Ryanair Holdings (Euronext:RYA) Q1 2027 Earnings Call

0:00 Hello and welcome everyone to Ryanair Holdings plc Q1 FY27 earnings release. My name is Drew and I'll be the coordinator for the call today. If you would like to ask a question, you may do so by pressing start followed by one on your telephone keypad. Please limit yourself to two questions. I will now hand you over to Michael O'Leary, Group CEO of Ryanair Holdings to begin. Michael, please go ahead when you are ready.

0:26 Okay, good morning everybody. Welcome to the Q1 results call. You'll have seen the results issued this morning. Q1 profit after tax of 538 million euros. That's a 34% decline on last year's Q1 of 820 million, primarily due to the impact of the large spike on oil prices. Thank you very much. Thank you. Unit cost rose 5%, which is an impressive number as the unhedged Q1 jet fuel prices doubled to $151 per barrel. FY27 jet fuel remains 80% hedged at $67 a barrel, a development in recent weeks as we took advantage of some price weakness on the forward rate and we're now 15% hedged for the entirety of FY28 at about $85 a barrel.

1:34 The underlying growth into the summer continues. We're operating three new bases this summer, Rabat in Morocco, Tarana in Albania, Trapani in southern Italy, and in total over 130 new routes. And we're pleased that the final 1.2 billion bond was repaid in full out of internally generated cash flow, leaving the group essentially debt-free. Touching briefly on a couple of points and then before I hand over to Neil, schedule revenue dipped 1% in Q1 to 2.91 billion as traffic grew 6% but at 6% lower fares. Q1 fares which benefited from a full Easter during April 2025 required stimulation as the Middle East conflict led to consumer hesitancy, concerns about EU jet fuel shortages, economic uncertainty and later bookings.

2:26 However, our conservative hedging policy means with 80% of our fuel hedges $67 a barrel, the group's earnings are largely insulated from periods of extreme volatile oil prices as currently, and this will materially widen our cost advantage over all of our other EU competitors. As I said, we recently extended those fuel hedges for the first time into FY28, now 15% hedged at $85 a barrel. Having repaid the 1.2 billion bonds in May, at the quarter end, gross cash was just over 2.8 billion. Again, an impressive figure after 1.3 billion of debt repayments and half a billion in capex. Liquidity is further boosted by the group's 1.1 billion revolving credit facility, which is mostly undrawn a sensible strategy at this time of the year when cash flows are strong. We're now 90% through the 750 million share buyback program. The average price is €26.35 per share. However, over the coming year, following the May repayment of our last bond, our funding priorities are one, the max 10 aircraft capex and the first 50 of those aircraft are coming in the spring of 2027.

3:43 Shareholder dividends, the completion of the current buyback program, which we think will run out until around the AGM in September. while rebuilding gross cash back to 4 billion which is where we were when we entered the COVID and we believe that's a sensible number to help us cope with unforeseen eventualities such as COVID or the current war in the Middle East. In terms of touching on fleas, Boeing continues to expect the MAX 10 certification in late summer 2026. I spoke to them about two weeks ago and they expect the MAX 7 to be certified in the coming weeks and they're reasonably confident that the MAX 10 will be certified either in late September or mid-October. They have protected our first 15 delivery slots in the spring of 2027 so we are growing increasingly confident that we will have the first of those aircraft in advance of summer 27. and with 300 of these super fuel efficient aircraft remember 20% less fuel but offering 20% more seats per flight due to deliver by March 30-34 it leaves us in very good shape long term for cost efficiency or cost efficient growth and we believe profitable growth as I said this summer we're growing a head top line growth is strong three new base in Rabat, Tehran and Trapani But with only 4% of FY27 traffic growth, our scarce capacity is being switched away to those states, regions and airports, cutting aviation taxes, lowering fees to incentivise growth. The examples we've given are Albania, Morocco,

5:18 regional Italy, Slovakia and Sweden and we are withdrawing material capacity flights and traffic away from high-tax, high-cost markets like Vienna in Austria, Dublin here in Ireland where costs have gone up 10% this year, Germany, we're closing the Berlin base at the end of the summer and regional Spain. Over the medium term, we expect European short-haul capacity to remain constrained until at least 2030, principally as the two main manufacturers remain well behind on aircraft delivery. Those industry capacity constraints combined with our widening cost advantage, our strong balance sheet, low-cost fuel-efficient aircraft order book, and industry-leading office resilience will, we believe, facilitate Ryanair's sustainable, profitable growth to over 300 million passengers by 2034.

6:05 In terms of outlook, FY27 traffic remains on track to grow 4% to 216 million passengers. Much of that growth is front-ended, so in H1 we expect to grow by 6%. We will cut back our schedules into the winter, and we expect to deliver only 2% traffic growth in the second half of the year. Our unit cost leadership continues to widen. We've seen the results reported by many competitors in recent weeks who have seen unit cost increases of high single digit, low double digit. We're this morning reporting low single digit cost inflation. Jetfuel remains 80% hedged to March 27 at $67 a barrel, and that helps us to offset a $300 million increase this year in EU and Euro taxes, significant crew pay increases under new multi-year CLAs and higher maintenance costs.

6:56 While summer 26 volumes are strong, the booking window remains closer in than last year, which further reduces visibility. Despite a recent slight uptick in volumes and less price stimulation, Q2 pricing is trending modestly down year on year. That is a decline from where we were on the full year results and we were hoping that Q2 pricing would be flat-ish year on year. They're now trending modestly down low to mid single digits. and the final H1 fair outcome remains heavily dependent on the strength of close in bookings in August and September but they will not be sufficient to make up for what will now be a fair decline in the second quarter. As is normal this year we have zero H2 visibility and so there is no point in trying to provide any meaningful guidance for full year profit tax guidance at this time.

7:46 And with that I am going to hand over to Neil Sorahan, CFO. Neil take us through the key points of the MD&A please.

7:54 Thanks Michael, not a huge amount to add to what you've already said there other than to guide people back to the Fortress balance sheet that we have quite uniquely 620 fully unencumbered Boeing 737s on the balance sheet, very pleased at going debt free back in May so a rock solid balance sheet which puts us in a very strong position over the next number of years to capitalise on every opportunity that comes to us Hedging again well insulated for the current financial year, 80% hedging at $67 a barrel. The key swing factor as was the case in Q1 for the rest of the year is going to be where the 20% unhedged fuel goes. Otherwise unit costs strong and I would guide people to slide 4 in our presentation.

8:45 You can see the gap between ourselves with EasyJet and everybody else is only getting wider. and I'd expect that to continue to be the case particularly as we start to take in the max 10 aircraft 20% more seats, 20% more fuel efficient from next year so good cost control in the business, some of that was down to having the extra aircraft you recall we were left short last summer so we had better productivity as a result of having all those aircraft in there equally grew by 6% so we were spreading Thank you Michael.

9:43 Thanks Neil. Just before we open up the Q&A I want to touch on a couple of more recent news events which I want to touch on. The Thessaloniki aircraft where we had the fan blade issue and depressurization event last Friday 10 days ago. We welcome the NTSB is now in charge of the investigation. They have released the aircraft to us yesterday, so we're now engaged in replacing the engine and repairing the skin of the aircraft. That was a dramatic event, particularly for passengers on board. Depressurisation is always a frightening event, particularly when all the masts come down. However, it took place in the climb of the aircraft. All passengers and cabin crew were belted in at the time.

10:30 So some of the more salacious reports that somebody, one passenger was halfway out the window, out the window, head out the window, nobody was out any window, they were all belted in. One passenger did suffer minor injuries, one pregnant lady was taken to hospital, they've both since been released and we are actively supporting the NTSB investigation into what happened in that aircraft. Initial indication would suggest it looks like a foreign object damage to the engine on takeoff out of Thessaloniki, but we don't have that. We can't say that definitively. There will be a draft report issued in about 28 days and then a more detailed report. The US NTSB has done a couple of these before.

