Ryanair Holdings PLC Q4 FY2025 Earnings Call

Hello, everyone, and welcome to the Ryanair Holdings plc FY '25 Earnings Release. My name is Nadia, and I will be coordinating the call today. I will now hand over to your host, Michael O'Leary, Group CEO of Ryanair Holdings to begin. Michael, please go ahead when you're ready.

Good morning, ladies and gentlemen. Welcome to the Ryanair full year results conference call. We have all of the management on various calls, as I'm now trying to distribute some of the questions around as best we can. I'll take it briefly, you've seen this morning, we released the numbers on the ryanair.com website. We reported a full year profit after tax of EUR1.6 billion compared to a prior year profit after tax of EUR1.92 billion. The reason for the decline in profitability was due to a 7% decline in airfares last year, a number I think we're particularly proud of that fare decline drove traffic growth of 9% to a new record of 200 million passengers despite repeated Boeing delivery delays last summer. While average fares were down 7%, unit ancillary revenues were up 1%. Total ancillary revenues were up 10% with 9% traffic growth. I think the most stunning number coming out of this morning's numbers is that unit cost per passenger were flat last year, which means we meaningfully again widened the cost gap between us and our competitor EU airlines, and if anything, that strengthens our ability to grow over the next decade. Despite Boeing delivery delays, we took delivery of 181 Gamechangers at the end of April. We have 618 aircraft in the fleet for this summer. We are constrained in terms of growth because of those delivery delays. There are still 29 aircraft we will take this winter for summer 2026. This means we can only grow by 3% this year to about 206 million passengers. We used the profit warning last year as an opportunity to increase the share buyback. So we bought back 7% of our shares last year and have canceled them in their entirety. So, I think overall, a reasonably good year in a very tough pricing environment for Ryanair. We move into this year then with unusually weak prior year comps, particularly in Q1, and we're already seeing that now. We have a full Easter in this year's April compared to only half of Easter in last year, and we've also fixed the OTA boycott from last year. We now have almost all of the significant OTAs approved and are booking strongly into this summer, which is why we look into this summer. Forward bookings are running close to 1% ahead of where they were at this time last year, and we're pricing up certainly very strongly in Q1. Pricing in Q1 is up about 14% to 15%. Q2 is a little bit early to say, as we have only about 30% of the bookings in the system for Q2, but pricing looks like it's up 4% to 5%. We are not going to get quite back all the 7% decline we had last year in Q2, but it looks like we'll get back a significant proportion, if not all of it. Touching on the balance sheet, gross cash is a bit stronger than we had expected again, primarily due to Boeing delivery delays. At year-end, gross cash was EUR4 billion. Net cash was about EUR1.3 billion. That's why we've brought forward another share buyback this year. We're ahead on cash because of the Boeing delivery delays. Because we have that spare cash, we think it's timely to return it to shareholders. The big challenge for us in the next year in terms of cash flow is we have EUR2 billion of maturing bonds, EUR850 million in September, EUR1.2 billion in May of 2026. We plan to pay down all of those bonds out of our internal cash balances. This will mean Ryanair will be entirely, or almost entirely, debt-free and sitting on a fleet of 650 aircraft, totally unencumbered and debt-free by this time next year. We plan to continue to return excess cash to shareholders, but we won't have a lot of excess cash for the next year or two, as we pay down debt and begin to fund the step-up in the MAX 10 deliveries. The relationship with Boeing has continued to materially improve in the last 12 months. We think the new management team led by Kelly Ortberg and Stephanie Pope in Seattle are doing a terrific job; the aircraft fuselages are coming out of Wichita in a timely manner with very little, if any, defects being carried forward, and that's increasing Boeing's ability to step up its manufacturing. I'm heartened by the fact that in April, Boeing delivered 45 aircraft compared to just 24 aircraft in April 2024, and we expect that will continue. Boeing now is reasonably confident that the MAX 10s will be certified later this year, the MAX 7 first, the MAX 10 before the end of the calendar year, and that will put us in good shape, we think, to take delivery of our first 15 MAXs in the spring of 2027. We expect the European short-haul capacity will remain constrained out to 2030, as many of Europe's Airbus operators are still working through their patent with the engine repairs. The two big manufacturers, Boeing and Airbus, are well behind on their aircraft deliveries, and EU consolidation continues. I think the consolidation is also driving that benign pricing environment, certainly, as Lufthansa takes control of Alitalia in Italy, we're seeing strong pricing and upward pricing movement in Alitalia. We would expect the same to take place in Portugal when one of the majors buys TAP. And as the largest airline in Italy and the largest airline in Portugal, we would expect to continue to benefit from that trend. One of the more notable regional developments has been on the ownership and control side; following an extensive consultation period with regulators and investors, the Board removed the ownership restrictions in March. This means that EU and non-EU shareholders are free to buy the ADRs or the ordinary shares without restrictions. We will continue to maintain voting restrictions; non-EU shareholders can't vote at the AGMs. Recognition of that development, the MSCI Index recently confirmed Ryanair's inclusion in the MSCI World Index at the end of May, and we would expect to be included in one or two other of the bigger world indexes before the end of the year. I want to touch briefly on the fact that Howard Miller has chosen not to seek reelection at the next AGM. Howard has been CFO from 1992 to 2014, a period of about 22 years, and then he has been an NED for the last 9 years and has made an enormous contribution to the success of Ryanair. Without him and Mike and Corley, together when we floated in 1997, we would not be where we are today. So I want to recognize that and thank Howard for his effort. Turning briefly to the outlook, we expect FY traffic growth to be constrained. We expect to grow by maybe just 3% this year to 206 million passengers because of those 29 Boeing delivery delays. We've agreed with Boeing we'll take those deliveries at the back end of this calendar year, so through September, October, November. We guarantee we'll have all 210 Gamechangers well in advance of summer 2026. Nevertheless, growth this year will be constrained to 206 million, and then we'll pick it up again or recover to 215 million in FY '27. Following a year of flat unit costs, we expect very modest unit cost inflation in FY '26 as the delivery of more Gamechangers, strong fuel hedging, and cost control across the group helps to offset most of what are very egregious increased route and ATC charges and higher environmental costs, the unwinding of the ETS and the introduction of SAF blend mandates. However, and I know it will come up in the call, we think unit costs will be modest, maybe up 1% or 2% where we are this year. To date, for summer 2025, demand is strong. Peak fares are trending modestly ahead of the prior year. We think we're up 5% to 6% in Q2. The question is what happens for the remainder of the year. Q1 fares are on track to finish a mid-high teen percent ahead of Q1 FY 2025. Some of that is due to the weak prior year comp and the fact that only half of Easter was in last year's Q1, due to the timing of Easter and this year’s Q1. We expect Q2 pricing to recover some but not all of the 7% decline we experienced in prior year Q2. As I said, we're only about 35% of Q2 bookings in the system. The final H1 outcome is heavily dependent on close-in bookings and the peak summer yield. As is normal at this time of year, we have zero H2 visibility. Therefore, we don't think we can give out full-year guidance, other than to say we cautiously expect to recover most, but not all of last year's 7% fare decline as we move through the year. It could be better than that or worse than that, depending on what happens in the geopolitical environment as we move through the year. This should lead to a reasonable net profit recovery or growth in FY '26. Two years ago, we recorded a profit of EUR1.93 billion. Last year, on the back of a 7% lower fare, that fell to EUR1.6 billion. I think you'll see a reasonably strong recovery through the remainder of this year, but we're not willing to give guidance at this stage because the remainder of Q1 and Q2 are heavily dependent on close-in pricing. One thing I would draw attention to is the opportunity in terms of lower-cost oil going forward. We've already hedged about 85% of our FY '26 fuel at $76 a barrel. Last year, we were hedged at $79 a barrel, so we secured a 4% saving. Following the trunk tariff announcement or independently, we saw a material fall in oil prices, which we will pick up at the moment. Last Friday, oil was at $62 a barrel, jet was at $67 a barrel. We will pick up meaningful savings on the 15% unhedged fuel for the remainder of this year. We jumped on the oil price weakness following the tariff announcements to hedge 40% of next summer, in other words, H1 FY '27. We've hedged 40% of next summer's oil at $66 a barrel, a 13% saving compared to this year. On a cost base of $5 billion for our annual oil price, we think there's a material possibility of making material oil price savings, not just for us, but for the rest of the European industry. In advance of President Trump's trip to the Middle East last week, we thought the more significant development was the fact that the OPEC+ producers abandoned their production cuts three weeks before he visited the Middle East. We expect the U.S. administration will turn its attention towards increasing supply and reducing oil prices in advance of the midterms next year, which may present a short-term or medium-term gain for airlines in general, but Ryanair, in particular, as we move forward towards the remainder of FY '26 due to weaker FY '25 comps. That's all I want to say at this stage. Neil, I'll hand it over to you in terms of anything you want to draw attention in the MD&A, and then we'll open it up to Q&A.

