Ryanair Holdings plc

Good morning and welcome to the Ryanair H1 Results School. My name is Adam and I'll be your operator for today. If you'd like to ask a question at the Q&A portion of today's call, you may do so by pressing star followed by one on your telephone keypad. I will now hand over to Ryanair Group CEO Michael O'Leary to begin, so please go ahead.

Good morning, ladies and gentlemen. Welcome to the Ryanair H1 Results Conference call. We're joined by all the members of the team from different parts of the globe and we will do a I'm going to run through quick highlights, ask Neil Thoroghan, our group CFO, as usual, to give you a comment on the financial highlights, and then we will maximize the time for Q&A. So you'll have seen this morning we reported H1 after-tax profits of $1.8 billion, 18% lower than the prior year H1 profit of $2.18 billion. Highlights of the half-year were traffic, strong growth, 9% to a record of $115 million. It would have been higher, but for the repeated Boeing delays. The key theme is average fares fell in the half year by 10%, but the trend is improving. We were down 15% in Q1, down 7% in Q2, and we'll turn to Q3 when we look at forward guidance. We have 170 737 game changers in a 608 aircraft fleet at the end of the half, and that had risen to 172 by the end of October. We have five new bases, 200 new routes opened this summer. The approved OTA partnerships now cover about over 90% of all OTAs. These protect consumers from being overcharged by OTAs. We give OTAs direct feed into the Ryanair.com website, but in return, they guarantee that the customer will get only the Ryanair prices. We also get the customer email, accurate customer email and accurate customer credit card, so we have a direct relationship with every customer now booking through approved OTAs. I think, again, our strong balance sheet has enabled us to take a very strong fuel position. We're 85% hedged for the second half of FY25 at $79 a barrel. We've jumped on recent points of weakness to increase our FY26 cover to 75% at $77 per barrel. We completed the $700 million share buyback in August, and as of today, we've done just over 30% of the $800 million follow-on share buyback We expect that buyback will continue, will probably run out until about April, May of 2025. And the board on Friday confirmed the interim dividend of 22.3 cents per dividend or dividend per share has been declared to be paid in February 2022. Looking back at the half year, ancillary revenues were resilient, rising 10% to 2.74 billion, slightly ahead of our 9% traffic growth. I think the key metric, though, is that operating costs perform well. They rose 8%, lagging behind the 9% traffic growth, as the fuel hedge savings offset higher staff and other costs due in part to Boeing delivery delays. We found ourselves gearing up for Boeing deliveries last summer, but being over-crewed, over-staffed, and then finishing about 5 million passengers short of where we were originally going to be. Yet, if you take the half year the operating costs rose slightly less than traffic. The balance sheet remained strong. Growth cash at the end of the half year was over €3.3 billion. Net cash was just €600 million at the 30th of September. And that is despite paying out €900 million in capex, €900 million in share buybacks, and a €200 million final dividend in H1. We own our entire Boeing 737 fleet. That's 580 aircraft. It's fully unencumbered. And this, I think, materially widens Reiner's cost advantage over our competitors in Europe, almost all of whom now are exposed to expensive financing costs and leasing costs. As I said, we expect a complete 800 million follow-on buyback program sometime in mid-2025. When we finish that, Reiner will have returned almost €9 billion, including dividends to shareholders since 2008. and we'll have bought back approximately 36% of our original issued share capital. In terms of fleet and growth, so at the end of October, we had 172 game changers in our fleet. We now expect the remaining nine Q3 deliveries after deliveries due in September or in October, November, December would be delayed into Q4. So we're hopeful we get those in January, February, March, if the Boeing strike settles reasonably quickly. However, There's no doubt that we're going to now miss some... When we take those nine aircraft in Q4, that leaves us with 29 more aircraft to take for summer 2025. We had originally penciled in to deliver those this winter. We now think it's reasonable, and we have no guidance on this, but to delay about half of those aircraft. So we think we get about 15 of those 29 aircraft prior to the end of June. In other words, in time for summer 2025, but half of them will be delayed into the winter of 2025-2026. And accordingly, that means, I think it's sensible now, we begin to walk back our original schedule of traffic. Originally, for FY25, we had expected to carry 205 million passengers. Because of the Boeing delays, we've had to walk that back to 200 million. In fact, I think we've come in a shade just under 200 million in the full year. The original target for FY26 was 215 million passengers. We're now going to have to walk that back, I think, to about 210, with the possibility that it may have to get shaved more. It might come back to 209, 208, entirely dependent on whenever Boeing settles a strike and then can give us some reasonably accurate update delivery on aircraft. We are working closely with Boeing. I speak to Stephanie Pope on a weekly basis. We spoke again on Friday. There is a Labour voting on the new pay deal today and hope we'll have a result tonight. I'm impressed, by the way, at the work that she and Kelly Orton-Burke have done. They're there. They're on the ground in Seattle. You can lift the phone. You can talk to somebody. That was something that wasn't there under the previous management. She is busting a gut to try to get us deliveries. In fact, even during the strike, they brought in management. We had two aircraft ready for delivery when the strike started. They brought in extra management and got those two aircraft out to us during October. So they're doing everything they can, and they have our full support. I think, though, this is a positive generally for the industry. We are going to be short aircraft ourselves for FY25. We're going to be more short aircraft in FY26. And looking forward, if the experience this year, we were surprised by the price softness. You know, we've come off two years in summer 23 and summer 24 of 20% price increases today. due to the post-COVID recovery. This year, we were a little bit surprised by the price softness. We think it's due to consumer spending tightness in Europe, certainly the impact of the OTAs, and the fact that we're 5 million passengers short on our original target growth. But if we're constrained in our deliveries next year, we know that the rest of the European industry is heavily constrained because of the Pratt & Whitney repairs, and the OEMs are struggling to increase production. I would be medium term very optimistic on where pricing is going to go because of these capacity constraints. I saw some of the coverage that today in Ireland and the UK, oh, a bit of a negative. Ryanair will be scaling back its growth ambitions. We will still get to our 300 million passengers by 2035 as long as Boeing get the MAX 10 certified, but we're going to have to grow a little bit slower in FY25, FY26 once we get the balance of the 29 outstanding aircraft, and that might be into summer of 2026, then we'll be back up to our target of 225, 230 million passengers. But I think these constraints should be positive for pricing into summer 25 and summer 26. As you're aware, the board is reviewing the airline ownership and control. We confirmed that over 49% of Ryanair-issued share capital is held by EU nationals in September. We think it's appropriate to review the potential variation of either the ownership restrictions, which prohibits non-EU nationals acquiring our ordinary shares, or the voting restrictions, which is how you exercise control. That process continues. We've consulted thus far with about 60% of our shareholders. We think it would take another three or four months, and the board would hope to make a decision on that, whether we are sensible to vary the ownership and or the control restrictions. sometime in the first half or the middle of 2025. Going to the key element then, which is outlook. So at this point in time, and I say this, we have about 70% of the bookings in the system for Q3. We have only about 11% of the bookings in the system for Q4. So we have very little visibility. However, we're pretty sure at this stage we're going to finish somewhere between about 198 to 200 million passengers. I think the midpoint, just over 199,000. up about 8% on the year, subject to no worsening of the current Boeing delivery delays. Unit costs are performing well, and we now expect full-year unit costs to be broadly flat, as our fuel hedge savings, strong interest income, and some modest aircraft delay compensation will largely offset ex-fuel cost inflation, most notably crew pay and productivity increases, higher handling and ATC costs, and the cost of inefficiency we suffered this year because of repeated Boeing 737 delays. Forward bookings into Q3 are strong, and the decline in pricing appears to be moderating. Again, what does that mean? Well, again, if I go back, Q1 pricing was down 15%, Q2 pricing is down 7%. Q3 pricing will be down by less than that, but it will be slightly down. So I think a small, single-digit decline, the trend, I think, is favourable. But then we get into Q4, and Q4, we will have a very challenging prior year comp because half of Easter was in last year's Q4. None of Easter is in this year's Q4. But at this point in time, Q3, the bookings are strong. Pricing is – the price declines are moderating, but we still have 30% of Q3's bookings to make, and those would be the key close-in Christmas and New Year bookings. We have zero Q4 visibility. and the quarter won't benefit from last year's early Easter. That will make the prior year Q4 comms challenging, and therefore I think it's too early this morning to provide any meaningful FY25 BAT guidance. The final outcome will be subject to avoiding adverse developments during the remaining five months of the year, especially with the risks of outbreak of the conflict in Ukraine and the Middle East, repeated ATC short-staffing and capacity restrictions, and our further buoyant delivery delays. Can I hand over to you with any comments, anything you'd like to throw out there for people's attention to on the balance sheet of the P&L?