11:15 Two of them took place in South West. and we think they're the best people to investigate and report on the issue. The aircraft was 18 years old, it has nothing to do with aging aircraft. The engine had been fully serviced and overhauled I think within the last two years and so you know there's nothing to do with either age of aircraft or engines. We welcome in the last week the Irish government has finally, 18 months after the programme for government, has passed the legislation enabling the Minister for Transport to lift the Dublin airport tap. We welcome that. It is badly needed given that the cap was 32 million and traffic at Dublin Airport this year is heading for 37 million. We now call on the Minister to actually abolish the cap.

12:01 We do not want it raised to 40 million or 42 million and have to go back to all this nonsense again. Abolish the cap. There is a physical limit on traffic at Dublin Airport. Two runways gives you capacity for about 60 million passengers. That should be what the cap is at 60 million passengers. And we should now get on with growing traffic at Dublin Airport, growing tourism and economic activity on and off the island of Ireland using its main gateway. We also welcome the IAA's provisional recommendations last week. They've recommended that Dublin Airport fees be cut from summer 27 onwards on the basis that traffic is ahead of the DAA's projections. Surprise, surprise, their capital expenditure is way behind what they had included in the previous projections. And we believe that all airlines will commit to growing at Dublin Airport if the high fees at Dublin are reduced.

12:59 We've already set forward our commitment. We will add 2 million seats at Dublin next year. Some of those aircraft will be churned away from higher cost airports like Vienna, like Berlin. But there's no doubt in our mind that Dublin and Ireland is set for a period of rapid new route and traffic growth led by Ryanair if the IEA recommendations are implemented in their final report, which we think is due in September, October. Pricing this summer is softer than we had hoped for. We had hoped that the close-in bookings would dramatically recover. Close-in bookings remain strong, but they're not sufficient to make up for the amount of price discounting we've had to do in the first half of the year. So we think pricing will continue to be soft.

13:44 If I were guiding you, I'd be moving to low to mid single-digit declines, certainly through in the second quarter. we don't see any significant fall off but the resumption of hostilities in the Middle East don't help the situation clearly oil prices have taken off again But it also creates consumer hesitancy, that nervousness about people traveling and booking. We think the rest of Q2 will be strong, but the second half of the year will need more discounting, although we expect a lot of capacity to be taken out of the system, the European system, in the second half of this year. particularly by our competitors who are losing money hand over fist or copiously losing money and can't compete with us at these low prices but nevertheless it would be what it would be the one little bit of upside I would give you on second half pricing is both halves of Easter will fall into March Easter is very early next year so we'll have almost all of Easter in March so Easter will come into this year's Q4 which should be positive for pricing in the second half of the year and lastly it wouldn't be a quarterly set of results without some more utterly useless regulation out of the European Union.

15:05 The European Parliament or the European Union last week are considering amendments to the ETS legislation which will bizarrely extend the damaging, harmful and discriminatory ETS to places like Morocco, Turkey and Greece, but not to Morocco, Turkey and Albania. which currently are exempt. Of course, they don't have the bottle to exempt. It's extended out to American, Asian and other carriers landing and taking off in Europe who still account for the majority of Europe's CO2 emissions. The one way to fix this utter discrimination of Europeans is to abolish ETS or at least move it into line with Corsair, but no, that would improve the competitiveness of European aviation and the European economy and useless von der Leyen couldn't come up with anything that would actually improve the competitiveness of the European economy other than giving speeches about it.

16:05 There's also a mis-sell by the European Parliament. They are introducing new legislation, again, which makes European Airlines less competitive, in order to eliminate the family seating and family pricing. Sorry, not the family seating, the carry-on bags. So you've had the lunatics in the European Parliament running around trying to assert the right of passengers to do pre-carry-on bags despite the minor quibble that there isn't enough space on board the aircraft for them. The solution of these geniuses is that change will now chase the advertising so that airlines in Europe in about the next 12 to 18 months will now have to advertise a price that includes the two free carry-on bags despite the fact that more than 50% of our passengers don't pay and don't want two free carry-on bags.

16:59 but Europe's airlines will now have to advertise a higher fare than the lowest available airfares and more than 50% of passengers we know will opt out of those higher airfares by opting out of the second or three carry-on bags So we have yet more bullshit useless regulation coming out of Europe. Instead of making Europe more competitive, they now have required the airlines to advertise fares that are higher than the lowest available fares in the system. And we will be extending ETS instead of abolishing it or bringing it into line with Corsair. The Parliament are overselling this as everybody would be entitled to bring two free camp bags on board. You won't. Airlines, if we're advertising fares, we'll have to advertise fares that include the second free or the second carry-on bag.

17:47 But we continue to believe that more than 50% of passengers will still opt out of the free second carry-on bag because they want the lowest air fares, which is we will no longer be allowed to advertise because those geniuses in the European Parliament would prefer that we advertise higher fares than are available in the system. welcome to Europe where things never get more competitive they just get further more regulated and more bullshit regulation getting in the way of actually offering people the lowest available airfares this is a solution to a problem that doesn't exist more than 50% 99% of pastors want the lowest airfare and there's been no complaints from pastors who want to pay for it if they wish to bring a second carry on they're happy to pay for it but that wouldn't stop the clowns in the European Parliament from inventing a regulation Anyway, that's my quarterly rant over.

18:38 We'll now move on to the Q&A session. And as we have already said, limit yourself to two questions and we'll sit through this as quickly as possible. Back to the moderator, please, for the Q&A. Thank you. If you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad now. If you do change your mind, please press star followed by two. When preparing to ask your question, please ensure your line is unmuted locally and please limit yourself to two questions. Our first question today comes from Jamie Robotham from Deutsche Bank. Your line is now open. Please go ahead.

19:14 Jamie, hi. Hi, Michael. Two from me. So just coming back on the unit revenues for the September quarter, when I read that you've seen an uptick in vols and less price stimulation, I thought the guide for some affairs might be nudging up. Thank you for joining us. Bless you. That's partly the non-repeat of the supply compensation. But I wanted to ask about ownership, except about 15% on a passenger basis. Are there any material one-offs in the DNA that you'd care to pull out?

20:01 I saw there was a comment about increased NG maintenance and a provision for midlife leap engine shop visits. Thank you.

20:10 Okay, thanks Jamie. I'll deal with the revenues the last day, then Neil then deal with the costs. A couple of things on the revenue side. Yes, look, we have been saying all from the start of the year, we started before the war kicked off in Iran at the end of February, pricing into the summer looked like it was going to be up mid-single digits. Pricing into one was always going to be slightly down, partly because the first half of Easter moving out, but Prices weakened once the war in Iran started in February-March. Nothing insignificant, but we've had to open up or keep stimulating forward bookings. Close-in bookings and the booking pattern is moving later. The people are making up their mind to travel slightly later and then pay slightly higher fares. But it's not sufficient to make up the discounting we've had to do or the discounting we do well in advance. We go into every month typically with about 75% or 80% of the seats sold on the first day of the month.

21:07 Therefore, we have only 20% of the seats left to sell during the month. When we had the 60-day ceasefire about a month ago, we did notice, and part of that is also we're moving into the summer schedule, we did notice a little bit stronger on the close-in bookings. The pricing is a little bit better on the close-in bookings, but it's not sufficient to make up for the volume of discounts we've done well in advance. We did say at the end of the full year results in May, we were hopeful that Q2 would be flattish. It's now moving down low to mid single digits. I would personally think it's moving closer to mid single digits than low single digits. If it's going to be weak, it's going to be weak.

