Hello, everyone, and welcome to the Ryanair Holdings plc H1 FY '26 Earnings Release. My name is Nadia, and I'll be coordinating the call today. I will now hand over to your host, Michael O'Leary, Group CEO of Ryanair Holdings plc to begin. Please go ahead.

Thank you, Nadia. Good morning, everyone. Welcome to the H1 results conference call. I'm here with the whole team in London and on other phone lines. We shared the results this morning, and Neil and I have held a 30-minute Q&A on the website. I encourage you to visit ryanair.com for that, and while you're there, consider booking a low-fare flight. A couple of quick points: I’d like to focus on Q2 since H1 was impacted by a strong Q1 and a weak comparison from the previous year. In Q2, traffic is up 2% due to Boeing delivery delays, which have improved recently. We have received 23 of the 29 aircraft that were supposed to be delivered at the start of summer. This allows us to increase traffic growth from 206 million to 207 million this year, aiming for about 3.5% growth. Fares in Q2 increased by 7%, reflecting a robust recovery that corresponds to last year’s fare decline, and we anticipate this trend to continue throughout the year. However, fare growth in the second half may be less robust due to stronger prior year comparisons. Overall, we're now confident that we can recover all of last year’s fare decline, perhaps even exceed it, though not by much. More importantly, our unit costs are well managed, rising only 1% in Q2 despite significant inflation in areas like air traffic control and engineering. The reduction in hedge costs this year is contributing significantly to that. Consequently, Q2 profits have risen by 20% to EUR 1.72 billion. Moving forward, I want to highlight a few themes for this call. Boeing has significantly improved its performance. They requested us to take some aircraft later this year, but we told them that we would work with them as long as they could deliver. In the past three months, they delivered 23 of the 29 aircraft, with two more expected in November, and the last four scheduled for delivery in January and February next year. We will have all 210 Gamechangers in our fleet by the end of March next year, setting us up for traffic growth to between 215 and 216 million passengers in FY '27. This will be the first year since the MAX groundings without dealing with Boeing delivery delays or disruptions to our summer schedule. We anticipate strong traffic growth and hope to maintain pricing and profit recovery into summer '26. On the positive side, we’re capitalizing on recent drops in fuel prices. We're currently 85% hedged for this year at $76 a barrel, down from $84 last year. We're pleased to announce that we are 80% hedged for FY '27 at just under $67 a barrel, which equates to a significant saving of about 10% on our fuel costs—approximately EUR 600 million next year. This will allow us to encourage growth while also addressing the increases in emissions taxes and other additional taxes in Europe, which are harming competitiveness by taxing only intra-EU travel. Our balance sheet is continually strengthening. We paid off an EUR 850 million bond in September, and we have a final EUR 1.2 billion bond due in May. After that, we will be entirely debt-free with a fleet of 640 aircraft. Our treasury team has effectively managed our hedging; the dollar weakened recently, allowing us to hedge the first 50 of our MAX 10 aircraft orders at a favorable rate, resulting in significant savings on CapEx. The demand for European capacity remains constrained and will likely continue until 2030 due to manufacturer delays and grounded Airbus fleets. With our upcoming capacity increases, we anticipate traffic growth alongside modest fare increases. Unfortunately, Europe is still struggling with competitiveness. A report issued by Draghi 14 months ago outlined areas for improvement that remain unaddressed. All European airlines are advocating for two key initiatives: aligning ETS tax rates with those of non-European airlines to enhance competitiveness and reforming the broken ATC services. We need measures to protect overflights during strikes, as we cannot maintain a single market if strikes repeatedly disrupt operations. Countries like Spain, Italy, and Greece already have systems to protect overflights, meaning Europe must follow suit. The significant rise in air traffic control fees this year, paired with inadequate service, is unacceptable. If the current leadership cannot enhance competitiveness, perhaps a change in leadership is necessary. On a more positive note, there’s a shift in environmental taxation at the national level, with several governments, including those in Sweden, Hungary, and Italy, eliminating their environmental taxes, which encourages growth. We’re reallocating capacity away from high-tax regions such as Germany, France, and the U.K., where taxes are increasing, to countries that support growth through lower taxes. The willingness of nations like Sweden to abolish environmental taxes is a hopeful sign that we can create a more favorable business environment for airlines. Our new MAX 10s will accommodate more passengers while using less fuel and significantly reducing emissions. However, the Irish government’s inaction on abolishing the Dublin Airport cap is disappointing. With a clear majority, they should move quickly to eliminate the cap to facilitate traffic growth. Governments in more productive regions, like Sweden, Italy, Hungary, and Slovakia, are working with Ryanair to foster growth. Looking ahead, we are optimistic about Boeing's recent improvements in delivery and quality. They have ramped up production, and we expect to receive the MAX 7 and MAX 10 certifications ahead of our first deliveries, enabling significant growth in passenger numbers. We project an increase from 207 million passengers this year to over 300 million by 2034, with an expected rise in profitability per passenger. There may be challenges ahead, but we are well-positioned for robust growth in the coming years, especially as price sensitivity increases among travelers in a sluggish economy. I am very excited about our growth prospects for the next four to five years and, despite regulatory hurdles, I am confident Ryanair will experience strong and profitable growth. With that, Neil, I’ll turn it over to you to discuss points from the P&L or balance sheet.

