Q4 2023 Ryanair Holdings PLC Earnings Call

Welcome to the Ryanair FY23 earnings call. My name is Maxine and I'll be coordinating the call today. If you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad.

I will now hand over to your host Michael O'Leary, Group CEO of Ryanair Holdings PLC Michael please go ahead when you're ready

Okay, good morning ladies and gentlemen, welcome to the Reiner full year results investor call. We have extensive numbers of teams all dialing in because we have an extensive 12 teams on the road till this week. So anybody looking for a meeting please call any of our brokers either Davy, Citi or Goodbody.

recovery. Traffic grew to 168.6 million passengers, which is up 13% in our pre-COVID capacity. In a marketplace in Europe , which was operating last year at less than 90% of pre-COVID capacity, so Ryanair has been taking enormous swathes of market share in almost all markets across Europe .

While our traffic has recovered last year ahead of COVID, profits are still marginally behind where they were pre-COVID at 1.43 billion, nevertheless a very strong performance at a time when most of our certainly the alleged low-co competitors in Europe are losing, are still reporting losses for the last year.

underpinning that was a very strong fuel hedge performance last year and that poses a challenge for us going forward over the next 12 months. Looking out at a couple of broad themes which I'd like to explore during the Q&A in particular we're looking at into a year.

where we have embedded in an enormous cost advantage over almost every other airline in Europe . I think one of the very significant results of COVID has been two things. One, a huge amount of capacity has been weeded out of Europe . You've seen a huge number of airlines with quite a considerable capacity go both the Thomas Coates, the IVs, the German Wings.

of its pre-COVID capacity in the short-haul market, and yet its prices have doubled. So there is heavily constrained capacity. The other feature of COVID, and particularly when we look back and rewrite the history, or write the history of COVID, has been a seismic movement in the unit cost gap between Ryanair and every other airline in Europe .

We have worked extraordinarily hard during COVID to keep our XQ unit costs down at around 30-31 euros per passenger, but we've seen most of our competitors suffer very significant increases in their unit costs. Most of our local competitors had higher...

Wages and labour before Covid, they're even higher now. Their airport and handling costs have materially moved upwards by week thanks to our growth. They've been able to maintain low and stable airport and handling costs. But on the ownership and maintenance side, Ryanair has, thanks to the renegotiation with Boeing during the max grounding.

We have seen a very substantial widening of our ownership and maintenance cost advantage over most of our competitors, almost all of whom who either are operating almost entirely leased fleets or went into COVID owning a significant proportion of their fleet, came out of COVID with most of their fleets re-pronounced on sales and leased back.

And as we move into an environment in a world environment of significantly higher rates and financing costs, our competitors will be paying significantly higher aircraft and ownership costs going forward for the next number of years, whereas our aircraft and ownership costs will be low and will keep low. And I think if you look at where we stand now with a whitening...

cost advantage, the ability to enter into markets all over Europe regardless of who the incumbent is, where we can get floss at airports. I think we're looking at a fundamental shift in European aviation towards Ryanair, large market share gains. Looking out over the next 12 months we expect to grow our traffic.

in my view, what is delivering or what is sustaining this strong demand outlook. We and all of our competitors are seeing this summer. Capacity is still behind pre-COVID. Demand is significantly stronger. People who've been locked up for two, three, two and a half years are going back traveling.

I think there's a very unusual scenario in Europe where, of essentially full employment, people are getting paid at the end of every month, and despite fears over energy, cost, inflation, rising interest rates, people are spending money, and travel, business travel, leisure travel, visiting friends and family is no longer a luxury.

guidance here. An awful lot of the strengthening of airfare is the last 10, 15, 20 percent of passengers. We have spent most of this year urging passengers to book early because prices we think will rise. There will be no near-term short sell-off in airfare. Prices are rising. Demand is strong.

Europe is being welcome. It will be invaded by American visitors It's something because the strength of the dollar and we're also seeing Asian traffic recover We're well hedged on fuel, although our fuel bill this year will be about a billion euros higher than it was last year Thanks to the strength of our hedges last year. The Boeing delivery delays are getting resolved I think we're now down to talking weeks instead of months for the remaining months.

which in a year when we're forecast to rise to 185 million passengers will be largely immaterial. With the benefit of our widening cost advantage we're rolling out those 50 new aircraft across most markets across Europe where competitors appear to be in retreat. Many of them are focusing on building up their capacity at their fortress airports.

or they're switching capacity away from competing with Reiner to the Middle East, which I think is a good sense of a strategy. Over the medium term, we see that capacity constraint story being maintained. The OEMs are challenged, obviously they have large backlogs.

Airbus is suffering significant delivery today as is Boeing. There is little prospect, I think, given the challenge in the supply chain, that there would be a dramatic increase in monthly production for the next two or three years. It will creep upwards, but it could creep up in ones and twos, not tens and fifteens. As you've seen a surge of orders, firstly, Airbus' order book is essentially full out to the early 2013s.

Boeing have been doing great work in, I think this year to date, signing up a number of very significant orders with Tata in India, our order for 300 new aircraft. There's more coming at the IATA conference in Istanbul in June and at the Paris Air Show. And I think we're looking at an environment where essentially the OEM order book are completely full out to the early 20th. For more information, visit www.fema.gov

growth and that is the strength of the Ryanair model, the huge cost advantage we have over every other airline and our ability to go in with very low fares stimulate growth and I think the way all of our competitors, every time I listen to a competitor investor call when they're talking about you know very dramatic fare increases fares rising by.

20%, 30%. That is driving traffic towards Ryanair. We don't expect our airfares to rise by those very, I think, irrationally exuberant numbers this year. We do expect our airfares this summer to be stronger than they were last summer, but we need that to pay for the full restoration of our people's pay and at the higher oil bill.

Looking out over the medium term in a constrained environment, I think one of the key features of the Ryanair story will now be the 300. They recently announced 300 Boeing MAX order. This order secures our growth out to the mid 2030s in an environment where there will be very scarce aircraft availability and the pricing is exceptional.