21:54 We're now well into the peak period of July and August, and I think it is trending weaker rather than stronger. The U.S. has run seven or eight nights of bombing in Iran. We are where we are. I think the decisions on summer holidays have been made. The one other one that runs across that is the World Cup does have an influence on things as it has had before. and you know I think there will probably be an uptick now that it's over people do tend to slightly postpone their travel arrangements until those competitions are done and out of the way but again I don't see any recovery in Q2 pricing now I think it is heading for down mid single digits on last year and if it is it is and we just get on with it I would not be optimistic for the second half of the year.

22:47 I think pricing is going to be weak. It will need more price stimulation. The only two things that change that are there are going to be meaningful capacity cuts coming out of competitors. Aer Lingus, for example, last week announced a significant fleet reduction that they're going to take their capacity down by 6% from the winter. You have the EasyJet M&A situation going on and at the valuations that they're currently talking about there. There will have to be some meaningful, I would say, capacity cuts at EasyJet if whoever acquires those kind of valuations. And then we are waiting to see what Wins do, apart from losing money heroically. But given that neither EasyJet nor Wins are not particularly well hedged once you get into our third and fourth quarters of the year, Again, we expect meaningful capacity cutbacks. And then you have all of Easter at the end of Q4, which will give Q4 and the back end of the year a little bit of a lift.

23:52 But I will be bearish now on pricing and we will simply revert back. There's a war going on in the world. There's a lot of uncertainty and therefore it's going to be price passive, low factor active. We will hit the traffic targets of 4% of the year and the pricing will be whatever the pricing will be. We are much more focused during these periods on taking out more costs. The airport churn negotiations are going particularly well. We're looking forward to the delivery of the MAX 10s which now we're more optimistic about in spring of next year and those aircraft will give us some capacity additions in the summer of 27 but on aircraft that are 20% more seats and burn 20% less fuel.

24:32 Neil do you want to take the unit calls please? Yes, good morning Jamie. you're seeing the start of that coming through equally just given that the NGs are a bit older the duration between checks is more frequent so just reflective of that and then of course we've 29 additional aircraft in the fleet this summer that we didn't have at the same time last year do I expect it to continue at this pace for the rest of the year no it'll slow down a bit as we go out over the balance of the year Okay, thanks Neil, thanks Jamie. Next question, please.

25:41 Our next question comes from James Hollins from B&B Paribas. Your line's now open, please go ahead.

25:47 James Hollins.

25:49 Hi, thanks very much. Michael, just giving you an opportunity for another rant. We didn't have much comment on the airport queues. I think you've been quite widely published in the media on that. Do you think there's any sign of Are there any countries lifting or pausing the EES regulations which might help? And I guess I'm asking, do you surmise there's some weakness around that in terms of the bookings as well? And then Neil, just to follow Heini's question, I mean, you did less than around that 2% X fuel cost per passenger in Q1. You say it's upticking a little bit in H2. Is around 2% to 3% a sensible number for the full year? Thank you.

26:33 Thanks James. I don't think airport queues are really that significant, certainly in the second quarter. We have identified about 15 airports, mainly in Portugal, Spain and some Italy where the border control are understaffed and there are significant queues. All of the European countries have the power to suspend these EES requirements until October, which is a more sensible time to implement them. The Europeans misdesigned this system. It should have been done online. When you're processing all this online, only the Europeans would invent shit like this. where you need border guards doing one finger typing into systems at airports coming into the summer period.

27:21 So it's another European screw-up. But is it going to stop people travelling through the peak summer? No, it isn't. And then will the queues ease off once you get out into the third and fourth quarter? Yes, they will. But the EES, if they really want to control this, this is a system that should be moved online. The airlines have all the passport details. We have all that information. and it should be something that is not beyond the wit of man or mankind but again it's just another example of where Europe under useless von Verlaine can't organise a piss up in a brewery, are hopelessly inefficient and you know we'll talk all day and all night about being competitive while really introducing more regulations that make us less competitive.

28:06 But no, so airport queues are frustrations

28:10 it's not something that is unheard of in Europe at this time of the year and the alternative means you're just stuck in Dover for longer isn't going to make any difference either second half of the question Neil yeah James good morning yes it will tick up a bit in the second half of the year particularly as we get towards the back end and we're getting ready for the summer of 2028 we didn't give a guide or as I said the main numbers you know it should be Margin below mid-single digits. If you want to be prudent in your numbers, probably 3.4 is a better guide than 2.3, but it won't be above mid-single digits.

28:53 Thanks, Neil. Thanks, James. Next question, please. Our next question comes from Alex Irving from Bernstein. Your line's now open. Please proceed.

29:04 Hi, good morning. Two for me, please. First one is on winter capacity. How do you see that evolving for the sector and how do you see the probability that we get a meaningful capacity reduction at competitors? Second one, I want to come back on easy jets where you talked about the likelihood of capacity cuts.

29:21 If there were any parts of easy jets that were to become available for sale, would there be any elements, say slots or an airbus sub fleet that might be of interest to Ryanair? Thank you.

29:32 Okay, I think it's an opportunity to ask Eddie Wilson, Ryanair DAC CEO. Eddie, do you want to give us an overview on winter capacity and likely competitor cuts?

29:41 Yeah, I mean, you're looking at the moment there of, if you look at the market, that is to speak, winter capacity would be up at about 5%. We don't think that's realistic. I think that's likely to be purged back significantly. Ryanair, we will be growing by around 2% this winter. and some of that has been driven by the fact we'll have two aircraft just due to timing that will still be in maintenance. We'll have two less aircraft actually this winter. But we do expect to see our competitors pull back that. We can't see any way that the market is going to grow by 5%. We will continue how we allocate capacity during the winter as we've had In previous years as we have paired back capacity in the shoulders in November and in late January and then sort of micromanaged the capacity growth in close to Christmas and the October bank holiday.

30:47 Yeah, so I mean we are flexing our capacity expanded this winter. I mean some of that is because 20% of our fuel is unhedged anyway, but we are still going to deliver 4% traffic growth for the full year. Just to touch on, you know, the EasyJet valuation is a fairly, you know, I think the Board of Management has done a good job with the valuations that are currently on offer, but if VC money comes in and pays that kind of money for EasyJet, I think it's inevitable that they will want to do something to monetize some of the fleet or the order book or they'll certainly want to be getting airfares up at their fortress airports if they're going to get any kind of VC or return on currently the market cap is about 5.5 billion sterling and Wales will continue Wales will just blow their brains out this winter if they don't have any fuel significant fuel hedging in place They have expanded capacity far too much this summer.

31:50 Some of that is driven by the only way you can keep the Ponzi scheme afloat is to keep taking aircraft and then doing sale and lease tax. and recognizing that through the P&L in the full year results they reported a profit of a million but with 630 or 640 million of sale and lease back profits, supplier compensation and forex gains, anything else you can think of. The underlying business therefore lost 640 million the full year when oil prices were $70 a barrel. God bless them when oil is up at 130 or $140 a barrel. So We think it is inevitable. Air Baltic are floundering around in Eastern Europe and may or may not survive. We think the government will keep them alive.

32:35 There's elections coming up in Latvia in October, November. I think they were out this morning saying that they're talking to a number of investors. We do think Air Baltic will probably be acquired by Lufthansa who already own 10% of it. But the consolidation process will play itself out. and I think we have to look today on the quarter numbers. The immediate short-term outlook is weak, pricing is weak. We see that as an opportunity to take out unit costs and to materially widen the unit gap between us and competitors on unit costs. But over the medium term, our growth and our market share gains are accelerating and that growth will take place on aircraft that will be materially more profitable for us. Any bits of EasyJet came up for sale? No, it would be the simple answer if you take the various bits.

