Q2 2024 Ryanair Holdings PLC Earnings Call
25 at about $79 per barrel.
Locking in a saving of about $300 million on the first half of the do we need for FY 'twenty five.
Net cash at the half year and stood at $840 million that was up from $560 million as of 30 <unk> March. Despite the fact that we've repaid over 1 billion in debt to it it takes months period.
We remain committed to Boeing as the new 300, Boeing Max 10 order, where we believe underpin low fare profitable growth for decades to 300 million passengers by FY 'twenty four.
This morning, the board has announced a $400 million made an ordinary dividend and has also rolled out a dividend policy, which I'll ask Neil just to comment on further in this call.
Turning briefly to growth in fleet. This winter will operate six new basis, Athens, Belfast Copenhagen.
This loan at your road Atlanta Rafi in Tenerife, we returning to the <unk> Island.
We will operate over 60, new routes, including our first 17 routes to Tirana in Albania, which opened last week with some success high load factors and strong customer impact to date over 90% of our summer 'twenty four capacity is already on sale, including over 180, new routes by Boeing are suffering delivery.
Problems.
Particularly with their fuselage supplier spirit, we continue to work with them to minimize these delivery delays ahead in 2024.
Boeing are contracted to deliver a 57%.
Boeing Max aircraft between now and the end of April.
Not sure they'll deliver or 57%, but we're certainly confident that we get about 45% to 50 of those aircraft by the end of June.
It will be.
In time for the summer peak in 2024 and that will be critical to our traffic growth next year.
We continue to see a constrained.
Apply situation across Europe, and I think that fundamental not just a minor a strong result in this half year.
Very strong results.
Reported by many of our competitors in recent weeks.
Eurocontrol have converted about Europe is operating short haul Europe into Europe is operating at about 94% of its pre COVID-19 capacity, we see no danger that it will return to a 100% pre COVID-19 capacity for the next two or three years.
<unk> continues to be a theme Europe, we see Lufthansa.
Closing in on the takeover of Asia at THP in Portugal is now up for sale and the SaaS refinancing our Seo is already underway and it looks like air France, KLM will take a 20% stake in the refinance debt leaving.
Leaving fewer and fewer intervention players out there I continue to believe that Europe is in Asia really moving towards a situation that has prevailed in North America. The last date of having probably for large airline groups each of them capable of carrying about 200 million passengers a year.
Three of the Big legacy guys and the air France, KLM and IAG and Ryan are being the large low fare point to point carrier, but should I sell the stake.
Yeah.
Added to that capacity constraints go either with the continuing independency of the Oems the manufacturers both Airbus and.
Boeing to accelerate delivery remained challenged under existing deliveries at both Airbus and Boeing are putting maturity behind because of supply chain challenges Boeing also with their production issues with spirit and I think also the Pratt <unk> Whitney engine issue is a large and as yet.
<unk> not factored into capacity story for summer 2024.
Europe is the home of <unk> hundred <unk> Ryanair as the only significant 77, operator across Europe and the proximity to the engine is fundamentally in <unk> hundred <unk> issue and we expect there to be material groundings of competitive capacity through the summer of 2024, and we think that will run into 2025 as well.
Again, because of the price of oil and Charles So we see it.
Little prospect of Europe, returning to its pre COVID-19 capacity between 2024, and 2026 and we think therefore that will continue just to show to underpin strong pricing.
Even in <unk>.
Consumer demand is challenged there will be less capacity than there was pre COVID-19 and I think the price of that capacity will be higher we certainly seen that amongst the legacy airlines in Europe, Lufthansa Air, France, KLM, and IAG materially increasing airfares theyre already hired and that puts a quite a high ceiling overreach.
Ryan are you seeing passengers trade down towards Ryanair, but a higher fare and thats reflected in our outlook and guidance.
In the third quarter for example in December we are.
We are seeing average air force currently running at.
Mid double mid teen ahead of our prior year.
We're clearly.
Growing strongly we're carrying out a topic costs well under control.
I would take the <unk> and our cash generation is strong that made the board has now begun to again look at capital allocation policy, we set out a clear policy since COVID-19. It has been recovered from Covid. The first priority with pay restoration on multiyear pay increases for our people that has now been done.
Secondly, we set out to pay down our remaining debt and we paid down two bonds of over 2 billion over the last.
Two years.
Have two bonds left in 2025, and 2026 of about $2 billion and we intend to pay those down their entirety, which would make Ryan are remarkably a debt free company in Europe.
The next two years at a time when the.
Higher for longer interest rates, our bond yields it looks like it's going to drive our financing costs for our competitors most of whom have very significant positions in Europe.
Once that's done we also then want to continue to fund our aggressive capital Capex program and we're taking delivery of 58 will be hope 57 aircraft between now and summer 2024, and that will lead to another 30 aircraft in time for summer of 2025.
The plan is to maintain a strong balance sheet and investment grade.
Grade rating.
The Max 10 order book will deliver annual traffic growth to $300 million. We think we'll do that largely out of internally generated cash flows, but we will continue to be opportunistic.
It's interesting that between FY <unk> FY 'twenty Ryanair has returned 7.6 dollars 74 billion to shareholders via buybacks and special dividends and we're turning now to a an ordinary dividend policy as well as today, returning 400 million by way of dividends to our shareholders, which is the $400 million they invested in <unk>.
During the peak of the Covid crisis.
Neal just to comment on the dividend policy in his remarks in terms of outlook, we continue to target approximately $183 5 million passengers.
The year to March 24, that's up 9% the final figure might vary a little bit it depends on Boeing leaving some or most of their delivery commitments between now and the end of April and they are running behind.
We had hoped to have 20 of these aircraft delivery for Christmas, We're now thinking where it looks like we will only get about Canada.
As previously guided ex fuel unit costs will increase by about two euros. This year, but that still means that we will have a materially wider cost gap between ryanair and competitors airlines across Europe.
Forward bookings, both traffic and fares are robust over the late October mid term debt into the peak Christmas travel period, and with the benefit of this constraint du capacity this winter.
We.
We currently expect average Q3 average fares to be ahead of the prior Q3 by about a mid teens percent unhedged fuel costs will be significantly higher, but that's only 15% of our fuel for the remainder of this year.
Normally this time of year. We are buried into Q4 visibility Q4 is traditionally the weakest quarter as issue would be impacted by the partial unwind to free ETS carbon credits from January onwards will benefit from the first half of the Easter period at the end of March.
Despite uncertainty over Boeing deliveries are significantly higher fuel bills.
Ltd, Q4 visibility and the risk of weaker consumer spending over the coming months, we now expect that full year 'twenty four.
<unk> after tax law, finishing a range between 185 billion to 2.05.
Assuming modest losses over the second half winter period. This guidance, obviously remains hugely dependent on the absence of unforeseen adverse events for example, such as the war in Ukraine Arent gap between now and the end of March 2024, as I said I think we're on track.
To return to what we kind of walk through what we believe is our normal.
After tax of about 10 euros per passenger.
Carrying a $183 $3 5 million passengers.
This is a very strong performance.
While the number looks big a profit of $10 per passenger is reasonably modest given the capital and the human resources that go into delivering an exceptional service to our customers high on time performance.
And a very low cost base, which we.
<unk> continues to pass off markedly lower are first of all our customers at a time due to capacity constraints in Europe. Our competitors are all pricing upwards very aggressively.
