Boardroom Conversation – Dealing with volatility in a high-cost environment

Transcript

Alex Cruz:Welcome, guys. We've got the clock running already, so, and a bunch of things to, to, to go through. Um, why don't you— all 3 of you have something in common in that you have not been at your airlines more than 5 years. I think that Martin has been at Gulf Air for Just about 6 weeks. You've been there—

Campbell Wilson:Nearly 4.

Alex Cruz:Okay, nearly 4. So you're getting there. And Anko?

Anko van der Werff:4 and a half. Okay.

Alex Cruz:Yeah. So really, you had a tremendous amount of experience coming onto these jobs. Will you share with us how has it been as you came into this company? Different cultures, certainly for all of you, different cultures from what you were working on before. Not completely unfamiliar, but different. What has that challenge been like? What— tell us about that arrival into Air India, Campbell. Okay.

Campbell Wilson:Well, for those who don't know, I had 26 years with Singapore Airlines, during which time I also founded the low-cost long-haul airline Scoot. Singapore, obviously, very well-structured, well-organized, very mature, highly regarded airline. Air India was coming off the back of over 60 years of state ownership, and during which time it had been severely neglected in terms of capital and focus. We had 30 aircraft on the ground for want of spare parts being robbed to support others. We had no recruitment for 20 years such that the average age of the workforce was 54 with a retirement age of 58, and we had 4 airlines that needed to be put together to create scale and capability. So it really was extremes coming from the Singapore context to the Indian context, but the flip side is that India is a very, very exciting market, very, very fast-growing, huge opportunity. And with a capacity to change unlike anything I've ever seen. It's been challenging, exciting, rewarding, terrifying, and whatever other adjective you want to make.

Alex Cruz:There's a lot there to uncover. Now, tell us about that amazing, really long experience of 6 weeks at Gulf Air. Now, you're still in the shock stage of arriving and getting to learn and know what that new environment is like. Tell us a little bit more about that.

Martin Gauss:Yeah, 6 weeks. What is the same? The Kingdom of Bahrain, from the population, is even less than Latvia, so it's a smaller country. We're missing engines, so that's the same. This follows me. The different connectivity is an issue, so I have to work on connectivity. What is not the same is the weather, so it's quite a shock. And I have been received very well. in the Kingdom of Bahrain. That is surprising me the most because I thought coming to a new place, you would have some issues to adopt, but I have to say this was very easy to adopt. It's very welcoming, but then going into the detail now would, I think, be not mature as I'm putting a team together now which should be leading the airline into the future, coming up with a strategy. And the journalists are asking me, so what's your strategy? It would not be mature to say after 6 weeks what's the strategy, but I have had 14 years building a brand. Now, I'm working with a global super brand which is 75 years old, which maybe needs a little bit of bringing the old glory back. So the brand definitely which I now inherited as a brand is something very nice to work with, and I'm sure when I come to other events, then I have more to say on the details. Thank you, Hans.

Alex Cruz:Great, great. Anko, before I ask you, I think we do have to reveal to our audience that our life could be defined as Sleepless in Seattle.

Anko van der Werff:Yeah.

Alex Cruz:I don't know who's Meg Ryan and who is— but Anko and I have become really, really good friends over WhatsApp over the last 7, 8 years. And I want you to know this was the first time we saw each other 10 minutes ago. And it's like continuity. He's a little thinner than I thought, but okay. Anko, you arrived in the cold after having been in the heat of Mexico and Colombia. What was it like?