Yes, we are paying a slightly higher price than we paid in our last order, but as I said previously if you factor in the delivery delay compensation, the price per seat comes out as a little bit less than our last order in 2014. So I think our timing is more to it as...

We're very pleased to have a long order book with Boeing and we think and look forward that that will deliver very stable growth. The growth will slow down as we get to 2027 at the max 200, at the max 10 orders. We don't expect to be growing at 10% a year when we're 225 million past it, but we do expect to be growing at mid-semes ages 5-6% a year.

That means we'll still be able to offer our airport partners 10-15 million passenger growth a year. We will be still a beneficiary of low-cost aircraft that we will be purchasing out of internally generated cash flow so we're not going on some debt splurge and it means we will be able to widen the unit cost gap between us and all of our competitors across Europe .

So I think we will and hopefully be able to deliver a decade of sustained, careful, slower, profitable and remunerative growth. And it's critical that we've now established a new target of growing to 300 million passengers by 2034.

And to put that in some context, that is 100% growth over our pre-COVID figure of 149 million passengers in our last year pre-COVID. It is astonishing the demand that is out there across Europe . There are some lazy analysts out there who believe that Europe is tapped out for growth. It isn't. We're still growing strongly, as Neil said this morning in Italy, in Spain, in Portugal, even in mature markets like Ireland and the UK.

We're seeing very significant growth. Central and Eastern Europe , there is enormous demand for Ryanair. People are fed up paying the high fares of our incumbent competitors and we have more growth opportunities out there than we can handle, not just for the next 12 months, but certainly for the next five or six years. One parting cautionary note, and I know everybody will lose their run of themselves, Q1 is going to be very strong.

Q1 is entirely distorted by the impact of the illegal Russian invasion in Ukraine last year which collapsed Easter which...

and badly damaged both traffic and fares into Q1 of FY23. We had to go out and dump yields and stimulate travel into Q1. So I caution, just a note that I want on the record, Q1 would be very strong, it would be distortedly strong because there's a weak prior year comparison. And when many of our competitors are out there telling you about the new paradigm and how wonderful it is.

cautious. Q1 will be very strong. We think that next FY24 will not be driven by Q1. We are cautiously guiding. When one were confident we'll go to 185 million pastures, that would be approximately 10% growth over next year. We cannot give guidance today.

Too much of the yield story depends on the last 20 or 30 percent of our passenger bookings. It looks like Q2 would be strong, certainly if there's nothing untoward, but at this point in time we have less than five percent of the seat sold for the second half of the year, which is the December March quarters. We see no reason why they won't.

the demand won't continue to be strong. But we're cautious, we think we're right to be cautious, and I think it's appropriate that we share. Caution everybody, we've seen too much, I think, irrational exuberance from our competitors, but there's no doubt that there is a strong recovery underway.

in a market where Ryanair is taking huge market share, in a market where capacity will be constrained, not just for the next 12 months, but for the next four or five years. And only Ryanair has a decade of aircraft deliveries and sustainable growth to deliver over that period of time. Neil, you want to take us through the highlights of the Q&A, please.

Sure Michael thanks very much for that. It's covered off very nicely on the unit cost performance that we had. I think it's important to call out the strength of the balance sheet. We've seen a good recovery in our balance sheet over the course of the past year. We finished with very strong liquidity of 4.7 billion but importantly...

moved into a net cash position of just under 600 million from from debt of 1.45 billion at the same time last year. I would caution however that that was flattered by the timing of aircraft deliveries which meant that about 450 million of capex has now been time from FY 23 into FY 24.

The balance sheet however remains extremely strong and last week S&P upgraded us to a triple B plus which I think is in recognition of the fact that nearly all of the the feed is on balance sheet owned and unencumbered which as Michael already said greatly enhances the financing gaps that we have between ourselves and everybody else. The interest rates are rising but yet we're paying which

bonds of which 850 million was already paid off in March just gone and another 750 million in August of this year. And then of course with the new Max 10 order book coming we will start to build up the war chest for that with capex starting to rise from there on.

But the balance sheet in a good place costs in a good place. Okay, thanks, Ian. Eddie, do you want to give us some insight into the market trends into the summer and median term growth opportunities across Europe ?

Yeah, again as referred to earlier, I mean, you know, fairies are strong going into the summer. You know, we continue to grow, we've got our new bases are going well in Belfast and the Canaries.

We've added aircraft to 11 bases, two aircraft to 11 bases. We've added one aircraft to 23 bases. Like indeed, the only base that went backwards was Zaventub this year for cost reasons. So, I mean, across all market segments.

We've seen them all recover as traffic has recovered. We see very positive signs in places like Spain where the government has taken a sensible decision there which feeds into our call space of lowering costs at airports, putting incentives in for secondary airports and freezing costs at the 2027. Likewise, they largely...

very weak markets with incumbents reducing in places like the politics with SAS going into chapter 11. TAP operating at 50%, ESA operating at a fraction of itself and continuing to grow in markets where we have substantial market share like Ireland.

for example where we've got again the largest summer schedule ever. So right across the right across the piece, you know, UK as well German regional airports and in French regional airports as well. So robust demand out there.

Okay, I think with that we'll open it up to Q&A, please.

Thank you. If you wish to ask a question, please press star so by one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing star followed by two to cancel. There will be a brief pause whilst questions are being registered.

Our first question today comes from Jamie Robotten from Deutsche Bank. Please go ahead, your line is now open.

Morning, two from me. Michael, point taken on the dangers of looking at the yield on a year-on-year basis for the next quarter, but compared to the same quarter pre-COVID, your March quarter fares were I think about 26% above. Can we think about them being at a similar premium to pre-crisis levels in the upcoming June quarter?

Second one's on the costs. Good to see the fuel largely locked in. In terms of the non-fuel unit costs, it sounds like it's mainly staff pay restoration and the en route charges driving the expected increase. Are there any other cost actions you can take to offset other than getting the 737 MAXs in to improve the fleet mix? Thanks.