He wanted to add some remarks on dividend.
Take us through the MD&A. Please.
Yes sure Thanks, Michael.
As you pointed out there were well along the road on our path to achieving all of our capital allocation priorities.
The next step is to look at some form of a dividend in the past as Michael said, we engaged in kind of odd hep distributions buybacks.
On AD hoc one off dividends, we're now at a size and scale and I think at maturity, where we can sustain and ongoing dividend policy.
And the board have this morning agreed to.
<unk> made in dividends be $400 million, which is marginally above our long term prior year payout ratio, but reflective of the 400 million euro.
Our shareholders contributors in the depths of Covid, which enabled us to raise our $850 million bonds and come out of Covid strongly. So that's approximately 35 euro cents per share half of das will be paid in February as an interim dividend the balance will be paid after our AGM.
In September and then when we look into next year FY 'twenty five onwards, what we're looking at a payout ratio of approximately 25% of prior year profit. After tax again, roughly 50 50 interim final dividends in February or March of each year and after the <unk>.
The AGM each year, so I think that underpins.
The board's commitment to return funds to our shareholders, but they are also left the door open so to the extent that we continue to have a very strong balance sheet.
Lots of liquidity.
Amazing all of our other commitments if there is surplus cash in the door is left open to look at other form.
Arms of distributions bead on buybacks.
Or.
AD hoc dividends, depending on where the market's out at that point in time just to briefly build on a couple of the other points that Michael touched on balance sheet is in phenomenal shape Triple B class races over 530 aircrafts unencumbered at period end, which gives us huge flexibility.
And what we do at unimportant Lee Thanks to the strong cash in the business.
Unique position, where we're paying down debt rapidly we paid down $1 billion alone in August to score on a $750 million maturing bonds on $260 million revolving credit facility. So that gives a huge competitive advantage over everybody else when theyre extending leases at high lease rate factors due to the problem.
With new Gtx issue, and indeed refinancing themselves into a rising interest rate environments, we're paying out of our own cash resources, our balance sheets in great shape as it enables the board this morning to engage in that dividend policy.
Further reading to add Michael.
Okay. Thanks, Matt.
Vaccine, we're going to open up to Q&A now and if you could ask there'll be just combine the first two questions I'm going to try and do with passenger is a great question relative members of the team. So we can get as many b of the management team on the call.
Thank you if you would like to ask a question. Please press star one on your passing key pipeline if you can change around.
Thanks Ross your question. Please ensure that your line is on mute.
Our first question Jamie.
Jamie by Boston.
Please go ahead. Your line is now open.
Hi, Good morning, Hi, Michael morning, Thanks for the presentation two questions. So very encouraging to hear that your third quarter SaaS could be up in the mid teens I know the visibility is limited for Q4, but could you give us a feel for the range of outcomes you've considered in coming up with the full year profit guide in terms of fourth quarter.
First please and then on the non fuel unit costs passenger which I calculate we're up about two and a half euros in the quarter.
I know they still leaves you a country mile below your peers, which is the critical thing, but could you, perhaps just talk about where there might be any flex any risks up or down to unit costs rising by around two euros year on year in the second half. Please thanks.
Okay. Thanks, Jim answered the first partners you might see the non fuel unit costs.
It doesn't at this point in time I think it's very frankly, we are giving you full year guidance. This morning separates us from the rest of the industry.
Despite that we're six months out.
We are seeing strong pricing at the moment in Q3, but it's very fragile, but pricing is largely driven by a very strong mid term break at the start of October and strong forward bookings into Christmas.
And how could how significant midweek not making capacity.
I think we are collecting that changed and it worked well for us in the last two years that we continued again this year.
Just too early to focus on Q4, our year nine patients are modest we do expect that Q4 will be a loss I think we lost about $150 million in Q4 of last year. The prior year I think we're looking at something maybe similar maybe slightly bigger we have the online to etfs will be a bit dependency in Q4.
And a lot of Q4 will depend on the strength of the Easter traffic.
We get the first half of Easter in the last seven days of March but.
If there are adverse developments in Ukraine, there are adverse developments in Gaza and the situation in the middle East is very fragile.
All of these forecast could be thrown off kilter.
I think the very fact that be giving you.
Our range of full year guidance is a strong signal today that we think we're in good shape for the winter.
We recognize that it could be thrown off by some adverse development. These non fuel unit cost you will take that.
Yes.
Jeremy how are you doing we still fairly close to the to your guidance on a full year basis.
Since since we come out in May.
Happy to stick with that despite the fact that we're going to be a few aircrafts.
Where are we talked we would have been at the spread.
Costs over more passengers.
Where are the risks.
Risk that you could see higher spike ups and the likes of route charges in the first quarter of calendar 2024, then we're anticipating there's a risk that we get less significantly shy.
On aircrafts that were handling more crews over last aircraft.
We're comfortable with the with the two euro that we have I think will be give or take a couple of cents.
Your site.
Close to that number on a full year basis. It is factored into the increase in the crews that we would typically have in Q4 ahead of the peak summer.
Factors in the inflation, we would've seen in some of the handling and maintenance.
So sorry to staff over the course of the year and then of course the factors in the lower cost game changers coming into the into the fleet over the next number of months on the airport deals so I'm I'm fairly comfortable.
Comfortable.
We'll be.
Close to that two euro on a full year basis.
Thanks, Jamie.
Jamie you embark on slide four of our presentation.
It is a country mile I hate that the gap is getting ever wider.
Competitors, many of whom were in a net debt situation facing pricing financing cost and rising.
Aircraft leasing call next question. Please.
Thank you. The next question comes from Jarrod Castle from <unk>. Please go ahead. Your line is now open.
Mike.
Hi.
Good morning, Michael.
Michael to ask how you sound rather proud of brightness.
Performance over the summer and indeed over the last few years.
Now speaking about a small loss for winter, but if you made a small profit I mean effectively you could achieve your incentive scheme targets.
No I guess, besides being very incentivized by the share price I mean do you think the board needs to then look at a new scheme or do you think existing schemes all practical purpose for yourself.
<unk> senior management.
And then just secondly.
You spoke about new routes opening up over the winter.
Can you talk a little bit about how much of that's been impacted by your thinking around your exposure to manner and moving capacity around.
Given the current situation.
Potential for paper to chase.
Went into sudden elsewhere. Thanks.
Okay I might ask just to do the new routes for the winter commentary just looking at the various.
Share option schemes in the LTI.
Then I come back and take that.
Theres a possibility we could get close to the.
The enhanced profit targets this year at the moment I think will fall short.
But who knows but I think both teams are still appropriate.
Even if we hit the target this year myself and the rest of the senior management team, we have to remain in fulfillment volumes declining until I think it would have.
For those of that.
It is important that somewhere during the previous slide you are diminished.
I managed to be more neighborhood hit the share options through the combination of Covid and the war in Ukraine.
And.
It is important I think for management not just meet with the wider management team.
That the share options. The relatives are achievable theyre working their asses off to deliver these kind of numbers.
And I think it's important that there is some we've said the board is that very ambitious target that profit after tax of $2 2 billion or a share price of 21 euros.
But even if we hit the management team was still have remaining full time employment after 2028.
The benefit from it.
Not alone is an important they're achievable, but they also mean that we're tying into management, we get immediate long term commitment from the senior management team.
<unk> continued to deliver impressive performance and results.
