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.

Great, thank you. If you would like to ask a question, please press star, fill it by one on your telephone keypad. If you would like to remove your question, please press star, fill it by two. When preparing to ask your question, please ensure your phone is unmuted locally. We ask you please send yourselves to two questions. The first question goes to Harry Goers of JP Morgan. Please go ahead.

Hey, morning, Michael. Morning, Neil. First question, just on the Q3 fairs, maybe you could provide us with what you're currently tracking for the quarter and if you've seen any changes, strengthening or weakening around that number in the last few months. And then second question, on the online travel agents, clearly the fare comparatives are normalising into the Q3 versus last year. I was wondering if you think you're still getting any actual realisable uplift or specific tailwind from those official partnerships, or is this just like fully past us now and we're back to a more regular kind of pricing cycle, just fully dependent on supply and demand in any quarter? Thanks a lot.

Yeah, thanks, Harry. I mean, I wouldn't want to spit out where we think we are on Q3 fairs because so much of it is dependent on the close-in bookings at Christmas, over the Christmas and New Year period. But October is strong, up on last year. November is a little bit weaker, slightly down on last year's fairs. And Christmas at the moment is booking strong ahead of last year on fairs. I think all I want to go, I wouldn't want to go any further than give you the kind of, We have moved from being hopeful to being now confident that average fares will recover the full seven-year fare decline from last year in this year's numbers. We're up 13% average fares in the first half of the year. We have tougher prior year comps in the second half of the year, so you won't see, I think, 7% fare increases in Q3 or in Q4. But I think rounded out for the full year, we're pretty confident now we'll be up, average shares will be up seven, maybe we might get to 8% if we have a strong Christmas, but again, we need to see how those close-in figures book. And I think that is what leads us, you know, with a reasonable degree of confidence to see a strong profit recovery this year, but we can't put a number on it yet because it's so heavily driven by Christmas and the New Year holiday bookings. The new aircraft from Boeing will give us, gives us the capacity to add a few extras there over that Christmas, New Year period. That's why we've been able to bring the traffic up from 206 to 207 million this morning. On the OTAs, the big impact on us on the OTA boycott last year was through the first half of the year when lots of people who I kind of complacently thought would be price-dense and therefore they'll book the holidays directly with us. They didn't. A lot of them moved to the tour operators last year to the Jet 2s and the East Jet holidays. They've come back to us in the first half of this year. You see that reflected. We have weak prior year comps and a strong H1s. We see some of those kind of tour operators, EastJet, AldersJet too, talking about a bit more price sensitivity in their bookings through the first half of the year. I think it's because that traffic, the OTAs have moved that traffic back to us. They need our low fare access. But that's not a key feature in the second half of the year. The OTAs are a lot less impactful in Q3 and Q4. And therefore, we didn't have the same decline in airfares in Q3 and Q4 last year. We've a much... Well, we have a tougher prior year comp, which is why we think, again, the second half of the year, you won't see 7% fair increases. It will be a little bit less than that, but overall in the round, we'll come out at fairs up to 7% of the full year. Eddie, do you want to add anything to that on the 1Q2 or OTAs?

No, I mean, like we said there, it sort of covers it off about what has happened, like slightly less in terms of fairs in November, but, you know, the first ones were happening without booking. So there's nothing really to add there at all, and I think we are through that sort of tail end of the OTAs, and I don't think there's going to be any further updates. I just think it's, as you say, much tougher for our competitors out there on the fire you're compiling. Thanks, Eddie. Thank you, Harry.

Next question, please, Nadia.

The next question goes to James Hollins of Exxon B&P Paribas. Please go ahead.

James, hi.

Hey, Michael. I'll start one for Neil, actually. Just on the ex-fuel unit cost performance, it was only up 2%. I think noticeable was the 30 million Q2 decline year-on-year marketing distribution and other. I'm assuming that's all lower disruption costs, or am I missing something else? within that particular line. And secondly, Michael, clearly using this platform as ever to get your point across on EU progress on overflights, etc. Maybe just give us an update on what this new Transport Minister might be able to achieve. And secondly, whether there's any update on this sort of comedy baggage regulation they're looking at. Thanks. Okay, John.

With a cast of my hand, Tracy can come in after him.

Yeah, sure. On the marketing line, which I think you're particularly referring to, some of that's down to lower EU261, lots of disruptions, but keeping them below the three hours. Equally, we've got up to 60 million people a week coming through on social, which is keeping our marketing costs way down. Some of it's a bit of timing. We'll do a bit more marketing over there. the Christmas period, and then offsetting that somewhat would be higher input costs for the onboard spend, which is going particularly well from an ancillary perspective.

Okay, thanks, Neil. And on Commissioner Titsi Kostas, who's the Transport Commissioner, has had a really impressive start. One of the most notable things is they finally moved on the – The infringement proceedings against Spain over the crazy Spanish bag fines that were levied only on the low fares airlines in Spain, but not on the high fare airlines. It's clearly illegal. It's in breach of EU regulation 1008-2008, which guarantees the airlines freedom to set prices free from government interference or regulation. He does want to reform ATC, but like I think a lot of commissioners, he's frustrated. They're all expressed frustration. and how little comes back out of von der Leyen's office. You know, there is a real dead hand of German incompetence at the top of the European Commission, and either she should deliver reform and deliver reform and competitors, or go, preferably be replaced with somebody who can actually do something. I would like to say we should get an Irish politician in there, given it was Peter Sutherland who originally deregulated air travel, but given the lack of action from the Irish politicians on the Dublin Airport mad, Dublin Airport capped, I wouldn't be recommending any of our Irish politicians either. The EU Parliament, as is its wont, is a, you know, we elect a bunch of clowns and we should be not surprised in a circus that they come out with crazy ideas. One of which is now that everybody should have the right to bring two free bags on board an aircraft. We have politely pointed out that there isn't room on board the aircraft for two free bags for 189 passengers. That does seem to be a detail that they've missed. We've also pointed out that, actually, one of the greatest things here is that limiting people to bringing one free bag on board, and that was the Whaling judgment, the ECJ judgment in 2014, we do allow half the passengers who are priority board to bring a second free carry-on bag. That's about as much capacity as the aircraft has. But what the European Parliament, now, part of this is that the commission under Tsitsikostas is looking for reform of EU 261. They're talking about bringing compensation up from three-hour delays to four-hour delays, which does make sense. The Parliament then pushes back with some ridiculous suggestion like two free bags on board. What that would do is, A, create huge queues at Europe's airports as everybody starts struggling with two bags through airport security, a bit like you have in American airports where, you know, you take forever to get through security because they're all bringing five and six bags attached to their persons through the airport. It would also mean inevitable flight delays, because bags that don't fit in the aircraft would have to be taken away at the gate and put in the hold of the aircraft. You'd have more aircraft missing their slots, and you would just gum up the whole system. But, of course, a bunch of lunatics elected to the European Parliament wouldn't worry about the day-to-day details of how people move. They only work about three days a week anyway, and wouldn't be all that sensitive at the best of times to efficiency. This is why... You know, in America innovates, China replicates, and Europe fucking regulates. And why Draghi has pointed 14 months ago, we need to get more efficient in Europe. And the best starting point would be, you know, stop issuing new bullshit regulations invented by idiots in the European Parliament and start making Europe more efficient. If you really want to deliver efficiency for consumers and their travel in Europe and competitiveness, abolish environmental taxes, or at least bring them into line with Corsair, and fix air traffic control. The European parent would be much better off wasting and spending its time reforming air traffic control or protecting overflights on a single market than they would designing new and hopelessly impractical and unimplementable regulations allowing passengers to bring two free bags on board an aircraft where there isn't room for the bags and they don't fit. Thanks, James. Next question, please.

