Q1 2024 Ryanair Holdings Plc Earnings Call
Speaker 2: The.
Speaker 1: Hello and welcome to the Ryanair Holdings PLC Q1 FY24 earnings release 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 the star followed by 1 on your telephone keypad. I will now hand over to your host Michael O'Leary, Group CEO , to begin.
Speaker 1: Michael, please go ahead when you are ready.
Speaker 3: Okay good morning ladies and gentlemen, you're welcome to the Q1 results conference call. As usual this morning we posted the results release, an extensive MD&A and a video Q&A with myself and Neil Soren. That went up on the rhinert.com website at 7 o'clock this morning so I refer you to that and I'll take it as read. Thanks for watching, I'll see you next time.
Speaker 3: I'll give you a couple of comments on the results and a few thoughts and then we'll open it up to Alath Neil just to give his couple of comments on the MD&A and then we'll open it up for Q&A. So as you've seen this morning we reported a Q1 profit of $663 million.
Speaker 3: The number is materially distorted because of it's compared to a Ukraine affected prior year Q1 PAT of 170 million last year. Last year you'll all recollect Russia invaded Ukraine on the 24th of February . It caused a significant collapse in traffic through March and into April .
Speaker 3: restore load factors through Q1 so that we could kind of underpin Q2. And I think that's important and it's something I was stressed a couple times today. So we very aggressively dumped prices in Q1 last year and so the kind of the growth of 600 from 170...
Speaker 3: we were the beneficiary of that. So over the quarter one traffic rose 11% to 50 million passengers. Revenue per passenger was up 27%. Again, that kind of average fares were up 42%, but that's distorted by the fact that average fares were down 4% in the prior year of Q1 and city revenues were up 4% on a per passenger basis.
Speaker 3: ROTI and Tenerife, all of them performing well. We've extended our fuel hedging. We're 75% hedged for FY24 at $89 per barrel, a little bit above current spot rates. We're 27% hedged for FY25 at $74 a barrel. If we were able or willing to extend that hedges, if we could hedge all of FY25 at $74 a barrel.
Speaker 3: our rating has been upgraded by both Standard & Poor's and Fitch's too from Triple B to Triple B+. The big development in the quarter was obviously the 300 MAX 10 aircraft order which we signed with Boeing in May. This order gives us a decade of further growth in Europe .
Speaker 3: in a marketplace where capacity is constrained, the industry is consolidating, Ryanair has access to another 400 very low-cost aircraft, another 100 max or game changers, and then 300 max 10s, which will enable us to renew the fleet but also grow traffic at a more controlled rate of 300 million passengers by every single day.
Speaker 3: we continue this summer to see volatile oil prices and higher interest rates, which is discouraging weaker, unhedged airlines from adding capacity. There is a shortage of aircraft, both new and leased, that I think will run on till the end of this decade out to 2030. This summer in Europe , there's no doubt we're seeing the benefit of a very strong influx of American visitors.
Speaker 3: strong in Q1. They would be modestly up in Q2 but not by what we had and what we saw in Q1. Remember, Q2 last year we had a very strong Q2. We reported after profit after tax in Q2 last year of 1.2 billion. And we expect average fares will be up but it will be a small double digit percent.
Speaker 3: something in the mid-teens. European airlines will continue to consolidate over the next two or three years. Lufthansa are moving to take over Ita in Italy. The sale of TAP in Portugal is now actively underway. There's a large backlog of aircraft manufacturer, OEM aircraft deliveries.
Speaker 3: And we believe that's going to continue to constrain capacity growth in Europe for at least the next three or four years and will assist us as we continue to expand our fleet. I think we'll see growth with strong traffic demand and I would hope to see modest airfare rises over the next two or three years. I suspect.
Speaker 3: a decade, coupled with our industry needing operational resilience, will create very significant growth opportunities and I think they'll be profitable growth opportunities for Ryanair over the coming years as we grow to 300 million pastures by FY34.
Speaker 3: In terms of fleet, the game changer fleet stood at 119 aircraft at the quarter end. It will rise to 124 at the end of July . We've already taken the first four of those July deliveries. Boeing hopes to deliver the last aircraft either on the, we think Friday the 27th or Monday the 31st of July . So we were.
Speaker 3: Just have all 51 aircraft in for the peak August travel period.
Speaker 3: Boeing has suffered multiple supply chain challenges which has caused repeated delivery delays. We had hoped to be out of these at the end of July but already we're seeing they've notified us of delivery delays in the autumn deliveries which have been hit by the strike in spirit in Wichita, the collapse of the bridge over the Yellowstone River.
Speaker 3: We already have agreed with Boeing that some deliveries will be delayed. Our last deliveries for summer 2024, which were to have been in April 2024, will now be delayed to June 2024. Hopefully we can take all those aircraft by the end of June 24.
Speaker 3: and therefore benefit with that continuing growth through the peak months of July and August . In May we signed the order with Boeing to purchase 300 Boeing MAX 10 aircraft. These aircraft are astonishingly efficient.
Speaker 3: The order is subject to shareholder approval at our September AGM, but these aircraft offer us 39 more seats 228 seats versus 189 on the 737 NG fleet, but deliver 20% lower fuel consumption 20% less CO2 emissions and they're 50% quieter. These aircraft will transform Ryanair's operating costs.
Speaker 3: will further widen our already considerable unit cost advantage over all competitive airlines in Europe and will materially, I think, incentive, will materially improve our growth for the next decade. We think about half of this order will be used to replace older NGs which will start...
Speaker 3: Just in terms of outlook, therefore we expect FY24 traffic to grow to approximately 183.5 million passengers. We've had to step that down and meet it from the original 185 million forecast because of these Boeing delivery delays through May and June . It also looks like we're going to suffer some delivery delays in September and October .
Speaker 3: as we start gearing up for maintenance, we'll be short some aircraft and we'll have to pair back some schedules. However, having said that, the cost gap between Rhein Air and all of our competitors continues to widen materially in Europe . As previously guided, we expect to see a modest increase in our XQ unit cost this year of about 2 euros.
Speaker 3: This is due to the full year impact of annualized crew pay restoration, higher crew ratios which is material this summer where we are suffering the challenge of really lamentable ATC provision across Europe .
Speaker 3: We know that some competitors have already been cancelling flights through the peak travel months of July and August . We're not cancelling flights. We expect to complete our entire operation. But we need more standby crews to be able to make up the amount of ATC delays we're suffering. The route charges and the impact of the game changer delivery delays will also impact
Speaker 3: be more modest because of a much tougher prior Q2 pricing. We think low double digits, something in the low teens. And again, that's partly because peak summer travel snapped back very strongly in Q2 last year following the Ukraine invasion. We have noticed in the recent couple of weeks a slight softening in the closed-in fares.
Speaker 3: in late June and early July . Nothing that I would be overly worried about at the moment, but I think there's either a degree of customer resistance to the higher fares, but we are filling our aircraft at fares that are marginally higher than they were into Q2 last year.
Speaker 3: But the final H1 outcome therefore is highly dependent on the trends in close-in bookings for the remaining seats in August and September .
Speaker 3: As is usual this time of the year, we have no Q3 or Q4 visibility. We are cautious though that we enjoyed a bumper Christmas and New Year travel period last year. That was the first kind of full Christmas period that wasn't affected by COVID for three years and we're conscious that this winter we're looking to grow. We're operating at 125% of our pre-COVID capacity.
