Q1 2023 Ryanair Holdings PLC Earnings Call

And welcome to the Ryanair Q1, FY 'twenty three results conference call throughout the call all participants will be in a listen only mode and afterwards there'll be a question and answer session. During the Q&A in the interest of time and fairness. Please limit yourself to two questions per person and just to remind you. This conference call is being recorded.

Today I'm pleased to present Ryanair group CEO Michael O'leary. Please go ahead with the meeting.

Okay. Good morning, ladies and gentlemen, you're very welcome to our Q1 results conference call. We're here with the senior team me and he will send near Thorne is on the call from London, where he is covering the the medium stuff this morning compiler or greater sustainability.

And Tracy.

Ryan here CFO .

With Peter lock and be ahead of budget.

Investor Relations.

This morning, So we release early this morning, and both the Q1 results we've done.

The usual video Q&A is all available under Ryanair Dot Com website.

And I assume we'll take that everybody has seen that so I'll just give you a couple of comments here.

A couple of themes and then we'll open up to Q&A as quickly as we can so this morning, obviously into a reasonably strong post COVID-19 recovery.

We see we reported a Q1 profit after tax of $170 million I would point out that was well below the pre COVID-19 Q1 profit after tax of $243 million in the equivalent quarter in FY 'twenty, but nevertheless, ridiculously ahead of last years.

The 300 million loss in the same quarter.

Same quarter last year, which was heavily disrupted by both by Covid couple.

Couple of highlights the number of 170 excludes an $18 million or exception of unrealized mark to market get net gain on jet fuel caps couple of headlines in the quarter. Obviously traffic is recovering strongly to $45 5 million from $8 million in the prior year that would have been better.

April hasn't been badly damaged both in terms of passenger numbers and yields over the Easter holiday period by the Russian invasion of Ukraine in late February and I think that's a theme I'll return to in the Q&A. We are clearly seeing a strong recovery. There is clearly pent up demand, but he is very fragile and capable of being damaged.

At very short notice if there is adverse colbert are adverse Ukraine developments as we suffered.

Q2, or in Q2 and Q4 of FY.

FY 2022, Nevertheless, we're performing very strongly this summer we've taken delivery of 73 of the 737 game changes ahead of the summer peak.

We have a.

Our subs are peak summer capacity to July August and September is unsaved, we're running at about 115% of our pre COVID-19 at capacity, we seem to be the only airline in Europe that is running significantly ahead of their pre SRT only major airline running significantly ahead of pre COVID-19.

At capacities and unusually we're well staffed to cope with that so we're not seeing the same disruptions our flight cancellations that many of our competitors have suffered this year, although we are suffering material disruption to our schedules, mainly because in our business performance by European Air traffic control and some.

Airports staffing shortages airport staff disruptions.

Nevertheless, the key to the earnings for the remainder of this year is where fuel is very well hedged.

80% hedged for the remainder of FY 'twenty three we've also materially increased our FY 'twenty four fuel hedging as it was at 30% last week were up to 35%. This morning.

Around $92 a barrel.

I would also point out we're very well hedged on the currency so that all of our Capex out to FY 'twenty six is hedged at a 120 425 dollar to the Euro average will be a major cost saving to us going forward, whereas our competitors who are not hedged on their capex will be significantly higher.

Cost for their aircraft acquisitions and a notable development in recent weeks as we've now extended the majority of our re allowed US <unk> hundred 20 leases for a four year period from 2024 to 2028 and very significant at least a monthly lease rental savings.

We're running at around between 25 and 33% for the next six years.

Touching on a couple of themes and I think our environmental and sustainability theme.

<unk> continues to be front and center, we're very pleased that somewhere operating 73 of the new game changer aircrafts and they are delivering 4% more seats, but burning in actual fact between 17 and 18% plus SKU.

And notably coding noise emissions in fact, the most of the positive feedback we're getting from customers and crew is how quiet it has to travel on the aircraft. We continue to invest heavily in the state's sustainable aviation by Research Center with Trinity College and in the line in the quarter, we announced a partnership with <unk> to power up to one third of all of our sites from Skip hop.

Our Amsterdam with a 40% Saf blend in April tested analytics ranked Ryanair the number one airline in Europe and the number two airline globally for our ESG performance.

In terms of the social I would touch on the fact that.

Again, the commitment we've made with our people and our unions during the <unk>.

Colby <unk>.

<unk> was that we negotiated pay cuts with the majority of our unions as an alternative to head count reductions and I think that's a.

As a result of that we were able to keep most of our pilots in most of our cabin crew employed and more importantly current during the COVID-19 pandemic and I think that's one of the reasons why Ryanair has recovered so strongly into the post COVID-19 recovery is that we're not having to retrain loads of pilots and loads of cabin crew and unlike a.

Number of competitors, who let go thousands of pilots and cabin crew. We kept our people employed we gave you obviously participate and furlough schemes, but the critical thing is we kept them cartons. So by flying the once a month in some cases on flights that were largely empty.

We had the pilots and the cabin crew ready and available to us. This summer so that as the market began to rebound very quickly.

We are able to run not just our pre COVID-19 volumes, but also a 115% of our pre COVID-19 volumes through the summer, but avoiding the kind of staff shortages that many of our airline competitors and indeed, many of the airports around Europe have suffered.

In the run into summer of 2022, and we expect that will continue through the peak summer.

We are fully staffed.

And I think that is vindicated the decisions we made at the time to keep people are trying to keep people employed but negotiate those pay reductions which were critical to our ability to keep them and people employed.

During the Covid pandemic.

We've made very significant progress during the last quarter and that continues on accelerating the pain restoration agreements.

We reached with the unions today's we've now.

<unk> reached a deals with over 80% of our bad the unions representing over 80% of our pilot.

The only ones now left outstanding as a result of agreements last week with the French pilots at the Spanish pilots or we have the Belgian pilots and the Irish pilots and it's a matter of significant regression that.

That the unions in Belgium, and Ireland are sitting on their hands are playing games as a result of which our pilots in Belgium and in Ireland are not participating in to pay restoration.

80% of their colleagues across Europe .

<unk> agreed and negotiated and we would again call on the Belgian unions and the somewhat less intelligent to Irish.

Irish out the union to get onboard these pay restoration negotiated we want to see the pay of our people restored and we are disappointed that these restaurants are being held up by small unions paying games.

Which really have no upside to them.

Cabin crew restoration negotiated have already made significant progress and we would hope that that will continue.

There has been a lot of PR about strikes and disruption via this year on Ryanair actually has been more PR and noise that in reality.

We have continued to operate more than 99% of our flights through June July and we expect we'll do so into August and there were some minor disruptions over the weekend in Belgium, but again more than 50% of the Belgian based pilots and cabin crew reported for work.

And we operated more than 90% of our schedules at this weekend. So the delivery on the ground and on the day is very good and I would caution investors that a lot of the Prs just at PR by a bunch of.

By unions in Belgium, and Ireland, who should know better and should be.

Should explain to their pilot members by their members that way are there to pay restoration of our pilots and iron in the bedroom or being delayed by their gameplay and Gwen that pilot unions in Italy, Spain, Portugal, Germany and everywhere else around Europe have now already read these pay restorations and our pilots are participate and are enjoying those pay restorations.

We want to see that continue.

Again on the operating performance.

Again, the decision to work with the unions on the pay cuts.

Been vindicated in recent months, because we are fully staffed at a time when most of our airline competitors also airports and handling companies across Europe appear to be short staffed.

We expect that to continue and we see no reason why.

We won't be operating at 115% of our pre COVID-19 capacity to the two peak months of July and August.

Over the last two years has numerous airlines have gone bankrupt many legacy carriers, most notably Alitalia THP SaaS and loss of only survive as a result of really radical reductions in their fleet and their passenger capacity and.

This has seen I think a once in a lifetime jump in our market shares we are making extraordinary market share gains in Italy, where we are now up about 40% market share in Hungary, where we entered the market competing with that ways. We're now up to 30% market share in fact market leadership, Poland where are growing strongly.

And we're up to 56% market share and in Austria, where youll remember in Vienna, two or three years ago. It looks like everybody wants to be go into Vienna, now, it's essentially down to Ryanair and Austria, Austrian Airlines, and we're again, making remarkable market share gains.

Boeing we expect.

Boeing that those gains will continue Boeing are scheduled to deliver over 50 more game changes to us. This winter ahead of summer 2023.

We are concerned about boeing's ability to make those deliveries on time.

Already there kind of mumbling about delivery delays, which we don't.

Don't understand and won't accept given that Boeing have already confirmed they are producing Turkey. One aircraft a month from June of this year. So they will produce more than 200 aircraft between this at the end of the year and out of that we are they are slated to deliver US 21 aircrafts. So we will not accept any excuses from Boeing on delivery delays when alco.