Thanks, Michael. I'll just reemphasize maybe a couple of the points that you made. Focusing on costs. As previously guided, we were very pleased to come in flat on a unit cost basis, which was a result of our strong hedging and productivity pay increases that we had, and other costs related to Boeing delays that came through the business. As Michael just said, we continue to be well hedged in the current financial year at about $760 per metric ton, with a meaningful dip on our hedging rates down to $660 per metric ton out to FY '27, where we're over 40% hedged in the all-important first half and about 34% in the second half of the year. So that blend is about 36% on the year. Our liquidity was very strong, helped a little bit by the timing of Boeing delivery delays, with just under EUR4 billion gross cash and EUR1.3 billion net cash after EUR1.6 billion in CapEx and EUR1.9 billion in shareholder returns, including the EUR1.5 billion buyback. We will be launching the EUR750 million buyback in the open period that starts tomorrow, so later on this week, that EUR750 million buyback will be formally launched. On the liquidity side, I would point out that we increased our revolving credit facility back in March. We upsized it from EUR750 million to EUR1.1 billion, most of which is undrawn at this point in time. So it gives us a lot of flexibility and additional liquidity should the need arise. Finally, I would point to our rejoining of the MSCI at the end of May. This is an important development as a result of the ownership and control review. Michael, I don't really have much more to add.

Eddie, do you want to add anything or just a commercial general trading point of view for the summer?

From a general standpoint, demand is solid. We've taken the opportunity with restrictive capacity increases, which we'll be catching up later on in the year with Boeing, further extracting cost decreases at some of the major hubs that we fly into. We're much pickier about where we allocate that capacity, and that's going to continue going into next year, with most of those aircraft allocated in their own right, but there's still a small number of jets that are allocated.

Good. Okay. We'll open up for Q&A. I'll try and move some of the questions around. We have all the wider management team on the line. So moderator, if you'd open it up, please. We'll stick everyone to two questions, and we'll try and get to as many as we can. Neil has to leave at 11:00 hour time, but we will try to get it wrapped up by 11:00, 11:15.

Our first question comes from Jaime Rowbotham of Deutsche Bank. Jaime, please proceed.

