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Ladies and gentlemen, thank you for standing by. My name is Emma, your Chorus Call operator. Welcome, and thank you for joining the conference call of Deutsche Lufthansa AG. [Operator Instructions]I would now like to turn the conference over to Dennis Weber, Head of Investor Relations. Please go ahead.
Yes. Good morning, ladies and gentlemen. Welcome to the presentation of Lufthansa Groups results for the first quarter of 2019.My name is Dennis Weber, and I head up Lufthansa's Investor Relations activities. In today's call, our CFO, Ulrik Svensson, will give you an update of the group's performance and outlook. He will then answer your questions. Ulrik, over to you.
Thank you, Dennis. Ladies and gentlemen, a warm welcome from me too. The beginning of the year has been challenging for Lufthansa Group. First and foremost, excessive supply growth in our short-haul business impacted our results. We estimate that the market-wide short-haul capacity in our home markets grew by around 9% during winter.A rate which clearly exceeds demand growth. As a result, price sensitivity of customers was high, putting yields and unit revenues under pressure.In addition, fewer cost increase by a good EUR 200 million.Finally, our Logistics business weakened compared with stellar performance in 2017 and '18.Solid results in long-haul continued cost efficiency improvements and strong growth in our MRO business were not enough to offset these pressures.All in, the group's adjusted EBIT declined to a negative EUR 336 million.Keep in mind that the contribution of the first quarter to full year profits has historically been small or even negative but the coming summer months will have a far greater impact.Before coming to our outlook for the rest of the year, let me discuss performance in the first quarter in more detail.Regional performance of our Network Airlines, Lufthansa, SWISS and Austrian Airlines differed significantly.In Europe, seat load factors and yields were both down, mainly reflecting the market dynamics I just outlined. In addition, we vigorously defended our market position in our home markets, especially in our main hubs. Doing so, we accepted a short-term hit on yields and unit revenues on certain routes where we are competing directly with the low-cost carriers.While increased competition is the short-term price to pay for long-term consolidation in Europe, long-haul performance held up much better.Growth in North America was clearly volume-driven, higher loads offset slightly weaker yields, so that unit revenues remained at around prior levels. In this context, remember that North America yields increased by almost 4% in the prior year quarter where the comparison base was clearly tough.Yields in South America continue be to be down at double-digit rates, mainly reflecting the tough economic and political situation in Brazil.Asia was the region with the best yield performance, driven by strong demand in Japan, which offset the effects from slightly more muted growth in China.Finally, in the Middle East and Africa, high capacity growth and some weakness in the South African market took its toll on load factors and yields.Overall, the revenue performance of the Network Airlines highlights that demand is intact, affected by continued volume growth.In light of the market environment in Europe at the beginning of the year, however, this growth came at expense of yields. In Vienna, this contrast was even more striking than the other hubs in Frankfurt, Munich and Zurich.The difference in the timing of Easter, which fell into April this year but March last year, was also a net negative for unit revenue performance in the first quarter.Corporate demand in March could not make up for the shift of leisure demand into April. In sum, revenues of the Network Airlines were up 2% in the first quarter, but RASK was down 5.2% in currency adjusted terms.Continued unit cost reductions offset some of the unit revenue pressures. CASK ex fuel of the Network Airlines was down 0.8% in currency adjusted terms in the first quarter, benefiting from the ongoing modernization of our fleet and improved staff productivity. These factors more than compensated higher MRO cost, especially as a result of planned engine maintenance, irregularity costs remained at seasonal low levels.In line with initial expectations, fuel cost at the Network Airlines were up 17% against the prior year, primarily because of the appreciation of the U.S. dollar against the euro.Volume growth as well as the expire of low price hedges which limited the cost increase in 2018. As a result, profits were down at all 3 Network Airlines.Adjusted EBIT was negative at Lufthansa and Austrian, which remained positive at SWISS because of ongoing solid performance in long-haul.In sum, adjusted EBIT of the segment declined to a negative EUR 160 million in the first quarter.As expected, the picture was broadly similar at Eurowings. However, given Eurowings' disproportionate exposure to the domestic and European markets and a tough comparison base on the previous year, short-haul yields declined even more strongly compared to the Network Airlines, they were down 8.8%.Unit revenues in the Eurowings long-haul business developed better, with a yield increase of 1.4% more than offsetting a slight load factor decline. On an absolute level, however, performance is not where we want it to be.We are confident that the shift of major parts of Europe's -- of Eurowings long-haul business to Frankfurt and Munich in Autumn will improve