Ryanair Holdings plc

Hello, and welcome to the Ryanair H1 FY21 results conference call. Throughout the call, all participants will be in lesson mode only, and afterwards, there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present Michael O'Leary, Group CEO. Please go ahead with your meetings.

Okay, good morning, ladies and gentlemen. Welcome to the Ryanair Half Year Results Conference Call. You'll have seen this morning that we have released the half year results on the website. There is a comprehensive slide presentation and a Q&A on the website, so I would take all that as read or seen. And then I'll just give you some comments on top of that. So as you've seen, the results this morning covered a six-month period to the end of September. The first quarter, we were essentially grounded, successfully returned to service in the first of July. We've run with about 60% of that capacity through the summer season, following all the ECDC and EASA health measures, and that has been successfully implemented. conscious of the need to prioritise the balance sheet in cash. In September, we raised €1.25 billion, a €400 million equity placing, which was led by the management team, and we've also raised an €850 million Euro bond. That means that today, we've got the half year, we've got a closing cash position just in over €4.5 billion. We will need that because in the next 12 months, we have over €1.5 billion of debt repayments due The UK government's $600 million loan is due for repayment in March, and we have our 2014, the first of our commercial bonds, the 2014 $850 million issue is due for repayment in June. Some of the key challenges over the last six months, the Reiner customer service teams and labs have cleared an unprecedented backlog of customer flight changes, COVID-19 cancellations, refunds, and voucher issues. All of that backlog has now been eliminated. We have refunded or vouchered 1.5 billion worth of bookings. We have no backlog in refunds now. And if there are customers out there who still haven't received a refund, it's because they haven't requested it or they're one of that small number that are stuck having moved and made bookings through screen scraper, unlicensed screen scrapers. where we have fake customer contact details and fake payment details, and we've set up a procedure whereby they can apply directly to us and bypass the overcharging scam artists, screen scrapers, and obtain their refund directly from us. COVID-19 crisis, though, has clearly caused the closure of a number of EU airlines, huge long-term capacity reductions at many of Europe's legacy carriers who are receiving unbelievable quantums of state aid, Air France, KLM, Lufthansa receiving over €10 billion each, Alitalia over €3.5 billion and similar sums or equivalent sums in SAS, TAP and others. We believe this illegal state aid will distort competition for many years to come and allow those flag carriers, failed flag carriers to engage in below-cost selling for many years. We have already initiated the first two legal cases in Europe against the SAS state aid and the French refund of aviation taxes, but only to French airlines. We expect to receive decisions on those cases this side of Christmas. However, I think it's important today we don't get stuck in the details or the short-term kind of details of the current situation with Europe moving back into second lockdown. There is a bright future ahead. We have taken advantage of the COVID or used the period of the COVID-19 crisis to radically restructure our cost base. We have now reached agreements, I'd say, with almost all of our pilots and cabin crew that will involve painful pay cuts and productivity pay reductions through the winter period. But it's a much better alternative than job losses. We have minimized the number of jobs and losses we have. We can't rule out further job losses. particularly on some bases in Spain and Portugal, Belgium, where the chemical unions frankly have their head in the sand and are still trying to insist on not taking pay cuts or opposing pay cuts. And in those circumstances, I think it's inevitable we will have job losses in some of those smaller countries. We're also looking to, in extensive negotiations with airports about growth incentives, returning or where we can return traffic quite quickly. I think we took great comfort from the recent experience with the UK Canaries market when the UK added the Canaries to their green list two weeks ago. Our daily target of 2,000 bookings was exceeded by a 14-fold. We took 28,000 bookings in the first day, 25,000 in the second day. I think if anything confirms our view that there will be a very strong snapback There is huge pent-up demand for air travel across Europe, particularly short-haul European air travel. We think the long-haul recovery will take longer. But the short-haul snapback will be strong and it will be immediate. And we are well-placed to cater to that. Again, we saw, for example, tour operators and charter airlines being slow to respond to that reopening of the Canaries, where we were able to add extras for Christmas travel almost immediately and responded strongly to that. A couple of other key themes. We are clearly in continuing dialogue with our partners, Boeing. We are now confident, as are they and the FAA and the AASA, that the MAX 8 will return to service probably sometime in late November, early December. That, we believe, will lead to our aircraft, the MAX 200, the Game Changer, being certified probably in early 2021. We are hoping to take the first delivery of those aircraft at the end of sometime in February. That would allow us to take, we have a limited capacity to take new aircraft deliveries at about eight a month. It would allow us to take something of the order of about 30 aircraft between February and early summer. That figure might fall to 25 or so, but it depends on when we can get the first ones. We have extensive MAX simulators up and running and extensive training programs for our pilots. We still think this is a great aircraft. All of the pilots who have flown it and flown the sim think it's a terrific aircraft. Operationally, they understand it well. It flies and handles very well. But from a financial perspective, it gives us 4% more seats and a compelling 16% lower fuel consumption per seat, as well as delivering 40% lower noise emissions. And we think that the game-changer aircraft will be a key component of us significantly lowering our aircraft ownership cost base for the next number of years. And I contrast that with many of our competitors who are engaging in sale and leasebacks of their fleet at distressed prices and paying high financing costs, which will significantly widen the cost gap between us and all other EU airlines over the next, I think, five or ten years, widening the gap between Ryanair and our competitors across Europe. We will therefore, I think, respond or emerge out of the COVID-19 crisis with a lower cost base, with a compelling growth model, with significant incentives in place across many airports. Many even want to recover their lost traffic quickly. And those that come up with the best incentives will recover that traffic faster than others. And in a marketplace in Europe where structurally a huge amount of capacity has been taken out and will not return. We aim, particularly with the game-changer aircraft order, to be able to fill those gaps and deliver or restore traffic at many of Europe's airports. The risk of a no-deal Brexit remains high. We hope before the end of the transition period that the UK and Europe will at least agree a trade deal to cover air travel. They had a bilateral arrangement agreed before the end of 2019, which was at the 1st. Brexit, but we believe that there will be a trade deal, at least one that will cover air travel, that will allow the free movement of people and the deregulated airline market in the UK and Europe to continue. In terms of outlook, and I know we'll have lots of questions, it is impossible in the current climate to give you any kind of outlook for the remainder of this year. You will have seen over the weekend the UK returning to a second lockdown. Ireland was already entering a second lockdown two weeks ago. We draw your attention to the fact that lockdowns are completely ineffective, and I would quote the WHO, who have said governments should do everything possible to avoid brutal lockdowns because it doesn't actually get rid of the virus. We've already learned that from the first ineffective lockdown, and we'll learn it again from the second ineffective lockdown. Nevertheless, I remain an optimist. I do take my lead from Dr. Fauci in the U.S., who has predicted that there will be one or more vaccines probably approved by the health authorities this side of Christmas. The key issue then is when will there be commercially available or widespread availability of a vaccine, at least to cover the high risk groups, the over 70s, the people working in the health service and in nursing homes. And we would hope that that will be by the end of Q1 or Q2 of next year. That would allow us at least to rescue most, but not all of the summer peak travel period. And hopefully then we see finally leave the COVID-19 crisis behind us. But at this point in time, as you know, our last guide, which we gave out in October, was for traffic of 38 million for the remainder of this year. I think that will probably get pared backwards. but not as a result of the second wave of lockdowns. We've been asked frequently this morning, will we be cancelling more flights to and from the UK? The answer is we don't expect to. We had already done severe surgery to our November and the first half of December flight schedules. It is likely, though, that we will not be able to run a 70% load factor through that period. We might see the load factor fall to 60%. There might be some judicious changes capacity culling within that, but we're talking maybe a couple of million passengers below the 38 million, and we will continue to manage that on a weekly basis. FY21 will continue to be hugely challenging, and for that reason, we can't provide any updated guidance. We do expect to still carry 38 million or slightly less, but maybe it's between 38 and 35 million passengers in FY21. A lot depends on how strong the Christmas is. And there is reasonable bookings there for Christmas, but it depends on whether European countries are out of lockdown at that point in time or not. We do need an end to these failed lockdowns. We are calling on European governments to be much more aggressive on test and tracing. For example, in Ireland, we're testing, have a capacity test, 100,000 people a week. We should be testing a million people a week. And that's what this government in Ireland should have done during the first lockdown back in the spring. But unfortunately, in Ireland, we're being run by a bunch of doctors and not by a government here. And the doctors continue to mismanage everything from nursing homes to meat factories to face masks, as well as lockdowns. But nevertheless, we are where we are. And as an airline, we'll have to continue to try and manage our way around it. Our key objectives during this period have been to conserve cash, strengthen the balance sheet, preserve as many jobs as possible, even if the price of that job preservation will be a pay cut for management for our frontline people, less flying hours for our frontline people, it is better that they are less busy during this winter but still in a job so that together we can all respond aggressively and grow strongly once we emerge out of the COVID-19 pandemic. The Reiner Group will emerge from this period with a lower cost base, a stronger balance sheet, we will be able to fund lower fares and add new lower-cost aircraft to capitalise on these growth opportunities, which will inevitably emerge once we emerge from the COVID-19 pandemic. Neil, do you want to add anything on the MD&A?