Good morning, gentlemen. Ticket revenues per passenger are down only 5% in March without Easter, then potentially up, as you said, 14% to 15% in June with Easter. The net of those two is very strong, even considering some tailwind from the resolution of the OTA issues. Have you been surprised by that strength? And maybe by geography, where do you see it mostly coming from? Then one for Neil. Presumably it’s too early to ask for detailed non-fuel cost guidance. So can I ask about CapEx? You mentioned in the presentation taking the first 15 MAX 10s in spring '27. Would you be willing to give a steer on the phasing of CapEx over the next three years, please, through to fiscal '28? Thanks.

The contribution in the first half is not unexpected, but I want to emphasize that it reflects weak prior year comparisons. Last year in March, we had both components of Easter, which boosted our growth since we increased capacity by 9%. We added 17 million passengers last year, but this year our capacity growth is only 3%. So, you see a mix of weak prior year comparisons and strong Easter performance due to the two Easter components in April. The largest area in Europe is increasing our seat capacity by 6 million passengers this year, down from 17 million last year. We've also created a more favorable pricing environment across Europe, which we believe will be advantageous for us. I think Q2 will provide a clearer view of the underlying trends, as we anticipate a pricing increase of 4% to 5%, potentially reaching 7% to 8% if close-in pricing remains robust. However, it could be challenged by unforeseen events such as geopolitical issues in Europe. Given our constrained capacity, we've been focusing on allocating more capacity to countries and regions eliminating taxes, such as parts of Italy, Hungary, Sweden, and airports that are still encouraging growth. I'll let Eddie share a few more insights, and then Neil, you can address the CapEx.

Yes, I would echo like you've largely touched on all of the points there. I wouldn't run away with what has happened as we close out Q1. It really is down to an exceptionally strong Easter, but those were weak prior year comparables as well. We have about 30% of the bookings in for the week, and we are slightly ahead on volumes. I wouldn't run away with Q1 at all or translate that into Q2. The geographies are a small part of our network. There seems to be some restriction on a combination down that. Other than that, it's right across the board in terms of demand. That's the only sort of color I’d add to that.

The only other one I would point out is the market that has constrained itself has been Dublin, obviously, where the new government, which has been in place for five months, with a 20-seat majority still hasn't passed any legislation to scrap the Dublin Airport cap. We have successfully obtained a legal injunction against it, but it has held up growth that we would otherwise have deployed in Dublin. We are growing reasonably strongly in Cork and Shannon, but they're very small markets. Dublin is being constrained by government inaction and, five months into the lifetime of this new government, it is time for them to start passing legislation before they all take their summer holidays in the next couple of weeks. Neil, CapEx?

Yes, Jaime. You're right. I'm not going to give you an awful lot of color over and above what we've already put out there. So we're talking about EUR2 billion, maybe a bit higher this year, depending on the timing of aircraft engine shops and other spares and parts. The PDPs on the MAX 10 are going to ramp up relatively slowly over the next couple of years. So you'll see a drop down in CapEx into FY '27, somewhere below the EUR2 billion, and then it will start to creep up again into FY '28. It'll probably be in the mid EUR2 billion to EUR2.5 billion to EUR3 billion territory that's here. But as I said, it ramps up relatively slowly this year and next, with only a small number of aircraft (15) coming in ahead of Summer 2027; there won't be too many delivery payments on that until that time.

Thanks, Jaime. Next question, please.

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

Michael, can I ask you one question on the EU and just get a few questions on that? In terms of regulation post-Draghi and stuff, are you seeing any signs that there’s action to regulate? I'm thinking of the challenges we face with the SAF and delays in deliveries that just make the whole net-zero thing a challenge for the industry. Then also the noise about retaliatory tariffs with Boeing. For Neil, could you just talk again about the rationale for a) paying back the bonds and b) the upsizing of the revolving facility? That would be great. Thanks.

Thanks, Stephen. No, I'm sad to say we've seen very little action from the EU. The Draghi report, I think, was a very positive development last year, but there's been no action on it. If you want to call out the EU inaction on regulation, it’s the failure to take any action on ATC reform. We gave them two very simple but basic ATC reforms. One, protect overflights during national strikes, and two, prohibit groundings; no action whatsoever, just hand-wringing and saying it’s a national competence. It isn't a national competence; it's a single market, and you can't close down the skies over a single market just because French air traffic controllers want to go on strike. They are entirely free to go on strike, but there should be no impediments to continuing to overfly France during a national strike. The Italians, Greeks, and Spanish protect overflights during national strikes, and the French should be required to do likewise. We have this lunatic Spanish minister running around trying to force all airlines to take unlimited bags on board free of charge; it’s a clear breach of EU regulation 1008/2008. We're still calling on DG Move to take action on this. They've written to the Spanish, but they haven't yet started any enforcement proceedings. I would be more optimistic about SAF; it is now clear that the oil majors are cutting back development of renewable fuel. There will not be a SAF supply to meet the mandate in 2030. The only logical development will be to move back those mandates. I think it will come, but slowly; Europe could do much more in terms of rolling back regulation and making air travel more competitive. One significant thing would be to move environmental taxes in Europe away from ETS towards CORSIA, which is what international long-haul airlines pay. The European airlines should be moving environmental taxes away from ETS towards CORSIA, so that we're all paying CORSIA rents. Again, no action whatsoever. With the European Union, particularly under Ursula von der Leyen, there are lots of talks and head-nodding, but no real action. But we'll keep pushing and campaigning. I think we'll see some movement back. The campaign for ATC reform is unarguable, and the campaign to move environmental taxes towards CORSIA, where European citizens will be paying the same taxes as non-European citizens, are both unarguable cases that should be implemented. Neil, do you want to come back in on the rationale for the bond repayments?