<unk> net new routes for the winter you want to give some commentary on kind of new routes and maybe Jason again this might come in on that as well.
I mean, I think like our growth.
As demonstrated by the agility that we have in terms of what has happened in the Middle East. For example, we would have had just north of 100, we can frequencies into Israel working very closely there.
The aerospace is well managed but obviously attentions are the conflicts escalated there. So most of the European carriers aren't playing in there, but we're able to flip.
In terms of 95% of that capacity, we can reallocate because it comes from 'twenty three different basis. So it's relatively straightforward for us to do that there is some softness in places like Jordan, but again, we've got the ability to flip that capacity ramp on the other side of course, we continue to grow strongly in the canaries.
We have two new bases there from winter a winter, it's a new base, but we've heard that there has been some wrote this year, both <unk> and intend to repo boats going up by one aircraft and then you look at what we're doing in Morocco, you would have seen our recent release, where we are.
Meeting with a head of government down there, who see ryanair in terms of developing not just summer. So <unk> started the year around traffic.
Into that into that market, which is a mixture of VFR.
Also I'd also winter, so and we continued to grow strongly in that.
In Southern Europe, where people still go to Malaga Alicante Seville southern.
Sure.
Italy, Sicily Sardinia.
Sardinia, so where.
We take a very conservative approach in terms of how we spread those roots and we always have the ability I supposed to reverse roots and reallocate capacity as we did at the start to the conflict in the Ukraine.
And Jason we're opening 17, new routes into surrounding during in November in the winter, we Matt Yes. So they started started last week. They sold has started very strongly.
Very surprising.
How quickly all the all the seats are failing and we will certainly be growing in China and summer 'twenty four like I said I think we would be close to $2 5 million passengers and trying to open for the next 12 months and it's certainly a based candidates over the next 12 to 18 months.
I can try on those calling out for a low cost carrier and we've seen that in terms of reaction from consumers, but generally across this winter demand is strong across CE Scandinavia, Italian domestics are very strong and I think that's helped by what we've done in the schedule as you alluded to earlier, 70% of our casino for winter 2003 is that the weekend versus 60.
5% last year and 60% prior to Covid.
A lot of work done by the revenue is scheduled to deliver to us it's paying dividends across Q3.
Thanks very much. Thank you next question please.
Your next question comes from Stephen Furlong from Davy. Please go ahead. Your line is now open.
Good morning, Michael.
Two questions. Please maybe Thomas is there if you could talk about the.
<unk> and also how the Winglets are performing in terms of fuel efficiency, and then kind of in that vein I just want to ask Neil about I know, it's the first quarter in the Q4 is going to be at the unwinding of the free allowances on Etfs.
And.
Can you just talk about that and about overall scheme.
Obviously, you've been paying Etfs for 10 years, but the freelancers go over the next couple of years that'd be great. Thank you.
Maybe I didn't.
Yes.
Yes, Stephen just on the on the SaaS side. So obviously in recent weeks.
If we had done some fit feel with OMB and Vienna, we've picked up some SaaS. So it gives us more access to different feedstocks and we're working hard with another one of our field partners to hopefully signing an Mou.
With them to increase our target like our percentage target. We're at nine 5% today with this if we get this mou over the line will be about 10% of our software be darn sure Mou is on the waiting list, we've been happy with what's installed today, we're seeing close to one 5% savings that we disclosed.
On the Winglets on it so yes, it's going well and we hope to rollout 100 over the winter to get to 100, Turkey by the end of the maintenance season.
This year, so we'll see more of an impact from trade wars Marvel on the aircraft.
So Steve until yes, as you said.
The allowance to start rolling off in Q4, which has an impact. So I think we have about 25% of our allowance as compared to Q4 of last year. It will be gone under Etfs, this quarter, which will impact on Q4 profitability and also.
Gone up from about 57, Europe <unk> around quota compared to FY2023 in FY, 'twenty, four which will have which is the impact Neal and Michael have been talking about in EPS in Q4.
And I would add Internet two like you also need the allowance even unwind for the legacy guys, who had bought more of their free their profits over by the <unk>.
I think again, that's one of the reason why we're seeing so.
Aggressive pricing from the legacy sort all across Europe, and a constrained market base driving up the headline bird, particularly in countries like Germany, where the tenant has a near monopoly air France KLM same in Holland and in France.
And I think thats driving up our airfare, the extent to which competitors are.
Dramatically increasing their airfares.
Next question please.
Yeah.
Yeah.
The next question comes from Matt Dudley Chamois from Goodbody. Please go ahead. Your line is now open.
Thank you and good morning, everyone. If I could ask two slightly longer term questions.
First of all as we think about the problem with EGF issue coming on top of the delivery delays from Airbus and Boeing how do you see that playing out in terms of the outlook for fares over the medium term and then switching to consolidation in Europe, which seems to have picked up recently.
Obviously, theres a lot of deals going on which deals you think will happen how do you see the end game.
Here on how to as Ryan are positioned to take advantage of it.
Yeah.
Let me see if I add that.
Two.
Instead of me.
In term fares, Eddie and Jason again, it might add onto that and.
And I'll come back to you on the consolidation so Eddy Jason medium term payer.
Well I mean, we've seen already as I said, we've guided sort of for mid teens.
In terms of Q3, but I think a lot of what's going to happen on a micro level with the GTS issue is going to be where.
Some of our competitors, where our competitors are going to allocate that they're going to allocate that capacity.
In particular markets and we have seen.
We've seen a lot of them and <unk> based aircraft that just don't add up to the total fleece.
<unk>.
With some of our competitors, we've seen a retreat in places like.
And the Italian domestics, which Jason said like where fares are actually becoming more and more robust I wouldn't like to sort of call is sort of a macro level, where fares are go to where fares are going to go to a book.
But certainly at a micro level, it's going to be where we're at that capacity is allocated with our with our competitors, both with reduced capacity and no new aircrafts coming online from the from the Oems.
I think we're still going to see I think we're going to see like.
Fair is continuing to rise against the backdrop, where economies continue to grow and there isn't the capacity there to match. It. So I think fair is still in the in the like certainly over the next 12 months ago continues to rise be Michael.
Jason.
Jason I think the agenda.
So I just didn't hear you there Michael.
You certainly you still have a fair.
The general trend over the next couple of years, So I think the job.
Okay.
I think the general trend is upwards over the next number of years and that's entirely based on the capacity environment is like if you look at this summer the market was recovered to 94%, 95%, but that includes drawing our growth without <unk>. Our go to market. This summer was only recovered to 90%.
I think the market isn't going to recover our competitors that is multi both 90% into 'twenty four restaurant volume fiduciary, we've outlined so that leaves a.
A market that hasnt grown for the last four years, and I think youre seeing that across certain countries be it Austria, Germany, Belgium, which are all significantly below where they were prior to COVID-19 and that's all helping the pricing environment at the moment.
And it is.
In terms of our growth and we are we are growing we are.
In the likes of <unk> U K, and Spain, which is delivering solid first and I think there'll be solid over the next number of years.
Yeah.
Okay.
Thanks for that in terms of consolidation.
Long lead Europe as movie and Ace would be towards all our carriers. If you look at what's going on at the moment depends they look like they're going to require what's left of Alitalia is a Portuguese government has put up for sale.
Depends the air France, KLM and AEG all are instead, I think longer term it probably belongs with fit better in IAG because of the Latin American.