Yes. I’ll maybe just focus again on a couple of things in the quarter and in the half. Firstly, as you already pointed out, costs put in an excellent performance, up just 1% on a per-passenger basis. That was due to our strong fuel hedging, which helped offset double-digit increases in ATC and environmental costs. We are still guiding modest unit cost inflation for the full year. What’s modest remains somewhere between 1% and 3% on a full-year basis, probably a little bit higher than the 1% in the first half in the second half of the year. We have extended our hedges into FY '27, as Michael mentioned. We’ve also extended our OpEx hedging into next year at 1.15 compared to 1.11 on the euro-dollar. So we’re locking in significant price savings next year, which will go a long way to help offset a jump in our environmental ETS next year somewhere from about EUR 1.1 billion this year to somewhere between EUR 1.4 billion and EUR 1.5 billion next year. The balance sheet is rock solid, BBB+ rated, 610 unencumbered aircraft and in a very strong position now to be debt-free by May next year, which I think is a great place to be. We are also locking in euro savings on our MAX 10 CapEx moving forward with a 35% hedge in place on 150 aircraft at 1.24. The buyback is moving along at a nice pace. We’re pleased with the brokers’ pace of management. They managed it well through indexation. We are just over 35% of the way through that, and it will run out to the back end of 2026. Finally, we announced an interim dividend this morning of EUR 0.193, which, similar to last year, will be paid at the end of February.

Okay. Thanks, Neil. With that, Nadia, we’ll open up to Q&A, please.

The first question goes to Harry Gowers of JPMorgan.

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

Thanks, Harry. I wouldn't want to provide specific details on our expectations for Q3 fares as they heavily rely on bookings made close to Christmas and New Year. However, October has shown strength compared to last year, while November is slightly weaker. Currently, Christmas bookings are looking strong compared to last year. I feel confident that average fares will fully recover from the 7% decline we experienced last year, with a 13% increase in average fares during the first half of the year. The comparison with last year's tougher numbers in the second half suggests we won't see the same level of fare increases in Q3 or Q4. I believe that for the full year, we'll achieve a 7% increase in average fares, and possibly even reach 8% if Christmas is strong, although we need to monitor close-in bookings. The new Boeing aircraft will allow us to increase capacity during the holiday season, which is why we've raised our traffic estimate from 206 million to 207 million. Regarding online travel agents, last year's OTA boycott affected us significantly in the first half by driving price-sensitive customers away. Many ended up booking with tour operators like Jet2 and easyJet Holidays, but they've returned to us in the first half of this year, which is reflected in our results. We're observing a trend with those tour operators regarding price sensitivity in their bookings, likely due to the traffic returning to us as they seek our low fares. In the second half, the influence of OTAs is less pronounced, so we didn't experience the same drops in airfares as we did last year. Given the tougher comparisons from last year, it's likely we won't see 7% fare increases in the latter half, but overall, we're expecting to finish the year with about a 7% increase in fares. Eddie, would you like to add anything about Q1, Q2, or OTAs?

No, I mean like what we've said covers it off about what has happened; slightly less in terms of fares in November, but Christmas, we're happy with how it's booking. So nothing really to add there at all. I think we're through that tail end of the OTAs, and I don’t think there’s going to be any further uplift. I just think it's, as you say, much tougher for our competitors out there on the prior year comparable.

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

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

Okay, Neil. Are you fine with Tracey coming in after?