Yeah, two good questions, firstly on the yields, clearly we can't predict what's going to happen yield-wise. I would be more cautious than that, you know, I don't think we'll see 26% growth replicated in the first half of next year.

All I can give you at the moment is that with about 80% of seed gold for Q1, at this point in time, 40% of seed gold in Q2, average shares are running modestly ahead of where they were this time last year, and bookings are stronger.

So I think the years will be up modestly.

We could have a very strong June , like August , you know, we're not used to these kind of environments.

We haven't been in an environment for 25 years where we have capacity down neck net over a two-year period and demand surging with transatlantic and Asian traffic feeding into the mix of very strong intra-European travel. It could be better than that but I would urge caution at the moment to see where we get to.

I again and I come back the Q1 would be distortedly strong because of the week prior years. The Q2 the half year numbers in November will tell everything. We could have a very strong H1. I would be caught with at this time but I always get nervous in this industry when all of my competitors are predicting huge booms and blue sky scenarios and massive you know.

20 and 30 percent fare increases, I get cautious. Non-fuel unit costs, and I think again, you know, the only slide you need to look at in our presentation is slide four. It is not so much what happens to our absolute unit costs, it's that the gap is materially widening between us and every other airline in Europe . But you're right, I think we will have a pay inflation over the next number of years. We've worked hard.

on pay restoration. We've restored the pay of all of our pilots, cabin crew by agreement with the union. We've built in pay increases each year over the next three or four years down the cloud, depending on whichever country the deal is done. We have also increased headcounts significantly this summer.

Because of the experience of the airport security and staffing shortages last year, we're more crewed, we have better crew ratios this summer, and we are seeing that translated into better on-time performance, better customer service, although being derailed every time there's a French or a French ATC strike, and we've had 55 to those already this year. But the things I would point to as where there was continues to be a white...

between us. You look at our competitors and they're suffering far more airport and handling cost inflation although a lot of that is a by-product of the fact that they're no longer growing.

WIZ for example appears to be growing but all the growth is taking place in the Middle East. It's not taking place in Europe , in fact they're in retreat. And the ownership and maintenance costs, the aircraft use we did during COVID and the aircraft, the new 300 aircraft order, particularly where our competitors will be taking delivery of much more expensive Airbus aircraft, and having to use financing expensive by a debt.

and we're moving to a fleet of max tens, where we'll be carrying 20% more passengers, but burning 20% less fuel. It's staggering, not just cost efficiencies, but staggering environmental gains as well. And you know, we are.

continuing to see a rising demand from the customers across Europe for greener travel. The way to your greener travel is to switch and fly Ryanair. It's the easy headlines across the media, oh Ryanair is Europe's biggest polluter. What they should remember is that the 185 million passes we carry this year.

are reducing their environmental footprint by 50% by transferring off high fare legacy competitors who have older aircraft, much lower load factors, less seat density. So the good news is that Ryanair is your biggest airline and we are reducing the environmental footprint by 50%.

Thanks, Jamie. Next question, please. Thank you. The next question comes from Pravanthi Sai from Raymond James. Please go ahead. Your line is now open. Goodbye. Hey, good morning. Just following up on Jamie's question a little bit, just wondering, you know, the non-fueled cost, you were expecting it to be down and now kind of expecting...

Almeidais agreement or if it's too soon for that.

Yes, the maximum delays I would be a little bit more optimistic. I think Boeing have it down to the delays are really running in terms of weeks now rather than months.

The critical thing for us, particularly for the summer of 2023, was can we get all 51 aircraft in by the end of May? Then could we get them all in by the end of June ? We're now reasonably confident we'll have them all by the end of July . Now we have had to take out some capacity in June and July . We think it'll cost us about 800,000.

for next winter for the summer of 2024 and it looks at this point in time now absent a curveball that comes out of left field such as the fastener issue and we will have all those aircraft in by probably the end of May so if there might be some slippage into June but we'll have them all there we'll have a fleet will expand by another 50 odd aircraft for the summer of 2024 allowing it

travel over the last year. Post COVID there seems to be a not just a desire for people to go back to the beaches, but businesses going back to work. Again, people were locked up working from home for a two year period. We see a lot of demand into countries into Eastern Europe , Poland, Morocco, a lot of focus on businesses, smaller businesses, fixing supply chains, switching supply chains away from them.

such exceptional recovery last summer. We had exceptional long-time performance, exceptional C-SAT metrics, but many of our competitors were struggling with to recruit and train people post COVID. And you know as I've long tried to espouse on short-haul European, premium traffic is over. You know no one will pay for business class on short-haul intra-European as they don't.

we switched capacity out of Germany. The Germans now are beginning to realize the error of backing Lufthansa as the national champion. Lufthansa have deliberately not returned their pre-COVID capacity. They're only operating about 80% of the German market. Airfares have more than doubled in the last 12 months. German businesses and consumers are going to be the victim of monopolistic pricing by Lufthansa in the German market.

the German airports will suffer, will be unable to recover their pre-COVID traffic volumes, obviously other than the two big hubs of Frankfurt and Munich. And I think German airports will become much more competitive the next 12, 24 months when they realize they're all getting screwed by Lothanze. They'll want somebody to come in there and provide competition choice.

and a much lower alternative for business and later travel and I suspect that'll be Ryanair. Eddie anything you want to add on business travel? Yeah just in relation to the specific query on Avadeus, I mean it's too soon to say but we are in terms of any sort of volume, we only launched it last week what I mean.

It is encouraging and it's interesting that you call it the German market. I mean even in places like Nuremberg where we have a relatively small base, two aircraft base, large employers around there, you know, the FUMAs, Adidas, SAP, etc. We want to get access to direct connections and the only alternative is to get on the train or to drive to Frankfurt.