performance, especially as we expect loads to benefit from the Lufthansa feeder traffic in our 2 German hubs.In sum, unit revenues at Eurowings decline 8.5% on a currency adjusted basis in the first quarter. Keep in mind that this performance comes on the back of ASK growth of almost 10%. Owing to the fact that we did not operate the full fleet taken over from Air Berlin in the comparison period yet.The non-returns of cost related to the integration which amounted to around EUR 70 million in the first quarter of 2018, was the reason why unit cost ex fuel at Eurowings declined by 7.2% on a currency adjusted basis in the first quarter.We expect to make more significant progress also on an underlying basis going forward as the measures we are implementing are starting to have an effect. For example, we are making good progress with the integration of the formerly separate organization of Brussels Airlines and Eurowings as well as the stationing of our flight crews so we avoid costly proceedings. In addition, the divestiture of Luftfahrtgesellschaft Walter means that we are making progress towards simplifying our fleet structure on just the A320 family.Considering higher fuel costs as well, the adjusted EBIT of Eurowings declined to a negative EUR 257 million in the first quarter of 2019, some EUR 40 million below the prior year level.This brings me to the Aviation Services, where performance differs significantly by business.Logistics business around Lufthansa Cargo weakened after a very strong 2018, largely because of lower demand on the routes between Europe and Asia.Given the moderation of economic growth and the resulting market-wide declines also hit Lufthansa Cargo. The American market however continued to hold up well. Nevertheless, operating profits were 2/3 below the prior year level, amounting to EUR 24 million in the first quarter.Future looks much better at our MRO business around Lufthansa Technik, where profits are tracking ahead of previous year levels. Adjusted EBIT reached EUR 125 million, 17% higher compared to 2018. This is mainly to do with an improvement in the engine division where throughput was up markedly.Finally, the catering business around LSG increased its profits to EUR 2 million in the first quarter, benefiting from good demand in North America as well as further progress in the transformation of its European business, which, historically, has been the least profitable part of LSG.Nonetheless, the centralization of the European production and logistic setup will require more work and investments in the rest of 2019.We continue to expect LSG's full year profits to be below the prior year level. A few weeks ago, we made a decision to prepare a formal sale process for our divestiture of LSG in parts or as a whole. In the further cause of the process, potential buyers will be invited to place their bids. While we are committed to go ahead as quickly as possible, focusing first and foremost on the key European business, it will be premature to discuss concrete timings or even the outcome of the process at this stage.Back to first quarter results, adjusted EBIT in the area of Others and Consolidation declined due to higher IT costs, amounting to negative EUR 59 million in the first quarter.While the first-time application of IFRS 16 only had a marginally positive impact on the group's adjusted EBIT in the quarter, amounting to EUR 8 million, it distorts the prior year comparison of the group's free cash flow and balance sheet performance.Investments increased by 50% to more than EUR 1.2 billion, solely due to prepayments for new aircraft such as the 40 long-haul planes, which were ordered in March, but will only be delivered between 2022 and 2027.The increase of investments was one of the key factors for the decline of free cash flow. Others included a profit decline as well as tax payments whose increase is related to the significant earning improvement in 2017.We decided also to disclose an adjusted free cash flow, including the IFRS 16 related amortization of operating lease obligations shown in this financing cash flow where you can better compare performance to the prior year.Adjusted free cash flow amounted to EUR 178 million, 78% below the 2018 level. Nonetheless, net financial debt would have remained stable compared to the end of 2018, excluding the first-time recognition of assets and liabilities related to operating leases in an amount of almost EUR 2.4 billion. Including this IFRS 16 effect, net debt increased 67% to EUR 5.8 billion. The ratio of adjusted net debt to EBITDA, which considers pension provisions as well, grew by 0.6 to 2.4.Stripping out the IFRS 16 effects again, the increase would have been a mere 0.1, caused by the increase of pension provisions following the further decline of market-wide interest rates. Strong performance of plan assets could only partially offset this effect.Looking out of the next few months. We expect supply and demand in the European market to be in a better balance in summer.Our confidence is based on the expectation that market-wide capacity growth will moderate significantly as many marketplace are refocusing on yields again rather than on volumes.In addition, memories of the disruptions in summer last year and the resulting compensation payments are still fresh. The many competitors have taken a more cautious stance towards expansion. Market-wide growth should moderate to 4% in the whole of Europe and just 3% when considering departures in our home markets only. The latter will reflect an around 6 percent point