Ryanair Holdings PLC (RYAAY) 2022 Q1 法說會逐字稿

Hello, and welcome to the Ryanair Q1 FY '22 Results Conference Call.

(Operator Instructions) Just to remind you, this conference call is being recorded.

Today, I'm pleased to present Michael O'Leary, Ryanair Group CEO.

Please begin your meeting.

Okay.

Good morning, ladies and gentlemen.

Welcome to the Q1 results conference call.

We have the whole team assembled at various locations on call today.

We posted this morning, the usual press release.

We've done the -- Neil and myself have done a Q&A on the results and the investor slide presentation.

I propose to spare you all that detail.

Rather than going through the press release, I'll take that as read and give you a couple of themes.

I think the key one in this morning -- three key themes this morning's message, one is traffic recovery.

Two is the very strong performance on cost containment and how that would play out over the next 2 or 3 years.

And then I think the extraordinary increase, the extraordinary growth opportunity that's unfolding in front of us as we take delivery of over 200 MAX aircraft over the next 4 years at a time when we will see meaningful and sustained capacity cuts across Europe.

So on Q1 traffic recovery, Q1 traffic was 8.1 million.

It's dramatically uncertain, the recovery within that it is 1 million passengers in April almost 2 million in May, but 5 million in June.

That recovery has continued stronger into Q2.

In July, we think we'll get to -- in fact, we will just about -- we just exceed 9 million passengers.

I know last week, we said almost.

We just got over 9 million passengers.

All we think about is that we're on track to just get over 10 million passengers and we'd be hopeful with the reasonably robust September that we get to about 28 million, maybe 29 million in the second quarter.

So not alone that we have 8 million in Q1, but about 28 million, 29 million in Q2.

All of this is obviously heavily qualified on there being no adverse COVID variant developments or return to lockdowns.

And we feel really confident that that's the case, we can't eliminate political mismanagement, particularly in the U.K. or in Ireland, which has been astonishingly poor at managing the recovery.

But in general terms, we think we're headed for a very, very strong traffic recovery through the second quarter.

there's a reasonable prospect that, that will be maintained into Q3 and Q4.

We're seeing a much strong recovery, I think, in Ryanair than any of the other LCCs.

If you take those monthly figures in Q1, we carry 5x the April traffic in the month of June, you've seen from the easyJet and Wizz that they carried about 3x their April traffic.

Our load factor is also industry-leading at mid-70%.

In Q2, we expect to operate or offer more than 80% plus of our pre-COVID capacity.

And with load factors in the mid- to high 70s, we expect to deliver about 70% plus of our pre-COVID traffic.

And then as I said, if there's -- the vaccine rollout continues and the -- the managed COVID reopening continues, particularly in the schools all go back as normal in September.

We see every reason to move the guidance as we have this morning up from previously the lower end of EUR 80 million to EUR 120 million.

Today, I think we're in a much narrower range of between EUR 90 million to EUR 100 million.

And I would -- I think it with no disruption, we're at the upper end of that range rather than the lower end of that range as we stand here this morning.

International development, then we're seeing -- we're continuing to deliver a very impressive cost performance.

I think we have, together with our union partners and our employees over the last 18 months negotiated very reasonable and modest pay cuts.

It ranges from 5% to 10% on cabin crew, 10% to 20% on pilot.

But that was in returns of keeping them all current and avoiding mass redundancies and layoffs.

And I think that's one of the key reasons that we've been able to deliver such a strong and rapid traffic recovery.

We've kept the crews current.

We have the right people in the right places.

And we've been able to unwind a very quick and rapid development reopening.

Airport and handling costs have been renegotiated.

We take in as of the end of July 11 of our first 12 of the MAX aircraft have been delivered.

And I would like to say that the performance of the MAX in the first month of operation thus far has been spectacular, admittedly with slightly lower than normal load factors.

The fuel performance has been well in excess of the 16% savings promised by Boeing.

But there's been a uniquely or I'd say, an overwhelmingly positive response both from our crews, the pilots and cabin who love operating the aircraft and from our passengers.

We've been operating the system for the first -- the last month where any passenger getting on a MAX who wanted to offload could do so without any quibble and travel on the next available flight.

Not one passenger has sought to offload of that aircraft yet.

And the feedback from passengers traveling on the aircraft is it is particularly quiet, a very nice experience.

And as we had, I think, long predicted that once we start flying the aircraft passengers, we love them.

These aircraft enable us tap in to enormous growth opportunities.

I don't think -- certainly, in my 30 years, in this industry post-9/11, post Gulf War, there has never been a growth opportunity in front of Ryanair such as we have at the moment.

Already this year, we've announced 10 new bases, multiple bases, they -- some are up in Scandinavia, where both SAS and Norwegian are in chaos.

We've opened basis in Billund, and Riga, in the Baltics, in Stockholm, Arlanda.

Two bases in Croatia, Zadar and Zagreb.

We've extended and enhanced low-cost deals at Stansted, Bergamo, Brussels South Charleroi both that go to the end of this decade.

We've doubled our capacity in Rome, Fiumicino as Alitalia reduces its fleet.

We've also announced new routes in Helsinki, new bases this autumn in Turin in Italy and Agadir in Morocco.

And this is just -- we barely scratched the surface so far.

There are extraordinary discussions and negotiations going on between our new route team and both existing airport partners of ours and also new airports across the entire piece of Europe, the neighboring states who are joining the European Open Skies.

To put it in context, the growth opportunity that fate confronts us, we, over the next 4 years, will take delivery of 210 MAX aircraft.

It will take the fleet to north of 600 units.

Over that same 4-year period, Wizz, who talk a lot about growth will take delivery of 80 aircraft.

Their total fleet will rise to about 230 aircraft.

So we'll take more new aircraft deliveries in the next 4 years.

or the equivalent as their total fleet.

And in the case of easyJet, there seems to be 0 growth.

In fact, the fleet has shrunk in the current year, and we see them plan to enter mind or protect what they have.

They certainly won't be a competitor for us on new route development or growth.

And where we think the real opportunity though will be as we've seen all the failures, Thomas Cook fly the Germanwings' level.

But there are much more meaningful and short-hauled capacity reductions in contact in Portugal where TAP have already announced that capacity reduction short-haul to fleet reduction of 20%.