Speaker 3: we'll have a strong H1, but I would be cautious into the second half of the year. Consumers are facing challenges out there across Europe , higher interest rates, higher mortgage payments, consumer price inflation is high. You won't have the benefit of the Asian and the American traffic in the second half of the year. We are pushing 25% capacity growth.
Speaker 3: in a market which this summer in Europe is operating at only 93% of pre-COVID capacity. We think that gets closer to 100% of pre-COVID capacity into the second half of the year. So I think we're right to be cautious. We are well crewed. We're getting through the summer well. Load fractures are high.
Speaker 3: But pricing might just be at that kind of inflection point where it begins to soften a little bit. I would welcome a softening in pricing. You know, we've had a very strong recovery over the last two summers. But with Riner's much lower cost base, I think you're going to see us continue to take market share from competitors. We may need to do that this winter based on price.
Speaker 3: However, given the uncertainty we have over the H2 Boeing deliveries that have been accentuated by the collapse of the Yellowstone River Bridge in Montana, our significantly higher fuel bill this year, our fuel bill will be up a billion euros over last year, the continued volatility of unhedged oil prices.
Speaker 3: very limited H2 visibility and our expectation that the risk of tighter consumer spending in the second half of the year we still remain cautiously optimistic that full year profit after-tax would be modestly ahead of last year. It is however still to worry to provide any money for the FY24 PT guidelines.
Speaker 3: We don't think that will change until we get to the H1 results in November . I would, two other, couple of other closing points. We look at the very strong growth profile we have here. We're very excited by our entry into the Albanian market this winter. Baney is a market that is ripe for exploitation.
Speaker 3: We were pleased and delighted last week. Eddy Wilson, Jason McGuinness, our Director of Commercial, myself, we spent Wednesday, Thursday in Ukraine where we met with all the main airports, Boris Volyn, Kiev, Lviv, Odessa. We were, I think, inspired by the state.
Speaker 3: Maybe by the end of this year they're looking at a kind of Israeli type Iron Dome solution over Lviv and Kiev and if they could achieve that we'd be hopeful that the European authorities would allow a limited flight resumption. I think it's important for Ukraine and the people of Ukraine to be able to do that.
Speaker 3: I mean, we endured a 10-hour train journey from Poland into Ukraine in and out. The one thing that's missing in Ukraine, Kiev feels remarkably normal, but what they're missing is air travel. And I think it's incumbent on all of us in Europe to support Ukraine as best we can. And I think the best way we can support Ukraine is by leading the return to air travel.
Speaker 3: So we will continue to work closely with the YASA, the FAA to encourage them to reopen at least, even if it's only on a limited basis, to return the fight into Kiev and Lviv. Once the war ends, and we all hope it will be sooner rather than later, we will charge back into Ukraine. We've committed to basing up to 30 aircraft in a year.
Speaker 3: Kiev, Lviv and Odessa. Kherson, Khaki will be later because those airports have suffered significant damage. But we intend to return back in there within four to six weeks of being allowed to do so. We expect to be connecting Kiev and Lviv with up to 25 or 30 European cities.
Speaker 3: Ukraine was a big and growing market for Ryanair prior to the invasion. And after they have successfully repulsed the Russians, we expect that Ryanair will be the number one airline in Ukraine. And in reasonably short order, it will be the number one airline in Albania as well. I think this underscores the strength of the growth.
Speaker 3: that is still ahead of us, in front of us in Ryanair, not just in Western Europe but in Central and Eastern Europe where the more we push into those markets, the more we take market share from our high fare competitors. One last thought, there is I think a slightly over optimistic, we are looking forward to holding a capital markets day on the first week.
Speaker 3: be updating profitability. We will not be discussing dividends or anything else. We really want to have it drilled down into just the growth, the Max 10, and what it will do for our costs. We will be sometime before the middle end of August issuing the Class 1 document together with the AGM notice for the Max 10 order.
Speaker 3: and that will limit any commentary we will have between it and the AGM when we hope shareholders will back our vision and support the order for the Max 10 aircraft. I just want to make sure that we have punctured any irrational expectation that the capital markets day will be some dramatic reveal it won't.
Speaker 3: I am astonished, never seems to be amazed. I looked at the numbers last week. Our PE multiple currently is 11. The PE multiples of WIZ and EasyJet who can neither match our profitability, our growth, our unit costs are also 10 and 11. So either they're materially overvalued or we're materially undervalued. But I'm sure the market will work it out in due course. We look forward to seeing you all here at the Capital Markets Day in September .
Speaker 4: I think it's clear that we continue to have the unit cost advantage over everybody else, although there is a bit of price inflation coming through in the first quarter as we annualise the pay restoration and the pay increases that we've awarded our people. And as Michael said, we've invested very heavily in crewing ratios this summer where we're operating up to about 5.8.
Speaker 4: sets of cruise per aircraft up from 5.4 sets of cruise last year. So you're seeing that coming through an increase in local ATC charges also coming through in the airport and handling line. So I think that that's apparent in the numbers this morning. The balance sheet in very good shape. We finished with 4.84 billion gross cash and as Michael said just under a billion.
Speaker 4: in net cash and that was after a billion in capex including a 250 million dollar signing fee on the Max 10 which we signed back in May. So we've got another 1.8 billion to go for the balance of this year. Our balance sheets became fully unencumbered.
last Friday when we paid off our final EXIM loan. So all of the 737-800s now fully unencumbered, which I think is unique. And that's reflected in the ratings that we got from Fitch and S&P up to BBB+.
hedging again, as Michael said, very well hedged for the year, just under 85% hedging, of which 75% is through swaps and the balance through options. So we've got about 25% of our fuel floating. And then as we look into next year, we've got about 40% of the first half of the year hedged out at approximately 75%.
dollars a barrel and then some modest hedging into the second half of the year. Just some other bits and pieces, the Class 1 circular will be issued in the next couple of weeks and this morning we published our annual report for 2023 and our 2023 sustainability.
report on our website which sets out our ambitious targets for the next decade there as well. That's pretty much it for me Michael. Okay, thanks Theo. We'll open up the Q&A now. I'm joined here in Dublin by Eddie Wilson, the DAX CEO , Tracy Molloy, Tom Fowler, Peter Larkin, Julius Comerich.
and Neil as well, obviously joining us from London where he's doing the media. So we can open up to Q&A and ask Frank to pass the questions around so we get everybody involved on the call. Thank you. Thank you. If you do wish to ask a question, please press star-flare by one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing star-flare by two to cancel. There will be a brief pause whilst questions are being registered.
Our first question today comes from the Vanthe from Raymond James. Please go ahead. Your line is now open. Hey, good morning. If I might, on the sleep plan, it looks like there were some changes there, a little bit of Maxence shifting around.
I was wondering if that was kind of based on what Boeing is telling you or you're making some assumptions given what you're seeing today And then just for my second question I was kind of curious with the investments in the operational resilience Does that get baked into the base and then we see kind of a more of a normalized growth? On top of that or how should we think about some of the investments that are being made there?