33:30 EasyJet aircraft orders, no, their airbuses wouldn't be particularly cheap either, so it wouldn't be a practice to us. EasyJet holidays came up for sale? No, we're not believers in the holiday model, but really the holiday model is just stuck onto EasyJet's portrait spaces. What else is there? I ultimately believe if EasyJet is bought by, you know, kind of a VC, by a VC entity, the only way they would finance over time would be to sell off the order books, monetize the fleet, there'd be more sale in lease packs. And then in time, I believe the EasyJet business will be sold off to legacy carriers in Europe. Certainly Air France KLM would be very interested in the EasyJet base operations in Paris. Schiphol and Switzerland and I think the Gatwick operation would be of great interest to the likes of IAG or Jet2 or somebody else.

34:26 I think if EasyJet does get done it will kick off another round of I think the M&A will bring people like Jet2 and Wiz more clearly into view for the M&A Businesses and ultimately it will speed up the inevitable consolidation of European Airlines into four large carriers, Lufthansa family, the BA family, Air France family and Ryanair and we intend to grow organically not by M&A. Thanks Alex, next question please. Our next question comes from Savant D5 from Raymond James. Your line is now open, please go ahead.

35:06 Savant, hi. Hey, good morning. Two questions. Maybe on the EU passenger life update, you mentioned, just curious if there are any technology changes that you kind of need to make to be able to show maybe both fares on your webpage and just if you expect any kind of demand impact from having to show the higher fare. And then on the EU ETF changes, just curious if it was to be in place this year, how much more of a step up would you see versus the 200 million you were expecting? Thanks.

35:39 Okay, on the passenger rights, I mean, at the moment of the way the legislation is framed, there's nothing we can do about it. The airlines now have to advertise a fare that includes two carry-on flights, even though that's a fare that will apply to less than 50% of passengers booking on board our flights. Passengers 99.9% will still go on our website, what's the cheapest airfare. We will put lots of banners up on those airfares, so we'll advertise the fare that has two free check-in bags, but click here and you can take €60 off your fare by opting out of the check-in bag. The idea that those morons in the EU Parliament would have Europe's airlines advertising, not advertising our lowest available airfares is just...

36:26 The kind of stupidity that you get in Europe but that is what the regulation says, of course it's being mis-sold by idiot parliamentarians, oh you're all allowed to bring two free cam bikes on board a plane now, two free cam bikes do not fit on board a plane and certainly not a 737 or an A320 and never mind the turboprops around Europe, so it's just again more idiot regulation that makes Europe less competitive and if you want an example of what makes European air travel less competitive ETS is right up there We are the only economic bloc in the world where we are penalizing our own citizens. with these ridiculous environmental taxes. The Americans don't do it, the Asians don't do it, the gold carriers don't do it, the Africans don't do it, Latin Americans don't do it, but the Europeans do.

37:16 And, you know, while Eustace von der Leyen is wandering around the world giving speeches about making Europe more competitive, while the Tragedy Report gathered dust two years after its publication, with not one recommendation implemented, The only thing they've managed to do now is to consider they don't like the idea that Albania, Turkey or Morocco and neighbouring countries don't charge ETS so they'll extend ETS to Albania and Morocco. I suspect they'll have trouble extending it to Turkey particularly with NATO so even this mightn't get off the ground. The real way to fix both of this, the stupidity of only taxing the Europeans if you're not going to extend those taxes to the Americans and the Gulls and by the way, I have no difficulty we should extend it to them if you want to, if you're really concerned about climate change and flying, everybody who lands and takes off in Europe should pay their fair share, but of course the Europeans design a system that only the Europeans pay an unfair share and the Americans, the Gulls and the Asians pay nothing at all, we exempt them But if you're going to exempt them, then you should also exempt the Europeans.

38:28 We believe the better way is to move everybody on to Corsia. Corsia is about 85% cheaper than ETS. And then at least you would be reducing the cost of air travel for Europe's citizens, for families going on holidays in Europe, and you'd have a more level playing field in Europe. but that would confuse the European Commission who'd be too busy giving speeches about competitiveness while doing absolutely nothing in fact they go the opposite way and make you look less competitive with these bullshit changes on how what airlines can advertise as their lowest fares and the bullshit extensions of ETS to neighbouring countries as well they've drawn a line weighing 5,000 square kilometers from Frankfurt which conveniently excludes Asia, America, everywhere else but catches for all Turkey, Albania, Morocco and maybe Egypt as well.

39:22 So congratulations, another complete fuck-up by the European Union when Mrs. von der Leyen is promising competitiveness, all we get is more idiot regulation. Next question please. Thank you. Our next question comes from Harry Gowers from JP Morgan. Your line's now open. Please go ahead.

39:44 Hey, yeah. Morning, Michael. Morning, everyone. First question, maybe you could just give us a little bit of an update on the CLAs with the unions, how to think about modelling that on the staff cost line. And was there already some impact from that in the Q1 or it doesn't really hit the P&L staff costs yet? And then second question, just coming back on those baggage Eddie, maybe give you an update on the CLA and then Tracey McCann, the likely impact of the baggage rules

40:33 Good morning, Hardy. On the CLA negotiations, you know, we're almost through the summer now and the largest markets like on Italy, for example, was completed earlier this year, both for pilots and cabin crew and subsequently the other, there's a number of other jurisdictions where their deals expired in April, so Two of those were completed in Romania and also in Denmark and they extended both the pilots and cabin crew and there are two then that are still in negotiations but are reasonably well advanced. and one on the pilot side and one on the cabin crew side, one of those currently under balance at the moment.

41:21 So there are other, the vast majority of the CLAs will mature next April, April 27, but there's already a number of unions that are looking at feeling out as to whether they could Thank you very much. and so we will so the course of those have actually come through and earlier this year as well we would have done the Spanish cabin crew as well but that was from a previous round as well so I think there's a lot of realism out there as well at the moment you know like there are you know pretty much no opportunities in places like the Middle East mind you there are a small number in and we are there where they don't actually have aircraft so that's particularly attractive for small people who want to be paid and don't fly and so but there is you know when you see the M&A activity that's going on places like EasyJet as well and what's likely to emerge this winter there's probably more of a

42:55 focus on you know people really valuing what they have here in terms of promotional opportunities and also the security of employment on a well-capitalized airline. People know exactly what's happening in terms of deliveries that are coming over the next number of years.

43:14 Okay, thanks Eddie. Tracey, with the new baggage rules, how will it impact revenues?

43:20 So we pretty much think it's going to be revenue news, but we've already seen it in Italy and it's had no impact, so revenue news for us. And just to add, Fabian, Eddie on the staff costs as Neil said earlier we will see some of the CLAs coming through later in the year what's already been done is in the costs and furthermore as we do the CLAs for the remainder of the year we will see some staff costs increase

43:40 I should say on that, we are, some of the discussions, there has been some delays in some of those CLAs with unions looking for backstations on the 1st of April. We will backtake nothing. Our principle is always, you do the deal, whenever you do the deal, we'll implement it, but you're not getting backstating. We closed the accounts for the first quarter, that's it. and just on the baggage rules I think it will change probably the way we advertise we probably won't do as much price advertising because not much point in having a you know what would now be our kind of 29 euro seat sale if thanks to the idiots in the European part we now have to include the second check-in bag a 29 seat sale would now become an 89 euro seat sale which doesn't sound particularly cheap by in European terms so I think you'll see us doing much more advertising not focusing on price and many other ways to deliver value and the website will, all the website displays will show this mad pricing with the second carry-on but with big banners you can opt out of 60 euros of this fare and you can say, feel free to opt out. Actually, we think more and more people will opt out but the same numbers or more will opt out when they think they can save 60 euros and therefore we think there's no impact whatsoever.

