Ryanair Holdings plc

Good morning ladies and gentlemen, you're welcome to the Ryanair Q3 results presentation. I'm Michael O'Leary, I'm the Group CEO and I'm joined this morning by Neil Thorne, our Group CFO. You'll have seen the strong Q3 numbers we published this morning on the Ryanair.com website. We reported a Q3 net profit of £88 million up from a Q3 loss in the prior year. We'll take that as right and we're going to run straight through the slide presentation which we'll move to now. As you will see, Riley remains Europe's favourite airline group. We have the lowest costs, we have the lowest fares of any airline operating across Europe. We're number one for traffic, 154 million guests, up 8%. Number one for coverage. Lower growth is driving slightly higher fares both this winter and we think that trend will continue into the summer of 2020. E-airline failures and sales reorganisations are accelerating. We've seen that trend over the winter period. Ryanair is proud to be Europe's greenest, cleanest airline and we're about to invest upwards of 20 billion in a fleet of new Boeing aircraft which will significantly increase the amount of passengers we carry per flight by reducing fuel consumption. Ryanair is and remains the lowest cost operator in Europe and we will be the structural winner. This site is familiar to everybody. It sets out our 82 bases, 241 airports, and I would draw your attention that in summer 2020, we have new routes in Katowice in Poland, Zadar in Croatia, a new country in Armenia, and in total, we'll offer over 111 new routes this summer. We continue and commit ourselves to offering Europe's lowest airfares, which is why other airlines, our competitors, can't compete with Ryanair's prices, nor can they compete with our costs. Other airlines claim to have lower costs on some random or chasm basis. It's simply not true. If you look and compare us on a unit cost basis, per passenger excluding fuel, we beat everybody. We're significantly cheaper, for example, than EasyJet on airport and handling costs, about one third of their costs. And in aircraft ownership, we're significantly cheaper than Wizz. In total, however, Our unit costs ex-fuel are more than 34% lower than our nearest competitor, which enables Ryanair to continue to grow off of lower fares than any other airline and sustain those low fares.

Neil, the results. Yes, Q3 showed a strong performance. Guests were up 6% to 36 million customers. Revenue for passenger performance strongly at 13% improvement. Thanks to strong close-in bookings on Christmas and the New Year, we saw a 9% increase in average fare. and priority boarding and reserve seating continue to drive a strong performance in our artillery revenues which were up 21%. Unit costs, despite the fact that we haven't got any masses in our fleet, were only up 1% in the quarter and as Michael already said we recorded a profit of £88 million in the quarter which compares to a loss of £66 million in the prior year. Interestingly our earnings per share is tracking ahead at that thanks to the buybacks that we've been doing over the past year.

In terms of current development, so clearly the MAX 200s are delayed. Boeing themselves are saying that the return to service, they expect the grounded MAX to return to service in June. The certification of the MAX 200s is running at least two months beyond that, so frankly we're too busy in July and August, so we've now reduced, cut back our summer 2020 schedule, taking out the 10 MAX aircraft we had hoped to receive, and therefore our growth next year will be slightly lower, but that should help the underlying airfare proposition this summer. Our cost leadership is being maintained, as Neil has said, despite the fact that we don't have 55 MAX aircraft in this winter's fleet. We're still seeing a tremendous unit cost discipline up only 1%. We believe the slower capacity growth by Ryanair and our competitors and higher fuel will continue to drive consolidation. We've seen that this winter with the failure of Thomas Koch and Adria, among others. There will be slightly higher losses due to the price war with Lufthansa subsidiaries in both Germany and the Austrian market. We believe they are engaged in low-cost selling. We are the lowest cost operators and we'll continue to meet and beat them on price. We're continuing to make significant environmental progress and we're pleased to announce today we've appointed our first Director of Sustainability who will be the focus of our delivery of these ambitious environmental targets. Of the 700 million shared buyback, we have about 440 million euros now completed. There's about 260 million to go. We expect to run that programme out slightly longer now, completed by about the end of July. And as you would have seen in early January, we raised our full year guidance from an old range of 800 million to 900 million. The new range is now 950 million to a billion and 50 euros. The max update. So we have 210 aircraft on orders. They will be delayed now until the winter of 2020. And that means slower FY21 growth. We're reducing it from 162 million to probably about 160-156 million over the next 12 months. Most of that growth will be delivered by the additional A320s in Lauda. It has led, regrettably, to some base closures this winter because we've had a constrained capacity with fewer aircraft. So we've closed bases in Arecife, in the Canary Islands, Belfast, Hamburg, Las Palmas, Nuremberg, Stockholm, Skata and Tenerife South. We've frozen our PDP payments to Boeing. We do want to restart those PDP payments, but only once we have certainty on our max delivery programme. We continue to look through the current noise and we believe this is a great aircraft. it does carry 4% more passengers per flight and 16% lower fuel consumption. Our senior pilots, our training pilots have been in the MAX simulators, they've been in the NG simulators, we recreate and they're very confident that this is a great aircraft, it handles brilliantly and that our customers are going to really like it when we start taking it on board. But the result of this delayed delivery means we're now moving out our target of 200 million guests will be delayed from currently FY24, it will now be FY25 or FY26 depending on when we can take the deliveries of all 210 of these aircraft. Consolidations continue. In recent months we've seen the failure of Ernst Airlines in Italy, Adria in Slovenia, Thomas Cook, the charter airline, has been the big failure last autumn. TAP is currently for sale, so is Croatia Air. Aer Europa and Condor have been sold. Alitalia, Flybe and Tarim are now in receipt of state aid. And even in Vienna, where Lava Motion is losing money, we've seen Eurowings significantly cut back their programme. In fact, they're closing their Vienna base. Level has cut back its programme and EasyJet has failed to grow. The ladder losses have increased marginally from 80 million to 90 million this winter, but it's entirely an average fare issue. Fares have been lower than expected and significantly lower than budgeted. That's because it's engaged in a freight war with Lufthansa subsidiaries in both Germany and Austria who are engaged in below-cost selling, and both Eurowings and Austrian Airways are losing money themselves. This year, Lada will carry about 6.5 million guests. We expect that to grow in the next 12 months to about 10 million guests. This summer, the fleet will rise from 23 to 36 aircraft. with most of that growth taking place in Vienna, the main base in Vienna, which will also open a fifth base in Zadar this summer. And as a result of those investments for the longer term, losses will grow from 80 million to about 90 million euros this year. The management team are now engaged in a line-by-line detailed cost review and are continuing to roll out cost reduction measures through this winter and moving into next summer. In terms of our environmental proposition, we are the first EU airline to publish our monthly CO2 emissions. We've now appointed Thomas Fowler as the Director of Sustainability. He will be charged with delivering the very ambitious targets that we've set out in our environmental statement. We are already one of Europe's greenest airlines. Passengers switching to Ryanair from Hyfair legacy European airlines can reduce their emissions by up to 50%. We're not content with that. We have a plan to cut our emissions further by another 10% over the next decade and much of that will be delivered by the Boeing MAX aircraft deliveries. We've committed ourselves to being plastic free in five years time. We're ahead of target now. We're up to 60% plastic free both in head office and on board. We're raising the voluntary carbon offset. This summer from April it will rise from €1 to €2 per flight. It doesn't offset all of our carbon emissions, but it is an indication for those customers who want to offset or make a contribution towards the carbon offset of their flights can do so. And critically, we're on the dawn of taking delivery of 210 new Boeing 737 aircraft, which will cut our fuel consumption and cut our noise emissions while carrying 4% more passengers.