Hello. Welcome to the Ryanair Holdings plc Q1 FY'24 Earnings Release Call. My name is Maxine, and I'll be coordinating the call today. I will now hand over to your host, Michael O'Leary, Group CEO, to begin. Michael, please go ahead when you are ready.

Good morning, everyone. Thank you for joining the Q1 results conference call. This morning, we shared the results release, an extensive Management Discussion and Analysis, and a video Q&A featuring myself and Neil Sorahan, all available on the ryanair.com website since 7 o'clock. I'll summarize the results briefly, share some thoughts, and then invite Neil to provide his insights on the MD&A before we open the floor to questions. We've reported a Q1 profit of EUR663 million, but this figure is skewed due to last year's Q1 profit of EUR170 million, which was impacted by the situation in Ukraine. As you may remember, the invasion led to a significant drop in traffic through March and Easter last year. In response, we significantly reduced prices in Q1 last year to improve load factors, resulting in average fares being down 4% from pre-COVID levels. Therefore, the increase from EUR170 million to EUR663 million this year reflects the very weak comparisons from the previous year. This year's Q1 benefitted from a robust Easter season, strong demand, and good pricing. We also had a second UK bank holiday in May, which contributed positively. Overall, traffic increased by 11% to 50 million passengers during the quarter. Revenue per passenger rose by 27%, with average fares up 42%, though this is influenced by last year's lower fares. Ancillary revenues increased by 4% on a per-passenger basis. By the end of the quarter, we were operating 119 Boeing 737-8200 Gamechangers, with a total fleet of 558 aircraft. We've also launched three new bases and added 190 new routes for summer '23, all performing well. We have extended our fuel hedging strategy and are 75% hedged for FY'24 at $89 per barrel, slightly above current spot prices, and 27% hedged for FY'25 at $74 per barrel. If we manage to hedge FY'25 at that rate, we could save nearly EUR1 billion in earnings for that fiscal year. Our net cash position at the end of the quarter was strong, nearly EUR1 billion, up from EUR0.5 billion at March 31st, thanks to the great work of Neil and the team. Our credit rating has been upgraded by both Standard & Poor's and Fitch from BBB to BBB+. A key development this quarter was our order for 300 MAX 10 aircraft with Boeing, signed in May, which secures a decade of growth in Europe within a constrained capacity market. The industry is consolidating, and we have access to an additional 400 very low-cost aircraft. This order, along with the other 100 MAX or Gamechangers, will facilitate fleet renewal and enable us to increase traffic to 300 million passengers by FY'34. We anticipate growth driven by strong demand and expect modest fare increases over the next couple of years, though likely not as steep as what we experienced in Q1. Our unit cost advantage over all EU competitors remains crucial, bolstered by our fuel hedging, solid balance sheet, and low-cost aircraft orders. This positions us well for significant and profitable growth as we target 300 million passengers by FY'34.

I'll very briefly just run through within fairness; you covered off everything quite comprehensively. I think it's clear that we will continue to have the unit cost advantage over everybody else, although there is a bit of price inflation coming through in the first quarter as we annualize the pay restoration and the pay increases we've awarded our people. As Michael said, we've invested heavily in crewing ratios. This summer, we are operating about 5.8 sets of crews per aircraft, up from 5.4 last year. So you're seeing that coming through as well as an increase in local ATC charges in the airport and handling line, which is apparent in the numbers this morning. The balance sheet’s in very good shape. We finished with EUR4.84 billion in gross cash and just under EUR1 billion in net cash after EUR1 billion in CapEx, including a $250 million signing fee on the MAX 10, which we signed back in May. We've got another EUR1.8 billion to go for the balance of this year. Our balance sheet became fully unencumbered last Friday when we paid off our final Exim loan. The 737-800s are now fully unencumbered, which I think is unique and that's reflected in the ratings we've received from Fitch and S&P up to BBB+. Hedging is very well managed for the year, just under 85%, of which 75% is through swaps and the rest through options. Looking into next year, we have about 40% of the first half of the year hedged at approximately $75 a barrel with some modest hedging for the second half. Just some other bits and pieces: the Class 1 circular will be issued in the next couple of weeks. This morning, we published our annual report for 2023 and our sustainability report on our website, outlining our ambitious targets for the next decade. That's about it for me, Michael.

Thanks, Neil. We'll open up to Q&A. Now, I'm joined here in Dublin by Eddie Wilson and several others, and Neil is joining us from London. So we'll open it up to Q&A, and I'll pass the questions around so we get everybody involved. Thank you.

Hey, good morning. If I might, on the fleet plan, it looks like there were some changes there, a little bit of MAX 10 shifting around. I was wondering if that was based on what Boeing is telling you or if you're making some assumptions given what you're seeing today? And then just for my second question, I was curious, with the investments in operational resilience, does that get baked into the base, and then we see more of a normalized growth on top of that? Or how should we think about some of the investments that are being made there and the impact on cost?

