Ryanair Holdings PLC (RYAAY) 2022 Q2 法說會逐字稿

Welcome to the Ryanair H1 FY '22 results. (Operator Instructions) Just to remind you, this conference call is being recorded. Today, I am pleased to present Michael O'Leary, Ryanair Group's CEO. Please begin your meeting.

Okay. Good morning, ladies and gentlemen. You're all very welcome to this H1 results call. I'm here with Eddie Wilson and our team in London. Neil, Thomas Fowler, [Tracey McCann], Ryanair CFO, here in Dublin.

So we'll -- as you all know, this morning on the website, we posted up the shareholder presentation, did an MD&A and a Q&A, myself and Neil. So we'll take you through the press release pretty quickly and ask Neil for some comments, then we'll leave as much room as we can for Q&A. We're pretty tight for time, so we'll be finished -- we have to finish on or before 11:00.

So if you see this morning, we reported a loss of EUR 48 million as traffic has rebounded very strongly at lower fares. I think what's interesting in these numbers is that in Q1, the June quarter, we carried 8 million passengers. In the September quarter, that bounced back to 31 million passengers, largely thanks to the success of the European Union's Digital COVID Certificate, which allowed a very strong traffic recovery from the 1st of July onwards.

And I think what's also interesting in this morning's number is if you take the full half year, our sectors and traffic has doubled, but revenues have gone up by 83%. So clearly, we were discounting and price stimulating into that recovery. But costs have only risen by 63%. So the kind of very large cost savings that we have exploited as a result of COVID will continue onwards and enable us to continue to pass on much lower fares to our customers and very much lead the recovery of EU air travel since the 1st of July last.

Nobody -- no other airline is recovering as quickly as we are. We're now expecting the second half of the year to be operating at about 90% of our pre-COVID capacity. The load factors will continue to be a little bit lower, probably somewhere in the low 80% as opposed to the low 90% pre COVID. But all of that suggests that we will probably exceed our current traffic guidance of 90 million to 100 million. As long as there is no adverse COVID disruption between now and the end of March, I think it looks like we'll carry probably about 103 million, 104 million passengers for the full year. And we will continue, I believe, to see a very impressive performance in controlling unit costs.

All of this will be done in an environmentally, I think, sensitive manner. We've taken delivery at the first of the Gamechanger, where we'll have 65 of these aircraft in the fleet for summer 2022. Already, we're seeing these aircraft, which have been operating in the fleet since June, offer 4% more seats but consume 16% less fuel and are cutting our noise emissions by 40%. Tom Fowler and our sustainability team are working hard on developing the supply -- research and supply of sustainable aviation fuels. We continue to push the EU Commission for reform of a Single European Sky so that we could minimize air traffic control delays and inefficiencies that arise as a result of air traffic control.

And we're proud of our industry-leading B- climate protection rating from the Carbon Disclosure Project, and we're committed to getting that to an A rating within the next 2 years. The COVID, as I said, the travel recovery post COVID in July has been impressive. We take considerable heart from the EUROCONTROL, have published numbers there for flights in September. Ryanair was operating at a 9% -- or 91% of our pre-COVID flights. Most of Europe's flag carriers were operating at between 50% and 60% of their pre-COVID flight volumes as were easyJet and others.

COVID-19 has accelerated the collapse of a significant amount of European airlines, including Flybe, Norwegian, Germanwings, Level, Stobart, et cetera. Alitalia has reformed as ITA but with only 50% of its pre-COVID fleet. TAP is operating at about 65% of its pre-COVID fleet as are LOT and SAS. And so we believe into the summer of 2022, there will be materially less short-haul capacity. I believe it will be a double-digit number, sometime between 10% and 20%.

And therefore, our 65 new aircraft deliveries means we are negotiating extraordinary COVID recovery incentives, growth discount schemes with our airport partners. And increasingly, the European governments are coming to the table. The Irish government, I think, came up with a very visionary COVID recovery scheme in the budget about 2 weeks ago. They're investing about EUR 90 million in -- for aviation, much of which is being passed on by the Irish airports to the airlines in the form of lower airfares.

We've extended our long-term, low-cost deal at Stansted Airport in London in return for a more aggressive COVID traffic recovery. I think that's going to be a key cost advantage for Ryanair in the next number of years, particularly in a marketplace where the owners of Heathrow have just jacked up fees to the airlines and passengers by 50% and still -- while still complaining that they're only getting low returns and they want to jack them up more. Gatwick will inevitably follow and raise fees. So Stansted and Ryanair, I think, will continue to be the low-cost haven or an oasis of low-cost traffic recovery and growth for the next 5 years in London.

And that situation is being mirrored by other EU countries as well. The U.K. has reduced U.K. APD by 50% on domestic routes. Even the Spanish government has decided that Aena's charge will be frozen for the next 5 years, which gives us the capacity -- the opportunity to add significant capacity in those markets while benefiting from low, or in some cases, lower fares. As you have seen for next year, we have announced 14 new bases. But more importantly than that is the aircraft allocations that are going to existing bases.

Normally, on this presentation, I'd point you in the slide, to the Slide 4, which is the unit cost slide. This time, when usually I'd point you to Slide 13, which is where the aircraft growth is being allocated for '21/2022. We have 29 aircraft being allocated to new bases, ranging from Stockholm to Venice, Zagreb, Zadar in Croatia, Turin in Italy. But much more aircraft being allocated to existing bases, 11 aircraft going into Vienna; 6 aircraft going into Stansted, where we bought the easyJet slots at Stansted to continue that growth; Manchester, 3 more aircraft taking up the -- an opportunity there, where Thomas Cook has shed capacity.

There's more than 20 aircraft going into Italy for summer 2022, Rome, Milan, Naples, Bologna, again where Alitalia has taken away a very significant amount of capacity. easyJet is also either reducing or closing bases in Venice and in Naples. And we're moving in there with lower-cost aircraft, taking up that capacity, working with the airports to reverse their COVID traffic declines. Italy, Spain, Portugal will continue to be markets where we will see very significant capacity allocations by Ryanair on the back of lower airport fees and very -- and I think accelerated traffic recovery into next year.

As a result of that, we've significantly stepped up our growth projections for the next 5 years. Originally, we had very ambitious targets to grow to 200 million passengers. It is clear, however, that the growth is going to be faster and more aggressive than that. So we've now increased that growth profile for the next 5 years by another 10%, up to 225 million passengers. And that means that next year, we expect to carry 165 million passengers. That's through the summer of 2022 into the year ended March 2023. And we will build on that over the coming years.

No other airline in Europe has the aircraft deliveries coming from Boeing that we have over the next 4 or 5 years. All the airports and the government, I think, across Europe recognize that we will be the vehicle by which they will accelerate their COVID traffic and tourism recovery. We have a big team of people this morning in London at the World Travel Market meeting government ministers, airports and tourism boards all over Europe. And they are beating a path to our door.

So I think the growth opportunity has never been more exciting. Certainly, in my 30 years in this business, I've never seen a growth opportunity like this. I have never seen an opportunity where we have 210 aircraft coming to us for the next 5 years. And most of our competitors are either cutting their capacity or don't have any aircraft orders at all for the next 5 years. So we're expanding very much into a market of -- that is full of opportunity and where there doesn't seem to be much competitor response at all.

