Good morning, and welcome to the Ryanair, Q3 Results Call. My name is Carla, and I will be your operator today. I will now hand you over to the Ryanair Group CEO, Michael O’Leary to begin. Michael, please go ahead when you're ready.

Okay. Good morning, ladies and gentlemen. Welcome to the Ryanair Q3 Results Conference call. As you have seen this morning, we reported a Q3 profit after tax of EUR149 million due to traffic growth of 9% to 45 million passengers at marginally higher fares. We had stronger close in Christmas and New Year bookings at marginally better fares than we'd expected. I would, however, caution cumulatively for the nine months the profits of EUR1.94 billion are 12% below the prior nine months' profit after tax of EUR2.19 billion as airfares over the nine month period are 8% lower than they were in the prior year. The Q3 highlights included traffic growth of 9% to 45 million, despite repeated and very frustrating Boeing aircraft delivery delays. Revenue per passenger rose 1%. Q3 average fares were up 1% and ancillary revenue up 1%. However, the approved OTA partnerships are almost fully integrated and are working well and we see them trending well into 2025. We have over 80% of our EUR800 million buyback completed at the end of December. In fact, we're now just over 60% of it done. Ancillary revenues in the quarter rose 10% to EUR1.04 billion in Q3. Operating costs with 9% traffic growth rose 8% to EUR2.93 billion as fuel hedge savings offset higher staff and other costs in part due to repeated Boeing delivery delays. Touching briefly on the balance sheet on 31 December, gross cash was EUR2.77 billion, which resulted in a modest quarter end net cash balance of just over EUR70 million, despite EUR1.1 billion of CapEx, over EUR1.1 billion of share buybacks and a EUR200 million dividend which was paid last September. Our owned Boeing 737 fleet of over 580 aircraft is fully unencumbered, and we believe this is critical as it significantly widens Ryanair's cost advantage over all other competitor airlines. While Ryanair prepares to repay a maturing EUR850 million bond in September and a EUR1.25 billion bond in May 2026, our competitors remain exposed to expensive and rising long-term finance and aircraft lease costs. We're now over halfway through our current EUR800 million buyback, and we expect to complete this program by mid-2025. When we finish it, Ryanair will have returned almost EUR9 billion, including dividend to our shareholders since 2008, with approximately 36% of the issued share capital repurchased and canceled. I think the most notable feature of the last quarter and for the next quarter is Boeing aircraft delivery delays. These delays have now forced us to revise our FY 2026 traffic target for the third or fourth time. It originally went from 215 million down to 210 million, and we now have to quote it to 206 million, which will be just 3% traffic growth for the next 12 months, a very disappointing outcome given the growth opportunities that are available to us across Europe. We are, however, hopeful and I would say modestly confident that the remaining 29 Gamechangers in our 210 aircraft order book will deliver before March 2026 and will enable us to recover this delayed traffic growth in summer 2026 instead of summer 2025. As we were in Seattle very recently, Boeing still expects the MAX-7 to be certified in the first half of 2025, the MAX-10 in late 2025, which we hope will facilitate a timely delivery of our first 15 MAX-10s in spring 2027 as per our contract. Over the coming summer, we'll reallocate this very scarce capacity growth to those regions and airports, most notably in Poland, in Spain, in Sweden, and regional Italy, who are investing in growth by abolishing aviation taxes and/or incentivizing traffic growth. We expect European short-haul capacity to remain heavily constrained in summer 2025 as many of Europe's Airbus operators continue to work through the Pratt & Whitney engine repairs, as both major aircraft manufacturers struggle with delivery backlogs and as EU airline consolidation continues. I want to touch briefly on the ownership and control issue. As you'll recall, the Board confirmed over 49% of Ryanair's issued share capital was held by EU nationals. In anticipation of breaching the 50% threshold, the Board deemed it appropriate to review potential variation of the ownership and control restrictions. As part of this review, we've engaged in an extensive engagement process with shareholders and regulators, which began last September and is now at an advanced stage. The current restrictions on share purchases and voting by non-EU nationals will remain in place during their review, but based on current trends, the company expects its EU shareholding will reach the 50% threshold in the first half of 2025 or soon thereafter. And then I think the board will consider and make a decision on whether we maintain the ownership and/or the control restrictions thereafter. Touching briefly on outlook. I know everybody is very excited by summer 2025. Unfortunately, we have very little visibility at this point in time on summer 2025. We do, however, expect our full year 2025 traffic, that is to March 2025 to reach almost 200 million. We might finish just short, subject to no further adverse news on Boeing delivery delays. Unit costs are performing well in line with our expectations as the cost gap between Ryanair and EU competitor airlines widens. And we expect our unit costs to be broadly flat for the full year, thanks to our fuel hedge savings. Our fuel hedge savings, strong interest income, and some very modest aircraft delay compensation in the form of credit notes against materials and services are largely offsetting ex-fuel cost inflation, particularly crew pay and productivity issues, higher handling and ATC fees, and the cost inefficiencies we've suffered as a result of repeated Boeing 737 delivery delays. While Q3 fares were marginally stronger than the prior year, remember, the prior year was impacted by the OTA boycott in late November 2023. This year's Q4 will not benefit from last year's early Easter, which makes our Q4 prior year comp very challenging. At this stage, we are cautiously guiding full-year 2025 profit after tax in a range of EUR1.55 billion to EUR1.61 billion. However, the final FY 2025 profit after tax outcome remains subject to avoiding adverse external developments between now and the end of March, most notably, the risk of further Boeing delivery delays and any short-term impact of the conflicts in Ukraine and the Middle East.