The next question goes to Jamie Robotham of Deutsche Bank. Jamie, please go ahead.

Hi, Michael. Two from me, both on growth. The first one on fares. Obviously, great to see you're making back what you lost from the OTA issues. But on an underlying basis, the pricing is broadly flat. And that's, I think, the scenario you're implicitly guiding to for this winter when the comps normalize. So as we look ahead to next summer, you'll grow in Poland, Italy, Ireland. you'll shrink in Spain, Germany, France, but overall, you'll grow seats at about 4%. It looks like the industry will do 3% to 4% again as well. That being the case, I was a bit surprised to hear you talking about modest fair increases coming through the system, especially as you hinted that Rhino will likely be passing some of its fuel cost decline on to stimulate growth. So, would it not pay for us to tread quite carefully when thinking about the direction of your pricing next summer? Second one, you've announced $25 million of annual investment today to accelerate cadet and first officer recruitment for the next three years. You've also talked previously about setting up one or two in-house engine maintenance shops. Is there any update on that project? Have you chosen the sites? And are there any other non-aircraft investments for growth that we should have on our radar? Thanks a lot.

Thanks, Stephen. I'm going to ask Eddie to deal with the growth question. I might ask Tracy McCant to come in on the 25 minutes of the first officer and on the engine shops update. Eddie, growth, 2026.

Yeah, I mean, if you look out into the summer of next year, just close to 75% of our growth will be in Italy, Poland, Albania, and the UK. I mean, like we've had. You know what's happened initially, we've opened two new, we've got bases in Traffini, we've, our Carana base will open, we've got an additional aircraft, three additional aircraft on it to Modlin, three additional aircraft on it to Krakow and then you see as we begin to, like it's not good to say that we're not growing in Spain, we're not growing in regional Spain, I mean regional airports in Spain are only utilized by about 70% but we continue to grow in Malaga and Alicante where we will have Probably we'll have 20 aircraft in both of those bases next year, and they'll be pretty much maxed out on early morning slots. We've got 12 places like Madrid, so it's getting more patchy, and Barcelona is full. But, yeah, the way this is playing out in terms of you look at our competitors, you know, and their sort of cost inflation, And that's going to drive fares up when the gap between us and our competitors widens on a unit cost basis, and that gives us the opportunity to take advantage of what we believe will be at least like fares at least rising to some extent. The bias is going to be towards that. And we continue to grow, as I say, 75% of it across Italy, UK, Poland, and Albania, and then a SMAT rate of one aircraft. increases across a wide range of bases where we're continuing to get low-cost deals. But, like, I could have allocated those 29 aircraft three times over, you know, based on the appetite that's out there for particularly the stability that Ryanair brings and the longevity into those markets.

And I would just add to that point, I mean, if you look at the non-ex-fuel unit cost inflation in our competitors, whether it's EasyJet, Waze, Lufthansa, Air France KLM, they are really struggling to contain unit costs. And that, I think, puts pressure on them next year to get fares up to cover these unit costs. The legacy carriers are also facing a much bigger penalty in terms of the withdrawal of the free ETS allowances. It has a much bigger impact on Lufthansa, Air France, and IAG. And I think the pressure on fares is going to be upwards for the next year or two. We have a much better unit cost discipline, and I think our fares will trend up behind them, despite the fact that we've already banked up to $650 million in fuel cost savings next year. Tracy, do you want to touch on the first officer recruitment issue and the progress on engine shops?

So, tuition rates are probably at the lowest we've ever seen. So, we probably slow down our recruitment this year of cadets probably to about 500. We should be up at about 1,000. So, given the long leave time for promotion to captains being about four to five years, we're commencing recruitment now for then peak years for the max 10 deliveries. So there'll be a carry cost of about 25 million per annum over to 2030. And any new shop progress? So just on the engine shops, we're close to selecting our first MRO shop. We will open two, so that will allow us to do 200 engines in each shop. The selection period's ongoing. There's nothing in our context for this year, but we will probably start paying something out next year. But we're close to announcing something on that through shortly.

We're in advanced discussions with GE and CFM on spares, packages, and we would hope to have announcements of those, if not before Christmas, maybe early in the new year. Next question. Thanks, Jamie.

The next question goes to Gerard Castle of UBS. Gerard, go ahead.

Good morning, everyone. Michael, I was quite interested to hear you say that you think the profit for Pax could go as high as €14 at least over the next few years. And you've given some commentary on pricing and costs, but just some colour on what gives you that confidence, assuming we've got a stable GDP environment, there's no downturn, I guess. And then you've obviously spoken about a number of countries, Germany, France, and I saw some comments on the UK, but it does look like you're still continuing to grow in the UK, which I think is about a fifth of your capacity. And if I'm not mistaken, you're going to grow in summer by this amount of things. So, you know, why is it still attractive to you? And, you know, what are your thoughts on the upcoming budget on the 26th? Thanks.