Our deliveries account for just about 10% of what they already confirm they are producing but Boeing remain a major area of concern for us.

Approximately 50% of September 23 capacity is now on sale.

We recently announced new base in Belfast International a fourth based aircraft in Venice. This winter, we're adding capacity in Vienna, and we're also we've commenced flight from Bologna, 40, which is our tortilla Italian airport, all of which are booking well and strongly.

Again, thanks to the 210 Boeing 737 order book.

The extension of the <unk> hundred <unk>, we believe Ryanair is well on track to grow from 149 million fastest pre COVID-19 to over 225 million passed by FY 'twenty six just to touch briefly on the quarter again, a couple of highlights I wouldn't underestimate the extent to which the first quarter was badly damaged by the Russian invasion of <unk>.

Great.

Easter which was in the at the end the demand the middle of April as suffered a big haste passenger numbers and also to fares as passenger is kind of a recoil from air travel on the back of the at the Russian based of Ukraine. As a result of that average fares were down 4% in the first quarter ancillary revenue.

So continued to perform strongly as traffic builds and has now risen to over $22 50 per passenger.

I am pleased to say that.

As the numbers. This morning indicate lower cost we continue to be very efficient.

We're seeing significant improvement in our unit cost a lot of that is being delivered by the 73 game changers, where again, we have 4% more seats.

But 16% less fuel consumption and we have bought those aircraft from Boeing at very competitive prices and we're pleased to say that in Q1, we saw the unit cost per passenger dropped to just under 30 euros per passenger which is a very significant milestone for us.

Our FY 'twenty three fuel requirements are 80% hedged at 65% jet swaps.

$53, a barrel at 15% caps at $78 a barrel.

I am pleased to say, we've taken advantage of the recent softness in oil prices to increase our fuel hedging.

As of this morning, we're up to 35% hedged into FY 'twenty forward approximately $92 a barrel, yes, there'll be a modest increase in our oil prices into FY 'twenty.

24, but we think it's certainly manageable and certainly in the context of the kind of underlying airfare growth, we're seeing at the moment.

I never thought a at a time when we're delivering when Europe's largest <unk> delivering 15% capacity growth.

We would also be seeing double digits.

<unk>, Inc. Underlying airfare increases into the peak summer period, but some of that is the very strong pent up demand and we are also seeing significant passenger transfers from other airlines.

Who you.

Canceling flights settled at the last minute.

The only concern about having that as you know our bookings still have not recovered. The advanced bookings are still not recovered to where they were prior to COVID-19, where standards are running 7% to 8% behind where we were.

Today for July August and September but.

But the gap is closing and we would hope that it will continue to close as we move through.

The period I think what we're seeing is load factors will continue to build strongly.

We saw in May for example load factor of 92% in June the load factor rose to 95% and we think we're going to hit 96% for July although we still have a couple of days left to go to the end of the month. So there is still a strong underlying recovery.

Double digit capacity growth huge market share gains and double digit airfare underlying airfare growth during the peak months.

The real challenge for Us is where that is but that will be continued into the winter.

The balance sheet as a result of that remains has strengthened materially net debt at the end of quarter ended June fell to $400 million of 0.4 billion, which was down from $145 billion.

Year ended 31 March 90% of <unk>, and Boeing 787 zero unencumbered and despite peak Capex. This year and next and also the obligation to repay two bonds. One in March 2023, and one in August 2023, we still expect to improve the balance sheet to a broadly zero net debt position.

<unk> over the next two years and is the strength of our balance sheet at which ensures that the group is well positioned to exploit what are very significant growth opportunities that exist in a post COVID-19 Europe, where many of our competitors who are on hedged are simply unable to compete with us on cost are withdrawing from competition within our markets.

That said and that's the good news.

The outlook is cautious.

Again, I can't take the current performance in Q1 as good performance in Q2 is strong but it is hugely dependent on there being no more adverse news flows either on Covid are on Ukraine into the second half of the year.

Go back and I would draw your attention to the fact that when we omnicom last at the Analyst Day last November Delta is a huge blow across Christmas December January and February we carry 10 million passengers in November that fell to 9 million passengers in December we were down to 7 million passengers in January and only $8 7 million passengers in February .

And that's the point, we keep making is that the recovery is very strong both at the volume level and at the pricing level, but he is hugely fragile.

Now I remain optimistic that because of the high vaccination rates in Europe, we hope that there won't be any further negative COVID-19 developments, but we can't ignore the risk of new Covid variance later this winter, we see in Australia at the moment.

A large flu.

Seems to be a combination of both flu and COVID-19 at the moment.

And we don't know what's going to happen in Ukraine. It seems to be of a war of attrition over there now, but I mean as long as it is confined to Ukraine, then we could see a strong continuation of the strong recovery into Europe , but I think it is sensible at the moment.

To foresee some adverse developments on COVID-19 or to watch out for some adverse development on Ukraine.

That's why really we cant give any guidance this year for the full year and nevertheless, I think into the second quarter. There is strong pent up demand as strong volume growth.

Strong underlying airfare growth and we are clearly benefiting from capacity shortages in staffing shortages and I think with the Ryanair is making significant market share gains one because of our capacity growth, but two because we are clearly.

Providing a much more reliable service and many other airlines and airports at through to the second quarter, but when the schools go back in September again, we will be significantly exposed to there any adverse news flows on COVID-19 and on Ukraine.

Second half of Q2, we have limited visibility and that's because we are heavily dependent on what is the average fare that's being paid by the people who are booking late and people are booking later into Q2, the data pre COVID-19, we have zero visibility into H two.

We lose money in the second half of the year, we don't lose a lot of money.

We don't expect to lose a lot of the money did in the second half of this year as long as there is no adverse news flows on Covid are on Ukraine. We are however, we do expect to grow FY 'twenty III traffic to 165 million passengers that would be up 11% on pre COVID-19 will continue to be load factor active yield positive in all of our markets and we will continue to.

Take significant share from competitors in those markets.

Despite being one of the best hedge Airlines in Europe high oil prices will lead to increased costs on the 20% of our few that's unhedged.

The second half of FY 'twenty, three and therefore, given the laser booking profile the lack of visibility volatile oil prices and our nervousness at potential adverse news flows on Covid and in Ukraine, We can't give you any meaningful guidance here for the full year, but we would hope to be in a reasonable position to give some kind of a high.

More accurate, but some kind of guidance for the full year, when we get to the second half results, which will be.

In late October early November .

Other than that business performing well operationally, we're doing well.

But I think caution is the keyword for the remainder of this year Neil anything else you want to add too and then I'm going to ask Eddie Wilson here just to give it to do a quick update or commentary on the.

Pay recovery discussions at the Union.

The union relationships.

Not a huge amount of it and just to echo that the cost base and a very strong position, we're seeing the benefits of having to 73 extra game changers in the fleet this summer and not only on the fuel line, but equally on the ownership and maintenance side of things balance sheet as well improved as Michael highlighted this down to <unk> 4 billion net debt, but we.

Do have a significant capex into the second half of the year, but we expect the cash flows to remain strong for the balance of the year and I'm very well hedged and have done nothing really outside and Michaels.

Okay. Thanks, Eddie do you want give us quick update on <unk> unions at pay restoration.

And any other items you want to highlight from an operational point of view, yes.

Just on the Union discussions.

What we have is the on the pilot Union side, we had the developments last week with the acceptance of the Spanish pilots Union at S&P.

French pilots Union.

Signing up to this them are agreeing come into an agreement with us on pay restoration of largely that means up to 20% they get 10% back straight away and then the other 10%.

Is is.

Scheduled for next April and contingent.

We got through that fragile recovery, so I think they're sensible discussions.

In terms of pay restoration and Youll always have disagreements with unions in terms of the timing of this.

But I think.

They have progressed very well.

Michael alluded to earlier I mean like things like that are happening in Belgium, where 50% of the pilot showed up for work. This week and then because of the large amount of inbounds into shallower zones from elsewhere in the network, particularly with the Sun destinations like 90% of the schedule operated on time, we showed our offer.

<unk>.

And they should return to those discussions so I would be hopeful that we'd be able to close the remainder of doses <unk>. Because every month that goes by unions that don't conclude deals are leaving money on the table.

So we will continue to work with them to do that restoration just operational resilience.

While we are fully.

Crude across the network.

In those basins, where we where we sell to handle and we have.

We are also fully crude but we feel operationally like we've got much lower punctuality that we've had at this time of year that does put strain on moving crews around but nevertheless.

Having the right number of crews has helped us to get through that but I wouldn't underestimate.

The difficulties that we've had with ATC this year, which have caused almost taken almost 20 percentage points so far.

Of our punctuality, and we would hope that that would change for summer 'twenty three but it is challenging in terms of operational resilience.

Our confidence that we're going to be able to complete our schedules are too as the way we've been for the peak summer period.