And we have seen that in Germany where people want to get access to travel. They have a lot of intermediaries with travel management companies that manage their expenses and Amadeus will allow them to segue into that. So I think one of the areas that you didn't call out there was Nordron, Italy where we see a surge in business traffic particularly from small and medium sized businesses there.

So we're very encouraged. I think this channel will work for us. People want to get access to our lowest fares but find it more difficult to do it directly through Riner.com when they've got the gap of a travel management system to manage expenses. And Amadeus will deliver that for us.

Yeah, although we expect the Amadeus volume to remain reasonably small, like, you know, both the overwhelmingly will take all the bookies to the Reiner.com platform, but lots of businesses have the, you know, internal or travel implants and that means a GES like an Amadeus.

Next question, please.

The next question comes from Alex Irving from Bernstein. Please go ahead, your line is now open Alex. Alex, hi.

Hi, good morning gentlemen, two from me please. First on cash returns, so you've got a net cash balance sheet, you've got capex and debt maturity that looks fundable out of ongoing operations. What would you want to see before taking the decision to restart the buyback or to implement a dividend?

Second question around M&A, a couple of deals coming in Europe , Europa, ETA, TAP, clearly not going to be appealing to you but how significant do you think growth opportunities could be for potential antitrust remedies? How many planes might you want to allocate to the opportunities arising here? Thank you. Okay, thanks Alex. Again, two good questions.

I think we should be cautious. We finished the year with 500 million of net cash, but Neil has said 400 million of that was Boeing delivery delays. I think what we've tried to set out, we do expect to generate significant cash flows over the next two or three years. With comfortability, if there's no curveballs, we don't get any more COVID or Ukraine wars.

But we have a sequence of what we want to do. The first challenge was pay restoration. We brought forward the pay restoration which was originally agreed over a two-year period over, which originally we'd done over a medium term period out to 2025. We brought it all forward to December 2022 because we saw it coming.

Pay restoration is critical. Funding, and these are expensive pay increases we've already agreed with pilots and cabin crew over the next four years. You know, when we're operating with higher, with increased crewing ratios, that these built-in pay increases will be expensive and need to be managed. Secondly is debt repayment.

We've repaid an 850 million bond in March as it fell due. We've another 750 million bond repayment coming in August . So we have a very large burden of debt repayment. We then have two further bonds to be repaid in August 2025 and March 2026 or something like that. I might get those out.

challenge. I mean we are spending two billion dollars or two billion euros a year net on on aircraft and that will continue for the next two and a half years. We take a funding gap for a year in 2026 before we start into the the max three the max 10 orders.

And so if you take that sequence, I think it's pay restoration and pay increases for our people first, debt repayment, address debt repayment, we want to get to zero net debt by 2025, capital expenditure and we have ambitious capex challenges, and I'm afraid, and I say this as one of the largest shareholders, the shareholders will just have to wait in line.

We need to be cautious and careful, and I think our shareholders understand that. We are conscious of the fact that shareholders stumped up 400 million in additional equity during COVID. We do want to return some cash to shareholders as soon as it's safe to do so, and that we generate some meaningful net cash.

And I think it remains our business objective that when we have surplus net cash, we will return that to the shareholders. I don't foresee there being an opportunity to do big share buybacks anymore, but I think a modest and reasonable dividend program sometime over the next year or two if the net cash is not being paid.

an opportunity for us to grow for the next couple of years. We strongly encourage and I think it's logical that Europe continues to consolidate. There's been a lot of consolidation during COVID and as a result of COVID and what we're seeing post-COVID is the emergence of four very large airline or airline groups in Europe .

Air France KLM, IAG and Ryanair. I don't believe in the next four or five years there will be room for any significant FIFTA airline. Those that cannot grow will either perish or have to find a way into the M&A space but and I think there will be further soft investments.

Soft divestment at big airports, busy airports, they're interesting to us but they're not going to allow us to do it, to allocate 50 aircraft a year. We would expect to be involved in the IAG acquires Air Europa in Madrid and Barcelona. I think there would be soft divestment there.

I think that many of the incumbents, a bit like TAP and Lisbon, are desperately trying to find a way to give their stuff to some other high cost airline like EasyJet or it might be Volitea in Madrid. But I think the airports increasingly recognize that with Ryanair you get kind of guaranteed growth, you get very efficient operations. We arrived there with bigger aircraft with 90,000 people.

aircraft in large numbers to the Italian market, the Spanish market as we have in the last two years. We're allocating a lot of aircraft in the UK market this year, particularly on UK domestics where again the government has enlightingly reduced APD on domestics by 50%. We've opened up a base in Belfast, we're adding capacity in Glasgow, Edinburgh.

So, you know, and I go back to the same point, there's not much growth, I think, out there for airlines whose average airfare here in Europe is sort of 150 or 200 euros. But if your average airfare in Europe is 40 euros and your average cost is 30 euros, there's a lot of growth. Some of it will be market share capture, some of it will be continuing to grow the overall market place.

And so we are very, I think, excited and very ambitious with the growth prospects for the next decade and that's what is underpinned by the 110 additional game changer deliveries over the next 2 and a half years and then the 300 MAX 10 order. Eddie, Neil, do you want to add anything on the M&A?

Or Neil on cash on that. No, I think on the cash returns you covered it off well. We've 2.6 to 2.7 billion worth of capex in the current financial year and we've got a big draw on debt to be paid down. So for the next 12 months anyhow the cash is well spoken for. M&A again, there will be some.

room for us to play where there are remedies but equally we'll continue just pushing capacity into into core markets and Eddie probably had a bit more color than me. Yeah, I mean I just called it like what you said there about IAG I mean like a lot of the domestic routes, you know with if that went ahead with Air Europa

some cases they'll have 100%, certainly 90% of a lot of those domestic routes. So we probably see more widespread divestments at Spanish airports which would be welcome and I mean I think that's the only near-term M&A that would crystallize into divestments for us.

we would welcome those and particularly with the cost break on costs in Spain for the next four years. Yeah okay I just could briefly, so the bond repayment data I've just had in here, so we have a 750 million bond to pay in August 23, 850 million bond in September of 25, and then a 1.2 billion bond we raised during Covid is due for repayment in May 26.