Touch briefly on the half year results. And again, I would point you, well, the sectors and traffic more than doubled. Revenue is up 83%. Scheduled revenues is down as we stimulate traffic recovery. Ancillary revenues, performing very strongly, but operating costs increased by just 63%. Looking forward over the next 12 to 18 months, we've hedged our fuel requirements. We're -- with a mix of jet swaps and caps. We're essentially 60% hedged out for the next 18 months to March of 2023 at around $60 a barrel.

We have swaps in place for a further 20%, both for Q4 of FY '22 and the first half of FY '23, the key summer months, at around $70 a barrel, which means we're insulated from the recent short-term spike upwards in oil prices. And the market is in backwardation, so we continue to see significant opportunities to buy fuel forward. The reason we don't want to lock away 90% on a kind of a rolling jet swap basis is clearly we've learned from the COVID experience that there could be a return of some kind of lockdowns. And therefore, we don't want to buy forward 90%. But we think that balance of 60% of jet swaps hedging and 20% of caps is the right place to be.

The balance sheet has recovered very strongly as bookings have recovered. Cash flows have -- are now at the half year end, we're north of EUR 4.2 billion. I would point again, we've repaid the 2014 bond of EUR 850 million, which was priced at just under 2% in June of this year. We've refinanced that with a new EUR 1.2 billion 5-year bond, which we priced at less than 1% to 0.85% for 5-year money unsecured to an airline. It's extraordinarily low-cost financing. And I think it adds to our price leadership over all of our EU airline competitors, many of whom have been doing expensive sale and leasebacks on their fleet in the last 12 months or have been adding to their fleets at very high prices.

We were out there during COVID, we went to our shareholders first. We raised EUR 400 million by way of a rights issue. And I think that gave the market significant confidence in the bond market. With a very strong cash position, we've taken -- the Board took the decision last week to repay the U.K. CCFF loan of GBP 600 million. We've repaid that 5 months early because, frankly, we don't need the money anymore. And we are well funded for our CapEx for the next 2 years.

I should highlight, we're again looking strongly at a potential delisting for the London Stock Exchange. In my personal view, I think we will probably delist sometime in the next 6 months. I think the -- this is part of the function of airlines operate under a regulatory constraint that we, as an EU airline, must be 50% EU-owned and -controlled. And we're 100% EU-controlled because we've disenfranchised all of the non-EU shareholders post Brexit.

But as you know, from an ownership point of view, we had about 40 -- between 40%, 44% of our stock is held in North America in ADRs, which means about 55%, 56% held or owned in Europe in ordinaries. But U.K. holders became non-European post Brexit, we've gone below 50%. And I think the European Commission wants us to be seen to be taking action. We've had our first forced share sale in September last.

Another step of that process is delisting from the London Stock Exchange. The trading in our shares in London has significantly diminished post Brexit. Most of the trading in the ordinary takes place on the Euronext Stock Exchange in Dublin and Brussels. And we would like to see that continue, which where our primary listing will be. And I think it is likely that we will delist from the LSE. It won't have any material effect on our U.K. shareholders, but we do need to move some of our U.K. shareholders into the EU shareholders over the next 12 or 18 months.

Looking forward briefly on the outlook. I think the outlook for traffic recovery remains very strong for the remainder of FY '22. That's why we've taken the traffic forecast up above the existing range of 90 million to 100 million. Pricing in the last week of the October mid-term break was astonishingly strong. We think Christmas again looks like it's going to be very strong. Forward bookings for Christmas are ahead of where they were here for COVID. We think the spring mid-term break in February will be strong, Easter will be strong. And certainly, summer '22, the forward bookings, while low at the moment, are pricing very strongly.

Currently, prices are about just over 5% ahead of where they were this time in 2019 for summer of 2020 pre COVID. We think we'll continue to build on that. And that would be a combination of less capacity in the short-haul market in Europe and increasingly people turning to Ryanair with some confidence because we're opening new routes, offering more frequencies to the destinations that they want to travel to. Pricing, however, outside those peak periods, I think, will remain challenging. We think November, the first half of December, second half of February -- second half of January, early February will be challenging.

But as I say, if you look at the last 6 months, when revenues have risen 83%, costs have only risen 63%, we have a unique cost base advantage now over every other airline in Europe. I think one of the effects of COVID is that cost advantage has widened because of our low-cost financing, low-cost aircraft delivery. It's a sensible way. We've agreed to pay reductions with our people for last year and this year.

And we're looking forward, we want to begin that pay restoration in April of next year. And it will be restored over a 2- or 3-year period. I think our people will take some consolace and the fact that we minimized job losses. We kept people current. We kept our pilots and cabin crew current. That's been one of the reasons why Ryanair has been able to recover so strongly since July, where many of our competitors, easyJet, Wizz and others, are canceling flights or much slower into the recovery because they don't have enough current pilots or cabin crew.

However, it's very difficult. I can't give you any guidance for the full year because there's too much uncertainty over yields. I think we will be strong in terms of volume recovery, would be strong on the cost delivery. But the outturn for the full year, which we think is still a modest loss of between 100 million to 200 million, is heavily dependent on pricing and yields for the remainder of this year. And then we move into the summer FY '23, there's going to be a very strong traffic recovery somewhere around 165 million, up at least 10% on our pre-COVID numbers. And I personally believe that the pricing will be very strong or the recovery of the pricing will be very strong across summer 2022. And Ryanair is better positioned to capitalize on that recovery better than anything -- anybody else.

That's all I want to add. Neil, anything that you want to add to that from an MD&A or a cost point of view?

That was a fairly comprehensive run-through. There's just a couple of things I'll reemphasize. Just on the costs, the load factor recoveries, we've seen unit costs start to track back down again. We were in the 30s in the first half of the year, EUR 38 for past year, and we would hope as we get back up towards 90% load factors and more Gamechangers in the fleet that we'd see that recover to pre-COVID levels and then some.

Now on the hedging, as Michael said, very well placed, well insulated against any spikes that might happen on both the jet but equally on the carbon. We're 100% hedged on our EUA to EUR 24 for this year and about 70% hedged on EUA to EUR 40 for next year. Balance sheet, very strong BBB raises. We reduced our net debt by almost EUR 800 million in the first half of the year down to EUR 1.5 billion. And that gave us the confidence, as Michael said, to pay off the CCFF last week, the EUR 600 million financing that we had.

And then the London Stock Exchange, where we're seeing less than our -- less than 10% of volumes on the ordinary share going through London at this point in time. So there's been a complete migration over to Euronext Dublin and the NASDAQ. So I think the Board will be in a position to make a decision on that in the not-too-distant future the next number of months anyhow.

And that's about it, Michael.

Okay. We'll open up for questions and answers, please. (Operator Instructions)

The first question comes from the line of Duane Pfennigwerth at Evercore ISI.

So you touched on it in your script. But from a yield recovery perspective into the holidays, can you talk about advanced book loads versus advanced book yields? The question being, how much of your December quarter has already been booked at sharply lower yields?

I wouldn't get into that kind of analysis. I mean, I think the guidance I've given you is that the December bookings, which drives a huge amount of Q3 are very strong. Forward bookings are strong. Pricing is robust. I think we're going to see -- there's a huge, I think, pent-up demand for people to reunite and see friends and families over this Christmas post the 18 months of COVID. We're entering November today. And what's unusually, we're entering November very close to where we entered November -- or October a month ago in terms of the load factors. And that's unusual because October generally has the benefit of the schools' mid-term break. November doesn't have anything in it like that.