Yes, sure, Stephen, and thanks for the question. At the moment, as has been the case for some time, cash continues to be the cheapest form of finance for the Ryanair Group. We finished the year with just under EUR4 billion in cash, and we're planning on the basis of paying down the EUR850 million bond in September. That bond has a coupon of 2.875%. If we were to refinance that today, we would pay somewhere in excess of 3.5%. Cash continues to be the cheapest form of financing. We've got another EUR1.2 billion bond with an eye-watering coupon of 0.875%, maturing in May of next year. Again, unless we see a significant dip in share prices over the coming months, we would finance that from our own cash resources. The revolving credit facility is a great opportunity for our banking community to step up, put some balance sheet at risk while getting opportunities to participate with us on currency and on jet fuel and carbon hedging. We had an opportunity in March to increase the size of our revolving credit facility from EUR750 million to EUR1.1 billion. We upsized the banking group from '14 to '17, and we extended the term out to March 2030 from 2028. This is a very low-cost facility, and most of it is undrawn. To be honest, we probably won't need much of it over that term unless there are certain shocks or opportunities that we want to take advantage of, but it’s probably at a very low margin over the loan. It gives us lots of flexibility and liquidity, and it’s an umbrella if the rain comes.

Stephen, thank you.

The next question goes to James Hollins of Exane BNP Paribas. Please go ahead.

Thanks. If I can come back on unit costs. Unlike Jaime Rowbotham, I'm going to give it a go. If I did my math correctly, you're looking at hedged fuel down about 4% year-on-year this year. You've talked about overall unit costs at 1% to 2%. I assume that implies an actual cost up maybe 3%. I think you flagged double-digit increases in things like recharges. Maybe just, Neil, can you provide more granularity on where else you're seeing some cost inflation? And are you doing much better than that? The second one, thank you for your comments on ITA. I'm interested about the pricing more or pricing up. Are you seeing any sort of irrational behavior by any competitors in Europe, whether it’s on growing ridiculously or putting fares down? Thank you.

Okay, thanks. I mean, there's not much more we can give you in terms of color. It’s cautious guidance, the unit costs are up 1% to 2%. We still have 15% unhedged fuel that could bring down unit costs, but it might go the other way. The one callout we would have at this point in time, though, is route charges, ATC fees, which are going up by double-digit percent across Europe with what is probably the world's most spectacularly city service. They will all start charging for work style next week at the start of June. Punctuality, which has been at record highs, we're delivering 85% to 90% on-time performance up to the end of May. Last year that fell to 60% in June, July, and August, and we expect the same thing to happen again. Again, we should expect this every year, but what we expect is some action from Ursula von der Leyen and her useless crew to reform ATC, yet nothing happens. There are costs that are moving against us. We've done another round of pay increases with labor starting on the first of April. That's part of a long-term 4-year and 5-year pay deal. Generally speaking, I think we’re reasonably comfortable with where unit costs are. What we've been trying to do is transition towards the MAX 10 deliveries, which we hope will happen in spring of 2027, and those aircraft will transform our operating costs. They provide 20% more seats, they burn 20% less fuel, and you can argue whether fuel over the new year term will trend downwards or upwards. But I think on balance, it trends downwards into the U.S. midterms next year. The issue for us regarding unit costs, Jaime, is not our absolute unit cost; it's what are the competition doing? If you look at the reports from all of our competitors across Europe in the last year, they've seen unit costs rise between 5% to 15% in the case of one spectacular competitor that couldn't manage costs as we jumped up and bit them. They are increasingly exposed to financing and leasing, with rising leasing costs, and all of those are rising rapidly. So the unit cost gap between us and every other airline is getting wider. We have a unique 12 months this year where we have weak prior year comps. We think we will look good this year. But bear in mind that some of that is due to weak prior year comps. Touching just on the pricing, there's nobody out there doing any irrational pricing as there is no real capacity growth; they're taking a couple of aircraft. But frankly, we don't see them in our marketplace. They're still taking capacity away from our markets. I think easyJet has closed three routes out of Vienna down into Italy this summer, where we're the only competitor in those marketplaces. We don't see much out of easyJet. There’s been a little bit, I think some pressure from the two operators TUI and Jet2, which seem to be doing a bit more seat-only pricing. We think that's a trend from last year, where during the OTA boycott, some of our holiday customers may have moved towards the tour operators, and they've all come back to us this year. Everything we see across the marketplace is driven by us only growing at 3%, which for us will be a historically low rate of growth. Everybody is pricing up, and most of them are pricing up more than us. Eddie, do you want to add anything on that?

We've said easyJet is not growing, and we continue to close a number of bases. You've got wins largely growing in places like Romania and further out to the Canary Islands. We don't really see them growing in our markets. We have seen some discounting from competitors, but not irrational discounting. As Michael said, that seems to manifest itself particularly in those selling package holidays, where they have options for package holidays and seat-only sales; they seem to be discounting for the seat-only rather than on the package side.

But their discounted pricing is still materially higher than our entry pricing. At this moment, everything we see in the summer season in Q1 and Q2 is strong. Forward bookings are stronger than we expected, closing off some of the cheaper seats, and we're pricing up very strongly in Q1. However, I think the main issue for us at this point in time is this: in the first half of the year, do we get back all of last year's 7% decline or most of it? I'd be more concerned. I think we'll get back most of it but not all of it, and I could be pleasantly surprised on the upside, but it’s too early to say. Remember, when things are going well in this industry, that's usually when some curve ball comes out of left field, whether it's geopolitical issues or terrorist attacks somewhere; something always seems to go wrong in this business.