And joy dose titration and can the Ryanair DAC CFO tissue on if you want to add on in terms of cash flows are well just to reiterate what Dan said cash flows have been very very strong with finished and cash over 4 billion net debt fell to <unk> 4 billion. Despite $400 million of Capex. This year, there's another 2 billion scope the remainder of the year.

And just over 2 billion next year. So we are on track get to that.

Net debt zero position over the next two years.

Okay. Thanks Tracy.

With that I will open up to Q&A. Please.

Thank you and just as a reminder, if you do wish to ask a question. Please press star zero on your telephone keypad now.

Our first question comes from the line of Savi shifts from Raymond James. Please go ahead.

Hey, good morning.

And just two questions on the <unk>.

<unk> front.

Curious you know pre crisis pre COVID-19 that was an expectation of kind of a lot of us.

<unk> and getting to breakeven.

Curious with the changes that you're making how that operation is looking at.

Profitability recovers and then from a second question just curious on capacity, 15% above pre crisis shot at this summer how is that looking for the winter and then kind of early expectations for next summer.

Okay. Thanks, and let me thank you.

Never made any commentary on allowed to profitability and Doe proposed start doing it now.

There was significant material changes I think that the challenge faced by loud at the moment as there was a huge capacity growth in Vienna, you had lots of kind of people entering the Vienna market, we had Austrian are allowed.

Level of the <unk> subsidiary ways easy Jade, but an Austrian Aoc.

And.

BN is an expensive airport and materially lower airfares.

I think we see now a very bright future for Ryanair.

We operate in Vienna onto the Ryanair, but we sell under the Ryanair banner, but most of that most of the capacity is delivered by loud, but I would put low to operate from four basis. Its VNS that 35, BNS stance that Palomar Zagreb, and Zadar about half loaded capacities in Vienna.

We see very strong growth and market share.

And profitability in Vienna.

But not getting into specific numbers.

And I think there will be I like can be and at this point in time to almost like Italy, competing I think with Austria, which is incredibly highly high cost inefficient.

Like competing with Alitalia over the years in it.

In Italy, I would expect us to continue to take meaningful market share.

From Austin in Vienna, and we have set ourselves an objective of overtaking Austrian become BN is number one airline.

Over the next.

Two to three years.

In terms of capacity.

We'll run through the summer way the peak months at 115% of pre Covid capacity I would expect that.

We won't run way, we will trim some capacity in the second half of the year I Wouldnt want only because we don't want to expose ourselves to the 20% of unhedged view.

It's a bit or too early to say, yet, but I would expect second half of.

This year capacity to run at high single digit growth over pre COVID-19.

But not a 15% above pre COVID-19 and then it all depends on whether we get to 50 aircraft delivered at Boeing are scheduled to deliver to us.

I am very worried about what's going on in both in Boeing.

They are already mumbling about delivery delays were due 'twenty one aircraft this side of Christmas, which should be of no issue to Boeing given that theyre going to produce 200 of these aircraft between June and December and already there mumbling about path of not being able to meet those those shakes out they can't deliver 21 aircraft to one of their largest archive.

Second largest customer in the World then I worry.

And we are demanding explanations from Boeing.

If youre, making 200 aircraft between now and the end of December There is no reason why we can't get our 21 aircraft. This site in December and the Turkey aircrafts between January and April , but as I have said on previous.

Calls the Boeing management in Seattle, or do not matter as much I'm very to some confidence into Boeing management in Seattle.

Yes.

I have a high regard for our Calhoun.

Unless or until something is done about the management's the management at the Geneva in Seattle than I would continue to be a worrier.

Someone will ask as well where are we on pricing on the Max tens were nowhere haven't heard back from them.

Yes.

Theyre not have any kind of competitive pricing at the moment, but we would hope eventually they'll get there.

Thanks, David next question please.

Yeah.

The next question comes from the line of Alex Irving from Bernstein. Please go ahead.

Hi, Thank you gentlemen, Hopewell as well two for me. Please first on close in bookings on Buzzard was the media.

Destruction airports are having a dampening effect on close in demand and clearly Youre far guide looks good but is that more from the strong performance in Elliott bookings any color you can provide on that please the.

Second question is on pay deals sufficient you've been restoring pay with unions, but to start and restoration Kelly inflation is running quite high and we've seen other unions economy wide aperture pay increases to keep pace with that you're having similar conversations with your unions and how should we think about staff cost going forward. Thanks.

Okay. Thanks, I'll close in bookings no I mean, I think if anything close in bookings in close in fares are mid tier being materially moved upwards as a result of the kind of media reports of disruption.

Theyre not media reports a lot of our competitors are suffering material disruptions and are cutting back capacity.

Our analysts out there earlier in the year, who were predicting that capacity would road this summer.

100% pre Covid, we believed it would be down around 80, 85% and I think we've been somewhat vindicated, while we are running at 115% to almost every other airline in Europe seems to be cutting capacity, particularly peak capacity.

Including some of the other sort of not the low cost carriers all seem to be operating at around 80, 85% of their pre COVID-19 capacity.

There has been I mean, if you take something like the U K, we've seen a notable strength in our close in bookings at airports like Stan said at Bristow.

Manchester.

<unk> Edinburgh, all those basis, partly I think refugees fleeing from.

Either Gatwick Heathrow, and probably I'd say this weekend from fucking Dover in Phoenix still was well realize that the only kind of safe and reliable way out off the island.

In a post Brexit World is ryanair at Stansted.

And also I think there seems to be a significant strength in the air fares at some of the regional airports I said, Bristol and Manchester in those cases, they seem to be as a result of disruptions at competitor Airlines.

In many cases, a number of competitors, who are canceling flights under 14 days of booking.

Ryanair flights or booking their passengers are disruptive pass it onto ryanair flights. So.

In actual fact, we see that the strength of the <unk> and we're saying low double digit price increases through the second quarter is if anything is a result of concerns media reports about disruptions at other airports tenants other airlines, rather that we are seeing no.

Slacking off in our bookings and but we still need Oh, sorry, Eddie have us come in on that just don't come in on the Paydowns whenever sorry.

Let me finish on the outlook.

Sequence of this thing, yes, sorry, Robert.

Firstly, it's pay restoration and then when we get up we don't pay restoration then we'll go on to pay more.

More medium longer term PE Eddie yes.

Some of those deals already what we have.

What we've locked away is that.

Pay increases for April 24 April 25 in April 26, so they bring us up to March 27.

Sure.

In the order.

Approximately 2%.

Yes, so the pay restoration D is already include pay increase has been seen and negotiated with them.

But our concern remains just those two countries.

Not because of any issue with the unions, but just that our pilots are suffering are missing out on pay restoration, because you've two unions, who are playing games and we will.

Wish the game paying would stop I mean, if you look for example in Ireland. They want to go through the WRC.

We have no business going to the WRC, yet they havent even entered into negotiations with us.

But while they're fasting around and the WRC. Our pilots are losing out on the pay increases in July the pay increase in August to pay increase in September they should get on and agreed to pay restorations first but it will be pay registration as far as the pay reservation deals include pay increases and what drives all of this will still be.

Is getting back to remember within the pay restoration themselves. If you take that we've restored if you take the 20% pay cut some of the pilot that was agreed during COVID-19.

The restoration was 10%.

This year, and then six and for over the next two years with an understanding that if we get back to pre COVID-19 profitability this year and Thats anything north of $1 billion.

After tax then we would accelerate that we bring forward the six in for and pay a second 10% in April of next year. So.

Somebody's going to ask me what does modest profitability. This year maintenance the answer to that is we don't know what modest profitability is this year, but everything we're driving towards is hopefully are trying to work profitability back up to north of $1 billion. This year. So that we can accelerate that pay restoration the critical thing that drive this.

Year to try to get back to pre COVID-19 properly. So that we can enhance or accelerate the restoration of PE and put everybody back at least to where they were pre COVID-19 by April of next year.

Next question please.

The next question comes from the line of Mark Simpson from Goodbody. Please go ahead.

Yes, good morning, I have two questions first on <unk>.

<unk>.

It looks as though you're.

Kind of switching a level, which is so high.

Anticipated.

I'm just wondering with.

Pricing large taxes.

Mid 90%.

Next year can we go higher still I mean are we seeing.

Before I move on I am sooner is better.

Better momentum looking into next year.

And on the balance sheets.

So obviously fantastic kind of net debt number $400 million at the end of June .

So accruals plus on that income of about $3 eight.

A billion at the time I'm just wondering.

If you kind of take the concept of net debts with our own cash.

Which has been historically, when you've paid out dividends or buybacks.

$2 billion.

But it looks like the number at the end of this year, we are getting close.

To a position where your balance sheet allows you to start buying back paying out dividends.

Okay. Neil why don't you do the first one the ancillary is give us a view on that and I'll ask Tracy just a comment on the balance sheet.

Okay.

