Sathish Sivakumar

Sathish Sivakumar requested more details on the partnership with GE Aerospace and CFM. He also asked for clarification on the number of aircraft in SCI One (350 versus an original target of 375) and the expected size for SCI Two.

Answer

CEO Joe Adams described the GE Aerospace and CFM partnership as a multiyear deal covering parts supply, piece part repairs, component repairs, and thrust. For FTAI, it provides greater access to parts and volume at favorable pricing, enabling scale and cost reduction. For CFM, it supports an open aftermarket, delivering optimal products, lower total cost of ownership, and extended asset life. Joe Adams confirmed approximately 350 aircraft for SCI One, noting that the number can vary based on the vintage and price of acquired aircraft. He expects SCI Two to be similar in size, around 350 aircraft.

Sathish Sivakumar asked for more details on FTAI Aviation's partnership with GE Aerospace and CFM, following their endorsement of the business model. He also sought clarification on the SCI One aircraft count (350 vs. original 375) and whether SCI Two would be of a similar size.

Answer

Joseph Adams, Chairman and CEO, FTAI Aviation, described the multiyear deal as mutually beneficial, covering parts supply, piece part repairs, and thrust, enabling FTAI to scale and drive down costs while supporting CFM's open aftermarket strategy. He confirmed approximately 350 aircraft for SCI One, noting that buying slightly younger aircraft can influence the per-aircraft price, and expects SCI Two to be a similar size.

Sathish Sivakumar of Citigroup Inc. asked for clarification on the updated guidance, particularly the assumptions for Q4 freight rates and volume growth. He also inquired about the current spot versus contract volume mix, vessel utilization levels across trade lanes, and a breakdown of the strong Transpacific volume growth between new West Coast services and existing East Coast operations.

Answer

CFO Xavier Destriau explained that Q4 guidance assumes continued volume growth but a lower average freight rate than Q3, despite recent stabilization. He confirmed the spot/contract mix remains around 65/35 and that vessel utilization is currently strong and expected to remain so until the Chinese New Year. He attributed Transpacific growth to strategically redeploying capacity to the Pacific Southwest, where ZIM now operates two services, up from zero in the prior year.

Sathish Sivakumar requested a breakdown of the EUR 240 million in Q3 disruption costs by airline and hub. He also asked about the 13% crew productivity gap, its primary drivers, and the expected timeline for normalization as grounded aircraft return to service.

Answer

CEO Carsten Spohr stated that while Munich experienced more issues than Frankfurt, the disruption costs were widespread. He attributed the productivity gap largely to aircraft delivery delays and groundings due to Pratt & Whitney engine issues, which will partially resolve as planes return. The remainder, he noted, will be addressed by renegotiating labor agreements. CFO Till Streichert added that irregularity costs are a key focus of the turnaround program.

Sathish Sivakumar of Citigroup requested a breakdown of the EUR 240 million in Q3 disruption costs and asked about the drivers of the 13% crew productivity gap, questioning how much is tied to grounded aircraft and when it might normalize.

Answer

CEO Carsten Spohr attributed the disruption costs to widespread issues including weather and ATC problems, with Munich being particularly affected. He explained the productivity gap is driven by aircraft delivery delays, grounded planes due to Pratt & Whitney issues, and outdated labor agreements that are being renegotiated. CFO Till Streichert added that irregularity costs for the first nine months already reached EUR 550 million, exceeding the full prior year.

Inquired about the vacancy rates within Maersk's own warehousing portfolio compared to market averages and asked about the pipeline for new capacity.

Answer

The CFO did not disclose specific vacancy rates but stated they vary by region, with Asia performing well, the U.S. improving, and Europe facing challenges. He explained that they are progressively filling recently expanded capacity, which is contributing to margin improvement. The company is actively managing its supply of warehouse space to meet demand, and this is expected to continue driving profitability in the 'Fulfilled by Maersk' segment.

Sathish Sivakumar of Citigroup Inc. inquired about the fleet-to-crewing ratio and its expected timeline to return to pre-pandemic levels. He also asked how the need for price stimulation would impact winter capacity plans.

Answer

Executive Edward Wilson explained the crewing ratio is intentionally elevated at 5.8 crews per aircraft to provide resilience against ATC disruptions and will not be reduced until the ATC situation is fixed. CEO Michael O'Leary and Executive Tracey McCann added that winter capacity plans remain unchanged; Ryanair will accept weaker pricing to achieve its traffic volume targets and will continue optimizing its network.

Sathish Sivakumar questioned the progress on the Nashville Lane project, the market response to the 407 ETR's incentive schemes, and sought clarity on the NTE 35West's traffic growth drivers, particularly the contribution from Segment 3C.

Answer

Corporate Finance Director Ignacio Del Pino indicated that RFPs for the Tennessee Choice Lanes are expected late this year or early next. CFO Ernesto Lopez Mozo confirmed plans to continue and broaden the 407 ETR's incentive schemes, noting very limited price elasticity so far. He clarified that while Segment 3C is ramping up as expected, the strong growth in segments A and B was also due to traffic returning after prior construction work.

Sathish Sivakumar of Citigroup asked for a breakdown of long-haul bookings between Transatlantic and Asia, whether Q3 cost guidance includes expenses for the Paris Olympics, and for an update on the upcoming €350 million bond refinancing.

Answer

Executive Benjamin Smith stated that booking curves are in line across all long-haul segments with no material differences. CFO Steven Zaat confirmed no specific additional costs for the Olympics are expected in Q3 and noted that while the market is attractive for refinancing the bond, the company also has sufficient cash to repay it.

Inquired about the booking load factor for Q4 and Q1, asking if the lag is consistent across the network, and sought clarification on the expected restructuring costs associated with the Orly network changes.

Answer

The slightly lower booking load factor is due to a significant increase in capacity, and the trend is consistent across the network. Restructuring costs for the Orly transition are not considered material; the main costs are related to fleet transition and training for Transavia. One-time employee-related restructuring costs will occur through 2026.