We think that we finish up closer to 30%.

Alitalia is reducing its fleet by 25%.

And again, we think that will be more.

And so there are enormous opportunities.

We are seeing slots becoming available to us at airports where previously we couldn't get them.

And I think if you have the aircraft deliveries in the next 3 or 4 years, we are going to secure space at airports, a once in lifetime opportunity to secure space airports and expand our footprint as an airline today, which has 70% of our departures at primary airports and Turkey and secondary airports.

We see that rising to about 80% of departures at primary airports and 20% of secondary airports over the next 4 years.

The one other issue we should touch on briefly is the EU announced at a Fit for 55.

I would caution investors, again, it will have no impact on our cost base until FY '24 onwards.

So there's no impact for the least in the next 2 years.

And it is, I think, a badly designed package, which introduces not just double taxation on short-haul European flights, but triple taxation.

Short-haul passengers, mainly EU consumers will now be faced paying not just ETS payments, but also an aviation fuel tax in addition to APD in many EU countries like Germany, Austria and others.

It is bizarre and inexplicable that these taxes are only being levied on European short-haul flights, while designed by our friends in the Holland, Germany and France, the long-haul operators in those countries get a free pass on these aviation taxes.

We believe, however, that this program will be materially renegotiated.

And I think softened over the next 2 years, we see a significant concerns being raised among EU peripheral states in Eastern Europe, Cyprus, Malta, Ireland, among others.

-- particularly also in the tourism destination, Spain, the Canaries, Portugal, the Azores, the Greek and the Greek Island.

And beginning to realize that what we have here is tax, in-aviation tax proposals being designed by the Dutch, Germans and French, largely named in aviation, where in most of those countries, people have the alternative of train or motorway alternatives.

In Ireland, in Portugal, in Greece, in -- certainly in Northern Cyprus, they don't have -- we don't have an alternative.

We can't simply transfer away from flying because there's no other way on and off these island.

And we think there will be a meaningful realization, particularly among the tourism industry, at the tourism nations and the peripheral nations that a long haul is going to have to bear its fair share.

The Dutch and the Germans and the French can't lecture the rest of Europe about more environmental flying while they give their long-haul operators a free pass.

But for the moment, I think it is in the medium term, and we would expect there to be a significant pushback from some of the tourism and more peripheral states of Europe against these triple taxation proposals and we very much support that.

I have nothing else I want to add in terms of the opening remarks.

So with that, I'll hand over to the moderator, and we will open it up for Q&A, please.

(Operator Instructions) Our first question comes from the line of Duane Pfennigwerth of Evercore ISI.

Just wondering, as you rebuild your network and kind of get back to some normalized capacity levels, what capacity level do you think you could get back to your fiscal '20 EUR 31 per passenger.

Do you have to get back to 100% of what you used to fly?

Or could you hit that level sooner?

Sorry, Duane, I'm not sure you asked a question about yield.

Is it...

No, no, sorry, your nonfuel cost per passenger of EUR 31 back in fiscal '20.

And -- What percent of fiscal '20 flying would you need to do to get back to that level?

I think we will be -- if there is no adverse COVID development, and we exited the pandemic this autumn, I would be confident that into FY '23, that is next year, effectively summer 2022, we will be carrying more passengers than we did pre-COVID within FY '19, which was 147 million in change.

And our unit cost per passenger will be significantly lower than they were in FY 2019.

With one exception and that is there is a kind of an uncontrolled escalation in ATC and ANSP charges where most of these government monopolies around Europe are now talking about recovering last year's loss of income and advancing, I think ATC price rises next year of between 30% and 40% on a per passenger basis.

It's not a huge part of our overall cost base, but it is material.

But other than that, I think you'll see continued meaningful cost reductions across all of the other lines driven usually by the fact that we'll be operating more than 60 MAX -- Boeing MAX aircraft next summer, summer 2022.

I would say, Duane, you can start to see something with a trail from the next quarter, although will be closer to the mid kind of 30s and then Michael said we're into the summer of next year.

We start to see critical mass on the MAX and the load factors are up, we start to get back to the EUR 31 and then hopefully improve on that.

That's great.

And then just for my follow-up on competitive capacity.

I mean, you touched on it, but I wondered if you could put some numbers on it.

As you assess the restructuring of European short haul that's already occurred and that's continuing to occur, how much capacity would you say is gone versus pre-pandemic.

And as you rebuild your own network, is there any numbers you could put on competitive capacity on your routes looking forward kind of Q2, Q3?

It's almost impossible at the moment to predict the competitor capacity because of open you have operators like Lufthansa, IAG, Air France, KLM.

They are sitting on lots that they're not using.

Alitalia and TAP have already announced meaningful structural reductions in the fleet of between 20% and 30%.

And then you've seen the bankruptcy of a lot of other carriers.

I think that into 2022 and into 2023, you're looking at, excluding our growth, a meaningful, I would say, 20% reduction in short-haul capacity across Europe.

It might be slightly softened into FY '22 because I think some long-haul aircraft will reappear on short-haul European routes because long haul will take longer to recover.

But there is a meaningful shortage of capacity out across Europe short-haul for the next, I think, 2 or 3 summers.

And if you look at the older profile of most of the other airlines, they have almost no short-haul aircraft on order.

I think you're looking at a 20% reduction in short-haul capacity in December '22 and December '23.

Eddie, I don't know whether you want to add anything to that, you'd be closer to that part.

Yes.

I mean it's -- you can see like some of it has been, I thought more defined by the pace of recovery with your competitors as to where they're actually going to -- where they're actually going to put that this winter.

But I wouldn't disagree that the figure of 20% is probably the more likely reduction and certainly the 1 that we've been looking at.

I mean we can see it as well in some of our market shares as we grow, particularly into August because of the slow pace of recovery of our competitors, 20%, I wouldn't disagree with you.

That's from the line of Daniel Roeska of Bernstein.

I'll follow Duane and ask the past question slightly differently.

I mean where are you seeing those planes leaving the market?

And do you think there'll be a difference between smaller markets around TAP and Alitalia and the larger markets with the wider groups because on a sector level, there still are a lot of planes registered to European airlines at this point.

And then secondly, on the EU 55.