I don't have a lot to add, Mike, other than to emphasise the work that we've done on the cost saving over the past number of months. I think that came through in the half. We saw operating costs down to 67%, albeit not enough to assess the 58% reduction. in revenue, but we worked very hard to improve what was already the lowest cost base of any airline in Europe. The balance sheet, also underpinned by the equity rates and the Eurobond that we did last month, put us in a relatively good position as we go over the next 12 months or so. All refinancing risk now removed. I would flag that there was some more hedging effectiveness In the quarter, we took an after-tax charge of $214 million, primarily due to the fact that we pulled back our winter capacity from 60% prior to 40% prior capacity, so effectively moving what would have been a charge of Q4 or Q3 into the second quarter. sorry, in the first half of the year. We're probably coming near the end of the hedging effectiveness, particularly as we look into next year, where we're relatively under-hedged. We wouldn't anticipate any hedging effectiveness next year. And from a cash perspective, we've already settled about 70% of the gas worth hedging this year. So balance sheet in good shape, cost base getting better, and maxes hopefully coming next year, which will improve the cost base further.

okay thanks daniel i will open up now for q a please we're going to restrict everybody to two questions and uh the obvious was the first ones which would be what would the yield be like and the traffic be like next year is we don't know go ahead please thank you if you wish to ask an audio question you may decide by pressing zero one on your telephone keypad if you wish to withdraw your question you may decide by pressing zero two to cancel once again

01 on your telephone keypad if you wish to ask an audio question. There will be a brief pause as we wait for audio questions to be registered. Our first question comes from Jared Castle from UBS. Please go ahead with your question.

Thanks, and good morning, both. Just kind of slightly new answers on some of the stuff you've already said on the Q&A on your website. But you obviously had some good cash control over the summer. and obviously will burn through cash as you normally do over the winter. But can you potentially give some kind of range on what you're thinking this will do to the balance sheet as you progress through winter? I'm not asking for an exact number, but just any color that you can give, Neil Michael. And then secondly, just again, not asking on yields, otherwise I know you're going to get cross with me, but in terms of your willingness to achieve a 60% to 70% load factor, As you said, there's pent-up demand, but would you be prepared to cut aggressively on yields to achieve that load factor, or is it a case of being conservative in the current environment at the moment, and maybe some people, you can't even motivate to fly given the current environment? Thanks.

Thanks, Jack. Two quick responses. The difficulty part is it's impossible to give you any guidance on cash flows through this winter. The challenge there is normally in a normal year, we would have a huge surge of bookings and cash coming through in January, February, March as people make their Easter holiday bookings, their summer holiday bookings for that Christmas onwards period. And we have just no idea. I mean, I think it will be strong, but we have no idea if there is a third lockdown going on in January or February. will we see that normal surge of cash flow and summer bookings coming through? There is no doubt at the moment that the booking profile is incredibly late, which is why we think there will be very little impact on us from the government announcement over the weekend. November is already reasonably well booked. And I think it's a judgment issue there. Normally what we've done through this crisis, I think reasonably successfully, we said we will run with a 70% load factor, and if we don't think we can achieve a 70% load factor, we'll cut the capacity. We will use pricing to deliver those. But we're not giving away 19.1 euro airfares. We're not doing sort of free travel. There's no point. And the ancillaries are strong. So, you know, where there's reasonable pricing and we think there's a reasonable prospect of operating to a 70% load factor, we will do so. In fact, this week we'll announce our October traffic statistics. The load factor in October was 73%. So, you know, and that is a reason, the reason we do that is one, obviously, to keep the aircraft, the pilots and the cabin crew flying. But two, it also means operating in those kind of load factors. We're about as close to break even and as close to kind of cash neutral as it is possible to get in the current climate, mainly allowing for the fuel hygiene effectiveness. So that's a reasonable way to go forward. We have a decision to make in November, which is why I think we would let the load factor probably decline to about 60% in November, just because the bookings in November are so weak. We don't want to collapse the business entirely. We would like to keep those skeleton flights operating, and we are down to skeleton flight levels across Europe. But there is demand for those flights. People are moving for work reasons. There are lots of people who work in the health services across Europe who are traveling to and who commute. using Ryanair services, and we think that will continue. So will we continue to, are we dumping prices to maintain a 70% low factor? No, we are clearly below our budgeted yields, though, for the month of September and October. but we are it is a reasonably sensible where we don't think we can get that 70% load factor we would take out that capacity that's why we've already cut or we've already announced we're only doing 40% of our normal winter capacity that is less in November it's a bit higher around the Christmas period you know but it is a very movable feast and the real challenge is we've no idea what will happen to the bookings over Christmas and into the that January, February, which is normally one of the high points of the booking pyramid. Our busiest week for bookings annually is always that second or third week in January. And we just have no idea yet what that will look like when we get there in January. Next question, please.

