Ryanair Holdings plc

Okay, good morning, ladies and gentlemen. You're welcome this morning to this presentation of Ryanair's full year results for the year ended 31 March 2021. I'm Michael O'Leary, the Group CEO, and I'm joined this morning by Neil Sauron, the Group CFO. As you'll have seen this morning on the Ryanair.com website, we announced a full year loss of €815 million for the last 12 months, compared to a prior year profit of just over €1 billion. Almost all of this was due to the impact of COVID-19 in our business, which has seen our traffic in the last year fall 81% down to just 27.5 million passengers. We have been prioritising liquidity preservation. We're pleased to say that we closed the year with 3.15 billion of cash. We have introduced extensive cost reduction measures across all four of our group airlines. We have eliminated an unprecedented backlog of customer requests and refunds as a result of the COVID-19 disruptions to our schedules. We've minimized job losses thanks to active engagement and pay cut negotiations with our people and our unions across all of our main EU countries. We've announced an increase in the Boeing 737 Game Changer aircraft order, which has increased from 135 to 210 units in return for a modest price reduction on the cost of those aircraft. We continue to invest heavily in our environmental and social and governance programs. We're pleased that we've received a first ever B-minus score from CDP, which is the Carbon Disclosure Project, an independent ratings agency. And we've committed ourselves to increasing that from a B-minus to an A over the next two years. And as a result of Brexit on the 31st of December 2020, we've had to limit the voting rights of non-EU shareholders and restrict their ability to sell ordinary shares since then. Just turning to a couple of themes over the last 12 months. So clearly COVID has devastated the business, but I think we have worked hard over the last year and effectively to reduce costs, to assist millions of passengers who were disrupted. We've laid a platform, I think, by lowering our cost base and engaging with our airports so that we can recover strongly in a post-COVID environment. The COVID-19 has seen the collapse of a number of EU airlines, including Flybe, Norwegian, German Wings and Level. A number of flag carriers have announced very significant cuts to their capacity, with the result that I think in a post-COVID world, Europe for the next number of years will be operating at about 75% to 80% of its pre-COVID capacity. This is why our game changer order is so important. We'll be taking delivery of 50 to 60 aircraft a year each year for the next four years. That means that we can offer our airports and some airports who we presently don't operate at, not just traffic recovery, but growth into the medium term. And in that regard, we've announced eight new bases for the coming fiscal year, a range of secondary airports, but also new bases at primary airports like Orlando in Stockholm, Zagreb, Riga in Latvia. And we intend to continue to look for these growth opportunities within Europe where we can, working with airport partners, restore the traffic that they've lost due to the capacity cuts or failures of their incumbent airlines. We've been very heartened by the rollout of the vaccine programme in Europe. Clearly, the UK has led the way. But most European countries have now confirmed that they expect to vaccinate typically around 80% of their adult population with at least the first dose of the vaccine by the end of June. And that, we believe, allows for a removal of many of the travel restrictions into the July, August, September peak travel period. And we expect to see our traffic recover strongly into that period. On environmental issues, we've shown in recent years that we can grow our traffic while reducing our impact on the environment. Every passenger that switches to Ryanair from a legacy carrier in Europe reduces their carbon footprint by approximately 50% per journey. Our new 737 Game Changer aircraft order means we will be taking delivery of aircraft for the next four years that offer us 4% more seats but burn 16% less fuel and also deliver 40% lower noise emissions. And this will help us continue to lower our CO2 footprint as we expand and grow across Europe. I won't deal on the revenues and costs because we've dealt with most of that on the slides, but I'd like to turn now to our thoughts on outlook. The next year ended March 2022 will be challenging. There's considerable uncertainty about the rate and timing of the post-COVID recovery. We are somewhat optimistic. We think that if Europe vaccinates most of its adult population and certainly all of its high risk groups by the end of June, then there will be increasingly very little justification for the type of travel restrictions, home quarantine or hotel quarantines that we've seen over the last year. Q1 traffic will, however, be still heavily curtailed. We expect to carry between five and six million passengers in the June quarter. But we're hopeful that the