At one stage we thought we might only get 35 aircraft for the peak summer this year. It now looks like, and I think credit to Boeing, they'll deliver all 51, but the last one will arrive on the 31st of July . We are, that's cost us about 300,000, 400,000 passengers through June , July . We've had to take about 200,000 passengers out of August . We are moving back. We're going to be seven or eight aircraft short in September , October , because we start all the maintenance on the fleet.
But other than that there isn't any and then we are moving some of the deliveries into summer of 2024 are moving back from February , March, April , they're moving into April , May, June . We're working closely with Spirit in Wichita and with Boeing to try to give us the most accurate.
figure we have on the fleet. Investment and operating resilience... It looks like Michael, your Max 10 deliveries were a little bit delayed too, like different than what you had in May. No, no, there's no change. There was some slight change, just sadly from the final experience and from the draft that it really is not major in itself between the first two years. Yes, the numbers are still the same per year.
The investment operation resilience, you know, like again, I'll give you the good, there's good news and bad news. The good news is that the airport, airport handling generally across Europe has been materially better this year than it was last year. Most airports, most handling companies are reasonably well staffed this summer.
and so we're not seeing any significant changes. There's significant improvement over last year. The bad news is that ATC is a shambles. They are short staffed, particularly at weekends. We have long complained about the 60 days of French ATC strikes and the European Commission continues to sit on its hands doing nothing.
I keep writing to Ursula von der Leyen, she keeps fobbing the correspondence off the DG move, which is a mis-description in terms of DG no move. Nothing is being done for Europe . The minimum we're calling for is protection of overflights during French ATC strikes. That hasn't been delivered. There are really things needed Alexis, with good
Most of the ATC providers, the Germans, the French, are short staffed inexplicably and are incapable of providing the staffing that's necessary. Remember, Europe this year is only operating at 93% of its pre-COVID capacity and yet ATCs have less staffing than they had in 2019 and 2020. It is a mismanagement shambles.
But it's exactly what you expect from anything run by European governments and by the European Commission. But the continuing failure of the European Commission to take some action on this is inexplicable. I think it's inevitable that we will have to maintain that improved operational resilience for the next...
year or two until we see Europe take some action on air traffic control. You know, and we're still, we would expect it to be as bad this time next year. I expect next summer Europe to be operating at about 100% of its pre-COVID short-haul capacity, and ATC will still be giving us capacity restrictions at weekends, short staffing, excuses piled upon excuses, and nothing being done.
So I think it is for the additional, well we've doubled up the operations capacity in Dublin and in Warsaw, but the additional crewing I think will be with us here for the next summer or two. I don't think it's long term. I think ultimately something will be done about European ATC and the mismanagement of ATC.
But I wouldn't hold out any great hope that Ursula von der Leyen is going to do anything useful other than sit in her hands doing nothing. Eddie, you want to add to that? Yeah, I mean, I think the important thing is that what's within our control, we are significantly better in terms of solving those issues. So the two main call-outs that Michael touched on there was the increased pruning ratios.
which you've got to be ahead of the curve of like 6-12 months ago to bring those people through. We're still training over a thousand cadets a year and we have significantly increased our cattle crew ratios and quite rightly like as APC is hopefully starved over the next number of years and we're growing we can get good ratios we can sort of lean into that.
But more importantly at the operations control center level both here and in Brotglaab, labs has been particularly important for those in designing systems that allow us in this environment where you've got what would have been five, six years ago meltdown days for us and we're able to manage that in real time in optimizing the allocation of crews. That has been critical.
Not just piling extra bodies in, but the support and systems that we have here that are homegrown systems and are working very effectively this summer. I mean, it just makes you, you're able to get through without cancellations, unlike many of our competitors. Thanks, Eddie. Thanks, Abby. Next question, please.
question comes from Maniba Kayani from Bank of America. Maniba, hi. Please go ahead. Your line is now open. Good morning Michael and Neil. So just on your comments on the softening in closing fares, is there anything you would call out in terms of specific geographies? Would you say there's a change in customer booking?
thinking at this point within across like dividend or buyback and any metrics that we should think about is in terms of a potential size in March this fiscal year. Okay. Thanks, Veneba. Again, I would draw your attention. I think it's important we say it. Partly this is I think is a function of the week prior your comps in Q1.
marginally ahead of our budget expectations and, you know, low to mid-double digits ahead of Q2 last year. But I think what we're trying to communicate here is in the last number of weeks, the close-in stuff has softened. You know, in some cases, we're now looking at very few seats left available to travel. We may have oversold.
Q2 a little bit ahead of schedule, but we're not seeing the same kind of jump up in close-in bookings that we saw in Q1, but I think that's more effective in Q1. Our budget was kind of predicated on last year's weak prior year comps versus Q2. It's not. And again, I don't need anything to be worried about here, but I do want to communicate.
We've had a very, very strong Q1. Q2 will not be very strong. It will be good, but not this good. And I don't want any kind of irrational exuberance building up out there. No more than that. Uses of cash. We try to be as transparent as we can. The board has set us kind of at four.
in sequential the priorities in terms of cash and profitability. One, restore the pay cuts. We did that 24 months early in December of last year. We're agreeing pay increases with the pilots, cabin crews, our ground handlers across Europe .
We've done deals with almost all the cabin crews. Most of the pilot groups are now largely done and we're working our way through the ground handlers as well. It's an ongoing process, but the board is committed. I think the first use of funds was pay restoration and rewarding the people who stood loyally with us through COVID with pay increases.
The pay increases will be modest. We are already significantly adding to the headcount here, the crewing ratios are higher, but the pilots, cabin crew and ground time, the people who are delivering the service deserve pay increases first. Second is debt reduction. We have a bonds, which we're looking at bond, we're repaying bonds here.
where we're paying our interest rate of 1.25%. The refinancing cost of those bonds today would even for us with a triple B plus rating would be four and a half, five percent. So we are committed to paying down that debt. As Neil said, we paid down the last hour exit debt last week. We have another bond of 750 million to pay in August of this year.
and then we have two more bonds of about 2 billion, one of which is due in September 25 and one in May 26 and then we will be completely debt-free at that point in time. And the third use of funds is going to be capex. As Nia said, we're in peak capex this year.
Capex does begin to run off as we run through the next two years and we have that two-year gap between the last of the game changer deliveries and the first of the Max10 deliveries and only an after we're confident that we can fund all of those commitments can we look at returning cash to shareholders.
I think it's something we'll be focusing on at the end of this year. Maybe we'll see some light at the tunnel when we get to the half-year numbers in November , but it certainly won't be before that date. I think we've communicated clearly that it's more likely to be dividends than share buybacks. And if you read the press release, it's going to be a bit more difficult to get through.
I mean, in terms of scale, I think we're conscious of the fact that during the worst of the COVID crisis, the shareholders invested 400 million in the company. That enabled us to access the bond markets. We raised $1.2 billion at the time during COVID at an annual interest rate of under 1%. So I think our kind of starting position looking, if we're looking at a dividend, would be try to return as much, if not all, of that 400 million as we can. But we won't make any decisions on that, I think, until the...
Half your numbers in November are maybe in Q1 at the end of this year or early next year. Thank you. Thanks, Vanneva. Next question, please. The next question comes from Harry Gowers from JP Morgan. Please go ahead. Your line is now open. Harry, hi. Yeah. Morning, James. Just two questions if I can. So the first one just on the... Okay.
or is there probably a heightened risk further delays actually lower in that pack's guidance further? Thanks.