Okay, I don't have a huge amount to call out other than to reiterate the strength on the costs. The gap between ourselves and competitors continues to widen, and pleased that in line with the guidance that we gave back in November with the half years, we're still guiding broadly flat full year unit costs. Hedging, very well hedged into next year. We're over 75% hedged at about $77 a barrel or 770 per metric tonne on jet. And then of course, as Michael called out the balance sheet is in very good shape and the buyback is going according to plan, but nothing really else that I want to call out.

Okay. Thank you for that. With that, we'll open up the Q&A, please.

We will now begin the question-and-answer session. Our first question comes from Stephen Furlong from Davy. Your line is now open.

Stephen, good morning.

Hey, Michael. Maybe just Mike, maybe just talk again about the type of growth for the summer, where that's going to go to, maybe Eddie can talk about that. And then the second thing is maybe just more generally what you think about the supply chain? Is it more aircraft, Michael, or delays, or would you say it's also engines? Because I know, for example, after Capital Markets Day you talked about maybe insourcing some engine shops from 2030, so maybe just talk about that. Thanks a lot.

Okay. Before I hand it over to Eddie to discuss the growth for summer 2025, I want to express some caution. In Q3, we had a slight advantage due to the OTA boycott affecting last year's comparison, making it easier for us. In Q4, we faced a tougher comparison because we had one half of Easter last year that will impact us. As we enter Q1 of summer 2025, we're looking at a more favorable comparison since we only had half of Easter in Q1, while this year we will experience both halves. We're observing a reasonable increase in pricing and volumes for Q1, but we lack clarity for the critical second quarter of summer 2025, specifically the September quarter. We won’t speculate on fares or traffic but want to note that European capacity is limited, more than we would prefer. If Boeing had delivered the 29 aircraft scheduled for this year, we could have increased our passenger numbers by about 10 million. Our initial target for summer 2025 was 215 million passengers, and now reaching 206 million will be a challenge. It's frustrating that we can't grow when many competitors across Europe are facing constraints due to Airbus engine repairs. However, we believe this limitation may slightly help forward bookings and pricing for summer 2025, provided no major issues arise. We acknowledge the risks, including potential further Boeing delivery delays and geopolitical events. Regarding the supply chain, we don’t consider this strictly a supply chain issue with Boeing. They have particular challenges stemming from the MAX grounding and significant backlogs compounded by a strike in November-December. We're somewhat disappointed with how slowly Boeing has resumed manufacturing, but they are making gradual progress. Initially, we expected 25 aircraft for summer 2025, which was then cut to 15, and now we're counting on nine aircraft, most of which are already in Seattle. There are currently no supply chain issues hindering Boeing. They have plenty of spare engines available; the challenge lies in getting them assembled in Seattle and ramping up production. We hope that if all goes well, Boeing will reach a production level of 38 aircraft by the end of summer, aiming for 42 by October, pending FAA approval. While there are no immediate supply chain problems, we are facing medium-term challenges, particularly involving engine maintenance shops globally. We are actively exploring the establishment of one or two in-house engine maintenance shops over the next year and a half. Eddie, is there anything you would like to highlight regarding our limited growth for summer 2025?