Yes, sure. On the marketing front, I think you're particularly referencing some of the decrease due to lower EU261 disruptions, keeping them under three hours. Additionally, we have up to 60 million people weekly engaging on social media, which is significantly reducing our marketing expenses. Some of this is also about timing. We plan to increase our marketing efforts during the Christmas season. On the other hand, we are facing higher input costs for onboard spending, which is performing quite well from an ancillary revenue standpoint.

Okay, thanks, Neil. And on its commissioner Tzitzikostas, who’s the Transport Commissioner, has had a really impressive start. One of the most notable things is they've finally moved on the infringement proceedings against Spain over the excessive Spanish bag fines levied only on the low-fare airlines in Spain, but not on the high-fare airlines. It's clearly illegal. It's in breach of EU Regulation 1008/2008, which guarantees the airlines' freedom to set prices free from government interference or regulation. He does want to reform ATC. But like I think a lot of commissioners, he’s frustrated. They’ve all expressed frustration at how little comes back out of von der Leyen’s office. There is a real dead hand of German incompetence at the top of the European Commission, and she should either deliver reform or be replaced by someone who can deliver. I would like to see an Irish politician there, given it was Peter Sunderland who originally deregulated air travel, but given the lack of action from the Irish politicians on the Dublin Airport cap, I wouldn’t be recommending any of our Irish politicians either. We elect a bunch of clowns to the EU Parliament, and we shouldn't be surprised with the circus that they come out with. One of the ridiculous ideas is that everyone should have the right to bring two free bags onboard an aircraft. We have politely pointed out that there isn't room on board an aircraft for two free bags for 189 passengers. They seem to miss that detail. We've also pointed out that limiting passengers to just one free bag on board was a key factor as per the ECJ judgment in 2014. We do allow half the passengers who are priority boarding to bring a second carry-free bag. That's about as much capacity as the aircraft has. The Parliament now part of this is that the commission under Tzitzikostas is looking for reform of EU261. They talk about bringing compensation up from 3-hour delays to 4-hour delays, which does make sense. The Parliament then pushes back with some ridiculous suggestion like two, three bags on board. What that would do is create huge queues at Europe's airports, as everyone struggles with two bags through airport security, similar to what you see in American airports. It would also lead to inevitable flight delays because bags that don't fit on the aircraft would have to be taken away at the gate and stored in the hold. You'd have more aircraft missing their slots, causing significant delays. A bunch of lunatics elected to the European Parliament wouldn’t worry about the daily details of how people move. This is why in America innovates, China replicates, and Europe regulates. Draghi pointed out 14 months ago that we need to operate more efficiently in Europe. The best starting point would be to stop issuing new impractical regulations and start making Europe more competitive. The European Parliament should spend more time reforming air traffic control or protecting overflights in a single market than designing impractical regulations. It’s all ridiculous.

The next question goes to Jaime Rowbotham of Deutsche Bank.

Two from me, both on growth. The first one on fares. Obviously, great to see you're making back what you lost from the OTA issues. But on an underlying basis, pricing is broadly flat. I think that’s the scenario you're implicitly guiding to for this winter when the comps normalize. So as we look ahead to next summer, you're growing in Poland, Italy, and Ireland; you’ll shrink in Spain, Germany, and France. But overall, you’ll grow seats at about 4%. It looks like the industry will do about 3% to 4% again as well. That being the case, I was a bit surprised to hear you talking about modest fare increases coming through, especially as you hinted that Ryanair will likely be passing some of its fuel cost decline on to stimulate growth. Would it not pay for us to tread carefully when thinking about the direction of your pricing next summer? The second one, you've announced EUR 25 million of annual investment today to accelerate cadet and first officer recruitment for the next 3 years. You’ve also talked previously about setting up 1 or 2 in-house engine maintenance shops. Is there any update on that project? Have you chosen the sites? And are there any other non-aircraft investments for growth that we should have on our radar?

Thanks, Jaime. I'm going to ask Eddie to address the growth question. I might ask Tracey McCann to provide an update on the EUR 25 million investment, the first officer recruitment, and the engine shops. Eddie, what can you tell us about growth in 2026?

