Fly Play hf. (PLAY) Earnings Call Transcript

Dear all, thank you for attending this quarterly meeting here at PLAY whether you are here in-person or just watching online. It will be an unusually long presentation as we're presenting our outlook and our change in the business model. So it will be longer than usual. I'm conducting this in English, although most viewers are Icelandic, but there are some that are not. So that's how we will proceed. I will take obviously questions afterwards, but I'll sort of run through the presentation uninterrupted hopefully until then. So I would love for this to be on the screen, what I'm seeing on the computer. Okay. So just at a glance, some numbers we tend to show at the beginning of our presentation, a slight decrease in passenger numbers as we'll cover extensively in the presentation. A very respectable load factor and as always, a pretty good on-time performance. I'd like to draw your attention also to the FROM, TO and VIA passenger split on the bottom right corner, not that it's changing so much, but we can see that it's about 28% FROM, 34% TO, and 38% are VIA passengers in our system. We are as almost always the most punctual airline in Keflavik. This has two implications. Firstly, it is expensive to have delayed flights and have passenger missing their connections, paying them for either hotel stays or just compensation. But it's also very important to have an on-time performance to make your customers just happy and so we are proud that we are as almost always the most punctual airline operating out of Keflavik. We are also the airline of all the airlines operating commercial flights in Iceland. We are the ones that Icelanders think contributes most positively to society. And of the 73 companies that were scored in this [indiscernible] PLAY came #7. Further things that happened in the past quarter, we announced four destinations, Faro in Portugal, Pula in Croatia, Aalborg in Denmark and Valencia in Spain. Incidentally, they are all cities and countries we are already flying to and are proud to present to the public. Now marketing and sales-wise, we are also pleased to announce that we are always increasing our network and the platforms we are operating at. So in quarter 3, we, for the first time, got connected with the so-called GDSs that is the sort of old-fashioned way of booking flight tickets and a lot of sales offices around the world too. So we connected with Sabre, 1 of 3 such platforms and we are continuing on this connecting platform through Dohop with easyJet and so forth to connect more and more. And so we see a 150% increase in sales through these connecting platforms year-over-year. Our customers are generally happy with us and we are glad to see an increase in that. So during the first 9 months of this year, the NPS score has risen 17% from the 30 points last year but both scores are actually quite respectable. And regarding further things we are doing, we are continuing to enhance our office in Vilnius, an office we established in 2021. We currently have 37 employees there and it's really beneficial for us to be able to dip into the great talent pool in Vilnius, where aviation is quite a bit bigger business than it is in Iceland. So there's an abundance of qualified and skilled people in Vilnius in this sphere. Now on to financial results. So we are here, here's a snapshot of some of the key numbers we are covering in the presentation. We'll go through it all in more detail but I'll point out that as ever, our external interest-bearing debt is $0. So on to the financial highlights. Revenue decreased by some 9% year-over-year from $110 million to just over $100 million, which is a combination of less production, less available seat kilometers on upper and lower yields. This then translates into a slightly lower EBIT for the quarter from $13.4 million last year down to $9.6 million this year. It is our second past quarter after quarter 3 2023 but still a disappointment to us. And then lastly, we like to point out that our cash position at the end of quarter 3 is just shy of $40 million, a slight increase on the $39.2 million we had at the end of quarter 3 last year. So in the income statement, you will be -- we're not seeing huge changes. Net result for the period is $3.5 million, down from $4.7 million last year. The EBIT is down, as we explained. Salaries and related expense is slightly up and we should mention here that we are actually paying almost two sets of of sea level people during quarter 3 and that there was quite a bit of new people coming into management in the past few months. And so what is really happening on the revenue side. So there is a 9% decrease in airfare from $144 million to $131 million between quarter 3 in '23 and quarter 3 this year, while we were able to maintain a stable ancillary revenue per passenger. And as I mentioned, there is a yield decrease on top of the production decrease. And the yield decrease we can say or the total RASK decrease is 5%, down $0.061 down to 5.8%. So this is, as we will explain further later in the presentation, this is mainly due to competition issues