With EU planning to add a lot more cost into this, and I acknowledge that we'll have to see what the final policy proposal will be.

But do you think that adding carbon costs in whichever way impairs the sector's ability to grow as fast as it has over the past decade?

And how should we think about Ryanair's opportunities amid a slower sector growth kind of in the 2020s?

And again, we go back to the capacity, I mean the obvious ones are the failures, the fly, the level, Thomas Cook, and others.

But the more interesting, I think, underbelly is the capacity -- short-haul capacity that's come out Norwegian has collapsed.

They've gone from a fleet of 120 to 20 aircraft.

SAS has cut short haul capacity.

Alitalia has already announced 25% capacity reduction, but we suspect they'll do more and TAP is in a similar boat.

Underneath that, then you have -- the question is how much short-haul recovery is there, do Lufthansa operate, Air France and others?

Now what drives a lot of that, I think it summer '22 and into summer '23.

There's a huge amount of their short-haul capacity is there to feed into and to feed from their long-haul offer networks.

And without the long-haul traffic without the Chinese and the agents wandering around Europe next summer.

We see -- I think that there will be huge pressure on those legacy airlines or the subsidy junkies, as we call them.

I think they will keep short-haul capacity reasonably modest because they are under some pressure to repay debt and refund or repay state aid.

The only 2 players out there at the moment with any significant short-haul orders over the next 4 years at Ryanair with over 210 aircraft on order and Wizz with about 80.

And Wizz is in chaos at the moment.

They did let go a lot of pilots and cabin crew.

They're clearly struggling to reemploy them or they are not current.

I mean where in the last couple of weeks, Wizz have been canceling hundreds of flights on a daily basis in Italy and across Central Europe.

We've seen already in Vienna, where they compete with us.

They canceled 14 of their main, the main front routes out of Vienna for the summer, July and August, they say they're going to reach out in September.

We're not sure they will.

So they have enormous operational challenges.

And I know there are some misguided analysts out there who believe Wizz will conquer the world with despite the fact that they have a higher cost base than Ryanair.

And it's not an ability, an inability to deliver in Western Europe.

But we think that they are suffering enormous challenges at the moment, including Wizz leasing in Romanian aircraft to prop up their pretty small Italian operation.

At a time when we are -- I think our load factors in Italy are about 70% plus, and theirs are mid-50s.

So -- but the real focus, I think, for the next number of years will be the slow pace of recovery, I think, of the short-haul operations of the legacy carriers because they won't have the long-haul feed to or from their operations.

in the meantime.

The question is how long will they be able to see the bed block slots at the major airports, Clearly, the EU is going to allow them to block them again until the winter -- this winter.

But they're getting down to 50-50.

And I think we'll have a major push on for summer of 2022 when it's going to become more late that they don't want to use those slots they have to lose them.

And on EU 50, 55, look, there's no doubt that the sector as a whole is going to face increasing environmental taxes for the next couple of years.

What we will ask and demand that the environmental body shared fairly between long-haul operators in Europe and short haul.

We've been bearing an inequitable burden of environment tax on short-haul while connecting traffic, for example, the Dutch who talk a lot about environmental impact of aviation, give KLM a complete free ride on all connecting traffic to and from Schiphol.

Those kind of environmental scams need to end particularly when they are taking place in the countries who are most likely to lecture the rest of Europe on what or how we should behave environmentally, particularly with regards to air travel.

Perhaps you will put your own aviation house in order first before you start lecturing the peripheral countries or the tourism economies who are hugely dependent on intra-EU air travel.

But I go back again to our -- what has always been the out contention.

Taxes that are levied on a pro rata basis will not immediately loose the margin or the price difference advantage we have over all other airlines in Europe.

And therefore, people will -- I think, if anything, it hightens the growth that Ryanair will enjoy over the next number of years because if there's an overall ratcheting upwards of the cost of air travel, and the lowest cost provider, which will be Ryanair in all markets and not Wizz or easyJet or anybody else.

And we'll do better and will recover strongly.

We see that already blown out in this summers' recovery.

We've been able to deliver a much faster and stronger recovery than any of the low-cost competitors.

And if you look across to domestic U.S.A., the recovery, post pandemic recovery, in domestic flying has been much more robust.

They've gone back to pre to above pre-COVID traffic levels, and we think we will benefit from that over the next 12 raging months here in Europe.

That comes from the line of Sathish Sivakumar of Citi.

I've got a couple of questions.

So firstly, on the ancillary revenue.

Obviously, you've seen a big step-up on steady revenues.

What are you seeing further additional opportunities in terms of new products?

And how do you see it normalizing say, from the current levels of EUR 22.

And the second one is around the hedging.

What is your thoughts around the hedging of both for fuel and carbon as we move into FY '23 and beyond?

Okay.

Eddie, why don't you take this question, and I'll ask Neil to then come in on the hedging in the carbon hedging question.

Yes.

I mean ancillaries are strong there, but it's primarily driven by priority boarding and seats.

And while we have -- we still have, as I've indicated on previous calls, like for the last year, we've been working on a number of initiatives here in terms of dynamic pricing and with those products.

But I would caution that we are in low load factors at the moment where by selection of seats or whatever meanwhile be at somewhat of a premium.

But I still -- there's still more initiatives to come and -- there's still some road on this, particularly on the core ones of seats, priority boarding and also on bag how they're presented and how they're priced on individual routes.

So we do a lot of work in that.

But we're going to have to wait for load factors to return to see how effective that they are.

Just to put that back, Eddie, but would you expect ancillary revenue per faster to rise faster or sitting slower than passenger traffic recovery in the next few years?

Yes.

I mean I think I'd expect it still to run.

What I'm saying is that I wouldn't get carried away with things because the strong performance in -- particularly on seats, of lower load factors, you'd have to see whether that translates when load factors return because people may well have been conscious of where they pick seats.

-- during the open crisis.

But there are lots of other initiatives that are coming that I'm reasonably confident that we're going to see some growth on the core products and ancillary revenue.

Just to add to that, I think if we can retain the kind of EUR 22 or slightly below, and we've seen a passenger and traffic growth this year -- that will be a pretty good performance.

And then we'd be hoping to improve on that into next year and beyond.