Yes, I believe that limited growth has highlighted the churn we’ve experienced in airports, where we've prioritized regions and airports that have reduced costs reflected in airport charges or taxes. For instance, in Italy, a municipal tax has been introduced in three regions, and we’ve added additional aircraft in Lamezia and Reggio in Calabria, as well as in Trieste and more recently in Abruzzo. This tax, which is EUR650 per passenger, has been eliminated in some areas. In Spain, while we continue to grow at major airports, the competitiveness of regional airports has come into sharp focus, as evidenced by recent issues with the airport authority. We’re significantly focused on leisure destinations in tourist hotspots like the Balearics, Malagas, and Alicantes, where we’ve added extra capacity. In Sweden, the aviation tax has been removed, allowing us to increase our based aircraft by about 30%. In central Eastern Europe, we’ve established a new base in Dubrovnik, which is performing well, and in Hungary, taxes have been reduced, including incentives in Dublin for Gamechangers aimed at lowering costs through decreased noise emissions and fuel usage. Additionally, Germany presents a similar disconnect to Spain, as major airports continue to increase prices through federal taxes, while smaller regional airports like Baden-Baden work hard to secure capacity.

Yes. And I would highlight the case of the UK economy in particular, where you, Rachel Reeves, claiming that to deliver growth, her first day initiative with increased APD, which immediately damages air travel to and from the UK, and now trying to distract everybody by supporting a third runway in Heathrow. The third runway will be may or may not be delivered in my lifetime, I wouldn't hold my breath. But if you're really serious and if that government is serious about growth, they should be scrapping APD, and stop worrying about a third runway in Heathrow. There's lots of runway capacity still in Stansted, Luton and in regional UK, where Manchester, Liverpool, Birmingham, Bristol, Glasgow, and Edinburgh have lots of capacity for growth. But the first thing she does is dump up the taxes, which harms growth and encourages us to reallocate capacity and growth away from the UK to markets like Sweden, Italy, Hungary and others, where they're reducing or abolishing taxes. It's about time these European politicians began to actually twig. Trump isn't always wrong, and if you want growth in European air travel, abolish these stupid taxes. The benefits flow immediately to consumers and there'd be an immediate response in terms of growth in the UK, whereas the third runway in Heathrow won't happen for the next ten or 20 years, and it's just a distraction from her failed policies of raising travel taxes. Next question, please.

The next question comes from James Hollins from BNP Paribas.

James, hi.

Hi, Michael. Yes, thanks. Two from me, please. First one is on the OTA update. This is not me trying to get you to talk about pricing in the summer. I was wondering if you can just give a broader response on what you're seeing on booking impact, maybe what tech integration still to go, and maybe what sort of upside you might see on pricing into fiscal H1 2026, now the OTA deals are done. And the second one, I know that being stupid here, but I get why full year 2026, fiscal 2026 passengers are only up 3%. But in your appendices you've got full year 2027 only up 4%. I think previous was 10% and obviously, you got a lower base. Maybe just run me through what I'm missing. Thank you.