Just before we move off this question, I'd like to add on the cost side, Michael, we did call out additional environmental costs in the release. This is the SAF mandates that have come in this year, and the full unwind of the ETS credits. If I was to point to one area where I feel a number of the analysts are maybe a little bit light, it's on that. We've guided that we're moving from an EUR850 million charge last year to over EUR1 billion this year. I still feel that maybe that's where some people are a little bit light in their numbers.

Okay, thanks for that. Next question, please.

The next question goes to Harry Gowers of JPMorgan. Harry, please go ahead.

Good morning, Michael and Neil. Just on Transatlantic leisure traffic, are you seeing any evidence that this is redirecting to places within Europe on Ryanair instead this summer? Would you expect any material boost in demand or yields from that? Or is it just too hard to tell at this stage? On the share buyback running for 6 to 12 months, what's your thinking regarding the timeline there? Will it be at the longer end of the time frame, given where the shares are trading? What is your current thinking on the pace of completing that? Thanks a lot.

As to the first half, look, I mean, it's too early to say yet, but anecdotally there seems to be a kind of weakness in EU-originating transatlantic travel. U.S.-originating is strong into Europe. We think that might be helping. There's a perception in Europe that the U.S. is an unwelcoming destination at the moment, which seems to be translating to more holiday at home in Europe. We see no decline in the inbound transatlantic to Europe this year, and all of the metrics we see forward bookings into Spain, Italy, Greece, and the holiday islands this summer have been reasonably strong both on the charter side, demand is strong, pricing is strong, and we think there may be some element there. However, I couldn't put a number on it; it’s really more anecdotal than anything else, that there's a little bit of local travel and transacting to the states and many are staying home in Europe. I wouldn't want to place too much emphasis on that. The underlying trend on pricing here isn't driven by transatlantic demand; it’s primarily driven by heavy capacity constraints in the European marketplace, which I think will remain this way this year and probably next year. Regarding the buyback, Neil, before I give it to you, we’re announcing 6 to 12 months. We've had a strong run in the share price. The buyback arises from our surplus cash at the end of the year, because of the Boeing delivery delay. So I'm not overly concerned about whether we do it over 6 or 12 months. I think Neil and the finance team will largely drive that. But I'd caution against promising any more share buybacks for the next year or two. We have EUR2 billion of bonds that we have to repay in the next 12 months, which is a big chunk of money. We do need to keep building a modest cash position thereafter. We will then — that will take us into the run-up to the MAX 10 deliveries in summer '27 and summer '28, where we will spend a considerable amount on opening two engine shops in the next two to three years, where a lot of the orders for tooling and spares will be front-ended. I'd suggest that this year's share buyback will likely be the last one for a year or two unless we exceed our planned profitability and cash. Neil, maybe you want to add anything to that regarding the buybacks?

I would expect it to run slower rather than faster, so closer to 12 months than 6 months. Last year's EUR700 million buyback was accelerated because we saw a significant dip in the share price and leaned into it. But if we're in more normalized markets with an EUR850 million bond maturity in September and an EUR1.2 billion bond maturity in May of next year, I think this will run a bit slower, so expect closer to 12 months.

Thanks, Harry. Next question, please.

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

Hi, good morning, gentlemen. Two from me, please. First one, just coming back on costs. You mentioned a moment ago around the pay fees in the first of April. Could you quantify that? What you're thinking about in 2026 and any remaining years on the multiyear pay deal? Second question is on tariffs. Would it be right to assume you can just take delivery of planes into the U.K. AOC and avoid any tariffs on delivery itself? To what extent would you expect tariff-driven increases on upstream components to apply upward pressure on future CapEx? Thank you.

The answer is no; we don't quantify the pay increases. The pay increases at the start of April this year are part of the third and fourth years in what are 4- and 5-year pay deals. We have another agreed pay increase in April 2026. They are modest because we tend to front-load the pay deals with multiyear agreements. But we wouldn’t get into exact numbers. But Darrell Hughes is here with me, who’s our Director of People. I’ll ask him to give some outlook on the pay negotiations or where we are on these pay deals. Darrel?

Thanks, Mike. I think you've covered most of it there. We’ve got a couple of pay deals expiring next March, a couple regarding pilots as well. The big chunk will be in March 2027. That’s really when the cycle comes up for the next round of deals. And as you say, we have modest increases in the tail end of the existing agreements running into April '26.

The timing of those deals is driven, Alex, as we get into April of 2027. We’re starting to get into the MAX 10 deliveries where we will gain reasonable bank productivity benefit from those aircraft. We’ve been getting a good productivity benefit. I think we can afford a reasonably favorable or generous pay deal with our people without going overboard over a three or four-year period on the back of productivity gains delivered by the MAX 10. On tariffs, if I understood your question correctly, is one solution with tariffs that we take aircraft into the U.K.? Our view on tariffs is as follows: All the evidence out of the Trump administration is that they announce tariffs and then postpone them for 90 days. They do some outline trade deals with China and the U.K., with another 90-day postponement. We don’t foresee tariffs being a big issue. We think trade deals will replace the risk of tariffs, and the imposition of tariffs on commercial aircraft will be delayed until there’s a trade deal. We would be very surprised if Europe imposed tariffs on commercial aircraft, given that Airbus exports much more wide-body long-haul aircraft to North American customers than what Boeing goes to Europe. It’s not to be ruled out, but ultimately, our deal with Boeing is a fixed price agreement. Tariffs will be for Boeing to count, not ours, but we would certainly work with Boeing to take deliveries in countries where we could avoid tariffs if that was the U.K. or somewhere else in Europe. We will work with Boeing on that.