Thank you. The next question comes from Maniba Kayani from Bank of America. Please go ahead. Your line is now open. Hi. So you were mentioning kind of Asian demand being positive for the short haul this summer. I just wanted to get a sense of...

terms of the booking window. And then secondly, Michael, your contract ends in 2028, the max 10 deliveries go on well beyond that. How should we be thinking about you staying on?

Thanks Beneva. I think I might ask Jason McGuinness to come in on the booking path. But just on Asian demand, I think with Europe there is unusually strong demand this year. I mean it is very difficult to get a hotel room or a golf course booking anywhere in Europe this summer with the number of people in the world.

astonishing and Europe , the strength of the dollar means that you know people are and there is going to be an invasion of Americans across Europe all summer long. We had no Asian traffic across Europe for the last two years, three years. I don't, we don't, we carry a significant number of Asian traffic but for us I think the real driver of the Asian traffic recovery is the transfer traffic onto short-haul legacy carriers.

It's the, you know, they fill up an awful lot of the short haul of La France, Air France, IAG and others. I think Carson was previously quoted saying, you know, upwards of 50% of their short haul travel across Europe in the summer is long haul transfers. And I think that's what is translating to there is that actually it further constrains the available capacity.

In a marketplace where short-hold Europe this summer will be operating at 90-95% capacity, you have extraordinary transatlantic transfer demand. You have a beginning of a medium-term recovery in Asia, filling up the short-hold capacity of our competitors, which leaves less seats for the European consumers, who are turning to Ryanair because we are the ones offering not just low-affairs.

new aircraft, fuel-efficient aircraft, but also we're the ones adding significant demand. In a marketplace that's operating at 90-95% pre-COVID capacity this summer, Ryanair is operating at 125% of capacity and we're capturing large amounts of market share. So, Jason, maybe just give us your thoughts on the booking patterns.

The booking curve isn't fully recovered but it's still happening closer to date but it's certainly trending more towards what it was in summer 2019. It varies across week 47 different market segments across Europe and it varies across them but leisure is booking almost as it was pre-COVID.

some of your domestic and ethnic routes will be closing closer to the date. So that's why we're just a little bit cautious when we're giving our fare guidance looking out across the summer, particularly into Q2. Although bookings are strong, it's still happening closer to the travel date. But I'm very comfortable in terms of the rate that's happening at the moment, very comfortable with load factors. You'll have seen that in terms of our April load factor.

when we announce May and when we look into the peak as well. Low tractors are very very strong but they are happening just a little bit closer to the travel date, but very strong in general. Just to finish briefly, thank you for your concern for my contract in 2028 but I would caution it's five years away and you know, nobody is thinking about it. Firstly, it's a matter for the board when we get to 2027 or 2028 and whether the board wants me to stay on after that period of time.

individual airlines, CEOs, we have multiple ops directors, multiple commercial directors, very good and strong financial and then the CFOs across the group. So we have a kind of a training ground and we have a very strong pipeline of management sufficient, not just for me but for every other senior manager within the group.

But really our focus I think as a group now, and I keep trying to urge everybody, there was the early days I used to make all the decisions in Ryanair, increasingly I make very few of the decisions in Ryanair because there's so many, it's such a big operation. I think the strength of the management team in Ryanair has been demonstrated to an extraordinary extent by the way we came.

And you look at we have a pipeline of aircraft deliveries now that allows us to grow 149 million passengers They go with 225 million passengers in 2026 and now 300 million passengers in 2033 or 2034 and much as I would like to believe that is all due to my innate genius

I'm afraid it's not. We just have a very good management team. And so increasingly, whether the board wants me to extend my contract in 2028 is frankly immaterial. There's a really good management team in Ryanair taking this business forward. And we will be, I think everybody's excited by the opportunity of executing this plan.

to grow to 300 million passengers by 2034. Remember the next largest airline in Europe at the moment in is Lufthansa had about 100 million passengers and yes they will engage in M&A but we will certainly I think capture about a third of the entire market for short or air travel across Europe and that is good.

Because if Ryanair doesn't capture a third of the market in the next 10 years, Lufthansa, Air France, KLM, IAG are going to screw everybody for ridiculously high airfares. We'll be the airline keeping them all honest, we'll be the airline offering lower fares, we'll be the airline delivering growth to airports, we'll be the airline delivering growth in not just...

traffic and job but also jobs in the regions of Europe . And so I think we're headed for a very exciting five years or 10 years and it doesn't really matter whether I'm there after 2028 there's a really good management team and we're not just a senior team but also the middle management team coming through as well and you'll all get the opportunity to meet them over the next week as we're banging them all out on road shows if you know then what they think of it.

My contract in 2028, although mostly they yawn about it.

Thanks, whenever. Next question, please. Thank you. The next question comes from Steven Furlong from Davy. Please go ahead, your line is now open. Hi Michael. Hi Neil.

Yeah, just on the winter profitability, just more kind of generically, do you think that the business is a bit more, obviously there's a summer peak there, but I mean it changes in the network, maybe something for Eddie, whether it's more weekend travel, changes in labor contracts that make it at least.

when you're having the Q3 and Q4, it's not like a massive kind of a loss making period because I think that the seasonality's improved to some extent. And the second one maybe for Neil, maybe just talk a bit more about what happened there in terms of the conversion of the syndicated term loan and that that helped in the deliberations with S&P for the upgrade. Thanks a lot. Thanks Stephen. Why don't we talk about winter schedules and profitability, maybe ask ADE.

take that in there, maybe a Tracy McCann might come in on it as well, and then Neil, we usually did the lone story piece. Yeah, we've been working over the last number of seasons on aircraft optimization. Or as we call it here repacking the suitcase in terms of getting better utilization out of the aircraft. And also within that there is a sort of a pivot.