Yes. Looking ahead to the summer of next year, nearly 75% of our growth is expected to take place in Italy, Poland, Albania, and the U.K. In Italy, we have opened two new bases in Trapani, and we are set to open a base in Tirana. We are adding three extra aircraft in Modlin and another three in Krakow. While it's unfortunate to say we are not expanding in Spain, especially in regional Spain where airports are underused by about 70%, we are still seeing growth in Malaga and Alicante, where we plan to have around 20 aircraft at each base next year, which will max out our early morning slots. Growth continues in Madrid, though it is becoming more uneven; Barcelona is at capacity. As our competitors face cost inflation, we anticipate that fares will rise, which will widen the cost gap between us and our competitors, allowing us to benefit from what we believe will be modest fare increases. Overall, about 75% of our growth will be concentrated in Italy, the U.K., Poland, and Albania, with some small increases in aircraft across various other bases where we are securing low-cost agreements.

I would just add to that point. If you look at the non-fuel unit cost inflation of our competitors, whether it's easyJet, Wizz, Lufthansa, Air France-KLM, they are really struggling to contain unit costs. That, I think, puts pressure on fares to increase next year in order to cover these unit costs. The legacy carriers are facing a much bigger penalty from the withdrawal of the free ETS allowances. The impact is much larger for Lufthansa, Air France, and IAG. I think the pressure on fares is going to be upwards for the next year or two. We have a much better unit cost discipline, and I think our fares will trend up behind them despite the fact that we’ve banked up to EUR 650 million in fuel cost savings next year. Tracey, do you want to touch on the first officer recruitment issue and the progress on engine shops?

Yes. So attrition rates are probably at the lowest we've ever seen. So we probably slowed down our recruitment this year of cadets, to about 500. We should be up at about 1,000. Given the long lead time for promotions to captain which is about 4 to 5 years, we're commencing recruitment now for peak years of the MAX 10 deliveries. So there’ll be a carry cost of about EUR 25 million per annum up to 2030.

And shop progress?

So just on the engine shops, we're close to selecting our first MRO shop. We will open two. This will allow us to do 200 engines in each shop. The selection period is ongoing. There's nothing in our CapEx for this year, but we will probably start paying something next year, but we're close to announcing something on that very shortly.

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

The next question goes to Jarrod Castle of UBS.

I was quite interested to hear you say that you think the profit per pax could go as high as EUR 14 at least over the next few years. You’ve given some commentary on pricing and costs. But I'm curious if you could provide some color on what gives you that confidence assuming we’ve got a stable GDP environment. There's no downturn, I guess. And then you've obviously spoken about a number of countries—Germany, France and I saw some comments on the U.K. But it looks like you’re still continuing to grow in the U.K., which I think is about one-fifth of your capacity. If I'm not mistaken, you're going to grow in summer by the sounds of things. So why is it still attractive to you? What are your thoughts on the upcoming budget for '26?

Okay, I’ll maybe ask Eddie to do the second half of the question on U.K. growth this year. Remember, the APD increase doesn't come in until April of '26. Just on profit per passenger, if you go back to the kind of broad strokes or my favorite back of the envelope, the real driver of our industry in Europe for the next 4 or 5 years is capacity constraint. We've gone through 25-30 years where new airlines were being set up, low fares airlines, and the legacies were setting up low fare subsidiaries. There is very little capacity growth across Europe this year, next year or the next 3 or 4 years. Nobody has any significant aircraft orders, with the possible exception of Ryanair. Wizz had some orders, and they’re desperately trying to defer those now, which means their profits implode because all their profits come from leasing profits being recognized in the P&L. But that’s an aside. I think the demand for air travel remains strong. Yes, there are economic challenges in countries like Germany, France, and the U.K., where they're not doing well, especially in the U.K. post-Brexit. But people are not willing to forgo travel. After the mid-term school break last week, we saw strong traffic flows and strong bookings at high yields. Easter, summer holidays, Christmas, we’re seeing strong demand for travel. I think, if anything, strong demand remains with Ryanair because we have such a pricing advantage over every other airline in Europe. Wherever we allocate capacity, we are filling strongly, and I think that was reflected in this morning’s bookings. Forward bookings are about 1% ahead of where they were this time last year. I was asked this morning, if we save EUR 650 million on fuel next year, will we pass that on as lower fares? My answer was, I think we can, but I don’t expect to have to because I don’t see significant downward pressure from our competitors. The increased labor costs and ATC will impact the cost for our competitors more than us while the legacy carriers face higher penalties from the withdrawal of free ETS allowances. Those guys have no future unless they constrain capacity and get airfares up for the next year or two, which is why I think we will see modest fare increases over that time. And certainly, I think that justifies the reasonable growth in profit per passenger from EUR 10 to EUR 12 or EUR 14 over the next 5 years to 2030. But then again, I like to think of myself as a hopeless optimist, which is why I’m in the airline industry. Eddie, U.K. growth and the impact of APD.