The pricing in November is a little bit weaker. But we would expect that. Remember, the budget pricing is also weak in November and the first half week of December. So again, I would give you no more, Duane, than say we will -- we did 31 million passengers in the second quarter. I think we will do probably 31 million, the same, maybe fractionally more through the third quarter, the December quarter. But it's too early. Too much of the yield is driven by the close-in bookings for the next 6 weeks in November -- for the next 6 weeks of November and the first 2 weeks of December to give you any real guidance on yields.

Okay. Great. And then just for my follow-up on labor availability. Are you seeing any pockets of challenge there? Or is the restructuring of weaker carriers making that more manageable?

There's no -- I think we're seeing no stress on the pilot side, a huge surplus of pilots. In fact, we're -- we've now gone back, we've opened a new training center in Dublin. We're training -- we've got about 650-odd pilots going through the cadet program, which is more than we will need for most of next year. And I don't see any pilot shortage for the next couple of years in Europe, certainly with our ability to train up to 1,000 pilots a year. I don't see also because we're training on 737s. As Norwegian has kind of imploded, Jet2 has now moved away from Boeing, placed a big order with Airbus, I think we'll probably be the only significant employer of 737 pilots in Europe for the next 5 years.

Cabin crew, there will be pockets of tightness there. I think most that I see in the U.K., we have a large and mobile population across the European Union, where we hired lots of Eastern Europeans, Italian, Spanish, Portuguese, boys and girls who want to go fly for a couple of years. I think the U.K. will be more challenging. And no great surprise post Brexit, there's a much more restrictive visa regime here. And while we think we are a high pay relative to kind of the retail and hospitality industry here in the U.K., I mean, our cabin crew, who are earning between GBP 25,000 and GBP 40,000 per annum, it does take some time across the U.K. bases to train cabin crew. I mean, we're seeing a lot of people join us from retail here in the U.K., applied from retail and from hospitality.

So I think there were -- we don't see any issues in terms of availability. But there will be pinch points, I think, in the U.K. And that's something where we'll manage our way through it. But I think you see many other employers in the U.K. bemoaning, many of whom were leading Brexit proponents, such as fellows running pubs and boutiques in the U.K. now looking for visas, extra visas so that they can hire people. They should have thought of that before they were advocating for Brexit. But they are where we are. I think the U.K. will be challenging. But I think we're well positioned to hire more -- or hire and train sufficient cabin crew for the summer of next year. And in a marketplace where most of our growth is still taking place across the European Union and the aircraft are being based in European airports. Eddie, any you would add on the labor side there since you were closer...

Some pressure as well on ground-handling in places, where they're making -- like Germany, in particular, where they're making the transition from government-funded schemes and attracting people back. Berlin was a particular issue for all airlines there over the last number of weeks. But I think most of that will wash out as people migrate off those government-sponsored schemes. And I'd echo what Mike would say there in terms of the U.K. It's more of a -- no more than the sort of the supply chain issue that it will work itself out.

But we're going to have to hire more people locally here in the U.K. And that is going to be more challenging. Because on the pilot side, given the structure of pilot recruitment, you should be -- you have to be ahead of where you want to be for next summer, like 18 months ago, which we were. And we've got 0 attrition on pilots at the moment. And with the cabin crew, you're catching up for about 18 months' worth of recruitment. But we are ahead of it. But if there's going to be any constriction at all, it will be in the U.K. But we have the ability to move people around as well, so...

Yes. I would contrast that with a number of our competitors in Europe, who have been canceling huge amounts of flight schedules, deferring base openings because they're massively short of both cabin crew and pilots. Some of our lower-fare competitors just furloughed a lot of people, sacked a lot of people into COVID. And now there is -- it takes a while to train those people to get them back. I think we, somewhat by luck and somewhat by foresight, continue to keep all of our pilots and cabin crew on the payroll and current and why I think we are doing so well into the recovery.

That comes from the line of Alex Irving at Bernstein.

Two from me, please. First of all, on your 225 million passenger target, are you planning any changes to network structure or productivity in order to achieve this? And what gives you the confidence to hit it with just 620 aircraft? That sort of looks like higher passengers per aircraft than you've had previously.

And then secondly, on ancillary spend per passenger, please. This has continued to be very, very strong as traffic recovers. Is this EUR 22, EUR 23 starting to look like a new normal? And can you please talk about the headwinds and tailwinds to ancillary spend over the next 12 to 18 months?

Okay. I'll take a network. And Neil, I might ask you to comment on the ancillary spend. Just on the network, I mean, we have far more growth opportunities, Alex, out there than we can cope with at the moment. I mean, if I could take my 20 -- summer 2023 deliveries, which is another 55 aircraft, I could allocate all of those aircraft at the moment for summer 2022. We have airports queuing up, looking -- desperately competing with each other, looking towards -- I give them significant allocations of aircraft. We have to be somewhat judicious in how we allocate those aircraft over the next year or 2. Much of it is driven by us being opportunistic and taking whichever airports come up with the biggest discounts or which governments come up with the best incentives. But also, we're trying to fill out gaps that I think will never occur again.

Like I point to Vienna, for example. We're going to base 11 additional aircraft in Vienna next summer, where Austrian have materially reduced their capacity. Wizz, who 2 years ago, were talking about a 20-aircraft base, are now in retreat, they're down to 5. And I suspect they get to 0 fairly quickly. Level, which was talking about having a 10- or 14-aircraft base, have gone bust. And there are huge opportunities there. So Manchester, we're adding 3 aircraft for next year straight on the back of the Thomas Cook failure. And we're going to place more than 20 new aircraft into Italy next year, taking up huge swaths of capacity that have been abandoned by the Alitalia restructuring and in airports where they are, to be fair to the Italians, very adept at incentivizing us to return to rapid traffic growth in that market. And the government has also reduced the municipal taxes as well. So I think we -- will there be much of a network change? No.

I think if you take our 210 MAX order, load factor recovery back up to 91% -- in fact, I think it may well because of capacity constraints in the next couple of years, where the load factor may even go back above 91%, 92%, we might get to 94%, 95%. We will need to continue to have and maintain an Airbus fleet within the Lauda Europe operation. And I think there -- we will need a few more aircraft to get 225 million passengers. But we're seeing remarkable opportunities out there at the moment. I think there's still a number of -- a lot of white tails out there. And the older-generation aircraft, the NGs and the ceos, the NGs on the Boeing and the ceos on the Airbus, are becoming increasingly available at very attractive lease rates. So I think we'll be opportunistic both with the airport deals we do and with the aircraft deal we do. But I have nothing but confidence we'll get to 225 million in the next 5 years. In fact, I think we'll go over that figure. But we need more aircraft to get over that figure. Neil, ancillaries?

Yes, Alex, thanks for the question. Yes, I think kind of '21/'22 is the new norm going forward. We did a lot of work last year during the downtime in relation to dynamic pricing on ancillary products, particularly likes of the priority boarding and the seats. That's sticking as the volumes grow. So we're seeing strong penetration coming through on those two products. Equally, the onboard spend is starting to ramp up again as we're getting more people flying on the aircraft. And with the U.K. now outside of Europe, we're able to offer duty-free on our U.K.-EU flights. I think we'll continue to see these kind of levels. FY '22 will probably end up somewhere close to EUR 22, maybe just under EUR 22 passenger.