And so there is as you said performed well 22 Euro 50 in the quarter and we would be hopeful that as we track up towards 165 million passengers in the year that we would retain somewhere between 20 to 22 Euro 50 for the full year and.

Beyond that you're right. We do continue to look at various other initiatives and dynamic pricing.

A long way away from looking at our budgets for next year. So I think I'll, just just happy to deliver 22 year old 50. This year and then we can talk about next year, when we get to that place.

Tracy balance sheet net shareholder returns when do you think we'd be looking at returning money to shareholders I think as we said.

We're on track to get to that net zero position by the end of FY 2019 comfortably prepared about in that case I think we can safely titles until beyond that so I think it's all dependent on let me get to that David.

And then we look at it.

Yes, I agree with both of those I would just point out on the ancillary we expect kind of the big performers. The last couple of years, which is the priority boarding.

Reserve seating to level out at current penetration, we have high hopes for jewelry sales on UK flights that is about 40% of our flight post the U K.

So we would expect to see something there on hopefully <unk> sales might come through in the next year or two but I think the reasonable outlook is that would it level out at around $22 50 until there is some new we.

Do some new development and I agree I mean, I think on balance sheet again, theres, a very strong kind of recovery in the cash flows this year as long as that is not disrupted later on this year by adverse Covid and our Ukraine developments, we would expect to get back to net zero net debt in the next.

Two years with that bear in mind that that covers the periods. When we have over 1 billion in capex each year for the next two years.

<unk> billion billion with 2 billion each year and we also have that in repayment, we have an $850 million bond to repay in March of 2023, and it's a 750 in August of 2023. So theres a lot of we are generating a lot of cash, but we have a lot of denim capex to fund over the next two years.

And I think again much higher up on our list of priorities would be to pay restorations and dealing with pay with all of our people. Once we're sure we're back to kind of again, if we don't have negative kind of COVID-19 in Ukraine. This winter pay restoration Im looking at pay increases going forward for the next couple of years would be number one.

Capex number two the bond repayments number three and I am afraid shareholders. We'll just have to wait in line, but I wouldn't expect anything on the shareholder return side until we get back to zero net debt by FY 'twenty four.

Next question please.

The next question comes from the line of James Hollins from BNP. Please go ahead James.

Good morning, Yeah, I'm going to turn it back on the borrowings.

Now you gave a pretty large they respond slowest home else about it and I was just wondering I mean that seems to kick them out.

<unk> performed on deliveries ahead of the summer I was just wondering whats going on here why you'll now suddenly very pessimistic on the ability to deliver <unk>.

20 aircraft by end of calendar year, whether this is just a way of giving us the kit and then on secondly, strategically probably for you as well Michael I'm just wondering if there's any particular areas you're kind of putting your throats.

And some of your competitors in Europe .

As you see them foundry.

These price increases would suggest there's no sort of <unk>.

This was going on across your network.

Okay, James Thank you firstly.

I don't want to get too pessimistic about Boeing but I would certainly come back at you that Boeing outperformed on deliveries this year that didn't.

I mean, we were supposed to get all of our aircraft by the end of April . We eventually finished up taking about half of deliveries through may and into the first half of June we didn't get the last aircraft until about the 15th or 16th of June .

And that's really painful for us because we had all those aircraft on sale through May <unk> at the end of April May and June we were actually canceling flights that take capacity out of the system and we delayed aircraft growth in places like that are in <unk> and in the end it because Boeing were short our deliberate short on the aircraft.

Now they did deliver 70% we took deliveries of 73, we were originally supposed to take 65 aircraft Thats because Boeing asked us could we take some of these additional aircraft remember these were the aircraft that Boeing had built pre COVID-19 or during COVID-19, but we're grounded because of the Max.

The Max capacity that they have been grounded and not delivered.

So they really delivering aircrafts that were built two years ago.

They.

And that goes into inspire confidence.

They are now next this winter we have to take aircraft that haven't been built.

We're very supportive of Boeing step up in production.

A lot of confidence from the fact that.

They have stepped up to Turkey, one aircraft a month and in fact, we received weighted meeting with.

<unk> and David Calhoun himself here in Dublin back in May where we were assured that the ryanair deliveries would this winter would take priority that we wouldn't have a rerun of these delivery delays.

And in the last two weeks were getting letters out of Boeing telling us mood there might be problems with 21 aircraft. This study the Christmas like I don't understand why it is going to be probably 21 aircraft decided Christmas if youre going to make 200 of these claims from June to December but its all part of the same yield that the.

Management in Seattle is always longhorn talk and begun assurances and short on deliveries.

And they need to get their finger out.

I think there needs to be new management in Seattle, but.

That's not my decision.

David Calhoun decision.

<unk>.

We've heard nothing back from them.

Remember last week and they had a reasonably good week.

100 aircraft to dead to Delta and Percy aircraft to Qatar, because he's already set the world on fire. These are aircraft the Max tens, which Boeing has not even sure it's going to get certified before the end of the year in which case. They may have to go back on <unk>.

I just have change in Congress.

But you have to be redesigned which will not deliver commonality. So.

I am remain worried I don't want to be too pessimistic about Boeing I said.

The right thing as we remain worried about Boeing and Boeing delivery Boeing are great on talk and short on delivery and what we want to see is less talk in more delivery growth.

Growth in Europe , I mean, again look we have never been in there that goes after market shares.

Where do we.

The fact is that the airports around Europe , I mean, we put 25 new aircraft into easily this year.

In a marketplace, where alitalia has reduced its fleet by almost 40%.

We think it's logical that Asia would be sold to lufthansa, but that means there'll be no growth by Asia initially to just be serving the Frankfurt and Munich hub.

We see significant growth in Portugal, we've again, we're tip's fleet has been reduced by 40%.

We've opened base a new base in Madeira, we're adding capacity in Porto and we'd like to add more capacity lizard, but again lisburn capacity remains artificially constrained and remarkably despite the fact that they EU required.

<unk> 16 daily Sloth 60 daily southwest to easy Jess an airline that has not been growing in Portugal. In fact has been retrenching in Portugal, and we fail to understand why the.

Slots go to an airline that is not growing in Portugal, but other than because <unk> don't want to have any more competition from ryanair down in Portugal continue to call for the opening of Monte <unk> Airport, Lisbon, which is the second airport in Lisbon, the Goldman keeps kicking it back remarkably theyre more interested in protecting THP from competition than they are in <unk>.

Growing the tourism business in Portugal.

But we are continuing to see very strong growth in Italy, and Spain, where Norwegian have cut significant capacity in the UK, where Thomas Cook Flybe.

And cutbacks by easy jet NBA. This summer are assisting our our growth and very dramatic growth in central and eastern Europe, even in a post COVID-19.

Environment, we're growing very strongly in Hungary in Budapest in with this whole market, we've now overtaken them in Poland, We're seeing very strong growth.

Loss has not returned to its pre COVID-19 capacity and the Baltic States in Romania and Slovakia.

Very strong market share growth.

<unk> are higher this summer I'm not sure where that's a short lived.

But I think if there is no adverse COVID-19 our UK development, we are going to enter into a period I think of three or four years of modest airfare growth.

It is inevitable.

Well hedged this year and into next year I mean, I think there is going to be significant capacity caused by a lot of our competitor Airlines. This winter because wanes, the easyjet and others, who are not as well hedged as we are simply would blow their brains out based on their plant capacity given that they are unhedged. So I think youre going to see material capacity cutbacks in.

This winter, which should sustain reasonably strong underlying.

Fair environment.

And I think that capacity constraints over the next year or two allied to a higher oil prices and continuing environmental.

Probably taxation.

Should see I think a medium term period of.

Upward airfares in short haul European Air Transport marketplace.

Particularly where a lot of this capacity that's been taken I was never going to return.

Thanks Congratulations.

Thanks James.

The next question comes from the line of Jarrod Castle from UBS. Please go ahead, Jared Hi, Hi, good morning, everyone.

I wanted to touch on ex fuel unit costs.

<unk> now which is broadly in line with where you were.

And so you're obviously, putting in a lot higher capacity spent two and half years taking out costs.

We're going to see a lot of improvements I guess in <unk> and <unk>.

So now it is just related to that your accrued expenses.

Very high 800 million versus normally 100 204 for the quarter. So I'm wondering if that's a lot of ramp up costs in that number.

And then just the second question on pricing you selling some at 23, 50% on the sale.

But what would normally be selling and I know, it's the answer is probably going to be no Michael but any color on directionally.

Pricing that's it then.

Were you at the moment or flat or down and you're picking one right.

Okay. Thanks Darren.

I don't want to undersell, our cost performance in Q1 it.

It is below therapy, it's not the same as it was because we were at 31 before Ed before Covid. So it is kind of notably down and that's only with the load factor in the first quarter because of the impact particularly of Ukraine in April .

