Earnings Call Transcript - RYAAY Q4 2024

Michael O'Leary, CEO

Good morning, everyone. Welcome to the Ryanair Full Year Results. I'm Michael O'Leary, the Group CEO, and I'm here with Neil Sorahan, the Group CFO. Earlier today, we published the results for the year ending March 31, 2024, showing a significant 34% growth in profit after tax, reaching €1.92 billion. Our traffic increased by 9% to 184 million passengers, which is 23% above our pre-COVID levels. The key points from the past year include a 9% rise in traffic to 184 million passengers, although it could have been higher if not for Boeing delivery delays. Our fuel expenses increased by 32%, an additional €1.25 billion, bringing the total to just over €5 billion. Despite this challenge, we still recorded a rise in profitability. Our ESG ratings have improved, with an MSCI A rating and an A minus from the Climate Disclosure Project. Additionally, we achieved a strong customer satisfaction score of 85% in the last year. We have taken delivery of 146 new Boeing 737 Gamechanger aircraft, increasing our fleet to nearly 600 by the end of March, although this number would have been higher without delays from Boeing. With these new aircraft, we opened five new bases and over 200 new routes for summer 2024, driving substantial growth in Europe. On the cost side, for the fiscal year ending March 2025, fuel is more than 70% hedged at under $80 per barrel, resulting in a savings of €450 million from hedge fuel for the full year. We declared a maiden interim dividend of €400 million scheduled for calendar 2024, with plans for a similar approach in 2025. Our strategy of ordering 300 Boeing 737 MAX 10 aircraft, the first deliveries expected in spring 2027, supports our growth target of reaching 300 million passengers by the early 2030s. Regarding our fleet, delays from Boeing have been a significant hurdle this year. We anticipate operating around 158 Gamechanger aircraft by the end of July, which is about 23 short of our contracted deliveries. While there is a risk of further delays, we believe it's unlikely given our ongoing communication with the Boeing management team. These issues may lead to more traffic growth in the lower-yielding second half of the year than initially anticipated. To maximize deliveries, we will continue accepting Gamechanger aircraft during the peak months of July, August, and September, although we cannot sell these aircraft until we have firm delivery dates. Lauda has extended three A320 leases from 2024 to 2028 without increasing costs. Travel demand in Europe for summer 2024 is strong. Despite Boeing's delays, we will operate our largest summer schedule with over 200 new routes and five new bases. The short-haul EU capacity is limited as competitor airlines ground A320s for Pratt & Whitney engine repairs. OEMs continue to face challenges in resolving their delivery backlogs, so we encourage all passengers to book early for summer 2024 as we anticipate higher seat prices compared to 2023. We expect the consolidation of European airlines to continue, with ongoing developments involving ITA and Air Europa in Spain, and the possible sale of TAP in Portugal. This consolidation, along with A320 groundings, will likely limit capacity over the next few years, providing Ryanair with a favorable growth environment with manageable trading conditions and constrained competition. This should support stable fare trends in the coming summers. Neil will discuss the financial results in detail, but I want to highlight our focus on shareholder returns. Post-COVID, we committed to careful management of our cash resources. We have prioritized restoring employee pay, which has been accomplished, and we are halfway through repaying our bond debt, with plans to be entirely debt-free by 2026. We also intend to use internally generated cash for aircraft capital expenditures. Our policy is to maintain a robust balance sheet while returning excess cash to shareholders when possible. I am pleased to announce that the Board has approved a €700 million share buyback, set to launch later this week. Once completed, this will bring total returns to shareholders since 2008 to nearly €8 billion. Looking ahead, we expect to grow by 8% in the full year ending March 2025, with passenger numbers projected to be between 198 million and 200 million, down from an initial target of 205 million due to the Boeing delays. Despite these challenges, our cost advantage over competitors in Europe is widening. However, we do expect a slight increase in unit costs for FY25, primarily due to annual pay increases, higher handling and ATC fees, and the impact of Gamechanger delivery delays. Much of this will be offset by our fuel hedging and rising interest income. With limited capacity for short-haul flights in the EU, we see strong demand for summer 2024, with forward bookings outpacing last year, although pricing has softened slightly. Recent weeks showed other airlines and Ryanair increasing promotional fares to meet volume and load factor goals. While we are confident in July and August bookings, April, May, and June are a bit weaker than anticipated. We remain cautiously optimistic that peak summer 2024 fares will be comparable to or modestly higher than those in summer 2023. Q4 2025 will not see the benefit of an early Easter, making it too early to provide precise profit guidance for fiscal year 2025. The final outcome will largely depend on avoiding significant adverse events like the ongoing conflicts in Ukraine and the Middle East, extensive ATC disruptions, or further delivery delays from Boeing. Now, I’ll hand it over to Neil for the slide presentation.