moderation of industry growth compared to winter.Compared to our previous forecast, we also expect growth on the Transatlantic routes to be slightly lower because of some capacity cuts amongst low cost peers.Last year, we were among the first carriers announcing plans to curb growth in summer. So we confirm our expectations of only low single-digit growth in the next 6 months to date. As a result, full year capacity growth at the Network Airlines will be around 4%.At Eurowings, we even decided to cut our growth plans to 0, also considering ongoing capacity constraints in the European aviation system.We expect more moderate industry growth, especially in Europe, to be supportive for unit revenue performance at the Network Airlines. We expect to return to year-on-year growth in the second quarter.This forecast is based on performance in April as well as bookings from May and June. The latter will reflect a good 2/3 of the total traffic volume that we are expecting for these 2 months. With this in mind, we confirm our unit revenue and margin outlook for both airline groups irrespective of a slightly higher fuel cost outlook.Following the recent oil price increase, group-wide fuel costs are now projected to rise by around EUR 700 million compared to the previous year. EUR 600 million at the Network Airlines and EUR 100 million at Eurowings. From an overall group perspective, the impact from the increase in fuel prices will be compensated by the other business segment. But we now expect results to be around EUR 100 million below the prior year level instead of the previously expected EUR 150 million.This reflect lower costs in headquarter functions and factoring in unchanged expectations for the remaining nonpassenger segment, we hence confirm our guidance of an adjusted EBIT margin between 6.5% and 8% in 2019.Thank you for attention. I'll be happy to answer your questions now.
[Operator Instructions] First question comes from the line of Daniel Roeska with Bernstein Research.
Three, if I may. You mentioned the LSG divestiture earlier. Could you share some thoughts on the Board discussions on a broader level? Specifically, is there a general sense among the executive team to continue streamlining the portfolio? Possibly, also looking at smaller subsidiaries? And given the experiences for Lufthansa systems and now LSG, could you share some thoughts how the contractual relationships within the group, so for LSG to Lufthansa mainline, for example, or SWISS or Austrian impact these processes?Second question. You announced a new incentive and remuneration scheme for the Executive Board in January and is also on the agenda for the AGM next week. Could you talk a little bit about this incentive scheme for the Executive Board? And how and if you're thinking about kind of scaling or rolling this out across the wider organization kind of in time line to kind of harmonize the incentives between the executive team and the rest of management? And then last, just technical question. There are some agenda items on the AGM next week regarding share capital and buybacks. Am I correct in assuming that this looks mostly like a routine extension of existing authorizations? Or is there anything substantial that you'd like to flag concerning those agenda items?
Yes, thanks for those questions. Starting with LSG. On the heli level, we are -- as you may have all noticed, describing ourselves as an airline group instead of an aviation group, we did 1 or 2 years ago. However, I think it's indeed too early to say. Are we going to see other divestitures on top of LSG going forward? I think gradually just by the size of the airlines growing much more than the other business, it is going to be more an airline. But for example, if you had Techniks, which had been discussed many times before, there are a lot of synergies between Techniks and the airlines, and we indeed are intending to keep that business going forward.In terms of contracts between LSG and the different airlines, clearly, we are in connection with a potential sale, put it in place, long-term agreements, which will be, so to say, at market level between LSG and the different airlines, which would be one part of, clearly, the sellers' prospectives.Going forward, when it comes to the Executive Board remuneration, we are indeed getting a more, should we call it, market up-to-date Executive Board remuneration system, which includes a combination of EBIT margin, return on capital employed. We don't think it's very important for the aviation group and also requirements which already exists today. Of course, we are all large shareholders but also specifically requirements of shareholdership for all the Board members. There is indeed ideas and plans to broaden the group going forward, not only to the Executive Board, also to the larger part of your management. But it's too early to say exactly when that will be put in place. That program will -- obviously, will look something similar to what is now what we are going to present at the AGM. When it comes to the share capital buyback provisions, yes, that's something which we have had every time in the past, and it is mostly regarded as a routine approval process.
You mentioned a contract between Lufthansa and LSG. Is that -- that would be kind of on a market level in the prospective. Is there any meaningful shift between the business units to be expected from that?
Not meaningful. But between individual products and airlines, it could be so but not meaningful.
Next question comes from the line of Neil Glynn with Crédit Suisse.