Anko van der Werff:Yeah, so apart from the weather being different, I think the main difference was that certainly at Avianca back then, we had gone through 2 restructurings, right? First, we did the out-of-court restructuring in 2019 when I got there. And then we did the Chapter 11. That was a heavy one. This is 6th gear hedge funds, all sorts of different shareholder constructions and everything else. Then you come to SAS and I started in July. For those of you that don't know July in Scandinavia, it's dead. Literally. There was 15 people in head office. I remember thinking to myself, oh my God, I mean, this is clearly an airline in need. But I think without really trying to be rude in any way, but it was really, I think we hadn't figured out yet that we actually needed something. It was lovely being there in July. Weather was nice, but yeah, it needed, in my mind, it needed to become alive. I've used the word alive a lot. back then, and you and I have spoken about it before as well. It just— I think every airline needs a story. It needs a narrative. It needs something that you can really build on, and that's for internal stakeholders as much as for external stakeholders. The first year, of course, was very tough, and you try and build that story. For us, I think the story needed a restructuring because in the end, the only thing that I really wanted and that I've really been pursuing is consolidation. SAS needs to consolidate. I've seen the benefits of consolidation all throughout my career when I started first with KLM and Northwest, and then Air France-KLM, Delta, and everything put together. Then we built a joint venture between Delta and Aeroméxico and sold 49% of Aeroméxico to Delta. Consolidation works. When you look at what ABRA and Avianca are putting in place or have put in place, Clearly, that was all Adrian and myself getting to the table with the relevant stakeholders, and consolidation was that piece. That's the same for SAS, and I think we're well on our way, but there's other elements too. You need to build an airline. You need to really build something that your customers want. We've done— we're, I think, on a really good path there.

Alex Cruz:Fantastic. It's quite fascinating to listen to all 3 of you because there's a common theme. There was a company there that has always been there, that has a tremendous attachment to the local geography and the local society, and you come in to really revamp it and really make it work for the next 100 years or 75 years or whatever it is. Incredible. Now, the topic of this session is one that is so dear to our hearts, and all of us that have been running airlines have had to endure and manage, and that is disruption and uncertainty in many respects. I remember a board meeting in Vueling many years ago in which I was trying to justify to the board putting in a fairly large millions of money under item unknown because we knew something would happen, because every year something happens, right? It is. We don't need to list all the things that we've been having, and obviously there's different degrees of severity of things that can happen. But in reality, it feels like that's what we get paid for, is to prepare for that uncertainty. Can you share, each one of you, a little bit about how have you, in your career, prepared, and what are the mechanisms that you use currently in your organization to deal with that uncertainty? Both from a functional perspective and a culture or human perspective? It's a small question.

Anko van der Werff:Yeah, very narrow.

Campbell Wilson:Yeah, well, I mean, the traditional answer is, you know, fleet strategy, supplier mix, fuel hedging, currency hedging, and so on. I'll leave it to my colleagues to talk about those. You know, I guess Air India has probably had the most volatile and challenging year certainly in my 30 years of aviation. You know, we started off the year with 3 good weeks at the start of the financial year. Then we had the India-Pakistan War. Then we had the AI-171 tragedy. Then we had the Iran-Israel conflict and lobbing missiles, closure of airspace. Then we've had the subsequent closure of Pakistan airspace to us. Then we've had 50% tariffs, H-1N1 visa, and then even just last week we had our— an implosion by our major domestic competitor. which caused all sorts of chaos and disruption. You really just have to be prepared for the unexpected. As you rightly say, unknown is a big line item that you need to account for. I think to Anko's point, how united is the organization behind a common goal? What are they prepared to be flexible on and go the extra mile in order to achieve? Those things do wonders. Your relationships with your crew, relationship with your your engineers, relationship with your frontline, and ultimately the relationship with your customers to— so that they understand the challenges you're facing without making excuses for it, but equally that they give you a little bit of latitude that some things are beyond your control whilst you're doing your best to be helpful and empathetic to their situation. That's my broader view. It's a culture and direction.

Alex Cruz:Presumably, it's really difficult to face the CAA and say, It was a combination of factors because— and we're talking specifically about the conflict of IndiGo in the last few days because it's very difficult to explain to politicians it's a combination of factors when normally society want a guilty party to hang.

Campbell Wilson:Totally. The regulator obviously wants to shift capacity from one airline to another, but we don't build an airline with 10% spare capacity sitting around. Your ability to flex up and take over the slack is very, very minimal. But explaining that to a regulator or to customers is very, very difficult.

Alex Cruz:Martin, airBaltic is the platform for you to talk about this because you went through so many things aside from basically taking all the A220s that we could have because you hogged them all at the beginning. But you proved that the product was really good. You've had political issues, you've had Geopolitical issues, being so close to Russia, etc. What was the airBaltic culture like? How were you prepared for uncertainty?