Okay, I'll maybe ask. It is through the second half of the question on UK growth this year. Remember, the APD increase, that doesn't come in until April of 26th, but it's coming. If you go back to the broad brushes or my favorite back of the envelope, the real drive, I think, of our industry in Europe for the next four or five years is capacity constraint. You know, we've gone through 25, 30 years where there was new airlines being set up, low fares airlines, the legacies were setting up low fare subsidiaries. Everybody had new aircraft delivery. There is very little capacity growth across Europe. this year, next year, or for the next three or four years. Nobody has any significant aircraft orders, with the possible exception of Ryanair. We've had some orders, and they're desperately trying to defer those orders now, which means their profits implode because all their profits come from mythical or Ponzi-like sale and leaseback profits being recognized in a P&L. But that's an aside. I think the demand for air travel remains strong. Yes, there are economic challenges in countries like Germany, France and the UK where the economies are not doing well, particularly in the UK post-Brexit. But people are not willing to forego the travel. You know, the kids, midterms, we've just come through the midterm school break last week, very strong traffic flows, very strong bookings and high yields. Easter, summer holidays, Christmas, we're seeing strong demand for travel. I think, if anything, strong demand for travel in Ryanair because we have such a pricing advantage over every other airline in Europe. Wherever we allocate the capacity, we are filling strongly. And I think that was reflected in this morning's bookings, even into the remainder of October, November, December, where forward bookings are almost 1% ahead of where they were this time last year. And we see that continuing. So, you know, I was asked earlier this morning one of the interviews, if we save $650 million on fuel next year, will we pass that on in the form of lower fares? I think my answer was, I think we can, but I don't expect to have to. Because I don't see, if you look at the kind of cost inflation or ex-fuel unit cost inflation in Wales, Easy Check, Lufthansa, Air France, KLM, it's high single-digit load amid double digits in the case of Wales. Those guys have no future unless they constrain capacity and get airfares up for the next year or two. And I think we would be the beneficiaries of that with a much more disciplined unit cost control. And I keep going back to slide four in our presentation. If you look at the comparative unit cost advantage we have over every other airline in Europe, I think there's a reasonable prospect that we will see modest fare increases over the next two or three years, plus or minus any unforeseen events, but modest fare increases, you know, mid-single digits, and in Ryanair's case, most of that flowing through to the bottom line. Now, we will have labour cost inflation in the next couple of years. I think ETC will continue to be badly controlled by government. But overall, we're moving into a decade where we're going to start taking aircraft that burn 20% less fuel per flight. We're looking at a much more operating efficiencies coming through. And I think that justifies a reasonably modest growth in profit per passenger from 10 to 12 to 14, I think, over the next five years to 2030. But then I'm one of life's hopeless optimists, which is why I'm employed in the airline industry.

Eddie, UK growth impact of APD. Yeah, I mean, notwithstanding the sort of background of continuous APD growth in the UK, I'm The way we look at it in terms of group development is not just season by season, but it's a continuous carousel of airports that we do deals with. If you've got airports, even in a tough market like that, that are willing to share the investment with you in terms of NOAA costs, well, then we're going to reward that with extra capacity, and we've got extra aircraft going into places like Newcastle, which It's gone from, you know, zero to a two-aircraft base and three-aircraft base. Birmingham's got an extra aircraft. Liverpool's got an extra aircraft. Birmingham, Manchester, Stansted, all these places have extra aircraft going in because they're willing. We're in there for the long term. We're lowering costs. They are incentivized for additional traffic. So it doesn't always go coterminous with the market, as you said. as you make those investments. And it's going to put even more pressure on our competitors.

Neil, anything you want to add there on UK growth or impact of APD?

Not particularly. I think we're, you know, Eddie and yourself have covered that off fairly well. On the profit per pax, I suppose just reiterate, it won't go in straight lines. There'll be years where we'll be up and years where we'll be slightly down.

Okay, thanks.

Michal Kaczmarzyk here as well, who's the CEO of Buzz. I might just ask, I guess, help us through just to give you maybe his insight into growth in Central Europe, Poland, and particularly the charter market in Buzz. Michal, I mean, you want to add on growth in those non-tax economies like Poland and Central Europe?

There are good taxes, too. I mean, Poland and Sweden are performing very well. The demand is strong. We have now 80 aircraft allocated in the region. The Poland is the biggest part of the market with 44, offering more or less 40 million seats with the most attractive destinations in CE. We have very strong ground recognitions there at Ryanair, but also supported by our local structure bus. generating over 3.5 thousand direct jobs in Central Eastern Europe, supporting another 20 thousand therefore handling and so on. We make a lot of significant investment in the region through our hangars facility but also through training centers we completed recently. The biggest crew training center in Central Eastern Europe with four motion simulators. It's located in Krakow. We'll be able to train over 300 crew per day. We develop also our Warsaw Ops Center, focusing now on covering Central Eastern Europe, but also serves as a backup for Dublin Ops Center. So there is a lot of capacity still we can allocate in Central Eastern Europe. The only constraint is the number of aircraft we can allocate there. And we are in the good shape to take a lot of market share in the next two, three years.

And we talked last year with moving aircraft back from the desert and basing aircraft in Central Eastern Europe. Are you seeing much of WIS in those markets, and how's the, what's Albania where we're opening a base in Tirana, which is currently a WIS base, how's the Tirana expansion base going head to head with WIS?

No, the WIS aircraft allocation from the deserts to Central Eastern Europe, I would say it's too late. I mean, after pre-COVID, we increased in Central Eastern like 40%. took their capacity or even past capacity from the region to the region. So now we are the biggest in Poland, Baltics, Croatia, Slovakia. We have the local structure there so we are able to compete in terms of cost level. There is no cheaper airline than us now in the region. Also with the highest fleet utilization ratio in the industry over six sectors per aircraft per day. So the new base launch next summer will be Tirana for us with quite significant capacity of weeds. But what I mentioned, we are absolutely not afraid of that because our local structure there, guarantee us the lowest cost. Once we deliver the lowest cost, we are able to deliver the lowest further as well. Thanks. Thanks, Wilhelm.

ADN, you want to add on growth there?

No, before we... I mean, just touch on the point there. You talked about, you know, WIS and what's happening out there, whether their policy or their growth strategy is to come back to central and eastern Europe. And certainly what we pick up from the airports is that those that are incentivizing us to grow is that we're there for the long term. And, you know, you can see even cancellations in Madeline from Wales before they even started back there, you know. So some of that has been replicated. And, you know, you hear a lot of noise, but not a lot of action. And that even extends down to places like Italy, where we're doing almost 1,200 frequencies a week, and you've got less than 100 frequencies a week from Wales there. But I think airports recognize Ryanair's in for the long term. Do a deal with Ryanair. Get the costs down. You'll have the traffic for the long term rather than looking at these other short-term deals that are available.

Okay. Thanks, Andy. Thanks, Gerard. Next question, please.

The next question goes to Stephen Furlong of Davey. Stephen, please go ahead.

Stephen, hi. Hi, Michael. Just on Boeing, last week they had the results, and I thought they were pretty vague on the certification. They just said 2026. Maybe they deliberately were for the MAX 10. I mean, a little bit more work on the 10 than the 7, and hardware and software modifications, although they did say it was pretty straightforward. So I just want to talk about that, what exactly they're telling you. And then you mentioned labor. If you just remind us, What's the timetable for CLAs? I think most of them are in 2027 and stuff. That would be great, the contract labor agreements. Thank you.