Just on the hedging and the carbon, we're well hedged this year, about 60% hedged, at $565 a metric ton, which is below about 630 tons in the market today.

We're 35% hedged in next year at about $600 a ton.

We would plan to potentially move that up over time to about 50% and possibly hold that, although we're looking at some other structures on top of that.

Carbon well hedged, 100% hedged for the current year at EUR 24 in EU, which is well below that EUR 50, EUR 52 it's trading at today.

And again, about 35% hedged for next year.

We've been holding off on hedging because we were waiting to see what was going to happen with the U.K. ETS.

That's been confirmed in the past couple of weeks.

So we'll start looking at adding a little bit to our hedging into FY '23 and beyond on the carbon.

Next question comes from the line of Muneeba Kayani of Bank of America Merrill Lynch.

Thanks for the call.

I realize that pricing visibility is low.

But could you indicate in your net profit guidance of small loss to breakeven?

What sort of pricing environment is kind of baked into that guidance?

And then secondly, operating cash flow recovery was very good in the quarter, driven by bookings.

How should we be thinking about operating cash flows in the second quarter as flight activity picks up?

Okay.

And as usual, on these calls, we're not going anywhere near pricing guidance.

It's completely too hard to call.

We think we are reasonably active with our volume guidance.

We think we'll continue to deliver a strong performance on ancillary revenues, but there's too much uncertainty over pricing.

And I wouldn't add any color to that.

I understand we have -- I think the overall outline for the year is an improvement.

We're into a small loss maybe even breakeven, but I wouldn't break down what that breaks down.

Operating cash flows, clearly, in the second half of the year will be much more heavily impacted by CapEx.

We've now started to begin to pay once more predelivery payments to Boeing.

And so I think it will flatten out from here and actually slightly decline as we get towards the end of the year and into much more pre CapEx.

Neil, do you want to add anything there on the cash flow?

No, I think that's fair enough.

We the first is the CapEx come in, in Q2, we look about EUR 200 million and then over the course of the balance of the year.

It's about EUR 1.2 billion in CapEx.

So you'll see that drop back a bit toward the end of this quarter.

We would anticipate that as we get into the fourth quarter and hopefully, more normalized bookings at that stage and you start to see that build up into the year-end, but we're dropping much for the next number of months.

Thanks, Neil.

And I'm just, again, conclude on the pricing guidance for all participants.

While I don't want to get into any details, it is our philosophy here, and I think it has been clearly indicated in the recovery in Q1 and Q2.

We will be load factor active, price passive.

We are determined to recover traffic as quickly as we possibly can.

And then I think over the second half of the year, we would expect to see load factors recover back up to high 80s, probably won't operate above 90% this year.

And as we build back our forward bookings and load factors, then we would expect to see pricing recover on the back of that.

Next question, please.

Our next question comes from the line of Stephen Furlong with Davy.

Can you just talk about the -- as you build back up the cabin crew environments.

I mean, obviously, you have -- I saw this 2,000 new pilots in the next 5 years and also it's been trained and things like that.

And the second thing is, I was just wondering with the 60-plus A200 aircraft coming from next summer.

And presumably you're in discussions, I see you with a number of airports on that.

I see you've launched new bases in Turin and Morocco.

So you might just comment about that to be good, too.

Okay.

And Eddie, I'd ask you to do the second half of that.

The new base, new route discussion.

I mean, in pilots and cabin crew environments, it has never been better, but there are enormous short-haul challenges.

One of the challenges we have as an industry, not just Ryanair is we've been essentially grounded for the last 18 months.

It has been very difficult to keep pilots and cabin crew current.

Our pilot has to fly once a month and cabin crew, I think, have to fly.

I'll get this wrong, but if I do correct me, once every 90 days, about 3 months, I've been with a very curtailed schedule, we've actually been flying empty aircraft up there to keep pilots current and cabin crew current because we knew that the recovery would be very strong.

And we believe that's one of the reasons why easyJet's recovery has been so slow that they have grounded a lot of aircraft, pilots and cabin crew, and therefore, they're facing currency problems.

If you didn't keep them currently to put pilots back into simulator or stimulator training and cabin crew have to go back and do quite unproductive recurrency training courses again.

And that's just difficult, and it's a huge logistical nightmare.

And I think we've been vindicated in trying to keep everybody current because we thought that the recovery would be strong.

As we emerge out of this, there is a huge surplus of pilots, particularly on 737s across Europe with the Norwegian collapse.

They were the only other significant 737 and flyer in Europe.

Also the Gulf carriers have done huge numbers of pilots and just cut them loose in the Middle East, and they're backing essentially in Europe.

And a lot of the Asian carriers have caught back, although in recent months, they started to re-recruit again, but they appear to be trying to re-recruit among the Asian nationalities rather than Europeans.

So we are also -- have restarted very aggressively our cadet training schemes, which they kind of dried up in after all we had to kind of piloting the rostering crisis in late 2017.

Currently, we have more than 350 pilot cadets in training.

They are paying us, on average, about EUR 30,000, and they would flow through over the next 12, 18 months.

We're opening up and have one of our partners recently of a very large new aviation pilot and chemical training center in Dublin, which we'll announce shortly.

But there's a huge -- on the cabin crew side, again, there's lots of availability out there, but there is a 5-week training course from [indiscernible].

So the challenge for us is we have enough pilots and cabin crew now to operate 90% of our pre-COVID capacities through July and August, but it's tight, it's particularly being impacted to where you think like the U.K. pandemic where people are being -- despite the fact that they're double vaccinated receiving getting pinged and told to isolate for 10 days, which is nonsense where you double vaccinated, but it is what it is.

There is a huge challenge of recruitment for us, though, into the next 12 months.

We will be recruiting huge numbers of pilots and cabin crew this winter, just crew up to 60 new aircraft we have for next year but also to handle normal attrition.

But again, I think the collapse of competition, the capacity cutbacks across Europe, we are -- and we have worked very closely and well with unions in the last 2 years to explain that.

Look, it's better that our people take very modest pay cuts last year and this year, we start in to repay those out to restore those pay cuts over the next 2 to 3 years.

We're in pretty good shape, and we don't foresee any labor or staff shortages over the next 2 or 3 years.

And just as important, we don't see any labor or staff inflation over the next 2 or 3 years.