Strike pivot away from midweek. Okay, we've got to do that within the constraints of the 5-4 roster and an X-and, you know, a base network of over 90 bases. But yes, we are trying to fill out the weekends. We've been more successful on that now in terms of how we've done that. We've sort of...

moved from a sort of a 65-35 split to about 70-30 now towards the weekends which runs through from Thursday to Monday. So that has really helped. Also on a lot of city pairs, you know, if you look back 10 years where we weren't even daily on some of those major trunk routes where we've now got multiple frequencies and we continue to build them and also the domestic networks.

places like Italy and Spain where we're continuing to grow which are less seasonal covering long distances so we are sort of hedging against that. We're working our way in more frequencies, more domestic markets, pivoting towards the weekend and strengthening up on city pairs so it's working its way towards that. Tracy?

Yes, I suppose what Eddie said, the fact that we pivoted away from midweek has certainly helped on the yield and helped on the ancillary, much stronger first to be got at the weekend. I thought it helped a little bit on cost in that it's allowed us, you know, no flying at some basis at the weekend, but it's helped with staff costs, it's helped with things like uploading onboard sales, where it's allowed some bonds probably closed midweek and some of the smaller basis. So yes, it's...

was the 99% on the convert balance sheet that we have and the strong liquidity within the group and they did upgrade it last week to a triple D plus. But they liked the fact that, you know, rather than having a term loan, which was gonna mature next year, we've now termed that out to 2028, we would have the flexibility to a revolving credit facility.

to pay that down or draw it as needed. And they count that effectively as cash. And John did a great job getting the margin down significantly lower levels. So maybe John , did you want to add a bit more color on that? Yeah, I think it also kind of ties into the message around the debt pay down on the basis that it was.

year out the facility in terms of May 24 it was due to mature and we've obviously extended that out for five years so I think it's a good piece of work and I think were helpful for the support of our banking group on this.

Next question please. Our next question comes from Mark Simpson from Goodbody. Please go ahead Mark, your line is now open.

Mark. Thank you, good morning. Two questions, one for Neil. In terms of use of cash, obviously significant inflows expected over the next couple of years. Is there an opportunity or potentially a benefit to accelerate PDP payments as we look into the third year of forecasting?

And then a kind of broader issue, probably if Julius is online, kind of political competition issues. Two things there, obviously we've seen the ECJ ruling, which must be seen as a win with regards to lookouts in SES, and then what the kind of ramifications of those rulings are. And equally, is there a kind of move by the EU Commission in terms of open skies and competition issues?

actually act on issues around ATC. Okay, Mark. Yes, so Mark on PDPs and use of cash we're getting to the stage now where we're more into delivery payments rather than PDP payments in relation to the remaining 110 game changers.

So accelerating them doesn't make a huge amount of sense. We don't really, with the exception of having paid assigning deposits on the 300 max tens, we don't get into PDP discussions or obligations this side of kind of the back end of 2026. So we can look at that state depending on where interest rates are, et cetera, and whether we accelerate some of that.

or not but the working assumption is that as before you know you'd pay up to 25 percent of your your pdps between 24 and 3 months of delivery of the aircraft with the balance on delivery

Okay, I want to point out and answer that just before Julius. Obviously, the only issue that we do have outstanding there, but we have a number of years is we haven't yet hedged the dollar or euro on the new aircraft order. Of course, the newbie's armed up to 27.

We have extraordinary exceptional hedge position on the all of the the remainder of the game changer delivery the dollar 24 to the euro Which means that again it just underpins how exceptionally low cost our aircraft additions will be Looking across at our competitor space where they're adding aircraft. They're not dollar hedged and they're taking leases

with significant cost inflation as interest rates rise. Julius, EGJ and... I was just going to do an add-on there Michael on the hedging. As Michael said, haven't hedged the max of 10s. We'll wait to start that.

after AGM approval in September when we got what was called a firm commitment for accounting purposes. The S&P upgrade last week will be very helpful in ensuring that we have the hedge lines in place. I wouldn't anticipate hedging 10 years out but we may start looking at kind of shorter 3-4.

possibly five-year horizons on the euro dollar. I'm sorry Julius now hopes yourself. Good, thanks. Thanks Mark. Hi Mark. Look, obviously the European Commission did a very poor job on the Lufthansa decision three years ago and I think we all...

knew that back then the legal community could not believe that the commission could cut corners to that extent. So I think the decision from the court two weeks ago was welcomed by most, maybe not by some people based in Frankfurt, but generally it was welcomed by most. And I think the focus now is on

converting that court win into something tangible. Obviously we don't want it to become a Pyrrhic victory. Damage to competition has been done. It's being done because Lufthansa managed to hold on to all of its slots and all of its aircraft. When you compare their situation to the situation of EasyJet for example who had to do...

Dusseldorf or Vienna where Lufthansa is in a very, very strong position but didn't have to effectively surrender anything in return for this massive state bailout. On ATC, Mark, it's not a great story. There's a five-year-old complaint with a European Commission filed by Ryanair and

or take off in France. And that is at odds with the position in Italy or Spain or Greece, where 100% of overflight are protected. The EU Commission have been sitting on a complaint from airlines for five years since 2018, and nothing has been done. So it's hard to say whether anything will actually be done at European level. We're pushing very hard. It's our priority number one in terms of

our public affairs engagement in Brussels. But I think that we need a very, very bad summer, I think, some sort of calamitous events, with people not returning from holidays before anything will actually happen. I think it's worth mentioning on this occasion the petition that we have launched a few weeks ago where we have been gathering sickness.

2.2 million signatures now, adding over 100,000 every week. And we very much intend to submit it to the European Commission very soon and call on them publicly to finally do something in this area.

Thanks very much. Thanks Mark. Thanks question please. The next question comes from James Hollins from BNP Paribas. Please go ahead, your line is now open. Hi, good morning. One for Neil just on a fuel hedging. As you look at the year 2020, what is the current year?

OEM delivery delays. Do you think for the fiscal 25 your best shot at delivering 2.2 million in net income? Would you not really think about it that way?

