Full Year 2022 Ryanair Holdings PLC Earnings Presentation (Pre-recorded)

I'm, Michael O'leary the group CEO , Brian here with me. This morning is Neil song of the group CFO .

We're happy to communicate to you. This morning, our full year results for the year ended March 2022.

Over the last 12 months, we reported a loss of 355 million euros, a significant improvement on the full year loss of just over 1 billion euros. The previous year. All of these losses are substantially due to the impact of Covid on our business over the last two years.

We've covered that in some detail in previous announced in previous announcements. So what I'd like to do is touch briefly on some key points highlights of the last year and obviously our guidance our guidance going forward for the next 12 months. So I think some highlights of last year, we're proud that our team.

Name is protection rating has improved from a b minus to B, that's part of a multi year strategy to get to in a climate rating in may which should make us the world leader in environmental and sustainable Air travel sustained analytics has recently ranked the number one EU airline for environmental social and governance performance.

Our traffic has recovered strongly to 97 million passengers.

But that's still 35% behind our almost 50 million passengers behind where we were pre COVID-19 average fares in the last 12 months have fallen by 27% to just 27 euros again due to the impact of Covid and towards the back end of the year Omicron and Ukraine.

The business continues to be while we're recovering that recovery is fragile because of the impact on.

Much closer in booking profile the impact of negative news flows on that booking profile. However, we continue to invest for the future at the year end, we've taken delivery of 61 737 game changer aircraft. These aircraft.

Sorry, 4% more passengers, but burn 16% less fuel and Thats I think somebody is going to be absolutely critical to our operating operations and to our costs going forward for the next couple of years, particularly as oil prices have risen post the Ukraine invasion to record levels, we have never seen so many growth opportunities out there. This summer we've now.

50, new bases across Europe , and will operate more than 717, new routes I am pleased to say that our team. Thanks to the efforts of our team we are very well hedged on fuel we have about 80% of our few bought forward through hedges or caps to March 2023, and at prices of between 60 mid 60%.

Mid $70 per barrel that are significantly below current spot prices of this gives us Ryan there are huge competitive advantage as we recover and grow across Europe over the next 12 months.

Summer Thanks to the new game changer deliveries, we will be operating at about 115% of our pre COVID-19 of our summer 2019 capacity the load factors might still be slightly lower than they were pre COVID-19 and affairs might still be slightly lower.

But theres no doubt that we are recovering strongly we're growing strongly but that growth is being delivered by lower pricing and the growth is that the recovery is fragile and as we saw both at Christmas and Easter where.

Recovery was damaged partly by the impact of <unk> and the Ukraine invasion.

That recovery is fragile.

We'll continue to invest heavily as I said the environment were.

We're making significant a couple of notable things there apart from the game changer aircraft, we've recently announced a partnership with nest egg in.

The Netherlands.

It will be up lifting up to 40% of our fuel at Schiphol airport will be with <unk>.

We're investing heavily in customer service the customer advisory panel met for the second time in Madrid in April we've taken on board their recommendations and you're going to see those recommendations implemented both on the day of light App online and at all customer touch points, both at airports handling and in flight and Im.

Pleased to say that our customer service scores are running at record levels and we aim to continue to maintain that on EU ownership and control. We have made significant progress in the last year from a starting point and when Brexit first of January 2021.

The UK shareholders were treated as non European.

EU share ownership was 32% we have seen that rise to 41% over the last 15 months, we've been aggressive on de listings, we delisted from the stock exchange. We've had a number of four sell downs of those non EU shareholders who've wrongly purchased ordinary shares instead of the <unk> and that will continue.

And we believe we are on a path to restore our EU ownership to over 50% in the next 12 to 18 months.

We are very exciting growth plans as I said, the 15, new basis and over 770, new routes and I think Chris.

Critical at the moment, while the outlook on earnings is shrouded uncertainty because of the fragility of the recovery and the impact of negative news flows. There is no doubt we are taking very significant market share gains in some of the biggest travel markets in Europe in Italy. This year, we expect our market share of over 40%.