Load factor over the first quarter was only get a 92% pre.

Pre COVID-19 that would have been up around 90, 697% I do think we will have a strong performance in the second quarter the load factor will be higher.

We would hope to get to 96%, we expect to get nicely from July I Hope, we get to 96% in August September will come off a little base.

Again all of that is on the.

Assumptions there is no negative news flows.

And so I would expect our cost performance in the second quarter to maintain or improve slightly on what we did in Q1 ex fuel.

Over the medium term I think our cost performance will be materially better than any other competitor airlines at the game changes are delivered we are delivering more traffic.

At materially lower fuel consumption I think that would be key going forward, we have locked in significant airport on cost reductions.

Over the medium term.

For the next number of years I think we will and want to see I think there will be some upward movement in staff costs as we conclude the paint.

Pay restoration and negotiations and we want to see pay increases over the next medium term.

Two to five years.

We want to reward our people who are delivering this industry leading performance and.

I think our first priority into a post COVID-19 once poet once we get back to pre COVID-19 profitability and growth I think it's our staff and our people with where we would be direct bad directing most of our energy as far so I would want to see staff costs rise a little bit over time, but airport and handling charges, we expect to be remain reasonably stable.

A few in the lap of the gods, Although again I think we are hedged materially better than our competition and will continue to be so because we the balance sheet to be more aggressive.

On hedging going forward I mean, we're still hedged at $92 a barrel to FY 'twenty four whereas Jess path at the moment is still about $120 a barrel so by having the balance sheet to be able to go out well into the future I think we're making material savings route charges I think will continue to rise rise despite the.

Abysmal performance of ATC.

I would have a considerable sympathy for a lot of our competitor airlines at the summer who are taking a lot of unfair criticism about their punctuality and cancellations. When it is not their fault with an awful lot of this is has been caused by air traffic control.

<unk> is only they can decide to change the systems in the middle of the summer peak not that they were never particularly efficient in the middle of the summer peak anyway.

Depreciation marketing others will be materially down in the next couple of years, because we're adding newer aircrafts at reasonably low cost and.

We will not see the kind of EU 261 comp this year, where we have no significant disruption cost because of our superior operational performance and so I think this year or the remainder of this year, we would expect to see keep costs below 30 euros ex fuel on a unit cost basis, although some of that.

Depends on what happens with load factor and capacity growth into the second half of the year and we will be staffing up in the second half of the year for our growth into summer 2023.

Pricing.

Go ahead, sorry, Michael just going to jump in there I mean, you touched on a couple of issues in the second half of the year, we will see most likely route charges increase after Christmas as we always do we will start taking staffing into the fourth quarter of the year ahead of the summer peak for 2023, So I think jarrod it's just.

So you don't run away with yourself. If you were to put a charge you want or just below it hurts you want in your full year.

That would probably be fair and we try and beat that putting that that'd be a reasonable forecast.

Okay.

And on pricing, yes look 50% on saying for next year is more than we would normally have particularly of the growth capacity, but there's no indication on pricing yet how to summer 2020, we can't even tell you what the pricing will be for the second half of August of 2022 never mind similar to 2023 all week.

Can tell you is that at the moment through what we've seen in July and August it looks like the prices are rising by a low double digit number.

That is.

Don't ever remember time before it is industry, where we were adding 15% capacity growth off a base of 150 million passengers and seeing a double digit normally you would see a double digit price reduction. So it is unusual that could lead to a very strong profit recovery. This year. If there is no adverse COVID-19 are.

Ukraine development through the second half of the year, but frankly, we expect some adverse news flows just because this is a huge industry that has afflicted with bad news wherever whenever you get things are recovering well you get bad news.

So I would be cautious on pricing and although we are well on controlling the cost.

Thanks, guys. Thanks, Michael.

Thanks Jared.

The next question comes from the line of Stephen Furlong from Davy. Please go ahead David.

Hi, Michael.

Just reading you looked at let me just go back to our aircraft reviewed.

77 energy leases and decided to extend the Airbus <unk> hundred 20, So just might just talk through that process.

I'm wondering as well with the leases going out to 2028, then presumably the growth of the year that could go beyond 225 million passengers, which tells me that you are not in any rush to do another deal with Boeing on the Max 10 and find it.

Just on that Max 10, even if we get certification wherewith hypothetically.

Larger aircraft like some competitors of <unk> hundred 20 ones wherever that the operators like slot constrained airports or longer sectors. Thanks.

Some of that morph into about six questions as far as I can tell but anyway. So.

Went out to the market.

To see what was in there I mean, we're being opportunistic and we're surprised.

Secondhand quote on the 737 <unk>.

We're reasonably expensive, which I think validate our own depreciation policy on our existing fleet.

Partly because they are a very attractive aircraft due to the cargo conversion program into China and into Asia.

We were surprised at the cost opportunities on a extending some of the <unk> hundred 20 leases, but there does appear to be quite explicit the marketplace on pricing that the Airbus Neo has been such a successful program that theres less demand it appears for the older.

On the <unk> hundred <unk> I think there's also.

You went through the Liza or the lessors of the Airbus Theres 29 of those aircraft two of those going back at the end of this year in Nevada. This year. So we're down to 2007, we think will extend leases on maybe 25 or 26 illustrates that we're fighting with price down price reductions with a couple of the lesser so.

Probably to extend.

25, 24 25 of those aircrafts.

Looking at rate reductions of about a third on the monthly lease rentals.

Very meaningful but I think a lot of that is also based on a lot of the leasing companies wanted the ryanair groupon, they're close to on their kind of customer and are willing to kind of aggressively priced to be able to stay there as a lessor to Ryanair Ryanair group so.

We have seen a very material reduction in those lease rates.

Not just for the full year as an extension, but for the last two years of the existing leases as well so.

The material.

And I think what it reflects is the deal of the strength of the success of the Airbus program, you want to buy new Airbus Neo now Youre looking at delivery in 2007 or 2008.

Which again I think highlights the reads the relative underperformance of Boeing they can't get the Max 10 certified decided to set up.

For the year.

I would hope that Congress would look favorably on any of those extensions I think we welcome the order from Delta for 100, and Qatar for Turkey, but I'm fairly sure they'll have walk away right at the Max 10 doesn't it.

It doesn't have a common fleet, so really everything in Boeing depends at the moment is on getting the Max 10 certified by the FAA and that has to be done either this side of Christmas and it is not on this side of the end of the year then the need to congressional legislative change and I hope that we'd be into midterm elections in November .

This is not looking good and Meanwhile.

They were dealing with Boeing who are modeling about delivery delays on just 21 aircrafts.

200, <unk> confidently say they'll produce despite of Christmas.

Much more importantly, the Turkey aircraft that they are scheduled to deliver between January and April of next year, which would be critical to our summer 2023 growth and we are not willing to provide any more delivery delays from Boeing or excuses coming out to Seattle and we can all we've had for the last two or three years has been excuses.

Yeah.

So, let's wait and see.

Where would we go with those I mean, if we got the Max tens are we took more Max eights that we're not we've never been that we've never been in a situation with Boeing.

When do we desperately want to need aircraft, we want to need aircraft whenever it is the pricing opportunity to volatile order aircraft we.

We did not order any aircraft through 2014 and 2019, we've ordered a bundle of aircraft I think over 400 aircraft between 2019, and 2020 or 2018 and 2020.

If we never know what another aircraft from Boeing with certainly we would.

Probably I think we will comfortably exceed our 225 million passenger target by 2026th but I don't want to get into raising target because we're not in that business at the moment, we set an objective there to get 225 by FY 'twenty six we're confident we'll get there certainly the extension of the Airbus leases.

Where has that process.

But we have to see what Europe looks like it by FY 'twenty five 'twenty six I still believe there will be very significant consolidation in Europe I still believe that by the time, we get 25 choices that will only be for large airlines in Europe , which would be Lufthansa air, France, Lufthansa Air, France, KLM IAG and Ryanair.

That means that somebody is going to take out easy GH ways, THP Alitalia and problem DSA SaaS would be given away to somebody.

Over that period of time, and then you may be in a different environment not unlike North America, where there's less capacity growth.

More mature markets and more upward pressure on underlying airfares, particularly if in Europe , we're going to continue to tax air travel are constrained food production as a risk.

Bonds to global warming and so.

225, Stephen over the medium term as the objective, but clearly the very advantageous lease extension of the <unk> hundred 20 facilitate that.

We did do a deal on Max 10, we will have no difficulty operating those Max tens in almost every market in which we operate I think the challenge faced by some of our competitors, most notably ways, whose load factors have fallen by 10% is they are simply unable to compete with us in places like Italy, where their load factors are materially.

Hind are behind Ryanair, they're entering into a marketplace, where ryanair has lower fares much more established presence and we have no presence in the Italian market that we can see and are out there desperately.

Engaged fasching airfares.

