Ryanair Holdings plc

Welcome to the Ryanair Q1 results conference call. As always, I'm joined this morning by our Group CFO, Neil Soraghan, and we're pleased to bring you the Q1 numbers this morning. As you'll see, we posted early this morning on the Ryanair.com website, the Q1 results reporting a Q1 profit after tax of €820 million. More than double the prior year Q1 PAT of 360 million. Traffic grew 4% to 58 million passengers, but fares, as we have previously guided, have jumped significantly on last year's week prior year comps. Remember, the two halves of Easter were in April this year, only one half was in April last year. And this time last year, we had that boycott with the OTAs, which we have since resolved. So the Q1 highlights traffic grew 4% to 58 million passengers. Revenue per passenger rose 15%. Average fares were up 21%, a big jump, but against a week prior year comp. Unit cost inflation has been just 1%, which means the cost gap between us and our airline competitors across Europe has materially widened as their unit costs have jumped significantly more than that. We have very competitive fuel hedges in place that de-risk the group from the recent fuel price volatility. Currently, as we stand today, we have 86% of FY2026 hedged at $76 a barrel. We have 181 Boeing 737 game changers in our fleet of 620 aircraft, and that includes five deliveries we took in Q1. This summer, we'll operate over 160 new routes out of a total of 2,600 routes. In recent weeks, we announced a deal to buy 30 spare CFM Leap 1B engines at a significant discount. And we bought those to improve our resilience, not just this summer, but for the next couple of years. And we're very pleased to report that Rhino was added to the MSCI World Index. I think, and you'll see from the results, these numbers speak for themselves, so I don't propose to dwell too much on them. I would caution, however, that Q1 here was artificially boosted by the two halves of Easter being in April and a week prior year comp. Q2 will not be as strong. Nevertheless, for Outlook, FY26 traffic remains on track to grow by just 3% to 206 million passengers due and that is our growth is being constrained by heavily delayed Boeing deliveries. We expect modest unit cost inflation in FY26 as our delivery of more Boeing 737 game changers, advantageous fuel hedging and effective cost control across the group airlines help to offset dramatically increased ATC charges and higher even though entirely unjustified environmental costs while s25 travel demand is strong q2 fare increases will be lower than the uh what we've just reported this morning in q1 which benefited as i've said from the full easter holiday in april and week prior comps and we however we now expect to recover almost all of last year's seven percent fair decline that we suffered in Q2. We expect to get back almost all of that in the current Q2. The final H1 outcome, however, is very heavily dependent on the strength of close-in bookings for the remainder of August and September and is normal at this time of the year with zero H2 visibility where the prior year fair comps normalise and last year's modest delivery delay compensation will roll off. It remains therefore too early to provide meaningful full year profit after tax guidance. We cautiously expect to recover almost all of last year's 7%. full-year fare decline, which means we now expect the average fares this year will return to where they were in FY2024. This should lead to reasonable net profits growth for FY26. However, the final FY26 outcome will remain heavily exposed to any adverse external developments, and that includes obviously the risks of tariff wars, macroeconomic shocks, conflict escalation in the Middle East and Ukraine, and European ATC strikes and mismanagement, which continue to bedevil our summer operations. And with that, Neil, I'll hand over to you to take us through the slide presentation.

Thank you, Michael, and good morning, everybody. Ryanair, as we know, has the lowest fares and the lowest costs of any airline in Europe. And indeed, our cost advantage continues to widen over competitors. We're number one for traffic and we'll carry 206 million passengers this year. We're number one for on time. Performance and reliability with high customer satisfaction scores. Sustainalytics and other rating agencies continue to rate Reiner very highly on ESG and our 300 max 10 order will underpin a decade of growth and this coupled with our financial strengths and lowest cost makes Reiner the long term winner. This summer, we're operating a peak fleet of 618 aircraft, which, as I previously said, should help deliver 206 million passengers in the coming year. We've 330 aircraft on order, including the remaining 29 in the Boeing Game Changer order book, and this shouldn't facilitate profitable growth to 300 million passengers by FY34. Our cost advantage continues to widen over all comers. You can see at the end of the quarter, €35 per passenger X fuel, which is now nearly 80% lower than the next nearest competitor. And we expect these cost gaps to just widen further and Ryanair's competitiveness to increase over the coming years. On the quarter itself, as expected, we saw 58 million passengers, a 4% increase on last year at 94% load factors. Average fare recovered, enjoying the benefit of a full Easter in April week prior comps and modestly higher close in bookings, so it rose by 21% to €51. We saw a solid performance from ancillary revenue, which was up 7% to 1.39 billion or up 3% on per passenger basis and as a result total revenue increased by 20% to 4.34 billion. Costs put in a strong performance rising 5% or 1% on a per passenger basis at 3.42 billion as we saw a strong fuel hedging offset significant increases in ATC which was up 16% and rising environmental costs. So putting all of that together, we saw a profit in the quarter more than double to €820 million. Balance sheet, Fortress balance sheet remains rock solid. It's BBB plus rated by both Fitch and S&P. Uniquely, Ryanair owns our Boeing 737s. They're on the balance sheet on Cumbered. And liquidity remains very strong, 4.4 billion in gross cash at the end of the quarter and over 2 billion in net cash, which places us in a strong position to repay our maturing bonds over the next 10 months. And with that, Michael, you might take us through current developments, please.