Canada, Latin American kind of influence of IAG, but the port fees are always wary of the Spanish.
<unk> said, the EAP base and move the great I think below what you.
He has done with air Lingus, they demonstrate that they can continue to grow transparency to Heathrow and building.
Successfully.
SaaS is a crock.
I think it's probably still together with Norwegian and move to a bigger crop up in Scandinavia, and air France, KLM that theyre going to take a 20% stake in that refinancing.
We need only to sort of.
Smaller independent players left in Europe, which is easy to get.
Focus around Paris, Switzerland at Gatwick.
<unk>.
Don't believe in the next five years there'd be an independent and I think they will be there'll be a subject to M&A activity.
Probably a mix of air, France, KLM and aren't IAG and at least with I would just say look tens that would probably by <unk> and <unk>.
With that footprint practice central Eastern Europe.
Recently, I think as with growth in the middle East, perhaps maybe with the middle East and interest will be able to acquire the middle eastern will be able to get access to aircraft.
But I think if we return in five Years' time, I think you're going to see a European market that looks remarkably similar to North America to date with four large.
Substantial airline competitor.
At three legacy guys depends of air, France, KLM, IAG and wound very large low cost point to point and Ryan It would be the southwest.
And the U S, except that Ryanair experience will be materially lower than those in southwest. After 10 years of consolidation in North America Southwest average fair last year at about $140 at Ryanair is average fare across Europe was about it was under 50 Europe.
We still feel we are materially lower cheaper and lower costs in southwest, but it gives us significant headroom for us to grow our business and I think modestly grow.
Airfares in a consolidated capacity constrained market over the next three to five years.
In a manner that will enable us to pay down our debt fund, our aggressive capex and being able to continue to put in place multiyear paid deals brokered.
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.
Oh, yes, yes more than anything.
Just a couple from me on unit costs.
<unk>, Neil perhaps the way Youre thinking about unit cost have you sort of give us some indications on trends.
Or will it be mainly thinking about wages and whether the pilots in particular agitating for a for a bit more from their deals.
And then secondly, what is it you know.
Rest of the airlines don't know that everyone seems pretty sanguine about that Whitney issues.
It is.
Significant for them.
Just run us through your thinking on what why it's.
So much bigger than some of the add ons are letting on thank you.
Okay.
Question on Europe.
I might ask maybe Neil Mcmahon to come in under what we give.
Our updated won't be think of weakness, but the problem with the issue.
Okay, James it's a bit early to be talking about FY 'twenty five unit costs and that we havent done our budgets at this stage, but what I am sure about is that we will continue to keep that gap that exists between ourselves and everybody else on unit costs, we have multi year agreements in place with our unions there is modest inflation.
<unk> true on the back of those but that that's something that we will we will cover a true other areas of the business. For example, we've already locked in about $300 million worth of savings on our fuel Bill based on the hedging that we have into next year, but it'll be likely may before I start to give you color on unit costs for FY <unk>.
Five I need to get the Boyd's the budget overlying with the board first.
And Neil when we go into the plant and with the issue.
Yes, Bob.
Europe.
Yes, so we know the Pratt and Whitney have significant issues with the GTS engines, which will affect.
20%.
Our app for with a 10, 5% to 10% for <unk> for other carriers around Europe. The reason why we think this is significant as well.
We know that MRO.
We're already full for this winter. This is an all expected issue that wasn't planned into the maintenance schedule for the engine for.
The engine shops, and therefore, we're likely to see delays or our competitors are likely to see delays effort and just come out of the shop. This will increase the lease cost we already know engine lease costs have increased so airlines, who are looking to lease and engines are seeing prices soar, because theres the scarcity of lease engines.
And we think that theres going to have a significant impact on capacity for F. 'twenty four might not be baked into order airlines numbers, yes, but I think as we go through the winter theyre going to see that the turnaround times for engines are going to be significantly slower I'm not going to materially impact our capacity for <unk> 24.
We take the view that.
Theres anything between five and 10% of the European sure totally $3 20 fleet deployed to get grounded through most of next summer.
Which again will forward the constrained capacity.
Competitor, if you will.
That would be more affected than others, although they have some new deliveries.
New aircraft deliveries this winter, but this is an issue that affects the Lufthansa air France, Iag's short haul fleet.
And.
If Europe is operating at 94% of pre Covid capacity today.
There is consolidation continuing which would be more capacity will be taken out of the Oems are running behind both Airbus and Boeing are running behind on their deliveries I mean, Boeing as they deliver up to 10 aircraft short about 57 deliveries.
Before the summer of 2024, and you add this Pratt and Whitney issue on top again, I think theres going to be a real challenge on the eastern European capacity next summer.
We will add maybe $40 40, 45 47 aircraft.
But overall there is no chance that Europe, returning to its pre Covid capacity next summer, we will see more Asian visitors I would hope that number as well.
Under.
It gives us a reasonable prospect of another strong summer of profit and pricing and I think that's already reflected strong forward bookings or book is already busy winter and summer 2020 volt either decided to date are running significantly ahead of where they were this time last year.
Next question please.
The next question comes from Alexander <unk>.
Please go ahead. Your line is now open.
Hey, good morning, gentlemen.
Two for me. Please first on capital structure. So how much liquidity do you see as required on an ongoing basis thinking about this as the reference to the announced dividend, which suggests your net cash position that will continue to grow is that in line with your expectations second drilling as a cost a little bit more so your airport and handling cost per passenger was up 11.
Percent year on year in Q1, 13% in Q2, what's driving that please and should we take the current levels per passenger as a rough indication of what stable. Thank you.
Thanks, Alex May Tracey, maybe you might take the second part of that question.
Capital structure needs to come in if there's anything you want to add.
Yes.
Historically, we wont be in a zero net debt position as we pay down debt aggressively I think the board does have a view that we should keep a read to be.
The size of the chunk of cash for the inevitable Ics.
And whenever we think we can do aircraft deal. So I think moving forward over the next number of years, we wanted to keep $3 4 billion of gross cash on the balance sheet, which is the number of operating that for about the last five or six years, we will they will pay down the last 2 billion of debt.
In 2025 and 26.
We have and we are going to go through a two or three year period to 'twenty five 'twenty six 'twenty seven where there is the material dip in capex because of the gap between the last of our <unk>.
Max.
The game changed literally the last which is due in December 2024 for 125, and then the first of the Max tens, which does not deliver until the spring of 2027. So.
There is likely to be a.
The strong upward pressure on our cash free cash flow over the next two or three years as long as trading is disrupted by adverse event and again I think our comments. This morning is that we intend to pursue.
They use that to an employee pay secondly pay down debt hard on Capex and then anything that as there are left over would be returned to shareholders.
We're setting up this morning, and ordinary dividend policy that would be 25% of net profit after tax. So for example, this year, we're now guiding somewhere just under 2 billion and net profit.
We would hope to be declaring a dividend of October so just over 500 million for next year.
Im.
But if there is a surplus over that over the next two or three years, we'll be opportunistic there might be special dividends, there might be share buybacks, but we have to be conscious of the fact that we will start aggressive capex again through.
FY 'twenty into 2026, and the Doc 2007 peak.
<unk> capex will be around on the Max 10, or it will be around 2008 2009.
But hopefully.
Traffic will continue to be strong profitability with very low cost base and widening gap between us. The company. We continue to be strong I think capacity constrains in Europe means that pricing would be strong.
