Q3 2024 Ryanair Holdings PLC Earnings Call - Q&A
Hello, and welcome everyone to Devine Holdings plc, Q3, FY 'twenty earnings release, My name is Maxine and I'll be coordinating crude today, if he would like to ask a question you may do staple question, Wisconsin Nicaraguan. Thank you Pat.
Speaker Change: I will now hand, James Michael O'leary mine at group C. H begin Michael. Please go ahead when you're already.
Speaker Change: Okay. Good morning, ladies and gentlemen, you're all very welcome to the Q3 results call.
Speaker Change: Early this morning.
Speaker Change: <unk> Dot Com website, we published our Q3 results together with the N and M. DNA in a Q&A session with myself and CFO Neil a.
Speaker Change: Couple of quick themes as you see we reported a Q3 profit after tax of $50 million.
Speaker Change: Traffic in fares were ahead of the prior year, but closer and Christmas and new year loads and yields were softer than previously expected as we had to lower prices somewhat in response to the very sudden but surprising but very welcome removal of flights from most of the major otas private websites in early December.
Speaker Change: Often after taxes for the nine months ended 31 December was up 39% at $2 $1 9 billion at prior year. It was 1.58 billion.
Speaker Change: Just to touch on some brief Q3 highlights the traffic grew 7% to $41 million revenue per passenger was up 9% average fares were up 13%, mainly due to a very strong Christmas and.
Speaker Change: And the October Bank holiday weekend, and ancillary revenues up 2%.
MSCI raised their ESG rating on Ryan here from a triple B to an a in December our fuel Bill rose $320 million in the quarter up 35% to $1 2 billion.
Speaker Change: At quarter end, we had 136 B 737 game changers in the total fleet that was significantly behind the original deliveries.
Speaker Change: Boeing delays.
Speaker Change: Most more importantly, going forward our fuel hedging we've extended fuel hedging we have 65% of our FY 'twenty five fewer now hedged at $2 $79 per barrel. This year were hedged at $89 per barrel. So we've already banked a saving of 450 million euros into FY 'twenty five and as you will all be aware, we have been the first in.
Speaker Change: Dividend of $17.05 per share is payable on the 28 to February.
Speaker Change: I think just to touch on growth in fleet at the end of Q3, we've taken delivery of 136 787 game changers. We now expect to have up to 174 of these aircraft in our fleet by the end of June in time for peak Summer 2024, that's up 50 aircraft from summer 2023 that would still be seven aircraft.
Speaker Change: Short of our contracted deliveries due to Boeing delivery delays. However, those new aircraft. It means we have a bumper summer 2024 schedule now on sale. It includes 169, new routes are first 11 domestic routes in Morocco, and our first summer with 23 routes in Albania are in that tier two and from.
Speaker Change: To round out the capital city of Albania, while travel demand remains high we expect summer 'twenty four EU short haul capacity to be behind where it was in December 'twenty three.
Speaker Change: As a considerable number of our competitors ground <unk> hundred 20 aircraft in Europe due to the Pratt <unk> Whitney engine issues and Boeing delivery delays constrain our growth from 57% to 50 aircraft.
Speaker Change: We are continuing to work closely with Boeing to minimize delivery delays and we've invested in additional engineering overage Ryanair engineering oversight to improve the quality control in both Wichita and Seattle at the recent Max nine grounding was a disappointing setback, but we welcome the on grounding of the Max Nines last week and Reiner do not.
Speaker Change: Operating any Max nine variance either no Max nine aircraft in Europe, and therefore, it is largely a U S issue. However, needle visited in Seattle in January metric bowling senior management and we.
Speaker Change: Urge them and they have agreed to increase their quality assurance resources on the ground in Wichita in Seattle.
Speaker Change: We are putting more engineers into Wichita in Seattle to run extra checks out.
Speaker Change: Our deliveries, but also in a recent 787 deliveries we've noted improvements in the quality with fewer delivery defect on the 12 aircraft, we got in the fourth quarter before Christmas.
Speaker Change: However, we do believe Boeing have more work to do to improve quality and reduce delivery delays, but I wanted to stress is we are fully supportive of the initiatives that David Calhoun and Brian West They are taking to improve <unk> performance and production.
Speaker Change: It is critical we believe too.
Speaker Change: Boeing's continue continued performance.
Speaker Change: That we support Calhoun and West I think they're a good team I have concerns about the management in Seattle.
Speaker Change: But I have a lot of confidence in Calhoun, and Brian West I think they are on the right track. The Max nine grounding was an unfortunate event and it does indicate that quality does need to be improved and Boeing but we are very supportive and a lot of confidence in what Calhoun is doing under his leadership. We welcome. The Otas. This was a significant event in December.
Speaker Change: The timing of the Otas taken as all stayed with it based on fortunate because it was the first week in December with Christmas coming you can't just go ahead and open up and don't seats to counteract that.
Speaker Change: We think historically these OTH pirate generally accounted for between 10 and 15% of our volume. So a sudden removal of that meant we saw a sudden or a very short term dip in our bookings that we would normally respond to that by opening up price promotions, but we didn't want to do that in the run into Christmas. We therefore think it will take a hit of one.
Speaker Change: 2% on load factor in December and January we will take any hit on yields during December and January but we think it will be short lived and we are happy with our forward bookings, particularly out into February and March although marches flight.
Speaker Change: It's artificially enhanced by having the first half of that Easter and that much more important for Ryanair and our passengers is to convert these otas pirates into what we would call kind of approved OTA partners. The partnership agreement, we signed last week with love holidays, who our fourth largest otas and Kiwi.
Speaker Change: Dot Com. This morning, who are our largest OTA, where our largest OTR tires are critical we think to protecting customers from Ot, a overcharges and scams as part of this agreement. We now give these two approved OTH a direct feed of inventory from the Ryanair dot com websites and they agree as part of the deal no.
Speaker Change: We're charging a passengers for either airfares are for any of our ancillary add the bookings are made directly in the Ryanair com website with the customers' actual real E mail address and Ria payment details. So that if we need to send a customer in EMEA are someplace information. It goes directly to the customer it doesn't get lost in some otas pirates.
Speaker Change: Phase E mail address and whenever we have to refund to passengers. We can now make the booking directly to the passengers. We think this is the way forward and we will continue to campaign to outlaw the illegal screen scraping and the old customer overcharging and scamming being undertaken by <unk>.
Speaker Change: Many others of these that.
Speaker Change: Otas Pirates.
Speaker Change: And converted into the <unk>.
Speaker Change: Test them are the same mechanism that we've now agreed with love holidays and Kiwi looking.
Speaker Change: Looking forward to December 2024, we expect airlines will continue to consolidate we expect capacity will be constrained by both the consolidation by the.
Speaker Change: The lack of aircraft deliveries post COVID-19 across Europe.
Speaker Change: I think the <unk> hundred 20 fleet Groundings. This summer, we expect about 10% of Europe's $83 23 to be grounded far D. While they address the Pratt <unk> Whitney engine issues and that this would mean tight supply for.
Speaker Change: For summer 2024, and while we still have 50 additional aircraft into that marketplace. We don't have the original 57, we hope we had hoped for so we think theres going to be reasonably strong summer pricing are already today. Our bookings are running about 5% ahead of where they were forward bookings into somewhere about 5% ahead of where they were.
Speaker Change: This time last year pricing is up a bit but by a low single digit percentage again some of that I think is that a factor of the fact that the first half of Easter has moved into March. So Q4 is strong, but therefore, there's less of an impact of Easter pricing in April.
Speaker Change: But much work remains to be done, but we're very pleased with where we are for summer 2024 in terms of outlook. We are targeting $183 5 million passengers in the current year that will still be a monumental achievement. The original budget was 185 million, but if you take the the ATC at 57, its been over 60 days of <unk>.
Speaker Change: Z strikes that's cost us over 1 million seats.
Speaker Change: Tel Aviv cancellations, which had been running since the end of.
Speaker Change: As citizens at the end of November that's cost us about another 600000 seats and the bowling delivery delays have meant we've had to truncate both of summer 2020, <unk> hundred 33 schedule and our winter 2000, <unk> schedule. So it will still be a very strong performance.
Speaker Change: However, as a result of these lower load factors, particularly in Q3 and the kicking in of some higher productivity pay agreements with pilot unions across Belgium, Italy and in the U K These are productivity.
Speaker Change: Enhances that we intend to rollout to most of the other.
Speaker Change: By agreement with the other pilot unions in groups between now and summer 2024 at which will significantly improve our operational resilience and reduced pilot attrition. We now expect full year 'twenty four ex fuel unit cost to rise by about two euros 50 that would still leave a dramatically wider cost gap between Ryanair and our main European.
Speaker Change: And competitor Airlines at <unk>.
Speaker Change: Two of whom reported last week.
Speaker Change: Q4, which is traditionally the weakest quarter will also be impacted by the partial unwind to free ETS carbon credits in the first of January but we will benefit from a strong first half of Easter traffic falling into late March. Although this is unlikely to offset the weaker than previously expected load factors and yields in late Q3 and early Q4. We are therefore this morning narrowing our.