Airfares, but operating with load factors that are typically 20 percentage points behind Ryanair in the Italian marketplace with bigger aircraft.

They are not able to fill those bigger aircraft in markets, where ryanair has lower cost and Ryanair has lower fares and I know there was still be idiots analysts out. There later on to date producing research that says, we'll have lower costs than ryanair and it will never won't happen in this decade or the next decade or the decade looking after that.

Because what nobody factors is the materially different price at which we buy our 737% compared to the newly Chris prices. They pay for <unk> hundred 21, and that gap is never going to close.

Next question please.

Next question is from Satish Kumar from Citigroup. Please go ahead.

Hi, Michael Good morning, two questions. So firstly on the demand for color. So you said that the bookings at the group level of 78% below 2019.

The market, where you actually seen the booking curve.

Good then the group level.

Or even stronger than the group level.

And then the second one on the beach.

Youre done with 80% on pilot.

Robin includes around 70% so the remaining capital.

Cabin crews at similar to the markets, let's see what Youre seeing for pilots in terms of Belgium and Ireland.

Thank you.

Thanks, I'll take the first I'll ask Andy just to do the 10% of the wage deal.

Look I mean, we wouldn't get into that kind of granular and analysis of the different markets. Some markets are stronger some markets will be weaker.

<unk> got to look at it in the overall context at the start of January we are running 20% behind pre COVID-19 volumes at the end of start of April we were running around 12% behind <unk> gold volumes. The start of July we're about 7% behind our pre COVID-19, but the gap is closing but were still behind we are and therefore.

Still exposed to closer in bookings and that's why we're worried about the fragility of the recovery if theres any negative COVID-19, our Ukraine development through September through the third and the fourth quarter.

We have a deal in cabin crew.

Briefly I mean, I think what you see is that as each of the.

Pave yields from terms of restoration and we've already answered that.

They've come through.

I think the remaining unions are coming under pressure I think from there from their own people because every month that goes by there is less of that restoration.

We're talking to all of those groups.

We're coming to the end of the summer we're entering into the winter and I think that we will be in a good position to close out the majority of those deals.

Body that we're not talking to at the moment.

Michael alluded to earlier there are a number of we've had some difficulties.

Belgium and Spain.

Disproportionately portrayed in the media.

And I think people are beginning to Davis.

<unk>.

Or the other.

Groups in other countries.

They're well on their way to restoration and.

There is a framework for <unk>.

Netting all of their money cycle within hopefully by next April . So that's so I think the majority of those are moving in the right direction would be closer yes.

Yes.

Next question please.

Hello.

Our next question comes from the line of Jamie Rowbotham from Deutsche Bank. Please go ahead Jamie.

Hey, Michael just one from me at the end of the prerecorded materials. This morning, you understandably encourage people to ignore the short term news flow focus on the long term growth opportunity in terms of the opportunity what do you say to the people who worry that.

They achieve ability of gross get tougher for Ryan given already high market shares in developed markets like the 40 odd percent you talked about now having in Italy. Thanks.

Let me now.

It has always been the naysayers say, we should last subject has always been somebody who 10 years ago THAAD aegis had a better product sorry, 20 years ago VA, we'd never be able to compete with VA PBR nobody would ever transferred Ryanair five years go easier and better products, we never be illiquid ECS for the last two or three years, we keep reading the stoning bullshit.

Some of them Gary an airline is going to have a lower cost base than ryanair buy on a.

Why don't you got that <unk> 30 on the per kilometer basis sometime in 2035.

So and yet we just keep delivering I mean, I think if anything the growth opportunity for us is getting easier and will be easier as a result.

Good.

No, but I think the remarkable job that the wider management team and Reiner of don't during Covid mean to have gone through COVID-19, keeping everybody the pilots and the camera crew current keeping the engineers keeping the aircraft current the strength of the recovery during Covid, we significantly renegotiate the price of the Boeing aircraft, we have done.

<unk> long term airport cost deals that locking.

Pretty ambitious growth targets there but.

All of our bigger bases at Stansted is.

Our Sunset a chart award Furthermore, and others.

Space is locked away till 2028, 2029, and yet you look across the piece and you have Heathrow.

<unk>, an airport that Couldnt run a piece of when its own brewery are out there looking for 50% price increases this year and 50% price increase next year gastric I think it would be shortly following along so.

We have taken a remarkable corn.

Cost out of the system.

Are there cost pressures going forward, yes, few will probably be up a little bit for the next year or two but we will still do materially better those because we can be more aggressive on hedging staffing I think there will be pressure across Europe on staff generally labor.

Labor will rise a bit but I mean.

I still believe that there is so much cost pressure on so many of our competitors that particularly the legacy guys.

Airfares will rise over the next four or five years and I would think over the medium term. We will continue to take very material market shares in big markets, where there's been huge capacity restructuring like easily like Hungary.

Austria Poland.

Spain, Portugal et cetera.

There is no country across Europe at the moment, where our new Ruth's team are not had very active negotiations with a whole swathe of airports, who are desperate to recover their pre COVID-19 traffic.

We're doing nothing and Joe was very different in Germany at the moment, but have no doubt in the next two years as the entire German consumer get screwed by those patents and eight overcharging.

I was the victim of the myself during the Q during our full year results roadshow to buy a last minute airfare economy airfare from Frankfurt down to Zurich.

One hour 40 minute flight I got charged 740 euros.

One way last week, as we announced two new routes in Vienna. This winter.

Monopoly monopoly neutral at the end of Copenhagen currently operated by Austria, They're charging 740, <unk> return on a one hour 20 minutes flight and we're entering the Vienna has thinky market, where currently it's only operated by Finnair is a monopoly doing four times a week, they're charging 800 euros return in economy.

There are air fares and markets out there where and that's why these airports are desperately beating a path to our door trying to get us to add capacity. There. One they know we have capacity significant capacity growth in the next four years as long as Boeing can deliver the aircraft to us we have significant capacity in recovery and to <unk>.

Their existing business is being Roger by Monopolists, like Lufthansa and Austrian and others, who are charging just our reagents our outreach.

Outrageous short haul airfares and I think we will continue to be the beneficiary of that so the one thing I have no doubt is that we will grow 225 million passengers over the next four years, we already have the airports to market the aircraft deliveries to achieve that and that takes us up to somewhere close to 25, 30% of European.

The short haul marketplace.

And I believe there will be capacity consolidation over that four or five year period, and we are poised with a very low cost base.

Particularly as the remember in the next four years, we'd have 210 game changers carrying 4% more passengers that burn 16% less fuel.

Occupy about a third of our fleet.

That will deliver very significant cost savings.

I think we're entering into a three or four year period, a very benign growth, but we will be the only airline that will have.

The cost gap between us and all of our competitors will maturity widened in the next number of years and therefore.

I think you'll continue to see us take very meaningful market share capture market share from our competitors, who have no chance of ever getting it back from us.

Unless we do something monumentally stupid and given that we're an airline therefore, we're always prone to be doing something monumentally stupid.

Thanks, Jamie next question please.

Next question is from <unk> from Bank of America. Please go ahead.

Hi, Pankaj.

So just on your fuel hedging so you said you're at 35% hedge fund.

Next how should we be thinking about.

Adding hedges for next year given currently at high oil prices is is it a bit of a formally king or is it opportunistic as my first question and then secondly.

Thank you Ashley you've been hearing a lot about pilot shortages right now is that a risk for Europe , especially as HIV opens and how you're thinking about that.

You add to your capacity.

Okay, So I'm going to ask Tom as a director of sustainability to the fuel hedge you can ask Eddie to do the pilot shortages.

Just on the fuel had been like as Michael said earlier on we have a strong balance sheet, which gives us the opportunity to hedge a fall of them with the curve in backwardation at the moment below spot, we see it as an opportunity to hedge which our competitors aren't able to do so so we will always continue to hedge a certain portion of 12 to 18 months in advance and at the moment with the backwardation.

We see that as an opportunity.

So we tend to be opportunistic, but we also will accept that by the time, we get kind of six to 10 months out we want to be at 80.

80% now I'm not sure we'll ever again hedge up to 80%, but there will be it makes the pages and caps.

We have consistently asked ourselves should we hedge out 100%. This winter and the reason we are only 80% is hedged. This winter is again, we're not sure that there will be COVID-19 disruption or Ukraine disruptions it's winter.

I keep coming back to the fragility of the recovery.

It features highly and lot of the union negotiations to pay restorations discussions case, let's agree the restoration now quickly because the situation could get worse in the autumn.

We could save more money by hedging up to 100%, but we just don't want to take the risk of 80% to 100%, where there may well be more disruptions later on this year.

Eddie on the pilot.

Hearing about US was pilot shortages for the last since I started here 25 years ago. I mean, we have if you look at what we're doing at the moment I mean, if you look at the profile of where Reiner, having moves local sort of terms and conditions are pilots start well paid throughout a 504 roster as they are.