Okay, thanks, Michael. You covered it fairly well, but I'll just reiterate, please, with how costs went in the first half of the year. The hedging that we locked in for the year is delivering good savings, but we're focusing across all of the other lines as well, and that's enabled us now to improve the guidance on the full-year unit cost to broadly Flask. Balance sheet rock solid, triple B plus investment grade rating, over 580 aircraft unencumbered, which gives us a massive advantage over everybody else. And another reason as to why the cost advantage and the cost gap between us and everyone else is widening is because we're financing ourselves through cash when everyone else is out there raising expensive leases and expensive debt. Distribution is going well. We're about one-third of the way through the $800 million buyback, as Michael said. That will hopefully get us out to the summer of next year. We've now locked in some modest savings on fuel hedging into next year, which is very important in this current very volatile oil market that we're in. And then on CapEx, while we're still guiding oil, 2.3 billion capex for this year, having spent about a billion in the first half of the year. The reality is that some of that is now likely to slip into next year when we've got greater visibility on where and when the aircraft are coming in from Boeing. We'll revisit that, but it's a timing issue more so than anything else. And I don't think really Michael has much more to add.

Yeah, I think that's right. Okay, let's open up the Q&A, please. And I'll spread some of the questions around the wider management team here.

As a reminder, if you'd like to ask a question today, that's star followed by one on your telephone keypad. And our first question comes from James Hollins from BNP Paribas. James, your line is open. Please go ahead.

Yeah, thanks very much. Good morning. Yeah, just one for me, actually. So feel free to spend twice as long as you would have done on this. I think the ATA situation, I mean, it's clearly been discussed at length, well, certainly between me and my investors. The Maybe any chance you could quantify what the ATA situation was, not just in Q1. It seems to be from your comments you very much thought that lasted into the summer. So we start to think about, I guess, fiscal 26 and the not easy comps. But just as much detail as you can. And I think you did note it was probably a bigger impact than you had thought. So just I'd love to hear your thoughts. Maybe Eddie, if he's on as well. Thanks very much.

I'll give you an intro and ask Eddie to comment on it, maybe Jason McGuinness as well. You know, I dismissed the OTA, impact of the OTA online travel agency dispute last, it started last November, December. Now, it undoubtedly took two or three, two points off our load factors in the third and fourth quarters last year. I think it did hit us this summer by more than I allowed for. I mean, the one reason I was a bit dismissive is I didn't see any of these bookings going to our competitors. I mean, there was no notable bump in load factors or yields of either EasyGetWiz or the others. But I think we've seen a strong bump in both bookings and load and for some of the tour operators this year, 2E, Jet2, etc. And so I think some of that traffic did migrate away from the OTAs and Ryanair onto the kind of tour operator sites. I would, by the way, however, you know, was it the right thing to do? Absolutely. We would fight with the OTAs again tomorrow morning and with anybody who tried to interpose themselves between us and our customers, particularly when they, by interposing themselves, they are overcharging our customers and giving us fake emails and fake payment details. Now, I'm pleased to say the relationship with over 90% of the OTAs is now excellent and We've only two standouts who have not yet signed up to the approved OTA deals. In other words, two OTAs who are still overcharging their customers, and that's Booking.com, although they're small in volume terms in Europe, and eDreams in Spain. Other than that, everybody else has signed up. So I think if I was, and we're guessing here, if we're looking at how much of our decline in pricing, if you take our pricing in Q1, Q2, we're down 10%. I think it's reasonable now to believe that maybe up to half of it is the OTAs and half of it is pressure on consumer spending. I don't think you can get away from the pressure on consumer spending issue. You know, we went from two years with pricing going up 20%, 20%. We did expect to moderate this year. I mean, I thought we'd be up between 5% and 10%, and we were down 10%. Sometimes it happens. There's nothing wrong with the model, and I would always sacrifice short-term fares for market share growth, and we have taken enormous quantities of market share from competitors across most of the major European markets this year, mainly because they were constrained, repairing, cracking with the engines, or having been in the case of Egypt, they still haven't recovered their pre-COVID traffic volumes. We're operating at 14% more than our pre-COVID traffic. I would always sacrifice short-term pricing and short-term profitability for long-term, for growth and longer-term gains. But I think the OTA was more damaging than I had first allowed for. The good news going forward is they forward bookings into next summer with the OTAs already very strong. Their pricing is well above our average pricing, but we would expect that because they're booking summer holidays next year, whereas we're taking bookings into the winter period. And we would have a much easier prior year comp next year. When we get to Q1 of next year, both halves of Easter will be in Q1. We should have a strong flow of forward bookings coming from the OTAs, but ensuring that all of those customers who are booking through those OTAs are now getting real Ryanair prices. The OTA is free to levy a separate fee, and that's fine, but we're getting the customer email and the customer credit card details, so we can interact with each customer as well. So I think that's been a very successful outcome for us, but we've no doubt we've taken short-term pain this year. Looking forward, as of today, we're about 2% stronger booked into summer, if you take the summer season of 2025, than we were this time last year. Now, it's on a pretty tiny sliver of bookings, like Minnow, but to be 2 percentage points further ahead on a very small number is quite strong into next year. And we will have, I think, weaker prior year comps by the time we get to summer 2025 as well. Eddie and maybe Jason McGuinness want to add something to that?

Yeah, I mean, the difficulty, James, sometimes is that when you're looking at comparisons is when you look in prior years with OTAs, like, you know, it was impossible to identify who was doing what coming through the pipes because they were, you know, they were using other intermediaries to scrape. But what we can see now is that, you know, as Michael has pointed out there about summer booking, there are, you know, OTAs don't, you know, are not a sort of a homogenous system. set here they do uh they operate in different ways but we can definitely see the holiday ones that do package holidays are uh they book further ahead and at higher fares um and you know if you look at that and compared to last year well then if we weren't getting those bookings then we were obviously chasing those to get a load factor but the good thing as well is that you know uh you know the otas it's not just a question of switching on the pipe here either because some are better than others in maximizing what's coming through there. Like the ones that are more tech focused have got up to speed much more quickly and others haven't. But there's no doubt that we can see the forward bookings, particularly for the summer ones. There are bookings that we didn't get in January, particularly of last year, because when this happened, you know, broadly in mid to late November last year, you know, you're pretty much sold into December. So it was really those summer bookings in January. And then the effect of, you know, obviously the other factors of the sort of macro issues about like interest rates and consumer sentiments and all that fed into it. But I echo as well what Michael said there. Look, you know, the hard decision was to do this. It was the right thing to do. And we can see that reflected in, you know, customer issues, like some of the hardest customer issues we had When you get to the sort of volumes that we have now, people showing up and being charged check-in fees because the OTAs had just sold on these and couldn't care less at that stage about what problems were visited upon consumers at airports. So broadly, Echo, it was absolutely the right thing to do. And some are better than others. And we still have a little bit to go with some of the OTAs in spooling back up to where they believe they were comparably with last year. Jason?

If I take Q1 and Q2, so Q1 the fares are down 15%. Now I think as much as a third of that was probably the first half of Easter moving into prior year Q4. So if you strip back Easter and I'm doing back of the envelope here, I think Q1 pricing like for like is down somewhere between 7% and 10%. Q2 down 7%. Q3 is down by a figure of between 0% and 5%. How much of that do you think is OTAs, and how much is just the consumer spending under pressure?

And I know it's a case, so... Yeah, sorry, for me, yeah. I don't disagree. I think it's about half and half. The interest rates, inflation environments, I think... last Christmas into January, the consumer was certainly weaker. I could see it in the volumes, particularly, as we said previously, across leisure and canaries. But lots of the markets continue to book very well. Central and Eastern Europe was strong throughout the whole period. Load factors through the summer are very strong. I'm very happy with how the summer is finishing out. Particularly, we've had a very strong October midterm. Hopefully, that continues into December, but a little bit too early to tell in terms of Christmas. And I agree, like summer of 2015, very early days so far, but I'm very happy with how it's selling so far, all of the markets selling well, and I think that is an indication in terms of the capacity environment as well. I think people are booking earlier this year than they have been on the leisure in Canary.

Okay. Thanks, James. Next question, please.

The next question comes from Harry Gowers from J.P. Morgan. Harry, please go ahead. Your line is open. Harry.