Okay Neil you'll take the extra year, you'll cost and I'll ask Tracy if she's any comment on that and then I'll deal with the full year of parks guidance. Okay Harry thanks for the question. On FY25 we would be hopeful that we'd be up and about just over 33 euro a passenger at the end of this year.
on an ex-fuel basis. We'd be hopeful that we would retain something along those lines into the following year. We're 5.8 sets of cruise per aircraft. We would hope we wouldn't have to go any higher than that for operational resilience into the following year. We do have some modest pay freeze coming through but I can observe that.
the numbers that we have. So yeah, I mean the hope and the plan is that we'll be broadly in line with the 33 into FY25.
As was previously indicated, it increased the local AGC and then we're seeing some wage inflation on the self-handling and handling side of things there. So they're really the two main drivers in the two euro. Okay and on the, if we were in the old days, I think we would have gone balls out. It's 185 million then we're just going to dump lots of capacity into them.
Albania and or Ukraine if we can get in there this winter but generally speaking no I would not be minded in current markets particularly where there is capacity is still constrained in Europe to be artificially you know jumping prices or artificially growing midweek capacity during the winter season just to hit some
target of $185 million. If as a result of the Boeing delivery delays we only have capacity for $183.5 million, then I think we will aim for the $183.5 million. We'll try to manage the yields as best we can during the winter. The yields in the winter will be lower than they were in the summer. The narrative that the era of low fares is over and is never coming back is not a correct...
scraping another 1.5 minute additional passengers.
ADNES you have had on that commercial? Yes, I mean I would agree there. I mean as we look through to winter, we've gone back again compared with winter 22 in terms of midweek capacity, that's about 30%, and we're up to 70% for weekend. So that's evidence of that sort of trimming that's going on midweek.
in terms of the review of what happened last winter. Also looking at the main Easter movie slightly earlier this year as well. And, you know, putting in Christmas extras and looking at sort of those traps and activity, you know, beyond the 10th of January as well. So we continue to do that at Definite.
That's where we'd be concentrating the efforts rather than chasing passenger numbers. So if you'd asked me, I am unlikely to make that up as we would have done in the old days. Okay, thanks Eddie. Next question please.
chasing passenger numbers. So if you're gas me, I am unlikely to make that up as we would have done in the old days. Okay thanks Eddie, next question please.
Thank you. The next question comes from James Hollins from Exane BNP Paribas. Please go ahead James, your line is now open. Hi Michael, yeah, you're going to hate this question but I'm going to come back on the pricing. You talked about low double digit, then you talked about mid-teens and then it comes low double to mid-teens. If you were lucky enough to be an analyst.
Would you be thinking about mid-teens is what you're currently sold at, but the management of Ryanair being quite cautious on that close in. And then the second one is just on your pilots. Are you seeing any sort of, I think everywhere except the Belgians have done on contracts, are you seeing any of them sort of coming back and saying, look, performance is good, summer's good, we want a higher pay increase? No.
I'll ask Eddie to come back on the pilot and go to... Sorry if I beg. I mean, I would have guarded mid-teens as low doubles digits. We expected the yield number, the average fair in Q1 was up 42%. We expect at the moment, our best guess is that the...
the yields performance in Q2 is going to be somewhere in the between, I would have said 10 and 15 percent at the moment it's running at the upper end of that range, but we're, I'm a little bit cautious just in the close in stuff, it's been a little bit weaker for the last 4 or 5 weeks. I don't see a reason why
at the back end of August or the September bookies at the moment would be dramatically different. So I would be picking, if I was lucky enough to be an analyst, if I'd only worked harder in school and got a job as an analyst, I would be pitching it very much in that 10 to 15% range. It's still...
will demonstrate a reasonably strong Q2. The H1 numbers will be strong for the year given that last year's H2 was 1.2 billion PAT. But, you know, this is a long winter and, you know, I'm slightly cautious in that there is still significant pent-up demand for holiday bookies this summer. There's still constrained capacity for holiday bookies.
But we're still heading for a very strong and very profitable year overall. I would just be cautious into the second half of the year. And then we're looking at next year where if oil prices continue as they are, we could pick anything up to a billion in terms of additional savings on oil prices.
our numbers. So, you know, the medium term outlook here is very strong. The aircraft order means we can grow 300 million passengers within Europe over the next decade. I would just be cautious on, you know, we've had a very strong Q1. Q2 is not going to be that strong but then with a much tougher prior year comp.
and I would be cautious into the winter. And that's the message we're communicating with our unions as well. You know, there's lots of silly wage demands out there, you know, from ground handlers and airports. It's not that good out there. You know, people are, I think there was still a lot of pent up travel demand this summer.
I think capacity will rise again into next summer mainly because Ryanair will add another 50 aircraft for next summer as well. I would just be cautious. Strong Q1, reasonably good Q2, and then I would hold my breath and see what happens in the second half of the year. Eddie, do you want to give us an update on where we are with the kind of the pilots or wage settlements into raising profits?
Yeah, I mean I'll just add just onto the fairs there that like don't forget like last year there, you know, like after the Ukraine invasion and by Russia like when we came into the summer into Q2 there were exceptional close-in fairs last year as well which are now going to be repeated. Just on the pilots, yeah, I mean our commitment was to stick with our people who were with us all the way through.
With those extension of those deals, there was no pay increase in April . We had revisited that with a number of our pilot groups and those agreements are now, in some cases, extended with a pay increase this April , obviously, which is feeding into the restoration where a year was brought forward.
recently. But again, we're growing and we will always look to our competitive position in the market and we've reacted twice by doing restoration early and also that flowed into April this year where we re-engaged with unions in the major markets and have come to agreements with them. I should say as well, we did have a strike by, you know, I'd say...
We were heartened by the fact that about a third of the Belgian pilots turned up for work and we ran a significant proportion of the Belgian base schedule. There was no strategy. Again, they called another strike for next weekend. But as we said to them all, you know, look, you can have exactly the same kind of increase that we've agreed with the Italian pilots, the Spanish pilots unions. But you can't have something stupid.
and they seem to have a kind of view of life that it's Belgium and Belgium is somehow different. It isn't. We will and are doing our best to be fair and work with our union partners and our people, both pilots, cabin crew, engineers, ground handlers, but we're not minded and nor are we going to fall over and concede some ludicrous pay increases just because we've had a strong Q1.
We would hope to make some progress with them, but if they want to go on strike again next weekend, they can go on strike next weekend. We will work our way and manage our way around it. As we are with the fires in Greece this weekend, it's important again to put that in some context. There have been forest fires that were in the Algarve this time last year.
Forest fires are a known phenomenon. They do appear to be getting worse. But in the case of roads, they're to the south of the island. Most of the resorts and the airports are in the north of the island. We've seen no demand for passengers over the weekend seeking to cancel flights to roads. In fact, all of the passengers who were on roads have returned flights scheduled today, tomorrow, Tuesday, Wednesday, Thursday. So the kind of stupidity you get out of some of the media this weekend, are you canceling your flights to roads?