Yeah, I mean, I think it's one of the things I give Boeing more credit. The new management team would owe much more credit. You know, the old management team would give you all sorts of pie in the sky, you know, to be here tomorrow, next week, and then miss targets all over the place. They'll, you know. The new guys are much more cautious. They don't want to make promises they can't deliver. And I think that's the senseless place for them to be in. But you look at what they have delivered. You know, they've got SA approval to go from rate 38 to rate 42 in October. They're now talking about going to rate 46 in March, April next year. That doesn't really affect us. I mean, we'll have finished the game-changer deliveries at the end of February. But at least we have all 29 aircraft in for summer 2026. there is a risk at the moment with the government shutdown that, you know, certification, they're pretty confident talking to us. And actually, we get this on the other side from talking to EASA who are involved in certification. EASA are very impressed with the work that the management team and the work that they're doing. And we get a lot of very positive feedback from EASA. So I think they're right to be somewhat cautious to under-promise and over-deliver. But, you know, we have a reasonable headroom there. At the moment, they're talking about MAX 7 being certified in Q2 next year, MAX 10 in Q3. You know, that could slip to Q4 or to Q1 of 2027, and we would still get our 15 deliveries in the spring of 2027. Now, clearly, we'd be one of the lead operators of the MAX 10. I wouldn't have any issue with that. The sooner we can get them, the better. But they're telling us and have gone in writing that they will meet our delivery date, the first 15 delivery dates, the first contracted 15 delivery dates in the spring of 37 they will meet. That's what gave us the confidence in the Treasury function to go out and start hedging the U.S. dollar on those firm deliveries. And, you know, we're looking for more opportunities to extend those hedging. So I think Boeing were right to be a little bit cautious in their public commentary and but all of the delivery on the ground in terms of quality of what they're delivering to us and the timeliness of what they're delivering to us now has been nothing but impressive for the last three or four months. Now, they clearly don't need any screw-ups along the way, but, you know, in Stephanie Pope, who is sitting on top of the production line in Seattle, there's somebody who's there every day. You can pick up the phone and call her. She gets back to you. You know, she really is well on top of it, and I would be very supportive of the work she's been doing. Maybe I'll add over to that. So timetable on CNAs, most of our labour contracts were now to come up for renewal in April 27.

There's a couple of labour contracts that will be up, two or three on the pilot side, and again, a similar number on the cabin crew side. But like a lot of what we're, it's not always just about pay. I mean, if you look at the disruption that's happened against the background of ATC and Ryanair's ability allow its people to actually deliver sort of a stable working environment underfoot by the continuation of the platform roster, which would be a key part of any discussions on the CLA. And we've seen also over the last number of years, one of the dividends of doing local labour contracts is that people now not only are in the right place, most people are in the right place where they want to be, And it's relatively easy in terms of, you know, how they're paid, the local bureaucracy administration. And labs have made a huge investment with that in terms of it's so much easier now. It's easier than it's ever been in Ryanair's history for people in far-flung bases to get the, you know, the smart things done. How do I get my time off? How do I get my payroll queries? And that's all done through a sort of a platform called Ryanair Connect. So there's lots of things like pilots and cabin crew more than ever value given the disruption that is driven by ATC to have a stable working environment. I mean, like this August, for example, we had our lowest cancellation level ever, you know, completely different from the previous season. A lot of that, again, is about recovering on the day. So we'll be talking with our union partners in terms of the renewal of agreements. We will try to do long-term agreements. stable agreement underpinned by superior working conditions that I think are increasingly becoming more valuable. So it's not all just about one thing. Do you want to touch on the Spanish CLA? We've just concluded the Spanish CLA for the cabin crew, which was one of the last ones post sort of unionization. There were some bumps in the road, but actually it was signed there last week and now it will be ratified by the local labour authority And that's for Cabin Crew. And that's very welcome. That goes into 2030, into that deal. And, you know, that sort of sets somewhat of a benchmark for where we're going to go with the new deals that are going to come up, particularly on the Cabin Crew side.

And Daryl, does anyone have anything to add on the CLA side and keep people off, sir? Daryl? No. Daryl? Okay, maybe Daryl's not on the line. Look, As you rightly say, Stephen, the labor contracts run out to April 27. That will, Cody, is timed to meet the deliveries of the MAX 10s. And there's no doubt we're going to get a productivity gain out of those MAX 10 aircraft, not so much from the extra seats, but from the fuel consumption on the engines, which is dramatic. We are willing, I think, to share some of that productivity upside with our people. I think they say, but, you know, Daryl and his team have started those kind of discussions around 2026 and 2027. We have, as Tracy has already said, record low attrition. I mean, we have almost no pilots and no cabin crew attrition at the moment. People are happy where they are. They're being well paid. They're in the bases they want to be in. Clearly, the Gulf carriers, which would historically have been a kind of a valve that would have recruited a lot of our pilots, they don't have any capacity growth either at the moment. So, things have never been more stable, but I think we will be seeing productivity gains coming over the next couple of years, and we are certainly minded to do deals with, as long as we can do sensible deals. Will we do unsensible deals? No, we won't. I mean, we've taken strikes in Belgium in the last 12 months. We've taken an occasional strike in Spain. We're happy to take strikes where people want to be stupid. We'll take strikes and we will face them down, but I think there is some upside coming in the next couple of years, and certainly we would want our people to be at the front end of that. And if we can conclude new pay deals in the next, either for April 26 or for April 27, and if that results in a step up in labour costs, it's something I think we'd be willing to fund and finance. So watch this space, and we would hope to make progress on that over the next six, nine, 12 months. Thanks, Stephen. Next question, please.

The next question goes to Alex Irving of Bernstein. Alex, please go ahead.

Alex, hi. Hi, good morning. Two from me, please. First on ancillary, it's really good to see that robust growth continuing on from Q1. What's driving that? Is it product innovation? Is it pricing decompressing two years into one as you reinstate the OTAs and flat unit ancillaries at this time of last year? And then related to that, what do you expect for unit ancillary sales over the coming years? Same question is on CapEx. We've previously spoken about peak CapEx of around €3 billion in FY30-31. You talk about looking at some of the dollar weakness and some of those gains into your future CapEx budget. What are your latest expectations for peak CapEx? When and how much, please?

Thanks, Alex. So maybe I'll ask Tracy. If we can't take the answer to this question, Neil, you might come in and do CapEx. or PCAPX. Tracy, ancillaries.

Okay, so the ancillary growth, 3%. A lot of that is driven, what we said, from dynamic pricing. So we're starting to get better pricing on seats, better pricing on bags. We also have our order-to-seat service, which is increasing our onboard spend. And so probably fall back a little bit. You're going to be faced with the same thing on the comparables in the second half of the year, so maybe not as strong as the first half, and probably about 2% per annum, I would say, beyond this year. But again, a lot of it is driven by what the lab team are doing in-house in driving them increments we can get on price.

Okay, Neil, you want to touch on CapEx?