that has increased capacity on our markets, which we are showing here. So if we look at the left-hand side of the slide, we can see that on the European side, the change in our revenue per available seat kilometer is not changing a whole lot, neither in the European safety side, which we call the northern part of the European network, the part that connects with North America nor the leisure side, there's limited changes there in revenue per kilometer, while it's down whopping 18% on the North America routes. And why this is happening is pretty clear on the right-hand side of the slide, where similarly, there is limited change in capacity to and from Keflavik on the European destinations, whereas the increase on the North America routes is 15%, which is clearly more than a market like this can sustain without any consequences. If we just look at the transatlantic market itself, not just the Keflavik part of it or actually the part that is direct flights between city pairs on the Americas side on one hand and Europe on the other. We see that the growth is 7%, which is not quite as much as the 15% we experienced here but still way more than the average growth or way more than the market can sustain for any extended period. So this is contributing to our worsening results -- or contributing -- this is the main reason for the worsening results. On the expense side, less dramatic news. So our CASK is down 1% from $0.0532 to $0.0526. If we look at the ex-fuel CASK, that's actually up 4% and so this chart shows what's really going on. We are benefiting from lower oil prices in terms of $0.002 and other benefits are our irregular operations or cost because of our flights not basically flying on time or compensations to passengers and so forth. So that's down $0.0004. But what is hurting us on the cost side or we should say what is hurting us on the unit cost side is mainly that we are just producing less. So we did have less capacity, particularly in September than we did last year, mainly because we were getting lower yields than we were getting last year. So we saw an opportunity in descaling a little bit. But with the fixed cost being fixed, this means that the unit cost is up by $0.0013. And there's also some cost increase with crew salaries and handling costs. Not big news on the balance sheet side. We did already mention the CASK levels. The noncurrent assets are decreasing primarily due to depreciation of the assets we have, basically the lease agreements. And so on to the cash flow. So as seasonality predicts, there is a negative cash flow in quarter 3. In quarter 3, we generally fly a lot. It's the quarter that we fly the most, to produce the most and incur the most cost but it's not the quarter that we sell the most tickets or get cash from selling more tickets. So basically, in quarter 3, we always burn up some cash so the changes in working capital there are $19 million. That's the contribution factor to that rather than that no surprises here. And so the biggest cost item we have at this company is the fuel cost, so it's worthwhile having a look at that. And it is interesting, if we look at the chart on the right-hand side, that oil prices have changed quite significantly in the past 12 months or 12 or 18 months, we saw in quarter 2 last year, oil prices were actually at similar levels as they are now, slightly higher but then rose quite rapidly. This time, it was not war in Ukraine but actually another war that contributed to this rise in the Middle East as we know. And so we saw oil prices actually, around about a year ago, peaking at circa $1000 per tonne. But this is now just over $700. I see, we say here $714 yesterday. And we are just abiding to our hedging policy with 56% of the current quarter being hedged at the price of $801, obviously higher than the current spot price as the prices are coming down, and we are hedging along the way. And then you can see the levels and the prices of the hedge agreements. So this is just according to our policy. And I think we've actually been quite good at hitting the right moments. And then as I am aware that people are thinking about our cash flow and our cash levels, I think it's notable just to place some emphasis on this in that. So our cash balance at the end of quarter 3 is slightly higher than it was at the end of quarter 3 last year, which is good. And then on top of that, we have projections for the coming winter that are, in general, much more favorable than they were last year. So we can mention a few. One thing is that we have now agreements in place or we did amend the agreements with our main [indiscernible] so that we are actually paying higher rent during the summer. We did so last summer, so we've been paying more for the aircraft in the past two months. And so we're paying less during the winter so $4.3 million less than the agreement set last year. So basically just mentioning a few positive things about the coming winter, the oil prices were up about $1,000 last year, they're now just over $700. We have already adjusted our schedule. So we've descaled our Hub-and-Spoke system for the coming winter