Full year FY 'twenty for a profit after tax guidance to a range of between 185 billion to $1 95 billion. It was previously one 5 billion to $2 051 billion.
So we think the number will come in just under 2 billion for the full year. However, this guidance and the full year results still remains heavily dependent upon avoiding unforeseen adverse events in Q4, such as the Ukraine War, Israel, Hamas contemplate any further Boeing delivery delays, which might add damages in the run into Easter.
Speaker Change: We've also given you a full update that we've attached to the release of a full update on the Otas pirate situation. I think this has been one of the most dramatic.
Speaker Change: Victories for Ryanair.
Speaker Change: In recent years, and I would always I'd be happy to take a short term pain, if it getting rid of Otas pirates scamming overcharging, our customers and moving those into a more cooperative working with US. It also I think the new agreements. This morning, with love holidays, and with Kiwi exposes the.
Speaker Change: Paul.
Speaker Change: Of some of these old claims that Ryan is just trying to eliminate otas, where now we have for many years worked with Otas like Google flights, who just who.
Speaker Change: Our enormous price transparency website.
Speaker Change: And passengers directly to ryanair to make the booking the reason we have a problem with the Otas pirates is illegal screen scraping of our digital of our data and then using that to scam customers for <unk>.
Speaker Change: Excessive airfares inflated ancillary services in some cases charging them for nonexistent services, such as refund insurance and our change fees, while non changed that would take us.
Speaker Change: But I think it's been a very good month or two months work and his long term very much in ryanair as interest and in the interests of our consumers that they can get access to our low fares, our low cost ancillary services without being scammed by some intermediaries.
Speaker Change: Neil I am finished here do you want to anything you want to highlight in terms of.
Neil: The finances, the balance sheet and the dividend.
Neil: I suppose just on the balance sheet ended.
Neil: Ended the quarter very strongly with just over $2 9 billion in gross cash and importantly, net net cash balance of $150 million.
Speaker Change: To be the most highly racist airline in the world with a triple B plus ratings from Fitch and S&P and a big advantage that we have in these markets is our unencumbered Boeing 770, <unk> 546, unencumbered aircrafts and so we're generating net interest income in the business at a time when our competitors are <unk>.
Financing or taking on expensive leases. So that's a big competitive advantage that we have you touched on the hedging, but I think we shouldnt underestimate the bandwidth of certainty that we have now in our hedging out at the end of March 2025, 4% to $50 million.
Speaker Change: Worth of savings being locked in in what are fairly volatile markets. At this point in time and then of course, we've got our first interim dividends at the end of next month and a half cents per share and we will have something similar again after AGM approval and.
Speaker Change: And in September and Thats pretty much all I wanted to add Michael.
Michael: Okay, Alright, and gives the speed then we'll open it up to Q&A. Please.
Michael: Yes.
Speaker Change: Thank you if you would like to ask a question you managers followed.
Speaker Change: Thank you Pablo.
Speaker Change: Your lines.
Speaker Change: One last question. Please ensure that your line is on mute Hello.
Pablo: Our first question.
Pablo: J P.
James Goodall: Please go ahead, Paul right now open.
James Goodall: Good morning, Gents, Hi, two questions if I can.
James Goodall: Question was just on the ex fuel unit costs, maybe you could talk through the increase in the productivity.
Paul: What impact you might say into 2025, and so any latest thoughts direction on ex fuel costs.
Paul: For March 25, and then the second one.
Paul: There were some comments from United I think loss rates that they were making plans that doesn't include the Max 10 going forward potentially.
Paul: The type of airlines start to cancel or defer.
Paul: <unk> orders would you have to take on some of those slots over the next few days or are you quite content with your current plans. Thanks a lot.
Speaker Change: Okay. Neither last few ex fuel unit costs, it's a bit early yet for FY 'twenty five we haven't yet finalized the budgets, but I'll ask Neil to in more detail United I thought this coming Saturday United last week was stupid.
Speaker Change: Uh huh.
Speaker Change: If they want to hand over or they want to cancel some of their Max 10 deliveries frankly, Ryan it would take them.
Neil: We'd be very happy to take aircraft early.
Neil: The Max 10 is a very good aircraft, we can't wait to get it into a downward this 20% more seats it burns 20% less fuel.
Neil: Max aircraft has now in Ryanair alone the Mcevoy, we completed over 1 million last year.
Neil: More than 20% of those on Max aircraft, Great operation reliability gives a great aircraft.
Neil: The Max nine.
Neil: The club with an unfortunate incident. It does highlight the need for improved quality control and Boeing but they are still making great aircraft as by the way our Airbus, We're making great aircraft. Despite the fact that they have a with the engine is a major issue.
Neil: Airbus Air operators going forward.
Neil: So, but I think we have two large manufacturers. They are both making great aircrafts the stupidity of United comments last week that their order books are full out to 'twenty, Turkey. So if a nice isn't going to take the Max aircraft and not only are they going to replace them or substitute them with are both there.
Neil: But if they want to delay or cancel any of those Max 10 aircrafts Ryanair.
Neil: Brian There will be the first people in just the asset has talked to Boeing about taking those.
Neil: Our aircraft, although I suspect it would be a Q.
Neil: Of customers waiting to take those aircraft given how tight the OEM suppliers between now and 2030, so I thought the United comments were unhelpful stupid.
Neil: But if they want to do something stupid like campus over the Max 10 orders Ryan here will be very happy to take them.
Neil: <unk> unit.
Speaker Change: Yes sure Harry.
Speaker Change: Thanks for the question.
Speaker Change: In the quarter itself and for for this year.
Ryan: As you've seen from the commentary this morning, we're looking at about another 50.
Ryan: On unit costs ex fuel so $2 50.
Ryan: Prior year some of that's down to the lower load factor in Q3 in early January the balance is kind of down to the productivity improvements that we're putting true for our people. Those PE improvements would obviously you have today and annualize into next year. So you will see a little bit of cost increase.
Ryan: As a result of that next year, but our fuel savings are going to more than offset any unit costs ex fuel increases that we have coming through on a year on year basis.
Ryan: And I think.
Ryan: Over obsess too on a quarterly basis, sorry on unit costs actually the key.
Ryan: Key issue here is still slide four in the presentation.
Ryan: While we are not in any way kind of.
Ryan: Relaxed about unit costs, our cost control the gap between us and other competitors ways easy jet in Europe and in particular the AG.
Ryan: Other airlines in the U S is widening dramatically as we but we do have to keep our pay competitive.
Ryan: We have a fixed we have agreements in place that cover basic pay and productivity pay with pilots and cabin crew that run for the next.
Ryan: Three four years, but if where our earnings are rising dramatically.
Ryan: There is some pressure on competitive pay particularly for pilots.
Ryan: It was to.
Ryan: Due to work with our unions and our pilots and keep their pay competitive which is what we will do.
Speaker Change: Okay. Thanks, Mike.
Speaker Change: Thanks, Larry next question please.
Speaker Change: The next question comes from Steven a follow ups from Davy. Please go ahead. Your line is now Stephen.
Steven: Hi, Michael to.
Steven: Two questions I noticed maybe one for Neil just maybe talk about the headwinds or tailwind on cost.
Steven: The next year or two I saw there that you were talking about Etfs reform and the re basing of current airline allowances. For example, maybe that's a minor thing, but you might just talk about the pattern.
Steven: Anything else on just big positives or are headwinds for calls.
Steven: And then on pricing Michael.
Steven: I know on the prerecorded you said pricing is strong demand very very strong.
Steven: Anything in terms of markets.
Steven: I mean, I guess, it's a function of capacity, whereas better than other places that'd be great. Thank you.
Speaker Change: Thanks Steven.
Speaker Change: Do you want to take the first one yes.
Speaker Change: Yes, Okay, Stephen the Rebase of Etfs against 2023, we're studying that at the moment, but we think it will be modestly positive.
Speaker Change: Our us haven't got the final numbers on it yes.
Speaker Change: As you know, we're very well hedged on carbon in any events.
Speaker Change: We've got all of our credits hedge next year at about 76 Euro an EUA, which is down from 81 Euro an EUA.
Speaker Change: In the current financial year, but I do think that Etfs reform.
It will be modestly positive for Ryder.
Speaker Change: And I think the the pricing situation as an opportunity to Eddie Wilson here CEO of <unk> <unk>. What are you seeing generally by market are in general terms for summer 'twenty four I think it's very early to say, but.
Speaker Change: You look at our three largest markets, Italy, Spain.
Speaker Change: And the U K, where we have the.
Speaker Change: The proportion of our growth so.
Edward Wilson: Nothing unusual there aging different across those markets at all and then we've got a lot of growth coming out of places like Albania, Morocco and Croatia.
Edward Wilson: You are still in very small numbers for the for the summer season.
Edward Wilson: And so it's.
Edward Wilson: There are no places, where we put a lot.
Edward Wilson: Or is your amount of growth in places like Albania, obviously will.
Edward Wilson: It's only a small proportion of what we do so but I think it's fair to say, we've been very surprised at the strength of the both the load factors and the payers and our new entry into Toronto, which is a market that was dominated by one or the other so called low fare airlines, we're running 90% load factors, having launched in November in the middle of the winter.