Neil Sorahan, CFO

Thank you very much, Michael. Ryanair, as we all know, has the lowest fares and the lowest costs of any airline in Europe. We're targeting up to 200 million passengers this year, so an 8% increase subject to Boeing delays. And we continue to be number one for on-time performance and reliability, and Sustainalytics have retained Ryanair as their number one airline for ESG in Europe. Our growth over the next 10 years will be underpinned by our 300 MAX 10 order. And our financial strength and our lowest cost will facilitate us to fund this and to be the long-term winner in our markets. We're number one in Europe for coverage and choice. This summer operating our largest ever summer schedule over 95 bases, 230-plus airports with a fleet of 600 aircraft. And this, coupled with our order book, sees us grow to 300 million passengers by FY34. This is a very important slide. It shows that the cost advantage that Ryanair has in place over where everybody else continues to grow and to continue to widen as we supplement this further with our increasing interest income at a time when our competitors are raising expensive bonds in the market, taking on expensive new leases due to capacity constraints. Ryanair is seeing huge cost discipline. And I think this is a key advantage that we enjoy over everybody else within our markets. On the full year itself, very pleased with a 9% increase in traffic to just under 184 million passengers at a slightly higher load factor of 94%. Revenues increased strongly by 25% to €13.4 billion, driven by a 21% increase in average fare and a solid performance on ancillary revenue. We saw a 24% increase in our operating cost, just over €11.3 billion, primarily due to a 32% increase in our fuel bill, so an extra €1.25 billion on our fuel bill this year. Investment in resilience and in our people, so pay restoration, pay increases and the impact of the delayed Boeing aircraft coming in there. So the end result is that we're reporting a 34% increase in profit after tax to €1.92 billion in the full year for FY24. Our industry-leading balance sheet with its BBB+ rating is one of the strongest out there. I would point to our very strong €4.1 billion gross cash at the end of the year despite significant CapEx and debt repayments. And we're very pleased to see our net debt position improved from just under €600 million last year to €1.4 billion this year. This fortress balance sheet, as Michael has already said, will be further enhanced over the next couple of years as we pay down our maturing bonds. And we've got a unique advantage in that all of our Boeing 737 aircraft, 556 of them at the end of March are unencumbered and on our balance sheet, which gives us massive flexibility at a time when competitors, as I already said, are raising expensive debt in the market and taking on expensive leases. As part of our capital allocation policy, we've now restored pay for our people. We're paying down our debt. We're funding our CapEx from our internal resources and we're returning funds to our shareholders through ordinary dividends and other forms of distributions. And with that, Michael, maybe you'll take us through current developments, please.