Yeah, good morning, everyone. I've got two questions, if I can, probably both for Neil. Just on the ex-fuel costs, I mean, I think we should start to annualize some of the pay increases put through at the back end of last year. So maybe a little bit more color on what you're expecting for ex-fuel costs per pack, specifically over winter or on a full year basis. And then related to the first one on the delay compensation received in the first half, maybe you're able to quantify the totals. And will that continue to be a bit of a tailwind maybe for ex-fuel costs over the next 12 months or so? Thanks.

Okay, Harry, I'll start with the second one first. We're not going to quantify the delay compensation. It's modest as we call out in the press release in the first half of the year. It's confidential between ourselves and Boeing and falls well short of putting us back in the money for the 5 million plus passengers that we've lost. Will there be more in H2? The likelihood is yes. It will depend very much on how many aircraft we get and when we get them. But again, it will be relatively modest in the overall scale of things. On unit costs themselves, total costs have done a very good job. Absence of the Boeing compensation, we've seen some improvements on other ex-fuel cost lines. in the second quarter of the year. We hope that will continue into the third and fourth, which is why we're guiding total unit costs broadly flat rather than marginally down, which we had previously. We would hope that next year, with the slower growth, we won't be over-crewed, as was the case this year. We've enough crews for about 20 more aircraft. That hopefully won't be the case into next year. And as you rightly said, As we get out into kind of the first quarter, calendar quarter of next year, we'll start to annualise some of that productivity pay that had come through. But it's too early to put numbers on where our unit costs are going to be next year. We haven't done the budgets yet, but I think we've done a good performance this year and pleased that we're guiding broadly flat and locking in with the 75% fuel hedging that we have modest year-on-year fuel savings. Okay, thanks, Harry. Next question, please.

The next question is from Stephen Furlong at Davie. Stephen, your line is open.

Stephen, hi. Hi, Michael. I guess two for me. Just looking at the allocation of growth, I think you call out some scrapping of aviation taxes, Sweden, Hungary, and various regional airports. You just might talk about that, where you see that going. And, yeah, well... Maybe I'll start and then I'll come back for another one.

Okay. Again, I'll ask Eddie to join us. Look, I mean, we are tonight on aircraft, so we're doing a lot more turn. We're taking aircraft away from airports and our countries who are raising taxes. The two big call-outs, they would be the French budget. Now, we're small in France, even though we're the number three airline. We're taking capacity away from France. We're reducing capacity in Germany where the government hasn't got a clue They're not alone raising aviation tax, but also ATC fees and security charges. And even Lufthansa Group are now reducing flights significantly. They've reduced about 1,000 Euro Wing flights in Hamburg. I'm medium-term optimistic on Germany. I think they'll eventually realize that either this government hasn't got a clue or this government's going to change its policy and start lowering air travel costs in Germany. And then we had the UK budget last week where they increased APD, a new Labour government committed to growth, got elected on a policy to drive growth, and the first thing to do is increase taxes on air travel on and off an island on the periphery of Europe. So we, again, and I think this plays into the capacity constraint story for us next year, if we're only going to be able to deliver between 205 and 210 million passengers, there's going to be a lot more churn. And I think you'll see us moving some air capacity out of Germany, France, and the UK next year. We're not able to grow in Dublin because of the traffic cap. And we will be redeploying that air capacity into countries who are scrapping taxes, Hungary, Sweden, who have scrapped their aviation tax entirely, which is, I think, a sign of what's to come. The home of flight gaming is now scrapping aviation tax. They've worked out that that's not the way to grow their economy. And Italy, we're having significant success for a number of the bigger regions in Italy, Reggio Calabria, Venezia, Giulia, and we hopefully, Abruzzo, where Pascara Airport is, have scrapped the 650 municipal tax. And we think there's a reasonable prospect that more Italian regions will scrap this Alitalia pilot pension tax. And so we're redeploying turning aircraft. We will get probably 20, 25 aircraft growth for next year, but our growth, if we go from 210, will slow down to about 5%, so there will be more turn. And again, a lot of that is being, we're having some very interesting discussions with some of our airports where we're saying, look, you're at the bottom of the list of our kind of, either you're one of our higher cost airports or you're, And airports are getting very, I think, realizing that they're about to lose aircraft and capacity. And that's making them, with nobody else in town, with nobody else coming over the hill because of capacity constraints in Europe and the cost of getting a lot more aggressive. So I think you'll see us reallocate a lot of our, a significant proportion of our aircraft capacity next year to those states and those airports who are lowering taxes and lowering fees to incentivize growth. And I think that's why The traffic cap in Dublin is so damaging. You know, we've just opened a second runway. It takes Dublin's capacity to 60 million passengers. But we have a pudding of a transport minister, a green transport minister, who thankfully is not running for election because he probably wouldn't get re-elected anyway. We would hope the election is going to be called next week, that the new government, the first thing the new government would do would be scrap the tax. We had a very, I think, good hearing in the High Court on Friday. The judge is going to give a ruling today at 2 o'clock, and we're pretty confident that he'll rule that there will be a stay on the IAA's ability to limit plots next year while pending an appeal to the Europe. And all of our legal advice, and it's pretty black and white, is that the Dublin airport traffic map is contrary to EU law, and I think it will be scrapped by the EU courts. I don't know whether you want to add to that, Eddie, and maybe Julius come in on the Dublin cap.

Yeah, Michael, I think you covered most of the geography there, except that I would say that, you know, post-COVID, we would have probably expected, you know, airports in terms of traffic recovery to move earlier. But now that it has started in, you know, places like Italy, where you have taxes coming out, or you look at just one example of Sweden, whereby, you know, SAS are much smaller than they were post-COVID or pre-COVID. Norwegian largely, you know, back in Norway, what does Sweden do for trapping? And, you know, they figured out they lowered the taxes. We put in 30% more based aircraft. And I think that's really going to start to play out across Europe where, when these airports now realize there's nobody else coming. So I think the cracks are beginning to come. And we see one other area where we put in a lot of capacity as well, a place like Morocco, you know, where we've got 14 or 15 based aircraft down there, close to 10 million passengers. So I think there's lots more. I think there's lots more to come. But I think you've covered up all the geographies there, Michael.

I think one of the points I'd make, we're looking at the UK market next year, like we expect to take our traffic down from about 55 million to about 50 million passengers. We're not going to close routes. What we're going to do is, you know, we have enormous capacity in the UK, but we're going to trim out frequencies. And I think you're going to see us across a lot of our bigger markets, trim frequencies next year, switch that capacity to those countries who are scrapping aviation taxes or lowering access costs and airports who are incentivizing growth. And I think, again, one of the reasons I'm optimistic on pricing next year, apart from the fact that we'll have a pretty weak prior year comp, is that we will be constraining frequencies. We will not be closing routes. We will not create vacuums that, you know, I don't think there's any competitors in Europe anyway. But we're certainly not going to be inviting anybody else into markets where we are currently operating. But trimming capacity on a lot of markets out of Ireland because of the traffic cap and in the UK because of this, insane rise in APD, I think will be very good for our pricing next year. And again, if you come back to Neil Thorne's point, if you look at the cost discipline in this business, the cost discipline is unmatched by any other European airline. If we get any bump in pricing next year, you're going to see an awful lot of that flow straight to the bottom line. Julius, do you want to give us anything on the Dublin cap?

Thanks, Michael. Maybe just to say that it is accepted by all parties that there is a serious question of EU law to be answered in relation to the CAP. And this is reflected by the fact that the court case on Friday was argued not only by Reiner, but also by Ellingers and, importantly, an association of American airlines who are concerned about the risk of losing some of their slots in Dublin. So it's hard to be definitive and hard to predict the outcome of a court process, but we are fairly optimistic that the court will see sense in our arguments and grant the stay that we requested, which would result in growth being possible in Dublin next summer.

Okay, thanks, guys. Stephen, did you have a second? No, I'll leave it at that, yeah. Thanks, Michael. Okay, next question, please. Thanks, David.

The next question comes... Next question comes from Jamie Robotham from Deutsche Bank. Jamie, your line is open. Please go ahead. Jamie. Jamie, your line is open. Please ask your question.

Jamie, go ahead. Okay, let's move on.

We will move on for now. Next question comes from Muneeb Kayani from Bank of America. Muneeb, your line is open. Please go ahead. Muneeb.