Edward Wilson: From my point of view in terms of growth is the disappointment that we're going to be somewhere seven aircraft short maybe 10 aircraft short for summer 2024. It really is constraining our growth we have many more airports out there who are looking for these aircraft and that doesn't even factor in things like returning to Ukraine, if or when they defeat the erosion.
Edward Wilson: We see very strong growth across almost all our airport customers for additional Ryanair aircraft, particularly in markets, where they are struggling to recover their pre COVID-19 volumes.
Edward Wilson: Next question between Thanksgiving.
Edward Wilson: The next question comes from Douglas Channel.
Douglas Channel: Please go ahead that totally height.
Douglas Channel: Morning, Michael morning, everyone. Two questions from me as well first of all on the higher productivity pay for pilots and you mentioned in the statement that's upbringings and increased operational resilience can you just talk us through what that actually brings for Ya.
Douglas Channel: And then the second question has to do with the capacity dynamics in Europe at the moment, obviously, if the GTS engine is the kind of biggest new thing. This year, how long do you see that market staying as tight as it is in below kind of pre COVID-19 levels. Thank you.
Speaker Change: So just give me the second half that again with the <unk> engines.
Speaker Change: Just in terms of the capacity dynamics being Thyssen Europe, obviously, it's going to be tight this summer, but do you see that rolling into next year and beyond.
Speaker Change: Largely the engine and maybe I'll give you and.
Speaker Change: And you can talk about the.
Speaker Change: Productivity.
Speaker Change: Yes. So if you take capacity generally eurocontrol a confirmed last year European shortfall was about 93% of pre Covid. The question for somewhere 24 is that going to grow or is it going to decline.
Speaker Change: We think it's not going to grow we're not sure yet whether it declines it depends on which markets.
Speaker Change: <unk> hundred 20 operators.
Speaker Change: Ground. The aircraft are going to grow for example, if you take the likes of ways are they go into kind of constrained our growth in the middle east or are they going to constrain their growth.
Speaker Change: Europe I suspect, we're going to see more constraints on growth in Europe, where they are struggling to compete with us.
Speaker Change: And we're still waiting to see where those find those final kind of schedule decisions haven't yet been made akshay tools haven't yet been altered.
Speaker Change: With the backlog between engine shops around the world.
Speaker Change: Clear to me that the <unk> engine issue is going to run on through summer 'twenty four and again, it's somewhere 25 may even stretch at December 26.
Speaker Change: The Oems are not going to deliver meaningful aircraft numbers between now and then Ryanair is very fortunate. Okay. We may get less short for aircraft. This with somewhere by Boeing will pick them up for the summer of 2025 were scheduled Turkey aircraft in advance at somewhere 25, plus whatever they leave a short this year.
Speaker Change: But really other than that Theres very few add new aircraft deliveries going into short haul Europe. We do expect the Asian market will recover more are reopened more for summer 2024 and that that will.
Speaker Change: Enhanced demand across.
Speaker Change: Short haul Europe, particularly if it builds a transfer of traffic on the legacy short haul.
Speaker Change: So all the indications are at this point in time is that demand our capacity is going to be constrained in European short hold for summer 'twenty four I see no reason why <unk> won't be strong. We're just not sure where that's going to fall in terms of pricing I do believe pricing and somewhere 24 would be ahead of summer 'twenty three it will be up though I mean, I think it won't be up.
Speaker Change: The 15% to 17% we saw last summer.
Speaker Change: Kind of mid to high single digits, maybe low double digit is a reasonable expectation at this point in time, but.
Speaker Change: That's capable of being derailed if there's geopolitical issues.
Speaker Change: Some adverse development in Ukraine, etcetera things like that but certainly all the indications are at the moment is that.
Speaker Change: But he for particularly during the school holidays Easter Easter break et cetera is strong and pricing is.
Speaker Change: Slightly upwards at this point in time.
Speaker Change: Just to give you a flavor, let me on the productivity via that feels like.
Speaker Change: Like if you if you go back to where we came out of covertly Ryanair with the best prepared all airlines.
Speaker Change: In Europe, it's not in the world for having sufficient crews.
Speaker Change: More than sufficient crews to run the schedule when many of our competitors were floundering and some of the lessons that we have.
Speaker Change: <unk>.
Speaker Change: And as we continue to grow we will lean into.
Speaker Change: Having not just.
Speaker Change: Sufficient crews, but we should build the extra resilience because the reason we need extra resilience with primarily driven by poor ATC.
Speaker Change: <unk>, we don't want to be caught out by that and that means that we've got.
Speaker Change: If we go to we have to remain competitive with our crews to attract and retain people and we will continue to do that if that means that we have to adjust pay like we have then thats, what we will do and it gives us the comfort in the medium term.
Speaker Change: ATC, if it's ever ultimately reserves to get back to.
Speaker Change: The sort of operational efficiencies that we have.
Speaker Change: That means that we can compare back crews in time, but at the moment, we're not going to take.
Speaker Change: Any risk on that whatsoever. So it's about having the right crewing ratios and placed Columbia schedule against the backdrop of a really shutting ATC environment.
Speaker Change: Yeah, and I shouldn't just say as well in terms of capacity they Boeing we're being shorted those aircraft from Boeing.
Speaker Change: Financing our budget at the moment, but we're walking back our full year traffic figure for FY 'twenty five is going to come back from $205 million, probably 200 million would be the working assumption. So we're going to have two 9% less capacity out there through certainly the summer 'twenty 'twenty four than we would wish to have at this point in time, so as I said previously United.
Speaker Change: Want to walk away from any Max 10 aircraft deliveries, we'd be very happy to step into the breach.
Speaker Change: Thanks for the question Doug next question. Please.
Thank you. The next question comes from Jamie Rowbotham from Deutsche Bank. Please go ahead. Your line is now Jamie.
Speaker Change: Morning.
Jaime Rowbotham: First one for Neil maybe that.
Jaime Rowbotham: Don't want to obsess too much on these ex fuel unit cost back in November.
Jaime Rowbotham: Whether there were any risks on the unit cost guide and you Helpfully mentioned the route charges, which I thought looked a bit high this morning, and presumably you've now got visibility on the higher eurocontrol rates for the next 12 months I just wondered whether these were also a little bit responsible for the extra 50 cents.
Jaime Rowbotham: On the cost of the tax guide in 'twenty, four and how much of a headwind there is on route charges into 25 at.
Jaime Rowbotham: At least I guess this will be the same for everyone and secondly, Michael given the focus on Boeing you mentioned.
Jaime Rowbotham: <unk> delivery defects on receipt of recent Max's.
Speaker Change: Could you expand a bit on that describe these sorts of issues you were encountering before the recent improvement. Thanks.
Speaker Change: Okay. Thanks.
Speaker Change: Oh go ahead.
Speaker Change: Yes.
Speaker Change: On route charges, Jamie yes, they are going to track Gulf of base at year on year, We're just getting the final numbers and at this stage run into budget and then I'll give you a bit more color when we come out in May which had the working assumption in the budget is that we are seeing recharge is tracking up slightly year on year.
Speaker Change: Yes.
Speaker Change: I wouldn't obsess with unit charges, the third quarter like the bigger driver of it on a quarterly basis was the slight slippage in load factor.
Speaker Change: We would have expected originally to grow that load factor by maybe 1% it's down 1% that will continue into January as well so on a quarterly basis. It moves the dial a little bit more on an annualized basis. It doesn't have that much effect Boeing delivery defects I mean, we've been jumping up and down with Boeing for about the last 18 months on the number or range of number of defects that were picking up.
Speaker Change: <unk>.
Speaker Change: We now do about a 48 hour inspection of each aircraft on delivery here in Dublin, which again is kind of as is.
Speaker Change: Have a painful process, we pick up lots of little things.
Speaker Change: I don't want to go into the detail but.
Speaker Change: Spanners under a floor board still for in the cockpit and it shouldnt be there those are the kind of small quality assurance things, we pick up the bigger issues were kind of over the last 12 months of the known issues you've kind of.
Speaker Change: Issues coming out of Wichita, where.
Speaker Change: Both into the desert Tailfin, we're putting the wrong way holds in the for the forward pressure that whatever it is I don't even know what it is drilled the wrong way stuff that shouldnt be happening on a $100 million.
Speaker Change: Piece of cake.
Speaker Change: You wouldn't expect them. If you were taking care of our bank card from Mercedes or Audi and we don't expect that when Youre, taking aircraft from Boeing from Airbus.
Speaker Change: But.
Speaker Change: Some people would say this is was probably.
Speaker Change: As a consequence of the two year grounding of production jewelry in Covid.
Speaker Change: I think there may be a little bit in that.
Speaker Change: But it means that Boeing and Airbus both need to significantly improve quality control both the oversight of the engines and then on the airframe fuel production.
We are pulling are aware of this and I think they have significantly increased the numbers of engineers to have doing quality assurance on aircraft.
Speaker Change: Aircraft goes through the shop and the 12 aircraft, we got in the fourth quarter or in the December quarter, we found less.
Speaker Change: A little silly things on those aircrafts on delivery than we had in any of the previous game changes over the previous two years. So we think quality is going the right way.