Neil? Neil Hedging. Okay, James, thanks. Yeah, we're 25% hedging in place now for the first half of FY25, locking in savings where we're hedging at $77 a barrel as opposed to 89 at the current financial year. I suppose one of the issues we have is we try to go out...

longer is that one, one of the only airlines that has the balance sheet to be able to hedge that far out which means in a relatively illiquid market which Jet is, when we come into the market they see us coming and we run the risk that if we do large volumes we move things against ourselves. So we're gradually

and I would hope over the next few months, that that will start to trend up 30, 40, 50% locking in savings. But we have to take baby steps on this because compared to pre-COVID, a lot of our competitors are sub-investment grade, got negative equity on their balance sheets and just can't play in this place. And equally, we've had to start looking at something we hadn't done in the past and so far as what we're now hedging out some of our capacity through caps or options. And again, this means that we get insurance against the worst case scenario.

So we're slightly better hedged there with just under 40% hedging at 111 into the first half of next year as opposed to 90% at the moment on FY24-108. Okay, thanks Ian. ETS, look, I mean, you know, we are, I think we will be a beneficiary of environmental taxation going.

though that there needs to be fair environmental taxation. In my view, scandalous and indefensible. The short-haul intra-EU pays all of the environmental taxation. We exempt long-haul flights to and from Europe , despite that they only deliver 6% of the traffic and yet account for 55% of the emissions, Europe's emissions.

That is unsustainable. Long Haul has to pay its fair share and also Alcos can for traffic. It is bizarre that you can take two flights through a hub, whether it's Schiphol or Frankfurt or Munich or Paris to get to your destination in Europe and you're exempt from ETS.

or environmental taxation, whereas if you take one direct low cost like you pay all of the ETFs. I don't regard environmental taxation, it won't fundamentally alter the huge cost and price differential we have or advantage we have over all of our European competitors. I am not going to get into any discussion on FY25.

profitability. It's far too far away and as we've seen from COVID and the war in Ukraine, too many outside factors or curveballs can emerge out of nowhere. However, I will go back to the underlying themes of this morning's conference, that is capacity constraint in Europe .

European short-haul capacity will be constrained for the next five years out to 2030. Traffic, I think, will continue to recover and be strong. People have more leisure time, rising incomes, they are going to spend more money on travel. And Ryanair is poised to be the beneficiary of that as we grow from probably 20% market share to 33% market share over the next decade.

Thanks, James. I can offer you there to bring in Thomas McNamara, who's our Director of Sustainability. Thomas, anything else you want to add on the environmental piece or ETS for the next couple of years? Well, look, I think you've covered it off that we'd like to see a polluter pays policy, but in Europe in particular, given that long haul doesn't miss the biggest higher proportion

Yeah, I kind of agree with what you were saying. Look, we need a polluter paid policy and Long House shouldn't be exempt and we'll be hopeful on the new ETS reform that in the end of 26 if a trustee is not fit for purpose, we see them fall into the ETS taxes as well and everyone pays for the CO2 emissions.

Thanks. Good. Okay. Next question, please. Thanks, John . The next question comes from Sivikumar from Citi. Please go ahead. Your line is now open. Let me try. Yeah. Hi, Michael. Thanks. Thanks. I've got a few questions here. So first is on the ancillaries. Where do you see it actually normalizing in the near term?

Have you seen signs of inflationary pressure on on-board spend or we actually benefit from inflation because of the price mix impact? And the second one is actually more specifically Italian, how the consumers behave there. Given now you kind of not a leisure, domestic carrier for that. How does you see the booking curve evolve there compared to the rest of the next slide?

to 23 euro per passenger. We continue to see strong demand for priority boarding, reserve seating and a lot of that's true there the various pricing models that we have in place where we're trying to hang on to the revenue while increasing the conversion on the product. Equally onboard spend has come back well and we're working hard to grow that year and year so I think you'll see modest year on year growth.

an ancillary this year. It might be another 50, 60 cents per passenger onto what we had. But you're not going to see the kind of three, four, five, six euro increases that we had over the past three to four years. It'll be at a more stabilized level, probably single digit increases from here. So just on the question, the line got a little bit jumbled there. It's a question on Italian classics.

Yeah, so just like I want to understand how the Italian domestic consumers like begin out of that it's a booking curve and versus the rest of them because now it's you're not just a leisure carrier there you're actually main flag carrier for the domestic market there.

Yeah you're right, Izzy at the moment is very strong for us, we're 40% market share, we're probably closer to 50% on the domestic market where we now have well over 100 routes. So in terms of what's happening on the domestic market, ISSA or Alitalia or whatever they're called now have broadly halved on the domestic routes. We had some carriers who tried to come in to us, leave us a comment.

subsequently closed. They've done more closing a basis than opening a basis. So the domestic market at the moment we're well over 100 routes. We launched about 30 new routes during Covid and they're forming very strong. The Italian market for us is our largest market. We carry close to 60 million passengers in Italy this year and I'm very happy with how it's booking at the moment. I think we're by far and away Italy.

Safer airline and it continues to work very strongly for us Thanks Jason, thanks for that question please Our final question this morning comes from Harry Gowers from JP Morgan. Please go ahead Harry your line is now open.

Yeah, morning, Jen. Two if I can, two quick ones. First one, just on the ex-fuel unit costs, I appreciate the guidance for this year for the increase and the widening gap versus PIRS. But then maybe how should we think about it more into March 25? Should it come down to the €31 for PAC suited this year? So, are you thinking more midterm? And then just secondly on probably something about some of the markets where the incumbents are weaker or the build back's been slower, so Scandi or Germany in particular.

Are you in active dialogue with airports to expand or put more aircraft in or are you waiting for airports to actually come to you over the next 12 to 24 months to drive traffic? Thanks. Okay, Neil, why don't you take the first one. Excuse the unit cost out to March 25 and then maybe Eddie and Jason might give us some commentary on Germany and Scandinavian markets and discussions.