And that should leave us in a position to be able to fund it.
Modest.
Reasonable.
Shareholder returns.
Where do you come to <unk>.
Come to the airport and handling coffee, yes. So.
The seating side in the airports and having some higher ATC caused <unk> does not sell local air traffic control costs at airports have seen an increase in them and we have the termination of some of the call over to a lease that we weren't getting the benefit of last year and probably the other driver and that is happening in that so a little bit of a labor inflation in the hunting costs across Europe.
Well, thank you very much again.
Constantly it's Alex is that it is less than half of the airports and handling cost increase some of our competitors have been reporting recently.
So that maturity more airport and handling cost inflation at the at the main airports that are being operated by our competitors.
Okay.
Therefore widening the gap again next question Maxine.
Your next question comes from Javier Garrido from Jpmorgan. Please go ahead Harry Your line is now open.
Yes, good morning, guys just two questions.
I mean average spreads up 15% in Q3 looks very strong.
Almost surprised by the strength of the Fas given concerns over the health of the consumer more widely and I was wondering if there was any potential one off benefits in there in Q3 for example from from maybe the rugby World Cup and then just any comments as well on Q3 on why do you expect the middle East.
<unk> just in absolute terms or year on year. Thanks, a lot.
Okay, and the last two to three minutes and considering our rebrand.
They are strong in Q3 again I think the critical driver of payers here is not individual events like the rugby World Cup, which were nice, but not materially commvault were carrying almost fivefold posture to date the rugby World Cup.
Is that would maybe make barely a blip on it.
What's really driving aircraft seem to take consolidation capacity constraints still in Europe.
Cheerio.
Dramatic increase in pricing.
It's been leveraged by the likes of competitive dynamics and the air France, KLM and IHG, who are starting with average fares that are four five and six times those of Ryanair.
If you take the German market, where lufthansa.
I see the national champion.
Now if a lot of capacity easy get how says have removed out of capacity for the German market in the last few years in the face of ludicrous airport cost increases, Matt German government taxation.
Security charges et cetera.
Eric Lufthansa determined market is the one that is.
We just covered only about 80% pre COVID-19, but short phone airfares in Germany more than doubled.
And everywhere you go in Germany deeply companion bulk account pricing.
That's what you get when you get an extra champion like Japan.
And I think that is going to continue to play itself out Lufthansa Air France, KLM IAG are going to are losing more in percentage terms carefree ETS.
Alternating from January next year is much more meaningful on their short haul traffic and ours is much greater upward pressure on their cost and their ability to increase airfares and this capacity constraint story, which has largely been paying out in North America over the last decade is beginning to rollout across Europe again Europe is entering it.
Eric <unk> are going to be modestly higher.
You have a combination of governments imposing ludacris environmental taxation, we have our own.
Transport Minister in Ireland.
There's just nothing.
To push back against ETS, so nothing too to push back against the French ATC strikes yet happening rings depends despite the fact that we're an island appropriate Europe.
Airfares across Europe are moving I think upwards.
The really dramatic, but not well understood capacity constraints story I think we continue to believe that month.
Through December of 2024, and December 2025 years, but we see no.
Easements and this could probably these capacity constraints and what really drives Brian Earth fare.
And the aircraft are tightening up their aircraft that they are driving up their efforts to an eye watering extent at the moment.
Neil ancillary.
Yes, Harry as we've been saying all year, we expect on a full year basis and salaries are up kind of 50 to 60.
Capacity a year on year, so youre, probably looking at similar to the first half about a 3% increase.
Over the second half and then thereafter, it's kind of a <unk> 5% per annum.
Growth area, depending on Johns sitting here beside me what you can do from a dynamic pricing and other things, but we've had a phenomenal staff up from $19 70 per passenger pre COVID-19 to $23 70 per passenger now and it's growing at a relatively steady state of kind of treat 5%.
Okay. Thanks, a lot.
Next question Maxine please.
The next question comes from D J.
Raymond James. Please go ahead. Your line is now open.
Hi.
Good morning.
In terms of investing for <unk> I would imagine that you are kind of keeping the buffers that you've put in place currently but as you kind of head into summer 2024 are you planning on making any additional investments or additional buffers.
And then secondly, just kind of curious on the Max.
With the Max delivery delays I'm guessing you're not going to able to take advantage of this but what are the kind of the what does the Mg pricing look like these days in case you wanted flexibility.
Sorry, you broke up at the start of it.
The first half of that question and I missed the second half as Max delivery delays, but I wasn't sure. What the question was repeated again. Please I'm sorry, yeah, just just on the edge.
More so on kind of LNG pricing like what are you seeing today. If you wanted to take advantage of it not that you probably can given the delays.
Sorry, you said AG pricing is it.
Yes, I can take that Michael.
Okay, sorry, I didn't I didn't hear it again, if you heard it David would you answer that for you as well.
Number 24.
Okay, well just just on resilient Savi I don't think air traffic control are going to be much improved but I'll ask Eddie to deal with that I'll talk about the ing's.
First I mean, the market for LNG is very hot at the moment.
Phone is ringing off the hook with people trying to buy <unk>.
Thus the leasing companies lease rate factors have increased quite significantly so wouldnt be minded to go out and try and lease anything from them.
I think we're very happy just operate what we have under continuing to work with Boeing to acceleration speed up the pace that we're getting the Max's.
Please vote, yes, Angie is holding values very well I think Eddie is going to answer the question on resilience.
What is mark to savings on operational resilience.
Post Covid, where we were just better prepared than all of our competitors by keeping everybody employed and keeping everyone current our crews and our aircraft curve and we've tried to work really really hard to sustain that advantage and you can see that I think in a lot of the recovery our lack of <unk>.
Covering from our competitors, who appear reluctant too.
To get back to.
Full recovery some of that I suspect is driven by.
Sort of meltdown days, where ATC drops everybody drops everybody English and what we've tried to do it.
As have additional crews built into the system and that gives us I mean, we're able to lean into that because we're still a growing airline.
As Hec hopefully will recover in terms of its capacity.
Over the next number of years will be able to.
Pair by Crewing levels to what you would need in a normal busy season books those of Europe.
Capital markets day, we would've seen what.
Johns team along with Neil's team.
And <unk> as well in terms of building solutions too.
To make best use of those crews so that we can get through those parts.
Parts of the meltdown days.
That are happening more frequently but it's something that we're in.
We're not crowing about.
There's a lot of hard pedaling under the under the surface here to keep that to keep that operation going and we've invested heavily in technology heavily in mining not just in terms of crews per aircraft, but also in our ops control center.
But we have to continue to invest we're not big commodity swings in any way about that.
And just to clarify just incrementally invest that wouldn't be that much greater than what youre seeing today right. I mean, it's not going to be another big headwind into the next year.
No I think what Youre, what youre like we have to look at all of these things on a sort of a micro level don't forget were spread over 93 separate basis, there's always room.
For improvement as to how you accrue that and given the data that we have no debt will inform our decisions, but I don't see a step up.
But my instinct would be to have to increase that slightly but I don't think it's anything material just because we're going to get into.
We're on a long term growth trajectory here and that means that you can all we sort of fine tune youre accruing ratios as you take delivery of aircraft as well so.
And I'd, rather have slightly more than slightly less.
Material.
Thank you.
Thanks Eddie.
Savi Im sorry, I Couldnt hear.