Speaker Change: It is very unfortunate, but that they had the Max nine door panel still Boeing are getting an awful lot of unfair.
Speaker Change: The coverage is there.
Speaker Change: There was an air Canada aircraft took off last week and one of the nosewheel fell off like that has nothing to do with Boeing I mean, thats the maintenance issue within Air Canada.
Speaker Change: But it's all as a pilot on 730 Sevens there.
Speaker Change: There are two.
Speaker Change: Large volume aircraft the <unk> hundred 20 family and the 737 family. They carry 90% of the wars passengers on the daily basis. They are terrific aircraft. They are very safe. We are big supporters of the 737 and particularly the new variant the game changer, which is carrying 4% more passengers and burned 16%, that's new and <unk>.
Speaker Change: Especially the Max 10, which will carry 20% more passive burned 20%, let's you as Neil said, we expect the game to the Max tends to be certified.
Speaker Change: Believe in the Q4 of <unk> 20 for first delivery to the American Airlines in early 2025, we're not pleased to get the first Max tenants of 2027.
Speaker Change: So we are well down the list of deliveries, but we can't wait to take them and pass on the value of the incredible value that those cost reductions those are efficiencies those aircraft will deliver for US we had pass it all on in the form of lower fares to customers.
Speaker Change: Thanks, Jamie next question please.
Speaker Change: The next question.
Speaker Change: Close to <unk> 15 can you kind of Hudson.
Speaker Change: Hi.
Hi, Michael Thank you I've got two questions. So firstly on the capital allocation. Obviously, you have started the interim dividend today and what does it mean in terms of share buyback.
Hudson: Given the balance sheet strength as we go into.
Speaker Change: Yours are into 2025, so that's my first one and then the second one.
Speaker Change: You flagged about the pilots being.
Speaker Change: In terms of.
Speaker Change: Flavors, such as being under pressure in the UK, but are you seeing anywhere else.
Internet in Europe about the pilots are actually under pressure like in terms of availability as being under pressure from Q.
Speaker Change: Thanks, Felicia so quick ones on capital allocation, we will continue to pay down debt.
Speaker Change: You need to fund all of our account base from internally generated cash flow. However, capex falls steeply in the next two years from almost $3 billion down to just under $1 billion a year.
Speaker Change: That should if profitability maintains where it is spring out throw off about $2 billion a year in free cash for the next two years.
Speaker Change: A quarter of that will be allocated to dividend payments and then I think the board subject to all being well with the balance sheet and the rest of the world will be looking to return due to the addition of any spare cash to shareholders. It would be and it will be a case by case basis, there'll be special dividends or buybacks.
Speaker Change: And I think that the driver that will be generally p/e multiples whenever we come to do it but we won't promise you know, we're not going to borrow to do it once we generate the cash if we have more than.
Speaker Change: 353 $4 billion in cash on the balance sheet than anything surplus to that will be returned we have two big more two more big debt payments, but one is in 'twenty one is in.
The FY 'twenty 60 deals in FY 'twenty seven.
Speaker Change: So I think shareholders should support should expect more returns per what format. They would be we don't know there that'd be a matter for the board pilot, we're not seeing huge pressure on pilots across Europe. There is some pressure in the UK that was.
Speaker Change: As some of the other UK Airlines, we're kind of paying out panic pay increases last year, because they came out of Covid short a pilot that does seem to have settled down and we are not seeing significant pilot attrition.
I think we did have a gap between our pilot pay and that our competitors for the last year again as a result of these kind of panicked pay increases that some other particularly 737 airlines in Europe and in the UK where pain.
Speaker Change: We intend and plan to keep pilot pay competitive we will never be the best Payor.
Speaker Change: But we certainly will keep it competitive and the rapidity of Ryanair as growth and the wage of promotion like you'll go from being a cadet here tissue by a captain on the 737 typically within a period of four or five years, if you're up to the job and that is what drives very rapid increase in pilot pay.
Speaker Change: UK, we think we're okay. At this point in time it hit the market is tight.
Speaker Change: Because of the flexibility of UK labor post Brexit.
Speaker Change: Yes.
And we don't have we have some growth in the UK, but not a lot.
Speaker Change: We believe that the.
Speaker Change: <unk>, we've now agreed with the unions pilot unions, and we're extending out to capital uses well leaves us well positioned with.
Speaker Change: Ample pilot and cabin crew resources for summer 2024, but that's heavily dependent upon their not being another meltdown in European ATC and the thing is like a repeat of the 60 days of ATC strikes, which we suffered in somewhere 20 territory. They really do ease up an awful lot of crew hours at peak periods and it's something that.
Speaker Change: We're building in slightly higher crewing ratios to improve our resilience.
Speaker Change: And that in turn reduces some of the productivity elements of pilot pay Eddie wants to commit on that point, yes.
Edward Wilson: If you look at the U K is primarily really a licensing issue the appeal as Michael says.
Edward Wilson: A particular.
Edward Wilson: Tightness in that market.
Edward Wilson: That you don't have the fluidity of moving pilots around from different parts of Europe that you had at pre Brexit, but what we've done over the last number of years, because we don't take people from other airlines, we've been growing our sort of R. R.
Edward Wilson: Our input of cadets into the UK system, so that coupled with.
Edward Wilson: The pay issues that we have dealt with there that chip that should sort that this isn't just it's not to say, it's the same for engineers as well because it is primarily driven by Brexit until the supply issues are sorted.
Speaker Change: Okay. Thanks. Thanks next question please.
Speaker Change: Our next question will come from Alex <unk> from Bernstein. Please go ahead, Alex Alex.
Alex: Hi, Good morning, gentlemen, two for me please firstly on the Otas.
Alex: Tell me, what's your typical level of ancillary spend per passenger is on otas booking direct booking is there a revenue opportunity here from the new deals are likely to Shutterfly that bookings also is there any cost savings opportunities from the otas change and a reduction in the level of money will postpone servicing.
Alex: Second question is on unit cost typically maintenance, we saw maintenance costs up 40% capacity up 89% year on year, what's driving that.
Speaker Change: We should be aware of thanks.
Speaker Change: Okay and got out of Tracy employ here, we're going to get harder to you that that maintenance cost question, Neil and then just so on the Otas.
Tracy: Any particular upside on salaries, but a lot of kind of misguided coverage here, we want to take these bookings direct that we can maximize our ancillary the big issue with the Otas is one we don't want anybody illegally screen scraping our website that is digital piracy, it's our data and we are a bit like music.
Tracy: See our film piracy should be outlawed.
Tracy: We wouldn't have such a big issue is if they werent scamming customers and so we have for a number of years, it's been chasing down some of these pirates.
Tracy: Overshot what they don't do they don't we will have less of an issue with them. If they suddenly said to each customer we are <unk> and here's an OTA EFI yours, but the OTI detailed the customer could decide whether they wanted to make the bookings that OTA and paid the fiber all come directly to Ryanair and say they've been scamming in and placing our airfares they are scamming and inflating Yang.
Tracy: <unk>.
Tracy: I think there might be a slightly bigger better conversion of ancillary if we're able to communicate directly with our the bookies made directly in the web site and in some cases that we released it on a monthly basis, our otas pirate surveyed.
Tracy: Some of these otas are inflating our ancillary the bag charges the fee charged by three and 400%.
Tracy: So I think there might be a slightly better conversion of ancillary if every customer has access to our ancillary as the published prices on our web site, but theres no big jump in ancillary as a result of getting rid of the Otas I think there may be but we're trying to do is to protect consumers from being overcharged by these intermediary and over.
Tracy: Longer term, we don't want a booking dot com or some other third party to be able to insert themselves between us and our customer capture huge amounts of customers as they have done for example in wholesale distribution and then turn around towards our re impose on us also.
Tracy: We had Turkey years ago, when we had to pay 20% for distribution through travel agents and global GDS, we do not want to we cannot afford to pay kind of.
Tracy: Extravagant commissions for distribution, particularly where there is no cost of distribution through the internet because that would simply inflates airfares, which would be not in the consumer interest. So we will continue to battle intermediaries, particularly those who are engaged in digital piracy, who want to insert themselves between us and our consumer or.
Tracy: Charge, the consumer or at some point in time in the future turnaround and try an overcharge us in a manner that would inflate the cost for consumers.
Tracy: But I don't foresee Alex if theres any immediate help citing ancillary although probably a little bit of a jump in conversion.
Speaker Change: By not by not overcharging consumers for ancillary Tracy maintenance staff for me. Please.
Speaker Change: The timing of project summit, where it's more tech following Q4 into Q3.
Speaker Change: We don't see efficacy.
Q4.
Speaker Change: Labeling leases.
Speaker Change: Alright.
I mean <unk>.
Speaker Change: Again, we bump over some of the recent.
Speaker Change: <unk>.
Speaker Change: At the end of August.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Thanks, Tracy will Don next question. Please.
The next question comes from James Hollins from BNP Paribas. Please go ahead, James James Hi.
James Hollins: Yeah, Jason Thanks.
James Hollins: <unk>.
James Hollins: The first one is would you expect to do deals with the Otas won't be some off limits homecare.
James Hollins: Given your history of tumor seeing them.