No, of course we're not. A, because Rhodes Airport is open and B, because we have lots of pastors who are in Rhodes who wants to return from their holidays and there are more pastors still going out to Rhodes. So, you know, it is the silly season, the media tend to latch on to pictures of forest fires, but when you're flying to 260 airports across Europe , are we seeing any changes in demand patterns? No.
In fact, if anything over the last two or three weeks, we've seen stronger demand ex-Ireland, ex-UK. People trying to get the hell away from the unceasably high rainfall we've had in Ireland and the UK, which if anything gives me even more confidence for sustained growth in Mediterranean holidays over the next fucking decade as we grow to 300 million passengers a year. James, I hope that answers the question. Next question please.
Thank you. The next question comes from Gerald Castle from UBS. Gerald, hi. Go ahead, your line is now open. Hi everyone, morning. I just want to get a question, firstly on axillaries. They were at 4% per pack. Obviously, inflation's running higher than that. So, are you sacrificing volume? Is there a mixed impact? Or you're just not pricing as aggressively as you would
Maybe you can at the moment and I guess you know linked on to that. You've said something about You know fair pricing during the current quarter anything on axillary pricing and then just looking a little bit further ahead You know, you've got a number of environmental headwinds coming under but for 55 You've obviously got the ETS step step down in free credit next year And then you've got staff of which you know, I probably say you must be best to breed at twelve and a half percent
This is what the EU is saying by 2030. But I guess looking at that, are you worried about the cost advantage, especially given that you also committed so much more than the EU is asking and to say, even if it is the right thing to do for the environment? Thanks. Thanks, Gerard. I'm going to ask Tracy to take the ancillary question. Neil, you might come in with some comments after and then I'm going to ask Tom Fowler our Director of Sustainability to deal with the environmental measures. So Tracy, over to you on ancillary. Yes, we've been in...
degrees on the air.
Neil, anyone want to add to that? No just Jared, we were quite clear, we made a big jump from €19 a passenger to just under €23 a passenger. We'd indicated a 50-60 cent increase as Tracy just said there. We're pleased that we're achieving that. Some areas where we'd like to make a bit more, we're working further with labs.
on the pricing models around seating and priority boarding, see if there's more we can do there. We're looking at a more detailed level on the odd board spend to see if there's more we can do on that. But we're pleased with how we're developing. It's in line with what we had indicated we would do. And this has grown on top of a significant step up.
over the past couple of years and you know there's another year or two to go in the Groton Ancillary. And Thomas you're in touch on environmental measures and their impact over the next two to three years? Yeah look obviously the ETS is to be able to lose in the three allowances but it will impact everyone the same who flies into EU will lose their allowance for Jared but what we are doing on it.
cost advantage won't leak because everyone will be hit the same with that who flies in through you. And then on the staff side, we've set the 12.5% target. It is aggressive, it's twice the European mandate but the cost is an unknown at the moment. We need to see production rise and like what I'm talking to fuel suppliers, we won't see the premium we see today as we see production staff increase. So I don't think that the cost disadvantage will be that significant as you may look at it today.
So it's just going to be as we see it follow through on production and on both. Yeah, and I would add to that, just if you take the environmental measure impact, or James, or Jared rather, sorry, over the next five years, we'll take delivery of another hundred game changers, 4% more seats, 20%, 16% less fuel.
And in that period we've taken the first two years of deliveries of the MAX 10, 28% more seats and 20% less fuel. The technological revolution that's going on with the engines and their fuel consumption will more than fund any kind of environmental cost. The fuel savings here are gargantuan.
particularly a marketplace in Europe where capacity will continue to be constrained over that four or five-year period. I think the real underlying story here that we should keep tacking back to is that the market in Europe has changed. Capacity is now constrained. It will remain constrained for another four or five years if not out to 2030. The reason I wouldn't be quite as there'd be another crisis between now and 2030. I just don't know where it will be and where it will come from.
But capacity is going to be meaningfully constrained. Europe is consolidating. Remember that consolidation is being led by airlines like La Panza, IAG, whose average airfare is north of, short-haul airfare is 200 euros. We're still continuing to expand our capacity in a marketplace that's constrained with aircraft that burn between 16 to 20 percent less fuel per seat with an average fare that in Q1 this year was only 49 euros.
So I think we will, uh, fares will continue, I think, to modestly rise for the next two or three years in a constrained capacity environment. Uh, our competitors will be under considerably more cost pressure than we are. They will drive fares up harder and faster. You only need to look at the German market this year where...
Germany is the market that has recovered least post-COVID. It's only operating about 75 to 80% of pre-COVID capacity. And airfares have almost doubled in the German domestic marketplace, which is largely now a left-handed monopoly. So I think what we're seeing in North America, which has been, you know, five, ten years of consolidated airlines with reasonable pricing power.
upward trend in fares is about to be repeated in Europe for the next decade. Next question, please. Thank you. The next question comes from Satish. Satish, hi. Go ahead, your line is now open. Satish, go ahead. Yeah, sorry. Thanks, Michael. I've got two questions here. So first is on the operational resilience. Obviously, you have invested in the resilience into this summer. So out of the KPL...
You broke up second on the first one, so you want to come and show them scope for improvement This is a one time performance, is it?
Now it's more about the operational resilience. Do you see further need to invest to improve?
like in terms of sector per day term? You mean asking do we need to invest further in ops resilience, is that the question? Yeah, that's right. Yeah, sorry. Yeah, okay. I mean, no, I don't. We have doubled up the ops control capacity and the two ops centres in Dublin and in Warsaw. We now think we have ops capacity here for close to 300 million passengers a year. That has been significantly helpful, particularly on those weekends when we suffered significant
European Commission take some action on improving ATC performance around Europe . And I would, you know, instead of that complete 20-year shambles of the single European sky, we need more competition between ATC providers. We should let the efficient ones provide services where the inefficient ones can't. I think maybe ask Eddie to comment on the optimization of the winter schedule and our plan for this year vis-a-vis last year.
be short of 10% there. But we continue to shake out that mid-week capacity as we continuously review root profitability. And there's only so much you can optimise. You can't go much below 30% given the 5-4 roster that we have for pilots. But that's continuous dropping from 37% to 30% this week.
opportunity to return or reopen some air travel into Ukraine that we would add that capacity to the wind so that's not in our current plans but we would add that almost regardless of the airfares. We are determined to be first and back into Ukraine and we will invest heavily in the recovery of Ukrainian air travel once it's safe to do so, we declare it safe to do so.
Next question please. Thanks Michael. Thank you. The next question comes from Mark Simpson from Goodbody. Please go ahead Mark. Okay. Yeah, morning. Two questions. One for Neil on the balance sheet and managing the cash accumulation. I'm just wondering if you can take us through your thinking in terms of how you maximize returns or maybe match cash for future.
And that's obviously going to be an increasing feature in the next couple of years. And then the other question for Tom, just on sustainability, you mentioned the sustainability reports, the retrofitting of the 409 NG fleet. I'm just wondering how that is going in terms of the completion of that program.
Okay guys, have you heard Blanchey? Yeah well Mark as you rightly pointed out there for the first time in a long time our treasure has now become a profit centre for us. We're operating net interest positive at the moment and like to do so on a full year basis. So last year I think we were negative.
about 34 million on interest this year. We'll be positive, possibly up as high as 30 million on interest this year. So we're managing our cash in a very conservative basis. We don't put it anywhere where we're not going to have sleepless nights in relation to it. So very conservatively managed.