Yeah, thanks, Neil. So we're seeing robust summer 25 demand. Fares look like they will recover last year's decline. Q1 was, as we have emphasised, artificially strong. Fares are up 21%. We now expect Q2 fares to recover almost all of last year's 7% decline. So we have strong forward bookings, strong pricing, close-in bookings remain reasonably robust. but they are subject to adverse news flow, particularly the close-in bookings as we move through the remainder of August and September. Disappointingly, we'll have slower FY26 traffic growth. It's only 206 million passengers due to those Boeing delivery delays. We're pretty confident at this stage, though, that we'll get the remaining 29,000 the delayed 29,800 aircraft will be delivered this winter, well in advance of summer 2026. And therefore we catch up that growth to 215 million passengers in FY27. That constrained capacity means we have to be much more rigorous in where we allocate that growth. And we're allocating those growths to regions like Sweden, regional Italy, Hungary, where we see regions cutting taxes. I announced a big growth in Warsaw Modlin last week. again on the back of airports stimulating traffic growth. We're very well hedged, the fuel, and these fuel hedges don't get us lower cost, but they do de-risk the group from volatility. So we're 84% hedged for FY26 at $76 a barrel, and we're already 36% hedged for FY27 at $66 per barrel, a 13% saving into next year already locked away. we did buy the 30 spare leap 1b engines we negotiated a meaningful discount on those engines and i think that's a sensible use of our balance sheet when our partners are looking to raise money we should be able to jump in there and buy capex in a way that improves resilience but also lowers our costs we're very pleased to have been included in the msci world index in june and we expect the footsie russell will include ryanair when they review their index in september The strong liquidity, as Neil has said, we have net cash of 2 billion. We need those funds to be able to repay. We have very large debt repayments coming in the next 12 months, an 850 million bond repayment in September, and then the last 1.2 billion bond in May of 2026. And we believe that this sets us up, particularly with Boeing get the MAX 10 certified by the end of this year, for a decade of low fare, profitable growth to 300 million passengers by FY34. Just to touch briefly on Boeing. So as I said, we have 618 aircraft in the fleet, including 181 game changers, five of them delivered in Q1. The quality and the timeliness of Boeing deliveries has dramatically improved over the last 12 months. Boeing have hit their production rate 38 on the 737 in May and did so again in June. And I think that's a testament to the good job Kelly Ortenberg, Stephanie Pope and her team are doing, particularly on the ground in Seattle. We're therefore taking the final 29 game changers well ahead of summer 26. In fact, the first five of those aircraft are due to deliver in August of this year. Boeing asked us to take them early. It doesn't suit us because we can't deploy them, but we're happy to take them early, so we guarantee we don't have any delivery delays running into summer of 2026. Boeing have advised they expect the MAX 10 certification to take place, 7 and 10 certification to take place in late 2025. Might slip into... Q1 of 26, but well ahead of our first deliveries, which are due, first 15 MAX 10s are due in the spring of 2027. And I'm pleased to say that Boeing have now confirmed in writing their confidence that they will deliver those first 15 MAX 10s to us in the spring of 2027, in time for the summer 2027 peak travel. And these aircraft will transform Ryanair's economics and further widen The operating and the cost gap between us and every other airline in Europe. These aircraft offer us 20% more seats, 228 seats. They burn 20% less fuel. They're also 50% quieter. So they will dramatically transform our cost base and make us significantly more efficient going forward. and as you see we set out a schedule there and the only change there has been fy26 we had originally planned to grow to 215 million that growth has been staggered over the two years fy26 and fy27 and then we by which stage we believe we will have eliminated all of the boeing delay issues that we've been struggling with over recent years and we know already from our discussions with airports all over europe they can't wait for us to take these aircraft we could deploy all 300 of these aircraft today based on the growth deals we have at airports existing and new airports across Europe. So we're very much looking forward to those aircraft and to taking those deliveries.

So as Michael already said, we expect to deliver modest 3% growth this year to 206 million passengers. Having enjoyed a strong Q1, Q2 demand is robust and FERS, we believe, should recover now most of the prior year Q2 decline. I have to caution, however, that the H1 outcome remains very dependent on close in August and September bookings over which we don't have huge visibility at the moment. We would, however, cautiously expect at this stage that we'll recover almost all of the prior year 7%. fair decline that we saw last year. This depends on us obviously not having any tariff wars or economic downturns in the second half of the year. On costs, we're sticking with our previous guidance of modest unit cost inflation. As we see, our strong fuel hedges help offset rising ATC root charges and environmental costs. As we look into the second half of the year, as is always the case at this time of year, we've no visibility into H2. Again, I would flag that comps get tougher in the second half of the year where we saw the normalization of OTAs and fairs in Q3 and Q4 last year. And indeed, we will start to see the modest Boeing delay compensation unwind as we take delivery of those final 29 game changers this year. So I think it's probably too early to give meaningful profit after tax guidance at this stage we do however see fair recovery we do have strong cost control in the business and on the back of that we would expect reasonable profit growth but too soon to put numbers on that this all is very much dependent as is always the case on no external shocks So long as we don't see economic downturns, tariff wars, geopolitical risks and ATC mismanagement, then I think we're on track to perform well this year. And indeed, with the 300 aircraft order book, the strong balance sheet in a strong position to grow profitably to 300 million passengers per annum by FY34.