Ryanair Holdings plc

Good morning and welcome to the Ryanair Q3 results call. My name is Carla and I will be your operator today. If you would 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 you over to the Ryanair Group CEO, Michael Lurie, to begin. Michael, please go ahead when you're ready.

Okay, good morning, ladies and gentlemen. Welcome to the Ryanair Q3 results conference call. As you have seen this morning, we reported a Q3 profit after tax of €149 million due to traffic growth of 9% to 45 million passengers at marginally higher fares. We had stronger close-in Christmas and New Year bookings at marginally better fares than we'd expected. I would, however, caution cumulatively for the nine months The profits of 1.94 billion are 12% below the prior nine-month profit after tax of 2.19 billion, as airfares over the nine-month period are 8% lower than they were in the prior year. The Q3 highlights included traffic growth of 9% to 45 billion, despite repeated and very frustrating Boeing aircraft delivery delays. Revenue per passenger rose 1%. Q3 average fares were up 1% and ancillary revenue up 1%. However, the approved OTA partnerships are almost fully integrated and are working well. And we see them trending well into 2025. We have over 50% of our 800 million buyback was complete at the end of December. In fact, we're now just over 60% of it done. Ancillary revenues in the quarter rose 10% to £1.04 billion in Q3. Operating costs with 9% traffic growth rose 8% to £2.93 billion as dual hedge savings offset higher staff and other costs, in part due to repeated Boeing delivery delays. Touching briefly on the balance sheet, on 31 December, gross cash was £2.77 billion. which delivered or resulted in a modest quarter-end net cash balance of just over €70 million, despite €1.1 billion of capex, over €1.1 billion of share buybacks, and a €200 million dividend, which was paid last September. Our own Boeing 737 fleet, over 580 aircraft, is fully unencumbered, and we believe this is critical as it significantly widens Ryanair's cost advantage over all other competitor airlines. While Ryanair prepares to repay a maturing €850 million bond in September and a €1.25 and a €1.2 billion bond in May 26, our competitors remain exposed to expensive and rising long-term finance and aircraft lease costs. We're now over halfway through our current €800 million buyback and we expect to complete this programme by mid-2025. When we finish it, Ryanair will have returned almost €9 billion, including dividends to our shareholders since 2008. with approximately 36% of the issued share capital repurchased and cancelled. I think the most notable feature of the last quarter and for the next quarter is Boeing aircraft delivery delays. These delays have now forced us to revise our FY26 traffic target for the third or fourth time. It originally went from $215 million down to $210 million, and we now have to cut it to $206 million, which would be just 3% traffic growth for the next 12 months, a very disappointing outcome given the growth opportunities that are available to us across Europe. We are, however, hopeful and I would say modestly confident that the remaining 29 game changers in our 210 aircraft order book will deliver before March 2026 and will enable us to recover this delayed traffic growth in summer 26 instead of summer 25. As we were in Seattle very recently, Boeing still expects the MAX 7 to be certified in the first half of 2025, the MAX 10 in late 2025, which we hope will facilitate a timely delivery of our first 15 MAX 10s in spring 2027, as per our contract. Over the coming summer, we'll reallocate this very scarce capacity growth to those regions and airports most notably in Poland, in Spain, in Sweden and regional Italy, who are investing in growth by abolishing aviation taxes and or incentivising traffic growth. We expect European short-haul capacity to remain heavily constrained in summer 2025, as many of Europe's Airbus operators continue to work through the Pratt & Whitney engine repairs. as both major aircraft manufacturers struggle with delivery backlogs, and as EU airline consolidation continues, most recently ITER, and now the focus is on TAP. I want to touch briefly on the ownership and control issue. As you'll recall, the board confirmed over 49% of Ryanair's issue share capital is held by EU nationals, In anticipation of the breaching the 50% threshold being reached, the Board deemed it appropriate to review potential variation of the ONC restrictions. As part of this review, we've engaged an extensive engagement process with shareholders and regulators began last September and is now at an advanced stage. The current restrictions on share purchases and voting by non-EU nationals will remain in place during their review. But based on current trends, the company expected to use shareholding will reach 50%, the 50% threshold in the first half of 2025 or soon thereafter. And then I think the board will consider and make a decision on whether we maintain the ownership and or the control restrictions thereafter. Touching briefly on outlook, I know everybody is very excited by summer 2025. Unfortunately, we have very little visibility at this point in time on summer 2025. We do, however, expect our full year 2025 traffic, that is to March 25, to reach almost 200 million. We might finish just short. Subject to no further adverse news on Boeing delivery delays. Unit costs are performing well in line with our expectations as the cost gap between Ryanair and EU competitor airlines widens. And we expect our unit costs to be broadly flat for the full year, thanks to our fuel hedge savings. Our fuel hedge savings, strong interest income and some very modest aircraft delay compensation in the form of credit notes against materials and services are largely offsetting ex-fuel cost inflation, particularly crew pay and productivity issues, higher handling and ATC fees and the cost inefficiencies we've suffered as a result of repeated Boeing 737 delivery delays. While Q3 fares were marginally stronger than the prior year, Remember, the prior year was impacted by the OTA boycott in late November 2023. This year's Q4 will not benefit from last year's early Easter, which makes our Q4 prior year comp very, very challenging. At this stage, we're cautiously guiding full year 25 profit after tax in a range of 1.55 billion to 1.61 billion euros. However, the final FY25 profit after tax outcome remains subject to avoiding adverse external developments between now and the end of March. most notably the risk of further Boeing delivery delays and any short-term impact of the risk of conflicts in the Ukraine and the Middle East, and clearly the continuing mismanagement of ATC here in Europe, where we continue to be deviled by short staffing, particularly on the first wave of departures. And with that, Neil, I'll hand it over to you. Is there anything you want to draw people's attention to in the MD&A of the nine months?

Okay, I don't have a huge amount to call out other than to reiterate the strength on the costs, the gap between ourselves and competitors continues to widen and please that in line with the guidance that we gave back in November with the half years, we're still guiding broadly flat full year unit costs. Hedging, very well hedged into next year. We're over 75% hedged at about $77 a barrel or $770 per metric tonne. on jet and then of course as Michael called out the balance sheet in very good shape and the buyback going according to the plan but nothing really else that I want to call out Michael.