Speaker Change: And are they coming to use of deals and.
Speaker Change: And secondly, you think he becomes 410% to 15% of tickets historically, so through OTI Pirates Youll works don't mind I was wondering how that normalizes. So quick Tms of Harlem until JP and you seem to imply that this is kind of a December January issue, rather than anything longer than that.
Speaker Change: Martin just one other thing.
Speaker Change: Okay.
Speaker Change: I'm not sure I mean look the.
Speaker Change: If you take there's about seven or eight Otas account for we think more than 50% of OTI pirate bookings were never quite sure. What the number is so I give you 10% to 15%.
Speaker Change: <unk>, we can track these and it's where we think theres, a fake credit card or theres, a fake email address and thats, what we chase them down so we're not entirely sure ourselves.
Speaker Change: <unk>.
Speaker Change: A number of them have come to us since December in fact wed love holidays were the first ones to come to us and we were I mean, we have offered them in essence the same offer on the table. We've given them. The same terms that were on offer through the GDS. So we signed up deals with the GDS as last year. So the travel agents had visibility on our payors.
Speaker Change: The critical thing again with that we would have add.
Speaker Change: The booking may directly in Ryanair Dot com and no overcharging no scamming of.
Speaker Change: Consumers either for airfares are ancillary.
Speaker Change: And that gives these business about OTR business models, a lot of flexibility, but what we're not willing to countenance is that people are taking our digitally or sorry. They also agreed not to screen scrape our website, because we give them a direct feed theres no need screen scrape our website do I think all of them will come on board frankly, I don't know and I don't particularly care.
Speaker Change: I do think the majority will be we.
Speaker Change: We have a number of others, who are we are in active discussions with almost all I would instead of the top eight top 10.
Speaker Change: Booking are not in our comp base, our top 10, they're reasonably small.
Speaker Change: But I do expect I don't know Julia So I wanted to ask.
Speaker Change: If he wants to add we do expect the the case with booking dot com to roll on.
Speaker Change: We're not particularly minded to settling with them.
Speaker Change: And I think but.
Speaker Change: We have so many examples of egregious overcharges by booking on air fares and ancillary.
Speaker Change: We are believe it would be very difficult for bulky dot com to go into core to the states eventually we're going to drive it that way.
Speaker Change: Thought it was remarkable that they wanted all of the Ryanair management deposed and we've all been deposed and yet none of the bulky management wont be deposed or they're kind of contorting regularly every which way they can to avoid being deposed because the first question you're going to ask them of course is why you overcharging and why are you a.
Speaker Change: Illegally screen scraping and overcharging customers, but they're reasonably small in terms of volumes, but we're not about to allow any of these people to try and engage in digital piracy or to overcharge consumers if they all want to.
Speaker Change: Have approved partnership deals, where we give them direct access to our inventory and they agree not to screen scrape munto overcharged and we'd be very happy to work with them.
Why do we think it's.
Speaker Change: December January issue.
Speaker Change: One because once they come off sale there is an immediate drop off in our bookings and it took us a number or a week or two in December to spot days.
Speaker Change: But passengers suddenly find the way they find other ways of the Internet factored the ryanair low fares.
Speaker Change: And also the passenger still mistakenly believed that theyre booking and Ryan here when they are actually booking through E dreams, our Skylark E dreams are booking our opposable are key we have these people they don't really realize that they're not making a booking in the ryanair website, they don't be realized theyre getting Camden overcharged.
Speaker Change: And if Ryan Air comes offset on some of these OTT pirate websites people simply find the way round.
Speaker Change: Go back to Google flights or somebody else or some of the other price comparison websites to find the ryanair pricing.
It does look and then of course, we always have the ability to open up a bit more.
Speaker Change: The cheap seats are a bit more about price stimulus, which we're happy to share in January and February we werent happy to do it in December because we thought we would track the close in bookings over the Christmas.
Speaker Change: New year period.
Speaker Change: And I have always been of the view that if we can eliminate these guys or at least remove the overcharging under scamming and at least <unk>.
Speaker Change: <unk> ourselves for the long term risk that these guys would try to become or would have so much of our volume that they tried to become a new GDS to renew intermediary charging either also customers a percentage of revenues.
Speaker Change: I think that's well worth taking on we are much more vocal about this because we have the cheapest airfares in every market. Therefore, we are much more of a target for these guys than the other higher fare airline I think the other higher fare airlines are a grateful for whatever bookings they get from these otas, whereas in our case.
Speaker Change: Because we have such a price advantage it gives them more latitude for scamming are overcharging passengers.
Speaker Change: Thank you want to add on the dot com side or the Otas.
Speaker Change: On <unk> Dot com.
Speaker Change: John.
Speaker Change: The bookings themselves.
Speaker Change: Yes.
Troubled with competition authorities.
Speaker Change: And likely to be honest.
Arkansas.
Speaker Change: Year, and I think they should consider seriously.
Speaker Change: In respect of consumers.
Speaker Change: And the extent of charges post I think ultimately.
Speaker Change: Harsh to constant terms with the fact that.
Speaker Change: Overcharge consumers with Hittite pieces over.
Speaker Change: They don't have to work with us.
Speaker Change: Okay. Thanks, Scott next question. Thanks, James next question. Please.
Speaker Change: Your next question comes from <unk> <unk> from Raymond James. Please go ahead your line is Avi.
Avi: Hey, good morning.
Speaker Change: First question for me.
Avi: On the GDS side of things, you've been adding more kind of corporate relationships. There I was wondering if you can kind of give an update on where you know.
Avi: Theres a lot more opportunity there and if you're seeing any improvement in either.
Avi: What kind of mix of business.
Avi: Travel or just any kind of color on how business is recovering.
Avi: And then just.
Avi: Secondly, just with the aircraft delivery delays.
Avi: Are you needing to change it and then just given how constrained.
Avi: Constrained the environment is are you changing anything in the way you kind of alluded schedules and the way you broke up schedules given kind of your historical.
Avi: Kind of yield passive load factor active strategy.
Avi: Okay, Andy maybe you take the GDS.
Andy: The point and then I'll do the aircraft deliveries and lower loading schedules.
Andy: The GDS is.
Andy: Came back, but primarily driven by business travelers like as we've grown our.
Andy: Our base network in particular.
I'm, taking post Covid, where corporates became much more price sensitive that we werent available.
Andy: A lot of the platforms.
Andy: We've done a recent deal with that Coker.
Andy: Which was.
Andy: Stock based products for our people to mandate.
Andy: Corporate <unk> managed our expense management, and we fit naturally into that.
Andy: And that will go live I think probably from when we signed the deal. It will go live in the API level will be working from.
Andy: Early April so it's just it's just another kind of GBS it.
Is growing spectacularly people still go.
Andy: For the.
Andy: Naturally gravitate towards our lowest fares you look at the recent otas that have come through you could argue there are channel yes one.
Andy: One of them as a channel for our does want to have a package elevate not material and what we do but we will continue to develop those channels, but our cycle time is not necessarily going to move the dial, but the one that I really am.
Andy: I suppose I'm excited about is as concur, because that will get those small and medium sized businesses.
Andy: Ryder will be presented.
Andy: You will have the lowest fares.
And I think it's fair to say we're also.
Andy: Wouldn't underplay.
What I underplay underplayed the significance of the of the Otas as last week with love holidays, and with Kiwi. This morning, I mean these deals now give them direct access into Ryanair inventory. They are capable of moving a significant volume of seats and the fact that they are now doing that without screen scraping, but giving their customers.
Andy: Ryanair airfares underwriting the real at Ryanair ancillary prices I think could have resulted in a significant boost in their volumes, although that volume of bookings.
Andy: Turning to aircraft delivery delays, it's very frustrating we have been very slow to launch the that the summer 2024 schedule I think it's fair to say typically at Christmas we would have about 85% of the summer schedule launched this Chris because we've only about 75% of it launched.
Andy: We have some and most of that is uncertainty over Eric there is still some we're still negotiating with some airports as well.
Andy: Eddie Jason and the.
<unk> made a major breakthrough last weekend with a new base in northern Italy, where they are.
Andy: And it's for visa.
Andy: Region are the Trieste region scrap the municipal tax which is the first time one of the big Italian reached a strap the municipal tax $6 50 per departing passenger these are major advances.
Andy: On behalf of consumers on in terms of our call.
Andy: So it's fair to say that some are 24 hour schedule at our summer schedule.
Andy: That launch has been delayed we are still at this point in time, we've only launched it with the core somewhere sure, but we're also late with the some of the summer.
Andy: Schedules that we would have ideally have launched in April and May don't get launched until June and July because of the Boeing delivery delays. We were supposed to have 57 aircraft from Boeing at the end of April we will be lucky to get 50 aircraft by the end of June and that in itself means a.
Andy: A lot of the summer business that we would want to do in May and June has been delayed and even today, we're still holding back about 15 aircraft we have only.
Andy: What's on sale at the moment is about 35 of the 50 aircraft that we have for Boeing we need more certainty and more confident that Boeing will deliver those aircraft to us.
Andy: And there are still a number of announcements to be made on some new routes.
Andy: Some new aircraft on some new routes and maybe one or two basis.