Our usually in their hometown like whether that's in the SBA initially or San Diego to accomplish that in Spain. So like we have a very good offering we have a presence at <unk>. This year in training who will be our.

So we have a very slick training machine here in terms of AB initio pilot is coming in and they have the confidence that they're going to be promotions along with the growth. We have 225 million passengers that they've got a good chance of being promoted within three to four years. So there is a compelling proposition on that.

In European short haul yesterday will always be.

The attraction of going to the goal for going to Asia, but I think people have seen what has happened during the COVID-19 pandemic, where people were thrown to the floor.

We're essentially trade a little bit of both.

And a lot of those jobs and those that were with Ryanair.

Were kept current and kept an unemployment and I think those decisions people will be less likely to make those given that there is the fragile nature of the recovery to move your families in that theater side of the world. So we have a good pipeline and an excellent pipeline of pilots.

And we have no worries, but eligible.

And bear in mind, most obviously all of them with all of our past the 737 pilots.

I think there will be a lot more turnover of Airbus pilots. This winter would you be in ways and easy Jason now get to moving to Airbus. So there's a lot more movement of Airbus pilots around the place.

100, <unk>, we are delighted by far and away the largest.

Operator in Europe as Eddie said, we are training pilots and today I think there will be.

Those have a tendency Jay with they get trained work through the gold for a couple of years, but they come back pretty quickly, but as Eddie said I think we're seeing a lot best turnover in pilots and cabin crew I think they appreciate the fact that we didn't as Eddie said it didn't just dump them out the door during COVID-19 when many of our competitor airlines airline seat, but I wouldn't underestimate.

I think there will be pay inflation over the next couple of years, particularly in some of the lower paid categories at the junior cabin crew ground handling across Europe , if theres going to be.

<unk>.

Full employment I think there will be upward inflation at the lower end of the salary scale.

But we're well crude and I think the strength of the cadet pipeline gives us confidence.

Our confidence in the future.

Next question please.

Next question comes from the line of Alex Paterson from Peel Hunt. Please go ahead.

Alastair Alex.

Hi.

Yes.

After the current filing or would you would you previously said that you expect the fleet to be more for replacement so capacity growth would slow.

Would suggest that you would need to be more yield active.

On behalf of the capacity growth to absorb.

Cost pressures.

The group has got the capabilities to develop ancillary revenue streams organically.

On the set of priority boarding baggage that sort of thing.

Okay.

To answer that question is firstly, we are the ones who invented the ancillary stream on priority boarding we were the first airline to charge for check in bags. When we started it as every other airline for me as you get to be a we would never charge you protected bag and then within six months. They are all copying us.

Also the year that had mentioned the priority boarding the reserve seating again all of the competitors, though we'd never charge you for receipt within six months. They are all charged.

Look we have demonstrated more inventiveness and agility on ancillary revenues, we have led the way over the last 10 years 15 years and the rest of the industry is copied us.

So, yes, I have nothing but confidence in our ability to continue to.

Inventively.

Developed ancillary revenue streams I would caution over an awful lot of those ancillary revenue streams come out as a way of changing passenger behavior, we don't want to charge for check in bag, we prefer to just not have the check in bag.

But the fact that 20% of our passengers when we first started tracking back to 80% of the faster they checked in diagnosed at a 20% one of the reasons why we've been so largely on disrupted. This summer is we don't have connecting flights going through hub airports. We don't we're not missing thousands of bloody bags, because we tend not to carry thousands of bag. So one.

The reasons that operationally, we're so much better than many of these other airlines is we don't have provide all these services, we don't over promise and under deliver we tend to under promise and over deliver.

I would.

Again I'm of the mind I think the more medium term upside for our investors and shareholders is that as capacity growth in Europe slowed down and there is no doubt that capacity growth in Europe is going to be flat I think flat if not slightly down for the next two or three years and that would be a combination of.

That's been taken out of this enduring cohort competitors, who are unable to restore some or all of their capacity going forward because they're unable to compete with us in markets, where we've taken huge market share gains.

Fact that we ourselves would be slowing down our own capacity post getting to 225, there's going to be if you look across North America, where for the last 510 years, you've had four major airlines almost zero capacity growth strong upward pricing power among the four incumbent carriers.

Europe is going to morph the same way in the next five years the next decade.

The attractiveness of an investment in Ryan at this point in time is you get to investing the lowest cost provider.

I think the best Rone group of Airlines in Europe , and the one airline that is going to be one of the big four surviving carriers that if we get down to the market in Europe , which I believe we will all Brian Air Lufthansa Air France and.

And IAG, you'll have for our three very expensive legacy carriers.

Repayments the pricing they are domestic and short haul intra European and Ryan Air being the only one out there keeping them all honest, but with materially lower airfares.

There are material upside in the year on year and pricing outlook over the next over that period over the consolidated period of time.

Thanks, Alex next question. Please guys Neocart is going to have to go.

He is doing one or two investor meetings in London, So Neil if you want to head off than we are.

The make up of the answers to the last couple of questions that we have left to do.

Okay great.

My honest here.

Okay. Thanks, everybody.

Right.

Next question next questioner Gerald.

Liberum. Please go ahead.

Jared Hi, Thanks, a couple for me if I can.

Firstly, you talked about the two bonds that mature in 2023.

Thoughts on refinancing.

And secondly on the operational disruption issue.

You talked about the benefit that you've had.

Keeping you'll staff employed on college, how old you managed to keep your suppliers.

External ground handlers.

How do you manage to get them to staff up to the right level.

Do you have confidence that that will remain the case through the rest of the summer.

Okay Bob.

For 2022.

Two bonds, we repaid traders, we I think we will.

Certainly the presentations, we just pay those down out of internally generated cash flows we're clearly moving into a higher interest rate environment for the next couple of years and I would want to reduce and pay down debt. Despite the fact that some of these bonds are pretty low cost. If we were refinancing those bonds now we'd be looking at probably double the cost.

The interest rate that we have on these bonds. So I think we're minded now and I think for the foreseeable future. We're all facing into a higher interest rate environment, and a higher financing cost environment and therefore, it makes sense for us to get back to zero net debt and begin to build up our cash balances.

And what has been for the last 10 years, a modest net financing costs will I think in the next five years become a modest net financing income as our cash balance as well.

Outweigh that.

The operation of this obviously I think one of the key things is that we have a lot of we work closely with our.

Our service providers.

New coming this summer that we were going to have operated a 115% of our capacity. So we work closely with we have blue handling our contractor in Spain, and Stan said, we do our own handling here in Dublin and not unlike those we took the decision last November and you highlight you back to.

The half year results presentation. We made last November we said, we're going to start hiring stopped recruiting or training pilots and cabin crew, but also handling costs at through those two quarters to build up for the summer.

2022 capacity growth now we got again, a fried as a result of omicron impact of Christmas. We got badly we took a lot of cough.

Our cost risk through April because of the damage done by the Roche and basically Ukraine, Don to Apis. So we didnt looked at Levered through Christmas or Easter, but now we are very clear, but I think a lot of our competitors decided.

Not to kind of engage in recruitment and training during that period of time and I think I was just.

Just if I decision given the uncertainty caused by.

Omicron in November and Ukraine in February we took a different decision and I think that decision has been vindicated by our success of getting through the summer but.

A lot of our airports, but also we were able to kind of taper off.

I don't have a lot of sympathy for an awful lot of the stuff coming out of airports, particularly out of Heathrow.

And John Holland, K Bullshitting on about nobody expected. This yes, we did we find the schedule.

We were certainly able to tell as Dan said, we expected the day, they get somewhere traffic would be.

Dublin again, we knew exactly what the summer traffic, we have been able to handle it Dublin had some handling problems here in April and May to be fair to did the da I think they have responded very well.

They hired under a lot of political pressure and some unfair criticism. They have hired very well and very quickly and I think the recent weekends and Dublin have been exemplary so well done Dublin Airport I would know often be complementary, but I think the management team did a good job of recovering from a bad start in April may.

But the shambles and Heathrow somewhat a mismatch that the security shortages in Manchester Bristow.

They were avoidable.

I can understand why some people were trying to be didn't want to recruit in.

February and March when we remember back in February March we were still in the teeth of the Omnicom cutbacks and the Ukraine, Russia invasive you create.

<unk>.

So I think we just manage it better and but we also were able to give our suppliers airports and handling companies are better heads up our heads up I think it's been a bit more accurate and a bit more reliable than what.

Many of our competitors were able to deliver but I have no time im not a customer of Heathrow I have no time for the bullshit that comes out of Heathrow, which is one of the greatest overcharging monopolies anywhere in Europe as smarmy on about need for large cost increases when they can rona pits have been a brewery.

And I think the airlines at Heathrow should be compensated by.