Yeah, Alex, there's not a lot to add at this stage. We're only 35% hedged on the firm, the 150 aircraft. We haven't done anything on the options yet. The CapEx that we've guided in the past doesn't include engine shops, so it's a bit premature to change. start changing numbers at this point in time. I prefer to wait up through the engine shops. Agreed. And then come out and refresh the numbers at that point in time.

John Norton here. Sorry, go ahead, Neil.

No, that's pretty much it.

John, do you want to add anything on CapEx and Treasury or currencies?

Yeah, how's Michael? Yeah, no, look, we've got a nice layer of base there on the CapEx piece of the max. I mean, when you look at it at the start of the year where, you know, your dollar levels were down at 102, 103 in January, and then when you also factor in when the contract was signed and it was at 108, we have that nice space in place now to take us forward. And we just look for opportunities when we think in just where the market's gone from forward to build on that.

Great. Okay. Thanks, John. Alex, thanks for the question. Next question, please, Nadia.

The next question goes to Dudley Shanley of Good Buddy. Please go ahead.

Good morning. Thanks for taking my questions. Two questions. The first one, Michael, you were on CNBC this morning, and I think if I'm listening to you correctly, you said, The consumers seem to be a little bit more price sensitive at the moment. How are you seeing that coming through your business? Is that just a temporary thing? And then the second question was to do with capacity constraint. Just what are you watching on that kind of three- to five-year view that it will remain as constrained? I know some people have been talking about the likes of aircraft from people like Spirit and things like that being shifted over to Europe. What do you watch? Thank you.

Thanks for the good night. that we see consumer price sensitivity at the moment I think is the fact that forward bookings without any price promotion at the moment are running close to 1% the way they were this time last year and this time last year we were actually coming off the kind of OTA pricing down 7% lower fares at the moment fares are up in the first half of the year 13% we think that will be a little less in the second half of the year and yet pricing is coming running against us or forward bookings are running against us if anything we're kind of slightly closing off cheaper seats to try to restrain forward bookings because, you know, clearly we want to keep as much capacity we can for the closer in bookings, particularly as we run up against Christmas and the New Year. In markets where we are expanding capacity, regional Italy, very strong. A new thing we've identified recently in Italy is Alitalia, or Ex-Ita, seems to have a number of their aircraft be grounded, particularly in the domestic market, because they're short of spares. And we are expanding, you know, seeing very strong lows. Okay, the prices are lower in domestic Italy, domestic Spain, that kind of stuff, but strong growth. And I note there is clearly a bit of consumer price sensitivity there. You know, I'm campaigning aggressively against Rachel Rees putting up APD or doing any more damage to the UK economic growth. But in a kind of slightly bizarre, screwed-up way, the more she damages economic growth and confidence in the UK... the more people will switch away from paying higher fares to BA and others onto Ryanair. So I think that all augurs well for our growth over the next couple of years. Capacity constraints, what do we look for? I mean, the only thing you could really look for is Boeing and Airbus orders. And they are, you know, the most recent one was Turkish, which I think was kind of pre-announced by Trump when he was sitting with Erdogan at some meeting in Ankara. And even Turkish, which, you know, has announced an order for 400, I think 200 or 250 narrow-body 737s, but they've no engines. They're now complaining that they can't get a deal out of the engine manufacturers. I mean, in our day, when we order aircraft, we're going, you go sort out the engines. But we wouldn't buy or order an aircraft unless it has engines attached. The market has moved so aggressively in favor of the engine manufacturers. People are now kind of ordering aircraft but with no engines and then kind of being price takers when they go to do deals on aircraft. Really, I don't see anything. I mean, some of those aircraft appear out of spirit. I think the chance of those appearing in Europe are zero. Airlines in Asia are in the Middle East and would be much more aggressive and willing to pay much higher lease rates. than airlines in Europe. I see no demand among LaPanza, Air France, KLM, IAG for capacity growth. They're all playing the same game. They've consolidated. They want to control capacity. If anything, they'll keep shaving capacity so they can get airfares up. WIS has cancelled or is desperately trying to, well, Indigo, not WIS, but are desperately trying to postpone those Airbus orders into the mid-2030s, which, by the time you've added five or six or ten years of escalation, Those already expensive aircraft will be even more expensive. And all EasyJet is doing is upgaging from an A319 to a A321 at their fortress airports, Catholic, Paris, Switzerland. That makes sense. It's a sensible thing to do. But as we tramp across Europe, as Michal has said, in Central Europe, we don't see WIS anywhere. In fact, as Eddie has mentioned, most of the big incentives we're getting, growth incentives we're getting from airports are from WIS customer airports who are shitting themselves that WIS is going to go bust in the not-too-distant future, I think that's a reasonable prospect, and are getting Ryanair to come in there and kind of, if you like, almost as the insurance policy against a WIS collapse. Now, I don't think WIS will collapse, but, I mean, as a competitor, we wouldn't pay any attention to them at all. I mean, the idea that they're going to close one of their desert bases in Abu Dhabi, the older word is they haven't closed the one in Riyadh, and they're going to move that capacity back to Central and Eastern Europe, well, whoop-a-dee-doo. We haven't seen them yet. They've expanded their definition of Central and Eastern Europe to the stands. Apparently most of the stands are now in Central and Eastern Europe, if you go by the WINS definition. Meanwhile, we're charging in on top of them in Albania. They were competing with us in Italy and in Austria for two or three years ago. They've disappeared. So we have a reasonably benign kind of map across Europe where Most airports want us to grow there, and increasingly countries want us to, are incentivizing us to grow by abolishing environmental taxes. And that is Sweden, Albania, you know, I don't want to go through the list again. One of the areas where airports are growing fastest in next year would be in Bratislava, where we had a three aircraft base. An hour up the road, the Austrians have failed to abolish their stupid environmental tax, which weighs less than 160 million a year. Vienna has put up its fees by 30% since COVID. And all of the airlines, including now Ryanair, are taking aircraft out of Vienna and putting them in Bratislava. We had already announced an increase in our Bratislava base in three to five aircraft next year. And then about three weeks later, Wizz announced they're going to open a two or three aircraft base in Bratislava, which is wonderful. Because in order to be able, the only thing we could do to respond to Wizz arriving in Bratislava is put up our airfares there so they'd be somewhat competitive with Wizz. who come in there with fares that are about 40-50% more expensive than Ryanair. And the outcome would be exactly the same as it was previously in Vienna or in Italy. Whiz will lose, we'll win, and the people of Bratislava will be left with the lowest fare airline, Ryanair, delivering all of that growth. But in Slovakia, there's a new transport minister, a new government, they've abolished the environmental taxes, they've cut ATC fees by 50%, and the airport is incentivizing growth. Meanwhile, Rachel Reeves is over here in the UK, considering whether she further increases APD, taxes the rich, and follows the Marxist-Leninist North Korean growth model, which consists of taxing the shit out of everything that moves, with the result that nothing fucking moves in the end. But to the extent that the UK economy suffers, I think more and more English people will start fleeing to Ryanair, and away from high-fair airlines like EasyJet and BA. Thanks, Godley. Next question, please.