Martin Gauss:I think transparency to the staff is, I think, a key item, and then also to the shareholders. When we all do budgets, it's always the same. In your final budget round, you end up saying to the revenue management people, but you need to bring more, while they already did their best, or you have unidentified costs. So the budgets are built this way, and if we look at it the last years, the cost items, as costs go up faster than we can increase revenues, all of us, we saw this earlier in the presentation. I think this will be the challenge going forward, to bridge that gap that you are not generating enough revenue because you don't have enough aircraft, but your costs go higher and higher. All airlines have that issue, and I think transparency in the organization is very important. I did that before and I have to do it now. So I'm in this— I'm just in a budget process but just for a few weeks in the company, so I have to understand what are the bottlenecks. But at the end of the day, it's the same, cost going up higher than you can bring up the revenues, and I think that will stay. So the challenge will be how do you explain it, and I think what I did in the past was to say, where are we in 10 years? to say the vision, where is this airline in 10 years, to the stakeholders, and then do your yearly budget and not forget where you want to be in 10 years, but you're going to adjust every year. That worked for me in my aviation life very well, setting a long-term target, and then each year you have to accept the realities. It looks like since COVID and the supply chain crisis, we are not getting out of it. I hope one day we will get out of it and can just offer what airlines do. You have a capacity plan and you can use it. That's not the case this year, not next year, and probably not the year after, but one day we should be, as an airline, be able to say, I have 25 aircraft and I make a schedule for 25 aircraft and I fly them. This is not the case today for airlines because of not having your equipment available to you.

Alex Cruz:Anko, everything must have been really easy for you at SAS. You arrived at an airline that was number 22 in the European punctuality league table, and now you're number 1 or number 2.

Anko van der Werff:Yes.

Alex Cruz:Something is happening there. It's not planning for uncertainty, but something is happening. What is happening? What are you doing about it?

Anko van der Werff:Yeah, so great, and really happy actually that you focused on that because— okay, I'm going to— you like this because you're Spanish, and so we're going to talk about a Dutch philosopher, which actually was our most important football player for a second, right? Johan Cruyff. Johan Cruyff played for Ajax and Barcelona, and hero, second-best player in the world of the last century according to all the stats. Baylor was number 1 in crap.

Alex Cruz:That's what you would say.

Anko van der Werff:No, actually, this is objective data, Alex, objective data.

Alex Cruz:Just look it up.

Anko van der Werff:I'm not even saying he was number 1. He was number 2. He has a simple philosophy. He has a simple statement. He's got beautiful statements. One of them is, if you can't shoot, you can't score, which is incredibly stupid, but it's incredibly clever as well. If you can't shoot— every advantage has its disadvantage. There's all these philosophical statements. One of them is, Football is a very simple game, but to play football simply is incredibly difficult. And that's the same with airlines. And so some of you maybe have heard me say this before, but what do people expect from an airline? It's one, that you fly and don't cancel. It's two, that you fly on time. And three, that we give you back whatever you gave us. Whether that is your pet or your bag or your unaccompanied child.

Martin Gauss:Right?