We obviously found a home for 750 million off our cash in the middle of August where we're paying down a maturing bond and that will obviously go ahead in the next couple of weeks. CapEx, we've another 1.8 billion to go this year and again the assumption is that we will finance that out of our cash resources. Thereafter it depends really on what's the cheapest form of financing for the group. I think for the next couple of years cash will remain.
I think you have to go back to December 2002 for it to be a profit center.
Yeah, that was before I joined Mark.
That was before I joined Mark. Yes. Tom, sorry.
Just on the scimitar windlass Mark, so we were just under 30 aircraft were installed with my year end and the plan is we'll install another 70 this winter during our maintenance program so hopefully by the end of this year 100 aircraft will have the scimitar windlass on them and we'll improve that again next winter as we go through the maintenance. 30 at year end or quarter end? 30 at year end of March, yeah. So we do it through maintenance season Mark, it takes a few days just to take it off and get a special fit and reinstall.
Hi Michael, most of my questions have been answered but I just want to add two things quick. On SaaS, which seems to be important, I saw overnight like IAG were investing in making an equity investment in the company. Would you consider it vertically integrating or is it more just...
do deals or just work with your suppliers? That's the first question. Yeah, I'll ask that one first. Okay, honestly the answer is no, but look we would never say never. I mean the problem with investing in one supplier in one geography is you've got to get the SaaS to the airport. And ultimately that's why I'm still of the view that it'll be the oil majors will be the ones who will be the only ones who actually have the capacity to produce SaaS in meaningful volumes. That's the question.
where we need it will be the oil companies which is why we signed up fast supply agreements now with Shell, Neste, OMG and Repsol to cover specific geographies across Spain, Austria, Germany, where else on? Holland, UK, France. I think that Michael's point is key here.
Whatever accelerates and maximizes A, the production of SaaS and B, getting it to the airports, which is where the only place we can uplift it is that airport, we would very much support and endorse. Second question, Stephen.
I was just wondering about EU, are they doing anything in the context, it's more kind of regulatory stuff but for example, I know you talked about overflight but things like either ownership rules or another thing would be the imbalance in terms of long-haul, short-haul, which obviously long-haul is not part of ETS, I know they have Corsia but I mean...
Do you see any chance that over the next couple years there's any movement in those two items?
Julius, do you want to give us an update on the regulatory developments, please? Yes, thanks Stephen. Hi everyone. Stephen, on ownership and control, my sense today is that we are not going to see a significant improvement in that area for the next 12 to 18 months. I think we need to wait for the new commission in Brussels in the autumn of 2024.
and then a further improvement in the relationship between the EU and the UK. On overflight I see an increase in appetite for action in this area.
You may have seen in the media that Michael personally delivered over 1 million signatures under our petition to President of Ukraine Commission Ms. von der Leyen. Now she unfortunately wasn't able to be in her office that morning, but maybe next time when we bring her the next million signatures perhaps she will be there. But on the 1st of June , the day after the petition was delivered, there was a transport council in Brussels and transport...
particular difficult issue. When it comes to other regulatory issues, I mean obviously on the environment you have already highlighted the significant imbalance in the treatment of short haul versus long haul operations, but it is important to remember that ETS is only restricted to intra-european flight until 2026.
And after that, it automatically extends to flights that go outside of Europe . And a specific decision will be required of the European Parliament and the Council to continue the restriction to intra-EU. And I just can't imagine in the context of the environmental debate that's ongoing in Brussels that the Parliament, that the same Parliament which wants to be seen to be greener and greener.
every year will continue to vote for the restriction of ETS to intra-European flights only. My sense is that ETS will have to, in the next few years, be extended to extra EU flights also. Thank you, thanks Judith. Next question please. Thank you. The next question comes from Ruri Palanane from RBC Capital Markets. Please go ahead, your line is now open. Ruri, hi.
Good morning. I was wondering if there's anything you could share about your limited Q3 visibility in terms of how well you're booked in terms of load factors or fares. And then secondly, you made some interesting comments about the potential impact of consolidation earlier in the call. Clearly some parts of Europe did become more consolidated over the pandemic. So are you seeing any better pricing power or anything like that in those markets now? Okay, thanks. Your line wasn't great, Ralph.
Q3 visibility, look we have very little. At the moment our forward bookings in Q3 are between 10 and 15 percent. So it's nothing and that's through October , November , December . Q4 is less than 4 percent. So we are where we are. We're at this stage every year. You know, it's a bit unfortunate that our year-end runs to the end of the winter season.
the Christmas markets might be a little bit weaker this winter. And again, that feeds back to why we won't blindly chase only 185 million passengers. We're going to cut the midweek capacities. We'll run the weekend stuff through the winter. And if we finish up at 183 million passengers or we finish up at 183.2 million passengers, it'll be what it'll be. The impact of consolidation, I think you're seeing pricing power around the piece generally. If you look at all of the reporting from the airlines from the...
to Air France, to EasyJet last week, to us today, we're all seeing, reporting a similar situation, strong Q1 pricing all the way. I would highlight that in our case it was due to a very weak Q1 pricing last year. Q2 is well booked. We think Q2 fares are up by a double digit percentage, although in my case I think it'll be low double digits. That is their affection to pricing power.
Now I think that's not so much consolidation. I would try, a lot of that is down to the fact that Alitalia emerged out of COVID with only 50% of the capacity they had going into it. TAP of only 60% of the capacity they had pre-COVID. Lufthansa are still only operating at about 85% of their pre-COVID capacity. So you have all of the legacy guys across Europe constraining short-haul capacity. And there is no doubt this summer that the transatlantic inbound has been very strong.
and you're seeing the Asian traffic begin to recover. I think next summer, but you know, in S24, we'll be closer to 100% of the pre-COVID short-haul capacity, but you'll still have another year of recovery of the Asian inbound. Maybe the transatlantic won't be quite as strong in S24 as it was in S23, but generally speaking, it is very difficult not to foresee there continues to be constrained short-haul capacity in Europe and some degree of meaningful pricing power in the system.
which are heroically loss-making SAS and Norwegians, may well be a target for consolidation. And ultimately then somebody will have a look at WIS. If it's not Lufthansa, we are re-establishing some eastward operations. Their expansion into the Middle East may well encourage an investment from Middle East ownership who are all excited about it and want to move forward in the future.
far better deployed in the Middle East where at least they're competing with similar high fare airlines rather than blowing their brains out trying to compete here in Europe or in central or eastern Europe with a really low fare airline like Ryanair, where it's the only masquerade is a low fare airline. Next question, please. The next question comes from Connor Dwyer from Morgan Stanley . Please go ahead, your line is now open Connor.
Hi guys, thanks very much. So the first question is back to the passenger numbers. Could you give some colour maybe on phasing of the seat growth that gets you back down to that 180, 3.5? So scheduled data has you growing seats in Q2 at about 11%, but that seems a bit high now, maybe closer to high single digits in the September quarter, and then maybe down to mid to high single digits in the H2. Interested to get your thoughts on how you're planning to grow that there. And then secondly, lots of talk of M&A and obviously your own growing cash balance. So I'm just wondering, would you ever consider doing large M&A in the space?