45:01 There will be some disappointment among consumers where in some cases they've been promised by parliamentarians are some of the more misguided consumer journalists that oh you're always allowed to bring two free bags on board, you're not because they won't fit. There is an interesting, what happens actually when the plane is now more than half full, do we still advertise price? The answer is probably no, because in theory, the first 50% of people have booked the fare that has included, but the last 50% of people couldn't get on that plane with bringing a free second carry-on, because there isn't room for them. but detail or factual detail that has never bothered parliamentarians when they're reviewing EU 261 it's always here just invent some new bullshit regulation that pastors don't need and are not interested in but which put up the advertised cost of air travel around Europe congratulations to the European Parliament another fucked up regulation making Europe less competitive instead of more Juliusz, anyone to add to that on the insightful presentation of our friends and colleagues in Europe in the Parliament and the Commission?

46:14 It's hard to top this, but I think that advertising true prices is going to become the norm in the industry. So I think as you go through the booking process and you see your flight, I think you'll be shown two prices, one with the bag, the other one without the bag. And then when the airline... so if you sell all the space in the overhead lockers on a particular flight it's going to have to be the lowest thing that's going to be advertised so there'll be no impact at any rate.

46:46 Okay, thanks Chris, thanks Juliusz. Next question please. On it, question comes from Stephen Furlong from Davie, your line's now open, please proceed.

46:56 Hi Michael, maybe it's Farnborough just the day the tenant but there's just comments about Boeing and Airbus talking about Looking by 2030 to fund a new jet program, I know you talked about the MAX 10, just general comments about that? And second thing then, while I'm talking about the supply chain, maybe just talk about the engine shops and where we're at on that. Thank you.

47:23 Okay, touching briefly, New Jet programme, look, it's all nonsense, you know, but that's what they talk, a lot of nonsense gets talked at, rubbish gets talked at at air shows. You know, Boeing and Airbus, you know, basically they're in the foothills of delivering the A3, the 2321 Neos. Boeing haven't even certified the MAX 7 and the MAX 10. These are dramatic technological revolutions in air travel. I mean, these are aircraft that carry 20% more seats than burn 20% less fuel. So from a climate, environmental, operating efficiency, everything there, these are brilliant aircraft. These are the aircraft that are going to fund the next 20 years of air travel. There will not be a need for a new tech program for probably another I think probably the end of the 2040s, you might be heading for 2050. Boeing and Airbus need to actually monetize these.

48:20 They put a huge amount of R&D into these. Boeing's balance sheet, you know, has suffered from the years of the max grounding, etc., etc. They need to rebuild their balance sheets, both Boeing and Airbus. The technology now, I think, is what we will have for the next 15 or 20 years. and you know the the challenge is going to be the engines not the airframe you know all so all this nonsense about hydrogen aircraft and electric fucking propulsion systems and all that it is just air show rubbish it will not be there in my lifetime and I expect to live well beyond 2050 Thank you very much. Thank you for watching.

49:38 but we don't have any alternatives to jet kerosene but let's have more engines that carry more propulsion systems that will enable us to carry more passengers while burning less carbon Engines are going to be a real challenge, or certainly engine maintenance, engine costs are going to be a real challenge for the next 5 or 10 years. So GE producing bumper results again over the weekend, margins rising into the mid 20% in Q1, and about 2.5 billion of net profit, net profit. Engines are also going to be a real area of competitive advantage or disadvantage in the airline industry. Those airlines like Ryanair who will in the next two years have our own in-house MROs will have a significant advantage over the rapidly escalating cost of third-party engine maintenance and third-party engine spares and parts.

50:31 And again, it's one of the reasons why we don't need a new engine, new aircraft or new jet programs. Engine, cost of engine maintenance and engine overallity is escalating rapidly. There is a worldwide shortage of capacity in that sector, partly to do with the repair. But just because the manufacturers are not willing to spool up MRO capacity to meet demands, they want to increase prices of that MRO capacity. We're very happy where we are. We are making significant progress on our two engine MRO shops. We've put in place a supply contract with CFM, who we are essentially partnering with on our two MROs. They want us to set up these two MROs.

51:19 They know we won't compete with them. We're not going to do third-party engine maintenance for anybody else. but we will have a material cost advantage by doing our engine maintenance in-house in the same way that we've had a material cost advantage by doing all our airframes in-house the last 10 or 15 years and that will continue so I realized it in Farnborough this week I realized everybody would be talking a lot of shite about new propulsion systems until somebody gets the Star Trek travel and you start beaming people around the world beaming people instead of flying them I think we're dealing with 737 Maxes and A3 or Airbus Neos for the next 10-15 years and these are going to be transformative certainly of Ryanair's P&L in our balance sheet.

52:04 Next question please. Our next question comes from Jared Castle from UBS. Your line is now open, please proceed.

52:15 Morning everyone. Michael, Neil, you've hedged 15% of folio 28 now, so I gather it's not a stock process anymore for 28, or is it still a little bit of a start-stop, depending what fuel's doing? If you could give any colour in terms of maybe the 28 view on hedging. And then another potentially contentious topic, Michael, have you changed your views on Wi-Fi on board and Starlink, given... Another low-cost airline, Wizz, has decided to put it on board and I guess the way they've looked at things from an economic perspective. Thanks.

52:55 Jared, we could be here for a very long time agreeing or discussing whether fucking Wizz is a low-cost airline. There aren't even low-cost airlines in Europe. There's only Ryanair. Nevertheless, I'll come on to that. Look, fuel prices are going to be very volatile for the next, I think, right up to the November midterms. My view is we'll dip in and out. We thought when it got down, fall rates got down to $85 a barrel. It was a sensible place to start. We hoped we would see it drift further down below $80 a barrel, but obviously, to no great surprise, the ceasefire broke down and fall rates into FY28 this morning are about $91, $92 a barrel.

53:41 So I think we'll expect us to be opportunistic, dip in and out. I don't expect that FY28 we'll be able to get down to $67 a barrel, which is where we are this year, but we'll be opportunistic. I'm going to ask Tom Fowler just to give you a director of fuel and sustainability give you some his view on that and then just Wi-Fi on board Jared again you know we believe Wi-Fi on board will be a significant benefit for consumers but only when it's free and we are the current technology militates against it being free you have to get it but there's a one or two percent fuel drag it comes as no surprise to us that someone like Wiz would be offering free wi-fi on board it'll just be another loss making right away and part of the deal is they've given away all the revenue to the supplier of the wi-fi so it's just another Stupid PR kind of stood by them, you know, but people in drowning, people going down on the fucking Titanic were still playing violin as well.

54:47 I wouldn't, we would not be rushing to copy anything Wiz do, in fact we'd probably do exactly the opposite. We do think Starling system is very good, I would also think the Vodafone system, there are a number of very good systems out there. but I would wait until the technology they can fit the areas either in the nose cone the baggage hold or the forward galley or the rear galley or something when there is the fuel penalty then I think we will be on it and we will be keeping the revenue that will or the revenue opportunities that will arise from wi-fi and there will be revenue opportunities even when it's free but you know Will we be copying some of our competitors who can't walk straight and chew gum? No. Thomas, fuel, give us a view on your general outlook.

55:35 Yeah, look, I tend to agree with Michael. I think we'll be more opportunistic in the hedge and Jared will go in and we think the price makes sense. When we see talks of fees for it, I think it is going to be volatile over the next few months. There's going to be a deal and there's not going to be a deal. We'll be ready to go in and do the hedging as we see fit, as we did In the last few weeks by doing 15% of each quarter for FY28. So I think that's the way we're going to manage it for the next couple of months that we see some normality in the oil market. It's just a very volatile market at the moment. Okay, Tracey, you want to add anything on that?

56:09 No, probably the only other thing is to say we have hedged some of the FX forward to cover ourselves as well. So we've about 18% of FY28 FX hedged as well at 120.

56:20 Okay, thanks, Gerard. Thanks, Tracey. Next question, please. Our next question comes from Muneeba Kayani from Bank of America. Muneeba?