For fiscal year 2026, we have agreements in place with over 90% of the major online travel agencies. A key aspect of these agreements is that they have direct access to the Ryanair inventory and agree not to charge our customers excessive fees. We're observing strong forward bookings, although the OTAs currently account for about 10% of our annual traffic. We are seeing significant volumes at higher average fares, particularly as customers are booking their holidays from Easter into summer 2025, typically for Saturday to Saturday travel and more premium dates. This indicates a positive shift from the OTA boycott we faced last year. Compared to the same time last year, we're seeing promising numbers for summer 2025, albeit from a low base. When excluding April from the figures, our forward bookings for summer 2025 are about 1% ahead of last year's figures, with slight increases in prices as well. April stands out because it includes two halves of Easter, so we anticipate a boost in Q1, but it's too early to provide forecasts for Q2 or Q3. The tech integration is progressing well, and we notice that some OTAs perform better in selling ancillary services. We are learning from this and collaborating with them. Furthermore, some OTAs are exploring artificial intelligence and machine learning to enhance fare displays and convert users into purchasing ancillary services. Regarding fiscal year 2026, due to a shortfall of 29 aircraft this year, we expect to be slightly under our target of 200 million passengers, potentially 30,000 to 40,000 short. We anticipate a 3% increase next year to reach 206 million passengers, and by fiscal year 2027, we expect growth to 215 million with the delayed aircraft. If we receive all 29 aircraft by the end of March 2026, fiscal year 2027 could reach 250 million, reflecting a 4% traffic growth compared to 206 million.

Yes, I'm curious why you're projecting only 215 million for the full year 2027, whereas you previously had it at 230 million. Am I misunderstanding something?

No. It's in the slide presentation. I'm not sure whether we were at 230 million; that number is flexible. Eight years ago, we calculated it at 230 million with the expectation of acquiring some additional second-hand aircraft. The 230 million target has now been pushed back to FY 2028. We still believe we can achieve that, but it depends on receiving the MAXs and avoiding any further delivery delays.

Okay, cool. Thank you.

Don't concentrate too heavily on comparing one year to another. Our growth in deliveries is essentially shifting back a year, and consequently, the growth reflects that adjustment. Thanks, James. Next question please.

The next question comes from Dudley Shanley from Goodbody.

Dudley, hi.

Good morning, Michael. Two questions if I may. The first one is on the slower growth profile next year. I mean, are there implications in terms of unit costs, I think particularly in staff, or does the airport and route churn ability that Eddie was talking about offset that? And then the second question is in terms of the outlook for capacity constraint in Europe over the next few years, have you seen anything change in that outlook in the last few months? Thank you.

On a slower growth profile, we don't see anything that should hold us back. Last year, we planned for 30 aircraft deliveries but ended up receiving only 15, which left us with more crew than necessary for much of the summer. As long as Boeing provides the nine aircraft we expect this summer, we will have a better crew balance this year. We have not over-recruited or overtrained. In fact, our attrition rates are at historically low levels. We are also reducing and postponing a significant amount of pilot and cabin crew recruitment training that would typically occur in Q3 and Q4, so there may be some upside there. The churn discussions have yielded significant results from negotiations with many base airports and governments. The rollback of taxes in Sweden, Hungary, regional Italy, and others is a direct outcome of these churn discussions. This situation underscores how the UK seems completely out of touch, raising taxes while other EU countries are eliminating aviation taxes and discussing a third runway for Heathrow in 30 years. It’s all meaningless. Although the slower growth profile is disappointing, it's temporary. We expect to add about 6 million passengers this year, totaling 206 million, and then return to our normal growth rate of around 9 or 10 million passengers. We anticipate growing by about 10 million passengers annually, which equates to roughly 4% or 5% growth on a 200 million base, consistent with our historical growth rate prior to the Boeing delivery delays. Eddie, do you want to discuss capacity and any changes you've seen?

Yes, but on that capacity constraint, I mean, that does bring those decisions into really sharp focus in different countries. I mean, if you just take what Michael called out there in Sweden, I mean, Sweden's got to look around and see, look, SAS has come out of chapter 11, much smaller than it was before it went in. Norwegian haven't really grown in Sweden. And if they want to have connectivity, they look around and say, what are we going to do, and Ryanair is essentially the only show in town to actually move the dial. And increasingly, we're able to move the dial even with that reduced capacity in places like Morocco, where we've grown by almost 20%. Italy, where that growth is going into those airports where the municipal tax has gone. And those regions airports know that there is no other carrier of volume that can actually solve the problem that they have for making up capacity shortfalls post-COVID, it just comes into sharper focus.