Here's the question properly next question please.
Our next question comes from Larry <unk> from RBC Capital markets. Please go ahead. Your line is now open.
Great.
Yes.
Morning.
It looks like relative to Q1, youre hedging position on cumulative advanced but not so much from FX. So I was just wondering.
<unk> was paused or what drove that.
And then secondly, a longer term question and you've got two years of slower fleet growth around 2025, 2026, do you think that it would be a more difficult area to restrain unit costs and as a result, as their silver lining to Burlington liveries Leif. Thank you.
Do you want to take this sort of hedging.
Your policy to hedge you can answer the two years of sort of fleet growth.
Yeah on hedging.
We're very pleased with the with the level of hedging that we have in place just under 89 for the second half.
The second half of this year at about 89, a $190 a metric ton and well hedged into next year over 50% in fact close about 56% in the first half of the year.
Savings.
790, a metric ton.
Change in our hedging policy not huge loss.
We are not going out with as high a percentage as we would have done in the past, but that's a factor of our competitor's balance sheets and not being as strong as they have not been able to get access to hedging line. So that's why we had a number of auctions. This year, we effectively tapped out the worst case scenario and then have that downside participation. So you may over time he is doing.
A little bit more on auctions, but we continue to have a kind of 12 to 18 months Rolling policy, we're well hedged out.
At the end of March 2025, and we will continue just to build upon that over the next number of months simply on the currency side. We continue to grow in a very active Opex book, we were hedged at one <unk>. The current year in Euro dollar what we're hedged at about 111.
111, 112 into next year and again, we will continue to build out over time. So no. We're continuing to execute honest, we continue to have huge hedge lines with our counterparties.
And the Treasury team have never been busier. So now we're pushing on.
Yeah.
Okay. Two years sure prequel if anything we're facing almost three years of slower fleet growth, we wouldn't take it.
If Boeing can meet their delivery commitments, we get 57 aircraft per forma 'twenty four we get clarity.
Turkey aircraft <unk> hundred 25, I think they missed some of the summer 'twenty four and therefore.
Even itself out we'll pick those up for some of our 25, we will have no signal for summer 'twenty takes very lucky for summer of 2007.
I think we'd take change would take 18 19 aircrafts.
From January to May of December 27.
It's not by choice, but I think the two or three years is still a fee growth does have.
It gives us a bit of a pause at the organization before we started a decade of aggressive growth. It does take some of the pressure off.
Group trading over that period of time.
It may create some challenges, but I think we're facing challenges on the labor front anyway.
The next year or couple of years I think we've reflected that in what had been the pay restoration of generous PE.
Already generate fee agreements in place with pilots and cabin crew across Europe.
But that is inevitably the upside of the silver lining of that is further constrained capacity would be the only airline delivering material capacity growth across Europe in December 'twenty, two 'twenty three.
Ryanair.
And we ourselves will be capacity constrained through the summer of 'twenty five 'twenty six 'twenty seven.
I think we'll continue to see significant churn of our operations during that period, we will continue to do aggressive growth deals with ambitious to airports and therefore, we would charge more aircraft out of expensive airports like Dublin for example, where.
Again, they are planning to build a week to 250 million on a total going nowhere. It's just again regulatory gameplay. They just wanted desperately weight capex on something that none of the airlines Air Lingus, Brian None of US want these stupid.
It only goes across where the cargo aircraft get parked.
And even this problem of spending $240 million on the timeline there.
Admit them says that dumped and therefore it is the timing.
The restriction of traffic comp of 32 million passengers. So the idiots only Dublin airport.
I've done nothing about this timing count for the last decade, one topic is the 32 million passengers and so government is now capacity constrained we may well have to take aircraft Jordan aircraft out of Dublin with dozens of these kind of exploit play coming up where they are looking for about 17% cost increase over the next year or two in passenger charges. So airports.
Like that that are badly badly managed and are in place you can justify the inflating comp.
We'll see I think we have churned some capacity out of places like Dublin.
And put them into other much more growth incentive.
Markets like Spain, Italy across Central Europe at the moment in Poland, Romania, Slovakia, Czech Republic, the Baltic States, we're seeing ambitious airports putting in place very.
<unk> discount schemes for growth Morocco, as Eddie said, Albania are going to be areas is significant.
There will be more churn in our business over.
Over those couple of years and I think that's good for the for the business.
It keeps us on our feet, if we keep as aggressive and it will also help us to keep put pressure on mismanage airports like Dublin, who continue to exploit the regulatory regime.
On justifiably increase comp at a time, where they should be lowering.
Fees and trying to drive growth.
Next question please.
The next question comes from Amit <unk> from Bank of America. Please go ahead. Many by your line is now open.
Hi, Good morning, two follow up questions. Please the first one just on the dividend for this year can you talk about why you do you have a 400 million dividend instead of a payout for fiscal 'twenty four and just to clarify so in the scenario that you think that is surplus cash.
Could there be a special divi our share buyback even for next year. That's the first question and then secondly on your pricing comments for fiscal <unk> Q do you think that your pricing trends are better than the overall market.
Do you think the market is also seeing similar mid teen pricing and are you benefiting from the trade down that you talked about earlier. Thank you.
Okay dividends this year for 400 million well, if we paid out 25% of last year's proposition, one pipe or opinion. It would have been about 350 $360 million and the board felt that it sends a strong signal to the market and also the shareholders. If we rounded that up to $400 million it would.
Repay the shareholders, including myself I might add who.
Who put her hands in our pockets during the depth of Covid and invested 400 million at a time when nobody was able to raise equity in the airline industry and I think that's the signal you know the shareholders who stood by us during and who wrote those difficult checks during the very difficult Covid period are seeing that return.
Is there a prospect of special dividends or share buybacks next year I mean, the answer is yes, but it all depends on trading it all depends on how the cash flows develop and it will depend on what the board decides to do I mean, we will continue to be conservative and judicious.
But you have our assurances that.
The excess cash will be returned to shareholders. Whenever we're confident that we can meet our payroll commitments are at pay debt repayments commitments on our capex commitments due I think Q3 will be better than the overall market yes.
I think what's driving the overall market across Europe is very aggressive price increases by Lufthansa Air, France, KLM IAG easy get another and Theyre, all pricing materially above Ryan or average airfares are.
In the case of Egypt.
Ryanair to the case of the legacy there 345 times higher than ours and it therefore, youll see average fares rise by a high single digit.
This winter and I think they are because of the capacity constraints.
They are driving more and more people more and more customers and their families is the direction of Ryanair seeking low fare air travel.
And we're seeing strong forward bookings and strong pricing.
I think thats why off a much lower base, we are seeing a strong.
We continue off a much lower base, we see stronger pricing in the Ryanair model as Europe consolidate our continues to consolidate over the next 234 years as capacity continues to be materially constrained and I think it's December 24, as many of our competitors will be grounding aircraft because they have no problem with that.
Operator.
I don't know Hey, do you want to add anything on the Q3 better than the hardware is that referenced the overall market.
Not really I think.
I think you covered it off there I mean like it's what we've seen before and.
I hate to use the phrase but sort of trade down.
But as people become more price sensitive.
Thanks.
I think youre quite right in what you are saying that migration of people.
And in a lot of cases, and given our size and scale we have.
More frequencies and.
More airports as well that gives us a little.
Little bit extra I suppose in terms of in terms of uplift.