In.

Vienna, we've seen a dramatic progress from 8% market share in the summer of 19% to over 20% in the summer 2022 in Budapest, The home airport one of our <unk>.

So called low cost competitors.

We've gone from over 18% market share to over 30% in the last two years and market leadership. We're now the number one airline in the home airport one of our competitors and even in Ireland, where we've already been long established we've seen our market share jump in recent months from <unk>.

Around 48% currently it's running in 50, 556%. So these investments are these market share gains will continue.

We'll now turn with Neil will take you through the slide presentation of the results, which in which we'll deal with most of the details.

Q&A and the financial numbers, so Neil over to you Michael. Thank you very much so welcome everybody to our full year results presentation.

As we've always said because the lowest fares and lowest cost of any airline in Europe and this year, we returned to growth with 165 million customers up from $149 million pre Covid. We remain number one for customer service on time performance of 90% last year and as Michael has already said and as lead and we've seen significant improvements in our ESG.

Raisings.

CDP, increasing our rating from BBB minus to a b and indeed sustainability.

Giving us a very strong number one EU ESG racing balance sheet remains rock solid and is this financial strength and lowest cost that makes the long term winter we have a platform for growth in place was 89 basis 225 airports across our network and indeed this summer we're operating 15 new base seven.

770, new routes. So this coupled with the new game changer orders will see us grow to 225 million passengers by FY.

<unk> 2006, we commenced a cohort with the lowest cost per passenger ex fuel that gap is only widening between us and everybody else. So significance at unit cost advantage ex fuel at all of their players on the year itself.

A significant recovery in traffic, 253% increase to just over 97 million customers wouldn't improve load factor of 82%. This however was stimulators true lower fares.

27% reduction in average fare to just 27 here, but we did have a good performance in ancillary and as a result total revenue was up 193% to $4 8 billion operating costs, despite plus at over 250% increase in traffic only increased by 113% at just under five three.

So as a result, we saw lower loss this year of $355 million down from $1.0 billion to $1 billion last year balance sheets very strong had I think the key call out here is the reduction in net debt, which despite $1 2 billion in Capex. This year reduced from $2 3 billion at the end of last year to one five.

At the end of FY, 'twenty, two and with that ill, maybe ask Michael to run through current developments. Okay. Thanks, Neil So clearly we see a very strong recovery of traffic into the summer of 2022, there is undoubtedly significant pent up demand for both business and leisure travel we are well positioned to capitalize on that recovery.

With we've taken delivery of over 70 game changer aircraft for the peak of summer 2022. There is no doubt that traffic is recovering we have seen in recent months stronger traffic higher load factors.

But most of that has been driven by lower fares in Q1, our fares will be which is the June quarter, our fares will be below where they were in the June 19 quarter, but as recently as April we've seen we've gone over 14 million passengers for the first time in load factor went over 90% for the first time since Covid, we expect that to continue there's a prospect.

Fares and yields in the second quarter, the key September quarter could be ahead of them.

Pre COVID-19 numbers and train some of our 2019, but that recovery is fragile and it remains very exposed to or.

Subject to being damaged quite significantly by adverse news flows as Christmas was damaged by the Omicron variant in the last week of November and Easter was badly damaged by the Ukraine invasion. However in line that we have very robust cost control will remain one of Europe's lowest cost carrier by a distance and we have kept our costs down and in many case.

This lower than during Covid, where many of our competitors have seen their costs rise and escalate on fuel, we're very well hedged we're 80% hedged out to March 2023 at significantly lower prices than sponsors and many of our competitors are significant are either not hedged at all and fully exposed to spot prices are.

Have inferior hedged inferior quantities are percentages of hedging in place.

One of the things we're committed to though is the gradual restoration of the pay cuts we negotiated repay close with our most of our people for the last two years, we've committed that we'll start off with the restoration of those pay cuts in July of this year and it will be a three year restoration July 23 in July 24.

We're in negotiations with a number of our pilot and cabin crew used to accelerate those.