What are the other challenges that will be in the short-term in the next number of weeks, though is airports and handling companies.

We had a lot of problems at a lot of airports over this weekend, you've gone straight back into kind of the peak weekends, handling companies who are short staffed, airport check-in, short staff, airport security, short staff.

We saw our on-time performance fall from kind of 95% to 80% on Saturday and Sunday, mainly as a result of ATC starting as they've done nothing for 18 months.

And then, of course, as usual, the French and Germans are generally short staffed on Saturday mornings where there -- and we've had airport issues as well.

We'll work our way through that, but it would be a bit painful over the next couple of weeks.

And then I think we're in reasonably good shape in the summer of 2022, but there is a herculean recruitment and training job to be done.

Eddie, do you want to touch on the aircraft and all the rest?

Can I just clarify one point there.

And on the pilot, I mean, our recruitment is exclusively on the cadet side because, obviously, we have enough captains and everything for, not only this summer and next winter, but next summer as well because we have all the people coming through the command upgrades.

So it's primary focus on that.

First batch of [indiscernible] cadet.

And just on the -- like there are on the sort of capacity allocation, looking at there, the competitors retrenching, and we've got the new aircrafts that have come in, you've got airports now actively looking for the attributes of less -- 40% less noise emissions.

And we've been able to exploring those opportunities, you look in particular, the ones that I would call out are in Scandinavian, like Arlanda, I think we've been talking to them over the last 20 years, and they realize the writings on the wall there as SAS aren't growing.

And Norwegian are all have gone out of Arlanda.

And then we've also taken the opportunity within that sort of Nordic region of -- we launched 9 routes of Helsinki.

Again, Norwegian done out of there and Helsinki looking around as to where their growth is.

And then we have -- it's different from the last time we launched any sort of capacity in Scandinavia way back in 2003, 2004, where we are flying from secondary airports to secondary airport.

So we've got those -- we've got extra capacity going to the Gothenburg and things like that and let see opportunity there for us to sort of knit that network together in the face of reducing capacity from SAS and Norwegian.

You look at initially there where most of the Italian airports are saying, why aren't we a Ryanair base?

And the sort of -- again, it took us some time to close at sort of Turin deal, but we've got like a very strong domestic network out of there.

We've got still some announcements to do in HV as we fill out the network there.

We are in Marco Polo, we've opened the base for Treviso.

So we put extra capacity into the Naples and into Copertino , where we're actually a cancel at (inaudible).

So -- and then you see places like Morocco where we were recently where the government down there is anxious to say where is the growth that has come from there.

And we have they want to substantially increase our capacity there, and part of that plan is to open a 2 base aircraft in Agadir, which will go particularly well, I think, in the wintertime.

So again, it's airports are coming to us.

We closed those long-term cost deals with our 3 I suppose major homes, which are Stansted, Bergamo and Charleroi.

And everyone is saying, hey can we get a piece of that.

And I think those opportunities are going to still present ourselves.

Some places are still slow to come on things that's all going to bounce back and there isn't going to be 20% reduction in intra-European capacity.

But we're certainly seeing it out there, and we are, like in countries like particularly Italy, as they say, releases, there's airport saying or their management, their shareholders are saying, why don't we have a Ryanair base because it's the only route to growth.

That's from the line of Mark Simpson at Goodbody.

2 questions.

One, you talked the MAX is performing well, good reception from customers.

Fuel burn, I think, has been indicated as surprising against previous guidance.

Can you give us a broader feel for how you see the MAX performance?

Things like turnaround times, I know difficult in the circumstances of COVID rules, but it'd be interesting to hear a bit more about that.

And then longer term, you've talked about a goal of 12.5% SAF by 2030, well ahead of the Fit for 55 to a 5% target.

What I'm interested in there is how do you achieve that?

I mean SAF infrastructure issues are clearly going to be one of the roadblocks to achieving those targets.

So do you have plans around your key bases, Stansted, Bergamo for some form of SAF infrastructure to help you achieve those targets?

Okay.

Thanks, Mark.

I will ask the Director of Sustainability, Thomas Fowler, to answer the second half of the question.

I'll take the MAX one and Neil, you can add I'd you want to this.

Look, I think the main performance in the first month has been extraordinary.

Now -- but I would also caution, we're operating with a low factor in the last month, but it looks like it's kind of about 75%, 76% as opposed to normally in July or June, July, we'd be operating up at around 90%, 92%.

So we're flying slightly lighter planes where the turnarounds have been on affected 25 minutes, no great issue.

Remember, it needs only 7 extra seats.

The turnaround, no issue at all.

Fuel performance has been meaningfully better, close to 20% savings.

But again, I suspect that as you get back up to more normal high 80, low 90 load factors.

But I think we are very confident now that the aircraft will come in at 16% or slightly better than that on the fuel savings.

The noise performance has been extraordinary.

And there's been meaningful kind of feedback from passengers by how -- and crew about how quiet the aircraft are.

So we're ever going to kind of sell.

We were worried at the start of this that there would be a kind of pushback from passengers.

We've gone to some considerable length to indicate that if you want to get off the aircraft, you can and not one passenger in the first 5 weeks of operation has wanted to offload off the aircraft.

There's lots of nervous passengers out there.

So it has generally gone remarkably well.

The pilot feedback is universally positive, but the handling has been an excellent, the performance of the aircraft has been excellent.

They like shiny new toys at the best times.

But it has been very, very well favorably received and the cabin crew like the aircraft, no issues with the new galleys, the new layouts.

But again, slightly, all of the performance in the first 5 weeks is slightly in kind of artificially enhanced by the fact that we're operating at low taxes in the high 70s instead of low taxes in the low 90s.

We think that's a good thing, though.

It does mean we plan to take our clout aircraft in probably the first 10 days of August.

The fact that we have 10 or 12 of those aircraft in the system through the summer when weather conditions are good, pilots and cabin crew rotating through the aircraft, everybody getting a feel for that.

But it is a really for crew as this nice slow introduction into the system.

And then this winter, we take probably another 50-plus aircraft if Boeing can deliver them all at a time when we're not under any great pressure.

So from a kind of a -- just an operational safety, it's good that we're able to introduce these aircraft at a time when we can allow the pilots and cabin crew, the airport, the handlers to get used to.

