Ryanair Holdings plc

Thank you, Nadia. Good morning, ladies and gentlemen. Welcome to the H1 results conference call. I'm joined by the entire team here in London and on other phone lines. We published the results this morning, and Neil and myself have done a 30-minute Q&A on the website, so I would direct you to the Reiner.com website for that while you're there. Book a low-fare flight. Quick couple of comments. One, as you see, I'd prefer to deal with Q2 because the H1 was distorted by the very ridiculously strong Q1 and the week prior comp. But if you look at Q2, so traffic is up 2% because of the Boeing delivery delays. They have improved in the last couple of months. We've now taken 23 of the 29 aircraft that they should have delivered to us at the start of the summer. That gives a little bit of headroom to increase traffic growth this year from 206 to 207 million. So we should get growth to about 3.5% this year. Fares in Q2 were up 7%, very strong recovery. That is the recovery of last year's 7% fare decline. And we think we will continue that through the remainder of the year. Of course, we do have slightly stronger prior year or tougher prior year comps in the second half when we began to repair the OTA boycott or the impact of the OTA boycott was less significant. So the fare growth in the second half won't be as strong as it is in the first half, but overall on the year, we're pretty confident now. We get back all of last year's 7% fare to time, maybe a little bit above that, but it won't be much. Much more importantly, as always, unit costs well under control, only up 1% in the second quarter. Despite significant cost inflation on air traffic control and a little bit on the engineering side, clearly the lower hedge cost this year playing a significant role in that, and as a result, Future profits are up 20% to $1.72 billion. Taking forward the kind of themes I would give you that we want to cover in the call, Boeing are doing a much better job. I think, you know, they asked us to take those, could we take the aircraft through August, September, October? We said didn't. They were no use to us at that stage, but we would work with them. We would take those aircraft if they could deliver them. They've delivered 23 of the 29 aircraft in the last three months. We get two more in November, and then the final four will be delivered in January, February of next year. So we will have all 210 game changers in the fleet by the end of March next year or in advance of summer 26, which puts us well on track, I think, for traffic growth to 215, 216 million passengers in FY27. And that will be the first year since the max groundings that, you know, we're not dealing with Boeing delivery delays in the spring or disruptions to our summer schedule. So we think that will lead to strong traffic growth and hopefully maintaining pricing and profit recovery into summer 26. The good news this morning is we've taken advantage of our recent fuel weakness. As you know, we were 85% hedged out to March 2026, so for this year at $76 a barrel, down from $84 a barrel last year. Today we're able to announce that we're 80% hedged for FY27 at just under $67 a barrel at That will be a very significant 10% saving on our fuel bill. We'll save us about €600 million next year, which I think will enable us to incentivize and stimulate growth, but also fund what will be another painful increase in emissions, ETS taxes and viral taxes in Europe, where Europe continues to damage its own competitive by taxing only intra-EU travel. whereas all the extra or the non-EU travel or people arriving to and from Europe are exempt from these egregious environmental taxes. Balance sheet continues to strengthen. We've paid back the $850 million bond in September. We have the final $1.2 billion bond we will pay in May, and then we will be entirely debt-free with a fleet of 640 aircraft. We have hedged, and I think the Treasury team has done a wonderful job. Start this year, the dollar was about $108 to the euro. It weakened in recent months with some of the Trump spectaculars to 124. And we've now hedged the first 50 of our 150 firm MAX 10 aircraft orders at 124, which is about a 15% euro saving on CAPEX on those first 50 aircraft. And we're looking for opportunities to extend those CAPEX hedges. And you can only do that with the kind of strong balance sheet Ryanair have. The real underlying, I think, story, though, is here that Europe's capacity continues to be constrained and will remain constrained out to 2030 because of manufacturer delivery delays, Airbus fleet still largely grounded repairing engines, a program that won't be completed until 2028 or 2029. And therefore, I think as we add capacity next year, there's a reasonable prospect that we will grow traffic, but we'll see modest fare increases coming through the system. The one negative in Europe is Europe is continuing to fail on competitiveness. We've had the Draghi report now. He's 14 months old. He pointed to a whole series of areas where Europe can and must be more competitive. Von der Leyen has committed herself to delivering on that competitiveness agenda and then done absolutely nothing for the last 14 months. All of Europe's airlines are calling for two competitive initiatives. One move, the ETS, Environmental Taxes, Emissions Trading System tax rates, In line with Corsia, which is what the non-European airlines are paying, it is indefensible that Europe is harming itself by having these excessive environmental taxes. Move ETS in line with Corsia, and it would result in dramatic improvements in competitiveness and also lower fares for consumers travelling on inter-EU air services. And then second, reform Europe's broken ATC services. We need the protection of overflights during national ATC strikes. We cannot have a single market if it can be shut down every time some air traffic control union wants to go on strike. It isn't much of an ask. The legal mechanism already exists because in Spain, Italy and Greece, they already protect overflights during ATC strikes and they ground the domestic flights. But as we all know in France, they protect a disproportionate amount of the domestic flights and cancel all the overflights. This is unsustainable. And von der Leyen should take action, I think, with what is a very impressive new transport commissioner, Tsitsi Kostas. He wants to reform, but everything dies in the dead hand of von der Leyen's office. So she should stop talking about reform and competitiveness and start delivering it. Protect overflights and then fix staffing on the first wave, ATC staffing on the first wave of flights, which again, Germany, France and Nats in the UK are inexplicably short-staffed. It's inexcusable. The airlines we roster stand by pilots and stand by cabin crew. ATC, they just allow the system to fall over, and they cut capacity. It's not acceptable. Air traffic control fees have gone up 14% this year, and we're still getting a shitty third-rate, third-world service. And if von der Leyen can't deliver competitiveness, frankly, she should leave and be replaced by somebody competent who can deliver competitiveness in Europe. Other than that, I think the good news is we're seeing a sea change in environmental taxation at national level. Governments in Sweden, Hungary, Italy, Slovakia, and regional Italy are all abolishing their environmental taxes, and we are switching an enormous amount of capacity away from high-tax economies like Germany, France, and the UK, where Rachel Reeves is increasing APD by another £2 in April, and moving that capacity to Sweden, Hungary, Italy, etc., where governments are abolishing the environmental taxes and they're also incentivizing traffic growth. So we want to reward those countries that are incentivizing growth and penalize those countries like Germany, France, and the UK who are incentivizing tax increases and damaging growth. And that will continue. But I think... The fact that countries like Sweden, the home of Greta Thunberg, the flight shaming five years ago, now have worked out they're abolishing the environmental taxes gives us hope and I think some degree of optimism that the way forward is not penalising Europeans, it is abolishing those taxes and allow airlines like Ryanair to invest heavily in new engine technology. Our new MAX 10s will carry 20% more passengers but burn 20% less fuel per flight, so a 40% reduction in fuel and emissions on a per-seat basis. Other than that, there's also some other government incompetencies. The Irish government, which was elected last year, are a programme to abolish the Dublin airport cap. Twelve months later, nothing done. We have a do-nothing Prime Minister and a do-nothing Deputy Prime Minister, both of whom have been sitting on their arses for the last 12 months, talking about passing legislation, despite the fact they have a 20-seat majority. They're now talking about legislation that might be moved by the end of 2026. Ireland and growth cannot wait for these do-nothing politicians. They have a 20-seat majority. They should pass the legislation scrapping the cap at Dublin Airport before the end of 2025 and allow the airlines, Ryanair and the other airlines, to get on with growing traffic at Dublin Airport the way we're growing and we're adding aircraft in Shannon and Cork. So there's always some stupid government and some incompetent politician holding back the growth. But thankfully, there's better politicians in Sweden, Italy, Hungary, Slovakia, all of whom are working closely with Ryanair to abolish taxes and allow us to grow strongly. I think we're looking forward, particularly with the improvements Boeing have made in the deliveries, the quality of the deliveries. Kelly Ortenberg and Stephanie Pope are doing a terrific job. They've gone up from rate 38 to rate 42 in October. We think the FAA will increase that to rate 46 in March, April next year. They are gradually catching up on the delivery delays. They're pretty confident that they'll certify the MAX 7, even with the current government shutdown in Q2 next year, the MAX 10 in Q3, which will be about six months in advance of our first 15 MAX 10 deliveries in the spring of 2027. So we have the 29 aircraft delivered this winter that enables us to grow to 215 million passengers in FY27. The first 15 Mach 10s coming in the spring of 27 will enable us to grow to about 225 million passengers by FY28. And then we are off and running on what I believe will be an 8-10 year program to grow from 207 million passengers this year to over 300 million passengers by 2034. Currently, we're making a profit of approximately 10 euros per passenger. I think it's reasonable to suppose that that profit will rise from 10 towards 12 or 14 euros profit per passenger over the next 10 years. There will be one or two curveballs in the middle of that. We are a cyclical industry, but we have a strong balance sheet. We will have zero debt in May of next year, and I think we are poised for very strong growth, particularly if the European economies continue to lag in growth people will get more and more price sensitive and will switch to Ryanair from high-fair competitors elsewhere. So I have never been more excited about the growth outlook for the next four or five years. I think we have a number of challenges in moving politicians to a competitiveness agenda. But within that, Ryanair is going to grow strongly and prosperably, I think, for the next four years up to 2030. And with that, Neil, I want to hand over to you. Anything you want to highlight in the P&L or on the balance sheet?