Anko van der Werff:All right, now if you start with those 3 things, you fly, don't cancel, that is, of course, a lot of maintenance in there, right? So there's a lot of maintenance focus. Okay, so brought Jason Mahoney in and the world looks different. 2, you fly on time and you give people back what you want. Now, the easy— it's easy to say that, right? But it's very difficult to deliver on because we fly anything from Los Angeles to Tokyo and from the North Pole, Svalbard, into Africa, 800, 900 flights a day, and that becomes really difficult because now you have different jurisdictions and different weather and different I don't know whats and crew and yeah, hey, I get it. But in essence, running an airline is very simple. And just spend your time focusing on those things. And so NPS has really been the Bible, and I definitely dare not claim to be the Messiah because that's just a copy-paste from Delta. Delta is incredibly focused on NPS. And they've got this reverse engineering of what would it take to get NPS 1 point higher, because for them NPS means repurchase intention and therefore, right, just focus on it. So really a lot of stuff has happened and it was beautiful to see because at first with the original team that I had, I tried to do the exact same things, the exact same things that we focused on, the exact same settings, the exact same meetings, the exact same focus, whatever, and it just didn't flow. And then literally with with Jason coming on board, and Jason, you've worked together, just really the world changed because it's hand in glove, right? We speak to each other on a daily basis about all sorts of things, right, small or big, but it's been this relentless focus on fly, don't cancel, fly on time, and give people back. And there you have the metrics, right? And you just go all the way down, and we focus on those metrics religiously. And so, yeah, The story is NPS is at an all-time high for us. Our operational performance is at an all-time high, and they're very linked. Therefore, your cost actually is much more under control because your crews sleep in their own bed or in the bed that they're supposed to sleep at night, and you don't have to cancel the next morning. You have your passengers who are actually at their place, and they don't misconnect. You've got bags who don't misconnect. Our operational air cost has come down by 40%.

Martin Gauss:Thank you.

Anko van der Werff:All whilst we have now consistently— I just checked the data earlier in the week— over the last 16 or 17 months or something, there's been 3 months that we have not been number 1 or 2 in Europe, and it's the winter months where we are covered in snow, right? Everybody will understand that. Even in the world, we've now been number 1 a couple of times, and so it drives itself. It's a flywheel.

Alex Cruz:Great source of pride. There is a reasonable correlation between being at the top league in punctuality and profitability. I think there is. Reasonable correlation. You're a private company. Let's talk a little bit about this. A lot of people in our audience would really benefit from your comments with regards to 2026, maybe a little bit beyond that. We're all going through budget planning. I'm helping with the budget at WestJet. I'll share just one thing. It looks like Stephen Carter before was talking about all these different things that are unknowns for next year. Often, we do business plans and then you put upsides, risks, and opportunities, and things like that. It turns out, for me, in my case, that normality seems to be an upside. If things go really well, that will be an upside, but I have to plan—

Anko van der Werff:Mm-hmm.

Alex Cruz:for they're not going to go so well in some respects, which is crazy. When you look at 2026, Campbell, India on itself, it's such a massive potential, incredible potential story for the years to come. What is the market looking like and what do you see those passenger flows looking like over the next 2, 3, 4 IATA seasons?

Martin Gauss:Sure.

Campbell Wilson:India, obviously, 1.3 billion people. It's the 3rd largest domestic air travel market in the world. GDP growth is 8.2% this year, going to 7.3% next year. If you look at the multiplier that was presented in the last presentation, that means a doubling every 5 years or so. You know, our fleet, we've got 524 aircraft on in our order book, which will be delivered by 2031. And that's just us. There's 1,700 aircraft in the Indian aviation order book. So the macro picture is very, very clear. Then you factor in 35 million people in the diaspora, you factor in a geography that can work as an intercontinental connecting hub in exactly the same way as the Gulf, you know, the upsides are immense. In the short term, there are huge challenges. One is the supply of aircraft. One is the development of airports to accommodate that number of aircraft. modernization of the air traffic control system to facilitate the movement of those aircraft. Then various other challenges. I spoke about the India-Pakistan War and the continuing closure of Pakistan airspace. That affects 40% of our ASKs, including some of the most profitable ASKs.

Anko van der Werff:Mm-hmm.

Campbell Wilson:Building a plan for next year is very, very challenging because there are a number of binary factors that can be the difference between $1 billion positive and $1 billion negative. We just have to plan on the worst-case scenario. We have to deploy aircraft as best they can be deployed, even if it's not optimal. We still need to plan for growth and recruit for that growth because those 524 aircraft are coming whether we like it or not. We're using whatever downtime we have because of this uncertain period to accelerate reliability programs, accelerate retrofit of the wide-body fleet, the narrow-body fleet having now been completed. But it's a very, very challenging environment. I think, as I said, in the 30 years I've been working in this industry, this is the most challenging.

Alex Cruz:I know I can go into the CAPA database and see it, but roughly, how are those deliveries spread out over a period of 10, 12 years?

Anko van der Werff:6.

Alex Cruz:6 years. How many aircraft?

