Ryanair Holdings plc

Good morning, ladies and gentlemen, and welcome to the Ryanair full year results broadcast. I'm Michael O'Leary, the Group CEO of Ryanair. With me this morning is Neil Soren, the Group CFO. We're happy to communicate to you this morning our full year results for the year ended March 2022. Over the last 12 months, we reported a loss of €355 million, a significant improvement on the full year loss of just over €1 billion the previous year. All of these losses are substantially due to the impact of COVID on our business over the last two years. We've covered that in some detail in previous announcements. So what I'd like to do is to touch briefly on some key points, highlights of the last year, and obviously our guidance going forward for the next 12 months. So I think some highlights of last year. We're proud that our climate protection rating has improved from a B- to a B. That's part of a multi-year strategy to get to an A climate rating, which would make us the world leader in in environmental and sustainable air travel. Sustainalytics has recently ranked Ryanair the number one EU airline for environmental and social governance performance. Our traffic has recovered strongly to 97 million passengers, but that's still 35% behind, or almost 50 million passengers behind where we were pre-COVID. Average fares in the last 12 months have fallen by 27%, to just 27 euros, again due to the impact of COVID. and towards the back end of the year, Omicron and Ukraine. The business continues to be, while we're recovering, that recovering is fragile because of the impact on a much closer in booking profile, the impact of negative news flows on that booking profile. However, we continue to invest for the future. At the year end, we take in delivery of 61 737 Game Changer aircraft. These aircraft are carry 4% more passengers but burn 16% less fuel. And that's, I think, something that's going to be absolutely critical to our operating operations and to our costs going forward for the next couple of years, particularly as oil prices have risen post the Ukraine invasion to record levels. We have never seen so many growth opportunities out there. This summer we've announced 15 new bases across Europe and will operate more than 770 new routes. I'm pleased to say that our team, thanks to the efforts of our team, were very well hedged on fuel. We have about 80% of our fuel bought forward either through hedges or caps to March of 2023. and at prices of between $60, mid-$60 to mid-$70 per barrel that are significantly below current spot prices. And this gives us, Ryanair, a huge competitive advantage as we recover and grow across Europe over the next 12 months. This summer, thanks to the new Game Changer deliveries, we will be operating at about 115%. of our pre-COVID or our summer 2019 capacity. The load factors might still be slightly lower than they were pre-COVID and the fares might still be slightly lower. But there's no doubt that we are recovering strongly, we're growing strongly. But that growth is being delivered by lower pricing and the recovery is fragile. And as we saw both at Christmas and at Easter, where the recovery was damaged badly by the impact of Omicron and the Ukraine invasion, that recovery is fragile. We're continuing to invest heavily, as I said, in the environment. We're making a couple of notable things there, apart from the Game Changer aircraft. We recently announced a partnership with Neste in the Netherlands, where we'll be uplifting up to 40% of our fuel and Schiphol Airport will be with SAFs. We're investing heavily in customer service. The customer advisory panel met for the second time in Madrid in April. We've taken on board their recommendations and you're going to see those recommendations implemented both on the Day of Flight app online and at all the customer touchpoints, both at airports, at handling and in-flight. And I'm pleased to say that our customer service scores are running at record levels and we aim to continue and to maintain that. On EU ownership and control, we've made significant progress in the last year. From a starting point in Brexit on the 1st of January 2021, where the UK shareholders were treated as non-European, our EU share ownership was 32%. We have seen that rise to 41% over the last 15 months. We've been aggressive on delistings. We delisted from the London Stock Exchange. We've had a number of forced sell-downs of those non-EU shareholders who have wrongly purchased ordinary shares instead of the ADRs, and that will continue. And we believe we are on a path to restore our EU ownership to over 50% in the next 12 to 18 months. We have very exciting growth plans, as I said, the 15 new bases and over 770 new routes. And I think what's critical at the moment, while the outlook on earnings is shrouded in uncertainty because of the fragility of the recovery and the impact of negative news flows, there's no doubt we are taking very significant market share gains in some of the biggest travel markets in Europe. In Italy this year, we expect a market share of over 40%. In Vienna, we've seen a dramatic progress from 8% market share in the summer of 2019 to over 20% in the summer of 2022. In Budapest, the home airport of one of our so-called low-cost competitors, we've gone from over 18% market share to over 30% in the last year. two years, and market leadership. We're now the number one airline in the home airport of one of our competitors. And even in Ireland, where we've already been long established, we're seeing our market share jump in recent months from under around 48%. Currently, it's running in 55%, 56%. So these investments and these market share gains will continue. I will now turn with Neil. We'll take you through the slide presentation, the results, which will deal with most of the detailed Q&A and the financial numbers. So, Neil, over to you.