Thanks, Savanthi. I think the only change in the fleet plan is just delayed deliveries from Boeing. We've had to continue to be reasonably adaptive there. At one stage, we thought we might only get 35 aircraft for the peak summer this year. It’s now that I think credit to Boeing, they delivered all 51, with the last one arriving on the 31st of July. So we've lost about 300,000 to 400,000 passengers through June, July. We've had to take about 200,000 passengers out of August and we’ll be moving back. We're going to be seven or eight aircraft short in September and October as we start all the maintenance on the fleet. But there isn't any major change other than that. The investment in operational resilience, there's good news and bad news. The good news is that airport handling across Europe has improved this year from last year. Most airports and handling companies are reasonably well staffed this summer. The bad news is that ATC is a problem. They are short-staffed, particularly on weekends. We have long complained about the 60 days of French ATC strikes. The European Commission, unfortunately, hasn’t taken any action. I keep writing to Ursula von der Leyen, and she just continues to ignore it. Most of the ATC providers are short-staffed; it’s a mismanagement issue. Europe is operating at only 93% of its pre-COVID capacity. Yet ATCs have less staffing than in 2019 and 2020. Although I expect the issues to remain, we've improved operational resilience for the next couple of years until we see some action from European ATC. Eddie, you want to add anything to that?

Sure. It’s important to note that what's within our control we have significantly improved. The increase in crewing ratios ahead of schedule helps but more importantly, the systems we have in place like our Operations Control Center allow us to manage the challenges we've faced this summer without significant downtime unlike many competitors.

Good morning, Michael and Neil. Just on your comments about the softening in closing fares, is there anything specific you could call out in terms of geographies? Would you say there's a change in customer booking behavior? Also, what portion of the second quarter is booked currently? And then for my second question on uses of cash. In the video, you talked about a potential cash return to shareholders. What are you thinking at this point regarding dividends or buybacks, and any metrics that we should consider in terms of the potential size in March this year fiscal year?

Thanks, Muneeba. I'd like to emphasize that the softening in fares is largely due to the weak prior year comparisons in Q1 and strong prior comparisons in Q2. As we progressed through April, May, and June, we saw our close-in fares rise ahead of budget expectations. However, in Q2, they've leveled out and the close-in demand hasn't jumped as significantly as it did in Q1. We're not overly worried about this, but I want to manage expectations. There will be some normalization in Q2 after a very strong Q1. As for uses of cash, the Board has set out priorities: restoring pay cuts first, then repaying debt, and finally CapEx. Only after committing to those, can we consider returning cash to shareholders. I think our focus will be on dividends rather than buybacks, and we aim to return as much, if not all, of the EUR400 million that shareholders invested during COVID. However, decisions on this will likely emerge at our half-year results in November.

Good morning, gents. Just two questions, if I can. First, on the ex-fuel costs, I think it’s up EUR2 in March '24. Neil, you indicated previously you don't want to keep it flat in March '25 year-on-year, is that still the case? On the trimming of the full year passenger guidance, do you think there's a possibility you can actually make up EUR1.5 million over the rest of the year, or is there a heightened risk that it could actually be lower than your guidance?

On FY'25, we are hopeful to maintain something along those lines into the following year. As Michael said, we had to trim guidance from 185 million to 183.5 million because of the delivery delays. However, we will manage yields as best we can, the yields in winter will be lower than the summer. We're not likely to artificially dump prices just to hit targets if needed. If the market requires that we only have 183.5 million passengers, then that’s where it will be. We think we're still positioned for reasonable growth in the market despite the current conditions.

We wouldn’t compromise on that just for an arbitrary number. The market dynamics are essential here. But we expect to see strong demand despite macro uncertainties. Eddie, I assume you are aligned with my view on this?

Yes, I agree completely. The demand has to stabilize and continue strong against a competitive backdrop as you've already alluded to. We won't force capacity just to hit old numbers, but we will look to optimize routes focusing on customer demand.

Hi, Mike. You're going to hate this question, but just to come back on pricing. You talked about low double-digit, then you mentioned mid-teens, and then low double to mid-teens. If you were an analyst, would you be thinking about the mid-teens as what you've been currently sold at, and how cautiously does Ryanair manage that? As for the pilots, are you seeing any coming back with performance expectations for higher pay demands?

We maintain that our best guess is the yield performance in Q2 will be between 10% and 15%. Currently, it’s on the higher end, but I prefer to remain cautious since the close-in fare demand has softened recently. The final outcome will depend on upcoming bookings in August and September. Regarding pilots, we’ve restored pay cuts which we did early and addressed pay increases with many pilot groups already.

Yes, we restored pay cuts earlier due to emergency agreements during COVID. Agreements for some other groups are ongoing, and we remain committed to fair and competitive pay structures across the board.

So you want to stop them selling your seats entirely?

We want to stop the misleading practices of mis-selling and anti-consumer pricing. By controlling how our seats are sold, we aim to offer transparency and better customer service over hidden charges. Legal actions will continue against scrapers to achieve that.

Just on seasonality, Europe has always had a more exaggerated peak leisure period than the US. Are there behavioral changes you've observed post-COVID? Also, how would you characterize the level of corporate recovery in Europe versus the 80%, 85% recovery in the US?

We observe strong growth in both leisure and business travel. Business travel has partly rebounded due to more domestic operations in larger markets while leisure segments are diversifying as customers seek interests beyond traditional beach holidays.