That comes from the line of Neil Glynn at Credit Suisse.

I also have two questions, please. The first one, just following on from the previous question, on labor market tightness. And I know Eddie mentioned briefly ground handlers. But just interested where -- across the U.K., in particular, a lot of people will have left the aviation industry, and on the airport side and on the ground-handling side, you obviously have less control. Do you need to change your approach at all in terms of working more closely with your suppliers in the U.K. or do anything differently this time around?

And then the second question, if we -- one structural difference you have from the recovery from the global financial crisis is the multi-AOC or multi-airline strategy. I'd love to understand, what benefits do you think this provides Ryanair in this recovery situation? And is there a next leg to the multi-AOC strategy that we should be thoughtful about at this point?

Okay. I'll ask -- Eddie, maybe take the labor market and -- do we need to change your approach? And then I'll deal with the multi-AOC strategy. Eddie?

Yes. I mean, talking about the U.K. in particular, I mean, we have -- we made a change just prior to COVID, where we have locked away our sort of self-handling model in Stansted. So we are actually in control of that at our major base. So anywhere where we see any sort of potential structural weakness in terms of dealing with third-party handlers, we are now more adept at looking at self-handling. And we've done that also in Poland and we've done it in Spain very successfully at all bases. So we're much more in control of that. So I don't see any real change to that.

I think you will just see like I have no difficulty on saying pay rates that we have on the ground-handling side. And I think it's temporary in terms of the washout that you will see of people migrating off government schemes. I think I just -- it's been well ventilated on the cabin crew side, there is a particular difficulty in the U.K. We will get through it. I don't necessarily agree with you as the sort of migration of people out of the industry. It's still relatively attractive to work in aviation.

If you're a cabin crew member, you're still restricted from working a maximum of 900 hours a year. And that's essentially a part-time job at full-time wages when you look at how they would move between other parts of the hospitality industry. So I think we're on top of it. But we do have -- we have a challenge in the U.K. over the next number of months. But we are adept at this particular issue of solving labor issues. I don't see any difficulty and we have plenty of, I suppose, elbow room with having 86 bases around Europe if you -- even if you were to come up across any sort of short-term operational problems. But I don't see anything.

I agree. And I think if you look at the strength of our recovery post July, where we're now operating -- I mean, EUROCONTROL produced numbers there for the month of September, where we're the -- we're operating 91% of our pre-COVID capacity, easyJet is doing about 60% of the pre-COVID capacity, Lufthansa, Air France, KLM, less than 50% of their pre-COVID capacity. We were out the door with our pilots and our cabin crew, all of whom are delighted to be back working again. And I think there's certainly a significant lift internally, I think, in the morale of the team generally.

On the multi-AOC strategy, look, we originally moved towards that when we unionized in 2017/2018. The biggest demand we had was from our people. They wanted local contracts and paying local tax. They were paying local social tax, wanted local labor tax. We were operating on this terrible burden in Ireland of this Finance Act 127B, where because we were Irish-owned and -managed, all of our people had to pay their taxes in Ireland. And Ireland has this reputation of being a great tax haven, which it may or may not be if you're a corporate. But if you're an individual, you're generally paying the marginal rate of tax at some -- EUR 35,000, EUR 37,000 per annum. So the only way out of that was to go with the multi-AOC strategy.

We moved all of our Eastern European people on to the Buzz AOC. Malta Air, with the Maltese AOC, meant we moved our people in France, in Italy, in Germany on to Maltese contract, the Maltese employment, so they could pay their taxes locally in Germany, in Italy, in France, have the benefit of local contracts. Thankfully -- but as usual, after the horse has bolted, the Irish government in this week's budget 2 weeks ago, has finally abandoned Section 127B, which means the few remaining people we have, the remainders we have now in Spain and Portugal are all the way from 1st of January move on to paying local taxes in their country, which regularizes everything. It also means we will no longer have the penalty that we had in the past of paying high Irish marginal tax rates for our pilots and our cabin crew, who will now benefit from -- generally speaking, because of the situation with TAP in Iberia and Spain, the pilots and cabin crew have some advantageous sort of tax expenses treatment there.

And our people will now begin to share in those more advantageous, personal kind of tax regimes in those national countries. So that was very much the driver of it. It also creates an opportunity, too, I think, where we can develop more management talent. We now have 5 airlines, we have 4 other CEOs. We have -- it's creating new opportunities for people to get promoted into leading positions, commercial -- we have 5 commercial directors, 5 CFOs, 5 operations directors. So it's a very good way of us getting more people to come up through the management chain and create opportunities for people to get promoted into senior positions. And I think we'll be a very much a training ground for -- I hate to say it, but for the next group or for the next round of management replacements. And we need more of those skills and talents coming through.

We've seen a large -- we promoted a lot of women, which I'm particularly proud of, to senior management positions now, again using those multi-AOCs. And we're bringing a lot of middle management talent through that would challenge us for our positions in the next, I should say, 4 or 5 years, but maybe I might hope to be challenged for our positions in the next 5 or 10 years, but nevertheless -- so there have been opportunities that have come up apart from -- but the multi-AOCs are seems really set up to avoid or bypass the Irish 127B. But now we have, I think, 4 or 5 AOCs. And we're very proud of the way those airlines and the management teams. And I think they're all building an individual culture there. Like the people in Buzz are very proud to work for Buzz. People in Malta Air are proud to be working for Malta Air and the same with Lauda Europe as well.

That's from the line of James Hollins at Exane BNP Paribas.

On the delisting, I mean, historically, you talked about a potential agreement between the EU and U.K. on reciprocity of shareholder ownership. Is this something you're no longer expecting and perhaps more importantly, for your U.K. shareholders not really care about you delisting?

The second one is on buying and leasing other aircraft. I think on your video there, you talked about not selling any more aircraft. But you've got the 29 A320s lease ending '22/'23 winter. Do you think it's something where you'll buy somebody's white tail soon in order to certainly address that issue or perhaps obviously extend the leases? And then do you expect Boeing to hold good on delivering up to 65 by the summer, given their historic issues?

Yes. Thanks, James. A couple of quick answers there. Look, the delisting, I think, is an inevitability post Brexit. The -- as we said, the market and trading volumes through London are tiny now, hugely outweighed by what's trading through the Euronext in Dublin and in Brussels. And I think Europe is going to be, particularly given the fraught state of relations, I think, between Europe and the U.K., the European Commission, and I think, led largely by the French and the Germans for obvious reasons, are going to be much more aggressive about ensuring that European airlines are majority EU-owned and -controlled from 2022 onwards.

We've already had our first forced -- our first compulsory share disposal. Delisting from the LSE is another measure that we want to be seen to be taking so that we're clearly doing everything we can over a reasonably short period of time to move back to being majority EU-owned as well as being EU-controlled. To our U.K. shareholders' care, I don't think so. But we have a number of very significant U.K. shareholders who have been holders for a long period of time. They get the business model. They understand the strategy. But we do want to kind of -- there has been a number, quite a number of small U.K. investors buying our shares since Brexit, who shouldn't be buying our shares. We don't -- you're not allowed to buy our shares unless you can fill in the form -- the CREST form saying that you're an EU shareholder. We still have to work our way through that.

