Good morning, and welcome to the Ryanair H1 Results Call. My name is Adam, and I'll be your operator for today. I will now hand over to Ryanair Group CEO, Michael O'Leary, to begin. Please go ahead.

Okay. Good morning, ladies and gentlemen. Welcome to the Ryanair H1 Results Conference Call. We're joined by all the members of the team from different parts of the globe. I'm going to run through quick highlights. As Neil Sorahan, our Group CFO, as usual, will give you a comment on the financial highlights, and then we will maximize the time for Q&A. So, you'll see this morning, we reported H1 after-tax profits of EUR1.8 billion, 18% lower than the prior year H1 profit of EUR2.18 billion. Highlights at the half year were traffic, strong growth, 9%, to a record of 115 million. It would have been higher, but for the repeated Boeing delays. The key theme is average fares fell in the half year by 10%, but the trend is improving. We were down 15% in Q1, down 7% in Q2. Looking to Q3 for forward guidance, we have 170 Gamechangers in a fleet of 608 aircraft at the end of the half, which has risen to 172 by the end of October. We have five new bases and 200 new routes opened this summer. The approved OTA partnerships now cover over 90% of all OTAs. These protect consumers from being overcharged by OTAs. We provide OTAs direct feed into the ryanair.com website, but in return, they guarantee that the customer will only win with our prices. We also have accurate emails and customer credit card information. Thus, we maintain a direct relationship with our customers through approved OTAs. Our strong balance sheet has enabled us to take a very strong fuel hedge position. We're 85% hedged for the second half of FY '25 at $79 a barrel. We've taken recent opportunities to increase our FY '26 cover to 75% at $77 per barrel. We completed a $700 million share buyback in August, and as of today, we've executed just over 30% of the EUR800 million follow-on share buyback. We expect that pace to continue and will probably run out until about April or May of 2025. The Board confirmed the interim dividend of EUR0.223 per share, which has been declared and will be paid in February 2022. Looking back at the half year, our revenues were resilient, rising 10% to EUR2.74 billion, ahead of our 9% traffic growth. Operating costs rose by 8%, lagging behind the 9% traffic growth as fuel savings offset higher staff costs due to some Boeing delivery delays. We expected to carry 205 million passengers for FY '25 but now think we will come in slightly under 200 million for the full year. Our original target for FY '26 was 215 million passengers. We expect to revise that to about 210 million, possibly down to 208 million depending on the resolution of the Boeing strike. We are working closely with Boeing, and I'm in regular communication with them. We are hopeful for timely deliveries, but we are cautious about adjustments to our growth plans. While facing some price softness this year, I remain optimistic for medium-term pricing due to capacity constraints in the European aviation market. Our proactive measures to ensure fare transparency with OTAs should benefit our long-term profitability. Regarding our outlook, we have solid Q3 bookings but limited visibility for Q4 due to Easter timing issues affecting comparisons. Our PAT guidance for FY '25 remains uncertain, but we expect unit costs to be broadly flat, supported by our fuel hedges. Overall, I'm confident in our ability to navigate the challenges and capitalize on growth opportunities.

Okay. Thanks, Michael. You covered it fairly well, but I'll reiterate. We are pleased with how costs went in the first half of the year. The hedging we locked in for the year is delivering good savings, and we're focusing across all of the other lines as well. This has now enabled us to improve the guidance on the full-year unit cost to broadly flat. Our balance sheet is robust, with a BBB+ investment-grade rating and over 580 aircraft, giving us a massive advantage over competitors. Our model of financing ourselves through cash extends our cost advantage, as many competitors are raising expensive leases and debt. Distribution is going well; we're about one-third of the way through the EUR800 million buyback, as Michael said. We've locked in modest savings on fuel hedging into next year, which is very important in this volatile oil market. While we're guiding towards EUR2.3 billion CapEx for this year, some of that is likely to slip into next year as we gain better visibility on aircraft deliveries.

Okay? Let's go to Q&A, please, and spread some of the questions around the wider management team here.

Our first question comes from James Hollins from BNP Paribas. James, your line is open. Please go ahead.

Just one for me, actually. So, feel free to spend twice as long as you would have done on this. I think the ATC situation has been discussed at length, and I was hoping that you could quantify what the ATC situation was— not just in Q1, but in the summer too. So, can you please share your thoughts on fiscal '26 and the not-so-easy comps with as much detail as you can?