You know, you always talk about growing organically, but it's quite a significant cost balance building up there over the next few years. Thanks, Conor. I can't really help you. Look, we're going to take down the full year numbers from 185 to 183.5. You know, take a bit off every month for the next six or seven to the end of the year. Most of that, we lost 300, 400,000 passengers in April , or in April , May and June , 300,000 in July , and then we'll have to shave a bit off September and October . But I'm not getting down to the monthly traffic numbers here.
It's not a significant movement, but it is a movement. Large-scale M&A, I would say, is highly unlikely. We tend to avoid large-scale M&A. You're generally inheriting somebody else's problems. I can foresee. And also, I think given our size, it is very easy for the legacy carriers like La Panza, Air France, and BA to mobilize or to lobby against Ryanair M&A. And given that with the aircraft orders we have in place now, we can grow organically to 300 million passengers a year. Frankly, I don't really see why we would want to engage in M&A. We have in the past done two deals. We did buzz originally back in Stansted in the early noughties.
where they had access to about 10 or 15% of the slots in Stansted, and we thought they were, we wanted access to the slots. And then we did a little bit with Lauda three or four years ago, pre-COVID in Vienna. Both of them were painful, bloody experiences, although they've been validated over the longer term by building up very strong positions in Stansted and in Vienna airport. But when you run a very efficient, highly profitable, low-cost operation, used what can ThoughtWorks are capable of doing to protect the young ?479 and descriptorsknitiki works, who perform Unch
people. But yeah, I mean, I remember the buzz integration, the original sort of KLM offshoot back in 2003 and they allowed it obviously to a lesser extent, but it takes significant management time. We have a large aircraft order. We have two years or 18 months to sort of be a gap between their gear up for the next.
And it's just better from a management perspective to be doing that in a linear fashion rather than employing resources. But we would actually encourage competitors to keep consolidating because it's been only... I mean, I think the real challenge, and they will all deny it, but the real challenge for EasyJet and Wizz and some of these others is actually as Ryanair continues to expand into those marketplaces, there's less and less of an ability for those guys to compete with us.
And if you're not going to grow, you're going to have to find M&A is the only way forward. I mean, I continue to believe that in the medium to longer term, Europe is going to be pollinating to four very large airline groups, which would be Love, Panza, Air France, KLM, IAG, and us. Neil, sorry, I cut across. Two to go.
I was just going to say that on the M&A where we pay a roll, Connor is actually on the remedies. So as that consolidation that Michael's talking about takes place, we'll be in there where this competition overlaps and we'll operate on that basis. As long as we can continue to buy aircraft at very attractive levels and we've locked away a decade of growth with our latest aircraft order, I think that's the best way for Ryanair to deliver value to our shareholders. Thanks for your time.
selling seat has been running for many years. I think the legal cases date back to 2010 at least but they continue to sell your seat so I don't know if you can say what what's your sort of objective is it to stop them selling seats is it to only let them do so through a commercial agreement and what are the financial implications for you of achieving that.
Eddie, and maybe you can start with a couple of examples of why we object to the non-licensed screen scrapers and we already licensed screen scrapers. I mean you have this sort of complete disconnect out there that screen scrapers are out there saying they're providing a service. They're not providing any service. And what they do is that in the vast majority of cases, scrape our website, tell fairs.
In a lot of cases, like huge markups, not just on the fares, but on ancillary, then flip the payment methods and then flip the contact addresses, meaning that we're not able to contact pastures, not able to process refunds, and then the OTAs disappear over the horizon, no customer service whatsoever, and people caught in the middle. And they're caught in the middle because they're not able to access their bookings, because nowadays you need to have, even access your booking, you need your email address, you need your reference number.
So like this is just like highway sort of robbery abandonment of customers and the difficulty in trying to actually provide a service and particularly in times of disruption and of course It's the sharp end when it comes to disruption So they don't provide a service at all and then sort of dump all the customer service fulfillment on without the customer having any information in order to access the book
companies remain in business is by putting on supplemental charges and then abandoning those customers.
I mean, it's the only form of internet piracy that hasn't yet been tackled by the consumer agencies. And we're astonished that the failure of the Italian consumer agency, the Spanish consumer agency, the UK consumer agency will not tackle this issue. Their business models can only survive if they somehow scam a consumer.
for either a hidden charge or to persuade them into buying a handling fee or some sort of fee, other than that just scraping our inventory. And we've a very good example last week, we have passengers now calling us up, asking about flights to roads, we don't know who they are. They've booking me through some screen scraper, you people in roads are calling the airline, what the...
We don't have any of your details. We have a fake email address, we have a fake payment account and the only reason we have a fake payment address and our email address and a fake payment account is because these internet pirates don't want us to communicate with the passenger because the passenger will find out that they've been overcharged and will be overcharged. It is extraordinary that the consumer agencies continue to sit on their arses and fail to deal with it. If any airline behaved or priced or behaved the way these OTAs had, the consumer agencies would be all over them like a rat. And we continue on to the next slide.
So you want to stop them selling your seats entirely? No, no, no, no, no, no, no. We want them to stop misspelling our seats entirely. We already licensed this, we licensed a significant number of OTAs or travel agents where they signed up an agreement in which they promised they would only quote our fairs.
<expletive> hits the fan like it does in roads or it did during COVID. Understood. And does this lawsuit when help you to do that? Yes. Julius, you want to add?
Yes, look, this win last week was on a procedural issue on appeal, so the case is not over. The case will continue for another two years, maybe three with appeals.
It was an important win, but it's not over. I mean we have numbers of cases where we get, we have an injunction, I'll probably get this right, I won't name them, but we have an injunction against, or a court victory against one OTA, and they stop selling through say a Swedish kind of website, and next day they open up an Austrian website, and then we go, we're a bit against the Austrian website, and they open up a Polish website.
and claim that it's something different. Oh no, that was the injunction. Like they're a bunch of fucking pirates.
It wouldn't be tolerated in any other consumer facing industry and yet the useless consumer agencies all across Europe and the European Commission and we brought it, we have submitted a dossier of overcharging, of misspelling, of mismanagement and nothing happens. So we keep fighting here and Ryanair is the poster child for this because in most cases we have the lowest fares in every marketplace.
So the reason they want to scrape our fares is that actually while they're levying a kind of a hidden handling fee or flipping the passenger at the point of payment for a higher fare than they've quoted, the package still looks reasonably cheap compared to the higher fares of other airlines.
So it's us until we can get the consumer agencies to wake up and stop this internet piracy. These guys provide absolutely no service whatsoever. Except mis-selling or charging people inflated airfares and hidden handling fees. Understood. Thank you. Next question please, Maxime. Sorry Michael, I'm just going to cut in there, Neil here. I need to drop off at this stage. Okay, thanks very much everybody. We'll keep going for another day, 10 or 15 minutes. We have three more questions, so let's take all those.
Next question please, thank you. Thanks Neil. Thank you, the next question comes from Neil Glynn from Air Control Tower. Please go ahead Neil, your line is now open. Oh good morning everybody. If I could ask, firstly on Ryanair Labs, I understand headcount has been growing strongly. I'm just interested in your take Michael on how you expect labs' contribution to evolve in helping ancillaries as well as operational performance over the next few years as you continue to grow. And then the second question.