Michael, thank you very much. So welcome, everybody, to the full year results presentation. As we've always said, we've got the lowest fares and lowest costs of any airline in Europe. And this year we returned to growth with 165 million customers up from 149 million customers. Pre-COVID, we remained number one for customer service on time performance, 90% last year. And as Michael has already said in his lead-in, we've seen significant improvements in our ESG ratings with the CDP increasing our rating from a B- to a B, and indeed Sustainalytics giving us a very strong number one EU ESG rating. Balance sheet remains rock solid, and it's this financial strength and lowest cost that makes us the long-term winner. We have the platform for growth in place with 89 bases and 225 airports across our network, and indeed this summer we're operating 15 new bases and 770 new routes. So this, coupled with the new game-changer orders, will see us grow to 225 million passengers by FY26. We come into COVID with the lowest cost per passenger, ex-fuel. That gap is only widening between us and everybody else, so significant unit cost advantage, ex-fuel, to all other players. On the year itself, we saw significant recovery in traffic, 253% increase to just over 97 million customers with an improved load factor of 82%. This, however, was stimulated through lower fares. We saw a 27% reduction in average fare to just €27, but we did have a good performance on ancillary, and as a result, total revenue was up 193% to €4.8 billion. Operating costs, despite an over 250% increase in traffic, only increased by 113% to just under €5.3 billion. So as a result, we saw a lower loss this year of 355 million down from 1.02 billion last year. Balance sheet very strong, and I think the key call-out here is the reduction in net debt, which despite 1.2 billion in capex this year, reduced from 2.3 billion at the end of last year to 1.5 billion at the end of FY22. And with that, I'll maybe ask Michael to run through current developments.

Okay, thanks, Neil. So clearly we see a very strong recovery of traffic into the summer of 2022. There's undoubtedly significant pent-up demand for both business and leisure travel. We're well positioned to capitalise on that recovery. We've taken delivery of over 70 game-changer aircraft for the peak of summer 2022. There's no doubt that traffic is recovering. We've seen in recent months stronger traffic, higher load factors. But most of that has been driven by lower fares. In Q1, our fares will be below, which is the June quarter, our fares will be below where they were in the June 19 quarter. But as recently as April, we've seen we've gone over 14 million passengers for the first time and the load factor went over 90% for the first time since COVID. We expect that to continue. There's a prospect that fares in years in the second quarter. The key September quarter could be ahead of pre-COVID numbers in summer 2019. But that recovery is fragile and it remains very exposed or subject to being damaged quite significantly by adverse news flows as Christmas was damaged by the Omicron variant in the last week of November and Easter was badly damaged by the Ukraine invasion. However, in Rhino, we have very robust cost control. We remain one of Europe's lowest cost carrier by a distance and we have kept our costs down and in many cases lowered them during COVID when many of our competitors have seen their costs rise and escalate. On fuel, we're very well hedged. We're 80% hedged out to March of 2023. at significantly lower prices than spot and many of our competitors are either not hedged at all and fully exposed to spot prices or have inferior quantities or percentages of hedging in place. One of the things we're committed to though is the gradual restoration of the pay cuts. We negotiated agreed pay cuts with most of our people for the last two years. We've committed that we'll start the restoration of those pay cuts in July of this year and it will be a three-year restoration July 23 and July 24. We're in negotiations with a number of our pilot and cabin crew units to accelerate those restoration, in some cases bring it forward to April or May of this year. We're also committing that if we get back to pre-COVID profitability in this year, financial year end, March 2023, We will then accelerate the year two and year three. We will restore fully the pay cuts if our profitability gets back to pre-COVID numbers sometime around between April and July of 2023. For FY23, the customer program has been launched. Our customer service scores are at record levels, and we want to maintain that significant progress. And generally, we have a cautious but, you know, I think ambitious program for FY23. We expect to carry 165 million passengers. We see strong traffic and load factor recovery. What we're not sure about is the fares and yields, and in particular, The damage that can be done to those fares and yields by adverse news events like COVID or like Omicron, like Ukraine, and that's why we're not able to give any sensible or rational profit guidance for the next 12 months. We're hoping for modest profitability, but we can't put a number on it at this stage. And touch briefly on summer of this year. So forward bookings, which were damaged by Omicron and Ukraine invasions, load factors are recovering, but at lower fares. We will operate 115% of our S-19 capacity in the summer of 2022. We aim to get load factors back to 90%. We got there in April. We hope to maintain that over the next six months of the summer. Nobody, no other airline in Europe will deliver that volume of growth this year. Other airlines claim to be the fastest growing airline airports or airlines in Europe. Ryanair is the fastest growing airline in Europe. And even then we can't cope with the amount of growth opportunities we have. We do still expect airport and air traffic control staff shortages. We're seeing pinch points at airport security, at ATC, particularly as usual at weekends. And, you know, those staffing shortage or pinch points need to be fixed for the peak summer months of July, August and September. We are making very strong market share gains in big markets like Italy, Ireland, Austria, in Vienna, Hungary and in Poland. And I believe no other airline in Europe is as well positioned as Ryanair is to thrive through an economic downturn or a recession if one is visited upon us. in the winter of 2022 or into 2023. In recessions, people get more price sensitive. They trade down to the lowest cost provider, whether that's IKEA, it's Lidl, it's Primark for clothes, it's Ryanair for air travel. People will continue to fly, but you'll see a lot of trading down to Ryanair in an economic downturn. Neil, maybe you touch briefly on fuel hedging.