56:31 Yes, I wanted to ask firstly around jet fuel supply. I think Neil was on TV saying that there's no shortage, but given the re-escalation in the conflict, how are you thinking around jet fuel supply and any learnings from the last couple of months here on that? And then just wanted to go back on your comments earlier, Michael, around Bookings. Could you give us a sense of what portion of August and September is booked right now to understand the visibility on your guidance of this modest decline year on year on fares for the second quarter? And into the second half, why are you expecting pricing to decline and price stimulation if airlines start cutting capacity?

57:18 Wouldn't that be good from a pricing perspective? Thank you.

57:23 Thanks Maneva. I'm going to hand over the first question to Tom Fowler and then I'll deal with the bookies. Tom, jet fuel supplies, do we think there's any issues?

57:31 No, look, we haven't seen any issues today. I think as Neil would have said this morning, we have good visibility now out into the end of August in most locations and in some other countries out to the end of the year and I think that supply situation has escalated but Supply starts to fall off towards the end of September, or demand starts to fall off towards the end of September as we get into the winter programme, so we'd be hopeful to see reserves fill back up, providing it doesn't escalate any further in the Middle East, but at the moment we don't see any issues in either.

58:03 And if you remember the previous conference call, remember the vast majority of Europe's jet fuel doesn't come through the Gulf. That supplies the Asian markets. All of Europe's jet fuel is coming from the Americas, West Africa, Norway and even Russian imports as well. So see no disruption on supply. Bookings, look, August today we're at about 75% already, 75% of our final number is already in the system, September we're only about 40%, and I expect fares will continue to decline, but there will be upside, that's because we haven't yet seen what competitors are going to take out of the system into the second half of the year.

58:49 If spot oil remains up at around $130 a barrel, they're going to be taking out significantly more. You know, so I think it is unrealistic not to expect at this point in time, if everybody maintains the capacity they're maintaining, and we will be growing our capacity by 2% in the second half of the year, I think pricing will fall. With the one caveat that we have, Easter comes into Q4, which we did, and Q30. 2-4 prior comps a week so that'll give the tickle there anyway but I think there could well be meaningful upgrades on that kind of pricing outlook depending on how much capacity is taken out of the system and depending on if you know an air bolt you've got a whiz air fail going into this winter you know they would clearly be very significant alternatives and we give the example there in England for example already talking now about a six percent capacity reduction some of that is long hold some is short hold going into the winter so it's too early to give you any Next question please and it's questions from Connor Dwyer from City.

1:00:16 Your line's now open. Please go ahead.

1:00:18 Hi. Hey, Michael. First question is just around a bit more medium term. Just thinking about growth this year is at 4% and obviously fares have switched soft so far in the year. And I guess the concern for investors stepping back I think about 14 euro per passenger net profit is that it needs pricing strength. But obviously your growth is going to hit about 6% to 7% by the end of the decade. And I'm kind of thinking about what gives you the confidence that fares Thank you for joining us today. Thank you very much.

1:01:20 Thanks Conor. Medium term I don't see any change in our outlook. What drives that medium term outlook is every time our competitors produce a set of half year or quarterly number their unit costs are up 8%, 10%, 12% and this is ex-fuel. You know, they can't control their costs. Their costs are escalating wildly. And the cost gap between us, our slide four, is getting wider and wider. Now, there's only one thing they can do at that. It's A, cut capacity to get airfares up to pay for their higher unit costs. Or B, materially take a lot of capacity out or go bust, which I think is inevitable in the case of a couple of our competitors. and then you have the consolidation place itself out.

1:02:05 If somebody comes over the hill and pays 5.5 billion sterling for EasyJet they're going to want a return on that and they're going to take I think much more sort of dramatic action or structural action on and like what you can't do with EasyJet is move it out of JASIC or move it out of Charles de Gaulle or move it out of Schiphol too. Where? Like Stansted full, Luton full, you know so It is inevitable to my mind you're going to see very significant capacity constraints imposed on the likes of an EasyJet going forward. I think they will. If you look at the two candidates looking at EasyJet, they're both experienced in the aircraft leasing market. I think they would see, and there's no doubt, the EasyJet order book and the EasyJet fleet is an attractive asset, but that asset will get monetized.

1:02:51 and so I think what's going to happen is the biggest upside on our is not that consolidation will take place in Europe in the next four or five years, which it will, it is that our competitors are struggling with unit costs and the only way therefore they can manage those unit costs is to pass it on in the form of higher airfares. We are much better at managing unit costs but our fares will trend upwards behind price increases by our competitors. and therefore I think that gets us over the medium term. You know, take this year as one of those operations, there's a war in the Middle East, Trump in the White House, the spot oil prices are all over the place and there's a bit of consumer hesitancy. That will dissipate The Middle East will get resolved. People will go back to some degree of normality.

1:03:37 We will have taken another five or ten points of market share off everybody else in the middle of all of that. And then, add to that, if something happens to an Air Force, or a whiz, or the people who can't shoot straight, it will be nothing but upside in terms of capacity restriction and better pricing in Europe. Neil, do you want to take on the cost question or the stock cost question, Connery?

1:03:59 Yeah, sure, Conor, good morning. Firstly, as you rightly said, we were carrying too many staff last summer as a result of being left short 25 aircraft, so we're getting better productivity this year from those staff now that we've got the full complements of the MAX A200s in the fleet. We have front-loaded some of the pay in the CLAs this year, so it'll be slower into next year. Importantly, with the MAX 10 starting to come, that will obviously drive even more productivity with 20% more passengers on board. But in the near term, as we flagged some time ago, we'll continue to take in high levels of cadets and apprentice engineers so that we've spooled up for when peak delivery starts to come along. We'll be self-sufficient for first officers and captains.

1:04:50 But, you know, I don't expect anything much beyond that. So we'll be slightly... Thank you, thanks Conor. Next question please. Our next question comes from Dudley Shanley from Good Buddy. Your line's now open, please proceed.

1:05:27 Just a couple of questions. First of all, on airport deals, I'm just wondering in the current environment where you're talking about capacity in Qatar in the winter, whether you're starting to see any airports come to you with better deals or is it just too early for that? And then the second question, just to follow up on Conor's question, are you still as confident that you can reach the 12 to 14 euros net income per passenger range over the medium term? Thanks.

1:05:52 Okay, maybe I'll ask Eddie to deal with the airport deals, how they're getting better, but obviously without naming names, but in general terms, what's happening?

1:06:00 Yeah, I don't think you even have to wait until the winter time, I mean, because we've seen a sort of a marked change, particularly over the last number of months, where a lot of airports are getting very nervous about some of their anchor tenants as to what's going to happen. They can see little prospects. They can see little prospects for growth. and when things happen like when we make announcements like the closure of Berlin or the five aircraft that are going to come out this winter out of Charleroi because taxes are going up you can see you can see airports that the board lights up here for the commercial department with others saying well we can take those we can do an improvement on the deal that we have all volume related and you can see things happening that we haven't seen for a long time where Thank you very much.

1:07:08 Don't just do these, are always back onto us about improving deals continuously, especially when they see those aircraft, when they see aircraft coming up free from other bases. So, you know, it's a different place to be where airports are competing that aggressively. I haven't seen it in a number of years. Do you want to just tell them, Vince, there's a number of these jet airports that have been on to us recently? Yeah I mean like you have places that are overexposed there where you've got say Luton, you've got airports particularly you know if you look at this sort of in a macro level like EasyJet have been gradually retreating from southern Italy up into northern Italy and understandably a lot of the airports there are wondering when are they going to go back over the Alps or not or are they going to stay there in some of those key airports but also you see as well with Wizz as well where Michael O'Leary,

1:08:24 Vienna, where we reduced our capacity by some 10% in the last two years due to high costs, and is a mad 14. Our €12 aviation tax in Austria, that €12 aviation tax raises less than €140 million for the Austrian government. Meanwhile, over the border in Slovakia, the government has eliminated the aviation tax, cut EDVs by 50%, and Bratislava, the capital city airport in Slovakia, has introduced very imaginative growth incentives schemes. In the month of June, Vienna's traffic fell by 6%, Bratislava's traffic was up over 120% year on year. Huge growth at low cost, and we are moving, switching aircraft around. We've taken away from Berlin. This year, for example, we'd originally planned to grow traffic in Dublin by 10%.