Yes. I mean, notwithstanding the background of continuous APD growth in the U.K. The way we look at route development is not just season by season, but there’s a continuous carousel of airports that we do deals with. If you've got airports in a tough market like that, willing to share the investment with you in terms of lower costs, we’re going to reward that with extra capacity. We’ve got extra aircraft going into places like Newcastle, which has gone from zero to two aircraft based and three aircraft based now. Birmingham has got an extra aircraft. Liverpool has got an extra aircraft, etc. All these places have extra aircraft going in because they’re willing to invest. We’re in it for the long term; we’re lowering costs there and incentivized for additional traffic. It doesn't always go hand-in-hand with the market, as you make those investments, and this will put more pressure on our competitors.

Neil, anything you want to add there on U.K. growth or impact of APD?

Not particularly. I think Edward and yourself have covered that off fairly well. On profit per passenger, it won't go in a straight line. There will be years where we'll be up and years where we'll be slightly down.

Okay. Michal Kaczmarzyk here as well, who’s the CEO of Buzz. I might just add, I guess, he can give you insight into growth in Central Europe, Poland in particular, the charter market in Buzz. Michal, anything you want to add on growth in those non-tax economies like Poland and Central Europe?

There are good taxes. True. Poland and CEE are performing very well. Demand is strong. We have now 80 aircraft allocated in the region. Poland is the biggest market with 44, offering more or less 40 million seats with the most attractive destinations in CEE. We have very strong brand recognition with Ryanair, supported by our local structure generating over 3,500 direct jobs in Central Eastern Europe, supporting another 20,000 through airport handling, and so on. We’re making significant investments in the region through our hangar facilities and also crew training centers. We've recently completed the biggest crew training center in Central Eastern Europe with four full-motion simulators. It’s located in Krakow, and we’ll be able to train over 300 crew per day. We’re developing our Warsaw ops center, which focuses on covering Central Eastern Europe and serves as a backup for Dublin ops center. There’s a lot of capacity we can still allocate in Central and Eastern Europe. The only constraint is the number of aircraft allocated there. We are in a good shape to take a lot of market share in the next 2 to 3 years.

There was talk last year of moving aircraft back from the desert and basing aircraft in Central and Eastern Europe. Are you seeing much of Wizz in those markets? And what’s happening with Tirana, where we’re opening a base that is currently a Wizz base? How is that expansion going head-to-head with Wizz?

So in terms of aircraft allocation, I mean Wizz's aircraft allocation from the desert to Central Eastern Europe is too late. After pre-COVID, we increased our share by about 40% in Central Eastern Europe, taking their capacity from the region. We’re now the biggest in Poland, the Baltics, Croatia, Slovakia. We have the local structure from where we can compete in terms of cost level. There is no cheaper airline than ours in the region. With the highest fleet utilization ratio in the industry, over six hectares per aircraft per day, the new base launch next summer will be in Tirana, giving us quite significant capacity against Wizz. We are not afraid; our local structure guarantees us the lowest cost. Once we deliver the lowest cost, we can deliver the lowest fares.

Thanks, Michal. Eddie, anything you want to add on growth there before we wrap up?

Just touching on the point you talk about Wizz and what's happening out there, where their policy or growth strategy is to go back to Central and Eastern Europe. What we pick up from the airports is that those that are incentivizing us to grow see that we're there for the long term. You can see cancellations by Wizz even before they’ve started back there. So there’s a lot of noise but no action. That extends to places like Italy, where we’re doing almost 1,200 frequencies a week while Wizz is less than 100 frequencies. Airports recognize that Ryanair is there for the long term. If they do a deal with Ryanair, they can lower costs and generate traffic over the long term, rather than looking at the short-term deals available elsewhere.

The next question goes to Stephen Furlong of Davy.

Just on Boeing, last week, they had results, and I thought they were pretty vague on certification. They just said 2026. I mean a little bit more work on the 10 and the 7 and hardware and software modifications, although they did say it was pretty straightforward. So could you talk about that, what exactly they're telling you? Then you mentioned labor. Could you remind us what's the timetable for the CLAs? I think most run in 2027.