vis-a-vis last winter and placed an aircraft that's actually flying to Miami next week, and we'll be working there for about 4.5 months. And we do see improved forward sales in that the total RASK in this quarter and next quarter are significantly higher than they were at the same time last year. So basically, the position at the beginning of this quarter or at the beginning of winter, we can say, is slightly stronger than it was last year. And many favorable factors pointing to a much more comfortable winter ahead of us than last winter was and we all know last winter didn't do us any major harm. So this was the past, this was what happened in the past few months and where we are now. We have already announced that we are going to be making some alterations to our business model, and we're now going to take some time or I'm going to take some time in explaining what it is. It's not very simple, I mean we've run through this with some of our employees, and it takes sometimes two or three runs for everybody to get it. So if there's a question you have at the end of this presentation, that's natural. It's a bit complicated. So I'll take some time in doing this. So just to remind us all what we do. This is the map of the Western world and the cities we fly to. So we have put in purple what we can call the Hub-and-Spoke network, the path of our system that we fly to Europe in the morning, come back in the early afternoon twice, land and fly to North America and come back early morning. So there -- those destinations connect in Iceland, so it's a Hub-and-Spoke part of it. The red destinations, the red cities are the Point-to-Point part of our network. These are the cities that we fly to without trying to connect them with the North America cities. Generally -- sort of on average or generally have longer sectors. So we basically can't fly there and back in time to meet the aircraft going to America. These are also more sort of leisure-oriented destinations in that a lot of them, if you look carefully, are sort of centered around the Mediterranean. It's basically sunny destinations that Iceland is like. Those that are not in the Mediterranean are sort of off the coast of Africa or key destinations, we can say, almost exclusively. So this is just to set the states. Our business model has centered around the Hub-and-Spoke model. So basically, we've had close to 75% of our capacity geared towards this Hub-and-Spoke or basically doing the Hub-and-Spoke system for us, North Europe, North America. And then we've had around 1/4 of our capacity doing these Point-to-Point flights almost as complementary to the larger Hub-and-Spoke system. And then we've done very minimal charter or ACMI projects with our aircraft but we are going to flip this around a little bit. So we will continue with the Hub-and-Spoke model, but that will be complementary to the larger part of the network, which will be the Point-to-Point system. And as I will explain better, I mean, the simple reason for doing this is that the Hub-and-Spoke has not yielded great financial results for us, whereas the Point-to-Point leisure, sunny destinations have. Now if Icelanders were a bit more than 400,000, I would love to deploy all the 10 aircraft flying to the Mediterranean. That's the best part of the business we have. But we are only 400,000, so we can't deploy all of them for that. So we will continue to use some for the Hub-and-Spoke market sort of hoping to skim the cream during the summer of the best pairs on either side of the Atlantic but then scale it down in the winter. And then as we are estimating that this will be appropriate for about 6 aircraft, this Point-to-Point and the scaled Hub-and-Spoke system, we have 3 to 4 other aircraft that we need to find work elsewhere. And it so happens that we have found new business for that or are in the process of securing business for those aircraft as we will cover more extensively in this chapter. So basically, just to elaborate, going to leverage on this part of the business, which is very much a low-cost carrier thing, Point-to-Point leisure on the flights and descale the Trans-Atlantic traffic as that has not been as good for us as we had hoped, particularly this year and then adapting to this and deploying aircraft elsewhere. So when I say one part of the business has been good and the other not, this is a reflection of that. So the red line is the Europe leisure, Point-to-Point, Sunny Mediterranean destinations. And so the black line there in the middle is the zero and it's a contribution per trip by market. And so you see basically always the European leisure Point-to-Point part of our network is always performing positively to us, even in the [ TAC ] winter months. With the exception of November 23, which incidentally is the month where the Reykjavik Peninsula exploded and drifted into -- well, it's still there, but it's sort of exploded and nobody bought tickets for a while. But so I mean, it's the only month that the leisure business hasn't been good for us. On the other hand, you can see that the other part has too often been too bad. And particularly the dotted