Thanks, Michael.

Thanks, Jeremy. Our next question comes from Daniel Rusker from Bernstein. Please go ahead with your question.

Thanks very much. Good morning, Jeremy. Hey, in your comments this morning, you highlighted the opportunity for growth as other airlines retreat over the next couple of years. Why haven't you announced any new bases or specific growth plans yet kind of compared to others? And then staying on that topic of growth, could you comment how you're currently thinking about deploying that growth in the upcoming years? Is it more strengthening existing bases? or new bases, and if it's new bases, kind of which geographic focus do you think can yield the most attractive return for you?

Okay, thanks, Daniel. We have announced one new base, which is Beauvais, outside Paris, opening in late January, but it's only a two or three aircraft base. I mean, the reason we haven't announced more is because we haven't concluded negotiations with airports yet. I mean, there are extensive negotiations going on really across the piece, across Europe. In a lot of cases, those airports don't know how much capacity they're actually going to lose. I mean, European airlines are allowed to hold on to their slots. They use them or lose them has been suspended for this winter. It will probably be suspended in the summer 2021 as well. But if you look at some of the legacy airlines like Lufthansa, KLM Air France, who have retired a huge amount of their capacity, you know, 25%, 30%. we think a lot of that won't reemerge, won't be restored. And there will be enormous growth opportunities for us. Now, clearly, those airports who've already been most affected by closures, for example, the flyby, German wings level, they're already quite aggressive. But there's more to do. And how will we deploy the growth? And the answer would be opportunistically. We will deploy the growth to those airports who want to grow or restore their traffic faster. And, you know, that would be from our largest airports at Dublin and Stamford down to our smallest airports and many new airports where we presently don't fly. And the more the airport works with us to have a return or an incentive, even if it's a short to medium-term incentive, that's where we will deploy that capacity. We will be opportunistic and entirely flexible. But it will spike back very quickly. I think the experience we had with the Canaries traffic two weeks ago is an indication of the level of pent-up demand there is, particularly for short-haul European air travel. I mean, I think any people who have been locked up for the last hour, you know, have been locked up for the last nine, 12 months, there is an enormous desire for them to go travelling again or to bring the kids on holidays, go back to the beaches of Europe. I think that will be reflected in very strong travel patterns into next summer, as long as a number of vaccines are announced and there is some reasonable availability of vaccines by the end of Q1, Q2.

You talked about the hub and spoke carriers. In principle, is the hub or the spoke more interesting for you?

In principle, Daniel, what's more interesting to us is those airports who offer us the lowest cost base. We don't really care. I mean, we're at hub airports and we're at spoke airports, but We are very minded to grow back very rapidly. I'll give you an example. For example, you take Stansted, which is our largest airport. I feel no great compulsion to restore traffic growth very rapidly in Stansted if, for example, there's a unique opportunity in Spain or in Italy or in Germany, particularly in the Central and Eastern European airports. Will we return and reopen in Stansted? Yes, of course we will. But whether we snap back from, you know, prior to the shutdown, we had nearly 30 million, close to 30 million passengers at Stansted. Whether we go back there, I use it only as an example. It's not the nature of a discussion with Stansted. But whether we go back to 25 million passengers in the first year or just 15 million passengers in the first year, we entirely depend on the nature of the discussions we have, not just with Stansted, but also with the other airports across the piece. And we're certainly seeing quite aggressive negotiations or offers on the table to us from particularly a lot of Central and Eastern European airports who've been very badly, I mean, devastated by much more autocratic cutbacks and lockdowns by their local governments.

Thanks very much.

Thanks, Ian. Next question, please.

Our next question comes from Saeed Saif from Raymond James. Please go ahead with your question.

Two questions. Assuming you get the 30 max as planned, just curious what your capex for the second half will be and maybe generally what the next couple of years might look like. And then just given the near-term lower cost and assuming you get the max as expected, just curious what level of operation you need to get back to in order to achieve the 30, 31 per pax cost you achieved prior to this crisis.

Well, I'll come back to Neil and to the CapEx question. I mean, I'm not particularly worried about, you know, there isn't an absolute number on cost per pasture at 31. Like, I think when we emerge out of this crisis, our cost per pasture will be meaningfully lower than it has been historically. We will have lower pay, lower wages. You will certainly have much lower fuel. We will lower aircraft costs, lower airport costs. And I think we'll have higher yields. because there is no doubt that there will be constraints on capacity coming out of COVID-19. If there is a vaccine available in Q1, Q2, there will be a very strong summer period next summer. Now, I know that's a big it, but there will be a very strong summer. And the airlines across Europe will not be able to respond or restore that capacity quickly. Again, I go back to the example two weeks ago when the Canaries opened up. We were back there. I mean, it's incredible. We filled flights. We didn't even know before the Canaries, the government had announced that the Canaries was, we see the huge spike upwards in bookings. We were adding extra flights into the Canaries for the Christmas period within 24 hours. Tour operators, charter airlines and some of the legacy carriers were scrabbling around, not able to add flights. They've already cut their schedule. So I think you will see us respond very quickly, but I think pricing in a recovery environment would be much stronger than we have had historically. Because so much capacity has been taken out of the system. But are we, you know, is it 31 or 35 or 27? No idea. It would just be lower than we had in the past. Neil, CapEx?

Yes, that's Tabby. There won't be a huge amount of CapEx in the second half of this year. In fact, most of the CapEx will be really maintenance. and even at that we're doing less flying, so it's less on the maintenance side. It's too soon to give numbers on what the Boeing CapEx might be because we haven't finalised the delivery schedule, so I'm not going to give CapEx for the next few years, but hopefully in the next few months we'll come to some kind of conclusion with Boeing and start giving guidance at that stage. Thanks, Neil. Next question, please. Thank you.

And this question comes from Mark Simpson from GoodBody. Please go ahead with your question.