If I could ask 3 quick ones, please. The first one just following up from Daniel's question on Sky Chefs. Forgive me if I missed this part. But can you confirm whether there's any expectation whether Lufthansa will retain a minority stake within Sky Chefs? Or is everything potentially on the table at this point in the process in its early stages? The second point with respect to the better momentum in pricing and unit revenues into the second quarter, long-haul market seems strong, and we've heard from the U.S. carriers through this month to date. But just interested, are you seeing meaningful changes on the short-haul unit revenue front, both for the Network Airlines as well as for Eurowings where you're obviously moderating capacity growth? And then the third question on the cash flow statement. Obviously, very, very topical cash flow generation. You clearly have outlined the year-on-year decline in the first quarter, which I understand was earnings as well as tax and CapEx-driven. But can you walk us through or at least confirm that you still expect that free cash flow should grow year-on-year with your underlying EBIT guidance for the year?
Yes, thanks for those. When it comes to LSG and minority or not, this is indeed something where we are open. We are, as we indicated, first speaking about the European business, which is very important for us to have the right partner from an operation point of view, from a strategic point of view. There could be different ways to skin that cat, so to say, it could be with a minority ownership or it could be without. Too early to say at this stage.In terms of revenue outlook, yes, indeed, we are seeing improvements very much in Europe as well. This is where we see the largest reduction in growth compared with what we saw in winter, and that's where indeed it has a positive impact on our RASK.Cash flow. Yes, we are expecting our free cash flow to grow compared with 2018 for the full year, that's as we already indicated last time we spoke. We are speaking about a slight increase. But for all the reasons we went through on the first call, we are not going to repeat the 2017 numbers.
Understood. And just to be doubly clear on the cash flow progression. Obviously, you have earnings, so your earnings guidance speaks for itself. But should we expect meaningful changes in the cash tax as well as the year-on-year growth in CapEx as the year progresses?
The CapEx guidance we have given is EUR 3.6 billion, and that still stays like that. The extra payment we made in tax now in the first quarter referring to 2017 year earnings, was a one-off. And after that, we had, so to say, paid all our arrears, so there would be no further repetition of that going forward, it would be more normal tax payments ahead.
Next question comes from the line of Stephen Furlong with Davy.
Can I just go back to Neil's question on short-haul. Obviously, that's the difficult kind of pricing environment in the Q1. And maybe if you could just give some color why you think it's improved so much in the -- is it in the Q2 one? Or is it because of moving to the summer schedule, Easter, just less competitor capacity, that type of thing in your own actions? And the second thing is, I noticed, even though the market is quite difficult, you kept your guidance for the Logistics business in terms of revenue growth of high single digits. Are you expecting kind of yield improvements there or what's going on there?
Yes. So starting with the short-haul. There are a number of reasons why we think short-haul will improve in the summer months. Clearly, the most important one is just looking at our bookings. We see, as I mentioned in my speech, not only us reducing our gross quite dramatically into the summer months, but also many of our competitors. So I think that just has a very healthy impact on our RASK booking outlook. So that's the basis for that. When it comes to guidance in Logistics, yes, indeed, we have kept that guidance intact. Clearly, there is a lot of flexibility. As you know, we have a number of MD11s. We have already taken out 1 virtual MD11 as we speak. So there's an opportunity to reduce cost on a short-term basis to meet that demand, we're just not really there in the same way it was last year. And -- but visibility, as we all know, in the cargo business is very short.
Next question comes from the line of Jarrod Castle with UBS.
Three as well, if I may. You're obviously cutting your Eurowings planned capacity to 0. So just wondering in terms of medium-term plans, if you can share anything on Eurowings, and whether or not there's been any other maybe approaches from airlines to join the platform.Secondly, can you give an update on where negotiations are with Fraport for aviation tariffs in Frankfurt? And then lastly, did you actually quantify the negative EBIT impact from Easter?
Thanks for those. In terms of Eurowings' capacity, yes, we have taken it down to 0 for the full year. Long term, I think Eurowings will grow in the same pace as the rest of our business, which typically has been around 3% in our home markets, but then, of course, there'd be further outside growth out of Germany, long term. It's too early to say how much that will be. But clearly, we have ambitions to grow Eurowings to be ultimately a Pan-European player.In terms of Fraport, yes, we are continuing our discussions with Fraport. There is nothing new to update at this stage, further discussions are going on in a healthy and in a practical way. We will come back when we have anything meaningful to report there.EBIT impact for Easter, it is very, very difficult to say. I mean clearly, we have had a negative impact in terms of some of the short-haul traffic which has moved into April instead. But I think the best way, ultimately, to look is, March and April together. And as it looks today, those 2, I guess, going to mitigate each other, basically, to balance out each other.