purple line, which is the North American flights are way too often, way too far below the zero line. And so we're sort of going to descale ourselves from that market. What we see is that the hub there in the middle of the graph, where the North America dotted purple line rises the highest is the summer of '23 which is a way higher, way better contribution we got from that part of the business than we had in 2022. So we were, at this time, optimistic that this was the trajectory that the company was on. So I mean it was somewhat -- I mean, it was negative in '22, but then at least in the summer of '23, we got a hugely positive a couple of months. And then we go a little bit back to negative territory. And then we get the seismic activities in the Reykjavik Peninsula, the Reykjanes Peninsula, contributing to this performing pretty badly. But we were optimistic that we would sort of rise again and get the best summer out of '24. But then the capacity issue hit and we did not get that and the result of these disappointing results is that we are going to -- we're basically saying, okay, it doesn't appear to us anymore that this will improve sufficiently for us to want to stay heavily committed to this part of the business. So descaling that and focusing on the red line there which has a good contribution. So what does this -- we're trying to put it sort of graphically for you all. So what does it really mean? So in the current business model, mean we have 10 aircrafts. I did explain that the Hub-and-Spoke part of it is actually more than 70% of the capacity we have and less than 30% is dedicated to the Point-to-Point leisure market. Here, we show with us 3 aircraft, which should be 2-points some aircraft and 7-point-some aircraft in Hub-and-Spoke model. It's not that we have certain 7 aircraft doing the Hub-and-Spoke and certain 3 doing the other stuff, but it sort of illustrates how we have been allocating capacity. And unfortunately, the Hub-and-Spoke business -- I mean, these are the trailing 12 months, these are the worst 12 months of the system has been very negative for us, whereas the Point-to-Point business has been pretty good. But under the new business model, the change is, as you can see here, that we will continue with 6 of our 10 aircraft under the Icelandic AOC. Simply speaking, the Icelandic airline, the Icelandic PLAY airline is shrinking from 10 aircraft to 6, okay? But we are actually starting another airline down in Malta, which will not fly in and out of Malta. And that airline will have 4 aircraft. Most of those will have nothing to do with Iceland. They will just be deployed for other carriers. There's a lot of airlines or tour operators that are seeking nice aircrafts like we have. So we will deploy while we're estimating three aircraft to such businesses. We're anticipating to have one aircraft based in Tenerife flying mostly to Iceland, perhaps some other destinations. But when we say Iceland, we don't mean only Keflavik, we will almost certainly fly to at least Akureyri, if not [indiscernible] as well. And then we have the 6 aircraft in the Icelandic business. We'll continue to have the 3 aircraft operating Point-to-Point as we have been doing before, but downscaling the 7 to 3-ish in the Hub-and-Spoke model. And even when saying that, we are assuming we'll take at least one out during the winter and do business like we're doing now down in Miami. Now the result of this is or should be a vast improvement in the financial performance of the company. I mean we know what the 3 aircraft doing Point-to-Point are doing for us currently. It's about $20 million contribution. We're just assuming that will continue. We know -- I mean, we are assuming with the Tenerife aircraft that it will be the financial performance of that aircraft will be of similar level but slightly worse though. The 3 we are placing in outside of Iceland and doing charter ACMI business for others. We are just expecting to yield sort of results that are common in that business. And that leaves us with the 3 that we are leaving in the Hub-and-Spoke system and we are here assuming that initially, they will yield a negative $5 million to the system or contributing negative $5 million to basically overhead and which will be a vast improvement from the current results. But obviously, not good enough in the long term. So we are expecting this to be sort of initial outcome and then once we fine-tune that, this should be better. If we are unable to improve on that, we will just discontinue with the business and deploy the aircraft elsewhere, which will be easier once we have put up this sort of two AOC structure. So we will only be able to deploy them outside of Iceland if this doesn't work. But we -- this is not what we expect. We expect this to work and then improve on this. Now again, so we are now iterating what went wrong in 2024. We did show you how the North America capacity increased and this is basically -- so seat capacity in the transatlantic market month by month, and then Keflavik to North America on the graph below how that developed through this year. So basically 15% to 