I'll give you an intro and Eddie will talk or maybe Jason McGinnis as well. The OTA situation started last November, leading to a two to three-point drop in our load factors in the third and fourth quarters last year. It impacted us this summer more than I had anticipated. While I did not see a shift of bookings to our competitors, I think we’ve seen some traffic migrate away from OTAs and Ryanair to tour operators this year. I think the actions we’ve taken against OTAs were necessary, especially to protect our pricing integrity. We're pleased to have signed up over 90% of OTAs who provide real Ryanair fares without hidden charges, although two remain. eDreams and Booking.com have yet to sign on due to their persistent overcharging. I expect that should change as they cannot sustain their models in a transparent market. I've also noted that our decline in pricing for Q1 and Q2 was influenced by consumer spending pressures. While I was surprised by the downtrend in prices this year, we are still capturing substantial market share due to competition constraints. Forward bookings into the summer look promising, and we expect to manage through current challenges.

It's Eddie. The difficulty in looking at comparisons is due to OTAs using intermediaries to scrape bookings. However, we have observed a positive trend that OTAs are recovering and bringing in higher fares. Some of the tour operators have reported better bookings compared to last year, as we weren't able to capture those due to the OTA issues in the January period. While we lost some Q1 bookings, we are optimistic for future growth as we’ve resolved most issues and anticipate a stronger market ahead.

If I take Q1 to Q2, fares were down 15%. If we account for the first half of Easter moving into prior year Q4, I think Q1 like-for-like is down between 7% and 10%. Q2, down 7%. Q3 – what's the estimate on how much is the OTA issue and how much is consumer spending?

Yes, I think it's roughly split down the middle between the interest rates' impact and inflationary pressures. Last Christmas into January saw a weaker consumer sentiment compared to previous years. Central and Eastern European markets have continued to perform very well despite general concerns, and our load factors remain strong.

Thanks, Jason. Thanks, James. Next question, please.

The next question comes from Harry Gowers from JPMorgan. Harry, please go ahead. Your line is open.

I've got two questions, if I can, for Neil. First, regarding ex-fuel costs and the pay increases put through last year— some color on the winter or full-year ex-fuel cost per passenger would be great. A related question on the delay compensation received in H1—could you quantify the total and the outlook for H2?

Starting with your second question, we're not going to quantify the delayed compensation. It's modest so far, as we call out in the press release. While it has been beneficial in the first half, we don't see it as significant enough to put us back completely into profitability given the lost passengers. Will there be more in H2? Yes, but it will depend on aircraft deliveries. On unit costs, we have seen good progress, and absent the Boeing compensation, we’ve noticed various improvements across other ex-fuel cost lines. This is why we’re guiding total unit costs broadly flat.

Thanks, Neil. Thanks, Harry.

The next question is from Stephen Furlong at Davy. Stephen, your line is open.

Michael, just looking at the allocation of growth, you called out reductions of capacity in Sweden and Hungary due to various regional airport issues. Can you elaborate on that? Over to you.

Sure, we are experiencing a shortage of aircraft, leading to increased churn. This means we have to take aircraft away from higher-cost regions, particularly France, where we are reducing capacity. The increased aviation taxes and fees are causing us to reassess routes, and we are repositioning capacity toward regions that have eliminated such costs, like Hungary and Sweden. Additionally, we are seeing some success in Italy and Portugal. We believe these moves will allow us to bolster profitability while facing constraints in Dublin innovation. Our outlook remains cautious but optimistic as we navigate these changes.

I think what we've seen post-COVID is the recovery of traffic moving earlier than expected. Airports in Italy, such as those that scrapped taxes, show a strong resurgence, signaling a positive trend for where capacity will likely be allocated in Europe moving forward.

In the U.K. market, we expect to trim capacity, reducing traffic from 55 million to 50 million. We’ll not close routes but adjust frequencies to accommodate better pricing pathways in lower-cost markets. The plan is aimed at supporting pricing upwards in the future across these key regions while maintaining growth.

Is that something you'd like to add, Eddie? No? Alright. Next question please.

Next question comes from Jaime Rowbotham from Deutsche Bank. Your line is open.

Jamie, go ahead. All right, let’s move on. We will circle back.

Next question comes from Muneeba Kayani from Bank of America. Muneeba your line is open. Please go ahead.