Campbell Wilson:500 and— we ordered 570, we've got 524 still to come.

Alex Cruz:Okay. I'm not sure if the audience really understands the depth Of how many aircraft per month you will be receiving over the coming 30 days.

Anko van der Werff:I think it was— you had one coming in every 6 days or something?

Campbell Wilson:Yeah, the last 2 years we've taken one every 6 days, but that's just a warm-up for what we're going to have to do in '28, '29.

Alex Cruz:That in itself is an incredible, incredible, incredible challenge. Of course, all your people will love the fact that there's new aircraft, etc.

Campbell Wilson:Totally.

Alex Cruz:Without—

Campbell Wilson:and that aligns people behind what is a challenging mission. Everyone sees advancement, whether it's cabin crew or pilots or engineers. They see network expansion, they see new destinations, they see revitalization of the national name under private ownership. All of these things are positive stories and gets people aligned behind what is life-changing opportunity.

Alex Cruz:Fantastic. Martin, this is your budget now.

Campbell Wilson:Yep.

Alex Cruz:It's going to be approved. You arrived right on time to ask all the questions, but 2026 will be your year. You came right on time.

Campbell Wilson:Yes.

Martin Gauss:I mean, the previous management did a good job because I came in and I have record load factors, and now I can send out the press releases saying it's all very good since I'm here. Similar to what he said, that we are in an area surrounded by the mega carriers where everybody would question, what are you doing between Qatar and Dubai? The growth is so big that the Kingdom of Bahrain being in the middle and having A very smart hub with a brand new airport where it takes 10 minutes to transfer, so you don't need a helicopter from one gate to another, you can just walk. There are these opportunities there. I need to see now capacity, aircraft capacity, because we have aircraft on order, but if I do a long-term plan, then maybe this capacity as it looks now is not sufficient. We just placed an order for 787s. Also, on day 1 when I came, I just signed it, but it was done by previous management. So I think that was smart, but I need to see for next year to leverage on that growth which is there. There's a lot of spillover. Saudi Arabia, there is a bridge connecting to the Kingdom of Bahrain. We have a lot of traffic coming to Bahrain. Yeah, try to do this, use this better next year. Cost-cutting was done in the last 2 years.

Campbell Wilson:Thank you.

Martin Gauss:Maybe we focus now on keeping the aircraft full and then grow and take that growth with us, which is there. There's a lot of growth, and the Kingdom of Bahrain being small there in the middle is developing very well because of that. There's a lot of effect coming to Gulf Air, which we want to use and keep growing. I now need to see how I do this with the existing cost base. How can I grow by not having sufficient aircraft due to engine shortage and so on?

Alex Cruz:Anko, new shareholders, new aircraft. You've renewed a lot of things whilst you were there. You're going into 2026 with a starting point which is different from prior years. What are your considerations, your main considerations for 2026? Yeah, I think demand, etc.

Anko van der Werff:Yeah, you're right. I mean, first of all, for us strategically, a very important year, right? This is the year that hopefully we'll give up on our independence, and I really mean that hopefully and positively, right? We've been wanting to consolidate, I think, this business since the 1990s. I mean, Janne Carlzon had this plan 1 in 5 '95, and I keep on joking it will be 1 in 3 '26, right? I mean, that's just how long it takes in this industry. It's ridiculous. And so hopefully next year, of course, we will get the approval from the European Commission, and that is, call it the long-term '26 goal, right? We expect that to close somewhere at the end of '26. And so that is literally the number one thing we're focused on at the most strategic level. Demand, everything else, I think we have a very, you know, straightforward look or way of looking at it. It's always— I like to build conservatism into stuff, right? Don't go wild, don't go mad. I've seen in other airlines when we really grow too fast that the wheels come off. I think we have done something. We're still growing, and our first budget month is actually just behind us. November is our first budget month. We have a weird budget and really on track to deliver on that plan towards Air France-KLM. The way we're looking at it for us specifically is, to your question, rate of exchange working for us at the moment. The Swedish krona is strengthening. It was also the worst-performing currency in IMF. Fuel seems to behave. There's potentially some bad guys there, but I think there is potentially a good guy depending on what happens in Russia. Ukraine and what is going to happen there, of course. Good guy if, of course, that can end on the right terms. Let me just be very clear on where we stand. For now, some form of stability, it seems, really in the world, even though the headlines, of course, are screaming at us on a daily basis. If that stability continues, then I think we're looking at a really decent year for SAS and the one where Hopefully, we'll be part of a European group towards the end.