Duration and some cases bring it forward to April or May of this year. We're also committing that if we get back to pre COVID-19 profitable pre COVID-19 profitability in this year financial year end March 2023, when would that accelerate the year two and year three we will restore fully the pay cuts.

If our profitability gets back to pre Covid numbers sometime around between April and July of 2023.

And for FY 'twenty three the customer program has been launched at the <unk> or <unk>.

Customer service scores are at record levels, and we want to maintain that significant progress and generally we have a cautious but.

I think ambitious program for FY 'twenty three we expect to carry a 165 million passengers, we see strong traffic and load factor recovery, but we're not sure about is the fares and yields and in particular the damage that can be done to those fares and yields by adverse news events like Covid like omicron.

Like Ukraine, and that's why we're not able to give any.

Sensible irrational profit guidance for the next 12 months, we're hoping for modest profitability, but we cant put a number on it at this stage.

Touch briefly on summer of this year, so forward bookings, which were damaged by Amazon in Ukraine invasion load factors are recovering, but at lower fares, we will operate at 115% of our 19 capacity in December 2022, we aim to get load factors back to 90%. We got there in April and we hope to maintain that over the next six months.

The summer nobody no other airline in Europe will deliver that volume of growth. This year. Other airlines tend to be the fastest growing airports or airlines in Europe Ryanair as the fastest growing airlines in Europe , and even then we can't cope with the amount of <unk>.

Growth opportunities we have we.

We do still expect airport and air traffic control staff shortages, we're seeing pinch points at airport security.

Particularly as usual at weekends.

Those that those staffing shortage or pinch points need to be fixed for the peak summer months of July August September we are making very strong market share gains in big markets, like Italy, Ireland, Australia in Vienna, Hungary, and Poland and I believe no other airline in Europe is as well positioned as Ryanair is to thrive.

Through an economic downturn or a recession. If one has visited upon us in the winter of 2022 or into 2023, and recessions people get more price sensitive they trade down to the lowest cost provider, whether that's Ikea is little.

Primer foothills, it's Ryanair for air travel people will continue to fly, but you will see a lot of trading down to Ryanair in an economic downturn, Neil maybe you touched briefly on fuel hedging. Thanks, Michael I think it's clear from this slide that Ryanair has standout airline when it comes to hedging in Europe for this summer and indeed beyond.

Broken out the numbers across the various house, but you can see for the full year, we're 80% hedged on our gas requirements, 65% true jet swaps about six to $3 a barrel or in metric tons about 630 per metric tonne and with 50% of our capacity hedged with caps, so again about $77 a barrel or 700.

70 per metric tonne and on carbon we've got a massive advantage over everybody as well, where we're 85% hedged at 53 Euro per credit, which compares very favorably to the 90 euro spots that we're seeing in the market at the moment.

Our balance sheet is why we've been able to hedge the weaker carriers don't have the hedge lines and I think that's very evident from the various statistics that you can see here at the bottom of the slide.

Just on market share gains Michael talked about the significant gains. We've made so you can see for example in Italy, we're now over 40% market share from 30% pre COVID-19, Poland growing strongly on their bonds with a 35% market share at this point in time, Austria as Michael already said, Vienna high performing exceptionally well for us.

And indeed, Ireland's our largest ever schedule this summer with Turkey tree aircrafts and so we've made good strides over the past two years, because you want to maybe talk about the recession. So let's come back to the point that I know because shareholders and investors are raising this issue with us in recent weeks one happens to reiner during a recession remember the economic.

101.

We will do better in a recession than any other airline in Europe consumer spending will be curtailed.

Consumers in Erith sanction always turned to the lowest cost provider, whether that's prime markets literally it's ikea in the airline space. It's Ryan here people will still fly they'll just be much more price sensible flying I would expect <unk> to grow faster in a recession as we have done in the last three or four whether it was 911 Gulf War.

Icelandic volcanoes, we grow faster and do better because in a recession.

Prices came.

Already we are seeing competitors cut capacity in markets, where we're largely there competing with us.