Michael O'Leary, CEO

Thank you, Neil. As I mentioned earlier, the demand for summer 2024 is strong. We are running our largest summer schedule ever and anticipate an 8% growth in traffic during the peak summer months, especially since the EU's capacity is limited due to Pratt & Whitney engine repairs, delays in original equipment manufacturer deliveries, and industry consolidation. It is somewhat surprising that pricing has not been stronger, and we are uncertain if this is due to consumer sentiment or a feeling of recession in Europe. However, we expect strong travel demand, particularly in July and August. If we need to offer discounts to maintain a 94% load factor in April, May, and June, we will do so. We are actively collaborating with Boeing to enhance quality and speed up our 737 deliveries. There is a slight chance our backlog may reduce from 23 to 20 by the end of July, but this won’t significantly impact the traffic growth figures for this year. The crucial message today is that we have already hedged 70% of our fuel costs for fiscal year 2025 at $79 a barrel, securing a €450 million saving. A significant development in the last three months has been the number of approved online travel agency deals we have signed, transforming OTA pirates from scamming consumers to ensuring they receive the lowest fares from Ryanair. As Neil has noted, there is a final dividend of €200 million, and this morning the Board approved a €700 million share buyback. Regarding capacity, while short-haul capacity in Europe remains constrained, we are operating about 30% more seat capacity than pre-COVID levels in April, while competitors are struggling to return to pre-COVID capacity. Wages remain flat year-on-year due to our grounding of 45 A320 aircraft, and carriers like IAG, Lufthansa, and Air France are significantly behind in terms of short-haul capacity recovery for summer 2024 compared to summer 2019. In this context, Ryanair is running a record schedule with a capacity increase of 35% compared to 2019, which will enable us to capture a larger market share from our competitors across Europe this year. Regarding Boeing, we had 146 Gamechangers in our fleet at the end of March and are likely to be about 20 aircraft short by the end of July based on our scheduled deliveries. We expect to catch up those deliveries by the end of October, potentially allowing for the addition of at least 20 new aircraft for summer 2025. Boeing is also contracted to deliver another 29 aircraft between January and April 2025, which means we could see around 50 new aircraft being added by summer 2025. Growth may slow in summer 2024, but we expect to regain momentum in summer 2025. We will continue to receive deliveries during peak months—August, September, and October—to ensure we bring those aircraft in. We appreciate the management changes at Boeing and support the efforts that Stephanie Pope and her team are making. We have observed improvements in the quality of our aircraft deliveries, but we still need to see further progress in accelerating those deliveries. We have also extended three of Lauda's A320 leases by four years until 2028 without increasing the lease rates, which is critical given the rising lease costs. We anticipate MAX 7 certification in late 2024 or early 2025, followed by MAX 10 certification by mid to late 2025. The first deliveries of the MAX 10s for Ryanair are expected in spring 2027, and provided certification occurs in mid-2025, we do not foresee any delays in these aircraft deliveries. Concerning the OTA issue, we are collaborating with a range of OTAs. A key aspect of our partnership with these OTAs is that they agree not to overcharge our customers. They can charge a separate fee for their travel agency services, ensuring that consumers know what they are paying. There will be no overcharging on Ryanair's airfares or markups on ancillary products, and no unauthorized access to our website. Ryanair benefits as we receive actual customer emails and payment details, allowing us to provide essential communication, including pre-flight and safety information. By working with major OTAs—like On the Beach, eSky, TUI, loveholidays, El Portes English, and Kiwi—we believe we can offer a broader range of products and services to consumers while ensuring they receive Ryanair's prices without inflation. Unfortunately, a few OTAs continue to engage in scamming, with eDreams in Spain being a prime example. They not only overcharge passengers for Ryanair flights but also inflate ancillary fees and have introduced a cancellation fee of €60 for non-cancelable Ryanair flights. This type of charging should stop. We urge consumer authorities, particularly in Spain and across the EU, to put an end to this kind of unethical overcharging and scamming. Regarding shareholder returns, the good news is that the Board has approved a €700 million share buyback. They endorsed this policy in November, and we are now ready to implement it. The plan is to balance the buybacks approximately 50-50 between EU and non-EU shareholders. If we can secure blocks of non-EU shareholders, it is generally more appealing to us, despite the significant premium associated with ADRs. We are working to balance these share buybacks to move towards an EU majority-owned company, making substantial progress over the last 12 months, increasing from 46% to 48%. As a reminder, the Board's policy is to distribute about 25% of profit after tax annually. Today, we announced a profit after tax of €1.92 billion, which should result in roughly €480 million being paid in dividends to shareholders in 2025. Neil, I'll hand it back to you to discuss the outlook and provide a summary.