Okay, thank you.

Next question, please.

The next question goes to Dudley Shanley of Goodbody. Dudley, please go ahead.

Hi, Michael. Two questions. First of all, I think you said on the video today that there were no new bases, but there are 160 new routes. Are the levels of route churn picking up as capacity slows? And does that manage costs? Or is it just better opportunities on the newer routes? The second question is a longer-term one. In terms of capacity constraints in Europe and consolidation in the industry, do you still think, longer-term, we move towards four big operators? Thank you.

Okay, Dudley. Eddie, do you want to take the first half of that since you have a good grip on the churn?

Yes. There has been a bias towards increasing frequencies rather than launching new routes, where we have to do a lot of investment at lower fares. We’ve also picked up excellent efficiencies, particularly as we launched the winter schedule this year, where we’re flying less on Tuesdays and Wednesdays and slightly more on Thursdays. We’re probably at the limit of what we can do. We've been on a program of that for the last two to three years. Yes, you’re seeing less new routes and more frequency building along with a lot more analysis on how we allocate capacity given the market numbers, and we've moved around capacity closing some bases as well, particularly in Scandinavia, where you've seen certain bases closed, and taxes have been raised there as well as tourist taxes, and in Sweden as well.

Okay, thanks, Ed. Do I think the world moves in the trend of four big operators? Yes, absolutely. We are heading towards 206 to over the next two years, 250 million passengers. The Lufthansa Group, the IAG Group, and Air France KLM. I think there will be further consolidation ahead. Obviously, TAP is next on the block. I think inevitably Wiz will have to find a home somewhere with one of the bigger airlines because they clearly can't make any money as an independent airline. Logically, that will happen. I think the challenge for all of the other independent airlines is what do you do when Ryanair keeps expanding in on top of your geography or your marketplace? They don't seem to have — they don't have a cost base that would enable them to compete with Ryanair. Their unit costs are still rising while ours are flat or marginally falling for the next couple of years. Thanks, Dudley. Next question please.

The next question goes to Savanthi Syth of Raymond James. Savanthi, please go ahead.

Hi, good morning, everyone. A couple of aircraft-related questions. Just on the NGE retirements, were those expected? It looks like maybe five are retired. How are you thinking about disposals in fiscal year '26? My second question, just on the MAX delivery; could you clarify, Michael, did you say you're not taking any more deliveries ahead of the summer and the rest are coming in the winter? Is that the way we should think about the rest of the MAX delivery?

Yes, Savi. We had the last five of this year's deliveries, delivery for this summer, the last five were delivered in April. They all came a couple of days early, which is positive. We had already agreed with Boeing that we would delay the last 29 of those aircraft. So we have 181 of the 210 Gamechangers ordered now delivered. We had agreed with them that we would delay the last 29 until the spring of 2026. They asked us recently whether we would take them in the autumn of 2025, which doesn’t really suit us. We can't deploy them during the winter, but we're going to take them early so that we guarantee we have those available in advance of summer 2026. Obviously, that’s also a consideration if tariffs are in place; we could delay those deliveries. We can bring them forward or delay them as long as we get those aircraft in advance of summer 2026, we would be in a very good shape. The next big issue is getting the MAX 10 certified and ensuring that Boeing delivers the first 50 of those aircraft for summer '27 growth, which is critical for our continued capacity growth in Europe. I'm growing more confident that this will happen without disruption. On the NGE retirements, again, we had planned to start retiring the first at the NGE sometime around 2028 or 2029. We could time that around the deliveries of the MAX 10. Again, the first issue is that we still need the Lauda 27 Airbus aircraft. Their leases run out in '28 and '29. We would want to replace those with some other Airbus aircraft. At the moment, we're still looking at those opportunities, but the market isn't in our favor in the short term. Current market lease rates are more than double what we pay per month for those 27 aircraft. The first issue will be how do we replace them preferably with Airbus? If not, we replace them with some of our older NGEs. By the time we get into 2029 or 2030, we’re taking 50 MAX 10 a year, we would then begin to start to retire some of the older NGE aircraft. We have no plans at the moment to dispose of them; it's a bit too far away at the moment. In the current marketplace, you could dispose of them because the leasing companies are short aircraft and are pricing up, but we're making so much money out of those aircraft that we would want to continue to maintain our own capacity growth in a market where we're challenged. It’s more profitable for us to run the aircraft than to sell them. So, nothing in the near term on NGE requirements. We're very happy with where we are in the MAX deliveries. Next question, thanks, Savi.

Next question goes to Jarrod Castle of UBS. Jarrod, please go ahead.

Hi, thanks everyone. Good morning. Michael and team, assuming your shares remain above the levels, it looks like you should be able to get your options vesting in about 16 or 17 days. I wanted to get your thoughts on a) if there's potential for a follow-on scheme. This could be in '26 or '27. I know the current scheme runs until March '28. Then just also how you see that as an incentive program in general for Ryanair management going forward. The second question, it seems like there's more confidence around Boeing and the MAX 10 getting signed off. I just wanted to get your thoughts on what if it doesn't get signed off on potentially doing more leases or perhaps if there’s an external factor where you want to accelerate capacity, such as peace in Ukraine. So just any thoughts on that optionality either way. Thanks.