1:09:13 We abandoned that plan. We moved three airports out of Dublin. Our traffic this year is flat, I think, in Dublin. But because Dublin put fees up by 10%, because they're a regulated monopoly in good. If the IAA's proposal, draft proposal, which is to cut Dublin airport fees by 15% in the summer of 2017, we will charge in there with another 2 million seats. that would be 10% growth delivered just by Ryanair this is in an airport that has a fucking capacity cap but while Aer Lingus are talking about reducing capacity by 6% we'd be charging in there next year with 2 million more seats so delivery very dramatic growth so don't underestimate the extent to which we can churn those aircraft where a number of our competitors you know are stuck at fortress airports like Gatwick or Charleston Ball they can't because of they need they lose the slots they can't kind of move airpods out of those whereas most of our airports we don't have slots or not too worried about them we chop and churn all over the place to encourage and that's not to kind of penalize high cost airports but it's to encourage those other airports who want to grow aggressively to be aggressive with growth incentives I'm turning to the second part, which is getting to 12 to 14.

1:10:24 Look, I've given you my view in relation to the second half of answering Conor's question. I'm going to ask Tracey maybe to give you a more independent or rational view of how battery will develop over the next five years. Tracey, do you think we'll get to 12 or 14 euros profit per passenger?

1:10:38 I think if you look at last year, I suppose we were just under 11, and a lot of this has come down to the deals we've secured on costs. Eddie's just spoke about the airport deals that are available out there. We're ready to, you know, open our engine shops in 2029, which again will give us cost advantage, and we've got to deal with CFM. Cost advantage is a max 10, so we'll have 20% more seats, so again, 20% upsell on ancillaries, revenue opportunities with no real incremental cost. We'll have the fuel benefit of the max 10 order, 20% more fuel efficiency. and it's how we finance them aircraft so probably finance them out of cash or take low cost opportunities to finance them if we get them and CLA deals that are you know ongoing at the moment improve productivity on crewing and I think that's all the steps are in place to actually get us there so I think it's a cost story cost advantage story as well as the opportunities we get with capacity coming out of the market.

1:11:36 yeah and remember you know we're competing across Europe mainly with legacy airlines whose unit costs are four and five times higher than ours you have the likes of Wynn's for example doing more sale and lease back of their fleet which is the only profit that they recognize in their P&L but that means they have much more expensive aircraft and ownership costs going forward for the next number of years if they survive that long and then I think if the easy jets are the subject of M&A there is no doubt in my mind that you know the financing cost of that M&A will be passed on to easy jets they will have to get airfares up and you know our strategy or our kind of contention at the last year of profit movement 12 towards 14 to 15 euros per passenger is that most of it will take place on the yield pricing line and I would still be confident that would be the case but as Tracey identified there's also significant and widening cost advances on the cost line as well.

1:12:31 Next question please, thanks O'Leary. Our next question comes from Ruairi Kalanen from LBC. Your line's now open. Please proceed.

1:12:40 Ruairi, how are you?

1:12:41 Yeah, good morning. Yeah, first question on ancillaries. They've been quite flattish on a revenue capacity basis for a few quarters. Now are you seeing less take-up for some of your ancillary products?

1:12:55 And then secondly, on fair trends, have there been any sort of noticeable areas of weakness across markets in H1? Thank you.

1:13:03 Jamie, I'll do ancillaries. Tracey, do you want to take it? Eddie, maybe do the fair cleanse.

1:13:08 Yeah, so ancillary pretty much, as you said, a flash in this quarter, but some of that is the Easter impact. So we've seen significant growth in the same quarter. Last year we were up 3% to 23.08. We're still on track to see ancillaries grow about 1% to 2% for the remainder of the year and continue to do, you know, what we said, it's about growing the total revenue now at the moment and starting to price between you know bags, seats and bags so it's optimizing the price and dynamically across all them products that we're in control of.

1:13:39 Thanks Tracey. Eddie, fair trails obviously we're not leaving particularly.

1:13:42 I know I mean like the only I mean if you look at it I mean it is a general story of I suppose the what's happening in the Gulf at the moment and consumer sort of sentiment and you know uncertainty you know which We saw earlier in the booking season which was around fuel supply concerns and then we could see the whole uncertainty as to the war going on and World Cup and that. But there's no real call out except obviously you'll have places that you've got a lot more capacity going into which would be into Central and Eastern Europe and to a lesser extent into the UK. or some of that may be driven by capacity.

1:14:30 But there's no real call out on a geographic basis.

1:14:36 Thanks Eddie. Next question please. Our next question comes from Andrew Lobbenbeck from Barclays. Your line is now open. Please proceed.

1:14:46 Andrew, hi. Hi, my content is classical, this one. Can you tell us what's going on with the EU ownership stake? You know, I think the ADR premium's been rising of late, so is there anything to say on the ownership and control situation? And then just another short, simple question. You mentioned that the RCF is mostly undrawn. We've suggested it is a little bit undrawn, but given that you've got pots and pots of money, why do you need to draw it at all?

1:15:17 Thanks. Okay, thanks, Andrew. I'm curious, maybe take the ADR question, EU ownership and ADR due to the update, and then maybe Neil, I go back to you, why is the RCF mostly undrawn in the middle of the summer?

1:15:32 Hi, Andrew. So our EU ownership last reported is 30%. Next report will be at the end of September. We'll get that in November with the H1 results. We have seen Europeans buying ADRs over the last few months, and this is a new development, quite welcome, and that could be behind the rising premium.

1:16:01 Any help on ownership and control? No?

1:16:03 Not much. I mean, there will be a revision of the law In Europe that deals with ownership and control rules that is due to start later this year and it will take about two years to go to the EU Parliament and the Council. It is still expected that EU 261, that ownership and control will be dealt with in that revision so that some changes will be proposed to modernize the rules to make them more suitable to the capital markets as we know them today. where European money may well be managed by someone in the United States or the United Kingdom and the other way around. But we just have to wait and see what comes out of the European Commission and then when it goes through the Parliament and the Council, as we've seen with EU 261, anything might happen. So we just watch that closely and keep pushing for a more sensible set of rules that we have today.

1:16:59 Okay, thanks Julius.

1:17:02 Neil, the RCF, why is it undrawn?

1:17:05 Yeah, Andrew, good morning. Yeah, we've about 40 million drawn under the, or sorry, drawn under the RCF. We've a big pool of banks and we like to let them leave a little bit of money on the table just to feel involved. No other reason that we could have paid it off. We decided to leave that sliver there for the banks.

1:17:28 And I would add to that, you know, we do expect we will, as we move into this September, December quarter, we will draw down on the RCF. Now, you know, certainly we won't need all of it, but bear in mind, you know, we think the kind of comfort base we should be in terms of cash on the balance sheet is around 4 billion. As of today, we have gross cash ourselves about 2.7, 2.8 billion. Michael O'Leary, Dara Brady, We go cash negative in the September and December quarter.