The next question goes to Conor Dwyer of Citi. Please go ahead.

Conor, hi. Hey, thanks very much. First question is for you, Michael. You were talking about how ETS credit prices should come in line with Corsair, which would obviously be quite material if that did happen, but how much of this is hope and how much do you think this might actually change? Is there political will for this? And then the second question for Neil is, on the cost-for-fax. It was something up 40% in the first half of the year, and you're talking about a bit of acceleration to the back half of the year, I think. You've got quite a strong fuel hedge position for that. So I'm just wondering, you know, where are you expecting some non-fuel cost pressure in the back half of the year? Thanks very much.

Hey, thanks, Conor. I mean, talking about moving ETS to Corsia, you know, somebody has to lead the campaign, right? We've been calling for this for about two years. We didn't have the support of the flag carriers in A4E, Lufthansa, IAG, or Air France KLM. But they're now much more badly impacted by the withdrawal of free ETSs. Because they haven't grown for the last 10 years, most of their traffic was covered by free ETS allowances. As Europe unwinds those free ETS allowances, they're getting much more hit, or the cost impact on them is much more severe. And lo and behold, they're all now campaigning for moving, well, if we're not going to abolish ETS altogether, at least move it in line with Corsia. It is utterly indefensible that Europe taxes the shit out of Europeans travelling within Europe. And yet the Americans, the Gulf carriers, the Asian carriers, all land and take off in Europe. They account for 53% of European aviation CO2 emissions and yet pay nothing. So I think the fact that A4E is now unanimous on this... I mean, I'm much more optimistic that we will see some movement on that. Now, we still have the dead hand of Ursula von der Leyen to deal with. But ultimately, I think you can even embarrass an incompetent German into fucking actually doing something on competitiveness. The Draghi report is 14 months old. She's done absolutely nothing. And I think if we build a head of steam there, there's a reasonable prospect that Europe, through the fog of failure, will ultimately want to do something other than spend hundreds of billions on defence, but to make its economy more efficient. And air travel is clearly one of the ways of doing that. It would be material, it would result in a dramatic or a significant reduction in airfares. Remember, passengers are paying these ETSs, it would result in a significant reduction in airfares, but at least it would mean that everybody in Europe is paying the same fair share as the non-Europeans. Whereas at the moment, you have the Europeans paying all of the taxes, the non-Europeans getting completely free ride, and useless Europe in the middle of it, or useless von der Leyen sitting in the middle of it, terrified of Trump or taxing the non-Europeans. And so I think it's a cause whose time has come. I also believe, but again, I'm one of life's great optimists, that actually we will embarrass her into doing something about air traffic control, or at least defending and protecting the single market. She was the one who was singing most vociferously during the Brexit negotiations. If the single market is sacrosanct, we will do everything to defend the single market. Unless, of course, a couple of French air traffic controllers want to go on strike. So I think, ultimately, I am much more motivated. Commissioner Sissi Kostas is really a guy who wants to get things done. He wants to deliver change. I think he really does want to transform air travel in Europe. He's from Greece and therefore they're very sensitive to making air travel more efficient and I am very hopeful that him together with Unanimity out of the A4E airlines will see some movement in Europe on ETS in the next year or two. Neil, Colin, you want to call for a passenger?

Yeah, sure. Connor, a couple of bits and pieces. Firstly, I would expect that our traffic control charges will go up again in January this year. The service is just so abysmal that they have to put up Again, I think you'll see some of that marketing spend. I talked about some timing in there. Some of that will catch up into Christmas and into the stimulation for the advertising ahead of the summer. We're starting to see the Boeing compensation unwind. So that will have an impact on the maintenance line where some of those maintenance credits went. And then we have the heavy maintenance at the back end of the year. Tracy also talked about, you know, we're going to start recruiting up on the cadets that will kick off probably in the January timeframe. So we'll be ramping up on the cadet side, but we'll also be ramping up as we always do ahead of the summer of 2026. So that tends to be back-ended costs in there, which is why I'm kind of keeping the 1% to 3% unit cost inflation.

Very helpful. Thanks, Conor. Next question, please, Daniel.

The next question goes to Sifanti Sith of Raymond James. Please go ahead.

Sifanti.

Hey, good morning. Just on the first one, another question on the unit cost. But, you know, given that you have hedging in place for next year and clarity around the Boeing deliveries, I was wondering if you could provide any kind of early thoughts on how we should think about fiscal year 27 unit costs. And then maybe a second question, you know, just on the debt side, you know, usually airlines that even have kind of good balance sheets find some value in having debt and being involved in that side of the financial market. So I'm kind of curious, is there a zero debt view just ahead of kind of, you know, you do have a max 10 capex, engine shop, you know, other opportunities. Is that kind of a temporary zero debt view, or do you have a different kind of philosophy on the debt side?

Yeah, thanks, Jimmy. I mean, I think on the hedging, I mean, I'll ask Neil to come back in and correct me if I get something wrong here. You know, it's too early yet. We haven't done the budgets for FY27. So, you know, I wouldn't get into unit costs at this stage, other than we banked $650 million in fuel cost savings with the fuel hedging. So that's a good, strong start. I think the two critical elements on the hedging is we've hedged 80% of FY27 fuel at just under $67 a barrel. We've made good progress on the currency hedging on OPEX. I'll ask John North to come in. Where are we on the OPEX hedging for FY27?

Yeah, so we've 80% done of FY27 at 11.15. And where were we in the prior year? So we won 11.15. Okay.

So, you know, we've hedged away OPEX and a little bit of saving as well. And then clearly it's not material in FY27, but we started to hedge the fixed orders on the MAX 10s. So the hedging is locked down. We have the 29 aircraft will be delivered by Boeing. And I think that's much more critical here into FY27. We have certainty now that we'll be able to deliver the headline traffic growth. And that's what drives ultimately the airfares and what drives the ancillary revenues. On the debt side, We're in this kind of artificial period. You know, we have this kind of two-year interregnum from 25 to 27 where, you know, in reality we don't have a lot of capping. You know, we could and, you know, we're coming up to in May next year we have the 1.2 million bond. I mean, we raised that coming out of COVID at less than 1%. So the cost of refining that bond currently would be somewhere close to about 3%. which, you know, is not a lot of money, but we don't need it at the moment. And therefore, collectively at the board, our view is we should demonstrate to the market that we can pay down these bonds. When we start to get into 26 or 27, I think we would reserve the right to start. We would probably go back to the bond market as we get into the heavy capex again on the max 10. But we do so coming off with a strong balance sheet, triple B plus rated. and say, look, we paid off back $4 billion worth of bonds post-COVID. And so we like the sense of we're not trying to be zero debt for some kind of bullshit, you know, philosophical reasons. We would expect to raise debt as long as we can raise debt cheaply, but only when we move into a period of heavy capex, which is where we'll be in 28, 29. We only take 15 aircraft in 27. we get another 15 aircraft in 28, but then we move up towards closer to 50 aircraft in 29 and 30. And so I would be of the view you will see us lay down the last bond in May. We will try to build up gross cash of somewhere between 3 and 4 billion out of that. Other than that, we'll return the surplus cash to shareholders in dividends and buybacks. But then as we get into the heavier capex in 27, 28, 29, I think you'll see us go back to the The bond market, like there's nothing here. We have no principles here in terms of having debt or being debt-free. It's just because of this kind of slightly strange, it's the first time in 30 years we go through a kind of a two-year period with very little aircraft capex, pay down the debt, and we can always refi again in 28, 29 from our position of strength. You want to add anything on that?