Pre-pandemic you obviously launched the the multi ALC the multi airlines strategy We're obviously quite some way along since then now And I'm just interested in your take in terms of how that multi ALC strategy is actually contributing today And what more we could expect from it in the future because I don't think there's been too much mentioned a bit of a recent quarters at least Okay, maybe Eddie since you're kind of leading the labs contribution you might take us through what you're seeing with the labs their contribution to date
you know, 50% of those working on scheduled revenue development and ancillary revenue development. And then you've got the other part of the business particularly is going to come more in focus as we grow with the Max Pan order.
because we're not going to be able to add people on at the head office level to support that in a linear fashion. And what you have is that you've got labs that are developing all sorts of support systems for pilots, cabin crew and engineers. You know, like things like e-tech log, where you take all that paper off the aircraft, where you've got flight planning, iPads for pilots and devices for cabin crew, where you're communicating things that are happening during the day.
So on an operational level, they would have been supporting the operations control center here as well in running resilience on rosters so that when you do hit really bad days, they can do that in real time and it takes that sort of China syndrome out of it where pilots and cabin crew and you've got 15,000 people trying to contact a call center, you can never have that amount of people there so you've got to solve the problems before they happen and that's what that 50% are really going to be focused on over the next 3 to 4 years.
So we won't have to do that. And then added on top of that, you've got sort of things like that are going to happen on the agenda for the AI, which will just be really on the sort of primarily on the sort of them, the contact centres that we have. And there are obvious upsides on that. But it's infrastructure and security first, then it's supporting scheduled and ancillary revenue, and then supporting our staff on the front line with better comms, better technologies, so we don't have to hire.
a large amount of people as we grow to 300 million passengers. Yeah, I think that's the key point with labs. You know, we bought a lot of kind of in the past, you'd buy B-Spoke systems from these big airlines like Lufthansa or Swissair or, you know, who at the time we were carrying four or five million passengers, they were doing 30 or 40 million passengers. The challenge for us going forward is, you know, the biggest airline in Europe , group in Europe other than us, Lufthansa, it's only about 100 million passengers. So nobody has developed systems for an airline that now has nearly 200 million passengers but a plan to grow to 300 million passengers. So we have to do it ourselves.
And the labs, you look at the successful way they've exploited ancillary revenues in recent years has been a really a visionary. Bringing that in-house and developing those systems ourselves has been, I think, one of the great key changes in our development over the last decade. If we were trying to do this now would be with providers, all these fucking IT consultants would be in here taking your watch and charging you billions to tell you what the time was. You look at some of our competitors who struggle with matching all these, you know,
tacked on systems that don't talk to each other. It creates very significant challenges for airline groupings, whereas in ours the systems are much simpler. Multi-AOC strategy, you're right, it hasn't developed much. Remember, you go back to where we were in 2017, the reason for the multi-AOC strategy was originally to get people off the Irish AOC. The Irish government had this ridiculous taxing claim on all pilots, all cabin crew operating on Irish registered aircraft. They were all paying high personal taxes here in Ireland.
As we recognized the unions in 2017, the unions and our people wanted local taxation, local employment contracts, and the AOC facilitated that. Lauda was simply one that we had bought an Austrian AOC, it was an Airbus operation. We did move it to Morska, but it's a separate AOC. Buzz was set up as a charter airline in Poland. It needed the ability there for the benefit of a Polish AOC so it could fly outside of the European Union to places like Egypt and Turkey, places like that. Really the only significant development in that in the last number of years has been post-Brexit the setup of Ryanair.
and IAG likewise has a, you know, UK AOC, Spanish AOC, a couple of Spanish AOCs, you know, within the group. But it's not something that we would advocate, but I think if you're going to grow to 200, 300 million passengers, and increasingly I think we'll want to fly to certain countries, third-party countries like, for example, Morocco from the UK, you need to have those AOCs because they're not part in open skies, as well as the UK is not yet in open skies.
But it's not something I think we would have done by choice, but I think it was a practical response to a number of issues and challenges we were facing, primarily post-unionisation in 2017. Next question please Maxine. Thank you. The next question comes from Johannes Braun from Stifel. Please go ahead, your line is now open. Can you please go ahead please? Nope. Next question please Maxine. Do we have another one?
Our final question today comes from Dwayne Benningworth from Evercore ISI. Please go ahead. Dwayne, hi. Hey, good morning. Thanks for the extensive call here. Just on seasonality, Europe has always had a more exaggerated peak leisure period than the US. I'm curious if there are any behavioral changes. You guys are observing post-COVID any changes you see.
in the underlying seasonality going forward. And then, you know, certainly appreciate Ryanair is primarily a leisure airline, but how would you characterize the level of corporate recovery in Europe versus the 80, 85% recovered in the US? Thank you. Hey, do you want to take the seasonality and I'll come back on a leisure airline business.
leisure countries that extend, you know, we've been particularly successful in extending the season in a lot of those countries. We've now added on Morocco is growing strongly, Jordan is growing strongly. So that sort of leisure sort of characteristic is extending itself out as
you get away from the normal perception of the sort of bucket and spade type holiday as opposed to sort of specialist, you know, interests of people traveling to those countries. It's not all about just going to the coast. So, like, we've been very judicious, as I say, in how we, which I've referred to two previous questions, which was in cutting back some of that midweek capacity. It's in towards the weekends. But I've been very encouraged by what we can see on, we were looking at this time last year where cities have recovered, domestics have recovered, ethnic traffic has recovered as well.
But the standouts are still the leisure which Michael will talk about now in the canaries. Yeah, I mean, don't overestimate the extent to which we're a leisure airline. We've seen a very strong recovery in our business travels. Historically, we have 40% of our passengers were traveling for leisure reasons. About 30% was business and 30% was BFR, Business and Friends and relatives. Businesses recover very strongly in our, we see business the hourly or very short stay, out and back same day or next day.
supply chains that were badly disrupted during COVID with supply chains that are based in lower cost economies but closer to Europe so Morocco, Portugal, Central Eastern Europe . We think that will be accentuated to if there's a reopening in in Ukraine there'll be a lot of business travel in and out of Ukraine as that economy recovers. So don't get too distracted by you know we're all a bucket-and-spade operation it's a charter and it isn't. We do have a large layer component.
but a very strong visiting friends and relative piece and a very strong and growing business piece as well. Okay, I think that's the end of all the questions we have today. Thank you everybody for participating in the call. Thanks to all the team here for what has been a strong Q1. As I said, our focus is on continuing to deliver excellent on-time performance during what is a challenging Q2. We're going to continue to mobilise and campaign for AT's effective action on the AT C front.
C reform and protecting overflights. And then we will continue to campaign heavily for improved staffing at the national ATC providers so that hopefully next year we'll have a more reliable or at least an ATC service that's more fit for the capacity that Europe requires. I have nothing else to add other than we'll keep you updated with monthly traffic load factor stats.
Our next big day will be the capital markets day here in the first week of September . We'll have the AGM in the third week of September where hopefully our shareholders will approve our Max 10 order and then I think our minds will focus on that half year results which will be accompanied by an extensive roadshow. I think it's in the middle of November , end of November ? Second week of November . Second week of November . Okay everybody, thank you very much. Thanks Maxine for your help. Bye bye. Thank you. This now concludes our conference call. Thank you all for joining us today.