Ryanair Holdings plc

Hello everyone and welcome to the Ryanair Holdings PLC FY25 earnings release. My name is Nadia and I'll be coordinating the call today. If you would like to ask a question, you may do so by pressing star, followed by one on your telephone keypad. I will now hand over to your host, Michael O'Leary, Group CEO of Ryanair Holdings Begin. Michael, please go ahead when you're ready.

Good morning ladies and gentlemen, welcome to the Ryanair full year results conference call. We have all of the management on various calls and I'll try and distribute some of the questions around as best we can. I'll take it briefly, you'll see this morning we released the numbers on Ryanair.com website. We reported a full year profit of after tax of 1.6 billion compared to a prior year profit after tax of 1.92 billion. The reason for the decline in profitability was due to a 7% decline in airfares last year, a number I think we're particularly proud of. That fair decline drove traffic growth of 9% to a new record of 200 million passengers despite repeated Boeing delivery delays last summer. While average fares were down 7%, Unis ancillary revenues were up 1%, total ancillary revenues were up 10% with 9% traffic growth. I think the most stunning number coming out of this morning's numbers is unit cost per passenger were flat last year, which means we've meaningfully again widened the cost gap between us and our competitor EU Airlines. And if anything that strengthens our ability to grow over the next decade. Despite Boeing delivery delays we took delivery of 181 game changers at the end of April. We have 618 aircraft in the fleet for this summer. We are constrained in terms of growth because of those delivery delays. There are still 29 aircraft we'll take this winter for summer of 2026. That means we can only grow by 3% this year to about 206 million passengers. We used the profit warning last year as an opportunity to increase the share buyback. So we bought back 7% of our shares last year and have cancelled them in their entirety. So I think overall a reasonably good year in a very tough pricing environment for Ryanair. We move into this year then with the kind of, you know, unusually for us with weak prior year comps, particularly in Q1. And we're already seeing that now. So we have a full Easter in this year's April compared to only half of Easter in last year. And we've also fixed the OTA boycott last year. We now have almost all of the significant OTAs approved and are booking strongly into this summer, which is why we look into this summer forward bookings are running close to 1% ahead of where they were at this time last year. And we're pricing up certainly very strongly in Q1. Pricing in Q1 is up about 14, 15%. Q2 is a little bit early to say yes. We have only about 30% of the bookings in the system for Q2, but pricing looks like it's up 4 or 5%. We're not going to get quite back all the 7% decline we had last year Q2, but it looks like we'll get back a significant proportion if not all of us. Touching on the balance sheet, gross cash is a bit stronger than we had expected again, primarily due to Boeing delivery delays. At year end, gross cash was 4 billion. Net cash was about 1.3 billion. And that's why we've brought forward another share buyback this year. We're ahead on cash, long on cash because of the Boeing delivery delays. And because we have that spare cash, we think it's time to return it to shareholders. The big challenge for us in the next year in terms of cash though is we have 2 billion of maturing bonds, 850 million in September, 1.2 billion in May of 2026. We plan to pay down all of those bonds out of our internal cash balances. And that would mean Ryanair will this time next year be entirely or almost entirely debt free and sitting on a fleet of 650 aircraft totally unencumbered and debt free. And we would plan to continue to return excess cash to shareholders, but we won't have a lot of excess cash for the next year or two as we pay down debt and begin to fund the step up in the Max 10 deliveries. The relationship with Boeing, our Boeing's performance has continued to materially improve in the last 12 months. We think the new management team led by Kelly Ortenberg and Stephanie Pope in Seattle are doing a terrific job. The aircraft, the fuselage are coming out of Wichita in a timely manner with very little, no defects being carried forward. And that's increasing Boeing's ability to step up its manufacturing. I'm heartened by the fact that in April Boeing delivered 45 aircraft compared to just 24 aircraft in April 2024. And we expect that will continue. Boeing now are reasonably confident that the Max 10s will be certified later this year, the Max 7s first, the Max 10s before the end of the calendar year. And that would put us in good shape, we think, to take delivery of our first 15 Maxes in the spring of 2027. We expect the European short haul capacity will remain constrained out to 2030 as many of Europe's Airbus operators are still working through their patent Whitney engine repairs. The two big manufacturers, Boeing and Airbus, are well behind on their aircraft deliveries. And EU consolidation continues. I think the consolidation is also driving that benign pricing environment. Certainly, as Lopunzitets control of Alitalia in Italy, we're seeing strong upward pricing movements in Alitalia. We would expect the same to take place in Portugal when one of the majors buys TAP. And as for the largest airline in Italy and the largest airline in Portugal, we would expect to continue to benefit from that trend. One of the more notable regional developments has been on the ownership and control side. Following an extensive consultation period with regulators and investors, the board removed the ownership restrictions in March. It means EU non-EU shareholders are free to buy the ADRs or the Orders Without Restrictions. We will continue to maintain the voting restrictions. Non-EU shareholders can't vote at the AGMs. Recognition of that development, the MSCI index recently confirmed Reiner's inclusion in the MSCI World Index at the end of May. And we would expect to be included in one or two other of the bigger world indexes before the end of the year. I want to touch briefly on the fact that Howard Miller has chosen not to seek reelection at the next AGM. Howard has been CFO from 1992 to 2014, a period of about some 22 years. And then has been in NEG for the last nine years. Has paid an enormous contribution to the success of Reiner. In fact, without himself and Michael Corley together when we floated in 1997, we would not be where we are today. So I want to recognize that and thank Howard for his effort. Turning briefly to the outlook, as we tried to communicate this morning, we expect the FY traffic growth is constrained. We expect to grow by maybe just 3% this year to 206 million passengers because of those 29 Boeing delivery delays. We've agreed with Boeing we'll take those deliveries at the back end of this calendar year, so through September, October, November. So we're guaranteed we'll have all of the 210 game changers well in advance of summer 2026. Nevertheless, growth issue will be constrained to 206 million and then we'll pick it up again or recover to 215 million in FY27. The following year of flat unit costs, we expect very modest unit cost inflation in FY26. As the delivery of more game changers, strong jet fuel hedging and cost control across the group helps to offset most of what are very egregious increased route and ATC charges and higher environmental costs. The unwinding of the ETS and the introduction of the SAF blend mandates. However, and I know it will come up in the call, we think that unit costs will be modest, maybe up 1% or 2% where we are this year. To date for summer 2025, demand is strong. Peak fares are trending modestly ahead of the prior year. We think we're up -6% in Q2 and the question is what happens for the remainder of the year. Q1 fares are on track to finish at mid-high teen percent ahead of Q1 FY2025. Some of that is the weak prior year comp and the fact that only half of Easter was in last year's Q1. Both halves of Easter are in this year's Q1. We expect Q2 pricing to recover some, but not all of the 7% decline we experienced in prior year Q2. As I said, we have only about -35% of Q2 bookings in the system. The final H1 outcome is therefore heavily dependent on close in bookings and the peak summer yields. As is normal at this time of the year, we have zero H2 visibility and therefore we don't think we can give out full year guidance. Other than to say we cautiously expect to recover most, but not all of last year's 7% fair decline as we move through the year. It could be better than that, it could be worse than that, it depends on what happens in the geopolitical environment as we move through the year. But that should lead to a reasonable net profit recovery or growth in FY26. Two years ago we recorded a profit of 1.93 billion. Last year on the back of 7% lower fares that fell to 1.6 billion. I think you'll see a reasonably strong recovery in that through for the remainder of this year, but we're not willing to give guidance at this stage. That's because the remainder of Q1 and Q2 are heavily dependent on close in pricing. The one thing I would draw your attention to is the opportunity in terms of lower cost oil going forward. We had already hedged about 85% of our FY26 fuel at $76 a barrel. Last year we were hedged at $79 a barrel, so we secured a 4% saving. Following the Trump tariff announcement on Independence Day, we saw a material fall in oil prices, which we will pick up that at the moment. Friday Brent was at $62 a barrel, Chet was $67 a barrel. We will pick up meaningful savings on the 15% unhedge for the remainder of this year. We did jump on the oil price weakness following the tariff announcement to hedge 40% of next summer's, in other words, H1 FY27. We've hedged 40% of next summer's oil at $66 a barrel, a 13% saving compared to this year. On a cost base of $5 billion is our annual oil price. We think there's a real possibility of making material oil price savings, not just for us, but for the rest of the European industry. I think in advance of President Trump's trip to the Middle East last week, we thought one of the most significant developments was the fact that the OPEC Plus producers abandoned their production cuts three weeks before he visited the Middle East. I think we expect the US administration will turn its attention towards increasing supply and reducing oil prices in advance of the midterms next year. There may be a short-term or medium-term gain for airlines in general, but Ryanair in particular, as we move forward for the remainder of FY26, where we have weaker FY25 comps. That's all I want to say at this stage. Neil, I'll hand it over to you in terms of anything you want to draw attention to in the MD&A and then we'll open it up to Q&A.