If you observe the competitive landscape, you’ll notice that some of our competitors, such as easyJet, are acquiring aircraft and increasing their fleet size, but most of this is occurring at their primary airports, like Gatwick, Paris, and Switzerland. They seem to be wisely avoiding head-to-head competition with us. Similarly, Wizz is purchasing aircraft at very high prices, which increases their ownership and maintenance costs with each new aircraft. However, much of their added capacity appears to be directed toward different markets, particularly in the Middle East. We do not see any capacity expansion in the markets where we are still significantly growing, such as Poland, Romania, Bulgaria, Hungary, and the Balkans. In fact, we are expanding considerably in areas where they were previously the leading carrier, like Albania and Tirana. We are experiencing strong growth there. I cannot definitively say how their growth is affected by Airbus engine repairs, but their activity appears minimal. Despite their claims of competing with us, they are rapidly withdrawing from Italy and have also exited Vienna quickly. We're not even sure if they still operate in Vienna, as it seems the local market is unaware of their presence. Meanwhile, we are continuing to grow robustly in various markets. Our capacity outlook for this year is constrained, which is disappointing because more aircraft would allow us to capture even more market share from established competitors. We see Lufthansa's acquisition of ITA leading to more feeder services into Frankfurt and Munich, which would create further opportunities for our growth in domestic Italy. Additionally, if TAP is consolidated, we stand to gain as the largest airline in Portugal, especially if a high-cost airline, such as Lufthansa or Air France, KLM, or IAG, acquires the remaining parts of TAP in Lisbon. Next question please.

The next question comes from Jaime Rowbotham from Deutsche Bank.

Jaime, hi.

Good morning, Michael. I have two questions. First, I want to revisit the topic of capacity. Last summer, despite various challenges, you increased your seat capacity by about 9%, while many competitors grew by only 4% to 5%. Some smaller airlines even exceeded that. The schedule indicates that overall system capacity last summer was up in the mid-single digits. Looking ahead to this summer, it appears you're now expecting around 3% growth. I understand that easyJet's situation is somewhat exceptional, but there are others, like Jet2 at 9% and Norwegian at 5%. Even accounting for additional aircraft and engine issues, it seems there’s potential for decent intra-EUC growth while demand trends are returning to a more typical correlation with the macroeconomic environment, possibly around 1.5 to 2 times modest Euro Area GDP. Therefore, I want to challenge the notion of such constrained supply once again. Secondly, could you elaborate on unit costs? They remained relatively flat this quarter, with fuel costs down 12% but non-fuel costs up 8%. You mentioned several factors driving that 8% increase, including crude prices and productivity issues. Could you go over those again and indicate when we might expect the non-fuel cost inflation to slow down for Ryanair? Thank you.

I’d like to address the capacity growth briefly. Sometimes, with all due respect, there seems to be an excessive focus on where that growth is taking place. While easyJet is adding some capacity, their main strategy involves up-gauging their aircraft from 319s to 320s or 321s in locations like Paris, Switzerland, and Gatwick, which does not affect us. Jet2 has seen a modest increase in capacity, primarily to UK regional holiday destinations, especially the Canaries. We're experiencing increased demand, particularly after regaining some business that shifted to tour operators last year. Our partnership with Ryanair and the online travel agencies allows us to have lower seat costs, making us more competitive compared to Jet2. In terms of our growth allocation this year, it is focused in Sweden, where we have not noticed any capacity additions from Norwegian. In Italy, we are seeing regional growth as municipal taxes are being abolished in three major regions. Hungary has its unique market dynamics, but again, we don't see new capacity being added there. The same holds true for Poland; Ryanair is the only one adding capacity. In every area where we are expanding, we do not observe others adding capacity. This year presents a somewhat favorable comparison to last year due to the online travel agencies, which impacted our performance negatively. While we were one of the few airlines with growth last year, fares dropped by 8% over nine months. Our prior year comparison is easier because we couldn't pinpoint consumer spending weaknesses, unlike competitors such as easyJet, which had flat fares and capacity. Jet2’s fare increase may partially stem from acquiring our OTA traffic. I acknowledge there may be some capacity growth across the board, but it does not seem to be impacting the markets where Ryanair is strong or expanding. We believe we are entering a period with traffic growth expectations around 3%, and currently, pricing is looking stable. For example, we initially anticipated a 1% price decline in Q3, but instead, prices increased by 1%. While we’re not expecting significant changes, it's slightly better than anticipated, and I hope this trend continues throughout the summer. Eddie, would you like to add anything regarding capacity growth?