Yeah, morning. Two questions. You're obviously not giving the firm guidance, but you have talked in the Q&A about a 50 to 80% of summer 19 capacity potentially being your targets for the summer 21. I'm just wondering what the variables are between that range, and is 80% a max that we should assume? um and then uh talking about max um obsessed by the idea of you uh taking max 10 in the future to further drive down your unit cost can you maybe comment around your view of the max 10 and what kind of ambitions you might have behind that and i'm sorry to squeeze one last quick clarification neil ccff you've got it down as a march for a payment but is it likely that the government will roll that out for at least another year

Okay, Neil, that's the last question. The first was that we're giving a very wide range, 50 to 80%. The real barrier, what drives that is availability of a widespread availability of effective or multiple effective vaccines and how that will impact government's ability or willingness to lock down economies or reopen economies. There's clearly the European, many of the continental European economies are hugely dependent on travel and tourism. Even Ireland, which is an island off the periphery of Europe, is hugely dependent on travel and tourism, but that hasn't stopped our government basically shutting the entire island down. It's easier to get out of North Korea at the moment than it is off the island of Ireland. So the wide range of 50% to 80%, which is over the full year, we're talking something like 75 million passengers to maybe 100, 120 million passengers, is entirely dependent upon tourism. timing and availability of widespread vaccines in Q1 or Q2 of next year. Is 80% our max? We think so. I mean, we think even if there was a vaccine available by the end of Q1, we would still struggle. I mean, there's just because of the obligation of recruitment and training, promoting pilots, having enough line flying this winter to complete all the training we need to do we think that it would be tough to get honey higher than 80% of our 2019 max. Now, we could over weekends add extras and things like that, but we don't think that there's any prospect next year that we would add carry more than 120 million or maybe 130, 25 million pastors, all being if there was a vaccine widely available in the first quarter. But clearly, the earlier a vaccine is available, the higher that number will go. And We're guessing, we're stabbing in the dark, but that's all we can give you. On Boeing on the MAX 10, we continue our intensive discussions with Boeing around compensation, pricing of our existing MAX order. We are looking at additional aircraft orders. Most of it focuses around the MAX 200, the game changer, which will significantly lower our operating costs going forward for the next number of years. Boeing are not in a position to engage in discussions on the MAX 10 at the moment. They have pushed back the production and delivery of the MAX 10 by anything up to two years, I think, Neil, about two years. And so they're not really at a point where they can give us any deliveries of MAX 10 or discuss pricing. We have, though, and we've agreed with Boeing that we will be first in the queue when it comes to a discussion on MAX 10 availability and pricing, and it's certainly something we would be looking at going forward. But we were already the lead operator, lead customer for the MAX 200. We have incredibly favorable pricing from Boeing as a lead customer of the MAX 200. And the fact that they give us 4% more seats at no extra cost and 16% lower fuel will transform our cost base for the next number of years. competing as we will be with airlines who have been doing sales and leasebacks, selling aircraft at stressed prices and leasing them back at what are very disadvantageous financing costs in the current climate.

And Neil then on the CCFS, Mark, our intention at the moment is to pay that back in March, but you're right, we don't have to make that decision until we get into the back end of March and there is a possibility if we want to roll it over for the year.

Okay, that's great. Very clear. Thanks, guys. Thanks, Mark. Next question, please.

Next question comes from Stephen Furlong from David. Please go ahead with your question.

Morning, guys. I presume revenue management systems are pretty redundant at the moment, but I was just wondering how the importance of Ryanair Labs and the work it's been doing on during the crisis. We just might talk about that. And then maybe just go back on the competitive landscape into next year. It seems that there'll be a huge chunk of capacity permanently out of the market. I don't know if that's your view. Like the ways maybe growing in Gatwick or domestic Norway maybe, but beyond that, would you agree that a lot of the capacity coming out would be permanent or do you think it's more or do you think it would come back post-crisis? Thanks, Michael.

Okay, I have Eddie Wilson here, the CEO of Jack. So I'm going to ask him to just give his view on the revenue management systems and pricing. Just on the competitive landscape, I mean, you know, if you look around the system, we think at best we'll only be able to operate 80% of our capacity through next summer. Air France, KLM already announced 20% capacity cuts. And Italia are focusing strongly on long-haul routes, massive short-haul capacity cuts. EasyJet will have 51 less aircraft by September 21. No growth thereafter until 2025. IAG, 68 less deliveries over the period 2022. Their winter capacity cut at 70%. And it's all across the piece. If you look across who has aircraft orders into next year, most have been deferred out of 2021 into 2022. With, as far as we understand, about 19 aircrafts, So it's reasonably small compared to us. We'll take delivery of something of the order of about 30 aircraft. We will be the airline with the largest additional or spare capacity into 2021. We are certainly, I think, the airline that most of the European airports are looking to offer traffic restoration pretty quickly. And we will be delivering that traffic restoration on meaningfully lower cost aircraft with much lower operating costs I go back always to the slide on our investor presentation on aircraft ownership costs. We keep hearing from Joe Varady and Wizz that they'll have lower aircraft costs than Ryanair, yet every time he adds an aircraft, the gap between Wizz and Ryanair gets wider and wider. We will be taking lower cost aircraft, he's taking higher cost aircraft, and the gap between us gets bigger and bigger. Eddie, what's our philosophy in terms of pricing and bookings going forward?

Yeah, I mean, I think if you look just at, Stephen, you were talking there about labs before I get into that. I mean, like we've had, our ability to leverage labs during this crisis has been phenomenal, particularly on the customer service side and our business intelligence teams. They were able to sort of be very flexible in actually coming up and managing that amount of data. of refunds and the ability to get ventures and things like that out. But clearly the curves on the revenue side are completely different now. I mean, there's an awful lot more closer in bookings because people are concerned about whether there's going to be lockdowns or whether they can travel or not. And we are working with our revenue management people in labs on that as to how we're going to adapt that going forward. it's going to be, particularly when bookings start to come back in, how they are traditional sort of curves won't necessarily be applicable. So there's a lot of work going on that at the moment. The good news is that the ancillaries are still robust, particularly on seats and priority boarding and less so on the in-flight. But, you know, having that amount of people here and being able to use them has been a real benefit for us And we're learning a lot from this as to how people are at the different profiles of bookings.

Yeah, and to be fair, Ryanair Labs has done a remarkable job. We had a backlog of nearly 1.5 billion of refunds and they have now eliminated that backlog. We've issued refund vouchers to all of the customers who were affected by COVID-19 cancellations. You will repeatedly hear quotes on the BBC talking about when we eliminate the backlog, it's done. The only people who are left out there are people who haven't applied to us directly for refunds. But it's been done and LAF has done a remarkable job. John Hurley is here smiling furiously at me. But they've done a terrific job. And going forward, as Eddie said, it is the nature of the beast. We now have a very narrow booking window, typically about 28, 30 days out. But we are much more flexible in the way we can deploy the aircraft. If we think we're going to be below 70% load factor more than two weeks out, we take out flights. The challenge for us in most cases is actually one of the flights, one flight of the two flights, that rotation will have a load factor of higher than 70%. And so it needs to operate. Next question, please.