Meaning to agile.
I continue to be amazed.
The amount of the hand, wringing going on particularly with the analyst community consumers under pressure and they are under pressure because he is very bright.
People don't stop flying.
In other sectors people trade down to literally all of the D by their furniture in Ikea.
On that score.
They are very strong performance over the last two years and we're now carrying 20% to 23% more traffic than we did pre COVID-19 in an industry across Europe, it's operating at about 94% pre COVID-19 capacity people are trading too.
The lowest cost provider, which in every market in Europe, It's Brian here and we're also happens to be probably the best on time performance.
Delivering great service at lower prices, we're now doing that on aircraft like the the Boeing Max that we're carrying more passengers, but bernie.
Burning less fuel.
And delivering very material operating cost efficiency.
So I think this is a time foreign expansion.
Desperately working with Boeing to try to get as many of those 57 aircraft. We counted number 2024, because if we don't keep that expansion going then consumers across Europe really will be screened by the Lufthansa Air France is in the high fare.
National Champions, all of whom received billions in subsidies.
During yet.
Covid.
<unk> payers out there.
And gratitude as demonstrated by now.
Scalping those taxpayers are extraordinary eye watering airfares.
Next question please.
Yeah.
Your next question comes from that.
Please.
Please go ahead. Your line is now open.
Thank you you got to have since here. So firstly on the forward booking curve and you pointed out that saying in fact, a much better than last year, how does it cut like award us event into this quarter for the <unk>.
Christmas period, as I listen to the.
Easter next year.
And then the second one any update on the potential risk from the Italian government on the price cap.
Thank you.
I missed I didn't get the second half of it.
I got the tap I'll deal with that.
Yes.
We see at the moment all of the forward bookings into the Christmas is strong the February.
<unk> mid term break ski is.
Running bookings and fares are running ahead of prior year and we have the first half of Easter in the last week of March.
So I think we remain reasonably optimistic on pricing for the second half of the year and into Q4, although we always have to qualify that we abated in Q4 visibility.
I didn't get the second half of the question, Neil or 80 did presale pre cancers.
Or we might get Julien.
Or some of the price cuts.
Thanks, guys.
Julien Satish.
Sufficient.
Pricing.
I got your question, but you can correct me if I am sorry, a different one.
I think we've had pretty more pricing in Europe guaranteed in EU law since 1987, and all governments recognize that it's there and it's an integral part of the success that European Aviation has enjoyed over the last nearly four decades.
The Italian government has done over the summer.
I would not take it too seriously.
Sirius were considered step it was part of a decree which was passed I think on the last day before the government checked out for the summer break at the same decree talked about a tax on Italian banks, which the government doesn't have to walk back from and some measures about the taxi industry, which apparently is a mess in Italy today.
European Commission, which we often criticize and those costs were maybe not being quick enough.
In terms of sorting out the ITC in Europe or air traffic control strikes and so on was actually incredibly helpful. In the context of this Italian situation. They they stepped in and put a lot of pressure on the Italian government to reverse that.
The Cree when it comes to attempting to control prices between mainland Italy.
The Italian islands.
And I think this is a very good lesson for all of the other governments that might have ideas of similar sorts.
Feeding populous agendas.
Go there because you will end up before the EU court.
Reschedule by airlines, but by the European Commission.
Okay.
That's helpful. Thank you.
Thanks T J 's question. Please <unk>.
Your next question comes from Duane <unk> from Evercore ISI. Please go ahead. Your line is now open.
Hey, good morning, good morning, its been very comprehensive call just one for me.
So air traffic control constraints are really not new in Europe, it's something you've been dealing with for several years, even pre COVID-19 we.
We're hearing much more about these issues in the U S.
And so just just curious how do you design your network.
To achieve high utilization low unit cost. Despite the constraints that you live with I mean, if there was a moment maybe 510 years ago, where you said look we have to operate differently because it is.
What are the changes you made from a network design network planning perspective.
I think Duane to answer that question you know ATC has been a much greater problem challenge for the industry in Europe and the U S. Europe is the adcs are fundamentally mismanaged, one to productive and ridiculously expensive compared to North America.
The biggest challenge continues to be not just the cost of that but the environmental impact of <unk>.
Long flight type that.
We have been campaigning aggressively for now two or three years at least the simple issue.
Strikes, which you tend not to have in North America, right, but in Europe would be definitely with them, particularly the French by 64 days of ATC strikes. This year, so far we're calling for the protection of over five.
Of the geographic location of France, if they don't use minimum service legislation to protect domestic flights and canceled all the overtime, but we think it should be reverse the other way Europe should be protected the overpriced the cancel print domestically that one initiative will probably remove.
Some.
78% impact of ATC strike.
This is Chuck.
And would have a very significant impact on the environment, the environmental impact and environmental damage done by European ATC to date.
I think we're seeing some movement on that.
Europe itself has been <unk>.
Billions over the last three years on a single European Sky project, They made not wouldn't millimeter of.
Progress on is a complete waste of time.
<unk>.
I personally believe.
Deregulate their two aircrafts to control.
Each individuals like to do with the airlines they should allow the air traffic control providers to compete against each other to provide service.
That would be a much more efficient way for them to compete against each other but as long as very small ATC union have a disproportionate power and you have weak European government to run really stand up the BP with the way Reagan did but the American aircraft controllers. It back in 1980.
We will continue to be bedeviled by ATC delays inefficiency and screw ups in Europe.
I don't know how you want to add anything further on that or maybe in advance.
Joe.
Yes go ahead sorry.
Eddie just in terms of design. So there has been no fundamental change in design, but it has resulted in we've had to increase resilience. So crewing resilient.
And because we offer no factory and theres going to be more ATC delays than there would have been 510 years ago and if we just use. The example of the UK nats collapse on the 28 of August.
Which resulted in the closure of UK airspace and widespread cancellations because of the increase resilience. We had boy that was on the Monday and by lunchtime on Tuesday, our operation was fully back to normal despite having 20 aircraft in the wrong position at the night before so I think that's what we're seeing there is an increase resilient entire crewing.
Ratios to factor in rather than an aerospace redesigning our network redesign.
Thank you.
Okay. Thanks, My next question Maxine please.
The next question comes from Alex Paterson from Peel Hunt. Please go ahead, Alex Your line is now.
Good morning, everyone. Two quick questions. Please firstly just on your October traffic your load factor was.
Slightly lower than the prior year. That's the first one here for a long time were there any anomalies in that kind of thing to cause that and secondly.
Just on the 737, Max Ted obviously, there has been delays to the backside, there's been problems with various engines and so we'll see if that isn't certified delivered on time, what would you do run existing fleet for long are there any other levers you can pull thank you.
Okay. Thanks, Alex October profit was off 1%, it's a rounding issue.
Nothing material in there we could have engaged in seat there that would have artificially driven it back up.
That's the wrong thing to do.
We're happy to let the load factor block, 1% Baldwin preferred.
We hit our target for the moment.
The only thing I would point to though is that there was a very steep falloff in load on the bite the Jordan Jordan and also obviously the Israeli situation.
The Israeli Hamas conflict at the stock market began operating place to information or if there was a dramatic increase in no shows.
Perhaps the booking much the same way, we had into into central and Eastern Europe.
Sure illegally invaded Ukraine in mid February of 2022.
I know, there's anything untoward in that.
There's nothing we would call out of the Sky.