Good morning. I just wanted to follow up on the earlier question regarding OTAs. Can you clarify what you mean by over 90% has been converted? Are they all fully integrated at this point? Regarding eDreams, where do things stand with them? Will you be able to onboard them as well? Additionally, Neil, on cash return and buybacks, can you elaborate on your thoughts for next year concerning the announced buyback amounts?

Thanks, Muneeba. A lot of the OTAs who booked on our system last year are now signed up, with two main exceptions. Both Booking.com and eDreams have to agree to the terms. We've initiated legal actions against both for overcharging consumers, and I believe it's just a matter of time before they comply. Meanwhile, we protect over 90% of OTA customers and ensure they're getting genuine Ryanair fares. It’s a vital step. As for buybacks, our approach remains influenced by our current surplus cash situation. We have significant bond repayments coming up, so while we aim to return cash to shareholders, the ongoing review of ownership variables won't influence our buyback plans.

In relation to our financing options, we remain opportunistic. We may consider leasing if it becomes compelling, but currently, our balance sheet allows us strong cash flow options versus competitors needing to finance through leases. We're focused on maximizing returns for our shareholders through buybacks in light of our growing free cash flow.

Also, notable is that if the share prices were to fluctuate, we would adapt our strategy in alignment with shareholder interests as share buyback is primarily driven by our cash flow capabilities. We hope to maintain that momentum moving forward.

Next question comes from Dudley Shanley from Goodbody. Dudley, your line is open. Please go ahead.

Could you provide an update on the MAX 7 and MAX 10 certifications? Additionally, what's being done about ATC disruptions?

Boeing remains confident about the certification of MAX 7 in the first half of FY '25, followed by the MAX 10 certification in the mid-second half of 2025. ATC disruption issues this year have worsened significantly. EUROCONTROL has reported that flights in Europe were at 98% of pre-COVID volumes, but staffing shortages are a significant issue. We’re engaged with EU authorities to push for improved staffing and protections for overflights during strikes, which are critical to minimize delays.

The next question comes from Alex Irving from Bernstein. Your line is open. Please go ahead.

On the MAX 10 certification, are there any risks associated with the timeline, and can you speak about ancillary sales growth?

We're excited about the MAX 10's potential, with scheduled deliveries starting in the first half of 2027. Successful certification of the MAX 10 will provide more efficiency in our operations, but there are complexities involved. Regarding ancillary sales, revenue per passenger growth is being positively impacted through boarding initiatives and enhancements to our onboard services. We’re optimistic about maintaining growth in this area despite challenges faced in prior quarters.

There's been a solid recovery in ancillary revenue, driven by premium seating options and onboard sales initiatives, which have shown year-on-year improvement as we've rolled out new services. Although we’ve faced pressures, we’re pleased with our progress in this area.

We anticipate that our new mobile app initiative could significantly enhance our onboard sales. It not only enables customers to order seamlessly but also allows us to gather valuable data on client preferences, which will further optimize our offerings. Thus far, the application has received positive feedback from our passengers.

The next question comes from Jarrod Castle from UBS. Jarrod, your line is open.

You've hedged 75% of your fuel for 2026—what influenced the increase in hedging? Does this suggest any insights into oil price trends in the coming year?

We've increased our hedging as a proactive measure against volatility in oil prices. Given recent fluctuations, we see it important to lock in cost certainty where possible. Currently, our hedges are effective, but it’s impossible to predict oil price movements with absolute certainty. However, based on current trends, we are positioned favorably for the next fiscal year.

In terms of ownership rules and discussions— we've engaged with regulators and shareholders representing 60% of our issued share capital, and we expect to take their feedback into account. However, it’s premature to discuss outcomes as consultations are still ongoing.

The purpose of these discussions is to ensure that our shareholders' interests are met. We're considering various options, including potential changes to ownership and control restrictions while being mindful of regulatory implications.

The next question comes from Sathish Sivakumar from Citi. Sathish, your line is open.

Can you elaborate on spending patterns between direct app orders versus traditional onboard purchases? Also, what progress has been made on SAF procurement?

Generally, customers ordering via our app tend to spend more than those making purchases onboard. The convenience and ease of accessing the app leads to this higher propensity to buy. On the SAF, we are currently negotiating contracts with suppliers. Full visibility on pricing is still being established, but we believe the premiums will vary by region and we foresee finalized numbers soon.

As for SAF pricing, we anticipate premium costs ranging from 2 to 4 times depending on the region, but we’re still in negotiations and finalizing agreements that will provide better insights moving forward.