30% increase in capacity is more than the market can absorb without feeling some pain. And again, about the Hub-and-Spoke model. So I mean we are talking about sort of three markets that we are going to be operating on, not -- I mean the two that we have been operating, the Hub-and-Spoke via business, the Point-to-Point and then this ACMI charter business that we're going to be deploying our capacity for. The Hub-and-Spoke model, I mean, it's -- '24 has been very bad. A lot of capacity increase, much worse than '23, not only for us but almost all airlines operating over the Atlantic. And so we actually expect '25 to be much better. But for the long term, we think there are elements that make it so that it will be quite competitive and difficult market to operate on. So here's one point, which is that Russia has basically closed its airspace for all European carriers. So the Chinese carriers are basically alone and flying from China to Europe, which means that the European carriers will have to find some other work for their long-haul aircraft and the Atlantic market being one such market with the diverting their capacity, too. Another change that is or has happened is that although air travel is basically back to pre-COVID levels, business class capacity is not -- or like business travel is not which has meant that the premium cabins are being sort of more and more occupied by leisure travelers, putting price pressure on the economy cabin. There is this [indiscernible] thing going on, which will presumably reduce Keflavik's competitiveness as a connecting point unless we will get endless exemptions from this directive or rule or whatever it's called, which we don't expect to be forever. And then we are seeing some aggressive capacity deployment in this market by certain airlines like SAS, that is recently refinanced or recapitalized. They are pretty aggressive now. We see Delta, we see other airlines. So we think the market is going to be a bit challenging. And there is also the matter of basically narrow body aircraft becoming ever more long range, but they have ever more long range. So I mean, just like our NEO engines carry our A320s quite a bit further than the CEO engines did before. And then we have the Airbuses with the LR or the long range and the XLR being extra long range. So this means that safety pairs on each side of the Atlantic will be sort of -- or carriers will be able to connect safety pairs on either side of the Atlantic with narrow body aircraft that hasn't been possible before. So when you had to previously connect them with wide bodies, a lot of safeties weren't just big enough to sustain a direct connection, which will change with these longer-range aircraft. So there will be a challenge operating Hub-and-Spoke system, we feel over the Atlantic. However, the leisure market is quite a bit different. So if you just look at the market itself, so about 1 million seats are already flown or planned to be flown between Iceland and Southern Europe in 2024. And this market is actually less seasonal than the rest of the Keflavik Airport. And it's also a market that is growing. So it is about 20% annual growth over the past 10 years in the leisure part of the Keflavik market and I want to say we don't expect this trajectory to reverse to anything very low because we all sense that Icelanders no longer want to go every other year abroad. It's just becoming a sort of natural consumption. And to some extent, because PLAY has made it very affordable to fly. I mean flying now down to Spain is so much cheaper than before PLAY. And this is just making trouble more easy, more affordable and hence, more of it. So we don't expect any change in this behavior. And this incidentally is just playing into our strength. And frankly, low-cost carriers generally just fly Point-to-Point and they are generally catering mostly to leisure passengers. So this is basically what we're going to be doing. The Icelandic market is now -- or the Icelandic leisure market is now 63% in the hands of low-cost carriers, where we see this up to 75% in many other countries. And this is a part of the business where we feel we will be very competitive with our cost structure and, frankly, nice aircraft. So how is PLAY doing in this market? We are the biggest participant in this market. We have over 40% market share in this Point-to-Point leisure, sort of sunny market. The nearest competitor is around 30% and then down from that. And frankly, we are always increasing our production in this market year-on-year but the contribution margin is not decreasing with increased capacity. So we do not foresee doing anything else than continuing adding capacity to this market, at least until Icelanders tell us that they don't want anymore. But frankly, as the picture shows, people are buying our tickets to the sun more than ever. So our forward TRASK into this quarter and next quarter from the end of last quarter is about 20% more or higher than it was a year ago. And so it seems that our customers are pretty happy with us. And yes, we're happy with them, must made it happen. And then thirdly, we've spoken