On the aircraft leasing, I mean, to get to 225 million passes over the next 5 years, we clearly will have to slow down our aircraft sales program. That's the obvious way of getting there. We take the 210 aircraft from Boeing. But there are opportunities out there at the moment, certainly in both white tails of Airbus COs and Boeing NGs. And also the leasing companies are becoming much more aggressive, like nobody really wants the older 12, 14-year-old COs or NGs. If lease rates continue to fall for those, I think, again, we'll be opportunistic about adding maybe another 30, 40, 50 of those aircraft.

But I don't think it will be in the short term. There's no requirement for additional aircraft for the next 2, 3, 4 years. We were disappointed, I think, by Boeing's decision to look for a price increase for a follow-on order on MAX 10, particularly at a time when Boeing's order book is going nowhere in a hurry. And their last few remaining customers in Europe, Norwegian, have canceled all their orders. Even Jet2, which was a significant Boeing customer here in Europe has now an ordered Airbus.

And IAG, which really had signed up an MOU for a 200 MAX order, they've now opened that up to -- invited the Airbus to come back in and retender for that. And with the new Spanish management running IAG, I would be astonished if that's not a -- that order doesn't move to Airbus sometime in the next 12 or 24 months. So Boeing's order book is going nowhere. We don't need any aircraft until 2026. And -- but we remain one of Boeing's largest customers worldwide. I think we're just having one of those marital tantrums at the moment. And until they see the rightness of our view of the world, there won't be another Boeing order either.

How are Boeing doing on the deliveries? I would be hopeful, rather, more than optimistic that we'll have 65 aircraft delivered by next summer. The deliveries are not going well. I mean Boeing have committee delivering us 8 aircraft a month from the period from September through to April. So far, the best they've managed has been 6 in October -- or 6 in September, 6 in October. They're talking about 5 in November, like really silly stuff. There's not that many airlines queuing up to take a lot of aircraft deliveries from Boeing. And the fact that they're not even able to deliver us 2 a week is not good.

But then I don't think we're overly impressed by the management locally in Seattle. I think they need to get their (expletive) together. I would -- we are -- Neil is meeting with the new Boeing CFO in the U.S. this week. I continue to have -- be in regular contact with Dave Calhoun, who I think is a good guy. But on the ground, in Boeing, they really are -- they got to get their act together, and it's not together at the moment.

Having said that, I think Boeing's deliveries will run late, but we're -- Boeing are committed to delivering us 65 aircraft by the end of April. I don't think they've hit that by the end of April, but I'd be reasonably confident that as long as we work with them to resolve these delays, I think we'll get 65 aircraft in probably by the end of June. And so we will have all of them there for the key peak summer months next year of July, August and September.

But on the ground, at the moment, things are not particularly good with Boeing. We would have expected a lot more delivery from them given they've been sitting there on the aircraft, sitting on the ground for 18 months. But look, we'll work with them. We remain a very committed Boeing customer, but we're only a committed Boeing customer when the price is right. Next question, please.

That's from the line of Jaime Rowbotham at Deutsche Bank.

Two from me. The ex fuel cost performance was clearly very good in the September quarter. On a per seat basis, I make it about 8% below the same quarter in 2019 at around EUR 26. Is that sort of year on 2-year reduction sustainable now over the winter, do you think? And anything to say on ex fuel unit cost expectations for the year to March '23?

Second one was just Slide 9 in today's presentation. There's lots of ways you could show your market share and how you -- along with perhaps with a close to running precrisis levels of capacity unlike many of the competitors. Was there a particular reason for showing this in terms of the ATC fees where we know you're expecting some hefty inflation?

Neil, I mean I'll ask you to comment on the ex fuel unit cost performance. Let me just see with Slide 9. Slide 9 is nothing just to give you other than a snapshot of how the recovery is going and who's recovering quickly, because I think that's fundamentally going to underpin market share gains for the next 2 or 3 years.

And these are independent, their Eurocontrol figure September '21 over September '19. I think the underlying strength of this is we are operating at 91% of our pre-COVID capacity. The other reason to be impressive on is Wizz there, who are operating at kind of 93% of their pre-COVID capacity. However, they've added something of the order of about 40 aircraft over that 18-month period.

They should be doing -- if they were doing as well as us, they would be operating at above their pre-COVID capacity at the moment. And everybody else is blowing their brains out, running at about 60% to pre COVID. Now a lot of that is labor issues Clearly, with the bigger guys: Lotame, Air France, BA. It is the fact that the long-haul transatlantic Asian markets have collapsed a huge amount of their short-haul -- short-haul traffic depends on long-haul connectivity .

And that's going -- it's not going to recover either this winter or I think it certainly won't recover fully into summer of next year. But if you look at us, Ryanair, with exactly the same fleet pre COVID and post COVID in September 2021, are operating at 91%. EasyJet, whose fleet has actually got smaller over the 18 months, are only operating at 60% or 57% of pre-COVID. And Wizz Air, whose fleet has gone up by something in the order of 20%, should be operating at above their pre-COVID capacity, but aren't. They're still operating at 7% below their pre-COVID capacity.

So I think all we're trying to give you with Slide 9 is not a view of the ATC fees but to show you who's responding, who's recovering much more rapidly than everybody else, and it's Ryanair. And Neil, with that, can I ask you, given your insight on the ex fuel unit cost performance and its sustainability.

Yes. Sure, Jaime. I think we'll continue to perform well on the unit costs. You're right. We came in just over EUR 32 on to EUR 33 in the second quarter. I think on a full year basis, we're probably just going to be a sliver on the EUR 35 on the unit cost ex fuel. But the unknown is what's going to happen with ATC and on-route charges from January onwards. So my best guess would be somewhere close to EUR 35 on an annualized basis.

Next question, please.

That's from the line of Hunter Keay at Wolfe Research.

The double-digit price increase that you referenced on again on the new aircraft from Boeing, what baseline is that off of? Is that off what you paid for the game changer? Or is that off of a prior conversation you had? And then second question is, Michael, what is your outlook on the recovery of business travel in Europe next year and beyond?

Sorry, I didn't understand the first half of the question. Why double-digit price?

I think you said earlier in your prepared remarks that Boeing was looking at like double-digit price increases. Did you not say that?

I'm sorry, yes, on the MAX 10, yes, looking at double-digit price increase. I wouldn't go into any further detail on that, but I would regard any price increase. Anything above 0 would be unacceptable to us. And in fact, given that your existing customer base, including Jet2, Norwegian, IAG are all switching out of Airbus -- out of Boeing and into Airbus, and we are last customer outside of North America, you'd want to be, if anything, cutting from 0 to a minus number, in which case, we'll happily sign up for an order of MAX 10s.

But these are for deliveries in 26 -- the periods 26 to 30, so there's no particular pressure on us at the moment. I don't think the quantum of the double digit is important is the fact that I think Boeing is just misreading the marketplace. The leasing companies and the other airlines are not ordering a lot of Boeing aircraft at the moment. We are very happy to order Boeing aircraft, but only if the price is right. And the second half of the question I missed because -- yes, business travel. Yes.

Yes. I was kind of curious with your outlook with business travel, yes.

I think business -- yes. The outlook for business travel, again, I split into two. Short-haul business travel has recovered very strongly. I think certainly in our network, we're seeing lots of businesses out there meeting customers, doing deals, back to selling whatever it is they sell. There's a World Travel Market meeting in London all this week, and there's huge volumes of people moving in and out.