Thanks, Jarrod. I'm glad somebody is reading the options question, because I’m sure the media will be picking up on this shortly. The options don’t vest and we only achieve the targets either later on this month or later this year. But none of those options, and it’s not a bonus, it’s share options, will vest until 2028. I and the rest of the management team have to stay here until 2028 and continue to deliver before we can actually verify them. They won't just come about for another three years, and a lot can happen between now and then. But I accept there’s a possibility that we might at least hit the performance targets, either later this month or hopefully later this year, remembering there are two targets: a share price of EUR21 or an annual profit of EUR2.2 billion. A cash follow-on scheme, I think, is pretty limited. The board about 3 or 4 years ago moved away from share options. We originally had share options for many years that were driven by profit targets, but that creates a kind of regulatory concern that we can’t share forward-looking profit or our forward-looking profit targets. So, we’ve moved away from those. For the last three years, particularly, the senior management team have been getting LTIPs, which are awarded every two years, and that seems to be a quieter and more reasonable way of rewarding superior management performance. This may continue for us going forward. My contract runs out in 2028, and there will have to be discussions, I presume with the Board and the Remco, about how my remuneration will be fixed from 2028 onwards if they want me to stay after 2028. I will have all the usual (indiscernible) in the newspaper. The point I want to make is I think we're delivering exceptional value for Ryanair shareholders. In a year where premiership football managers are being paid EUR20 to EUR25 million a year, Ryanair shareholders are getting exceptional value out of our share options, both mine and the rest of the management team. If the Boeing MAX 10 doesn't certify, we've already had that discussion with Boeing. Boeing has to manufacture something, and what is likely to happen, although I think it’s increasingly unlikely, is that they will make more MAX 8200s. Boeing has kind of confirmed with us that if for some reason the MAX doesn't get certified later this year, they will start to make more MAX 8200s and deliver those to us, maybe for summer '27 or summer '28. Boeing has to sell something. I’m reasonably confident they will be making certified MAX 10s. The fallback position is to make more MAX 8200s, and they can do that with about 18 months notice. It’s only a difference in the fuselage. One way or another, I certainly prefer the MAX 10s because they have 20% more seats and burn 20% less fuel, whereas the 8200s have only got 4% more seats and burn 16% less fuel. Boeing, clearly, wants to sell more MAX 7 and MAX 10 than 8200. I think that’s the fallback position, which Boeing and we would be reasonably comfortable with. I think the likelihood of that fallback is receding as confidence grows in getting the MAX 7 and MAX 10 certified later this year. Thanks, Jarrod. Next question, please.

The next question goes to Ruairi Cullinane of RBC. Ruairi, please go ahead.

Good morning. First question on Slide 9, where you're expecting 7% passenger growth in FY '28. It looks like that's on just over 2% fleet growth. So is there something else other than fleet growth going on there? Secondly, just on cash tax going forward, the cash tax charge was just under half the tax expense on the income statement. What are your expectations for the future? Thank you.

So Neil or Tracey, might address the cash tax question. Let me just touch on Slide 9; we set out what we expect from both fleet and passenger growth. We expect FY '27, which is summer of '26, to pick up to close to 650 aircraft with further growth. The following year, which is summer '27, we go up by 15%, which is the first of the MAX 10 deliveries, and that provides us with 20% more seats. We believe we could actually deploy some of that extra capacity in the autumn of '27 or spring of '28, leading to more growth in that period.

Regarding the cash tax rates at the moment, it continues to rise, granted moderately. We finished the year with cash tax being just under half our book tax charge. We expect that to remain relatively light for the next number of years. The effective tax rate this year and last was 10%, and that will gradually creep up over the next two or three years as OECD rules are adopted by more and more countries across Europe. Unless, of course, there’s a rollback given what's happening in the U.S. where they have moved away from OECD.

Great, thank you.

The next question goes to Muneeba Kayani of Bank of America. Muneeba, thank you.

Yes, good morning. I wanted to ask, firstly, around there was around 1% growth per passenger last year. How are you thinking about it this year? Is that a similar flat increase that we should expect? Secondly, if I could just go back to unit costs, through the quarters, is there any cadence? Is 15% a bigger increase in the second half or anything like that that we should be looking out for? The guide, is that based on the current jet fuel price or not? Thank you.

I think both of those...sorry, what's the guide you're talking about there? I didn’t give any guide on it?

When you say the unit costs, the modest increase for the 15%, is that based on fuel or?

Yes, that would be based on current performance, as you see it today; it will be taken at a moment in time.

That's based on what jet closing last Friday, at about $67 a barrel for the 15%.

Yes, exactly. Just over on cost, I'm not going to break out the quarters. We've given a full year number. We're not going to go into the micro quarter-by-quarter. I think there's enough information to build from. Regarding the ancillaries, up 1% last year, we'd anticipate something similar, maybe slightly better into FY '26. I think again, if you model plus 1%, you won't be far off on a per-passenger basis.

Okay, thank you, Muneeba. Next question, please.

The next question goes to Gerald Khoo of Liberum. Gerald, please go ahead.

Good morning, everyone. If I can, firstly, on finance income, which seems to be very high in the second half, in the fourth quarter; I think it implies an interest rate of 10%. I think that line includes some compensation from Boeing. Firstly, is that right? If so, how long is that likely to continue for? Secondly, you talked about Spanish rules on cabin bag charges; can you clarify what you are actually doing? Are you still able to charge passengers for cabin bags, putting out of Spain, or are you actually prohibited from doing that at this moment?