Okay Harry good morning. I suppose I would echo Michael's earlier comments in relation to slide four of our presentation and the gaps that exist between ourselves and everybody else. Some of the drivers of higher unit costs this year will be, as Savi rightly pointed out earlier on, in the call down to higher crewing ratios. We staffed up.

for a full complement of 52 game changers for this summer at the back end of April . A lot of those won't be in until the end of July into August . We've got a headwind on route charges with less airlines playing in that space. You may see a euro or so of ticks.

between ourselves and everybody else. I think it would be short-sighted if we didn't invest in operational resilience this summer. We had a phenomenal performance last year. I think a lot of people are booking on the back of our reliability and having the higher crewing ratios as we go into the summer, particularly with 57 days of French ATC strikes is the right thing to do. And the key for us is to retain.

the massive gap that exists between ourselves and our competitors in Europe over the next decade. Yeah, just on the German market, I mean there's clearly dysfunction going on in the German markets at the moment. There are rising costs there with security costs and it's not unusual to have airport costs on a per passenger basis up in the sort of mid 50 euros and where you've got Europe's largest airline that has got discretion on where to allocate resources and you're less likely to put aircraft there.

I mean, we have the, you know, you've got the capital city of the largest economy in Europe where Reiner cuts its capacity by 25% and grows its market share by 2%. And EasyJet cuts by more than 50% its based aircraft in Berlin. Like there is something broken in the German market, particularly at the major airports. And that sort of dovetails what Julius had to say with the sort of state bailouts there protecting the incumbent.

loss of connectivity there and I think it will eventually come around in the next 24 months or maybe it could be up to three years. But in the meantime we'll continue to grow strongly at German regional airports. In Scandinavia it's sort of a different play there. You've got two very weak incumbent carriers but you also have to date the governments up there to seem to have an unending bottomless pitch for bailing out airlines.

in Riga and we have also a long-standing base in Gothenburg. So we have the bases there when we get a turn on cost there to to grow that market. It has all the sort of, you know, short-term connections which you need to put in a serious amount of frequencies in there.

Scandinavian leisure has been excellent for us over the last, particularly as it picked up post-COVID. And we would hope to grow and we will grow in those markets, particularly with two weak incumbent carriers. But I think it's got a dawn on some of the airports up there that there's nobody else coming in terms of growth.

And we're essentially going to be the only show in town that can move the dial. So I'm pretty hopeful that we're going to grow in Scandinavia, that's going to move for us. And Germany will come in the major airports in time. Right. Oh, Claire, thank you. Yeah, I don't have much more to add other than that we're going aggressively in our core market, Italy, Spain, UK, the majority of which we've locked away long term, low cost deals out to the end of the decade. Like central and eastern Europe , we're by far in the way the largest carrier.

in Poland where we've closed six sent market share, 15 million passengers. We're probably going to double those passenger numbers over the next 10 years. So there's many more opportunities that we can deal with at the moment and we'll come back to the Germany and Scandinavia when the costs are at a level that we are willing to accept. Okay, thanks Jason. Next question please. This does conclude the Q&A session.

challenges. We are seeing forward bookings and average airfarers into the summer are ahead of where they were last year. Whether they get to the kind of 20 or 30 percent our competitors are talking about I'm not sure and I think now is a appropriate time for caution rather than an irrational exuberance. I think the good news this morning is that we have resolved the delivery delays of bullying for this summer.

We are increasingly confident that we'll take 50 aircraft for summer 24. We'll have another 25, 30 aircraft in into summer 25, FY26. I would not underestimate the strength of the Boeing MAX order, the fact that we're able to set out an ambitious growth strategy for the next decade, taking us to 300 in a decade past.

full year of pay restoration and committed pay increases with our pilots and our cabin crew over the next four years. Jet repayment is a commitment that we're very the board is very strong on. We are very ambitious and capex at financing costs for the next two or three years.

But I think what underlies that is an enormous and widening gap between us and our competitors on the cost side. I thought it was interesting just to come back briefly on Harry's point. While we do focus, and I think everybody should focus on the ex-fuel unit cost slide on page 4, don't forget that for the next four years and then for the next decade, we will on top of that be adding in new aircraft.

with more seats, but dramatically more efficient, dramatically lower fuel consumption on a per aircraft on a per seat basis. So we're not just talking about the ex-fuel unit cost advantage going forward, we're talking about an ever widening inclusive fuel cost advantage going forward and we will be trying to pass on those fuel savings.

our growth and I think what would be strong growth over the next four to five years with reasonable prospects of strong profitability and strong cash flows as long as we don't see any more curveballs like Covid or Ukraine. Can I again just caution the Q1s would be very strong they would be artificially strong because the Q1

prior year comp last year was badly damaged by the Russian invasion of Ukraine, which disrupted Easter and meant we had to aggressively price to maintain high load factors on constrained schedules up to the end of June last year. Q2 will be much more modest because Q2 last year was very strong for us. We didn't have the kind of disruptions we had, our competitors had, but nevertheless I think we're set for a year where we will see strong traffic growth to 185 million passengers, up 25% on our pre-COVID numbers.

and then we'll have a much better feel for what's going on. I hope my competitors are right and the pricing will be ludicrously strong all summer long, but 30 years of pain in this industry has taught me to be cautious when my competitors are irrationally exuberant and maybe to be a bit more exuberant when our competitors are cautious. OK, everybody, thank you very much. I think we have extensive roadshow teams on the road all week.

Across North America. I'm in New York for two days, Boston, Chicago. We have teams on the West Coast all across Europe . If anybody wants a meeting or hasn't got a meeting booked in, please ask one of the broker City Davies good bodies and we'd be delighted to meet with you. If not, and you want to come visit us in Dublin at some stage during the summer, please do so. We'd be very pleased to give you a briefing and an update and other than that, thank you for participating in this morning's call and we look forward to seeing you all at some stage during the week.

Thanks very much everybody.

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