Good morning. It's Maneeba from Bank of America. So I just wanted to follow up on the earlier question around OTAs. And you said that over 90% have been converted. What exactly does that mean? Like are they all kind of the technology? Is it fully kind of integrated at this point? And then secondly, where are discussions with the two remaining ones? Do you think you would be able to get them on board as well? And then a question for Neil around cash return and buybacks. In the video you mentioned that there could be more. How have you thought about the amounts for share buybacks, the $700 and the $800 that you've announced this year, and kind of any framework for thinking of the amount into next year? Thank you.

Thanks, Vadim. Maybe I'll take the first and Neil will give you the second. So on the OTAs, if you take the range of OTAs who are making bookings on our system prior to last November, we've now signed up over 90% of them. There's essentially only two remaining OTAs who have not signed up to our deals, who are still overcharging or inflating our airfares and overcharging consumers, and that is Booking.com, but they're very small by volume in Europe. eDreams are bigger by volume in Europe, particularly in Spain. We have multiple court cases ongoing with both. We've won with booking in the States in Delaware. We've won numerous cases against eDreams in Europe, outside of Spain. We have lost a couple of defamation actions in Spain, although generally they've been ex parte defamation actions where we weren't able to make our case, and we would be appealing those measures. I expect, I think it's inevitable that both booking and eDreams will eventually sign up to our approved OTA agreements because I think it is very difficult using the transparency of the web to be able to be overcharging your customers while your competitor OTAs are selling them directly Ryanair's low fares with no kind of hidden charges or no inflation. But I think the critical thing is so far we've protected over 90% of our OTA customers and we expect that figure will rise towards 100%. Over what period of time, I don't really know. I think it's much less on the OTAs unless Jason or Eddie, you want to come in on it and then Neil, you answer the second question.

Yeah, sorry, Michael. What you have is that without naming the specific ones, those that are more tech-focused companies are much better at maximizing the APIs that we've put into them already, because they've got the tech resources on the other side, and some aren't. And they are still coming up to speed, particularly because as part of the OTA agreements, they can't put on extra charges on things like ancillaries. So they've got to be doubly sure that they are reflecting the transparency in pricing. So there's There's some way to go on some of them, you know, while they maximize it. But those that are selling out summer holidays for next year in terms of packages where, you know, it's a little bit more complex on their side where they've got to put hotels and all that as part of it, they're generally, you know, getting back up to where they would have been. So they're at different paces. But, like, I'm not going to give a color on how many, you know, like what ones are behind the curve. It's just about their tech resources on the other side.

Okay, and just for a handout, on the share buyback point, Maniba, I would draw your attention to two things. One, the Boeing delivery delays this year meant we had, you know, with less CapEx, more spare cash. Our first instinct was to return that additional cash to those, that spare cash to shareholders. I would highlight, however, as we've done in the results, we have two large bond repayments coming up in September of 25, $850 million, and May 26, $101.2 billion. We are determined to pay down that debt. and that will be the board's first priority while maintaining our dividend policy going forward. Neil, on that share buyback, what's your view?

You read into where I was going to go. I mean, the quantum this year was driven by the slower capex, but also we didn't have any big bond repayments. We got an opportunity just given where the share price went. in the July-August period to lean into the $700 million buyback. We finished that earlier than anticipated. And $800 million with the slowing CapEx and the delays in Boeing seemed about the right number. That gets us out to the next number. But we're very focused that we do have that $850 million bond in September 2025. We have the $1.2 billion bond. Beyond that, we'll continue to pay back 25%. prior year PAT and you're seeing that we've already announced about a 240 million dividend in February there'll be another 240 million or thereabouts in September of next year but ultimately the profitability in the business the capex opportunities the debt repayments will dictate how much spare cash is available for the boards to return but I think the key is let's finish the 800 million buyback first and then we look at what comes after that Maneba

Thank you.

Thank you.

Next question, please.

The next question comes from Dudley Shadley from Goodbody. Dudley, your line is open. Please go ahead.

Thank you very much. Two questions, if I may. First of all, can you just update us on the latest you've heard on the certification of the MAX 7 and then the follow-on certification of the MAX 10? And then the second question is one of your favorite topics, Michael, which is ATC disruption and It was particularly bad during the summer, especially for the first wave. Can anything be done about this, and can it be done without root charges going up over time? Thank you.

Great, okay. Ladies and gentlemen, I spoke to Stephanie Pope on Friday afternoon. They remain confident that they're still working away on the certification. they still expect certification, the MAX 7, in the first half of FY25, and then that the MAX 10 certification will follow reasonably quickly thereafter in about sometime in the mid-second half of 2025. And I think we should take them at their word. We've had some reasonably positive feedback with EASA, who have said that they're reasonably impressed by the MAX 10 and don't see any reason why that certification won't take place. It's a good aircraft. but it's driven by getting the MAX 7 certified first. And I think what's important, though, is that work continues even while the strike is ongoing. The ATC disruptions have been a shambles this year. I think what's really depressing about ATC is, you know, so much of this is fixable. Much of Europe Control's own figures show that flights in Europe this summer were at 98% of their pre-COVID volumes. So it's not that the skies are black or they're dealing with huge growth. They're actually dealing with fewer flights than they had in 2019. But they're short-staffed. And in many cases, they're short-staffed because people simply won't come to work on Saturdays and Sundays. Or as in the case of the French, they've done this mad deal with the French unions where they can report to work three hours late. Now, you know, if you're An accountant reporting to work three hours late doesn't make that much difference. But if you're a pilot or you're an air traffic controller and you're due on at 4 a.m. in the morning and you report at 7 a.m. in the morning because you can, then the whole first wave gets delayed. So there are two things that can be done, and we're pushing hard with the EU Commission. One, protect overflights during national ATC strikes. The Spanish, the Italians, and the Greeks already do this. They use minimum service to protect 100% of overflights. But the French use minimum service legislation to protect about 80% of their domestic flights and only 20% of overflights. So because of the geographical position of France, everybody else gets screwed. So two simple measures will be, one, protect overflights during national ATC strikes, and two, we require a commitment that each of the ANSPs, particularly the French, the Germans, and to a lesser extent the Spanish, will be fully staffed for the first wave of flights every morning. There is no point in having a labor deal that allows some air traffic controller. And, you know, we're talking one or two air traffic controllers short on the first wave of flights in France could take about 20% of its capacity out. And we're talking tiny numbers of people here that are being grossly mismanaged. And, you know, I think if the new EU Commission, I think we're optimistic. Ursula von der Leyen has put competitiveness at the center of the new five-year mandate for the EU Commission. And if you really want to do something about competitiveness, start with fixing Europe's chronic ATC services. And those two simple measures would eliminate about 90% of ATC delays. Next question, please.

The next question comes from Alex Irving from Bernstein. Alex, your line is open. Please go ahead. Alex, hi.

Hi, good morning, gentlemen. A couple from me, please. First of all, for up on the Max 10, you know what you say about the mention of Boeing, but what are you crewing for? Is there a risk of unit staff cost inflation if this gets pushed out? Second is on ancillary sales for passenger. Notice that growth has been pretty low in this quarter and the last quarter. What's driving this, and what initiatives are you currently working on to get these back to growth, please?

Sorry, if you just repeat the second half, you broke up the tax something in the second quarter?

Ancillary sales for passenger. It's been low growth the last two quarters. What are we working on to get that back to growth?

Okay, and I'll give the second one to Neil. Max 10, look, we're very optimistic about the Max 10. You know, it's why I wouldn't change one decimal point of our growth trajectory to 300 million by the mid-2030s. The big issue for us is we're due our first 17 deliveries of Max 10s in this first half of 2017. So we have them there for summer 2017. As long as the Max 10 are certified in the second half of 2025, and Boeing can increase their production, their monthly production in line with their projections, then there should be no delays to those deliveries. Do we see, those aircraft will bring us, compared to the original, our 737 NGs, we're getting 20% more seats, burning 20% less fuel. I mean, they're transformational for our operating costs. We don't foresee any significant staff impact. It will make our, if you go back to slides, three of our presentation, our slide four of our presentation, unit cost line, it will meaningfully widen our staff cost leadership, airport and handling cost leadership, everything with the sole accepted route charges, the aircraft are heavier, and our fuel leadership over every other airline in Europe. We will not obviously recruit additional pilots if there's some additional delay to those deliveries in the first half of 2027, but I think you've seen us, which did happen to us in the summer of 2024, So I don't see any significant bump in staff costs arising from, we will have a fifth cabin crew on board, but all of our pay deals at the moment with pilots, cabin crew are done, whether you're, they factor all variants of the 737s. We will only be taking 17 aircraft in. So, you know, if there was, if somebody was silly enough to say, well, you know, we won't fly the MAX 10 unless we get XYZ, we'd say, fine, we simply move it to a different geography where, We'd have no difficulty getting our crew in the MAX 10. So I think there's nothing but upside for us in the MAX 10. The productivity of the aircraft are extraordinary. The productivity, by the way, even of the game-changers, have been extraordinary. We are getting 4% more seats. They are burning 16% less fuel. These are transformational. In our business, we own the aircraft. And I look across at some of our competitors who are frantically doing sale and leasebacks, desperately cooking the books, trying to take fucking profits of sale and leasebacks through the P&L. We have none of that. And we have no long-term debt or leasing costs on our balance sheet. So I can't wait for the Max 10s. I think they are going to be transformational for our costs and for our profitability from summer of 2027 onwards. And... I'm not quite sure that on the ancillary sales, ancillary sales were up 10%, traffic is up 9%, so we are getting, as we said, ancillaries continue to bump a little bit ahead of traffic growth. But then Neil and maybe I don't know whether Eddie, you want to add something on ancillaries there?