Yes, I think Boeing’s new management is taking a more cautious approach, which seems wise. They are managing their delivery schedule more effectively. They have received FAA approval to increase their delivery rate from 38 to 42 in October, and they're planning to reach a rate of 46 by March or April next year. This change won't affect us right away, as our deliveries will be completed beforehand, with all 29 aircraft expected by summer 2026. However, there is a possibility that certification could be delayed due to a government shutdown. Boeing is confident, and we've heard from EASA that they are impressed with Boeing's management team. Delivery quality has been notably high for the past few months, and they are careful about making commitments. Currently, they indicate that the MAX 7 should receive certification by Q2 next year and the MAX 10 by Q3. This timeline could extend to Q4 or Q1 of 2027, but we would still receive our 15 deliveries in the spring of 2027. We would certainly be among the top operators of the MAX 10, and I want to avoid any complications with that. The sooner we receive the aircraft, the better.

Most of our labor contracts run out to April '27, but there are a couple that will be up 2 or 3 on the pilot side. Similar numbers on the cabin crew side. But it’s not just about pay; it's about the environment and stability for our staff.

Touch on the Spanish CLA?

We just concluded the Spanish CLA for the cabin crew, which was one of the last ones post unionization. There were some bumps in the road, but it was ratified last week by the local labor authority, which is very welcome. That goes out to 2030. That sets a benchmark for where we’re going to go with the new deals coming, particularly on the cabin crew side.

And Darrell, anything you’d like to add regarding the CLA side as Chief People Officer?

We just concluded the Spanish CLA for the cabin crew, which was one of the last agreements following unionization. Although there were some challenges, it was ratified last week by the local labor authority, which is very encouraging. This agreement is effective until 2030 and establishes a benchmark for our upcoming negotiations, especially concerning the cabin crew.

As you rightly say, the labor contracts mostly run to April '27. This is timed to meet the deliveries of the MAX 10s. We will be identifying productivity gains coming from the MAX 10 aircraft. We are willing to share some of that productivity upside with our people.

The next question goes to Alexander Irving of Bernstein.

Two from me, please. First on ancillaries. Really good to see that robust growth continuing since Q1. What’s driving that? Is it product innovation? Is it pricing decompressing 2 years into one as you reinstate the OTAs? And flat unit ancillaries at this time last year? Then the second question is on CapEx. You've previously spoken about peak CapEx of around EUR 3 billion in FY '30, '31. You talked about locking in some of the dollar weakness and some of those gains into your future CapEx budget. What are your latest expectations for peak CapEx? When and how much, please?

Thanks, Alex. So maybe I’ll ask Tracey McCann to take the ancillaries question. Neil, you might come in and do CapEx, our peak CapEx. Tracey, ancillary?

Okay. The ancillary growth of 3% is primarily driven by dynamic pricing. We’re starting to get better pricing on seats and bags. We also have our order to seat service, which is increasing our onboard spend. Probably, it will fall back a little bit; you’ll see comparables in the second half of the year. So maybe not as strong as the first half and probably about 2% per annum, beyond this year. A lot of it is driven by what our labs team are doing in-house in terms of driving up increments we can achieve on pricing.

Okay. Neil, do you want to touch on CapEx?

Yes, Alex. There's not a lot to add at this point. We’re only 35% hedged on the firm, the 150 aircraft. We haven't done anything on the options yet. The CapEx we've guided in the past doesn't include engine shops, so it’s premature to start changing those numbers right now. I prefer to wait until the engine shops are agreed and then come out and refresh the numbers at that point.

Yes, thanks, Michael. We've got a nice layer in place on the CapEx, particularly for the MAX. If you look at it at the start of the year, euro-dollar levels were down at 1.02, 1.03 in January. Now consider the levels when the contract was signed at 1.08. We have a nice space in place now to move forward.

The next question goes to Dudley Shanley of Goodbody.

Two questions. First, Michael, you were on CNBC this morning. I think if I’m listening to you correctly, you said consumers seem to be a little more price sensitive at the moment. How are you seeing that coming through your business? Is that just a temporary thing? The second question was about capacity constraints. What are you watching on that kind of 3- to 5-year view that it will remain constrained? I know some people have been talking about aircraft from companies like Spirit and think that’s been shifted over to Europe. What do you watch?