Our next question comes from James Collins from Exam BMP. Please go ahead with your question.

Morning, yeah. I was just wondering on redundancies themselves. I know you're talking about mainly focusing on pay cuts and 5% to 20%. I was wondering, I think your staff base was 18,000, what we should be thinking about for, I guess, the end of this fiscal year. And secondly, probably for Neil, on the Boeing side of things, I know you're not talking about compensation, but obviously you've started that process, 250 million coming in already. Is the best way to think about CapEx next year the same as Southwest? You basically said it would be net zero.

On the CapEx, the discussions are ongoing. Some of that includes timing of cash flows. We're finished on that. It's very difficult to give you numbers, but we'll be trying to keep as much cash in the business for as long as we can, James. I don't think it's much more important to give you this side of announcing what we finalized. We're following on that front.

Yeah, and on the headcount issue, I think it's not helpful to focus on job losses, although there is likely to be more job losses this winter at those number of bases, or cabin crew bases, in Portugal, Spain, and Belgium, where we haven't got agreements. Where we have reached agreements with all of the pilot bases across Europe, with the vast majority of cabin crew bases, we're reasonably confident there won't be any more job losses. We are participating in furlough schemes where they're available. In some cases in the UK, for example, the furlough scheme is punitive because the employer has to pay out of the first third of the salary. We simply can't participate in those. We won't fund those kind of salaries. But we are keeping pilots and cabin crew flying, admittedly on the basis of paying them less. But that's better than, you know, sitting at home on the dole in the UK this winter. It's more helpful, I think, to look at it in the round. And that is, you know, in the half year, the staff cost decreased by 60%, which was due to flight hours, recruitment freeze, some job losses. I mean, more of the job losses have been in head office and in overhead functions rather than in pilots, cabin crew and engineers and participating in the government support schemes. And I think that will continue to be the case. We are very conscious, you know, as we're ending, our utmost priority here is to keep the aircraft fleet flying. Even if the plane's already doing one or two flights a day through the winter, keep as many pilots and cabin crew current as we can so that we can pounce on these growth opportunities and return quickly to more normal scheduled levels of flying as soon as there's a vaccine or the, you know, where we emerge at the end of this COVID-19 crisis. And an awful lot of our competitors, for example, who have grounded aircraft for six, nine months, their pilots would have gone out of hours, their cabin crew would have gone out of hours, their aircraft would need a heavy maintenance shop visit before those planes can come back in the air. Whereas we're keeping everything ticking over, while still delivering 60 to 70% reductions in our total payroll costs. James, the answer to the question is don't focus on the headcounts at the moment. Focus on the payroll cost savings while still keeping us there, giving us a very flexible and keeping our pilot and camera crew current. Next question, please.

Our next question comes from Jamie Robotham from Deutsche Bank. Please go ahead with your question.

Hi, guys. Morning. So just You've alluded to the UK government, one minute it puts Canary Islands on the safe list and you take a load of bookings, the next it imposes a national lockdown and tells people not to travel unless for business purposes. Is there anything more you can just say in terms of what you're going to have to do now to manage this latest development in Q3 in terms of capacity and also things like refunds? Second thing, a more simple, boring one, in terms of the Brexit-related risks you've highlighted, Could you just remind us what percentage of your current shareholder base is UK, please? Thanks.

We don't need that number. Okay, let me add to the first one first. Q3 will manage it on a day-to-day basis. Yes, the UK government has whiplash from the numbers of U-turns they're performing, not just on COVID, but on Brexit as well. We think that the capacity, we've cut the capacity to 40% the prior year. The close-in bookings are reasonably strong, but anything out six, eight weeks or more than that is weak. That means we don't have a big refund liability out there. It's not like we were back in March this year where we had lots of bookings through the summer there for a huge contingent liability. We don't have that at the moment. There is a spike upwards in bookings at Christmas. When they added the Canaries to the list, we saw a big surge in bookings to the Canaries, but it was largely for people who would normally go to the Canaries with their families at Christmas and New Year. There isn't a lot of people out there booking with holidays booked in the middle of November because schools are open. You know, there's no... So what we have booked for November is largely business or essential travel anyway. And we will expect most of that to travel. But, you know, I would be perfectly open. The 38 million could fall to 36, it could fall to 35. You know, we don't know, but we're down at pretty much rock bottom levels of traffic and capacity at this point in time. But if there's any kind of error or any changes, there will be changes to the slight downside. On refunds, we have almost no refund liability left because we have no forward bookings out there. And I've made clear this morning in the PR, whatever flights we're operating will operate. People do not have a refund entitlement on those flights. If the flight is operating and you don't travel, you don't get a refund, although you can, take advantage of our change. We waive the change fees for any of the bookings that have been made recently. That was at the end of January of this year, which is one reason why we might have a slightly lower load factor in November. It might fall to, say, 60% from 70%. If it begins falling less, that will take out some capacity. So we have a very flexible cost base at the moment. We have a very flexible capacity base. And I think if you look at everything we've done since we went back flying on the 1st of July, Ryanair is the only airline that's delivered a 70% load factor every month since the 1st of July. We look at EastJet's load factor fell to 54%, Wizz's load factor down around 64% last month. You know, we have delivered, we deliver exactly what we say we will, and we have a very flexible capacity and cost base going forward. On Brexit, who the hell knows? I mean, the best thing we can say is, look, There was a unilateral agreement to cover flying announced between the European Union and the UK government before December of last year. It obviously wasn't needed because there was a transition agreement. We suspect there will be some kind of agreement that will be cobbled together because Johnson and Gold will U-turn again, having lied on just about every aspect of their Brexit policy. But if there isn't, I think we don't factor in the EU and UK. The EU, non-EU is still running at about 54.46. We do have the provisions in place to remove the voting rights from non-EU shareholders in a hard Brexit if there isn't a trade deal covering aviation. But we'd be expected to be well covered. But we're not breaking out what our UK shareholding is. It's not a thing we've ever given out. and nor would we start now. I'm just going to say, Julius, anything you want to add on the Brexit dimension, Julius Comrick, our group, the CLO?

Just one thing, perhaps, which is that if there was no deal between the UK and the U27 post-January 21, we will activate our Brexit ownership and control solution, which Michael described, the central element of which is the application of voting rights. for non-EU shareholders, and that will protect our EU licenses, which we have in Ireland, Malta, Poland, and Austria at the moment. And we would hope that this application will be a temporary solution until the number of EU27 shareholding exceeds 50% again.

Okay, thanks for the introduction. Next question, please.