Yeah, I'm happy to do that, Michael. As you said, it was a pretty good performance in the first half of the year with the 10% increase. In revenue, you know, there's probably three big areas, Alex, as you're well aware, where we make a lot of the money to reserve seating. That's going well. It's up year on year. And we'd hope that there's more we can do on optimizing that and the pricing around it. Onboard sales have improved year on year. And our new order to seat initiative, which we were trialing in the early summer and are now rolled out across the network, is going very, very well with people. keen to get their order in early on board. So I'd be hopeful more to come from that. The one area that probably disappointed me a little bit this year was the priority boarding. I think some of that might have been down to the fact that, you know, we've been under pressure with air traffic control this year to try and not take on slots. Our priority is to close the door, get people onto the aircraft and fly. So there's maybe been a little bit of gaming from some of the customers on not saying take the bags on board. But we're addressing that. We're working through some upside there. So I feel there's a bit more to go on the priority. We've been quite clear. There's not going to be any major new initiatives coming, but there's lots to be done with the products that we have, just enhancing them. I'm pleased with what's happening on board. Having underperformed for the past couple of years on board sales, I've turned the corner this year, and I think we'd order to see plenty more to go on that front. And then working with labs, we'll continue to try and work on improving the – the seating and working with my colleagues in the operations and the airports, we will work on improving the priority boarding.

All right. Thank you.

Anybody else want to come in on ancillary?

No, I mean, just it's really good. Sorry, it's Eddie here. It's really just down to, you know, the interplay or whatever between those, those core products in terms of optimizing revenue between the trade-offs, between the, behaviors on on bags and uh priority boarding and bundles uh and issues like that and it's just yeah we'll never get to the end of it uh alex you know with with the lab scene as them you know as the models get even more as the models will get more sophisticated in time you know and i've also had just one one thought there you know in a past year where the uh

The average fare was down 10% per passenger. A lot of that is due to consumer spending being under pressure. I think it's very impressive that ancillary revenues were up 10% on a 9% traffic growth. We are still able to mine the ancillary revenue line and to encourage or convert customers to the convenience of priority boarding, reserve seating, etc., even in a period of time when consumer spending is under pressure. Next question, please.

The next question comes from Jared Castle from UBS. Jared, your line is open. Please go ahead.

Hi. Morning, everyone. You hedged 75% of your fuel for 2026. And if I look back a year ago, you'd only hedged 53% at that stage for March 25. Why have you, I guess, increased the hedging? Is this suggesting anything in terms of the direction you see oil going to in the next year? And then also, you know, you've kind of highlighted a lot about ownership-first control rules and your engagement with, you know, stakeholders. I'm not asking, you know, kind of where this heads, but can you kind of just give a bit of color in terms of you know, potential outcomes that you'd like to achieve. Thanks.

Okay.

I'll ask maybe Julius, do you do the ownership and control? Actually, I'm hedging, Jared. Look, you know, we're always there waiting to pounce. We see weakness in oil prices, you know, below our current year where we can lock away a cost saving. I think we're always keen to do so. We're undoubtedly in a period where the world is more volatile. Fuel prices are A week ago, we're under $70 a barrel. Today, they've opened up over $75 a barrel. So, you know, what we're trying to do is to have some cost certainty going forward. We're hedged this year at $79 a barrel. We're now 75% hedged at $77 a barrel. I don't think we would go over a median term higher than that. I think there's a real risk that they, you know, and some of the market analysts are beginning to talk now about maybe $60 a barrel. We could find ourselves a bit exposed compared to our unhedged competitors. Oil price could go lower. But then we'll pick that up with our 20%, 25% unhedged fuel. But I like the feel of where we are at the moment. I think given the situation in the Middle East and in Ukraine, as we move into the winter, there is always a risk that oil prices will go higher, $75, $80 a barrel. we're not trying to beat the market. We know fucking nothing more than anybody else does about oil prices. But we have a balance sheet that allows us to hedge out, to buy forward, jet into plane jet. And we are always, if you go back two years, we were hedged at $89 a barrel. This year it's $79 a barrel. Next year we're at $77 a barrel. If I saw an opportunity there, say if oil prices fell below $60 a barrel and we could meaningfully go in and hedge another, 10 15 percent and bring it down you know towards low 70s uh we might move but i'd be i think it's unlikely like we're still burns or score scarred by the memory of covid where we would hit the covid uh 90 we used to have a rolling 90 percent hedge policy i don't think we'll ever again hedge up to 90 percent unless there's some ridiculous opportunity there and but i like the fact that We have very stable unit costs. We're taking more game changes. That gives us an operating cost kind of efficiency. And we've hedged 75% of our fuel this year at $2 a share less than the current year. So I like what we're able to do to secure our kind of stable costs next year. But I think given weak prior year comps, there's a reasonable risk to the upside in terms of pricing, particularly with even our own capacity constraint next year. And Julius, maybe you give people a quick briefing on the ONC consultations and where we think it might go.

Yeah, thanks Michael. So over the last few weeks we spoke to shareholders who represent approximately 60% of the issued share capital. Those shareholders currently hold both through the ordinaries and through the ADRs. We received a lot of interesting feedback and generally found this exercise very useful. We still have quite a few meetings in the diary for the coming weeks, and at the same time we are in discussions with our regulators. So that's the national regulators in Ireland, Poland, and Malta, and also the European Commission. I wouldn't want to talk more about potential outcomes, and I don't think it would be appropriate to give more color, given that we haven't yet spoken to everyone. We have an open invitation today, out on our website for shareholders to express those views, and we have received interesting feedback through that channel also. So I don't think it would be appropriate to those that we haven't spoken to yet to now go and get more color. But it has been useful, and we will give an update as soon as we can.

Okay.

Thanks a lot.

And I think there's an important point to be made here, Jared. There was some concern at the start of this, particularly with the ADR holders. The ordinaries were trading at a discount of 29% to the ADRs when we started this consultation on the 11th of September. Over the past six or eight weeks, that ordinary discount has narrowed down. As of last Friday, it was at 18% the discount on the ordinaries compared to the ADRs. That narrowing has been partly due to the prices of the ordinaries rising by 11% over that seven-week period. In fact, the price of the ADR has increased by 1%. So I think there was a fear among ADR holders that if we move here, what they see as a premium on the ADRs, what we interpret as an unfair discount on the ordinaries, would be arbitraged away by the ADR price falling, in fact, as it has been borne out over the last six or seven weeks, we think what will happen is that the discount on the ordinaries will arbitrage away as the ordinaries will rise up to where the ADRs are. And I think that's a key point. But, yeah, as Judith has said, we have an open mind on this. The board will consider it. And the alternatives are we could remove the ownership and control restrictions. We could remove just the ownership restrictions but keep the voting control restrictions. or we could keep the ownership restrictions and remove the voting restrictions. And not only will the board take account of the views and the inputs of shareholders, but we also have to delegate with our regulators as well, the European and national regulators of the five airlines that we presently own. And we think that process... Is there a time frame, probably mid-next year, before we come to some kind of conclusion? I think is that a reasonable time frame?

That's the best estimate at the moment, but no fixed timeframe.

Okay.

Thanks, Julius. Thanks, Jared. Next question, please.

The next question comes from Satish Sivakumar from Citi. Satish, your line is open. Please go ahead.