Neil Sorahan, CFO

Sure. Thank you very much, Michael. So we're expecting the traffic this year will grow by over 8%, a range of between 198 million and 200 million passengers, which is heavily dependent on Boeing not having any further delivery delays. We expect that the cost advantage that we have over everybody else is going to continue to widen, while we will have a modest unit cost increases this year. Most of our non-fuel inflation will be offset by the positive hedging that we have in place and the ever-increasing net interest income in the business. Demand remains strong and capacity is constrained in Europe due to the OEM delivery delays, the Pratt & Whitney GTF engine issues. We have, however, as Michael said, noted some softening in pricing, particularly in Q1 of this year. So we continue to be load active, yield passive. We're stimulating fares to hit the load factors and the traffic target in the business. It's too early to give a meaningful or accurate FY25 PAT guidance, but it will be very heavily dependent on peak, close-in summer bookings, where we'd still be somewhat cautiously optimistic that fares will be flat to modestly up this summer, even though we're growing capacity into the summer season. Outside of that, we have a very strong balance sheet, which coupled with our industry-leading lowest cost is going to drive our fleet and market growth over the next years, which is underpinned by our Boeing 737 MAX 10 order, which will see us grow over the next decade to 300 million passengers. And with that, maybe we'll take some Q&A, please.

Peter Larkin, Analyst

Michael, Neil, good morning. Can we begin by discussing Ryanair's FY24 ESG highlights?

Neil Sorahan, CFO

Yes. I mean it was a great year on the ESG side. We saw significant rating increases. The likes of MSCI increased Ryanair's rating to an A from a BBB. The carbon disclosure project increased our rating to A minus, which is something that we've been trying to achieve for the last number of years. And Sustainalytics kept us as the number one rated airline in Europe for free ESG. On the technology side, we saw another 48 Gamechanger aircraft enter into the fleet this year. These aircraft, to put it in context, have 4% more seats with 16% more fuel efficiency, 40% more noise efficiency. And we also invested heavily in the retrofit of Scimitar winglets onto our NG fleet, where we now have 25% of that fleet retrofitted for this summer, delivering 1.5% fuel and CO2 savings, 6% quieter. And we'd hope to have the whole program rolled out to our 409 NGs over the course of the next couple of years. And then the final progress that I'd like to report is in relation to sustainable aviation fuels, where we've continued to partner with key fuel companies in big markets all across Europe. So while we have an aggressive target of fueling 12.5% of our flights with SAF by 2030, we now have secured 10% of that volume, which I think is a great achievement at this stage.

Peter Larkin, Analyst

What's your latest EU ownership figure?

Michael O'Leary, CEO

I'm pleased to report that over the last 12 months, we've seen EU ownership rise from 46% to 48% as of the end of March 2024. We're getting very close to the 50% threshold. And I think that's important because what we plan to do is to reinstate voting rights for all shareholders once we get the EU ownership back over that 50% threshold, and I hope that will be shortly.

Peter Larkin, Analyst

Moving to your fleet. What's the latest update on Gamechanger deliveries?

Neil Sorahan, CFO

By the end of March, we had 146 Gamechangers in our fleet. We aim to increase that number to around 158 or 160 by the end of July, which still leaves us about 20 aircraft short for the peak summer season. However, we are collaborating closely with the Boeing team, including Stephanie Pope, Brian West, and Dave Calhoun, and will be taking deliveries throughout the summer up until the end of October. By then, we hope to have approximately 180 or 181 aircraft in our fleet. After that, our attention will shift to the final 29 deliveries planned for next spring, ensuring we have 210 Gamechangers ready for next summer. Additionally, we have enhanced our traffic for the upcoming year by extending three Lauda leases that we would have otherwise returned to lessors this winter, and we secured those extensions on favorable terms.

Peter Larkin, Analyst

Will you receive compensation for the Boeing delivery delays?

Michael O'Leary, CEO

We will. But the compensation is modest and clearly subject to confidentiality. It doesn't reflect the quantum of the losses that we will suffer this year as a result of having to cut back our traffic growth from 205 million to 198 million to 200 million passengers. Our focus, though, and that of Boeing is on accelerating those aircraft deliveries, recovering the delivery delays, getting the 59 aircraft deliveries in here by the end of October, end of November, and then moving straight away onto ensuring that Boeing delivers the 29 contracted deliveries between January and April of 2025, so that we underpin strong traffic growth through summer 2025 into financial year '26.

Peter Larkin, Analyst

When do you expect the MAX 10 to be certified?