Yes. No. The Spanish bank ruling, Gerald, is under appeal to a regional Spanish court. The appeal is dispensary. We continue with our policy of having one large free carry-on bag for non-priority passengers, with priority passengers allowed to bring two carry-on bags. Our current policies will see no change. We believe, unless the commission forces the Spanish to stop interfering and pricing in breach of EU regulations, we will go to the ECJ, which could take about two years. It will, in our view, undoubtably be overturned by the ECJ. There is no discussion of going back to the free-for-all model of baggage that resulted in larger airport security queues, which results in increased costs for airlines and higher fares. It is, in my view, counterproductive regulation. On finance, there's a tiny bit of Boeing compensation in the finance income line; it is not material. It will not continue; Boeing has caught up on those deliveries.

As Michael said, the modest Boeing compensation was received in Q3 and Q4. It’s in our terms, but we won't break out the exact numbers; it is coming to an end at this stage.

Not only is it modest, it doesn't compensate us at all for the shortfall we have from Boeing delays in this marketplace. Thank you, Gerald. Next question, please.

The next question goes to Andrew Lobbenberg of Barclays. Andrew, please go ahead.

Can I just check? You spoke about the expenditure on the engine MRO shops. Is that all included in the rough CapEx guidance you were giving earlier? If not included, are you able to quantify how big it might be? And then Ukraine and Israel; there's been a lot of excitement about the potential of peace in these markets yet we still don’t have peace. How are you thinking about it, and if there is an opportunity, how would you execute it?

To take the first part of the engine CapEx number, it's not included, and obviously, we're negotiating this. But it is a significant CapEx number spread over a three- or four-year period, which I think that will secure a significant cost advantage for Ryanair going forward. Touching on the Ukraine and Israel situations, we want to see peace in both contexts. Our Israel-Tel Aviv schedules and, to a lesser extent, Jordan, are being repeatedly disrupted by the conflict. We have canceled all flights to Tel Aviv until early June. We're running out of patience with Israel, as the Tel Aviv flights to and from there keep being disrupted. If they're going to keep being disrupted, we would be better off sending those aircraft somewhere else in Europe where we can at least sell the seats without disruptions. Ukraine is clearly a big market for us; we were the second-largest airline in Ukraine before the Russian invasion. We wish to return to Ukraine, however, we have been disappointed with the response from the Ukraine airports, who have refused to engage with us in a post-war marketplace. We have extensive plans to go back to Kyiv, Lviv, and Odessa. We’re concerned about the runway integrity at Odessa, but we could easily charge back in there with five million passengers in year one, growing to ten million in three or four years. Unless the airports come up, at the moment, all we’re getting are the published charges. We certainly want to charge back in with a broader network, but alas, it seems unlikely if the airport is prepared to engage in a free market manner. They should be aggressively discounting and providing opportunities across the board to bring airlines back to those markets, not egregiously profiting off what will be an empty airport. Thanks Andrew. Next question please.

Next question goes to Alex Paterson of Peel Hunt. Alex, please go ahead.

Good morning, everybody. Two questions, please. Firstly, would you mind just repeating what you said about FY CapEx guidance? I just missed that. Secondly, I wonder you've been clear on holidays that you would not be interested in offering them until your aircraft deliveries in the 2030s. However, your relationships with OTAs that have signed agreements with you seem to be working well; that seems to be helping you. I wonder if you might be interested in helping them grow in regions where perhaps their brands aren't strong, perhaps by directing people booking flights on your website through to theirs to book a holiday.

Regarding the CapEx guidance, Neil, you might take that. I’ll take the holidays question. It’s worth being careful here. I don't think we’re altogether uninterested in holidays, but I think the development of a Ryanair Holidays brand will only come with significantly lower growth or if we’re not growing at all. We’re too busy growing headline traffic by 4% or 5% a year, which, in our case, is now 10 or 15 million passenger growth. We're using Ryanair Labs to transform the way we deliver service, dramatically transforming our cost base. We’ve done in-house work on our ops systems; we’re transforming in-airport handling costs, kiosk systems, and all that kind of stuff. We have a lot on our plate. We’re pleased with the approved OTA deals. As far as the OTAs are concerned, they’ve been very excited about the positive growth they’re enjoying, enabling them to stimulate business through the Ryanair-approved OTAs. We are quite happy to let them monetize the holidays while we get on with growing headline traffic over the next five or ten years. If there are particular markets or needs they have, we’re open to working with them; we want them to do the hard work.

Alex, I'm assuming you missed the question at the start of the call from Jaime about the phasing of MAX PDPs over the next three years. We talked about EUR2 billion, maybe a bit higher this year, depending on aircraft engine shop timings and various spares and parts. The PDPs on MAX 10 will ramp up relatively slowly in the next couple of years. You will see a drop down into FY '27, somewhere below the EUR2 billion, followed by an increase in FY '28.

Okay, ladies and gentlemen, thank you very much for your time this morning. We have an extensive road show coming up. We have about 12 teams on the road across Ireland, the U.K., Europe, and both the East and West Coast of the U.S. We're also planning online meetings with Asian investors. If anyone would like a meeting with us, please approach us through City or Broker City, Davies, or Goodbody, and we’ll be happy to set up a meeting. If anyone wants to come to Dublin over the summer before our AGM in September, you are more than welcome. Thank you for your support over what has been a difficult year, but I think you can see from this morning’s numbers, we’re coming out of it strengthened, very cash-positive, and we aim to pay down debt aggressively over the next 12 months to be hopefully debt-free. We are still growing strongly in what I hope will be a benign pricing and fuel environment. I believe we're set fair for a reasonably strong summer trading as long as there are no unforeseen adverse developments in the next couple of months. We look forward to seeing you all on the roadshow this week, and if not, meeting you in Dublin sometime before the AGM. Thank you very much, everyone, and thank you to the moderator for your time and assistance. Bye.

Thank you. This concludes today's call. Thank you all for joining. You may now disconnect your lines.