Ryanair Holdings plc

Okay, good morning ladies and gentlemen. Welcome to the Ryanair Q1 results conference call. You'll have seen this morning we released our Q1 results together with an MD&A and a slide presentation is on the Ryanair.com website. I therefore won't read the press release, but I'll touch on a couple of key themes. We reported Q1 profit of 360 million. That's 46% down on last year's Q1, 663 million. Despite strong traffic growth, traffic is up 10% in the quarter to 55.5 million customers. But this has been offset by weaker than expected airfares, some of which is impacted by the first half of Easter falling into the prior year Q4. Nevertheless, traffic growth is strong, up 10% to 55 million, but it's only strong at a price, and we're having to repeatedly stimulate fares and bookings, and the close-in fares and performance of close-in bookings has been disappointing and materially weaker than we've expected, particularly on the way into the peak months of July, August and September. We have 156 game-changers in the fleet at the end of June. That is 20 aircraft less than we had originally budgeted, We are seeing record summer scheduled bookings, but at lower prices. We are continuing to sign up multiple approved OTA partnerships, which will protect consumers and ensure that consumers get the lowest, Ryanair's lowest airfares, while we get the consumers' correct email and payment details. We've continued to extend our fuel hedges at attractive prices. We're now 75% hedged. for FY25 at about $79 a barrel, saving ourselves over €450 million in the current year. And we're now extending our fuel hedges for FY26 to 45% of our needs at about $78 a barrel. And as of Friday, we have completed just over half of the €700 million share buyback. Touching briefly on our continuing environmental commitment during Q1, we took delivery of 10 Boeing Game Changer aircraft. These offer 4% more seats but burn 16% less fuel and have less CO2 emissions as well. And the retrofitting, winglet retrofit program on the NGs continues. We're on schedule to achieve our target of retrofitting the entire fleet of 409 NGs by 2026. These winglets reduce fuel burn by 1.5% and noise by 6%. However, much of this excellent environmental work is being undone by the deteriorating performance of European ATC. Eurocontrol's old numbers this morning shows that while flights in July or up to July are 4% higher year-on-year than they were in 2023, it's still 3% less than the 2020-19 levels. Year-to-date, the number of flights across Europe is 5% below 2019 levels, and yet we are suffering, as are all other airlines, repeated inexplicable ATC capacity restrictions. These can only arise from material understaffing or short-staffing, mainly in the French, German and Hungarian ATC areas, and we are suffering horrendous ATC delays, particularly which is inexplicable on the first wave of morning flight departures. They're blaming all sorts of things like adverse weather, etc., etc., but it is down to understaffing, and we are having our worst summer ever in terms of ATC delays and flight cancellations, because as these delays roll through the day, we're having to cancel late evening flights at curfew airports. We're continuing to call on the EU Commission, President Ursula von der Leyen, and the EU Parliament to deliver their long-delayed reform of Europe's hopelessly inefficient ATC services. In terms of fleet and growth, this summer we're operating our largest ever schedule. We have over 200 new routes and five new bases as we deliver as much low fare growth as possible for passengers and our airport partners in FY25. To that end, Lauda has extended operating leases on three of its A320s out to 2028. And we have agreed that Boeing will continue to take delivery of 737 game changers through the peak months of August and September, although these aircraft will arrive too late to be able to schedule them for peak summer flights. We'll use them as backups and as spare aircraft through the remainder of August and September. We expect, and it is real, that European short-haul capacity will remain constrained for some years. As I said, Eurocontrol's own figures suggest that year-to-date we're 5% behind where we were in 2019 in terms of EU capacity. A320 operators are grounding aircraft with the engine repairs. The manufacturers are continuing to struggle with delivering backlogs, more pronounced in Boeing, but also Airbus is failing to... hit its delivery commitments, and airline consolidation continues. Most recently, the Lufthansa, the EU approved the Lufthansa takeover of ETA in Italy, and we believe IAG's today takeover of Europa should also be accelerated. These capacity constraints, combined with our significant unit cost advantage and a strong balance sheet, low-cost aircraft orders and industry-leading on-time performance will, we believe, pin a decade of profitable growth to 300 million passengers by FY34. To touch on shareholder returns, as I said today, we've completed just over 50% of the programme. When it's complete, Ryan, it will have returned over 7.8 billion to shareholders. We also expect a final dividend of 200 million to be paid to shareholders in September, which will take the total shareholder returns to just over 8 billion since 2008. Reiner ADSs, following a recent board review, the board has approved a change in the ADS ratio so that one ADS will equal two ordinary shares compared to currently a one to five ratio. We hope and expect that this will make the ADSs more attractive to new investors and will potentially increase ADS liquidity. Turning to the more important issue, which is the outlook. FY25 traffic is expected to grow 8%, but somewhere between 198 to 200 million passengers. We think we're edging closer towards 200 million than 198, subject to no worsening of Boeing delivery delays. We were supposed to take seven aircraft from Boeing in July. That now is only going to be five. Two of those have slipped into August. And we're supposed to get 10 aircraft in August. That's now down to eight and probably heading towards seven. So we're still struggling even to get our delayed to Boeing delivery in on time. As previously guided, we expect unit costs to rise modestly this year as our ex-fuel unit costs, most notably pay and productivity increases. Higher landing and ATC fees and the impact of multiple 737 delivery delays on our unit costs are substantially offset by our attractive fuel hedge savings and rising net interest income. These gains will significantly widen Ryanair's cost advantage over its competitors and allow us to continue to grow strongly, albeit at lower fares than we had expected this summer. While Q2 demand is strong, pricing remains softer than we expected, particularly the closed-in airfares. It is not pricing up the way it has for the last number of summers. And we are repeatedly seeing price resistance as we try to close off cheaper seats. And we're having to open up again, close in in July and in August. We have only 34% of September already booked, but we expect this trend will continue. As a result, we now expect future fares will be materially lower than last summer. We had previously expected them to be flat to modestly up. The final H1 outcome is, however, completely dependent on these close-in bookings and yields in August and September, and we think the trend is downwards, not upward. As is normal this time of the year, we have zero visibility in Q3 and Q4, but we see no reason why Q3 and Q4 pricing won't be soft as well, and we will have to continue to simulate through the second half of the year. Q4 will not benefit from last year's early Easter outlook, And therefore, it's too early to provide meaningful full-year profit after tax guidance, although we would hope to be able to give you some headlines at our Hague Fund results in November. The final FY25 outcome remains so as to avoiding adverse developments during FY25, particularly given the continuing conflicts in Ukraine, the Middle East, repeated ATC, short-staffing and capacity restrictions, which is leading to a spike upwards in cancellations or further Boeing delivery delays. And with that, Neil, I turn over to you for a quick run through the MD&A or highlights on the MD&A, please.