Neil Sorahan, CFO

We need to first see the MAX 7 certified and then the 10 will come a few months after that. So the way things are tracking at the moment, we understand that the 7 should hopefully be certified. If not, at the back end of calendar '24 then into early 2025. That would then mean that the MAX 10 could be certified somewhere hopefully in the first half of calendar 2025. I think the launch customers in the US would then fly both aircraft next year, which will put us well on track to receive our first MAX 10 into the first half, so the spring of 2027.

Peter Larkin, Analyst

Michael, looking at your summer '24 schedule. What are the key call outs?

Michael O'Leary, CEO

Very exciting growth plan all summer long. We're opening over 200 new routes this summer. We're opening five new bases in Copenhagen, Dubrovnik, Reggio Calabria, Trieste, and Tangier in Morocco. That growth is strong. Forward bookings are strong. Although, the pricing is a little bit weaker than we had thought. We think that growth will be underpinned by continued intra-EU capacity constraints for the reasons we've already set out, and we see positive demand in December 2024. Pricing at this stage is a little bit weak, weaker than we expected into April, May and June. But at the moment, forward bookings and pricing look strong, well ahead of 2023 for the peak months of July and August.

Peter Larkin, Analyst

What's your view on intra-European capacity over the next few years?

Neil Sorahan, CFO

Well, I think it's going to continue to be constrained. We saw a structural change in capacity throughout COVID, a lot of capacity came out over the past few years. The M&A story is starting to play out in Europe as well with likes of the ITA, Lufthansa, and the IAG, Europa deal going through competition approval at the moment. TAP likely to be up for sale in the next number of months as well. Closer in, this summer we're going to see a lot of A320 capacity grounded due to the Pratt & Whitney GTF engine issues, that's not going to go away quickly. That's likely to roll out to at least 2026. And then we've got the ongoing OEM delivery delays, both Boeing and Airbus are behind on their deliveries and not likely to catch up this side of the 2030. And at the same time, we're taking delivery of Gamechangers. We'd hoped for 210 Gamechangers in our fleet for next summer, and then we've got our 300 MAX 10 order between ‘27 and 2034, which is going to enable us to grow to 300 million passengers over the next decade.

Peter Larkin, Analyst

Moving to current trading. How are summer ‘24 bookings and fares tracking?

Michael O'Leary, CEO

As we've already said, we see demand is positive in December 2024. Pricing in Q1 is a little bit weaker than we had expected. Pricing at this early stage for Q2 looks to be a little bit stronger, but the visibility is limited. And therefore, the outcome depends entirely on the close-in fares for bookings through the three peak summer months of July, August and September. I think at this stage, we're cautiously optimistic that summer 2024 fares will be flat to modestly up on summer 2023 despite almost 9% capacity growth in Ryanair.

Peter Larkin, Analyst

Neil, switching to your results. You reported a PAT of 1.92 billion. What were the key drivers?

Neil Sorahan, CFO

We saw a 9% increase in our traffic to just under 184 million passengers. This year was a very strong performance despite the Boeing delivery delays. Average fares put in a good performance, up 21%, driven by a record H1 last summer. We also had a very strong March just gone where we enjoyed most of Easter in that, that was offset somewhat by the OTAs taking Ryanair flights off sale in December of last year. So in Q3, which impacted fares and loads in that quarter. Ancillaries put in a very solid performance of 3% per passenger to just over €23.40 in the year. So with a strong revenue performance on costs, we saw a 24% increase in cost, driven primarily by a 32% increase in our fuel bill. So an extra €1.25 billion onto our fuel bill in the year just gone. We also saw staff costs increases that we had a full year of pay restoration. We increased investment in crew resilience and crewing ratios, some of that down to the late delivery of Boeing. And then we saw some handling increases. But I think the key thing is that the cost advantage between Ryanair and everyone else is supreme. We continue to widen the cost gap and this has been further supplemented by the strong net interest income in the group and we would expect that to continue for some time to come.

Peter Larkin, Analyst

What's your current fuel hedging position?