I do think business travel on long haul will be a much slower and more painful recovery. I do -- I think the idea that people on at business that, what is it, bloody Skype or Zoom are going to replace short-haul business. Getting on a flight and going to meet a supplier or a customer 1 hour 50 minutes away, whether that's across Europe, that's back. And I think it's going to recover very strongly. If anything, I think there's pent-up demand.

Again, there's lots of supply chain issues. People need to go out. Certainly I speak from somebody in Ireland. There's lots of supply chain issues, getting stuff from the U.K., and we're seeing lots of people switching to sourcing alternative suppliers in Portugal and Germany and Italy builders and all that kind of stuff. So if anything, I think that's going to be good. We'll see growth in short-haul business travel.

Personally, what is not a market, I mean, I think long-haul business travel will be much more challenged for longer. I think you'll see a lot of these multinationals now used to hold big conferences or every get together once a month or once every 2 weeks. That's all going to move to Zoom. I do believe this idea though that business travel will never recover or ever -- never ever, never really works. Ultimately, business travel will recover. We are social animals. We do best when we're doing business, whether that's sales or buying stuff, meeting people, having dinner with them, bonding with people personally.

I think -- but I think the recovery in long haul will be much slower. It will be -- I think I don't see I think, about a 50% recovery in long haul into the summer of 2022 because fundamentally, I think the Asians won't travel. The Americans probably will to Europe, but they'll be slow and reluctant. And I think it's going to be summer '23 before you're going to see the full recovery of long-haul travel.

Long-haul business travel, I think, will take a bit longer than that. It will take 4 or 5 years, I think, for long-haul business travel to recover because some of that is long -- is, I think, structurally going to move to Zoom and Skype and all that kind of stuff.

Short haul, people are already back. I would say our business, certainly in our numbers, our business travel is back up. And we see that already. I think the fact that we're entering November, just 1% with a load factor -- forward load factor 1% down where we entered October. October is hugely driven by the school midterm break, which was phenomenally strong.

And yet we're now going into November today, 1 percentage point behind in load factor where we were. That's really business travel across Europe. There's not a lot of leisure travel. I mean there might be a bit of Christmas market stuff going on there. But fundamentally, I think a lot of that is business travel, Italian domestic, Spanish domestic back on the move again. Next question, please.

That's from Stephen Furlong at Davy.

Just in terms of Page 13, can you just go through that again in terms of the Italian market? I know there's a big opportunity there. You've added 20 aircraft to new and existing bases. And as ITAs or the new Alitalia is smaller, are you seeing any -- when you do these deals, are you seeing any competition from anyone else, whether it's Wizz or anyone else, for that kind of market growth opportunity?

I'll just -- I'll give that to Eddie first, then I'll come back in at the end of it. Eddie?

Yes. Stephen, it's not just Alitalia that are withdrawing from that market. Like EasyJet as well have started to exit, particularly from places like Naples and Venice. But certainly, I have seen the appetite for -- because don't forget, when we look at where we're going to allocate capacity in the middle of the pandemic, a lot of it was driven by where we thought people were still going to be able to move with some certainty in the Greek island, some domestics in Spain and domestics, particularly in Italy, where Italians continue to travel. And our ability to sort of close out deals in places like Treviso was one, Turin is another.

And you look at some of the bases that we have down there, whereby we're able to have longer-term deals there and the ability to get into places like Balania or Treviso, where we have -- they're pretty much maxed out now. Like there are no early morning departure slots in terms of physical infrastructure down there, so it's very difficult for anyone else to base aircraft in those places. So you're only looking at -- same in Bergamo as well.

So you're looking at places that have come, I suppose, later to the low-cost model, which is Venice, Malpensa and places like that, and Rome, Fiumicino, to a lesser extent, still a very relatively expensive airport. So we have the capacity. We're really the only show in town, and people know that if we commit to going there, we're going to stay there.

Some of the airports have remarked to us that those that are making enhancements are -- don't have the aircraft to do it, are putting in leased in aircraft that are smaller than what they have in their fleet and leaving passengers at the airport on that. And we have the presence, and we've got the frequency. And I think we've got the sort of street cred down there over the last 20 years that when we say we're going to deliver, we're going to deliver, and we're going to be there for the long term.

Yes. I agree with that. I think Eddie has summarized it very well. I mean the one point I'd make about the Italian market is not just the collapse of Alitalia's capacity from 110 aircraft to 55. It's that EasyJet have been closing basis and withdrawing aircraft from markets like Italy and Portugal. Rightly, I think they're focusing back on, we feel like, their kind of -- their fortresses in Gatwick and Charles de Gaulle and Orly and Switzerland.

They really don't want to compete with us in these other markets like Italy and Portugal. But also Wizz has been out there. They're great for making announcements about new bases and new routes. And almost as soon as they maybe announce a new base, a new route they announced or where they don't announce, they just, in quarter day, defer the openings. They cancel the flights. They take out huge capacity.

And it's never -- it doesn't kind of surface. It doesn't appear. Now I think a lot of that is that kind of operational chaos that they've been dealing with for the last 3 or 4 months, frequently denied yet never yet explained. And I think they will struggle as they have done in Germany and in Norway, and they're struggling in Italy is that their labor model simply is not sustainable in the Western European market.

They're certainly under, I think, intense pressure from the German unions and the Italian unions about this labor scam they operate with Hungarian contracts and paying front -- paying for a Swiss pay point while trying to base them in Germany, Italy, it's not sustainable. It's not going to survive, but they're reasonably small in the Italian market. They don't have much awareness in Italy. The 3 big ones in Italy would be Alitalia, EasyJet and Ryanair. And of those, 2 are in retreat, and 1 is growing very aggressively. Next question, please.

That is from Sathish Sivakumar of Citi.

Michael. Just actually a follow-up on the Italy. So you actually reported about EUR 422 million of revenues in Q2 on EUR 58 fare, it's like 7 million passenger, and Alitalia, used to carry about 22 million. Given you're adding about 7 new bases, would it be more like a market share gains? Or do you actually see that low price point would stimulate more at travel? Do you see an opportunity in terms of offering some transfer traffic connectivity here?

So some of it -- you faded in and out there, Sathish. But anyways, I think there's going to be very dramatic market share gains in the next 2 years for Ryanair. We do not see our expansion being driven by low price stimulation for the next year or 2. There isn't much -- there's no -- I mean, I think net-net, overall capacity across Europe is going to be in decline I think by a double-digit number for summer of '22, maybe a high single digit, low double digit for summer '23.

And therefore, we rolled these aircraft out into new airports where slots and capacity have been ceded to us by the shrinking of Alitalia fleet, TAP fleet, the bankruptcy of Thomas Cook, Flybe, LEVEL, Germanwings, you name it. And the legacy guys have all significantly cut back the short-haul capacity because they don't have the long-haul fee to and from.

So I think I don't see we're using low fares to grow the overall market. I think for the next 2 or 3 years, we are taking market share. And it's my personal view that we'll do that in the summer of 2022 at higher fares. So I think, actually, prices -- and we saw that certainly in the October midterm break last week. People are booking late, we're paying very high one-way fares, north of EUR 200 one way. I think that's going to recur again in Christmas, so I urge everybody to book early for Christmas because if you're booking at the end of November or December, you're going to be paying very high airfares.