Thanks, Michael. I've got two questions here. First on the ancillaries. On the video, it did mention about 35% of the passengers are ordering directly via app. So in terms of the spend, how does it actually come past, say, consumers or customers ordering via app? Do they tend to spend more versus the traditional onboard spend? Any comparison on that, like what does the spend for packs would look like? And then the second one is around the fuel cost as we go into next year when the SAF mandate kicks in. Do we have any visibility around how much of the SAF procurement is done, at what price, so that, again, it gives us good visibility in terms of fuel cost into the next few years? Yeah, thank you.

Thanks, Satish. On the order to seat, what we're seeing is a greater propensity. Now, you know, it's reasonably recent, but there's an increased propensity of people making the orders while they're sitting there waiting for the aircraft to board. I think it will boost the spend per pax on in-flight sales, but in-flight sales are a pretty small part of our total ancillary volume. You know, as Eddie has said, the large volume, the large moving items are the priority boarding reserve seating. But we think, and it's certainly borne out in the first couple of weeks of trials, there is a notable double-digit increase in the percentage of people who will shop on board when they can do so in advance using the order to seat functionality, and we think that will continue. And I'm here with Thomas Fowler, our Director of Fuel Sustainability. Thomas, do you want to take the second part? And then I might double back and ask Eddie or Neil to comment further on the order to cease.

Yeah, so if he's just on the SAF side, we're currently negotiating the prices with our fuel suppliers ahead of the mandate next year. So it's very early to give an exact number on it, but we have some contracts rolling off with suppliers in January that we're negotiating at the moment. And we're looking at some SAF premiums of,

between two and four times depending on the region but we're nowhere near finalized on it yet um uh eddie neil you want to hang on the order to seat ancillary spend i mean as you say it's just um and it's just started just two points i'd make is that one is from a lab's perspective here's a low-cost solution done by bluetooth that has changed behaviors on board and just shows the innovation that we're getting from the lab side without any servers on the back of the airplane or any certification or anything like that. So it's a pretty slick solution. And then the second thing I'd say, and I'm here with Sinead, and you get this anecdotally back from the crew that people are more inclined to buy more when they're ordering on the app rather than asking directly. So sometimes people don't ask for like three packets of Pringles or four cans of Heineken, but of no difficulty. doing that when they're doing it through the app. So it's a behavioral change, and so it looks like people actually will need more data on it, but it does look like they actually buy more per passenger.

Yeah, I'd agree with Eddie there. I think one of the other benefits it has is that people who may have traditionally waited for the second service or the third service are now willing to put in that random order between service, and you get the incremental sales that you wouldn't have got before. before boundaries and things like that performing well also.

Yeah, I'll give you an anecdote. When I came back with the kid from Rome, the school midterm last week, my wife now has me ordering the stuff to, if you are paranoid that we won't have a panini or a ham and cheese or something on board, so we now order to app. The only downside is I was sitting in row four People around me say they arrive down with my stuff first. You get special service here on the in-flight. No, no, with the orders of the season, you can join in too. I think it will significantly boost the conversion of people on board, but it won't be dramatic. Its impact on our overall ancillary revenues won't be dramatic because in-flight sales is a reasonably small percentage of that. Next question, please.

The next question comes from Sivanti Sitt from Raymond James. Sivanti, please go ahead. Your line is open.

Hey, good morning. Hey, two quick questions. If you look at like the next 12 to 18 months, just given your slower growth plan, are there any kind of major cost items that you think from current trends you'll see kind of greater pressure or maybe because some of the items that you're working on that might see less pressure than you're seeing today? And then just on the second question, could you talk about the steps that you need to take to migrate that last 25% of customers to the app? And are there any kind of related cost savings that you're expecting?

Okay, ADL, excuse me, second half, I'll do the first half. Next, first 12, 18 months on cost items. I mean, I think the two that we would focus on at the moment is, you know, the propensity of governments like the French and the UK to look for increased taxes on air travel. I think we've seen very significant successes in getting the Irish, the Hungarians, the Swedes, the Italian regions to roll back taxes. but there's no doubt in my mind that the UK and French are going in the opposite direction. I would worry about route charges, although, you know, I think, you know, while we think there's some reasonably simple solutions here on route charges, like protecting overflights and making sure that they all show up to work first thing in the morning, I think it would be used by governments as a way of trying to drive up ANSPs to drive up route fees or ATC fees by above inflation rates. Other than that, we think airports and handling, labor, aircraft and ownership, and our financing income line will continue to be strong. But I think I draw an awful lot of comfort from our cost performance in the first half of this year and over the full part of this year. No other airline in Europe is going out there this year with kind of cost flat, unless they're kind of scamming the P&L by recognizing lots of sales and leaseback profits through the P&L. I think the real upside for us in the next 12, 18 months, with our capacity constrained and, you know, revenue or frequency reductions in a lot of the bigger markets, is I think there's a real potential to the upside on pricing and fares. And I hope we're beginning to see that as we move into Q3, you know, where there's no doubt in my mind we're strong bookings, pricing, the price declines are moderating. A lot depends on what happens in summer 2025, but I would be reasonably optimistic that, And again, against prior year weak comparables, we'll see fares up in summer 2025. Eddie, do you want to talk about migrating the other 25% of customers to the app?

Yeah, I mean, the real benefits here, and we've seen this flowing through from the app and the day of travel app where we're actually able to communicate what gates you're going to, any delays that might be coming, and we're able to manage that much, much better. And the next phase of this will be on the... you'll be able to manage operational problems more easily on the day. So, for example, if you're down gauging an aircraft from an 8200 to an 800 and there's a different seat configuration, you'll be able to virtually do that in real time without people having to, you know, talk about which seats they're in and all those things that will drive operational efficiency and 25-minute turnaround. And, you know, there's also the ability when you've got everybody on this app to get around those old legacy systems that are at airports, which have been around since old God's time, you know, Caesar systems, et cetera. You'll be able to manage queues, have virtual boarding areas, et cetera. So that will speed up like anything that speeds up getting people on aircraft, turning around on time, particularly as more larger gauge aircraft come online. We've got to be thinking about that as well. And ultimately like, okay, it saves, it saves paper. but there'll be ultimately a cost benefit for us in getting around legacy systems and it'll be a much better experience and it'll be in place for next summer. You'll need a smartphone to do that. 70% of people do it. We did this before with online check-in and people didn't have to go to check-in desks. It's another change, but I think people see the benefit of it.

I mean, I'm very optimistic. I think we can't guarantee if we eliminate 100% of things like boarding card reissue fees, airport check-in fees, but really if we have everybody on the app and we're sending you messages, it should really collapse those fees, which really are a source of irritation to a small number of passengers. And increasingly, the vast majority of our passengers who arrive at airports without having checked in our customers of OTAs who weren't passed on the reminder emails or the text SMSes went to some fake mobile phone number. If we have 100% of people on the app, you'll be getting the reminders, and I think everybody then, you'll be able to check in there on your phone the day before you travel. We should really be able to eliminate 100%. Now, there'll always be some moron who will ignore the messages, think it's spam and won't check in, If they still arrive at the airport and haven't checked in, they will be hit with a fee. But we think we should be able to collapse that to almost zero once we have everybody on the app. So there will be a real boost, I think, in our interaction with customers, but also eliminating some of those annoying fees for customers, some of which they only pay because OTAs didn't pass them on our kind of reminder emails and text SMSes. Next question, please.

The next question comes from Dwayne Fenigworth from Evercore ISI. Dwayne, your line is open.

Please go ahead. Hey, good morning. Thanks for going into overtime here. Just on overstaffing, have you paused pilot hiring? And maybe you could put into context, you know, the number of pilots you plan to hire in the next year versus what you've done the last couple of years. And then really the point of the question is do you have an estimate of for the size of the cost headwind from overstaffing, which presumably should work itself out over the next, you know, year or two?