Neil Sorahan, CFO

We're 70% hedged for the full year through March 2025 at approximately $79 a barrel, which results in a saving of about €450 million compared to last year's hedge fuel rate of $89 a barrel. Recently, we've noted some weakness for fiscal year 2026, and we are currently 10% hedged for that year at around $79 a barrel as well.

Peter Larkin, Analyst

What about your OpEx currency hedging?

Neil Sorahan, CFO

On the fuel OpEx, we're well hedged just over 80% at this point in time, at 1.11 on the euro-dollar.

Peter Larkin, Analyst

Is carbon hedged?

Neil Sorahan, CFO

Yes, the full year 2025 carbon exposure is fully hedged at €76 per credit.

Peter Larkin, Analyst

Switching to your balance sheet. What are the highlights?

Neil Sorahan, CFO

It's an industry-leading balance sheet with a very strong investment grade rating, BBB+ for both Fitch and S&P. I'd point towards our strong gross cash at year end €4.1 billion despite the fact to be €2.4 in CapEx and well over €1 billion in debt repayments. Net debt, very strong, so up from €600 million last year to €1.4 billion at the end of this year. Although, it was somewhat flattered by delivery delays, which will now time into FY25. I think importantly and uniquely, however, Ryanair owns all of its aircraft. We've got 556 Boeing 737s fully unencumbered on our balance sheet at the end of the last financial year in March. And this is a unique advantage because it means at a time when our competitors are out there taking on very expensive leases due to a shorter capacity and raising very expensive bonds as we've seen over the past couple of weeks; Ryanair is able to fund itself out of its own cash resources and has huge flexibility due to the unencumbered fleet.

Peter Larkin, Analyst

What is your CapEx guidance for FY25 and FY26?

Michael O'Leary, CEO

Due to the Boeing delivery delays, gross CapEx for FY25 would be about €2.3 billion with no aircraft deliveries then scheduled in 2025 and 2026. We expect FY26 CapEx to fall to approximately €1 billion. So significant CapEx savings for the next two years with no aircraft deliveries.

Peter Larkin, Analyst

How will you fund the aircraft CapEx?

Neil Sorahan, CFO

With the strong cash balances that we have and in a rising interest rate environment, it makes sense to use our own cash. But we can be flexible and we will be opportunistic in what we do. I mean it'll ultimately boil down to what's the lowest form of financing at any given time. And thanks to our strong investment grade ratings and our unencumbered fleet, we can choose from everything, whether it's bank debt, bonds, JOLCOs. But at the moment, cash is the way to go.

Peter Larkin, Analyst

Michael, moving to the OTAs. What's the latest update here?

Michael O'Leary, CEO

Well, I think the relationship with our OTAs has been transformed in the last four or five months. We've signed up probably eight of the 11 or 12 largest OTAs—online travel agents—to our approved OTA distribution. This gives those OTAs direct access into the ryanair.com website. They no longer have to pay intermediaries to scrape our website, that's a significant saving for them. They also guarantee that they'll give the consumers the real Ryanair prices for airfares and for ancillaries. They're free if they wanted to charge a separate fee for that service; that's a matter between them and their customer. But what's critical for us is we protect consumers by ensuring they get real Ryanair prices for fares and ancillaries and Ryanair gets the real payment details and the real customer information details. So if we need to communicate with those passengers, flight information, safety information, disruption information, we can do so without having some intermediary in the middle. Regrettably, the only large OTA, online travel agency pirates, still in existence is eDreams in Spain, who will continue to scam our customers for inflated airfares, inflated ancillary services, and they've also introduced this new eDreams Prime service where they get—persuade people to subscribe for €65 a year and then deliver them no benefits whatsoever if they're booking Ryanair flights or ancillaries. It's a scam. We've reported to the Spanish consumer ministry, to the EU consumer agencies, and we expect and hope that they'll take action to outlaw the consumer overcharging and scamming, which is at the heart of what I consider to be the broken eDreams OTA pirate model.

Peter Larkin, Analyst

What are the longer term benefits of removing unapproved OTAs?

Neil Sorahan, CFO

Well, as Michael already said, the real winner from this is the consumer, and they're no longer being overcharged; they've got full transparency in what's happening. And then more on the day-to-day operational side of things, because we're not getting fake email addresses, because we're not getting fake payment details, it means that if there is a schedule change, if there's a cancellation, if somebody needs a refund, we're now able to deal with the customer directly and process things in a very efficient manner, and they're not missing flights that they should otherwise have been informed about.