Next question comes from the line of Damian Brewer with RBC.
Couple of questions for me, please. First of all, on Eurowings, giving you mentioned it in the presentation. Of the losses in Q1, could you give us how much of that is long-haul related? So we understand the difference between the long-haul and the short-haul operation. And therefore, what might change as you change the operating method of that business in the autumn? And then secondly, I think, you've got cabin crew negotiations with Lufthansa mainline coming up in May, I think it is. Could you just update us on that? Has there been any early discussions? And what are the key waypoints around that?
Yes. Starting with Eurowings. We have never really gone into the detail of the long-haul and short-haul, but we can say as much as -- that our disproportionate losses in the long-haul business, that is a much tougher business than the short-haul. And this is one of the reasons we are moving over the long-haul business to a high degree over to Munich and Frankfurt where we'll get the benefit of the feed. So I think the long-haul will gradually pick up in autumn this year.When it comes to UFO, well, I think there's been a bit of a speculation in the press. Clearly, we are regarding the collective agreements by UFO, the termination they've done as invalid because it's unclear who's actually representing UFO. The actual agreement in itself runs out at the end of June. So I think we have a number of different mechanisms, where, if it really would turn out in the wrong way, we had put in a number of mechanisms where we negotiated with them last time in terms of, for example, how you do an arbitration process. So I'm not so worried about that something will happen there on the short-term basis.
The next question comes from the line of James Hollins with Exane.
Two for me, please. Just on the -- can you maybe elaborate a bit on where the EUR 50 million improvement versus previous guidance in the Other business' EBIT for the full year is coming from whether it's any specific actions you've taken there? Or it's just a rounding error? And then just to clarify, are we talking Q2 unit revenue up for the Networks and Eurowings?
Yes. The EUR 50 million is basically all savings. There are savings at the headquarter levels, there are savings in a number of different areas. And that is something we're just rolling through. Clearly, with the Q1 results, we are looking extra carefully at all costs in the group. When it comes to your second question, can you just repeat that because I didn't get that down.
I was just clarifying, are we -- you're going to unit revenue up in Q2. I was just checking that unit revenue up for both Eurowings and the Network Airlines as your guidance?
Okay. Yes. No, that is what we indicated, it's only for the Network Airlines.
You think Eurowings will go up?
No. It would be very tough for Eurowings to go up. But it will clearly be much better than it was in the first quarter.
Next question comes from the line of Johannes Braun with MainFirst Bank.
I have 3 as well. Firstly, back on the Q2 unit revenue improvement that you are seeing. Can you -- if you compare the April bookings with the May and June bookings, how does that look? Just to get a better sense of what Easter is and what is underlying improvement. And then secondly, you obviously intend to reintegrate the maintenance work of the German Lufthansa mainline into the airline, so away from MRO. Could you provide the rationale for this? As it looks to create some complication and dissynergies in my view. And then lastly, there were some statements recently in German press that you could potentially spend EUR 6 billion to EUR 8 billion for M&A. Maybe you could give some context to that statement to what -- in order to that number which looks a bit exaggerated to me, and also probably in relation to that, an update on Condor?
Yes. Starting with the booking outlook and the different numbers going forward. So there's no significant change between -- or difference between different months going forward. When we look at the maintenance work, yes, indeed, we are moving a number of functions on Lufthansa Technik's maintenance into the airline, which is already how it exists in most airlines in the world, including SWISS. And we have seen a number of different benefits of that, clearly better transparency, it's easier to steering of the fleet when this thing is going into maintenance and so on. So I think in the same way as we have seen the benefit of it in SWISS, we will see the same benefit out of Lufthansa German Airlines. The M&A number, you have seen in the press, I would say, I have -- well, it sure doesn't come from us. I think it's just pure speculation in the press. So there's nothing I really would like to comment upon. Condor. Well, Condor is a leisure business which is growing. All things which are potentially for sale in our home market, we are looking at. We want to play an important role in the consolidation of Europe. But there's nothing more I can say at this stage.
Just a clarification on the first one. So you're seeing the April year-over-year improvement in RASK yield being equal to May and June despite the Easter effect in April?
That is correct, yes.
Your next question comes from the line of Andrew Lobbenberg with HSBC.