September quarter will see a significant recovery of traffic and that we'll be able to build on that into the third and fourth quarter of the current year. As a result of that, we're still operating on the basis that our full year travel figures this year would be somewhere between 80 to 120 million passengers. We're at the lower end of that range, but there is a possibility that we could get to the midpoint or higher than the midpoint of that range. At this point in time, on the basis of the costs we've already taken out and subject to, obviously, whatever the yields will be, means we think we're operating at somewhere between a small loss to break even for FY 2022. Obviously, there's huge uncertainty around those forecasts and that guidance. But subject to the vaccination programme continuing to successfully roll out in Europe, to the removal of most travel restrictions by the end of June, and there being no emergence of any unforeseen variants, then we think those numbers are achievable over the next 12 months. Looking further out and beyond the COVID-19 crisis, Ryanair has used the last 12 months to significantly reduce our operating costs. We're going to expand our ability to grow in the next four or five years with the Game Changer order. We will be expanding in a market in Europe where significant capacity has been taken out by airline competitors that have either failed or that have significantly cut capacity. And we will be competing in the next number of years with a whole series of legacy airlines in Europe who have received huge quantums of state aid. But as a result of receiving that state aid, they've been unable to tackle their high cost base. They will be unable to compete with Ryanair into the future from a cost perspective. Although in the short term, it's undoubted that we will be facing below cost selling by some of those airlines. We expect to see a strong rebound this summer. There's significant pent-up demand for air travel from families in particular who've been locked up for the last 12 months. And we hope to be able to provide low-cost, on-time, friendly services for those families as the business recovers through the second quarter. And then we would hope that into the third and fourth quarters or the second half of this year, we'll see a return to 80% or 90% of our pre-COVID traffic volumes. The uncertainty is at what the fares will be and will continue to be load factor active, yield passive. But I have no doubt that Ryanair is going to emerge leaner, stronger and probably with an accelerated growth profile from the COVID-19 pandemic. And that will in time lead to more secure jobs for our people, lower fares and more choice for our customers and stronger and better returns for our shareholders. Neil, you want to take us through the slide presentation?

Thank you very much. Ryanair has the lowest fares and lowest costs of any airline. We're number one for traffic, customer service and on-time performance. Our environmental credentials have improved with our CDP B-minus first time rating of which we're very pleased. We've 210 Boeing game changers arriving in the next number of weeks. This will help see us grow to 200 million customers by FY26. Our balance sheet, which is BBB rated by both Fitch and S&P remains one of the strongest in the industry. And this financial strength, coupled with our lowest costs, will make us the long term winner. As you can see, we're number one for choice and coverage. And indeed, we've already started growing with eight new bases already launched for summer 21 and into winter 21. We've got the lowest cost of any airline in Europe, €31 per passenger ex-fueled pre-COVID, 26% lower than Wizz, over 70% lower than EasyJet, and the gap is widening. On financial results, last year was one of the most challenging, in fact, it was the most challenging in our 35 year history. We saw an 81% reduction in traffic due to government lockdowns and travel restrictions. It's just 27 and a half million guests from 149 million pre-COVID. Revenue tracked down by a similar amount, down 81%. And while we did a very good job on reducing costs, we saw a 66% reduction in costs. This unfortunately wasn't enough to offset the lost revenue. And as a result, we posted a pre-exceptional loss of 815 million euro, the exceptionals being a 200 million fuel ineffectiveness charge that we took in the year. Our balance sheet, which, as I've already said, is BBB rated by Fitch and S&P, is one of the strongest in the industry. In a very challenging year, we finished with 3.15 billion cash, which I think was a very strong performance. Lots of liquidity in the business. And indeed, we've got lots of assets available to us as well. 85% of our Boeing fleet. Practically all of our fleet is unencumbered at this point in time. And that's on the balance sheet at a very conservative 7.3 billion book value. So we're in a very strong position as we look towards debt maturities over the course of the next 12 months. And with that, Michael, I'll maybe ask you to run through current developments, please.