Peter Larkin, Analyst

Switching to shareholder returns. The Board approved a dividend policy in November. Any further update?

Michael O'Leary, CEO

No, we've gone ahead with that. The policy is to pay out about 20–25% of net after-tax profits in the following calendar year. In calendar 2024, we're paying about €400 million in dividends, €200 million was paid in February. We expect the balance of €200 million to be paid in September after the AGM. And based on this year's profitability, I think it's reasonable for shareholders to assume and expect that we will declare—the Board will declare a dividend of €480 million payable in calendar 2025. Again, half in February and half in November. So we're living up to our commitment that once we can secure or we can generate additional spare cash, we will return that to shareholders; but only after, first, we've looked after our people; secondly, we paid down our debt; and thirdly, we have funded our ambitious CapEx programs.

Peter Larkin, Analyst

You announced a €700 million share buyback this morning. What are the details?

Neil Sorahan, CFO

Yes, in line with our capital allocation policy, we feel we've hit a number of the key targets that we have in mind, debt repayment, CapEx, funding, and then the restoration of pay and then pay increases for our people. So the Board were pleased this morning to announce that we're going to launch a €700 million share buyback, which we'll formally launch later this week in the open period. It'll run for a number of months, probably out towards the half year in November. And when that's complete, we'll have returned just under €8 billion to our shareholders since 2008.

Peter Larkin, Analyst

Could you give more color on how the buyback will be deployed between ORDs and ADRs?

Michael O'Leary, CEO

I mean, it makes sense for us. It'll be split between EU shareholders and non-EU shareholders, that will also include the ADRs despite the fact that the premium is about 30% at the moment. We do plan to try to secure blocks of ADRs. We do need to balance the share buybacks so that we can continue to maintain a growing EU share ownership. We want to get from 48% up to 50% over the next 12 months. But as part of that buyback, we will consider blocks of ordinaries that are held by non-EU holders, particularly pre-Brexit UK holders and also holders of the ADRs within the confines of the AGM buyback authority to enhance our EU share ownership.

Peter Larkin, Analyst

And lastly, what is the group's FY25 outlook?

Neil Sorahan, CFO

Just to sum up, we would target traffic growing by at least 8%. So somewhere between 198 million and 200 million passengers this year, subject to Boeing delivery delays. Unit costs will remain in good shape. So we expect the cost advantage between ourselves and everybody else to widen with modest unit cost, ex-fuel inflation offset more or less by our positive fuel hedging and our net interest income increases. On fares, we'll remain load active, yield passive, so we will hit the passenger target and price accordingly. We have noticed softer pricing despite the capacity constraint in the market at the moment and we've been simulating into Q1. At this stage, with limited visibility, however, we do think that peak summer fares would be somewhere between flat and modestly up despite the growth this year. So look, it's too early to give meaningful or accurate PAT guidance. We'll update as the year goes on. But I think the key is that we've got a very strong balance sheet. We've got a very low cost base. We've got an order book that's going to enable us to grow to 300 million passengers over the next number of years. And we're returning funds to our shareholders.

Peter Larkin, Analyst

Michael, Neil, thank you.

Michael O'Leary, CEO

Thanks, Peter. Thank you, Neil. And by the way, ladies and gentlemen, we have an extensive roadshow underway this week. We have 12 teams of the management touring through Ireland, the UK, Continental Europe and also both the East and West Coast of America. If anybody would like a meeting, please contact us either through Citigroup, through our brokers, Davies, our Goodbody’s here in Dublin, or through our Investor Relations function headed by Peter Larkin; we'd be happy to meet you wherever you are and brief you on the Ryanair story. I think it's one of exciting growth, certainly exciting delivery, widening cost gap over our competitors, and we stand on the threshold of taking 300 Boeing 737 MAX 10 aircraft that will transform our operating economics, widening the cost advantage leadership over every other EU airline, and we think will generate profitable growth for us out to the mid-2030s. Thank you very much. Look forward to meeting you later on this week.