I think so. I mean, I wouldn't want to put a particular number on it, Dwayne, but, you know, we had geared up, we were crewed for, we had trained up and, you know, we recruit and train pilots in the January, in the first, in the first calendar, first two calendar quarters. So we had hired more pilots and cabin crew for 20 more aircraft than we actually operated through the summer of 2025. Now, we could have taken the decision right then, make them redundant, get rid of them. We won't. We did think natural attrition would take them out. The problem actually at the moment is we have very little attrition of pilots and cabin crew. You know, we're at all-time record low turnover of pilots and cabin crew. So... We did carry them through the summer. I think it was, it did minimize some EU 261 compensation costs because we did have more standby pilots than standby cabin crew. But we wouldn't want to do it again. And I think that's why we're telegraphing now to the market early. We're taking down the growth next year. We're saying today 210 million. If Boeing come back with adverse news, you know, between now and Christmas once the strike is over, I mean, Stephanie Pope is committed to me. She'll come back to me once they are out of the strike and have people back to work. She'll give me a definitive delivery on our nine Q4 delayed deliveries. And then how many of the 29 aircraft, the last 29 that we're going to get in advance of. And when I say summer 25, I said, Stephanie, I'm only taking aircraft up to the end of June. I'm not counting any in July and August. This year, we were trying to take deliveries in July, trying to take deliveries in August. We had crews ready to go. And you know what? We had them on sale and we had to chop and change the schedule. It was very disruptive and costly. But because of the lack of attrition at the moment, we have stepped down or cancelled a lot of pilot recruitment and training, pilot recruitment and cabin crew recruitment and training, both in the calendar fourth quarter and in the calendar first quarter of next year. We are doing some modest pilot recruitment, but it's very modest. almost all of it will be taken by our cadet, will be absorbed by our cadet programs, recruiting our cadets as second officer, promoting them through the first officers. There's very few people leaving at the moment. There's not a lot of other 737 jobs across Europe. There's very rich demand in the Middle East for 737 pilots. And so I think our turnover attrition of pilots is at an all-time low, which is good. I think people are generally happy with where they are. They're getting the benefit of significant pay increase and productivity pay increases over the last two years. And people seem to be generally happy with life and nobody's leaving. Having crew, same situation. But again, because the recruitment and training of cam crew is a much shorter cycle, you know, but we have cancelled a lot of recruitment and training programmes that we had planned in Q4 and calendar Q1 of next year. We will do some recruitment and training in the first half of next year, but probably only running at about 30% or 40% of what we would have normally done in previous years when tuition was higher. But I think we had a meaningful cost penalty this year You know, if you look at over the full year, you know, we expect the kind of staff costs going to rise. Traffic up about 9%. Staff costs will rise between, you know, high teams. Some of that, you know, a couple percentage points, that is because we were over-crewed through the summer with those pilots and cabin crew for the 20 aircraft, which we didn't get. And that hits us on the double. We're down 5 million passengers. We've lost that 5 million passengers. We've lost the ancillary of those 5 million passengers, but we've carried the crews through the summers at the same time. Neil, do you want to add anything on that?

No, I think you've covered it very well. The 20 aircraft worth of over-crewing was the key lag for us this year, and hopefully we can manage that down a bit. into next year if we're growing for less aircraft in the fleet, we'll accrue appropriately.

Yeah.

Thank you.

Thanks, Wayne.

Next question, please.

The next question comes from Ruby Cullinane from RBC. Your line is now open. Please go ahead. Ruby, hi.

Sorry. Yes, good morning. Firstly, on slide 17 of your presentation, you've now got 10% passenger growth in full year 27 on 1% fleet growth, so how should we think about that? And then secondly, I was wondering if you think Q3, your book-to-date pricing was much different from your fair expectations given the slightly weird prior year comp you've got from OTAs removing Ryanair flights from their websites last November. Thank you.

Thanks, Rory. I mean, I can't remember off the top of my head what's on slides. What number, traffic number, are we in for FY27 there? If you're looking at it. Oh, hang on.

If we put 230 in there, which is, you know, a point in time, it may or may not be that number, depending on the number of aircraft we get.

You know, I think that's reasonable. Like, we would expect for FY27, I mean, a lot of this now would be dependent on getting, if Boeing deliver all of the 20, I mean, I've got an assurance of Stephanie Pope on Friday saying, But, you know, while they may miss some of the deliveries for summer 2025, we will have all of the remaining game changes, the 210 game changes in the system for summer 26. I think it would be reasonable that we would get close to 230 million. So, you know, we are determined to continue to hit those traffic numbers, but they're dependent on Boeing delivery delays. So if you take our FY25, originally we are 200 million. I think we'd be at about 199 and change. FY26 was originally 215. We would step that back now towards about 210. But I see no reason why we wouldn't then be able to get that back up towards 230 million for FY27. Now, maybe it might be 225, 227, 228. But, you know, we will, as soon as we get those aircraft, we can deploy them profitably. And so I think that's reasonable. We then will have a year or two. I'm not sure about FY28. or FY29, because we will, at that point in time, be facing re-delivering some of the louder A320s, and we're heavily dependent on Boeing not having any delivery delays on the first of the MAX 10s. On Q3 and the OTAs, look, it's hard to separate it. I mean, all we can give you is what we have at the moment, and that is that the forward bookings into Q3 are strong. We released the October traffic stats this morning, 94% load factor, traffic up 7%. and that was even with the Boeing delivery delays. It's hard to, again, say how much of that is due to the OTAs coming back online. Eddie has made the point, while we have approved and delayed deals in place with over 90% of the OTAs, some of them have not yet got the pipes or the API pipe fully functional because their IT departments are slower than some of the bigger ones who are better at the IT. And so I think there's more to come from the OTAs in Q3 and Q4. But what we can tell you at this point in time is traffic growth is strong. We would still expect in Q3 that the scheduled traffic in Q3 to be up some 7-8% in line with the October number. And the price decline is certainly moderating, you know, and I go back again, minus 15 in Q1, some of that was the Easter moving into Q4, minus 7 in Q2, I think, you know, a midpoint between 0 and minus 5 in Q3 would be a reasonable back of the envelope, it's not a forecast, please don't quote it back to me as some bloody forecast, but, you know, it is moderating, and then it's just hard to know how much Easter will affect Q4, but While we have a tough prior year comp in Q4, we will have a bumper Q1 because we'll have all of Easter in next year's Q1, whereas we may have half Easter in this year's Q1. Thanks, Rory. Next question, please.

The next question comes from Andrew Lobbenberg from Barclays. Andrew, your line is open. Please go ahead. Andrew, hi.

Your current capacity to the UK, you say by 10%. What are you going to do with those slots? And then a second question back to OTAs. Are you bored of it yet? You say 90% of the OTAs are signed up. But eDreams is kind of large, I think. So would it be fair to say that that represented more than 10% of your passengers back from last year? So actually you're missing a bit more than the 10% you suggest there. What is the pathway forward for you to kiss and make up with eDreams?

Okay, thanks, Andrew. As I said, we made the point that a lot of the airports in the UK, if we cut about five million passengers out of the UK next year, it will be done on frequency. We won't move aircraft. We won't vacate overnight aircraft in place. Most of our UK airports are not slot-restricted, but we certainly wouldn't reduce overnight aircraft at the big airports, Stansted, Manchester, Bristol. I'm trying to think, Eddie, off the top of my head, is there any others that are stop-controlled? I don't think so. Edinburgh, Glasgow, all the rest of it. But we will take kind of some... A lot of the capacity we operate at those airports is on aircraft that are based elsewhere in Ireland or in Europe, flying in and out of those airports. And we will divert some of those frequencies away from the UK to other lower-cost destinations like Italy, regional Italy, Sweden, Central Eastern Europe, where we're seeing incentives or increasing incentives. So we don't think and we wouldn't compromise slots at any of the couple of UK airports where slots for us are an issue. On the OTAs, eDreams is one of the bigger ones, but it's nowhere near 10% of passengers. None of the OTAs on their own have a significant impact on our volumes. They're all reasonably modest on a standalone basis. If you look at the eDreams business model, however, you know, most, almost, well, in fact, 100% of what they claim to be profitability is coming from this eDreams Prime subscription where they promise you a discount on 100% of flights, and yet on every flight we try, they're overcharging customers. We think it's inevitable that eDreams will ultimately have to sign up because I think they're going to cede market share to other competitors like Love Holidays, and the other OTAs who would simply take that because the other OTAs can now offer low Ryanair fares at Ryanair's prices, whereas the ETA is still trying to run a business where they're inflating Ryanair fares and the cost of Ryanair ancillary services. And I think given the transparency of the web, it's inevitable that they will have to sign up eventually. We're indifferent as to whether they do or they don't. But at the moment, we're off sale with eDreams. That suits us fine. We don't want to be on sale with anybody who is inflating our airfares or overcharging our customers. And it's a matter for eDreams. We, frankly, couldn't care less. It's not going to make any difference to us going forward. But we are absolutely determined to ensure that nobody gets between us and our customers and that we, by working with approved OTAs, ensure that those OTAs are offering their customers real Ryanair fares And we're getting real customer emails and real customer payment details. Anybody else want to add anything on the eDreams OTA side? Feel free. No? Okay. Next question, please.