Yeah, no problem. Thanks, Michael. I think I'll turn first to costs in the quarter. As previously guided, we saw costs modestly up as we saw the benefits of our fuel hedging offset much of the non-fuel inflation coming through, the likes of the annualisation of productivity pay increases and, of course, the impact of the Boeing delivery delays Balance sheet in very good shape. We finished the quarter with $4.5 billion in gross cash. That was after half a billion at CapEx. And we'd spent about $250 million on the buyback, which we all know started in May during the quarter. Now, cash improved from $1.4 billion to $1.7 billion. And just on the buyback, as Michael said, we're now over halfway through the programme at this stage. It's going very well, a little bit ahead of expectations on that. Michael, I'll hand over to yourself then.

Okay, thank you. Before I open up to questions, I'm going to deal with the first question, what does material mean? We don't know what material means, although clearly we think the pricing, the minimum floor on price falls into Q2 is going to be above 5%. Could it get to double digits? It could. It doesn't look that way at the moment, but pricing on close-in bookings is getting weaker as we have moved through July. We see no reason why that would change in August and certainly no reason why it would change in September. We are now going on a front foot aggressively, and we will continue to aggressively advertise low fare availability. We will maintain our targeted 95%, 96% load factors. We have a much lower cost base than any other airline, and if the fares are going to be materially lower this year, then that's what it's going to be. We repeatedly guide everyone that our fare guidance, to the extent that we give fare guidance, is always fair. dependent upon close-in bookings. And the reality is that during June and also now into July and August, which is surprising given the capacity constraints, close-in pricing is materially weaker. It is down on where it was prior year. Why? We don't know. We look around and we see that consumer spending under pressure all over Europe. There's no one market where we're seeing any material strength or weakness. We think the consumer is under significant pressure across Europe. Interest rates are materially higher. Mortgage loans, et cetera, are materially higher. Most consumer-facing operators are under pressure, and we believe that is being translated into air travel. People are traveling. We are growing strongly, although we're growing at a slower pace than we had originally budgeted to because of the Boeing aircraft deliveries. But we are having to increasingly discount to fill our flights. We think that's good news for passengers, even if it means short-term pain for shareholders. I share your pain, obviously, but we're better off at the moment. If the consumer is under pressure and there has to be price discounting, then we will lead the price discounting and we're going to continue to lead that price discounting through July, August and September. I will now open it up for questions, please.