Alex Cruz:Great. Again, lots to unpack there as well. Let's now talk a little bit about how you're going to achieve this. In a way, when we're starting a new year, we look for anchors that are going to help us to deliver. Sometimes it's people, team, sometimes it's a certain market advantage. Some other times, it's the support from shareholders and everything else. What is going to be your secret sauce for delivering that budget that you just told us about for next year? What are those elements that you're looking forward to using in Fortify to help you deliver the budget?

Campbell Wilson:Ankur, do you want to go first this time? Anko.

Alex Cruz:That's very smart.

Anko van der Werff:That's very smart. No, look, I think, I think no, no secrets, no secret sauce there, right? I mean, clearly we're going to get one more A350s in. We're going to get more A320neos in. They all help, right? There we already have about 85 neos or something, one of the bigger fleets in, in Europe. And then with the A350s, yeah, further building out that hub of Copenhagen that we, that we really— yeah, that's working well for us. But we have 2 very strong countries there as well. Norway, domestic market, of course, and European traffic doing well and increasingly, increasingly better. Sweden is, is still somewhat of a mess because of all the policies that people have created over the years. So Swedes have practically stopped flying, which is somewhat of an issue if you're in the aviation business. And so that is something that is gradually coming back, but really, really, really slowly. And then, yeah, look, we, we have nice products coming out. We just launched SAS Holidays, fairly quick maybe for a legacy airline, fairly slow for an airline, right? But we had all that Star Alliance to SkyTeam IT work that we had to take care of. Otherwise, I think we would have been able to launch about a year ago, which of course would have been better. But hey, we had that change, the alliance change, and, and really that is— that was a redirection of of effort and tremendous. But anyway, well done on the guys. And, um, and yeah, so SAS Holidays, new and nice. We are very much focused, and you again, you also know this, I've got 5 pillars, let's say, and, and load factor is one. We're really at record highs for, for us at SAS. We were also very low in, in, in the past, but we're now at record highs. And sitere is record highs and, and really focusing much more on that. Then there's the operational performance and NPS. And if you bring that all together, that really drives profitability. If you are profitable and you can build those with the A350s, with the A320neos, structure that, and we top it up with 8.5 million Eurobonus members, there's lots to like, really. There's lots to like at the moment.

Alex Cruz:You did mention Norway, and you've got Swedish Swedish shareholders, you have Danish shareholders. Now you have some French shareholders.

Anko van der Werff:The Swedes are actually out. Sweden as a state is out. It's just— so it's private equity is 40%, then there is the Danish state, and then there's Air France-KLM.

Alex Cruz:I just don't hear the word Norway. Well, we're Norwegian citizens. SAS, do they care about Norway?

Anko van der Werff:Yeah, yeah, yeah. No, it's a very, very interesting and fair question. I keep on wondering why that's so complicated, because when I'm living in the United States and I want to fly to Europe, a lot of people take KLM. What's the big deal, right? So for us in Norway, we've got about 40 aircraft in Norway, and that's, that's right, just right there. I think we have a slot share in Oslo of 48%. So yeah.

Alex Cruz:48%.

Anko van der Werff:That's not irrelevant, right? It's not irrelevant.

Alex Cruz:Undebatable presence and so on. You just arrived, you just saw your toy set. What are the things you're going to be relying to deliver the— what is going to be your secret sauce in 2026, Martin?