1:18:13 We will draw down the RCF. I would not want us to go down to kind of 2 billion or below 2 billion gross cash and then have something untoward happen. This is a capital-intensive cyclical business that is subject to extreme shocks such as war in the Middle East, oil prices go mad in bookings. Putin invades Ukraine, Covid, etc. So it is a sensible strategy to have a reasonably sizable RCF there in place. As we've said in terms of our funding Objections for the next 12 months, it is to fund the Mac 10 capex out of internally generated cash flow, fund the engine shops, fund the balance of the share buyback, fund another share dividend coming in September, and then rebuild gross cash back up towards about $4 billion a year.

1:19:05 That would take us at least another year. But our discipline with the RCF is draw it down during the winter period when you go cash negative, pay it back as you get into the summer period when we're cash flow positive. Next question, please. Our next question comes from Mark Zek from Kepler Chevro. Your line's now open. Please go ahead.

1:19:30 Okay. Good morning, thank you for taking my questions a bit too if I may and just maybe just chop on the ETS. Do you mind sharing what percentage of kind of revenues the passenger is now newly affected by the 5,000 kilometer radius from Crampton wasn't before? The second question would be on the recent heat waves and I reckon and I think the quarter was unusual due to Iran but do you feel the extended heat period has also weighted maybe somewhat on maybe yields so you need to stimulate and what do you expect your impact from let's say more often more heater heat waves and in the future say UK becomes a beach destination what's the impact on the operation? Thank you.

1:20:21 The first one, I invite Neil or Tracey to come in. I mean, look, the extension of the ETS would now mean we'd be charging ETS on, if it is implemented this way, we'd be charging ETS on EU traffic to Albania and Morocco. We have very little, almost nothing going to Turkey apart from some chart, buzz chart or stuff, but tour operators will be paying that. So it will have minor impacts on us. The fundamental impact on us and all the rest of European aviation is Europe has this mad system where we're taxing the shit out of European citizens and then exempting all the Americans, Gulf, Asians arriving in Europe, leaving Europe, despite the fact they generate more than 50% of European aviation CO2 emissions It is a mad, discriminatory, indefensible system and the Europeans should grow some vertebrae and either have a fair system that taxes everybody arriving in or leaving Europe or stop taxing the Europeans altogether.

1:21:22 But, you know, expecting von der Leyen to come up with anything that would improve the competitiveness of European aviation is, you know, We'd be around for a long time. She's useless. And there would be nothing as the Draghi report gathers even further dust in Europe. There's been no reform on ATC. There's been no reform on ETS. And Europe continues to be a hopelessly uncompetitive market. Despite the fact that air travel is one of the few areas where Europe wipes the floor with the Americans. They're ahead of us in AI, they're ahead of us in energy security areas. We wipe the floor in America when it comes to air travel and yet Europe keeps inventing new regulations to make us either less competitive with ETS or make us look less competitive with the new mad advertising regulations.

1:22:09 As the heatwave had any impact on us, not really. As someone who put his wife and children on top of flights to Portugal yesterday, despite a prolonged heatwave here in Ireland, the Europeans are all still going to the beaches of Portugal, Spain, Italy, Greece, etc. I don't see that changing. You hear occasional stuff that the French and all the others are going to keep coming to Ireland to get away, but there's no sign of it. I don't think... One summer is not going to make any huge difference. I don't think that it makes any significant impact at all. It allows newspapers to fill up rubbish during the quiet, during this kind of, when the parliaments are all closed, they'll all start writing shite. And I'm sure Sky and all those will be doing features, daily features now on global climate change and all the rest, but most of which will be nonsense.

1:23:02 But no, we don't see any change in travel patterns. Eddie, any of you on huge wave travel patterns?

1:23:09 No, we haven't seen anything. I mean, things like the World Cup and that, I think you will see a bump on, right? I've seen that in previous tournaments as well, but I don't think there's any systemic change in booking.

1:23:24 and Julius Interpols who are going to stay at home during the summer or keep heading for the beaches of Bulgaria, Greece and God knows where else.

1:23:31 Keep going to Denmark.

1:23:35 Okay, thanks Mark. Next question please. Our final question comes from Axel Stassi from Morgan Stanley. Your line is now open, please proceed.

1:23:45 Axel, aye. Hey, thanks for taking my question. To your mind side, please. Could you maybe just reiterate how much we should look at capex for 28 and 29, considering the maintenance swap and the delivery of the Boeings? And second question, on the buyback beyond the 750 million, almost done. Consciously said you wanted to focus on aircraft capex, DVs, and the 4 billion gross cash level. What kind of gearing should we look at to understand the leeway here on the potential buyback? Is it four times, one times, just to have an understanding? Thank you.

1:24:21 Okay, thanks Axel. Neil, you want to take the CapEx and I'll do the buyback?

1:24:26 Yeah, sure, no problem. Good morning Axel. CapEx, current year, FY27 unchanged from what we previously got, somewhere close to £2 billion. If I look into the next year we're probably somewhere in a range of 2.7 billion to 3 billion and I wouldn't go beyond that in any kind of guidance at this stage.

1:24:49 Thanks, Ian. Buybacks, actually, we've been quite upfront. We've said there won't be another buyback this year. We'll finish the buyback probably around the time of the AGM in September. The AGM will get approval to continue buybacks, but we will not look at another buyback until the spring of 2027. We do go cash negative in the September, December quarter this year. We've already paid back a bond of 1.2 billion. We'll have funded dividends of 400 million this year and we'll have completed the 750 million buyback. So shareholders have done well this year. They'll just have to wait. I think we will look at it again once we get a better handle on what the CapEx looks like through the middle of 2027 and that is when we'll be into the heavy engine shop CapEx.

1:25:36 and then I think we will reassess I would be you know I think we will continue to do buybacks there just won't be another one there won't be a follow on one this in 2026 when we complete the 750 you'll have to wait I think until either March or the full year results next year in May and then we'll have a more expensive position

1:25:59 Can I just add to that Michael, just on a specific gearing question, look we keep it very simple, we're going to build the cash back up towards 4 billion, then to the extent the surplus cash, that will likely go back to the shareholders, whether we take debt on or not will principally be driven by the cost of that debt and we don't have any targets one way or another as to whether it's 2, 3, 4, 5 or 6 times gearing on the balance sheet, we'll keep it very simple And opportunistic

1:26:29 Okay, thanks Axel. Ladies and gentlemen, thank you very much for participating in the conference call. Again, I wouldn't get too upset over the weak near-term outlook. It is what it is. There's a war in the Middle East. We see this as a period of opportunity. We are aggressively churning airports. There are a number of airports who are very concerned out there by the financial challenges faced by some of their incumbent carriers. and are doing more aggressive deals with us. There is a lot of upside in the system over the next year or two. Things like the Dublin Airport cap being lifted, the IAA bringing in price reductions here at Dublin. Pricing will be a little bit weaker than we had originally hoped this year. Fine if it is, it is. We think the pricing will recover strongly in 27, 28 onwards because the underlying fundamentals is our competitors' unit costs are rising rapidly and they have no choice but to either constrain capacity or leave certain markets where they're unable to compete with us if they're going to get their airfares up and in the meantime what we have to do then is manage a nonsensical or idiotic EU regulation where they'll continue to invent new regulations that make aircraft in Europe either less competitive or make it look like it's less competitive but Ryanair will continue to find its way around those regulations and continue to take significant market share from our competitors as we move into a winter period where we expect a number of failures among those competitors.

1:27:59 Okay, we're not obviously Q1 results, we don't do a roadshow. Neil is meeting some investors in London. I think he's going to Switzerland tomorrow to try and sum up some more European interest. And if anybody wants to do a follow-up meeting or come to Dublin and see us at any stage over the next couple of weeks, please feel free. Jamie, who's head of IR, would be happy to set something up. Thank you very much, everybody. Look forward to seeing you in the future. Have a good, a great summer. Enjoy yourselves. God bless. Bye-bye. Thank you for joining us. That concludes today's call. You may now disconnect your line.