OK, thanks, Neil. Just touching on current developments briefly, we see a very strong post-COVID pent-up demand. We're strong recovery of traffic subject to the continuing success of the vaccine rollout programme through summer 21. There are significant growth opportunities for Ryanair in the current year. We've announced eight new bases. Long term, our EU cost leadership has been extended and enhanced by our experience in the last 12 months. We hope to take delivery of the first game changer aircraft in May of this year, although we are losing confidence in Boeing's ability to deliver within that latest deadline. We've established a clear pathway to 200 million passengers by FY26. We're investing, as Neil has already pointed out, heavily in our ESG improvements under a new Director of Sustainability. We are taking steps to enhance our EU ownership and control post Brexit. And the FY22 outlook is for traffic to be at the lower end of our 80 to 120 million range. In terms of demand, clearly COVID-19 uncertainty continues. Travel restrictions and lockdowns are widespread across Europe in Q1, as most of many European countries deal with a third wave. However, the rollout of vaccines will, we believe, replace lockdowns and testing into summer of 2021. We've seen a very strong booking recovery in just the last six weeks. As I've said previously, the first week of April, we had only 500,000 bookings. Last week, that had tripled to 1.5 million bookings. And we hope to see that strong growth recovery continue. We will be matching capacity with demand through H1, the remainder of H1 and into H2. We've already are taking steps to make it easier for people to travel with us. We now have a document wallet on the mobile app to which customers can upload their COVID documents, whether it's vaccination certificates or negative PCR tests before travel. And many of our European countries will accept that on arrival. And we're continuing, obviously, for the sake of our crews and our passengers to maintain our healthy flying measures. Touching briefly on cost efficiencies over the last 12 months, we have pay deals agreed with most of our pilots and cabin crew. Pay cuts are between 5% to 20% in the first two years, restored over years three to five. Airport and handling deals are being extended and improved upon. And I would point particularly to the three larger bases at Stansted, Bergamo and Brussels, Charleroi, where those deals have now been extended out at various different times, but between 2028 to 2030. On the ownership and maintenance costs, I think the new 210 game changer aircraft order, where we're taking delivery of aircraft for the next four years with 4% more seats, but that burns 16% less fuel and also 40% lower noise emissions, is a huge step forward in our cost efficiency, not just for the next year or two, but for the next decade. We will be selling some of the older aircraft and returning aircraft as they mature from leases. And in terms of sales, marketing and other costs, Labs continues to lower our marketing spend, and we're seeing a significant or steep reduction in our EU261 costs, admittedly as a result of an artificially high on-time performance over recent months due to COVID. And fuel, we believe, will kick in further savings as well, particularly as we're 50% hedged into the next fiscal year at about $55 per barrel. Touch briefly on the game changer. We hope to receive the first delivery in late May of 2021. We have been disappointed by Boeing's repeated moving back of the first delivery date. It was originally scheduled in early April when it was certified by the FAA and EASA. But eight weeks later, we're still to receive the first aircraft. However, we are confident we'll take 60 of those deliveries next winter in advance of peak summer 2022. These are phenomenal aircraft. Any aircraft that has 4% more seats but burns 16% less fuel will transform Ryanair's cost base in our economics. They will also make us a much more environmentally friendly aircraft. This is the most scrutinized, most audited aircraft in history. So we think now it's been back flying for almost four or five months. Your passenger safety concerns have been ameliorated as it racks up more and more flights across North America, Latin America and Europe. but the lower-cost game-changer aircraft will help us to drive market share gains into a post-COVID-19 recovery. And as our fleet grows to 600 aircraft over the next five years, we're confident that we can grow our traffic to 200 million passengers. That pathway is already well established. We have huge opportunities as a result of airline failures and retrenchment into COVID. Airports are actively approaching us seeking to recover their traffic and to lay down a platform for their own growth into the next four or five years. We have