Yeah, I'd agree with that, Michael. I mean, it's very much down to a cost decision at the moment. The cheapest way to fund ourselves is out of our own cash resources. And that's why we've decided to repay that bond out of our own cash. We've got nearly a billion in dry powder in the form of our undrawn revolving credit facility. And as we've done in the past, we'll be opportunistic when we go back to the bond market. We'll go back at a time of our choosing and not just because there's a bond maturing and we have to roll it over. And I think that's how we will lock in the lowest cost ultimately long term for the group. So as Michael said, it's not just we have to be debt free, it's just it's going to fall that way for a period of time and then we'll be back in the markets again.

And again, I would throw the point as you look forward in terms of unit costs going forward, if I may say so, You look at our competitor airlines across Europe, the so-called low-cost airlines, they have huge net debt on their balance sheets, aircraft leasing costs, financing costs, and those costs are rising for the next year or two. We will have zero financing costs. We own 650 aircraft completely unencumbered, and it is another point of difference between us and the competition. It's also one of the reasons why they need to get airfares up for the next year or two to as their financing costs are rising and they have huge leasing obligations, and why I think our underlying airfares may well rise into 27 and 28, whereas our unit costs will be well under control. So, thanks for the question. Next question, please, Nadia.

The next question goes to James Goodall of Redburn. Please go ahead.

Yeah, hi. Hi there. Thanks for taking my question. I've just got a couple of follow-ups. So, firstly, just on the MAX 10 deliveries, Do you know how many deliveries to other airlines are in front of you in the queue? I mean, it looks like various airlines like United, Alaska, they've been pushing back some Max 10 deliveries from 26 to 27. So I'm just trying to gauge the risk profile to you if the program gets pushed back any further, which I guess seems lower now than it was from those airlines. So I would love your thoughts there. And then secondly, just following up from your comments around forward bookings being up one point in Q3, does that forward book load factor level differ between the peak and the shoulder periods in Q3? And I guess what does the higher book load factor level mean for you in terms of pricing strategy in the latest market? Cheers.

Okay, thanks for that, James. Eddie will do the forward bookings. And let me touch on the Max 10s. I mean, yes, one of the reasons why we're growing increasingly confident we'll get our first 15 deliveries in 2017 is we're not delaying our Max 10 orders. United, who were the lead customer, I think, hasn't delayed them. At one stage, they were talking about cancelling the Max 10s. We offered to step in and we'd take any Max 10s they wanted to cancel. But it has helped, I think, Boeing to catch up with their production. I understand we've got two airlines in front of us. I think WestJet is one. Alaska might be another who are still ahead of us in the queue. They're due deliveries in middle to late 2026. Not sure whether they'll get them or not around. You know, I think there's a reasonable prospect that the lead customer is likely to get the first max 10 deliveries in probably Q3 or Q4 of 26. We have about six months of headroom, therefore, before we get our first aircraft. and I would be reasonably confident we will take them. I don't think we'll be the lead operator. I don't think we'll get the first MAX 10 aircraft, but we might be second or third in the queue. And to those, you know, to my mind, it made no sense for United or some of those others to postpone the MAX 10s because, you know, you postponed them into the late 20s or early 30s. You're just paying a couple of more years of escalation. I would rather take the aircraft as quickly as I can get them, We built in our price. The price is averaged over the lifetime of the deliveries between 2027 and 2034. I want those aircraft as soon as I can possibly get them. I would happily take an aircraft. Any aircraft that has 20% more seats and burns 20% less fuel will be an economically much more efficient and an environmentally much more efficient aircraft to operate here in Europe. And I would take as many as I can get as soon as I can get them, which is why we stepped in when United stupidly announced that they wouldn't maybe take theirs. I said, well, we'll take anything that United want to cancel. They finished up not cancelling and just postponing. I think we're about third or fourth in the queue, but it'll be a reasonably short queue. I think the first deliveries will take place in Q3 or Q4 of 26, and our first 15 are in the spring of 27th.

Eddie, do you want to talk about forward booking through November, December, maybe into Q4?

Yeah, I mean, with Q4, we're only about 10% booked, so very little for Q4, so very little visibility there. Like, if you look forward to, say, November has required some price stimulation, but we're happy with those factors. If you look in December and January, I mean, we've learned as well from previous years in terms of trimming our schedules as well there, particularly as we get into the, beyond the first 10 days of January, and also doing some trimming around the early December as well. So, look, we're about, you know, 70, I think 77% booked for November. You know, like our bookings are ahead of where they, they're marginally ahead of where they've been for each of those months, both November, like November, December and January. comfortable with what we're seeing but November is the one that needed a little bit of price stimulation to get there but nothing we didn't have to dig too deep but we're ahead you know and so we're happy but you do have limited you do have limited visibility and like really like with 10% of bookings for Q4 you have no real visibility whatsoever so happy thanks for that James next question please Daniel

The next question goes to Maniba Kayani of Bank of America. Please go ahead.

Maniba, hi.

Hi. I just wanted to follow up on your outlook for the fourth quarter. Why are you saying there's no Easter benefit? Because there is the earlier Easter, and a couple of days will fall into the end of that. So I just wanted to understand your thinking around kind of the base effects into the fourth quartered. And then just on your ETS, what sort of increase should we be expecting in fiscal 27? Because it looks like hedging levels on that are just 11% right now, and the prices have gone up. So how much of those fuel savings could be offset by the ETS costs going up? Thank you.