about the Hub-and-Spoke, I've spoken about the leisure business. And then this third portion, which is maybe most a little bit alien to some of you, so what is this really? So there is no doubt that there is aircraft shortage in the world. During COVID, Boeing and Airbus, descaled their production as much as they could. And so quite a few aircraft came off the line during that period. And they haven't nearly ramped up their production to the pre-COVID levels. So this means a whole of unproduced aircraft. This is on top of the Boeing's marks and just generally Boeing's troubles and on top of the massive Pratt & Whitney engine problems that are ongoing. So there is a big shortage of aircraft in the world. And that shortage is most obvious or prevalent in the kind of aircraft we actually have. So this is the most sought after aircraft globally which makes the ACMI market very strong. This means that a lot of airlines have fewer aircraft than they want either because they haven't been delivered or they are being delivered late or they are -- there's engine problems or whatever. And so we are in a position to provide those operators with aircraft that we can fly for them. We can't just deliver them the aircraft or sell them the agreements, the agreements are nontransferable. So we have to operate the aircraft, but we are happy to do so. And we also did secure these aircraft basically during COVID or when COVID was just about ending and aircraft leases were at the bottom. And so we are now paying annually $40 million in lease payments for the 10 aircraft we have. If you would -- if the aircraft lessors were offering the same aircraft currently, it would be about $55 million. So that's a difference, that's the Delta that we want to somehow get by operating these aircraft. We're obviously hoping to get by operating the network that we have been doing. But unfortunately, due to capacity issues that does no longer seem probable for us. And so we are already in talks with several interested parties and those range from like airlines that are like household names to smaller operators further afield. And so I would say in the next couple of months, we hope to be able to tell you a little bit more about what we're doing in this space. And so to be able to make this happen. We have applied for a Maltese AOC. And we expect to get that in the spring of next year. And the plan, as stated before, is to operate 3 to 4 aircraft on this AOC, most of them on sort of longer-term projects. But why do we need another AOC? And why Malta? These are understandable questions. So Malta happens to be sort of an airline favorable country or an island. And so there are over 50 airlines that already have AOCs in Malta, thereof one Icelandic one. And just to take any doubt. We're not going to be flying in and out of Malta. It's just that the AOC is there but we can operate the aircraft anywhere in the world. And we're going to -- as I said before, the plan is to deploy them mostly just outside of Iceland and not connect them with Iceland at all. But we need another AOC to -- because these projects that we're going to be operating will demand that the crews are local. So I mean, if an aircraft is placed in Greece, it makes no sense other than having the crew from Greece. You don't want to be flying them continuously from their home to a different country and placing them there in a hotel and so forth. So that's the reason for another AOC and Malta was the country of choice. Now so we've covered why the Hub-and-Spoke model hasn't been working for us and why we don't think it will be great in the next few years, how the leisure market is and how this new market is going to be good for us. And then on top of this, on top of these changes, we are going to be dealing with the extreme seasonality that Iceland has to live with by placing an aircraft or two seasonally outside of Iceland operating for operators that don't have the same seasonality or maybe a counter seasonality in the Southern Hemisphere, the demand is more actually in the winter time -- when it's summer for them. And so this is in Miami, I mean it's close to the Equator so good demand also in the winter there. So I mean, I'm guessing a bit ahead of myself. The thing is that Keflavik is one of the most seasonal airports in the world where the demand between summer and winter fluctuates more between seasons than Europe in general or the globe. We have been altering our capacity a little bit less than Keflavik, which probably isn't optimal. So we'll be doing a little bit more of that. Now on top of all of these changes that are meant to enhance our financial results. We've been mostly talking about the revenue part of it but there are also cost benefits that will come from the change in the business plan. In that -- when we have fewer destinations, and a simplified network, maybe even fewer countries that we fly to. This will just automatically simplify all the work we are doing in the office and so in the commercial or marketing, IT, whatever all of these parts will become more simple and hence, less costly. On top of that, we are and have been