Expect to we're running slightly ahead of where we are year to date on load factor and <unk>.
Full year load factor target.
Max 10.
Remember how far does it return to January 27.
The Boeing expects the Max seven to be.
Certified either this side of Christmas are already first quarter of 2024.
We think that enrolled all day right that will rollout with the FAA will start to fall off I think.
The Max 10 sometime towards the second half of 2024, it might slip into early 'twenty five, but we are a long way behind the lead customers on that so I don't think theres any particular risk to our deliveries of Mike 10 aircraft in January 27, given that it will be three or four years behind the U S.
Presentation aircrafts.
What would happen we would simply I mean again it would further constrained capacity does.
Does any delays to our Max deliveries in 2027, it was part of the constrained capacity across Europe, where again Airbus and Boeing GE would be challenged on their delivery positions.
But I would be reasonably confident that we'd get those deliveries on time in the first half of 2027.
Neil anything you want to add on the Boeing side.
But just to add that if if there was a delay and I don't anticipate because as Michael said there are they are on track to hopefully deliver the first <unk> turns it into the customer's next year because there was a delay we sell less of the <unk>.
We've penciled in a 150 <unk> due to exit the fleet.
Japan's command so.
We just manage that within the business, but we have every expectation that we get in the tens in in early 2027.
Thank you.
Thanks, Alex next question please.
The next question comes from Joel <unk> from <unk>. Please go ahead. Your line is now open.
Hi, Good morning, I have one for me if I can you talked about some 90% of summer 2024.
Capacity being on sale I'm, just wondering why is it 90% are you holding some back for <unk>.
Potential bone device.
No the reason for that.
Secondly.
A big gap between the increase in average fares and increasing uncertainty passenger.
Why are you taking to say much of the common stream peak demand in the SaaS model, but that's it thanks.
Okay. So 24, Jason you might add some comments.
Perfect. That's about normal this time of the year in fact more normally we don't have an 8% to 17000.
Couple of things happened there, we'll we're not sure about the last of the Boeing 10 aircraft delivery.
Bill.
What negotiations ongoing about new basis, new routes.
Is paying off because we haven't yet finalized.
What was the allocation of the existing fleet.
90% already obviously, that's higher than it would've been in previous years.
Is there a big gap between average ferrous content yet.
So we're quite happy with load factor active.
What's driving the volume broken out repair.
The strong upward pricing.
As being that's being.
Delivered by our presence in Europe.
Screen market.
And again I would point to look fantastic, Germany ethylene recovered to 80% of the fleet globally and here for instance.
Douglas.
The two are not the same literally we will tend to the Venezuela, considering the revenue.
Business. It does tend to keep up a couple of percentage points ahead of.
Profit growth is up 3% per passenger.
Our half year put it in the Barnett pricing fluctuation of pricing volatility.
Flying out there.
<unk> got a downturn average airports like that crude would fall.
In a capacity constrained and quantity market like New York.
Your underlying effort right.
We continue to prolong doing what they do and it's a.
Much more reliable income as long as we have referred to make sure that we get the loan types can fill all of our flight.
And anything on the corporate that night.
Sales.
No.
It covers our third 90% are actually ahead of where we would have been previously is that with more capacity percentage wise on the sales rep 24 than would have previously.
There's two other factors at play there is the potential for two or three new basis next year, but that will depend on how to negotiations progressed over the next number of weeks and likewise, where we feel there is unjustified cost increases into 2024, we're keeping some of that capacity.
Off sale Hollywood negotiate code airports, but we will not be accepting unjustified airport cost increases into next year. So that covers off the same centers.
Thanks very much.
Okay.
Thanks <unk> next question please.
Your next question comes from Connectwise from Morgan Stanley. Please go ahead Cohenite. Your line is now open.
Hi, Thanks, very much hi, guys. So first question is regarding the excess cash and how best to go to shareholders. So before you've expressed a preference for the special dividends, but this morning seems to be a bit more of a balance between decent buybacks. So I'm. Just wondering if that is just because the decision has been made officially us or cheap valuation is making a buyback a buyback a bit.
More attractive now.
And the second question is just around pricing growth is very strong for this period and sounds as though it's benefiting from the headroom you've built up over the last few years. So I'm just thinking do you think that can extend beyond this period and that you could probably paced market share growth over the next few years, because they're already talking about an overall market environment for further growth should be pretty pretty.
Thanks.
My last year, the pace of growth over the next few years.
I think we are at the board.
Meeting last week I think we are.
We are slightly changing dynamic I would expect that we'd be looking to return surplus cash to spare.
For the next year or two if we have surplus cash, but the way. Our P/e has de rated you know historically, we've been on a 15 times p/e multiple where knockdown undertaking what eight or nine I joke.
The processing and southwestern at 15 times, P/e, but with less profit higher call less growth.
But it is what it is.
But I think it's.
There are multiple continues to be.
As insipid is it is there has to have day rates it over the last number of.
Over the last 12 months I think it's incumbent on the board to reassess, whether we return spare counts by dividends or share buybacks and I would be very strongly and favorable.
Restarting share buyback to the power of the multiple continues in single digits I think we're vastly undervalued for the PERC.
We are delivering in.
Mark in your consolidated.
I think in the next few years.
Yeah, well I think in fairness, Jason and Eddie covered it fairly well recently, but capacity is going to be the key driver of our pricing for the next couple of years. The market remains constrained nike's remain constrained for a various number of issues, including the Pratt and Whitney engines, the lack of availability of <unk>.
New orders this side of 2030 on the consolidation play.
So look I mean, nobody knows exactly what's going to happen, but there's more risk to the upside on the downside as we look out over the next year or two.
Alright, thank you thanks.
So that kind of a vaccine I think pretty pass, we don't know where trade UBS Gogo <unk> 10 minutes, we'll do two more questions. Please I know you guys cut it off.
And that does conclude our Q&A session for today, so I'll hand back over to Sean.
Thanks.
Okay.
Okay. Thank you very much everybody.
Got an hour and 20 minutes.
Which is fairly exhaustive coverage of their results.
Thanks to the team for what I think it's been a very strong six months.
Performance, Thanks to our customers who continue to support.
We continue to deliver power to.
Half on lower.
And exceptional performance in the European marketplace, which will continue to be challenged by capacity constraints for the next.
A couple of years.
Consolidation OEM delivery delays and I think the path.
<unk> will become a much bigger and more challenging issue for our competitors to the next.
In summary, 2025.
We've antibody we have an extensive roadshow.
Great.
Thinking about 12 or 14 different teams on the road under the state Neal I think it goes to the state.
And the rest of the team recovering off Europe, if you'd like a beating.
Please feel free contact <unk>, our CD and we'd be happy frankly.
And if anybody wants to come and see as the Dublin over the coming weeks. Please feel free to do so Peter <unk> head of Investor relations be happy to take that to.
To set that up.
With that thank you very much everybody for joining us this morning, and look forward to seeing you over the next week.
And let's hope.
There would be a peaceful outcome of the current to do.
Situation in Gaza ended the Ukraine, and we can all get back to not carrying more passengers at lower fares than our competitors across Europe.
Hopefully rewarding shareholders.
Our support during the pre Covid period. Thank you very much everybody I hope to see you later on this week. Thank you bye bye.
Thank you, ladies and gentlemen that does conclude today's call. Thank you for joining you may now disconnect your lines.
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