per passenger per year higher. So for -- in F '22, it would be basically EUR 2 per passenger higher versus F '20. That's what you should kind of put in the model, and we continue to see that EUR 1 in the out years, as well as we still have hedge room on products and pricing.

Our next question comes from the line of Jaime Rowbotham from Deutsche Bank.