Thanks. Currently, consumer price sensitivity seems evident. Forward bookings without any price promotions are nearly 1% higher than they were at this time last year. Last year, we faced challenges due to OTA pricing, which was down 7%, and lower fares. At present, fares are up 13% in the first half of the year, but I expect a slight reduction in the second half. Pricing is somewhat affecting our forward bookings, and we are attempting to secure cheaper seats to maintain capacity for last-minute bookings, especially as we near Christmas and New Year. We are increasing capacity in regional Italy, and we are observing strong load factors. While prices are lower in domestic Italy and Spain, we are also seeing growth there. There is some consumer price sensitivity at play. I am actively opposing any increases in APD from Rachel Reeves or any actions that could harm U.K. economic growth. Interestingly, if her actions continue to negatively impact economic confidence in the U.K., it may lead more consumers to switch from higher fares to Ryanair. Overall, capacity constraints involve careful monitoring of Boeing and Airbus orders. The latest was from Turkish Airlines, which had previously announced an order for about 200 to 250 narrow-body 737s, but they are struggling to secure engines. They have reported difficulties in making deals with engine manufacturers. We wouldn't order aircraft without engines. Right now, the market heavily favors engine manufacturers, resulting in airlines ordering planes without engines and becoming price takers. There seems to be little interest from Lufthansa, Air France-KLM, or IAG for capacity growth, as they prefer to reign in capacity. Wizz is eager to postpone their Airbus orders, which would increase costs. EasyJet is simply upgrading their fleet from A319s to A321s at key airports. In Europe, we have a favorable situation, as most airports are encouraging our growth, and some countries are even incentivizing us by lifting environmental taxes.

The next question goes to Conor Dwyer of Citi.

First question is for you, Michael. You were talking about how ETS credit prices should come in line with CORSIA, which would obviously be quite material if that did happen. But how much of this is hope, and how much do you think this might actually change? Is there political will for this? The second question for Neil on the cost per passenger. It was obviously up 1% in the first half of the year, and you're talking about a bit of acceleration. I think you've got a strong fuel hedge position for that. Where do you expect non-fuel cost pressure in the back half of the year?

Thanks, Conor. I mean, with regard to moving ETS to CORSIA, we've been advocating for this for about two years. We didn’t have the support from the flag carriers in A4E, like Lufthansa, IAG, or Air France-KLM. They are now more affected by the withdrawal of free ETS allowances as they haven't grown much over the last 10 years. The cost impact is significant for them. Now they’re campaigning to move, at least to align with CORSIA. It's indefensible that Europe heavily taxes intra-EU flights while non-Europeans pay nothing. I think A4E’s being unanimous about this, and I'm much more optimistic we will see movement on it. I'd like to see Ursula von der Leyen do something regarding competitiveness. The Draghi report is 14 months old, and she hasn’t executed anything. If we gain momentum, we may see changes in ETS. Lastly, I’d like to see efficiency in air traffic control and protecting the single market.

Yes, sure, Conor. A couple of things. Firstly, I'd expect air traffic control charges to go up again in January. The service is so poor that they have to put this up. You'll also see some marketing spend catch up in Christmas to stimulate demand ahead of summer. The Boeing compensation will also unwind; some maintenance credits are falling away, which will have an impact on our maintenance line. The ramp-up of cadets will be in January. We are ramping up for summer 2026, which drives those pressures, that's why we've maintained the 1% to 3% unit cost inflation outlook.

The next question goes to Savanthi Syth of Raymond James.

Just on the first one, another question on the unit cost. But given you have hedging in place for next year and clarity around Boeing deliveries, I was wondering if you could provide any early thoughts on how we should think about fiscal year '27 unit costs? The second question is on the debt side. Usually, airlines with good balance sheets find some value in having debt involved in that side of the financial market. Is the zero-debt view philosophical? Is it temporary?

Yes. Thanks, Savi. I think it’s too early yet. We haven't done the budgets for FY '27, so I wouldn’t comment on that now. However, we have banked EUR 650 million in fuel cost savings through the hedging. In terms of hedging, we are locked in at 80% of FY '27 fuel at just under $67 a barrel. We have also made good progress on currency hedging for OpEx. I'll ask John Norton for an update on that.

Yes, we've achieved 80% of FY '27 at a favorable level.

The cheapest way to fund ourselves is with cash. Therefore, we decided to pay back bonds out of our own resources. We’re in a unique period now with limited CapEx. We plan to repay the bonds and build up gross cash between EUR 3 billion and EUR 4 billion. Any surplus could be returned to shareholders in dividends and buybacks, but as we get into heavier CapEx, we may consider going back to the bond market.