Andy: We're in the final part of negotiation so.
And overall savvy to answer your question the aircraft delivery delays is delaying the summer schedule. It is constraining our growth I mean, it would add another $1 million or 2 million passengers and we were able to launch. These summer roots in May and June as opposed to launching the Mali at the end of June or in July.
Andy: To hit the summer peak, but it is very frustrating with dry I think the next year. Instead of 205 billion passengers will probably be running around $200 million would be the number for the full year.
Speaker Change: Next question. Please thank you.
Speaker Change: Thanks.
Speaker Change: Thank you. The next question comes from.
Speaker Change: Duane Arnold glass Evercore Wayne <unk> go ahead.
Duane Pfennigwerth: Your line is now.
Duane Pfennigwerth: Good morning, just a couple of quick ones on the ETS credits that are expiring can.
Duane Pfennigwerth: Can you just help us think about the magnitude of that relative to the $450 million in fuel savings.
Duane Pfennigwerth: <unk> 25 over F. 'twenty four in other words that $4 50.
Duane Pfennigwerth: What should we subtract from that for the sort of change in the Etfs credit recognition.
Speaker Change: Yes Duane.
Duane: So we'll lose about 20% of the free allowances. During next year. So we had about just under four menu free allowances, so about 20% of loan volume and halfway tiny.
Duane: What's happening in financial terms, though.
Duane: It's about 665 your tone today, so it's public.
Duane: So the fuel hedging savings of about $4 50, and the ETF dependent on wages cost of about $60 million to $70 million okay.
Duane: Great.
Speaker Change: Yeah, just just with respect to a tighter OEM market and these lingering constraints, where would you estimate the value of your unencumbered fleet today, thanks for taking the questions.
Speaker Change: That's a big.
Above my pay grade.
Speaker Change: The value of our existing unencumbered fleet is dramatically higher than multiple or anything.
Speaker Change: It's the big defeat us in some of our competitors in Europe remember, we had all of our aircraft that the net purchase price to the balance sheet and so you'll get the benefit and lower depreciation significantly lowered radiation charges over the next 20 years I heard one of our competitors last week talking to themselves trying to explain how they're doing sale.
Speaker Change: Leasebacks, recognizing a profitable front, but it doesn't make a lot of difference over time between us and Ryanair.
Speaker Change: In fact, the aircraft ownership costs for that here and are more than double that of Ryanair on a per passenger basis like just complete note or horseshoes.
Speaker Change: <unk>.
Speaker Change: The fact is.
Speaker Change: They also by the way the hour delivery book of aircraft, which we price them in the last of the we still have.
Speaker Change: More than 60 are just over 60 game.
Speaker Change: Game changes to take delivery of over the next two years, we could.
Speaker Change: Our work I would say probably not far off <unk>, but what we will be paying for them over the next two years and even the Max 10 game Changers I would say the market is so constrained I read a story. This morning that Airbus are out trying to buy back some of the delivery slots from some of their <unk> hundred <unk> from the lessors and some of their customers.
Speaker Change: Our sensitivity to provide.
Speaker Change: Aircraft to United in the states. So I hope they are very successful and I hope therefore, as a result generated walk away from a load of Max 10.
Speaker Change: Because we'd be the first ones out there looking for additional Max tens or <unk>.
Speaker Change: <unk>.
Speaker Change: $6 27, if we could get but I think it's the reality for all airlines is that were all short of air.
Speaker Change: The OEM channel.
Speaker Change: The more significant thing might be welcome to Max Nines going back into the air last week, just so that you just take that as the issue of it I thought that the most significant.
Speaker Change: Intervention by the FAA and Boeing not to increase monthly production.
Speaker Change: That does represent a challenge for Boeing it will leave some dissatisfied customers going forward for deliveries in 2020 remained at 24 25, and 20 States, we were still getting get our perky aircraft next winter.
Speaker Change: But I think it is inevitable given the quality challenges facing both Boeing and Airbus that some of this capacity ramp up needs to be slowed down and we still haven't even taken account of some of the orders that are still out there from the Chinese airlines the middle Eastern Airlines, some Indian airline for additional aircraft.
Speaker Change: Therefore, I think the world is going to be challenged for certainty short haul aircraft for the next seven years out to 2030 Ryanair is one of the few airlines that has a secured a pipeline of reasonably low cost of new aircraft deliveries over that period of time and these are new aircraft deliveries that will transfer.
Speaker Change: Form our operating our operating cost because they offer a significantly more seats, but at a significantly reduced fuel consumption.
Speaker Change: So I don't think ive ever been more excited about our growth and the.
Speaker Change: Possible profitability of our growth in Europe in the next three to five years, where our capacity is going to be meaningfully constrained and I think if you look at the pricing of air travel across North America compared to where it is in Europe at the moment, it's clear that pricing in Europe has some considerable way to go to catch up in North America.
Speaker Change: Will it get all the way to North America, I don't know nobody really knows but certainly.
Speaker Change: If you were at the lower end of the pricing model as Ryanair is I think there is we have more headroom for price increases over the coming years to cover higher cost, although we will be using our low cost aircraft and improved fuel consumption to keep airfares down.
Speaker Change: And I think one of the big difference between us and some of the our competitors who reported last week as we saw average airfares rise double digits in the third.
Speaker Change: In Q3, whereas their average fare performance was.
Speaker Change: Significantly behind that of ours and as I think in large measure because we're expanding into rollout of their market.
We're expanding profitably where they are unable to compete with us and reporting losses.
Speaker Change: Thanks, Mike next question please.
Speaker Change: Thank you. The next question comes from Larry <unk> from RBC. Please go ahead. Your line is now open.
Speaker Change: <unk>.
Larry: Good morning, and yes. The first question bring delivery delays I saw the previous expectation would be that you'd be down around 10.
Ross this summer and it now sounds more likely to be down 7%. So I was wondering what apps.
Larry: Since George this slight improvement and then secondly on the modest growth in ancillary revenues per passenger you previously explained that.
Larry: And Sidney reputation should be more stable than says.
Larry: Is this driven by you sort of holding back on pricing or are you seeing some take up of ancillary products declining in the current environment. Thank you.
Larry: And that's usually the ancillary.
Tracy Mccann: Tracy Mccann here.
Tracy Mccann: Just in relation to believe it's a movable feast here.
Tracy Mccann: Originally we thought we'd be down five and then it looks like we're going to be down.
Tracy Mccann: 10, now we think our best guess is that by the end of June will be down about seven aircrafts now that could be nine it could be five we are working.
Tracy Mccann: We have eight aircraft deliveries.
Tracy Mccann: In may.
Tracy Mccann: Made there are seven <unk> June and then there is about 9% in July and we are hoping that we will get some of those July into June I mean, I think it's fair to say, we will also take some deliveries at the first seven or 10 days of July but we have said the Boeing that under no circumstance that we take an aircraft. After the weekend of the 13th 14th of July where not to.
Tracy Mccann: And aircraft because frankly, if we're not starting to get them before that we can put them on sale.
Tracy Mccann: So I think we are working well with the team in Seattle, There is a big focus on those aircraft deliveries in June.
Tracy Mccann: Our in May June and the first couple of weeks of July and we think there's a reasonable prospect.
Tracy Mccann: We will get 50 aircraft might be 52, it could be 48.
Tracy Mccann: The big driver, though it's certainly not going to be 57, and we accept that but we have said if we don't get the buy the that's that could we get that second we get into July were not taken them until October.
Tracy Mccann: Which is why again our number for next year has moved back from kind of originally 205 million towards $200 million.
Tracy Mccann: But it's movable we would be hopeful that Boeing will do slightly better, but if they have other unforeseen events like the Max nine issue it might move slightly back the other way ancillary that modest growth.
Tracy Mccann: Yes, we're already we're very much on track to what we said we would do this year, we said we'd be up 50 to 60 on a per passenger basis, that's exactly where we're going in with 23 Europe a passenger in the quarter just stand this and you remember it was a big step up in ancillary after COVID-19.
Tracy Mccann: We've jumped from about 18 euro passenger to 23 Europe passenger today longer term, we think will track ahead of the growth in passenger numbers. So a couple of percent two 3% for passenger increase in spend for the next two or three years. So we're bang on where we where we thought we would be.
Tracy Mccann: And certainly I mean again I come back to the OTH point, if we can convert a number of the otas into partners, who are no longer charging front salaries and that you might see actually an increase in ancillary conversion and some pricing improvement because of the people were originally paid.
Tracy Mccann: 20, or 30 euros for a 10 year old bag.
Tracy Mccann: Well, we may convert more and with a yield management might get 11 or 12 euros on average for those bags.
Speaker Change: Thanks, Larry next question please.
Speaker Change: Thank you. The next question comes from Jeff over to Keith from Liberum. Please go ahead your line.
Jeff: Two if I can firstly.
Jeff: Sheets looking at core assets over the last six nine.
Jeff: Just 1.2 billion USD one three.
Keith: I was just wondering once that relates to and how.
Keith: How would win that might convert into cash.
Keith: Secondly on the Max 10, I know you will firstly, they've resolved two years off the bus.
Keith: First ones.