Our next question comes from Maniba Kiani from Bank of America. Please go ahead with your question.

Hi. Can you talk a little bit about how you're thinking about hedging? You said 40% for fiscal year 2022. What's the base assumption for that 40%? And just a clarification on ticket refunds. The $1.5 billion, was that largely all in 2Q?

Sorry, maybe you broke up there, Jane. Just repeat that last question. The 1.5 billion refunds, wasn't it?

Yeah, so the ticket refunds, the 1.5 billion, was that almost all in 2Q or was there a portion in 1Q as well?

Okay, last, Nia, to answer the second part. Hedging at the moment, look, we would be reluctant to do any more hedging into next year, not because we don't fundamentally believe in hedging, but simply because the volatility in oil prices... means we really should, I'm happy we should hold out and hope that oil prices will remain reasonably low. We are about, what, 40% hedged into next year already?

Which would be the upper end of our PAX forecast. Pardon me? That would be based on the upper end of our PAX forecast.

No, it wouldn't. 40% hedging. But our PAX forecast is at 70 to, 50 to 80%. Correct. So is that the upper end of that? No.

We have got 40% of the fuel hedging. We don't see any circumstance in which we won't be operating about 40% of our capacity through next year. We're already operating about 40% this winter, despite the fact that there are more lockdowns in place. So we certainly don't see any further fuel hedge ineffectiveness into next year. Would we be willing at this stage to increase that hedge position? No. One, because we don't want to take a risk. Two, the balance sheet, while strong, we don't want to put it under any further strain by extending our hedge lines. And three, frankly, I think when some economic activity resumes, we will see continued heavy oil supply, and hopefully that over the medium term, oil prices will remain reasonably low, which will allow the airline industry as a sector to recover. And on the second part, Neil, on the hedging into Q2, or the refund into Q2?

Yeah, most of that was into Q2. We got our people back in the office from the 1st of June, so we started processing the backlogs at that point in time, and we've done a huge amount of work, as we already said, with labs and the customer service team, getting through that over the past three or four months. Okay, thanks, Munir. Next question, please.

Hello?

Our next question comes from from . Please go ahead with your question.

Yes. Good morning. Two questions, please. First, a follow-up on the airports, please. The basis that you closed this winter are primary airports. Bouvet is a smaller airport. With the weaker balance sheets and before the crisis, will you continue to focus on primary airports where you are in direct competition with airlines that have received huge state support? Or do you expect at least temporarily to focus again on smaller airports? And second, I'm asking a lot of people. It might be a coincidence, but I do not know any person in Germany that asked to be reimbursed and has already been reimbursed for canceled dry and air flights. You mentioned in the press statement this morning almost all non-OTA refund requests have now been dealt. Could you please be more specific on what you mean with almost all, and is Germany a country where the refunding process has been slower than the rest of Europe? And considering the OTA refunds that still have to be done, how high do you estimate the total cash at least to be reimbursed to passengers? Thank you very much.

Okay, thank you. Let me touch on the airports first. I mean, again, don't get distracted by the primary or secondary state-owned airports. We have closed some airports, I would hope temporarily for the winter, Cork, Shannon, Toulouse. We've closed Stuttgart and Dusseldorf, but they will be permanent closes. They're not reopening. We would expect Cork, Shannon and Toulouse to reopen for next summer, but that all depends on whether Ireland has reopened its connectivity to the rest of the world or whether we're still being strangled by a bunch of doctors mismanaging the economy here over the next period. Again, I go back to we are utterly indifferent as to whether our growth will be at primary or secondary airports. It will be at those airports who need the growth most because they'll be the airports who'll come up with the best deals. We are utterly indifferent as to who the competition is at any of those airports because we have much lower cost base than all of them. Even Lufthansa and Air France KLM, yes, they're all engaged in below-cost sellings, but we'll still be able to undercut their prices because we have a, I don't know, a lower cost base than they have. And eventually they'll run out of their 10 billion of state aid. In fact, I think they'll run out of the 10 billion of state aid pretty quickly anyway. There is no, honestly, on the German situation, I have no idea where you get that. You'll need to get out more, Roxanne, or meet more people. We have refunded all of the German customers whose flights were cancelled during the COVID, have either received cash refunds if they requested them or they've received vouchers. There may be some there who are expecting the refund to fall in the doors of them, but if they have a voucher, it's up to them to either use the voucher or request a cash refund. There is no backlog at all of refunds in Germany or any other EU country at the moment. In fact, our current people who applied to us last week for refunds or cash refunds requests that came in last week have already been processed. There is a small, and I would emphasize a small number of pastors out there who go through OTAs. I suspect it's probably a single bigger percentage of our total customer base. And the challenge we face with those is because the screen scrapers are scamming those customers by adding hidden handling fees or inflating the price of the Ryanair fares, They don't want the customer to be in direct contact with the airline. They don't want the airline to refund the money directly to the customer, even though under EU 261, that's what we're obliged to do. We have put in place a procedure where those customers can actually apply directly to us through the website, and we will give them the refund directly to them. The reason we haven't done it so far is because we have a fake email address for that customer that usually sends the email directly to the OTA who sit on it, or we have a fake... a virtual credit card from the ota and we won't issue refunds to a virtual ota credit card we have littered with examples of where we've already processed refunds to people who we thought weren't otas and you have these screen scrapers have been sitting on that cash for two or three months keeping their business models going whereas otherwise they would have gone bankrupt but there is if you have somebody in germany waiting for a refund ask them to send us an email straight away requested a refund, and it will get processed in the next four or five days. We have, as we said, processed over 1.5 billion in refunds and vouchers, and there is nothing, there is no backlog left in the system, either in Germany or any other EU country. Thank you. Next question, please.

Our next question comes from Carolina Doris from Morgan Stanley. Please go ahead with your question.

Hi. Hi, good morning. So two questions. One, if you have to reduce your flight significantly, is the 60 million euro cash burn guidance that you gave us at year-end results still a good estimate for your fixed cost base? And my second question is, how are you thinking about minimum liquidity? You have 4.5 billion. At what point would you looking to raise more funds, and initially you chose a mix through the summer of equity and debt. Would that be your preferred option, or you would look at leaseholds? I guess, what do you think would be most attractive at this point?

Sorry, Kelly, can you just repeat the first question? I wasn't clear. You said a figure of 60 million and something, but I didn't pick it up.

60 million euros per week of cash burn was the guidance during the first lockdown, and If you have capacity going down significantly, is this your fixed cost base? Let's put it this way.