working on several cost-saving initiatives that we should be seeing the effects of sort of towards the end of this year and beginning of next. And these are -- I mean, you can read them. So these are of different nature, but all initiatives that we already see that are bearing some fruit. Now if there's anything I want you to take away from what I have been saying, is that, well, you probably already knew, but I'm not going to shy from it. We are presenting disappointing results. And the year in general has been disappointing for us, particularly the Hub-and-Spoke part of our business. So we're not just going to bang our head against the stone and hope it will change automatically. We're going to change ourselves. And so we're going to decrease greatly our emphasis on this Hub-and-Spoke part of the business. We're going to increase the capacity deployed on the Point-to-Point leisure business that has served us really, really well and deploy some capacity to this ACMI charter business. And to emphasize that, we are already in discussion with a couple of or several partners, some more advanced than others, about operating those aircraft. And then also, again, so our cash position is slightly stronger than it was at the same time last year. And the winter is looking much more favorable when it did last year with our seasonal rent of the aircraft with a much lower fuel prices, with our decreased capacity towards the Hub-and-Spoke system and an airplane deployed in Miami for the winter. And as we've shown about a 20% higher total RASK into this quarter and the first quarter of next year than we saw at the same time last year. Now a question I was bound to get. So this means that we are convinced our cash position is stronger than it was last year. Cash flow projections are better than they were at the same time last year. Hence, I mean, we know we went through last winter, we're here. Hence, this should be even less of an issue. However, we can say that in connection with our new AOC and our sort of potential agreements with partners elsewhere, the company might decide to raise capital somewhere in the organizational structure, be it the listed parent company or somewhere else. We haven't decided when, where and how. So I can't really comment on that much more. But this is how we see the next few quarters with regards to this question. Thank you all for listening. And we will now take some questions that I'm sure you have.

My question is simply just on the changes in the business model. Do you think you'll be able to issue somewhat of a guidance to the market in the beginning of next year?

Right. I don't -- I'm not sure about that. I guess this will depend a little bit on when and to what extent some of these aircraft that we're going to be deploying elsewhere, so what sort of agreements we are doing and when. But I guess we'll have to see. To be honest, the financial predictions we have been making in the last couple of years. They have not always been accurate. So I'm hoping to give the next guidelines, I want to give -- I want to be sure that we meet. So until I know a little bit more, I'm going to have to wait with that. I should have repeated the question. The question was, am I going to be giving a guideline for 2025 and when. We have -- I can see questions from online if you want to think about it here. How much do you think the Icelandic leisure market can grow? Are you retreating for good from Iceland with those 4 aircraft? I think the Icelandic leisure market will continue to grow, at least while we are offering fares at such great prices. I mean it's been a 10-year journey with 20% CAGR. So I mean that would be surprising to see that drop significantly off. So I think this can grow still significantly. And if we're retreating for good from Iceland with those 4 aircraft probably, but that doesn't mean we can grow our 6 aircraft in Iceland. So I would rather expect us to grow on both AOCs in the future, although that is not the key thing currently. Currently is sort of just to establish ourselves, get a firm footing and then we can see about the future. We are getting more online, if you want to take some more. What about your SG&A costs, how would you manage that? You are adding one AOC, you're not growing, how would you reduce? Okay, SG&A. Good question. So SG&A has been $35 million plus on a 12-month basis for us and with an added AOC, how is that going to go? So the answer to that just the fact that we are adding an AOC is increasing our costs slightly on the SG&A. It will save us money elsewhere on the income statement. But to the extent that we are flying for others with 4 aircraft, that's automatically going to simplify the life for us. So if we're selling tickets for 6 or 7 aircraft instead of 10, marketing them in fewer cities than we are doing now. This will all -- it will be a simpler life for us. And plus, with the cost initiatives that we have been actually gradually working on over the past few months, we feel confident that we can take the SG&A down by a significant amount we can say. Is the Malta move because we are in a bad financial position? No. The