Yeah, I'll maybe just focus again on a couple of things in the quarter and in the half. Firstly, as you already pointed out, costs put in an excellent performance of just one on a per passenger basis. That was down to our strong fuel hedging, which very much helped offset double-digit increases in ATC and environmental costs. We're still guiding modest unit cost inflation for the full year. What's modest? It remains somewhere between 1% and 3% on a full year basis. probably a little bit higher than the 1% that we had in the first half, in the second half of the year. We have extended our hedges into FY27, as Michael said. We've also extended our OPEX hedging into next year at 115 compared to 111 on the Eurodollar. So we're locking in significant price savings next year, and that will go a long way to help offset a jump up in our environmental ETFs next year for somewhere from about 1.1 billion this year to somewhere between 1.4 and 1.5 billion next year. Balance sheet, rock solid, BBB plus rated, 610 unencumbered aircraft and in a very strong position now to be debt free by May of next year, which I think is a great place to be. Also, we're locking in euro savings on our max 10 capex moving forward with the 35% hedge in place where we've hedged 35% at a fair mortise. That's 150 aircraft at 124. Buyback moving along at a nice pace. We're pleased with the pace that the brokers are moving at. They managed it well through indexation. So we're just over 35% of the way through that, and that's run out to the back end of 2026. And then finally, the last thing I'll point to, Business as usual, but we've announced an interim dividend this morning of 19.3 euro cents, which, similar to last year, we paid at the end of February. And that's all I wanted to touch on, Michael.

Okay, thanks, Neil. With that, Nadia, we'll open up the Q&A, please.