We've spoken an awful lot about unit revenue trends going forwards and focused on the capacity. I mean we haven't spoken a great deal about demand. And how confident are you that corporate demand continues to be serene given the volatility in the world economy? And equally, how confident are you on German or home market leisure demand? Then can I ask on the Eurowings capacity cut, can I ask a really stupid or tacky, obvious question. Why -- what motivated you to make that cut? Where is that cut coming in terms of the timing or in terms of the routes? Yes, that will do.[Technical Difficulty]
Well, there was a long sentence I did, Andrew, which you missed.
No. I bet it was good.
It was good. So now I will come up with a slightly different story then. Sorry, I forgot to push the unmute. Starting on the revenue side, corporate demand and leisure. Clearly, leisure is the stronger part as we have indicated earlier. Corporate demand, however, as you might recall there was some individual customers already last year who started saving programs in travel, but there were others who increased their travel. So overall, it was very much a balanced picture. This is continuing into this year. Now, some segments of the market where it goes down and some where it's holding up very well. And of course, this is the area we had very little visibility, since, by definition, people book short in advance. But so far, there are no large uncertainties on the corporate demand. In terms of...
Can I just -- the segments that are struggling, are they the obvious ones of auto or automotive?
Yes. I think that's what you would say. Typical customers with a lot of export into China, for example. During capacity cuts, well, one element of this, of course, is further to make sure we have operational stability into the summer, which as you -- we all recall, was costing us quite a lot last year both in terms of customer nuisance and in terms of costs. So there are no specific areas where we have taken a decision to take down capacity. It is very much keeping the flexibility up, which is the reason why we have taken down growth in Eurowings.
And is there any difference between Eurowings and Brussels, for example? Because we never talk much about Brussels.
The majority of this change from the last guidance is coming from Eurowings alone.
Next question comes from the line of Nuala McMahon with Goodbody.
Just one question from me. Just on the revenue improvement that you talk about in Europe, do you mean it's an improvement from Q1 for the overall group, but we should still be thinking about it as down year-on-year in Q2?
We are speaking about an increase year-on-year not comparing Q1.
Your next question comes from the line of Malte Schulz with Commerzbank.
Maybe can you shed a little bit of light on your expectations by region? Maybe a little bit particularly on the long-haul side? And you mentioned already something, is there any kind of positive signs that they will see improvement in South America? Or is it -- do you expect to further continue weakness also when you look at your forward bookings? And second, also if we look at the Other segment or you mentioned that you sort of looked at some costs you were able to cut, is it also something going forward where you see more headroom, particularly also when we think about next year, will you still see a lot of room for improvement? And finally, how do you or what are your expectations on unit cost reduction? We have talked a lot about revenue but we haven't really talked about costs for Q2. Is there any extraordinary progress to expect? Or anything special to keep in mind on ex fuel unit cost reduction?
Yes. So starting on the long-haul side. It is very much driven by the U.S. side, where we see strong demand. To some extent driven by leisure as well but indeed strong demand coming out of U.S. South America, however, will most likely remain laggard also going forward in the year, driven to some extent by the economic outlook in some of those countries. Costs, yes, I think it's important with your question on costs. I mean we are continuing our CASK reduction ambitions. We have reduced CASK now for 3 years in a row, 2019 will be the fourth year in a row, which is unheard of in the Lufthansa history, where CASK is going to be further reduced. So with an environment where indeed revenues are more volatile, as we have seen in the first quarter, these elements, if we can fully control ourselves, like the CASK, is going to be extra essential and we will just continue that part.
Okay. Can you tell us, particularly, on Others, is it now -- or do you think you're now finished there with your improvements? Or is it just the starting of a, like, year-long program of further improvements on the headquarter side or within some of the smaller units?
Well, some of them are having investments and IT systems will -- clearly will continue. But in terms of headquarter cost, it is going to be just a continuous journey to reduce cost there as well as in the different airlines and businesses. So -- but if your question is, can we take another EUR 50 million in Q2? Then clearly the answer is no. But it is going to be no real large one-off elephants, but it's a continuous journey to continue to reduce our CASK and cost levels.
There are no further questions on the line. I would like to hand back to Ulrik Svensson for closing remarks.
Well, thank you very much for joining today. Q1 clearly was a very difficult quarter for us. As we have heard, Q2 is indeed going to be an improvement and we are excited to invite all of you to our Capital Markets Day. We will give you more meat on the bone on how our medium- and long-term plans are to continue to improve this business. So thank you very much.
Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.