Our onboarding app initiative is expected to enhance our ability to deliver personalized services to customers and drive efficiency. We're actively working to invite more of our passengers onto the platform, which will allow us to streamline operations and reduce operational costs.

The next question comes from Duane Pfennigwerth from Evercore ISI. Duane, your line is open.

Could you comment on if you've paused pilot hiring due to overstaffing? And could you articulate the associated cost impacts that might play out over the next couple of years?

Yes, we have eased back recruitment due to overstaffing issues. We had initially over-recruited, preparing for greater operation levels and training more pilots than needed. Currently, our pilot attrition rate is at an all-time low, leading us to reassess future hiring plans, particularly due to stronger economic conditions in our workforce. Going forward, I expect our cost structure to stabilize and not see significant reductions for some time.

The impact of overstaffing has been evident in our cost performance this year, causing staff costs to rise disproportionately. As we recalibrate our employee numbers, we anticipate reducing some of these cost pressures moving forward.

Next question comes from Ruby Colony from RBC.

On Slide 17 of your presentation, you've indicated a 10% passenger growth in full year '27 on only 1% growth in fleet size. Could you clarify this expectation? Additionally, for Q3, is your book-to-date pricing significantly different from expectations given the OTA impacts?

For FY '27, the numbers reflect our optimism in continuing passenger growth due to efficiency improvements and better operational management stemming from our fleet size. We don't project a perfect correlation between fleet growth and passenger numbers anymore, especially with changes in market dynamics. In Q3, we anticipate strong bookings based on recent trends despite last year's OTA issues. Thus far, load factors are encouraging, showing a positive trajectory.

The next question comes from Andrew Lobbenberg from Barclays. Andrew, your line is open.

Could you comment on the reduction in cabin capacity to the U.K. by 10%? How are those slots being utilized? And regarding the OTA situation, eDreams appears substantial; have they contributed more than the indicated 10% of passenger losses?

The capacity reduction in the U.K. will focus on frequency rather than a total aircraft loss. We will adjust our routes without vacating aircraft, prioritizing growth in regions that offer favorable economic conditions. As for eDreams, it's not a large portion of traffic overall, and while they are impactful, they’re not exceeding 10% of our passengers.

Ultimately, we're focusing on retaining profitability while navigating changes in our growth strategies, ensuring we adapt our approach amid challenges, especially with eDreams.

The last question comes from Gerald Khoo from Panmure Liberum. Gerald, your line is open.

On the tax rate, it seemed high at 14% in Q2, which is above expected. Can you clarify this? And related to your revised aircraft schedule—what timeline for strike resolution with Boeing do you anticipate?

The high tax rate in Q2 results from geographical profit distributions, with much of our earning concentrated in regions with higher taxes. A sensible assumption for the full year would be around 10-11% taxation overall.

We have not made assumptions yet regarding resolution timelines for the Boeing strike. However, we've stayed close to Boeing in communications as they work on plans to improve delivery and reduce backlog—unfortunately, that hinges on their internal negotiations with staff which we expect to better understand soon.

Our last question comes from Conor Dwyer from Morgan Stanley. Conor, your line is open.

Regarding the potential influence of ownership rule reviews on the buyback plans, I'm curious if you'd hold back some cash for a larger buyback later?

The review of ownership regulations won't significantly shift our buyback strategy; our focus remains on ensuring strong cash flow suggests the feasibility of future buybacks. The influence remains entirely on financial performance rather than ownership considerations.

We’re considering various financing options based on overall organizational value. If the costs of financing through leasing become notably appealing, we may approach that, but as of now, internal cash remains our best option. Any major shifts would be predicated on market dynamics and results over the coming periods.

As we continue to assess the financial landscape, our primary goal remains returning value to shareholders, adapting strategies that serve that purpose. Ultimately, we will manage operations prudently while watching the fiscal horizon for any opportunities that arise.

That concludes the Q&A session. I'll hand back to you.

Thank you, everyone, for attending. We’ve covered a lot in the past hour and a half. The management team will be engaging with investors across various markets. If there’s any further interest in discussions or meetings, please reach out. Despite recent challenges, our cost discipline remains intact, and while pricing faced pressure this summer, we expect it to improve as markets stabilize. Our balance sheet positions us well for future profitability, and we look forward to connecting with stakeholders in the coming weeks. Thank you once again.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.