So it has gone remarkably well, with the performance of the aircraft thus far.

And certainly, the one we care most about, which is fuel consumption has been exceptional.

As need to be fair, we thought it would be because Boeing were willing to guarantee 16% fuel saving.

And again, I think that would be key in our pushback on the Fit for 55 in taxing short-haul aircraft.

Here, we are investing over EUR 20 billion in the fleet of new aircraft that consumes considerably less fuel, and it's remarkably quieter than normal standing aircraft operating in Europe.

And that should be reflected in future environmental taxation.

And with that, Thomas, do you want to give us a quick run through on SAF and what we're doing to develop improved supply of SAF for 2030?

Yes.

No problem.

Mark, thanks for the question.

I think, obviously, at the moment on the infrastructure, yes, the issues, that's why we've done the partnership with Trinity and be mix after the best to invest in and show our fuels as far as the key fields where which is the base to invest in for the goal of 12.5%.

So a bit of work to do with Trinity in the next 12 months.

And then obviously, with our key major suppliers in our key bases on what the infrastructure to put in, but that's to meet the target of 2030.

So that's where our main focus is in the next 12 and 24 months.

Yes.

At the moment, they are the only key markets where we can pick up staff is Scandinavia, we would hope to see that get rolled out over the next few years, both as Thomas said, significant investments and research needed to get the right blends in the right place.

It's also one of the pushbacks as well on the Fit for 55.

They're announcing all the taxation, but there's been no allocation of this taxation revenue to developing sustain our high-volume SAS.

So they've set the target themselves a 5% SAF for 2030, but there's -- the program is silent on how you get there and how you put the infrastructure in place at European airport.

So we'll be calling for much more work from our Dutch friend, Mr. Tillemans, and some of the other eco warriors there in Europe, a, start taxing your own Dutch airline, and b, tell us how you -- what you're going to do with all this money to actually help us to exceed these ambitious targets and SAFs.

Next question comes from the line of Savi Syth at Raymond James.

You noted strong bookings in August and September.

I was just kind of curious if you're seeing any signs that with return to office still uncertain in Europe.

If there's perhaps a higher floor to the usual seasonal drop-off in traffic that you're seeing based on current bookings?

And then also just to follow up on the near-term ones you talked about, Michael.

You talked about crew and airports.

I was wondering what you're seeing on the maintenance line side and if there's any kind of a supply issue there?

And addition to route charges, what you're expecting -- if you're expecting maintenance to be a headwind over the next couple of years?

Okay.

I'll take the forward bookings and Neil, I might ask you to come in on the maintenance side.

On the forward booking look, we're all in the line -- speculative here at the moment.

Our focus for the last number of months has been to try to stimulate and ensure that we could provide for our operating, a very strong recovery into Q2.

8 million passengers in June, 9 million in July, we might get just 10 million in August.

Our view of life saving is that if 80% or 85% of Rio De Janeiro's population is vaccinated by the time we get to the end of August into early September the schools go back to work or schools go back.

Most families have been able to travel in reasonable safety and confidence during July, August, the peak European holiday season.

Then we think there's going to be a -- we start to replicate what the U.S. has seen a very strong recovery of short haul into EU air travel.

Business travel gets back leading suppliers conferences, postponed events get refixed.

We think -- we see if we get 10 million in August and again, there's no adverse kind of consequences.

We see no reason why we wouldn't maintain maybe 10 million into September, and then we're looking out into Q3.

And I'd be hopeful of averaging 10 million passengers a month across Q3 as well.

So and it may be me, but it's better than that.

But I think keep look and locked up for the last 18 months will want to go for weekend breaks away, we want to go to the Christmas market.

So there'll be a strong short-haul recovery in, I think, business travel if you haven't seen there's a lot to talk about Zoom ending business travel.

You think, well, if you haven't met your suppliers for the last 18 months, you need to get back out and see them you haven't made these sales calls, you're not going to do that on Zoom.

So we think on also a lot of that, there'll be -- where be a very strong rebound of CFR weddings that were postponed, Christenings that were postponed, those family events that were postponed or people haven't seen.

So we think -- I'm not a believer in the people will return to the office.

I think the office employers will want people back in the office I think there's no doubt we are facing much more flexible working conditions into the future.

But I mean if you look at what we're doing in Ryanair, we're saying people, we're busy, now back to the office.

We are looking, though, at reaching agreements with our people that maybe you can do 3 days a week in the office, 2 days a week from home.

There will be a lot of that kind of flexibility.

But the idea that offices are going to close and people will not return, I think, is absurd.

I always think socially people, younger people, particularly want to work from office.

It's where they meet a lot of people.

So we think it's coming back.

And I think the best indication of that is the U.S..

There were very strong recovery in U.S. domestic air travel.

I think that would be replicated in European short haul with the one exception is that we will still be missing the long-haul connecting traffic on which the legacy or the state junkies are so dependent upon for filling up their short haul.

That could lead to -- they'll run all their short-haul capacity at just dump prices.

We don't think they have the balance sheet or that depends on state.

It allows us to do that.

Which Thomas has already said they're very focused on only flying what they can fill and repaying the state as quickly as they can.

And we think most of the other airlines will operate on that basis.

We will take up most of that short-haul slack with 60 new aircraft being delivered this autumn.

And Neil, on the maintenance side.

Yes, Savi, thanks for the question there with the exception of just being a ramp-up in capacity and go through the shop.

No major increases coming through.

In fact, we've locked in better rates with our engine maintenance providers going forward.

We've built up huge expertise on maintaining the aircraft ourselves over the years and we do a lot of our own maintenance in-house.

There's no difficulty getting access to the appropriately qualified engineers and in fact we're taking in more mechanics and friends to allow for growth over the next few years.

We've got new hangar capacity coming on train in bases like Seville, and we're looking at building a couple of new hangars across Europe over the next year or 2.

One of the benefits of the MAX coming in is that it enables us now to exit some of the older, more expensive to maintain aircrafts from the fleet and you'll see some sales over the next number of months and years.

We've already handed back all of the leased 737s, which were a bit older than we would have liked to use the delays in the aircraft coming in from Boeing.

That's all been sorted out.