Martin Gauss:My secret is definitely the Gulf Air brand. A week before I joined, I was in Kathmandu in a taxi and we had the chat and he said, so where are you the taxi driver, where are you working? So we discussed this and I said, I go to Bahrain, and he said, oh, that's where Gulf Air is. We don't fly to Kathmandu at the moment. So I was impressed and I hear this a lot in the region, but coming from Munich, if I ask somebody, where is Gulf Air from? They will tell you it's either from Riyadh or from Abu Dhabi. They don't say Kingdom of Bahrain because we don't advertise that. We say we fly to Abu Dhabi, so the advertising doesn't fit. The brand is not known. While the brand is the oldest brand, it was the first airline in the Gulf 75 years ago. It was in the '80s, '90s an iconic brand. It is there, and that's my secret sauce, and it comes with the combination of my shareholder, and a lot of people don't know it. Of course, it's the Kingdom of Bahrain, but my board is MUMTALAKAT, the sovereign wealth fund, and they just— and that's also people don't know that.

Anko van der Werff:Yes.

Martin Gauss:They just became a world champion last week in the Formula 1 because they own the Formula— the McLaren team. So the same people who did that transition are now my shareholders. My chairman is the same who was in charge last week becoming world champion Formula 1. So if you connect the dots, I have very strong source.

Anko van der Werff:Quick turnarounds. You're going to have quick turnarounds.

Alex Cruz:I was going to say, you can bring the Formula 1 guys.

Martin Gauss:Yes.

Alex Cruz:So I— 1.6 seconds.

Anko van der Werff:I want to train you in airports.

Martin Gauss:What better secret sauce you have if you have already a brand which is not used and then a very supporting shareholder with a very dynamic team there? I think that is a new approach to it. I have a very strong base, but I need to do something out of it, which is then coming back to airline basics where I miss engines and so on.

Alex Cruz:Martin, will you share the story about the fountain?

Martin Gauss:Leave that for later.

Alex Cruz:Okay, that's good.

Martin Gauss:Otherwise, I lose it later because it's going to be an integral part of turnaround story.

Alex Cruz:That sounds fantastic. What an incredible weapon, really, your brand. Campbell, your turn. What is your secret sauce for 2026 budget?

Campbell Wilson:I think similar to— well, 2026 budget, let me—

Alex Cruz:How are you going to do it?

Campbell Wilson:Let me go a little bit backwards. Air India is a 93-year-old airline. It was started by a guy called JRD Tata, India's first commercial pilot. It was nationalized in the '40s and '50s. During its life, it has been up there with the best airlines in the world. Salvador Dalí provided onboard ashtrays. It had the best French Impressionist artwork onboard the aircraft. But it was neglected badly for a number of decades. And so we're in this phase of rebuilding. It's been 3 years under private ownership, coming up 4, and we think it's going to be a 5-year turnaround, whether it's all of the facilities have been replaced, 140 IT systems have been replaced, 4 airlines have been merged together, all of the pilots have been harmonized into a single contract and seniority list. We've got 4,500 people have voluntarily departed, 9,000 new people come in, build a new MRO, new flight school, new training facilities, and completely refitting all of the product in addition to all of the ones that we have coming on new aircraft. So it's a complete rebuild of the business. It is not a finished rebuild of the business. We said it would take 5 years and it will take 5 years. But at core, it is a 93-year-old airline that most Indians have flown on in their first travel experience. There are 35 million people of Indian origin around the world who, when they choose to fly, their preference is to fly an airline that speaks their language, that serves their food, that understands their culture, and that represents their country. We have the national name on the side of the aircraft. It might not deliver 2026's budget, but it will absolutely deliver the aspirations and the future budgets of Air India. That affinity, that strength, the underlying secular trajectory of India, I think, is what is going to power Air India, and that's the secret sauce.

Alex Cruz:I'm jealous of all these different incredible levers that you have, and I hope that you can use them to deliver that budget. We've got a couple of minutes left. There's one word that has been absent in our discussion. We've discussed politics, we've discussed people, which I personally believe is our biggest lever, but we have not talked about technology. We have a lot of friends in the audience who are dedicated at helping us and supporting us on the technology side. We haven't mentioned the AI, et cetera. Maybe just a quick thought from you on your own position with regards to the role of technology. It's incorrect to say there is no role, but tell me how passionate you are, how passionate is your team around the usage of technology. I'll start with you, Campbell.