And I think that will encourage people again to book earlier for spring midterm break for Easter and for next summer. And the figure I gave you this morning as of last Friday, the average fares into summer of 2022 are about 5% where they were ahead of pre COVID. Now it's a reasonably small number of fall bookings. But the fact that we're not having to price discount at all in December 2022, I think, shows, I think, the potential demand that's out there over that period. Does that answer the question? Or did I...

No. No, I got it. Just a follow-up question. On the load factor, right, do you actually see any pockets of strength and weakness across the market? Like do you see you'll be underperforming with (inaudible).

Load factor, we see strength. I think -- sorry, I mean, again, the load factor recovery has been, again, astonishingly strong. We did 79% in July. And then for August, September, October, we've been north of 80%. Don't tell anybody, but we'll be announcing our October traffic numbers tomorrow morning and the load factors...

It went out this morning, Michael.

It's supposed to go tomorrow. Well, as you can see in October, the load factor jumped to 84%, up from 81% in September and August. We did 11.3 million passengers. So now we're not back at the pre-COVID numbers yet, which was kind of 92%, 93%. But I don't think it makes sense to do that. We'd be -- we're happy to wait for the overall market recovery.

But all through last weekend of the school midterm break, the system-wide load factor was in the 90s. So I don't see any pockets of weakness in load factor out there, and that's because we tend to use yields to fix load factors. We're load factor active; yield passive. But I would be very surprised if we don't see load factors next summer go back up to pre-COVID levels, 91%, 92%.

And I think with shortness of capacity or with capacity reductions in Europe for the next 2 or 3 years, I would be surprised if our low price doesn't creep up to 94%, 95%. It will be above where it was pre COVID. And that's on aircraft with 4% more seats burning 16% less fuel, good for the environment and good for shareholders.

Next question, please.

That's from the line of Jarrod Castle at UBS.

Michael, I'll ask 2, but you're welcome to answer 1 given it's nearly 11. Just on your net debt, I mean, it's coming down quite nicely now. How should we think about kind of the balance sheet going forward? You've got these fleet deals, but you're throwing off decent levels of cash. Would you require an even stronger balance sheet, given kind of the lessons from COVID? Or should investors still think about the old way in terms of cash returns, you'll give it back if you've got excess cash.

And then just, again, I said you're welcome to answer whichever one if you don't have time. But also just some color on the customer advisory panel. I know you spoke about it on the preprepared remarks. But what are some of the areas that you will listen to the customer panel on? And what are some of those areas that thanks, but no thanks, let's say, enhancing the product, which leads to increased costs, et cetera. So just some flavor in how -- what you're taking away from it.

Okay. I'll give that -- I'm going to ask Eddie to do the customer panel. They kept me away from the customer panel for some strange reason, I didn't quite understand. So but Eddie led it in Dublin. Quick -- my view on the balance sheet. I might ask Tracy Molloy then just to give us a comment on it as well.

As bookings and cash flows have surged post July, the balance sheet net debt has gone from EUR 2.3 billion at the end of March down to EUR 1.5 billion at the end of September, very strong. I think the balance sheet will repair itself very quickly going forward. I don't think we need any more cash. I mean I think we would, as a company, want to continue to operate at a 0 net debt. That's always been, I think, a very comfortable position. It's where we've generally been over a 20-year period. When we get above 0 net debt, we returned those funds to shareholders. I see us getting back to 0 net debt in the next 12 or 18 months, reducing from $1.5 billion net debt down to 0.

I point out the fact again, we entered COVID with probably a 0 net debt, and we've come through COVID very strongly. Yes, we went back to shareholders for, but it's a reasonably small equity raise EUR 400 million. I think that was more to send a signal to the markets that we ask shareholders to put their hands in their pockets first before we went to the bond market or anybody else. And I would contrast that with the likes of Heathrow, who expect to go to their -- put their hands in their customers' pockets first and never ask their shareholders to come up with any cash.

Thereafter, so once we go back to 0 net debt, I think we're back into shareholder returns. I think going forward, though, that the recovery, if it is going to be strong and as profitable as we think it would be, I think the challenge in the next 2 years, well, firstly, we want to restore or pay.

We're conscious of the fact that management and staff have all taken pay cuts in the last 2 years, and we owe it first to them to restore those pay cuts next year and in the next 2 and 3 years. And thereafter, then I think we want to see returning money to shareholders.

Going forward, I suspect we're probably going to be more open to a mix of dividends and share buybacks. I think given our size and scale, share buybacks become much more difficult because they need to be big and lumpy. But I think, unusually, I think we'll look at -- probably once we've restored the debt, we'll restore the balance sheet to 0 net debt and restore pay. I think then shareholders will be next in line with a mix of dividends and share buybacks. Tracey, have you have anything else you want to add there on the balance sheet and the cash returns thereafter?

Yes. So probably just on the balance sheet. We may not be as optimistic as you to get the net debt within a year. So I think a little bit longer, probably closer to 18 to 24 months before we get to that net debt 0. But I think it is all about preparing the balance sheet first and getting to where we'd like to be, which is closer to 0 and probably be mindful with 2 bonds to be repaid in FY '23 and ['20.] And then with the CapEx spend, so again, it all depends on how we finance the CapEx over the next 2 years.

Good. Thanks, Tracey. Eddie, color on the customer panels?

But we did invite you to the customer panels. Obviously, got copied to the spam folder. We advertised mid-summer there, and we've got about 10,000 applications from our customers. We whittled that down to I think it was 6 people that came to Dublin. There was a good cross section there by gender, age group and market. And they didn't tell us a lot that we didn't know already ourselves.

But certainly, there were some things on our comps that particularly on how we -- our -- the number of e-mails that we send people, some useful issues on the website. But also they really want the communications and day of travel. And last week, we launched the Day of Travel app. It gives you really good information on your gate terminal, and we're going to continue to grow that. I mean just sensible information that people will want in terms of making that experience go much, much better.

And I mean, we also have the issue of having over 300 airports. We don't have our own people on the ground. And even though it goes right from 99.95% of people all of the time in terms of the lowest fare, it gets you there on time. When it goes wrong, and it goes around in an airport where we don't have people on the ground, our ability to actually recover the situation, while our operations people are very, very good at recovering the aircraft, and that's their job and recovering the crew, our speed at communicating with passengers is something that the Day of Travel app, and those -- where it's gone around, we've been able to do that through the app, through video to the 189 people, sitting in Biarritz last Saturday when the weather closed in and their aircraft was diverted to Santander, and somebody's on within 5 minutes.

Equally, we had some cancellations in Lisbon over the weekend, able to get to people, like directly to people rather than do it in the Twitter sphere, where everyone's got an opinion, get to the people who can to your customers. So the Day of Travel app, I think, is going to -- is something that's going to grow. And the functionality that we put on the website in terms of wallets and all that sort of good stuff in terms of what we learned throughout the whole COVID crisis in terms of recons, where we had to get through 25 million plus leverage that sort of proprietary knowledge that we now have, and we're able to put that out there to our customers. It's going to continue to grow.

And actually, it will be a softer way of doing it as well in terms of leveraging extra sales on the ancillary side. I want to add a bag. I'm going to the airport, and security queues are this long if you want to actually buy a fast pass or whatever to get through. So it's the start of it, but I think it's really functional and it's useful for customers.