Thanks, Michael. I'll just re-emphasize maybe a couple of the points that you made. Just focusing on costs, as previously guided, we were very pleased to come in flat on a unit cost base as a result of our strong hedging, which helped offset productivity pay increases that we had and other Boeing delay related costs that came through the business. As Michael just said, we continue to be well hedged into the current financial year at about $760 a metric tonne and then a meaningful dip on our hedging rate of $660 a metric tonne out to FY27, where we're over 40% hedged in the all-important first half and about 35% in the second half of the year, so that that blend is about 36% on the year. Liquidity was very strong. It helped a little bit by the timing of Boeing delivery delays, but we came in with just under $4 billion gross cash, $1.3 billion net cash after $1.6 billion CAPEX, and $1.9 billion shareholder returns, including the $1.5 billion buyback. We will be launching the $750 million buyback in the open period, which starts tomorrow, so later on this week that $750 million buyback will formally launch. Just on the liquidity side as well, I would point out that we increased our revolving credit facility back in March. We upsized it from $750 million to $1.1 billion, most of it undrawn at this point in time, so it gives us lots of flexibility and additional liquidity should the need arise. And then finally, I would point to our rejoining the MSCI at the back end of May. I think this is an important development on the back of the ownership and control review, and Michael, I don't really have much more to add.