Okay, so let me come back on those points. So, firstly, I mean, we have no idea. Again, the cash flows are impossible to foretell through the winter period because we have, I mean, generally speaking, you have very weak bookings around Christmas, very strong bookings recently after Christmas. We have no idea whether those strong bookings are going to emerge or not. Clearly, it will be assisted, I think, strongly assisted if there's announcements of, vaccine licenses this side of Christmas, but without some kind of insight into what the spring booking season will be like, we have no idea what the cash flows will be. Minimum liquidity, I think you have to take a thought based on what we've already done. We have $4.5 billion in cash at the moment. We have about $1.5 billion in debt refunds next year. That gives us a minimum of $3 billion at the moment. I mean, we're certainly not going to go below $1 billion in sort of cash. But it is very difficult to foresee that we would need to go back to the market for more equity or more debt, given where we are at the moment. But clearly, there's all sorts of scenarios. You know, if there's no vaccine and COVID continues for the next five years, we will have to go back to the marketplace. We don't think that's likely, and nor do any of the medical experts from Dr. Fauci to most of the Eurobid, the ECDC. There seems to be a reasonable concern. There are any number of vaccines already in phase three trials. It looks like they will be, a number will be licensed pre-Christmas. And the question is how widely available those vaccines will become in Q1 or Q2 next year. And there was a third element. Oh, yes, on terms of aircraft financing, no. We have generally been always very conservative in aircraft financing. We, as you know, have got 80% of our fleet is unencumbered. We would continue to believe that we'll use a mix of equity and bond or low-cost bond debt financing to fund our aircraft orders. We have the backstop of Exim out there as well, you know, for a kind of a crisis eventuality. And we also have some flexibility built into the order with Boeing that we can postpone deliveries, you know, if kind of that COVID-19 continues. But the price we're buying these aircraft, that is well factored into our cost base. And as Neil has said, you know, we have no cash outflows on CapEx between now and the end of March 2021, even despite the fact that we have, what, 30 or up to 30 aircraft deliveries in the first half of next year. Next question, please.

Our next question comes from Neil Bloom. Credit Suisse, please go ahead with your question.

Hi there, good morning. If I could ask two, please, also. The first one, just following up from your last answer there, based on aircraft financing, I guess based on that, given the leased aircraft that are due to go back to less ores, am I right in thinking that you might actually get to a point over the next 12 months where you don't actually have one operating lease at the moment or at that time? I just wanted to check that. This is quite interesting. And then the second point, I appreciate you don't have a crystal ball and I understand your point with respect to the Canary Islands demand, but just interested in terms of how you think about the next few years and leisure travel to cities, the recovery of that segment of the market and how that might influence your network strategy over the next couple of years. Do you think that there might be a structural change there where, which may not happen, for example, in beach demand?

Yeah, okay. I mean, let me tell you, you know, it's unlikely that we won't have some leased aircraft. We do have aircraft coming off lease in the next year or two. In all those cases, we're having discussions with the lessors. You know, if there is a significant reduction in the lease rate or the monthly lease rate, you know, we're happy to extend those leases. If there isn't or the lessor has some other use for the aircraft, then we're happy to let the aircraft go back because we're now into the spring of next year. We're into the max, the 200 delivery. So we are, again, opportunistic where there's an opportunity to significantly reduce lease costs, then we would extend leases, where there isn't, we would end or allow those leases to end. But no, I think it's unlikely the next few months we'll get to a situation where we have no leased aircraft. Over the next few years, again, you're getting into this, with respect, and you're making the same mistake, is that, oh, it'll be demand-led, where, you know, Our growth is never demand-led. Our growth is always opportunistic. It's where we see opportunities to, where there's large growth incentives or where there's big discounts on published charges. That's where we place the capacity and then we stimulate the demand. Clearly, we think there will be a huge return, I think, to the beaches of Europe, short haul, in the summer of 2021. But, you know, if we are emerging out of the COVID-19 crisis and we are, you know, there's widespread vaccines available, city travel will continue to be strong. One, because that's where the business travel will start from and will go to. And secondly, you know, a huge amount of kind of work-related travel, people commuting to jobs, commuting to work. I mean, lots of people, example, people who live in Dublin who work in London, that will return very quickly. And then I think into next autumn, you will see a very strong return, aided in no small part, because you'll see lots of city-based hotels cutting hotel room rates, lots of advertising of Christmas markets and reasons to go to Amsterdam or Madrid. These cities are hugely dependent on tourism. They'll need to see the restaurants, the hotels, and their leisure industries, concert venues, et cetera, recover their business. And I think you will see significant price stimulation by hotels and tourism destinations, which I think the city traffic will return very strongly as well. I mean, I have no doubt, you know, I listen to all this kind of sage analysis. I don't mean sage in the UK, but this analysis, oh, you know, it will take two years, four years, five years for travel to recover. Bullshit. It will recover very rapidly within about, I suspect, 12 months. because of the huge price discounting that will go on by the hotels, the airlines, the providers. Pricing will stimulate a very rapid recovery. The question is how long then it will take. Is it two, three, four years for pricing to recover to 2019 levels? And that is a much more likely outcome. There will be very rapid volume recovery very quickly, but it will be price driven. The advantage in the case of Ryanair is that pricing will be driven by a materially lower cost base across all the major cost items, wages, fuel, aircraft costs, airport costs. We will have materially lower costs going forward across those, which will enable us to fund very aggressive pricing strategies. And I think then in terms of the city break market or the beach market, the hotel, the accommodation providers will actually also play their role because they will dump prices quickly to get the business back. Next question, please. Thanks, Ian.

The next question comes from Alex Patterson from Showhunt. Please go ahead.

Hi. I'm not asking for yield forecasts, just to be clear, but is there any colour you can give on the impact of later booking patterns? So Does that have a negative impact or actually given pent up demand and lower capacity, will it make no difference or is it too early to tell? And just secondly, on the ineffectiveness charge, I think it was 214 million. You say 70 percent is settled, which would be about 150 million. But on the cash flow, it's showing is 97. Are you saying 53 was paid out in the third quarter to date? And when would you expect the rest to be paid out, please?