So I don't see too many headwinds Savi on the maintenance side for the next few years.

And I would just add to that.

We've been reasonably judicious over the last 12 months.

We've invested.

We've acquired a new office building beside ours at air site, where we've opened up a new Ryanair technical center, where we've moved all of our engineering, fleet planning in there.

It's about a 30,000 square foot building.

We, as I said, we shortly announced a great new -- we've invested about $10 million in a new aviation training center, close to Dublin Airport, four simulators, cabin crew training.

It kind of quadrupled our training capacity in Dublin in addition to large kind of crew in Bergamo, Frankfurt and others.

So -- We've kept investing judiciously through the crisis and the shutdown, and we now have those facilities and those resources coming on stream for both our pilot and cabin crew and our technical team next.

That's from James Hollins at Exane BNP Paribas.

Michael, Eddie, you sound like a couple of kids at Christmas, when you talk about the growth opportunities and your excitement.

You clearly seen about Italy, Scandinavia as good examples.

I'm just wondering if you sort of need to or even want to go after some of the more established operators, the state aid junkies, your words, not mine in Western Europe or whether there's sufficient growth elsewhere.

The second one, either for Thomas or Juliusz, if he's on.

Just on the Fit for 55, you're obviously apoplectic about this sort of kerosene tax, it won't work, et cetera.

Just wondering what chance you actually have of getting some changes to Fit for 55?

And won't they just say, foresee a deals with long haul.

Okay.

Last, Julius to maybe comment, Thomas to add on the second.

First half, yes, I think we will see more growth, particularly at primary airports.

I mean, we're pushing hard, for example, for further release of flights in Italy and Portugal, where TAP and Alitalia is still sitting on lots, which everybody knows they won't use in the future because they've already announced -- they've already reduced the fleet.

There will be further opportunities in Germany, where there have been different closures of -- Germanwings have significantly reduced capacity.

But again, we'll be opportunistic.

I mean, I think most of our growth, if I was to look at the next 2 or 3 years, where will you place the 200 aircraft, the ones I would point to would be a and the first one will be those larger base airports where we've already rolled out significant long-term lengthening of our low-cost agreements with Stansted, Bergamo, Charleroi.

Then I would say pivot, there would still be a lot of new route development in Scandinavia and what we would call Central and Eastern Europe, where we're seeing pullbacks by Wizz and others, they seem short of aircraft or they're moving aircraft further east in Dubai and elsewhere.

Italy, Spain, Portugal continue to be very strong contenders for more capacity development.

We're investing heavily in a new maintenance facility in Seville.

France, we've opened up bases in Talus.

I think they base opening in Paris Beauvais.

And the U.K., there's also opportunity there, although they would be -- I'm not sure how much more new base opportunities, although we're talking to a number of U.K. airports.

We've announced the new base in Newcastle.

There's and we are pushing, for example, even in Holland, where KLM is bed blocking lots in Schiphol, we continue to ask why Lelystad, which is owned by KLM is not being opened.

We asked by Montego besides Lisbon, which is owned by ANA is not being opened, so that we can deliver further growth in those markets.

So I mean I have never seen, in 30 years, the amount of growth potential we have over the next 4 years.

We could allocate the 200 new MAX aircraft twice over, I think, in the next 4 years.

We are not able to do that.

So we will be judicious.

We will also churn some of our own underperforming airports and bases because there is more growth opportunities out there and more into growth incentives out there than we can, I would say, manage at the moment.

Juliusz, so maybe do, Thomas you want to talk Fit for 55 and how we push back?

Yes.

I'll come in quick, Juliusz here.

Well, there's no immunity in the EU at the moment on fuel taxation and there has never been.

This proposal generally emanate from countries in the old Center of Europe in the Netherlands.

You see some support for it in Belgium in parts of Germany and parts of France.

But those are countries which are very well connected by road and rail infrastructure.

And their position is dramatically different from that of countries on the peripheries of Europe from the Baltic states from Scandinavia down to Greece and then through the Mediterranean.

The countries which are dependent on tourists, they are very concerned about the increase in the cost of access that such taxes may bring.

And we are in regular contact with government in those countries as part of our load winning efforts in Brussels.

And we know that the conversations in the Council of the European Union about the tax would not be swift and they will not be easy.

I think there will be a lot of upset from some of the tourism-dependent nations at the suggestion that cost of taxes may need to go up quite significantly over the next few years.

So I think this is not over and we will do our best to highlight those inequalities, which are being proposed by a taxation measure that only targets short haul rather than the short haul and long haul.

Just on your point, James, on Corsa.

The course offset credit has been offset not at an impact.

And at the moment, they're trading and 3 points less than the current EUA prices.

So despite there we have seen short haul, long haul will do.

Next question please guys, we've got to end this call at 11, so we need to probably get through a couple as quick as we can in the last 5 minutes of this call.

Sure.

The next 1 is from the line of Neil Glynn Credit Suisse.

Just one of your latest applications with respect to appealing the navigation charge increase prospect, no expectations on timing.

And then the second question, just with respect to the longer term carbon consciousness continues to develop among consumers.

Is there an opportunity or even a need to prevent your carbon footprint relative to competitors in the booking process like people like Skyscanner do?

Or how do you think about your communication on that going forward, Michael?

Okay.

Neil, didn't hear all that question, but it needs to just be Neil, can you answer the first half on the NAV charge?

And maybe Thomas briefly answer the second on the carbon footprint as far as I could tell.

Okay.

I'll pass the map charge question over to Julie.

It was a bit hazy to one.

Could you maybe give that again?

We just couldn't think you correctly on that.

Yes, sure.

So Skyscanner for example, will highlight our carbon footprint on a given route relative to competitors.

Is that something Ryanair should be doing to communicate most effectively with carbon-conscious consumers going forward?

Yes.

On the carbon side, in fact, in the last number of days, we've launched a carbon calculator which enables our customers to fully offset their carbon footprint.

That's very much up in light, and we've already seen good pickup in relation to that.

We're continuously looking at different ways of differentiating ourselves.

We're not shy in pointing out that as people switch to Ryanair, they can reduce their carbon footprint by 50% compared to the legacy carriers.

And there'll be more comps like that going forward.

It's not in the booking process, yet, doesn't mean it won't be at some stage in the future.