Okay, I'll ask Thomas Fowler, who's the Director of Sustainability, maybe take the ETS question for you, Mindy. But let me deal with the outlook. I mean, yes, Easter Sunday next year is on the 5th of April. So the first weekend of the school holidays will fall into the last weekend in March. But it's not significant. We will get a little bit of a bump. But I think at this point, we're better off just saying, look, there'll be no Easter benefit in Q4. If we get a little bit in the last two days of March... Great, but really most of it will flow into April. You know, it's really only when you get an Easter on the end of the 31st of March or 1st of April, you see the first, as we did two years ago, the first half of Easter was in the prior year Q4. Almost all of the impact of Easter next year will be in Q1. There'll be a couple of days in March, and if we get a little bit of a benefit out of that, well and good, but there's certainly no point in going out now going, ooh, two days of Easter in March next year, whoop-a-dee-doo. We bugger all their visibility in Q4, and we won't have any until we get out to the Q3 numbers in February. And that's all we're trying to communicate now, Miniva. And now I'll turn to Optimistic Tom for the ETS outlook for FY27, and you weren't touched on 28 yet. But as we shoot our step on delay in between now and then.

I think Neil alluded to that. The call, I don't know if you're on or not, look, we think the ETFs and SaaS calls go from 1.1 billion this year to somewhere between 1.4, 1.5 billion next year, depending on the outturn of where the pricing is. Obviously, it is higher. Prices are higher going into next year, and we have the final loss of the free allowances. So somewhere between 1.4, 1.5 is where we think it's going to be.

Thomas, is it worth pointing out? That's the last big step up as well that we're going to have.

Well, it's the last step up the loss of the allowances. Obviously, bar pricing changes, Neil. Yeah, like, you know, we hopefully won't see a step up to that level the following year until mandates increase on staff in 2030. We do see the mandates grow a bit in the UK, literally for 2030, but obviously given it's a portion of our business, we don't get the full impact of that through the line.

Yeah, okay. Sorry, go ahead. And it calls into question, you know, if Europe is serious about being competitive, this bullshit tax needs to be rolled back. We need to bring it in line with Corsia. And it's one of the reasons this unwinding of the free ETS is why Lufthansa, Air France, IAG are now much more vocal about the need to have a fair and level playing field on environmental taxes in Europe. We can't just be taxing ourselves to death in Europe. and exempting the Americans, the Gulf, the Asians, and everybody else. It's simply insane. Only the Europeans would design something this stupid and self-defeating, and therefore I think the more we can't allow, the more and louder we campaign, the more likely we are to see some progressive reforms and pushing back on this bullshit. Next question, please.

The last question goes to Rory Cullinane of Research RBC Capital Markets. Please go ahead.

Rory. Hi. Good morning. Yeah, first question, follow-up on the previous one. So it sounds like you're not focusing lobbying efforts on sustainable aviation fuel mandates. Would you like to see any changes there to rules in the UK or EU? And then I wondered if you'd be willing to comment on whether the UK has diverged at all from the Q2 mandate FAIR trends you've reported or 3Q booking trends. Thank you.

Sorry, Roy, to speak up, you're very faint there on that. I got the first half with the SAS. What's the second question?

Yeah, the second question on the UK. Has the UK diverged at all from the Q2 FAIR trends you've reported or Q3 booking trends that you've seen across the group? Thank you.

Okay. Look, SAS, You know, I'm not a believer in – sorry, I'm a believer in SAS, but, I mean, there is simply – the volumes will not be there to meet the EU 6% mandate by 2030 or the UK's insane 10% mandate. You have the oil majors at the moment growing back from the production of SAS under pressure in the White House. I think they're a – I think I join and I support the call of all the A4E airlines in Europe. We need to move these mandates to the right – We may get to 6% or 10% by 2035, but I think there's no prospect of getting there in 2030. And I would be surprised even if the oil majors don't produce the SAF, there's nothing we can do to supply it. These are just another example of British and European lack of competitiveness. The environmental agenda, you know, there's a war in Ukraine, Trump at the White House, There is no... There is no, I think... What is the word? There is no significant... If anything, the whole environmental agenda is moving backwards. We need competitiveness in Europe. And if the Swedes, who were the home of the original environmental tax and fight-shaming and all that, if they've worked out that Greta was wrong and they're abolishing their environmental tax, then surely... the rest of the dodos in Europe will do likewise. So I think there is very little prospect of those SAF mandates being met in 2030. I don't think as an industry we should abandon SAFs, but we do need a much more... Either Europe and European governments should use some of the environmental taxation, this astonishing ETS taxation, to incentivise the production of SAFs or move the SAF mandates to the right or further out into the 2030s. There's nothing we see divergent in the U.K. Sorry, I'll add that to 81 times that question.

U.K., Q3, fares and yielding, like I said, like in November, required price stimulation. And even though if you look at U.K. leisure, U.K. leisure for us is about the birth of all of our seeds still out of the U.K., like where we've got them. You do see some price pressure there. But just in November, a lot of capacity has gone in there in the market. I think it's causing a lot more. pressure for our competitors. It's a very small part of it. If you look at the rest of the UK, our city to city, our ethnic traffic to the UK and Ireland and all that, that's in line with the rest of the network. There's only a slight call out there in terms of UK measure, I would say, and a lot of it would be focused in the region. A lot of capacity within post-COVID. Some of that went our competitors' way in terms of holidays last year. I think they're feeling more of the pain, but we're getting the load back.

But are you seeing any divergence in UK traffic in U3 compared to non-UK or EU traffic?

The only call that I would have is some of the UK measure in November. And it's a very small part of our business, and the rest of the UK is as robust as the rest of the network you're applying. Okay, Rory, can I ask a question? Yeah, thank you.

Good, okay.

Any other questions? Nadia?

We currently have no questions.

Okay. Folks, thank you very much. I think we've done, what, an hour and 25 minutes. We appreciate your time on the call. We have extensive roadshows on the road, Ireland, UK, Europe, and North America for the remainder of this week. If you'd like a meeting or a one-on-one, please contact us either through Jamie here, our head of IR, or through the City Davies Goodbodies. Thanks to City Davies and Goodbodies for arranging and facilitating the roadshow. And we look forward to meeting you all at some stage over the remainder of this week. If anybody wants to come visit us in Dublin after that, please feel free. As long as you fly right there, we'll be happy to meet you. And otherwise, you know, I think we're reasonably cautiously optimistic on the outlook, if not for the next 12 months, but I think for the next four or five years. Keep focusing on the fundamentals. Capacity is going to remain constrained in Europe. We are doing much better deals with airports across Europe. Governments are increasingly reversing these environmental taxes and therefore I think there's a reasonable, I'd be reasonably cautious that we're going to see controlled growth starting to 250 million passengers by 2030, 300 million passengers by 2034 and there's a prospect, thus or minus the occasional unforeseen event that net profit per passenger will over that period of time, although lumpingly move from 10 towards 12 towards 14 euros per passenger. And we hope you'll all be joining us for the ride and see where it goes over the next four or five years. Thank you for your time. Look forward to meeting you this week. And thank you very much. We'll wrap it up there, Matthew, please. Thank you.