Campbell Wilson:Oh, totally. As I said, we've completely ripped and replaced 140 IT systems, so I think at least from a technical platform, we have as modern as anyone. We need to learn how to use use it as well as everyone else, but I think the core ingredients are there. We are 75% owned by Tata Group, and Tata Group own TCS amongst Jaguar Land Rover, Taj Hotels, and others. So you can imagine, you know, TCS is one of the world's largest IT and particularly outsourced companies, and so we have not just their capability, we have their passion and Our chairman is the former CEO of TCS.

Anko van der Werff:So, you know, 610,000. I met with the CEO last year, 610,000 employees in TCS.

Campbell Wilson:Well, Tata Group has 1.1 million.

Anko van der Werff:Exactly.

Campbell Wilson:But TCS has 600,000.

Anko van der Werff:Incredible.

Campbell Wilson:If there's one thing that he's passionate about beyond aviation, it is technology.

Martin Gauss:Great.

Alex Cruz:So that will help you. What about you and your new environment?

Martin Gauss:So I came from an airline where there was a lot first in the world things developed on the technology side. I have in the— the CIO is very much into it and we will— we were small so we can maybe go faster on some of the things, but relying on what is out there today. And in the past, I've shown that I can introduce innovation. We will do the same, but we will rely on who is there out there.

Anko van der Werff:Thank you.

Martin Gauss:to see what fits best and then try to do pilots, do it in-house. I do rely a lot on, I think as all of us, on what is coming there on AI, but I cannot tell you today what is going to be the thing Gulf Air stands for in new technology, but there will be things where people say Gulf Air did it. That's definitely something we will see. Overall, there's all the airline systems we have which will change over the years. All of us will— we will all look at others, see what is best, and then try to copy. If we can develop something ourselves, we will do, and all of us will have unique— if you have that manpower and backup, there will be maybe a lot of things they develop which we might be able to take as well.

Alex Cruz:Anko?

Anko van der Werff:Yes, very happy for you to ask that question. I think one of the things we did well at Avianca, really not to criticize, but I think that SES got wrong at first, and I took it with me from Avianca, was COVID hits, and I think it was very easy for a lot of companies to then slash their IT budgets. At Avianca, we doubled. At the start of COVID we said we're going to slash everything else, no expenditure, but CapEx actually doubles because we figured very early on, and literally, I think this is the first weeks, that we wanted to become more self-service, more ancillaries, more everything else, more personalization through technology. When I got to SES, I saw indeed that everything was paused and I went back to, okay, what was the original budget before COVID Well, X. Okay, well, 2X. From now, it's 2X. It was my first board meeting in SES and pushed that through. That's why ancillaries, for instance, all of the stuff that you're doing, look, airlines can run airlines very well, but there's The technology out there is far superior, at least retailing-wise, what we're capable of ourselves, right? So I'm a big fan. I'm a big believer. I spend a lot of time in— when we built our app, which we— I think really honestly and objectively one of the best travel apps out there. We won the Webby Awards and everything for it. And at a personal level, kind of a cliffhanger I cannot disclose yet, but I— What is it? May soon join a board of an already successful tech aviation startup. And I really believe in making hopefully that bigger. So yeah, cool, cool part of the world, cool part of what's happening there. AI, of course, not just a buzzword, but really trying to see in 2026, is there concrete— we've got 5 AI bets, is one of them— can we really bring an AI bet to fruition?

Alex Cruz:I can hear the music. Few seconds, one question, one number or a range. Today, how much do you think are you using AI today versus the potential? Is it 10%, 20%, 30%? Low, medium, high? How would you characterize it?

Campbell Wilson:1 or 2%.

Alex Cruz:Amazing. Martin?

Campbell Wilson:Same here.

Anko van der Werff:Anko? The answer is not enough, right?

Alex Cruz:I need a number. I need a number.

Anko van der Werff:Well, 1. Now, whatever, right? So when we do something, water management, you do, of course, You do stuff in revenue, you do stuff in whatever, right? I mean, there is stuff.

Alex Cruz:A world of opportunity. A world of opportunity. Dear audience, this is our great panel. Please help me to thank them. Thank you very much.

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