Yes.

Overcharging monopoly for the egregious mismanagement that has been visited by Heathrow Airport you look at gas.

Gastric stansted loot and all the other London airports.

Significantly outperformed this heat this summer, but Heathrow is badly run overcharging patients monopoly and if you had a competent regulator in the CAA, which you don't they.

They would be taking much more affirmative action on behalf of the airlines and on behalf of consumers, rather pathetically rating of <unk>.

Transport Minister writing to the Airlines last week in the UK asking us to ensure that our preparedness you don't need to write to the airlines try raising just some of your.

Heathrow Airport, which is where most of the problems life.

Next question please.

The next question comes from the line of Johannes Braun from Stifel. Please go on here on site.

Yes, hi, good morning.

First question.

Said earlier that you are prepared to cut that growth a bit this winter.

Due to the high fuel costs, which you'll have to pay on the 20% unhedged part.

I think you said single digit above pre pandemic down from 15 this summer.

If fuel prices stay as high as they are into next some of which you would be prepared to cut back.

For next summer as well based on the same logic and also given the fact that you're only hedged.

75% for next summer.

And second question I guess that one would have been for Neil but still try.

You said that you're fully hedged in terms of the U S. Dollar in terms of the Capex.

To what extent are you hedged on the Opex.

Okay ask Tracy was going to say I have a question.

I think.

Let's take the capacity question.

The winter is very fluid at the moment, where believe we kind of we will not run at 15% to pre COVID-19 capacity. This winter, we will cut back, particularly mid week unprofitable flying in November 1st half of December 2nd half of January February.

I think our capacity growth and traffic growth in the second half of the year will be probably something 9% and 10% of pre COVID-19.

If however, and I expect to see in the next number of weeks and months material cutbacks by our competitors who are completely on hedge this wafer and we'll blow their brains out mind, you'll often don't have a lot of brain, but nevertheless, we'll blow appraised they do have.

We might opportunistically change that.

Because we've already hedged 80% of our fuels. So this winter is a very fluid I think.

S situation.

It's fluid if theres negative news flow on Cobra that on Ukraine, and I think it will be more fluid or theyre, certainly going to be opportunities arising if we see material cutbacks by someone like EUA in Vienna, who are unhedged ways, who are completely on age or large UN hedged. This winter are hedged at a $120 a barrel.

I don't think theyre going to operate the schedule that they have fires and I think I expect to see that those many of those areas will materially cut their winter capacity. This winter.

Would we cut back some money I didn't know we will go ahead for leather in summer 2023.

For two reasons, one we will be better hedged at 90 of our competition I think by the time, we get to the second half results at the end of November we expect to be probably certainly 80% hedged for the summer 2023 period for the first half of the year to be about 80% hedged because thats how rolling program.

And whatever weird hedge that would be materially better than any of our competitors.

I think there will still be very strong recovery of pent up demand into the summer of 'twenty 'twenty three on short haul Europe , and we will still be building out material.

Our market share gains across Europe , and remember does that fully capacity as long as Boeing deliver a 50 aircraft next year that full capacity growth that'll be another <unk>.

Capacity will grow by 9%, 10% to somewhere between 23 all of that capacity go will be taking place on aircraft that carry 4% more passive but burn 60% of that deal. So it will be on game changers, and Eddie and the team are doing a terrific job negotiating very advantageous.

Airport deals falling back capacity growth into the summer of next year that the new base in Belfast.

Now, which opens in somewhere next year is a low cost traffic recovery scheme.

Growth at some of the other airports that have already been announced is already very low cost. So we will do no matter what price fuel is next summer. We will go at full capacity through the peak summer period next year. The only question Mark over that as can Boeing delivers these aircrafts as contracted before the end of April and as you know I do not have great comp.

It's in the Boeing management into gasoline in fact, a very little confidence in them and therefore I expect them to continue to focus up deliveries are have delayed deliveries. Despite the fact that there are very few deliveries to make next year, but that's.

That's where we are with Boeing.

Tracy do you just want to give an update on the opex hedging.

Yeah.

Sorry, Opex hedging of the technology quite shelf the Opex for this year, we're 80% hedged at 115 and for next year with 10% hedged at the Opex that we want to wait a month.

Any hedge that you said already on the Capex of 124.

About the Capex hedging rolls out to FY <unk>, it's amazing we weren't.

<unk> hedged on the Capex, we'd now be paying a third more for those aircrafts.

Our.

Third more for those aircrafts like not alone and we got very low cost.

<unk> cost aircraft, but we've hedged away the fuel exposure as well at a time when many of our those are a few of our competitors who haven't yet we're adding aircraft for the next number of years <unk> will be adding fewer aircraft than we are that would be adding those aircrafts at materially higher prices and they haven't got the capex.

If you look at it are like with the underlying story for ways. Its not just at their own Asia few but they're relatively unhedged currencies as well until the exposures they have on both Opex and capex.

Are going to blow a few brands that have left out.

Yes.

Which again is why I think there would be material capacity cuts by many of those competitors. This winter.

And those analysts who are missing for the last time, we had been peddling the lines until a lower cost than ryanair sometime by 2035, we'll have to revisit those insane.

<unk>.

Godspeed.

Next question please.

We have the final question from Harry Gowers from Jpmorgan. Please go ahead.

Yes, good morning, Mark Good morning, Hi, good.

<unk> spoken about the <unk>.

Alright.

And so I don't see bookings for Q2 are you able to tell us what percentage of seats on salaries.

Q2, or even out in Q4.

Thus far at the moment I never would've been one nail capex, obviously hedge two weighted this year anything to call out just on the quarterly phasing from Q2 to Q4.

Yes.

Okay, Yes.

Not sure what to get into where we are at the moment for the second quarter I don't think it's helpful. I mean look at focus on the.

But the two fundamental is one where we're running at around the first of July we were about 7% behind for July August and September .

And I think the other.

The only other material development that the July load factor is going to reduce load factor was 95% the July low touch.

96% now that 2% behind the 98% as we did in July .

Yes.

Pre COVID-19 in July 2019.

So we are where guests were behind on the forward bookings, but we're materially closing that up with close in bookings.

Those close in bookings are coming to us at materially higher airfares. So.

I would look at this at the moment as being a huge opportunity for us.

We haven't pre sold as well as we did pre COVID-19, but we are selling during the month at materially higher airfares. The fares that are more than double digit percentage points ahead. So there is a short term gain for us in the second quarter, but that's again why I come back to the nervousness in our caution on the third and fourth quarters.

There is a negative new slow developed our new negative developments on Covid, Our Ukraine into October November December January February March then and I would think we'd be the default bookings will continue to improve in that period, but the close in bookings we get hit.

We saw that had Christmas with Amazon and at Easter, We do create.

If that doesn't happen then we'll have a very strong recovery for remainder of this year and a very strong recovery and profitability as well and the first objective, but that would be too.

Finish out the pay restoration discussions with our people.

So I would look to that as being a very a positive but a positive of which we should continue to keep a wary eye on negative news flow into.

The third quarter and the fourth quarter.

Just capex, sorry, Tracy Capex, our capex, probably pretty much the same in Q2 as we've seen in Q1 with the end.

The balance of the Capex in the second half the year pretty much in line with its own database.

Thank you very much.

Thank you for that Henry Thanks, Tracy, Okay folks I have nothing else to add.

The Q1 results in more lumpy right away and leave we're not doing a roadshow Neil is meeting a couple of the investors in London later on today.

If you have any further follow up call Peter Larkin is here Manning.

IR desk and we'll be here all week and if you want to talk to any of them myself, Eddie Tracy Neil over the next.

A couple of days, please give us a call and we'd be happy to take any individual individual calls from you in the meantime may I wish you.

Enjoy the remainder of the summer.

I look at the Sky news coverage of the big use of Dover.

Cancellations at Gatwick and Heathrow is good for the Ryan air share outlook or performance.

Our operate to operationally our teams have done a remarkable job and our crews are doing a remarkable job in very difficult circumstances, with particularly with the EC to ATC delays.

It.

Delays and substandard performance and.

I would hope that the Ryanair brands continues to improve as we are a recognized particularly across the UK and Europe as outperforming all of the other airlines in terms of our punctuality and reliability. This summer and we hope that that gives us a good platform to continue to build into the winter of this year and into the summer of 2023 as long as we have no more disruption.

Delivery disruptions with Boeing.

Rest assured we'll keep doing our best and managing as best we can to eliminate those delivery delays and so that we can rollout continued strong capacity growth into this winter and into the summer 2023, and we hope that in time that would be reflected in a dramatically or a reasonable recovery of our share price and your investments over the next six to nine.

12 months. Thank you very much everybody good to talk to you and apologies needed had to ring off early.

We covered everything thanks Bye bye.

This concludes our conference call. Thank you all for attending you may now disconnect your lines.

Yes.