As announced significant short haul flight called South of the U K to it, particularly Italy, and Spain now is to deal with labor shortages easier is taking seats out of aircrafts again because of labor shortages, but also in markets, where they are unable to compete with Brian Ayers larger aircrafts and more notably wins in recent weeks and I will talk about <unk>.

<unk> into places like Saudi Arabia, and India, which markets. We're thankfully they don't have to compete with ryanair because in markets, where they do like Austria, Vienna and initially they are in retreat.

As Neil said, we have that very significant fuel hedge advantage over all of our competitors right here at the end of the next fiscal year.

We are dealing with a huge number of airports, who are competing aggressively against each other to try to recover their traffic or to capture what will be the scarce capacity growth. We can offer over the next two or three years. The new game changer aircraft are delivering us more passengers, but at lower cost much more efficient fuel burning aircraft and we.

We expect to take delivery of another 55 at least 55 of these game changer aircraft next winter. So that we can emerge into the summer of 2023 with an ambitious growth target of north of 180 million passengers in FY 'twenty four and all I can tell you is that if there's a recession or an economic downturn that growth will be faster and we will grow.

Faster and more profitably than any other airline in Europe .

If you like underlying the ambitious growth plans that we've already set out which takes us to 225 million passengers over the next five years to cope with this we're already out in the market, we have an RFP out therefore.

Up to 50 secondhand aircraft.

Advanced discussions with a number of lessors, both Airbus and Boeing for low cost secondhand aircraft and we're hoping to see Boeing finally kind of returned to the table or put an offer on the table for now because they need new aircraft orders.

Otherwise Airbus is easing their launch, but we are very excited by the growth opportunities that exist now for the next five years here in Europe , and maybe Nate if you turn to the ESG points and maybe wrap up the presentation I would of course, thank you very much.

We've made significant strides in the past year and our environmental credentials the carbon disclosure project upgraded us as a result of the good work that we've been doing to be raising last December very pleased with us, particularly at a time when some of our other European Airlines were being downgraded us equally in the last month, we saw sustained analytics one of the largest independent rating agencies.

S. J in the worlds ranked us number one European airline for ESG and indeed, the number two airline globally. So a very strong position with assets.

We can sit down and relax.

Those ratings that are behind us, there's an awful lot more to do we've got very ambitious targets with our aviation with purpose.

Our plan to get to carbon neutrality by 2050. So we'll continue to execute on that plan and you can see the kind of targets that we have here, we plan to reduce cotwo, 10% between now and 2030, we hope to improve our ratings with CDP to in a over the next couple of years and we're working very hard.

One with the delivery of the game changers coming in with a lower fuel burn, but equally with Trinity College in Dublin on sustainable Aviation Research Center at research into the right plans of sustainable aviation fuels to use we've already partnered with <unk> in Amsterdam to take 40% planned.

Out of that airport for this year and so I think we're moving well along the tracks and improving our environmental credentials. So just to summarize.

Continues to be significant risks in the markets.

Underpinned by the invasion of Ukraine.

And cole with particularly into the winter periods.

We would anticipate that we will grow to 165 million customers in the current financial year, but we will do that on the load active yield passive basis, so with loafers, what will drive that traffic recovery in recent weeks, we have seen an improvement in bookings, but the curve remains still very close in and.

And behind where we would typically have seen pre COVID-19.

And some of our 2019.

We think the market remains fragile, but we are hope.

Hoping cautiously optimistic that we will deliver a modest profitability in FY 'twenty three.

As we look beyond us we've put a phenomenal platform in place for 210 aircrafts coming that will see us grow to 225 million customers by FY 'twenty six we've got a very solid balance sheets, which will underpin the fleet growth and the significant market share gains that we have so as always lowest cost and financial strength will be absolute.

Winner in this market.

Thank you very much thanks again.

And that is generally we will move on to the Q&A and we've asked Stephen Stephen furlong of analyst here at Emerson Davis to host that for US This year, so Steve over to you.

Yes.