I would reiterate that we are not adopting any principle here relative to being debt-free. It’s merely that this is a unique situation. In a period of heavy CapEx, like in 2028 or 2029, we would look to return to the bond market.

The next question goes to James Goodall of Redburn.

I just got a couple of follow-ups. First, just on the MAX 10 deliveries. Do you know how many deliveries to other airlines are in front of you in the queue? I mean it looks like various airlines like United, Alaska, have been pushing back some MAX 10 deliveries from '26 to '27. I'm trying to gauge the risk profile of you if the program gets pushed back any further, which seems lower now given the deferrals from those airlines, but I'd love your thoughts there. Secondly, following up from your comments around forward bookings being up one point in Q3. Does that forward book load factor level differ between peak and shoulder period in Q3? And what does the higher booked load factor mean for you in terms of pricing strategy in the late market?

Okay, thanks, James. For the MAX 10s, yes, one reason we're growing confident we will get the first 15 deliveries in '27 is we are not delaying our orders. United is the lead customer and has delayed. We offered to step in and take any MAX 10s they might cancel. Currently, we have two airlines in front of us in the queue; I think WestJet is one and Alaska might be another. Their deliveries are due in mid to late 2026. Not sure if they’ll meet their timelines, but I believe that we should still get our first MAX aircraft in spring '27, about six months after the others. Eddie, could you touch on forward bookings?

Yes. In Q4, we are about 10% booked, so very limited visibility. In November, we required some price stimulation, but we’re happy with load factors; we are at around 76%-77% booked for November. Bookings are a bit ahead of where we've been. This is a small part of our business, but it is more robust than last year's results. However, we have to be careful about digging too deeply into forward predictions as we're at a low level of advance bookings.

The last question goes to Muneeba Kayani of Bank of America.

I just wanted to follow up on your outlook for the fourth quarter. Why are you saying there's no Easter benefit because there’s the earlier Easter, and some days will fall into the end of that? Wanted to understand your thinking around the base effects into the fourth quarter. Then on EU ETS, what sort of increase should we be expecting in FY '27? ETS costs are just 11% right now and prices have gone up; how much could the fuel savings be offset by the ETS cost increases?

We expect very little benefit from Easter in Q4; it will be so minor that we’ll disregard it. Most of the Easter impact will flow into Q1. Regarding ETS, I expect costs to rise from EUR 1.1 billion this year to between EUR 1.4 and EUR 1.5 billion next year, depending on the price outturn. Yes, prices have gone up, but that’s the last big step-up; we should not see increases to that level for next year.

The last step of velocity allowance relates to pricing changes driving ETS for further years. We do see the mandates grow a bit in the U.K. leading up to 2030.

And again, this brings up how absurd the situation is. If Europe is serious about being competitive, they need to roll back these taxes. They must do so to align with CORSIA. It's indefensible that Europeans are heavily taxed while non-Europeans are exempt. The idea is simply absurd. If we can unify together, maybe we can get some significant changes in this situation.

The last question goes to Ruairi Cullinane of Research RBC Capital Markets.

Yes, first question: a follow-up on your previous comments; it sounds like you’re not focusing lobbying efforts on sustainable aviation fuel mandates. Would you like to see any changes there to rules in the U.K. or EU? Secondly, I wondered if you'd be willing to comment on whether the U.K. has diverged at all from Q2 fare trends you've reported or 3Q booking trends?

Regarding SAF mandates, I think there’s little prospect of those being met by 2030, and we need to shift our focus from them. If there’s no significant supply, they'll likely defer further. On the U.K. fares, Eddie can speak to that.

The only divergence would be in U.K. leisure in November, which is a small part of our business. The rest of the U.K. traffic aligns well with the rest of our network.

Does that answer your question?

Yes.

Thank you all for your time. I appreciate your participation in the call today. We have extensive roadshows planned for the remainder of this week across Europe, North America, and Ireland. If you'd like a meeting on a one-on-one basis, please reach out to us. We look forward to meeting you all. We believe there is cautious optimism in our outlook for the next four or five years. Capacity is constrained across Europe, we’re negotiating better deals with airports, and countries are rolling back environmental taxes. We expect controlled growth up to 250 million passengers by 2030 and further to 300 million by 2034. Thank you very much, and I look forward to seeing you all. We’ll wrap it up there, Nadia, please.

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