Keith: Do you get concerned about certification delays impacting that.
Keith: 100007 delivery date for yourselves.
Speaker Change: Okay I'll take the Max 10, I'm going to ask and maybe Tracy Mccann here, which is that current taxes, though the rest of the issues at the Max 10 deliveries the first day of.
Speaker Change: The first delivery of the North American Airlines are scheduled to take place at the end of calendar 'twenty for early calendar 'twenty five.
Speaker Change: I don't think we would be concerned about the offers that we only take 17 aircraft in the first half of 2027.
Speaker Change: So I think we will begin to get concerned if the if they miss the summer 'twenty five the first deliveries of the Max 10 run into the winter of 'twenty by spring of 2006.
Speaker Change: At that stage, we start to get a little bit concerned, we don't honestly foresee there being that kind of a significant delay.
Speaker Change: These aircrafts are.
Speaker Change: There are kind of production lost there in Seattle and Wheatstone in Seattle for them.
I think the issue is more certification.
Speaker Change: Still hopeful that the Max seven will be certified.
Speaker Change: The current.
Speaker Change: Quarter and delivered the person delivered they are already built and the first southwest for summer of 2020.
Speaker Change: So I wouldn't want to be complacent, but I mean, I am reasonably happy that were not the lead customer for the Max 10.
Speaker Change: But given that we're taking outsourced aircraft two years after the schedule deliveries to the American Airlines I'd be reasonably relaxed.
Speaker Change: And it creates you wouldn't take that point on the other assets.
Speaker Change: Yes.
Speaker Change: Prepayments 50 prepayments.
Speaker Change: And then the capital.
Speaker Change: No we're not.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: And I would just add to that Gerald over many years, we've got significant discounts.
Speaker Change: From some large suppliers like by giving them prepayments and that some of that will be reflected in the non current asset line. That's what I was I think you might be referring to.
Speaker Change: Okay.
Speaker Change: Thanks, guys. Thanks, Karl next question please.
Speaker Change: The next question comment.
Speaker Change: Can you tell me in on a nitrogen.
Speaker Change: Hi, guys. Thanks, very much first question is on pricing commentary. So if you are currently running low single digit ahead. Initially for the summer and you think you can get to mid to high is that just as the impact from a late Easter hurting April dissipating or you think you can get more of the late yields.
And then secondly, assuming certification does happen on the Max 10 later this year.
Just want to actually take them.
Speaker Change: <unk>.
Speaker Change: How confident are you that you would be able to actually take them to run that capacity, what kind of lead time would you need for that thanks.
Speaker Change: Okay.
Speaker Change: Look I think the biggest driver at this point in time on pricing is that the first half of Easter is in March and not in APAC in April Easter.
Speaker Change: E series did a big driver of forward bookings. This time of the year Q4 is materially stronger than Q4 was the same last year, we are still expecting a loss in Q4.
Speaker Change: <unk>.
Speaker Change: <unk>.
Speaker Change: But.
Bookings through the summer are running ahead of where they were this time last year, both in terms of volumes and pricing.
Speaker Change: But I would believe.
Speaker Change: This time last year, we were in a very strange we had a very very strong January but then after that we still post COVID-19 recovery people getting out there and booking early so we had a very very strong first quarter, and then pricing softened into the second and third quarter of last year I'm not sure. This year, we won't see pricing at the moment is.
Speaker Change: Modestly up.
Speaker Change: The strengthened further as we go through into calendar Q2, and calendar Q3 might be wrong, it might I might be calling that wrong, but thats the way it feels to me.
Speaker Change: And I think what we need to see like we monitor closely some of our <unk> III <unk> competitors and they haven't yet in the case of we've taken out as far as we can tell the 40 are grounded $40 45 aircrafts same with <unk>.
Speaker Change: <unk> I don't think they finalized.
The capacity is coming out yet.
Speaker Change: So there may be more to go with that we don't know, but I think pricing will continue to drift upwards into the summer of 2024.
Speaker Change: But we havent theres more to run on that and I think we won't have a better feel for that until we get to may and where the full year results roadshow.
Speaker Change: Second point Max 10.
Speaker Change: If we were to.
I mean, it would be very happy to start looking at it.
Boeing.
Clearly, we'd want to negotiate the price of them.
Speaker Change: I would be very happy to take Max 10 deliveries in for somewhere in advance of summer 'twenty six I'm not sure we'd be in a position taken in advance of summer 'twenty five but.
Sure. They can manufacture deliver management advanced over 25, but if someone like United want to walk away from those deliveries over the winter twenty-five into 'twenty six or we could take more aircrafts in for summer 'twenty six and uncertainty increased we have 17 aircraft Max 10 deliveries in the spring of 2007, and I'd be very happy to take that up.
Speaker Change: From 7%, Turkey, 40 aircraft over the winter of 'twenty.
Speaker Change: Six spring of 2007, we have more than sufficient demand across Europe for these aircraft and the operating performance of these aircraft is.
Speaker Change: Dramatic classic, but I don't foresee despite all of that what I thought was kind of nonsense commentary on United last week, I don't see any chunk of it and not taking the Max tens.
Speaker Change: And I'm sure there'll be a Q not least of rapacious aviation lessors out there and others looking to get those aircraft if youre nicer somebody has walked away from them.
Speaker Change: We're still expecting a number of very large orders coming out of the middle East.
Speaker Change: And Chi.
Speaker Change: China might also step up to the plate as well so if somebody wants to walk away from Max paint I think there'll be a few people will take them.
But from my answer to your question, we have a very keen on taking back pain for summer 'twenty six north somewhere 25 that would be too early for us.
Speaker Change: Alright. Thanks.
Speaker Change: Thanks very much next question please.
Speaker Change: Your next question comes from <unk> <unk> from Bank of America Pizza Hut minivan.
Speaker Change: Good morning, I, just wanted to clarify on pricing for Q4, So fares went up 13% year over yet in Q3 and kind of what's in your guidance for Q4, and then secondly, just on capital return and the share buyback given the shared ownership issues post Brexit.
Speaker Change: How does that impact your ability to do a share buyback this year. Thank you.
Speaker Change: Sorry give me lets say the second piece that again maneuver.
Speaker Change: And also do share buybacks.
Speaker Change: Yeah.
Speaker Change: Just in terms of EU ownership.
Speaker Change: Oh, yes, sorry for that and how do we factor that into any potential share buyback.
Okay.
Speaker Change: I wouldn't get into pricing on Q4, we would never break it down on a quarterly basis.
Speaker Change: You can work it back from our full year guidance.
Speaker Change: You can work it back from our full year guidance.
Speaker Change: Yes, we've narrowed the range slightly but more to reflect the behavior in Q3.
Speaker Change: Somewhere between $1 85, and $1 95 billion, but detail on Q4 pricing and our cost we wouldn't get into at this point in time and Eva on EU share ownership.
Speaker Change: We continue with the only airline that is very close to 50 50 at EU ownership other competitor Easyjet and ways of way below 50%, but that's a matter for the EU Commission not for us.
Speaker Change: I do believe though that if we did a share buyback I think we would probably be looking at trying to buy ADR and ordinaries.
Speaker Change: I think it would be in our interest to do both.
Speaker Change: Although it is we have in the past we have found it easier to buy ordinaries in Europe.
Speaker Change: Been very difficult for us to buy.
Speaker Change: ADR one of the challenges we faced with the ADR they tend to be quite tightly held by a number of very large institutions in the U S and when we come looking to do share buybacks. They all go buy somebody else's ADR.
If we are unsuccessful in.
Speaker Change: Executing share buybacks of ADR as we would typically buy more origin reads and then over a period of time as we've done in the last two years since Brexit.
Speaker Change: <unk> continued to use the fairly draconian powers, we have two day supply.
Speaker Change: Our non EU non EU buyers of the ordinary shares.
Speaker Change: But I would think the working theory by working assumption would be.
Speaker Change: If we are returning cash to shareholders by way of further share buybacks, we would probably split that 50 50 between the ADR than the ordinary set so that we balance the EU ownership rules.
Speaker Change: Thanks, Ben next question please.
Speaker Change: The next question comes from Alex Paterson from Peel Hunt. Please go ahead, Sir your line is Mark Alex.
Alex Paterson: Good morning, everyone.
Alex Paterson: Wondering if you could give any more color on the commercial agreements you've got with the Gtx is in now with two otas.
Alex Paterson: They pay exactly what a customer would pay if they book directly on your website or are there any phasing between like an API or anything else.
Alex Paterson: And is there a second one.
Speaker Change #100: No that was it.
Speaker Change #100: That's why everybody else.
Speaker Change #100: So.
Speaker Change #100: What we're trying to do there is no we don't charge them anything we're very willing to give people direct access into the GDS and the otas.
Speaker Change #100: The critical thing for us is to eliminate the kind of illegal screen scraping and if we can kind of eliminate the illegal screen scraping that makes it much more difficult for these kind of Ot a pirate to exist.
Speaker Change #100: They get direct access to our fares and ancillary prices in our web site.
Speaker Change #100: They undertake so what we do I think what we do is we freed them from the cost of the interdigital piracy by giving them a direct feed and then return agreed that the booking will be made in the paper in our website directly on our website. So we have a contract with the customer both the E mail contact and the payment details and they agree.