eight new base deals already announced for later this summer and this winter, which shows, I think, the vibrancy of the growth opportunity that's available uniquely to Ryanair. The game changer aircraft deliveries will facilitate this growth. And I think you'll see us capitalise on this pent up demand with our lower cost of operations, enabling us to make market share gains across Europe for the coming years. And we'll do so all off the back of our very strong triple B rated balance sheet. We have made enormous strides in our environmental performance over the last 12 months. I've set out there on the slide briefly 11 initiatives that have been rolled out in the last year, and we're very heartened by receiving an industry-leading B-minus score, our first ever rating from the CDP, the Carbon Disclosure Project, and we've committed ourselves to increasing that rating from a B-minus to an A rating over the next two years. We have set ourselves further ambitious environmental targets. We hope to reduce CO2 per RPK by 10% by 2030. We've now set a goal to use sustainable aviation fuels to power about 12.5% of all of our Ryanair flights by 2030. And we're well on our way. In fact, we're 80% complete on our original five-year plan to be plastic-free on board our flights within five years. And I'm particularly pleased with the new partnership we've recently announced with Trinity College Dublin, where we're funding a 1.5 million euro sustainable aviation research centre with Trinity College to help us to develop new technologies and new fuels to help us reduce our environmental footprint as we continue to grow. We've also made significant progress on our social and governmental objectives in the last 12 months. Jobs have been saved through active engagement with our people in our unions. Pay cuts and furloughs have been a much better alternative to job losses that have been announced by many of our competitors in Europe. We've gone to incredible lengths to keep our pilots, our cabin crew and our engineers current, even during the COVID lockdowns when we had very few passengers. We continue to make great strides on diversity. We have appointed more female non-executive directors and we're very proud of the great strides we've made in promoting more female senior managers within the group. Safety remains our number one priority. The chairmanship of the board and our board committees have been refreshed over the last year. We've appointed a non-executive director in charge of workforce engagement, Roisin Brennan, who's already commenced that work. And all of our non-executive directors are independent in full compliance with the UK Corporate Governance Code. We've improved our communications for customers with disrupted or COVID cancelled bookings. We have launched our first ever customer focus panel where we're going to be inviting customers, real Ryanair customers, to come meet with us twice a year, summer and winter. and take on board their advice as to how they'd like to see us improve our services, improve our communications, and improve the way we interact with our customers. We've developed new online cash form that makes cash refunds easier. We've also established an online travel agent verification process So people who have mistakenly have been duped into booking through these unauthorized third party screen scrapers can now come to us directly to get their refund directly from us rather than having it lost or misdirected through these unauthorized agents. And I think one of the key features of recent months has been our zero change fee initiative, which has given passengers much more flexibility and created much more confidence about bookings during the remainder of the COVID-19 pandemic. EU ownership and control post Brexit remains a challenge. We're currently about one third EU owned, although by restricting the voting ability of the non-EU shareholders, we're clearly fully EU controlled. We will keep effective control in the hands of our EU shareholders. We are enhancing and protecting EU ownership. Non-EU nationals can no longer acquire ordinary shares. They can clearly continue to trade in the ADRs, but not ordinary shares. We've extended the restrictions on the trading of ordinary shares so that even if they're owned by non-EU nationals, they can only be sold to EU nationals going forward. And the board has taken further powers so that we are in future, in the coming months, going to be able to write to non-EU purchasers of our ordinary shares, asking them to sell down those shares, or if need be, forcing them to sell down those shares where we have non-compliance with those requests. We intend to grow our EU shareholding back over 50% over the next 12 months, and we're well on our way to achieving that objective. Neil, do you want to finish up on the outlook?