The next question is from Gerald Koo from Panmore Library. Gerald, your line is open. Please go ahead.

Morning, everyone. Here, if I can. Firstly, on the tax rate, which seemed a bit high at 14% in Q2, obviously above the Irish standard rate, I was just wondering why that was and what would be a sensible assumption for a full year. And secondly, on your revised aircraft delivery schedule, could you clarify what you've actually assumed in terms of timing of the resolution of the strike at Boeing, please?

Okay, maybe Neil or maybe Tracy McCann might find out the tax rate and then I'll take the Boeing delivery schedule.

Yeah, I'm happy to jump in there on the tax, Gerald. As you're probably aware, we make most of our profits in the first half of the year and jurisdictions where tax rates are slightly higher, whereas we tend to make less money in the second half of the year. So you'll see the tax rate migrate down as losses come into some of the the markets in H2. I think a reasonable assumption for the full year would be somewhere close to between 10% and 11% tax for the full year.

Thanks, Neil.

And on the aircraft delivery schedule, we put there an updated aircraft delivery schedule, more showing so we can give you a sense of where we think we are in terms of the additional Boeing delivery delays and why that's causing us to step back our traffic of Forecast for FY25, but also for FY26. We've made no assumptions on the settlement of the strike. There's a ballot today on the 38% pay increase. We've no idea whether we get settled or not. Boeing themselves think it's about 50-50. I suspect the Labour may well turn it down if they're at 38%. My view is these guys will hang out for 40%, but what do I know? I mean, all we're saying there is that's what our current forecast would be for FY26. To get to 210 million passengers, we need to get the nine delayed Q4 aircraft in by the end of April or May. I'm saying we get those in the first quarter. And then the critical issue is how many of the 29 additional aircraft do we get by the end of June? We're not going to schedule any aircraft deliveries in July or August. So whatever we get by the end of June, at this point in time, I think 15 is a reasonable assumption. but I would, uh, that's heavily qualified by Wolf Boeing. And, you know, again, I talked to Stephanie Pope on Friday, they will update their kind of delivery schedules with us once the strike is finished. And they have, they think that they, it will take about four weeks to get back into kind of full production after the strike. Uh, we hope to try to get through this week, in which case, at least they're back up to full production before Thanksgiving and Christmas or after Thanksgiving, but before Christmas, um, But there is a real risk that we will get less than those 15 aircraft in time by the end of June. If it's 10, if it's 5, I don't know what that impact will be. We will have to move some of our traffic growth out of FY26 and into FY27. But I would caution again, the more we have to delay our growth, the better I think would be the outcome for pricing in summer 2025 and in FY2026 with a week prior year comp in FY2025.

Okay, thanks very much.

Personally, I would like to take as many aircraft as we can get, but as a shareholder, I think the more the aircraft are delayed, the better it would be for our profitability in FY26. Thanks, Aaron. Next question, please.

Our last question comes from Connor Dwyer from Morgan Stanley. Connor, your line is open. Please go ahead. Hi, guys.

Good morning. First question is just on the buyback you talked about. the slowdown being influenced by the payback of the bond next year, lower capex this year, accelerating it. But I'm wondering if there's any influence by the fact that you're also expecting potential rule changes on the ownership, and if basically it would make a bit more sense to hold back some of the cash to do more of the buyback on the ordinary. And the second question, on the pre-recorded call, Neil, you spoke about a willingness to explore other financing options if they become more attractive than cash. Just wondering if that's only to really kind of change the capital structure, or if you also might consider extra leasing to bump up the growth of the overall business over the next few years. Thanks very much.

Okay, thanks. I'll take the first again, and Neil to take the second. On the buybacks, I don't think the review of the ownership and control would have any difference. You know, the buybacks are not driven... by the pricing of the discount on the ordinaries are on the ADRs. I mean, the current buyback, we've skewed 70-30 towards the ADRs anyway. But I think it's instructive that since we've began this consultation process with the shareholders, the discount on the ordinaries has eroded from 29% to 18%, and almost all of that has come as a result of the pricing on the ordinaries rising even at a time when we're buying more APRs than ordinaries. I don't think it'll make any significant difference. If the board was to change either the ownership or the control rules in conjunction with our regulators, we will still be facing, I think, the material challenge of very strong cash generation as long as we maintain current profitability for the next two or three years. while we have a gap or a fall off in capex. And what drives our share buybacks is surplus internally generated free cash flow. We have no other uses for that cash. And therefore, as was evident this year, we completed 700 million share buyback. Now, I think there was no doubt that the The decline in the share price as a result of our disappointing guidance on pricing and fares this summer certainly incentivized the board, I think, to move quickly and to accelerate the share buybacks, but it was driven by having surplus cash. I think the surplus cash will be a little tighter for the next year or two, given the two big bond repayments, but there should still be room for share buybacks over those two years. And then we're back into significant capex as the max 10 deliveries start to roll out in the first half of 2027. So I don't think the bond and the board's willingness to look at buybacks will be in any way affected by the consultation process on ownership and control. It will be driven solely by our ability to continue to generate really strong free cash flow and deploying that free cash flow in terms of shareholder returns. I look around me at our competitors, all of whom have massive net debt positions, and yet we've returned $9 billion to shareholders over the last 15 years. I think if there's every indication through a combination of dividends and share buybacks that we'll be able to continue that market-leading performance for the next couple of years. Neil, I forgot to do the pre-record on financing options available to us.

Conor, we've always been opportunistic in what we do. The reality is in relation to leasing, we've got a higher investment grade rating than any of the lessors out there. So we can raise money cheaper than the lessors. They would have to have a compelling reason for why we would go towards leasing. that financing. I can't see what capacity constraint for some years that the lessors are going to reduce what are now sky-high leasing rates, which thankfully we're not paying, but our competitors are. But if the bond market, for example, was to become cheaper than financing ourselves out of cash to refinance bonds and stuff like that, we might look at it. Potentially in a few years' time when we're trying to take some of the residual risk From the NGs off the balance sheet, we might look at lessors, but I think if their pricing remains where it's at, that wouldn't be my first, second, or third port of call when it comes to looking at alternatives to our current cash.

Very clear. Thanks very much, both.

Again, I think looking forward to next year, nothing fills me more full of optimism than the aircraft lessors making record profits on lease extensions and new aircraft leases to our competitor airlines. They're driving up the cost of operations of our competitors across Europe at a time when we're buying new aircraft, using our balance sheet, and those aircraft are carrying 4% more passengers but burning 16% less fuel. When we get to the max tens, 20% more passengers at 20% less fuel. So I'm very optimistic going forward that the unit cost gap between us and our competitors will continue to widen and our competition in Europe are going to be under significant pressure. You look at the France's results last week, Air France this week, all talking about EBIT because there isn't any earnings there. These guys in a constrained capacity market are going to drive up airfares for the next couple of years. I think that will give us a lot of headroom to see modest growth in airfares, much of which will flow through to Ryanair's bottom line. Any other questions or are we at the end of it? Thank you very much, everybody. I think we've run an hour and a half on questions Q&A. We have an extensive roadshow in place. Me and a number of the team are over here in the U.S. Neil is in the U.K. heading for the U.S. Eddie and there's other team members will be covering investor meetings in Ireland, the U.K. and Europe. If anybody wants to meet with us, please contact then you contact Davies, Good Buddies, or Citi. We'd be very happy to have a meeting with any investors. And may I conclude by saying, look, I think we've had a fraught summer on pricing. We were surprised by the downturn in pricing after two years of very strong pricing. I think the real message today's takeaway from this call, though, is look at the unit cost performance. The unit cost performance is absolutely bang on. We are doing a stellar job on containing costs. We've been surprised by the weakness in pricing this year, but I think it's reasonable to expect that pricing will move modestly upwards for the next summer or two in a heavily constrained marketplace, as long as there's no geopolitical events that disrupt air travel. And I would think the Reiner balance sheet concerning Reiner's P&L is poised to benefit from any improvement in pricing or upturn in pricing next year, particularly as we will move into FY26 with a very weak prior year comp. And with that, may I say thank you very much. I look forward to seeing you all at some stage over the next week. Oh, and Neil and Jason are going out to the Blair Industrial Conference in Chicago, or Baird Industrial Conference in Chicago next week as well. So if we don't get you this week, and anyone's meeting with Neil or Jason, they'll be in Chicago next week. Thanks, everybody. So I hope to see you soon. Thanks. Bye.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.