Speaker Change #100: That they will not levy any fees or charges on our underlying airfares are ancillary that does not necessarily preclude them from charging some kind of fee for their services as many travel agents now do but it has to be an identifiable fee par.
Speaker Change #100: If there are the long holiday for example, they've made that they generally do package holidays. They may take.
Speaker Change #100: Take something or they may make their money out and what's the other item to the package they sell but the customer booking with them on Ryanair is paying the underlying airfare and the underlying reiner ancillary prices without any inflation price inflation or price distortion.
Speaker Change #100: We don't at the end of the day have a difficulty if as with the GDS distribution of travel agencies want to levy a fever, but they serve as long as the customer knows that that's the travel agent fee. We don't have a problem with it we think ultimately over time.
Speaker Change #100: It would be difficult to consumers with.
Speaker Change #100: We'll certainly move away from travel agency fees. If the fees are unreasonable level, just increasingly booked directly in the Ryanair dot com website.
Speaker Change #100: Critical to all of this is protecting the consumer from Overcharges, and then not having some OTI in a position like booking dot com is with the hotels, where they control hotel distribution and then they charge them, 15%, 20% of revenues for that distributions.
Speaker Change #100: May work for the hotels, but I certainly wouldn't work in a low margin industry like airlines airline industry for us and you won't have to invest.
Speaker Change #100: It's just like when the Apis are fully functioning out there youll see that people will it'll be absolutely clear in the case of somebody buying a package of the elements that they are buying and then see that theyre getting the right are priced right areas galleries and theres no ability within that flows.
Speaker Change #100: Extra charges so.
Speaker Change #100: In that sense, it will be very transparent for consumers because some of the most egregious complaints we get here.
Speaker Change #100: <unk>.
From consumers, who buy through part screen scrapers, knowing don't get idea that what you guys don't get the emails to service emails and they're the ones that turned up at the desk and didn't realize they can get any of the three or four email to tell them head to check in online beforehand. So when these things are up and fully functioning. We've cited we've done the deals and while we're working on them in the background.
Speaker Change #100: The API Apis are up there you'll see how transparent to this.
Speaker Change #101: Okay. Thanks, Eddie Thank you. Thanks, Mike next question. Please.
Speaker Change #101: Yes.
Speaker Change #102: Our final question, we have time for today is from <unk>.
Speaker Change #103: <unk> from <unk>. Please go ahead ma'am your line is now open.
Speaker Change #104: Good morning, guys.
Speaker Change #104: Yeah.
Speaker Change #105: Just two quick ones.
Speaker Change #105: First of all Im Krueger, Australia, as I mentioned, a number of times, but I just wanted to check.
Speaker Change #105: Running at $5 eight at the moment versus five four historically should that five point. They continue into this summer or is it likely to be higher and then the second question more big picture.
Speaker Change #105: Covid the fourth quarter with January profitable.
I appreciate this carry a range of factors driving a heavy loss this year, but to what extent do you think the seasonality of your earnings are structurally changed.
Speaker Change #105: If that's the case like this have any ramifications for how you deal with unregulated airport contracts for example.
Speaker Change #105: Okay, Eddie maybe you want to take on the deal.
Edward Wilson: With the Covid crew raw string isn't.
Edward Wilson: The crews for aircraft is just is just one of the inputs. There I mean, we're we've made.
Edward Wilson: Very large inroads is the support systems that we have here in terms of.
Edward Wilson: Computerized systems that we have in the operations control center that helps us, particularly.
Edward Wilson: Melton days, which manages arris properly and then spreads to more evenly so the accruing ratio.
Edward Wilson: Is there is no significant increase we're keeping it at the same levels that we have which would be.
Edward Wilson: It will be in the range of $5 four to five days.
Edward Wilson: I wouldn't see it going beyond that don't need to hit anywhere near six or anything like that but some of this is a function of the number of smaller basis that you have were getting much better at managing errors.
Edward Wilson: Particularly in the peak, so don't see any sort of more upside that accruing but.
Edward Wilson: That will be traditionally higher to where we would've been if we didn't have.
Edward Wilson: This ATC environment, French ATC strikes and that we would probably we should be able to pull that back but that's.
Edward Wilson: That's some distance away.
Edward Wilson: And certainly we are working towards so we're pushing hard with the European Commission the European Commission.
Edward Wilson: Made one stabilization weakness to protect overflight, particularly over price over France. It will dramatically transform both on time performance and ATC disruptions across Europe.
Edward Wilson: With European elections, coming up this year, it's very depressing and.
Edward Wilson: That Europe hasn't moved on this there are great for talking about the <unk> market in north of underlying tend to what you're doing to protect the market and yet the French shutdown as a single market for air travel 57 days last year complaining about macro and pension reforms that didn't even apply to them.
Edward Wilson: So we're continuing to campaign for that.
Edward Wilson: Seasonality look it's a seasonal business and I don't think you can never get away from that we make.
Edward Wilson: The majority of our profit in the first two quarters. The first half of our year, which is the June and September quarter, I don't see any reason why the third or fourth quarter shouldn't be kind of breakeven already thereby they should be see why they should be loss, making but there are a number of issues. There at the moment we are.
Edward Wilson: One of the challenges that we gear up for a lot of summer growth and with most of that gear of takes place at the end of Q3 and Q4, we have to start the recruitment of pilots and cabin crew training our pilots and cabin crew, we tend to take a lot of the aircraft deliveries from Boeing in.
Edward Wilson: In the first three or four months of the year without having being able to deploy those aircraft are use those aircraft in service. So there is a disproportionate weighting of cough into that fourth quarter without if you like the commensurate revenues.
Edward Wilson: And Thats, why but Q1 and Q2, then generally tend to be very significantly profitable.
Speaker Change #106: Again, I try not to get lost in the short term or in the quarterly stuff.
Speaker Change #106: The key message here is even with data on this morning's new numbers and we are back at where are we at the end of January.
Speaker Change #106: We're on track for to make over 10 euros net profit per passenger for the first time in since a.
Speaker Change #106: Number of years, I think that 10 euros net profit per passenger will be the kind of baseline going forward I think there's a reasonable prospect plus or minus uncertainty and geopolitical events that that number might move upwards from tend towards 11% 12 or 13 over the next couple of years, particularly as we get more and more game changer and Mac.
10 aircraft into the system, where we are carrying materially more passengers per flight, but burning significantly.
Speaker Change #106: Yes oil and I think what's really.
Speaker Change #106: My key takeaways from this year's numbers, we're about to make 10 euros profit net profit per passenger in a year when our oil went up 34, Turkey, 40%, we went from being hedged at $65 a barrel in FY2023 to $89 a barrel in FY 'twenty, four and yet our customers we're winning.
Speaker Change #106: To pay a modestly higher airfares.
Speaker Change #106: <unk> performance that ancillary at a time when most of our competitors are still losing money or reporting reasonably modest profitability for the full year. So this is a very impressive model. The costs are heavily controlled we are widening hugely widening the gap between us and our principal competitors in Europe on airports and handle.
Speaker Change #106: Link cost aircraft and ownership costs and I think that will continue for the next couple of years. So.
Speaker Change #106: Yes.
Speaker Change #106: I think we are.
Speaker Change #106: I have a reasonable expectation that the.
Speaker Change #106: Despite the kind of the surprise or the sudden impact of the otas on the Q3 numbers, we had a strong year of profitability and I think a realistic profitable prospect of strong pricing through silver 24, which will deliver another year of strong price.
Speaker Change #106: Strong profitability in the year ended March 25.
Speaker Change #107: Neil I think thats as much I can add on the seasonality and the other question.
Speaker Change #108: We have any other question.
Speaker Change #108: Okay.
Neil: Thank you Paul.
Great. Okay. Thanks, very much everybody for participating the call Neil Neil is going to do what it's doing is have a roadshow day through a London today, France, and Paris and Frankfurt.
Neil: Just trying to appreciate more and more.
Neil: Hey.
Speaker Change #109: Thats correct, yes, yes.
Speaker Change #109: Yep.
Speaker Change #109: To encourage more European share ownership here, it's not that we don't love. The Americans. We do we are we going to need more Europeans on the share Register in the meantime, we will continue to try to execute and deliver.
Speaker Change #110: And thank you I, we are not doing a road show on the Q3 that you ought to be in Paris, and Frankfurt and want to meet you would need by all means that.
Speaker Change #110: Other than that if anybody wants to come see us here in Dublin over the next coming months, please feel free to do so and.
Speaker Change #110: Not with you at the full year results Road show in May Thanks, very much everybody good to talk to you about.
Speaker Change #111: Thank you ladies and gentlemen that does concludes today's call. Thank you for joining you may now disconnect your lines.
Speaker Change #111: [music].
Speaker Change #111: Yes.
Speaker Change #111: Yes.
Speaker Change #111: Sure.
Speaker Change #111: Yes.
Speaker Change #111: Yes.
Speaker Change #111: Yes.
Speaker Change #111: Sure.
Speaker Change #111: Sure.
Speaker Change #111: Sure.