But the carbon calculator was the most recent initiative and as said, proven very popular.

Yes.

And I think, look, there is of that at the level of round Neil an eco label where the airlines will feed in their information like the Skyscanner so I think at the moment, Skyscanner, and Google calculations are very generic.

They don't fully reflective of the actual numbers, and there is a bit of work on that at the moment, that European level.

I think people are getting more aware of things like CDP as well and ratings on that, and that will help drive decisions into the future.

And that question comes from the line of Jarrod Castle at UBS.

You're moving more into the primary airports, you said from 70 to 80 and going back a decade, you were probably sub-50%.

Are you targeting a more affluent client base?

And at some point, will we actually see the average fares rise just given the experience cumulatively over the last few years, that hasn't been the case.

And then just secondly, Michael, any quick thoughts on the customer advisory panel?

Is this part of always getting better?

And what kind of questions will you try to get them to answer besides cheaper fares with better service or something like that?

Okay.

Well, since that's a jack question.

I'll give that back to Eddie for just to close on the cost.

Just in terms of the move into more basing -- getting more slots and basing more aircraft at primary airports is not at some kind of quest for an excellent client base.

It's simply us being opportunistic.

That's where the slots are available, and that's where some of the better growth deals are at the moment because those airports are the ones suffering the greatest traffic and capacity loss through COVID.

Will fares rise because we get a more affluent client-base?

No.

We are happy to take more affluent customers or more ordinary customers, they all pay and from the same the same fare classes, we don't discriminate.

But I think it's inevitable that what will really, I think, drive for right in the next 2 or 3 years will be shortage of the intra-EU capacity.

There is going to be meaningful shortages of short-haul EU capacity reductions.

And I think that and a combination of that and probably increased environmental taxation will undoubtedly put upward pressure on air fares and yields.

And we will be poised, I think, to be a significant beneficiary of that as we have rolled out 210 new aircrafts, lower operating costs.

but probably, if anything, a less intensely competitive environment in those markets where we're expanding.

Eddie, do you want to touch briefly on the tax customer panel?

Yes.

I mean we have the first meeting of that in early September.

But what's really behind that I suppose is selling on our digital offering, particularly from a customer service point of view, daily travel app with gate information, gate changes, on-time information, et cetera.

But there's a lot of other developments coming on that over the next number of months.

And we'll just see from the customer service, from the panel as to what ideas they have.

And some of the people on that panel already have sent in a really active in terms of the suggestions that they have.

Also, what we've learned through the whole COVID experience of refunds, dealing with disruptions on the day.

We've got some -- I signaled this the last time, we'll have some announcements later this year on how we deal more efficiently with customer disruption for the less than 1% of flights that we have disruptions on and how we actually get that information out to people in our 240 airports, so that people know exactly what's happening, how they get their refunds processed, how we deal with EU 261 and deal with that in a much more efficient manner.

That's going to be the focus of it.

I mean we are like we still retain all the -- all the other initiatives that we've had over the always getting better program of the 2 bags on board and on that.

We're going to continue to build on that.

But it's really about what we learn from disruption, more leveraging of technology in terms of getting information out for closer.

So we're really looking forward to the first meeting with the 7 people, I think, across 7 different markets.

So we'll let you know on the next call.

Thanks, Eddie, we've gone over time, but we'll have 1 last question and then close it down.

If we missed anybody, please reach a question throught to me or Neil Sorahan andLeo and Peter is the cost in the Investor Relations panel.

So let's take one last question, other than we...

We had a follow-up from Neil Glynn.

I believe we missed the second question.

So I know going quite a -- he just hung up.

So I will take the next question from Carolina Dores of Morgan Stanley.

Quite quick.

On the yields in this first quarter that has passed the first quarter '22, is there a mix of routes effect on lowering yields, meaning more domestic or more really short routes that is taking the price down?

Or is it just a really active price coming down?

And my second question, if you if I may, is the supplier reimbursement that we got this quarter, the EUR 140 million.

Is there more of these to come?

Well, firstly, I think no, there won't be more of the supplier reimbursement.

At least I hope there won't be any more supplier reimbursement we've negotiated now that we're entering the recovery phase, reimburses we negotiated with not just 1 but a range of suppliers, we think will come to an end.

The fare, lower fare in yield has been a function in Q1 of very much later traffic or booking curve.

We would normally go into the summer with very strong advanced bookings.

People already booked all their holidays.

We had almost none of that in the system because of the huge COVID uncertainty.

So as we went through and you look at the speed of the recovery from 1 million passengers in April, 2 million in May to 5 million in June, 9 million in July.

That has all been built on very late, very close in aggressive pricing to capture that volume.

And then we believe that, that will begin to reflect itself in a marked rises in fares and yields probably towards the back end of the second quarter, but maybe into the third quarter once we get back to kind of post our pre-COVID norms.

All of that presupposes that there's no adverse news flows, no further introduction of restrictions on passenger movements around Europe and schools reopened in September.

Okay.

Ladies and gentlemen, thank you for your participation this morning.

I'm sorry we cut it short after an hour.

As again, we said I hope we tried to emphasize that the recovery is well underway.

We are exploiting that recovery faster, and I think much more operationally efficiently than any other airline in Europe.

And I think if you look out over the medium term into the next 2 or 3 years, we have a unique opportunity with the delivery of 200 -- 210 MAX aircraft, all with the first of which have now been delivered or operating exceptionally well.

Huge new growth opportunities at existing primary and secondary airports.

And you'll see us, I think, grab a significant wins on market share front across most Western Europe and Western, Central and Eastern European markets over the next 3 to 4 years as long as we can safely say that by September of this year, the pandemic is behind us, and there are no development of vaccine resistance vaccine resistant variants or the restoration of lockdowns.

With that, I said, I apologize if we missed anybody's questions or didn't get around to you, please, Call, Neil and Peter in Dublin this morning.

We'd be happy to speak to all of you individually.

There's no road show for the Q1 as is normal.

And with that, we look to go forward to speaking with and hopefully meeting with you in person on the Q2 at the end of October.

Thanks very much, everybody.

Good to talk to you.

Bye-bye.

That concludes the conference.

Thank you all very much for attending.

You can now disconnect your lines.