Malta move is because we need to be cost competitive when offering our aircraft to operators that are not in Iceland. And so we need to be able to have just local crews on the aircraft. We cannot do that on the Icelandic AOC so it's a necessity because of that. It doesn't really have anything to do with our financial position. And another question that has to do with our financial position. Do you feel Icelanders are booking less tickets because of the rumors that PLAY is soon bankrupt? Okay, that's a blunt one. The short answer to that is that Icelanders are not booking less. So either they must not think that we're going bankrupt or they are so thrilled with us that they are booking with us anyway. I'm leaning towards the first but they -- that it's more in sort of certain circles where people think we're going bankrupt and the majority of the population is, as always smarter than you think. So I hope that answers that. There's more activity out there actually than in this room. So is the Icelandic market sustainable in terms of profitability given the reduction in connecting traffic? Okay. So I guess the question is, I mean, is our operation in Iceland big enough if we reduce the VIA flights and so forth? And if that's the question, then it's a pretty good question. It's often been said that you need sort of 10-ish aircraft for an AOC to make sense. You can sell tickets without operating aircraft to sell. I mean there are endless tour operators that basically have their own brand on the aircraft that are selling tickets for people to fly from one city to another that don't operate the aircraft themselves. They just get somebody else to do it, which is basically what we're going to be doing with some of our aircraft. And so the general thing is you need sort of 10-ish aircraft to be able to operate an AOC. Now we're actually going to have 10 aircraft on two AOCs. This is rather unusual but this is still way better than operating 5 on 1. So two aircraft and two AOCs is much more economical than 1 AOC and 5 aircraft. So we think we are convinced that the burden of the second AOC is not material, you can say. I'm still open for you to jump in, but the web continues. There is a rumor circulating that PLAY will be subleasing or dry-leasing aircraft -- the rumor circulating that PLAY will be subleasing or dry-leasing aircraft to third-party companies, such as those in Lithuania which would place these aircraft outside of the airline's control. Is this true? Okay. I don't really understand the question, but the -- so if it's about us somehow moving some of our aircraft out of the company, then that's not going to happen -- I mean that's just not possible or allowed. The lease agreements we have are such that only we can operate the aircraft. If we discontinue operation or don't want to operate an aircraft, we can't just place it, we can't sell the contract, we have to operate the aircraft that we have agreements for. So if the question was if we're going to be selling aircraft or selling lease contracts, then that's just not possible.

The length of the lease contracts of our aircrafts?

Right. That is a little bit -- advised a little bit between aircraft. I think I'm correct in that there's one that we have 5 years left on, which is the shortest. Then I think it's a couple we have 6 -- 7 years on -- the ones we took delivery on in 2023. So these -- we have 11 years running on.So I think on average, it's probably I would say, 8, 9-ish. Generally, these lease contracts are until the aircraft is 12 years old. So when you're getting a new aircraft, it runs for 12 years. If you get it when it's 4, it's got 8 running on them. That's when an aircraft goes to a major overhaul. Yes, sorry. I should have repeated your question. It was about the length of the lease contracts of our aircraft. There is one more question from the web. Do you believe Iceland will remain a viable and competitive connecting hub in the future? Or it's role as a key transit point diminishing? I guess you need a prophet for that one, if Keflavik is going to serve as a big connecting hub in the future. I'm not predicting that Keflavik hub will not function as such for the longer term. I think like in all business, it will evolve. Market conditions will change. There will be some dynamics pushing in all directions. And so successful companies will probably have to evolve along some lines. But I don't want to give the major prediction how this is going to play out over the long term. Okay, is PLAY going to have Icelandic cabin crew on the planes flying from end to Iceland? Generally, yes, the 6 aircraft on the Icelandic AOC will be operated by people locally based as with the other aircraft. The only exception being that we -- as we've said, we are tempted to place an aircraft in Tenerife, flying mostly to Iceland, but probably also to some of the destinations. Since that aircraft will be based in Tenerife, we would be expecting crew there to be at least based there. I mean, they can be of whatever nationality, Icelandic if we want that. I'm told it's nice there. The web is exhausted, what about the room?