Okay, thanks, Alex. I'll let Neil answer the ineffectiveness, the second question. Let me just do the late bookings issue. I mean, what we're doing at the moment, clearly we are pricing into and have priced through September, October, November at lower than the budget and lower than we did in the previous September, October, November. But we're not in desperation pricing. Like, we constantly take the decision we don't price down close in. Within 14 days, if we're getting a booking, people have to travel. And we've seen some of our competitors, you know, we've allowed them to price below us in certain markets where they're not well known. Like, for example, Waze were out doing one euro airfares in Italy last, I think, a week or two ago. I mean, to measure the desperation of Waze, who don't have much of a presence in the Italian market anyway, we didn't bother matching it. And normally, we would always match and undercut our competitors. And the reason we're not matching it, because frankly, we have 70% load factors close in. If somebody's booking close in, there's a reason and they have to travel. We are still being reasonably aggressive on pricing. You know, we're 30% off, 50% off. We're doing $9.99 and $14.99. But that's all typically beyond two, three weeks out. We're not aggressive on pricing in the moment for Christmas because there's too much uncertainty. So the advantage of late bookings is you're generally dealing with people who have to fly. And therefore, we're not being that aggressive on pricing. although we are considerably below where we would be pricing this time last year for those close-in bookings because this time last year, the load factor was 92%, 93%, and currently it's at around 70%. So while, I mean, what we need to do with close-in booking is to be very flexible in terms of capacity three and four weeks out. We need to be certain, you know, if we're not going to get to that 70%, take out a rotation or take out a flight. It's generally a rotation because taking out one flight would strand passengers. And we continue to manage that judiciously. And all I can, again, come back to the same point. We have managed a 70% load factor every month from July through to October. And no other airline has delivered that. Neil, the ineffective discharge?

Yeah, the 214 ineffective discharge, as I said earlier, Alex, that's just front-loading from Q4 and Q3 in the first half of the year. We've already paid about 70% of our mark-to-mark on hedges that have gone ineffective for the year to date. not putting the exact figure out there, but we're well through at this point in time.

Thanks, Alex. Next question, please.

Thank you. Just as a quick reminder, if you wish to ask an audio question, it's 01 on your telephone keypad. Our next question comes from James Goodall from Redburn. Please go ahead. James, hi.

Morning, everyone. So two, please. On the renegotiation with employees, I'm just sort of trying to get a gauge on how the share of variable and fixed pay has shifted. Are you able to give us a gauge on what percentage of staff costs are now variable? And then secondly, on the max compensation from Boeing, I mean, how are you thinking about this? Are you looking to reinvest all of that into lower-priced aircraft, or are you potentially going to take some cash there? Sure. Okay, thanks.

I'll do the second half first. Eddie, just to give you in general terms, we're not going to get into specifics, but we'll give you general terms of the employee compensation. In terms of MAX, look, we are obviously in discussions with Boeing about the MAX aircraft. Compensation is not uppermost in our minds. We are much more focused on the pricing of the aircraft order. We are talking to Boeing about additional orders. But it is a complicated... There are three elements to it. There is clearly compensation for the delayed deliveries and we're now running 18 months behind. There is also some sort of the pricing of the existing order and we're also looking at the possibility of adding to that order in the current environment. Boeing need orders and we believe we have very strong growth prospects for the next two or three years where there will be, I think, a very sizable snapback in air travel post-COVID and not that many airlines in Europe who can actually have the capacity to be able to deliver that or to carry that traffic. But really, I would postpone a lot of the discussion on MAX until such time as the MAX returns to service and we have a credible or realistic delivery schedule from Boeing. We really can't conclude those discussions, which are pretty advanced but not concluded. Eddie, do you want to give a flavor for the NHR handoff?

Yeah, I mean, the... The key to this was that we were out very early with our people and also with the union, which is a very clear message. Those deals were out there and what we've got is that we've got a 20% reduction for our pilots and up to 10% for our cabin crew and 100% of pilots are covered in that. The key as well was that there was pay restoration over the next five years. It was a simple message. And our people, I suppose, realize it's better to hedge their bets on job security in the long term and take the pain up front. So it is a measure of how they went about this. It took a while for the message to sink in, but eventually it's about job security, reductions in pay, pay restoration, and have a very, like, in other words, our pay rates are variable to our activity with the 20% reduction in the case of pilots. So it's a good deal for people in the longer term, I would say, and they have taken the pain of that credit.

And I would contrast that if you take some of the legacy airlines around Europe, there's a real problem building in some of those legacy airlines where, you know, they have all of their pilots and cabin crew off on government furlough schemes, which is all fine until the government furlough scheme unwinds. And I think, you know, when a vaccine emerges and governments no longer lock down, the governments are going to be under intense fiscal pressure to end furlough schemes. And then you're going to have these airlines, the Lufthansa's, the Air France's, KLM's going, oh shit, you know, the furlough scheme is ended, we now start paying these people, but we can't make them redundant because that's part of the terms of the state aid they get. You know, they're going to be very, and nor will they have gotten any, they've not negotiated any pay cuts. So, you know, we are in a very strong position going forward. It has been painful for our people. It has been painful for the entire management team. We've all taken deep pay cuts. But we will be much more flexible and much faster to reemerge from this with a restructured cost base. at a time when we'll be competing with the Los Angeles and the Air France KLMs and the Spanish airlines, all of whom are receiving these kind of job scheme furlough doping, but that's going to come to an end fairly quickly because European governments can't afford it to continue ad infinitum. And I think the challenge for those areas at that point in time will be, oh, now we need pay cuts. And the unions are going to go, go to hell with your pay cuts. You know, you've had furlough support, and a lot of these furlough schemes are based on, you know, no pay cuts, no job cuts. So we've restructured, and most of our competition hasn't. The notable exception to that would obviously be IAG, who have kind of, you know, followed us, but we were out first and faster, and we had the deal done. Next question, please. Thanks, James.

Thank you. There appears to be no further questions, so I will hand back to the speakers for any other remarks.

Okay, everybody, thank you very much for your attendance on the call. Clearly, this has been a very challenging six months for Ryanair. It's been a very challenging six months for the industry. You know, I think it's important to finish on a more positive note. The coronavirus will end. Vaccines will be found. I hope it will be in time for a reasonably strong summer 2021. But all I would assure you is that in the meantime, we have taken a lot of the painful decisions. We have restructured the cost base. We have a strong balance sheet. We are actively engaged with our partners, Boeing, in restructuring the aircraft order. And I think there has never been a more exciting period or opportunity for growth, certainly in the European airline industry. And that's going to be the one market, I think, that's going to rebound very strongly with huge suppressed or pent-up demands And Ryanair will, in my view, be by far and away the best positioned airline with the lowest cost base and with a new aircraft order coming through over the next couple of years to take up the challenge of that recovery and it will lead to superior returns over the coming years. But the next couple of months through, up to Christmas and maybe after Christmas, will be difficult and challenging, but rely on us, we'll continue to manage it as best we can. Thank you very much, everybody. We have an extensive roadshow taking place over the next two or three days. We are cramming everybody into 30-minute meetings, which means we can get through huge numbers of investors over the next two days. If you'd like a meeting or some kind of Zoom or online video meeting, please talk to Peter, to Davies, or to Citibank, or to Citi, and we will set something up for you in the next couple of days. Thanks very much everybody. Good to talk to you and I hope to see you soon when we have all returned to travelling and when hopefully the poor oppressed North Korean people of Ireland will have been allowed on and off the island once more. Thank you. Bye bye.

This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.