A lot of the planned capacity from competitors often ends up not materializing. Best estimates suggest that European capacity may increase slightly, about 1 to 2% compared to pre-COVID levels. I agree with what Michael mentioned. When we experience growth, such as 20% in Morocco, there is room for us to expand, similar to Italy, where we manage 65 million passengers. We can operate in regions that others have not entered. For instance, while Wizz has six domestic routes, we have 123. Our extensive network allows us more flexibility. We haven’t seen major shifts from other airlines. EasyJet has entered certain markets, but we still operate at the two major airports in the area, Bergamo and Malpensa, and that dynamic hasn’t impacted us in individual markets.

Okay. Neil, you want to touch on unit cost? And I'll ask Tracey to come in here as well.

Sure. Jaime, again, and everybody else, first and foremost, I would reference you to the MD&A which does a pretty good job in going line by line on the unit cost. But in the quarter itself, we're very pleased where we finished up down 1% on total unit costs, fuel offsetting a lot of the headwinds that we've been calling out since the start of the year. The likes of the extra crewing ratio due to Boeing delivery delays, the productivity pay increases that we implemented at the back end of last year coming true this year and driving some labor inflation in the business. We've 36 extra aircraft in the fleet, 9% more sectors, and traffic driving some of the movements on a number of the other line items on maintenance, because we haven't had the Gamechangers in the volumes that we would have expected, putting more cycles onto some of the older aircraft and driving that up. A little bit of FX adverse in the quarter, but that's offset by a positive foreign currency impact below the line. And then on the marketing distribution and other, we've got a one-off legal charge that we've taken in the quarter. So overall, very pleased with how the unit costs have gone, broadly flat on a full year basis. And some of those headwinds will start to dissipate into next year. We hope to be nowhere near as highly over crewed as we were this year with the aircraft coming in from Boeing and the planning that we've put in place.

Tracey, anything you want to add on unit cost?

Yes. First of all, the biggest thing behind them all, which Neil has gone through there is labor inflation, which is driving into a lot of them, has a bit of an impact on that maintenance line as well. And again, the strength that we're seeing on the dollar at the moment having some impact on maintenance, which more or less offsets itself. And then the biggest one, which we'll probably see to continue for next year is again increase on route charges, again, which unfortunately isn't linked to an improvement in ATC performance. But that's going to continue. We've already seen the charges shared have been published for FY 2025 calendar, and we're seeing an increase again in that. But other than that, as Neil said, we are reviewing the budget at the moment and going through each cost line in detail.

Regarding unit costs, there are positive developments as we are now 75% hedged into fiscal year 2026 at $77 per barrel, which represents a $2 savings per barrel compared to this year. It seems the current administration will likely support increased U.S. oil production, potentially leading to further reductions in fuel and oil costs, benefiting all airlines. Our costs are slightly outpacing the 9% growth in traffic over the past nine months, but only by a small margin. This reflects excellent cost performance, especially considering the inflationary pressures we anticipated early in the year from airport, staffing, and route charges. We continue to outperform other airlines in Europe regarding cost management. Additionally, we are on track to be debt-free in the next 18 months, while many competitors are dealing with substantial debt or finance lease expenses. Looking ahead, we face a medium-term outlook of higher interest rates and increased lease rentals. Since we own our fleet outright, we will remain unencumbered, further differentiating ourselves from our competitors.

Hi, Michael. So, two from me. First one, I'm afraid I just want to carry on on this capacity point. Last summer, despite all the challenges, you grew your seats about 9%. I think some of your competitors, many of them grew at 4% to 5%. There were one or two smaller ones that grew even faster. So the schedule suggests system capacity last summer was up mid-single-digits.