Okay. I'm conscious of the time. We're -- check the time. We're quite past 11, so I'm going to limit this to 2 more individual -- 2 more questions, please, and then I'm afraid we'll have to cut it off because we have an investor meeting that -- I have investors standing outside the door here. So can we do 2 more questions. And then if you haven't got a question, please route them directly back to Peter or we will see you, and no doubt, we have an extensive road show going on in the next week. So next question, please.

The next is from Mark Simpson at Goodbody. Mark?

Two quick ones. I wonder if you could just have a CapEx update just given -- just the sort of targets on aircraft coming in. And the other one, which I think is more kind of strategic is to what extent will you look to Gamechangers customers onto your flights over the next couple of years? You've got a good sort of basis to do that. Will you be very aggressive in pushing that message?

Thanks, Mark. Neil, do you want to take the CapEx? And I'll do the green opportunity.

So opportunity, Mark, is no change on the guidance. So we're still guiding EUR1.2 billion this year, including maintenance CapEx and p CapEx of EUR 2.3 billion next year, and then we will start to see it coming down again.

Okay. Great. Thank you. Just on the green opportunity. I mean, I think it's a very strong message we're communicating to the market. Now if people want us really traveling in an environmentally friendly way, switching from Europe's legacy carriers to Ryanair reduces your emissions by 50% on the short-haul flight across Europe.

And as we can add more and more of the Gamechangers, you'll be flying on aircraft now that will significantly reduce emissions, 4% more seats, but burn 16% less fuel. We are determined to take our emissions down from 68 grams per passenger-kilometer below 60 in the next 5 years. And the Gamechangers will be very much the way we do that, while Lufthansa, Air France and others are up at 120, 130 grams per passenger-kilometer.

Michael, we know that message, but I'm talking about the broader market and how do you really exploit that in terms of getting customers to come to you.

I think, I mean, obviously, Mark, if you look at our traffic recovery in the last 3 or 4 months, we have no difficulty getting customers to come to us. They're beating each other over the head to get -- come to us, and I think that will continue. It is a longer sale, but we have, I think, pivoted our communications much more towards an environmental message. And in every communication we have now, we keep stressing our commitment to the environment and to more responsible flying in an environmentally friendly way.

Plus, Mark, I think our continued improvement with the likes of CDP, Sustained Analytics and others is getting us more positive pickup on the media and with the customers. The message of you can cut your carbon footprint by 50% by moving to us is getting out there, absolutely.

And Mark, it's Thomas. I think if Ecolabel comes in across Europe with the asset, that will show our stats compared to the other airlines that every airline times up to.

Thomas, anything else you want to add from an environmental point of view? Sorry, I should have brought you in on the call earlier.

No. No, you got -- no. I think you mentioned it right, Michael. Like the passengers are obviously coming back to Florida as our staffs are out there. And I think like with the Gamechanger coming in, we'll see that coming down. And hopefully, we see better initiatives on SAF and see uptake in SAF, which will afford or bring down our CO2 emissions.

Okay, Tom. Last question then, Pete. And apologies for cutting it short, but we can only really handle one more.

That's from Savi Syth at Raymond James.

Savi. Just a few for me. I was a bit surprised to see the sale of aircraft in the September quarter. And I was just -- was that before the accelerating kind of growth target? And just curious what you're thinking of in terms of kind of lease returns and aircraft sales over the next couple of years.

And was there a second question?

I'm sorry. And the second question -- yes, second question, just if you could provide a quick update on how outstanding flight credits slip compared to historical norms and if you expect the air traffic liability to kind of be more normal historical patterns going forward?

Okay. Neil, do you want to take sales of aircraft in the September quarter, and maybe I'll ask Tracey to talk about the refunds or outstanding flight credits.

Okay. Well, Savi, these are the oldest 10 aircraft in the fleet, which were starting to become expensive to maintain. We were somewhat opportunistic in that there is high demand for that age of aircraft for cargo conversion. It sort of straddled the decision on the breakdown of the negotiations with Boeing on the MAX 10 as well. So we're fairly happy to get these older aircraft out. They're going to a good home, where they'll improve their environmental story that were replacing 737-400s.

On lease returns, we have returned all of the Boeing 737-800 at this point in time. And with 29 A320s on lease, first of those are due to go back in the winter of next year. But as Michael has said, we'll talk to the lessors. If it makes sense economically to extend, we look at that equally. If there are other opportunities on the NG side to enter into cheap leases, we'll look at that.

Yes. I think just to add to that, I mean, the 10 that you've seen in the September quarter were kind of presold before the MAX 10s had broke -- or the discussion have broken down and before we had stepped up the growth profile of 225 million passengers. Tracey, do you want to give a question update on the refund situation? [Tracy Molloy] go ahead.

So we've received over EUR 1.6 billion in reforms given back to customers. As of today, there's a few customers still sitting there without it, but we're starting to see a very high redemption rate on them.

So I think, Savi, yes, we'll start to see a return to normalized liabilities. So pretty much all the refunds are cleared as of today. And the new customer service wallets will allow people to get a weapon within 5 days, cash refund if they wish. So pretty much everything is cleared.

And I think, Savi, you're starting to see it build now sooner and future fly on the balance sheets. I mean, that's fairly obvious at the -- at the half year end. I'm just going to ask Tracy Kennedy here from customer services here, just to add to that as well.

Savi, yes, just to say that with the exception of a few of the OTA, young and travel agency bookings we have effectively got no refunds in the queue. I think the new technology that we launched last week is really first of the industry in relation to putting the power of future purchases back in the hands of the customer as well. So the wallets will enable the credit to go in, in 24 hours.

But I think again, we have gone above and beyond in relation to commitment then in terms of cashing out that refund. So we should be in a position where we have future-proofed the growth in the airlines to make sure that we have no future big challenges the way we would have experienced with the COVID crisis.

Yes. And I think the commitment we rolled out last week is that, going forward, refunds will be issued within 5 working days. Once the refund has been cleared, the payment will take place within 5 working days back to the original method of payment, will be faster than any other airline has committed to.

But clearly, we can't envisage a circumstance where all our offices are closed as they were in COVID last year, which caused the big backlog of refunds. But on an ongoing steady-state basis, those passes, and there's not many passes on an ongoing basis who are entitled to refunds because we have so few cancellations. But once the refund is approved, they will receive it in 5 working days back to their credit card and to their bank accounts.

Okay. Ladies and gentlemen, thank you very much for participating in the call. I'm sorry, we can't take any more, but we have extensive roadshows going across the U.S., the U.K. and Continental Europe for the remainder of this week. If you'd like a meeting with any of us, please talk to Davis or [Sydney]. They'll be happy to arrange a meeting.

If we haven't answered those questions, I'm sure we'll get to it at the individual meeting with you over the next 4 or 5 days. Thank you, sincerely, for all your support over the last very difficult traumatic 18 months, but I hope you'll agree with certainly me that we've taken very sensible decisions during COVID. We've reduced costs. We have expanded our aircraft orders opportunistically.

And I have never seen a growth opportunity like the one that is unveiled before us for the next 4 or 5 years. I cannot remember in the last 25 years where we could take up so much growth, and I think so much of that growth will be profitable and at very low cost. And I think we'll deliver lower fares to our customer base for the next 5 years.

So thank you for your time and for your support. And we look forward to meeting you at -- over the next 5 days. Thank you. Bye-bye.

Thanks. Bye-bye.

This now concludes the conference. Thank you, all, very much for attending. You may now disconnect your lines.