Ryanair Holdings PLC (RYAAY) 2021 Q4 法說會逐字稿

Hello, and welcome to the Ryanair FY '21 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 go ahead with your meeting.

Okay.

Good morning, ladies and gentlemen.

You're all very welcome to this full year results conference call.

I'm joined by the entire team here in Dublin.

Neil Sorahan, our CFO; Eddie Wilson, the CFO (sic) [CEO) among others.

And then we also have the other airline CEOs on the conference line.

I don't propose to go through the results that we have -- they have been up on the ryanair.com website this morning since about 6:00.

They're there for you to read.

We've also done an extensive -- Neil and myself have done an extensive Q&A, which is also on the website, and I would encourage you all to have a look at that, which addresses most of the issues that would be of concern to you.

I wanted to give you the form -- but there's some brief commentary though on 4 key areas.

The first is COVID development; second, balance sheet; third, the Boeing aircraft [or the] situation; and fourth, the environmental ESG agenda.

Touching briefly on each of them.

Obviously, the business has been hugely disrupted over the last 12 months by the COVID restrictions and lockdowns.

Traffic was down 81%.

We have been very pleased and impressed, I think, by the rate and scale of the COVID, the vaccine rollout program since the turn of the year, particularly in the U.K., which has led the way, remarkable -- remarkably successful vaccine rollout, up to 60% of the adult population already vaccinated.

And it looks by the end of June, there'll be an 80% of the U.K. population fully vaccinated.

And I -- with the rest of Europe catching up, most of the European -- main European countries are now saying they'll have at least 80% of their population will have one dose of the vaccine by the end of June.

One dose gives typically 75% to 85% protection against COVID.

So we expect there to be a rapid decline in COVID serious illnesses, morbidity, hospitalizations, et cetera.

And we've seen that in recent weeks, a rapid kind of unfolding of restrictions as vaccines begin to cover the high-risk groups.

Most notably, the U.K., which has been leading that vaccine, has been to the fore in reducing restrictions, particularly as it begin to lead into travel.

And we have seen a very dramatic surge in bookings over the -- the last 6 weeks.

In the first week of April, for example, we took just over 0.5 million bookings.

Six weeks later, last week, in the second week of May, that had grown to 1.5 million bookings.

And over the weekend, bookings were again -- were up about 15% on the previous weekend.

So bookings are returning at very strong volumes.

It was led originally by the U.K. leisure, booking to places like Portugal, Italy, Spain and Greece.

Portugal is now the U.K.'s green list.

Spain, Italy and Greece are on the amber list, but I think people accept that they're coming.

Not much of those bookings were into May, but it's very, very strong bookings into June, July and August, so it's into the peak holiday period.

Over this weekend, for example, there was particular strength in the German leisure, Benelux leisure, Scandinavian outbound and Eastern European begin to move towards Greece and Italy as well.

So I think people are looking through the current short-term use of the -- there's lots of kind of harum-scarum in the U.K. over the weekend about Indian variant.

With everybody missing the guidance coming from Matt Hancock [effective] which is that the vaccines seem to be, at this point in time, effective against the Indian variant just as they have been against the South African, the Brazilian and the Kent variant as well.

The underlying message here is that the vaccine seem to be effective against all known variants to date.

But people are looking beyond that and saying, "Well, it looks like it's going to be fine." Safe to travel in June, certainly by July and August when the U.K. school holidays kick in at the end of June, and they are booking and they are booking in ever-increasing numbers.

So we think we're heading for a very strong recovery in bookings and volumes.

Now pricing is lower than it would normally be at this time of the year because we've only 20% of July, August, September, prebooked.

At this time of the year, normally we'd have between 50% and 60% of prebooked.

But we would happily accept lower pricing for a strong rebound in volumes.

We've been keeping the aircraft, the pilots, the cabin crew current over the last year, in many cases, flying empty aircraft just to keep the aircraft and crews current.

We're very well prepared for a very strong recovery.

And why we think we'll get to maybe -- we carried about 0.5 million passengers in -- or 1 million passengers in April.

We think that will grow to about 1.6 million in May.

June, at this point in time, this looks like it's heading for about 4 million, maybe a little bit more than that.

And if we get to 4 million in June, I think we're looking very strongly at something like -- it could be anything between 7 million and 9 million in July, which would be about 2/3 of normal pre-COVID July, August volumes.

And then we think that will grow into August and September unless there is some very adverse development, either a fallover of vaccine deliveries or some variant that looks like it's resistant to the vaccine.

And all of the indications are that there's going to be stronger demand than usual for European holidays, long holidays is not going to recover this summer.

People are not going to be going to Asia or Latin America on holidays, but families are going to be moving in very large volumes, Scandinavians, German, Benelux, U.K. to the beaches of Europe, I think, through June, July and August.

And I think if we see that recovery, strong recovery, I think that would very rapidly see confidence being regained.

And then I think we're looking at an environment around Europe where generally, there will be vaccination on demand by September, October if the schools go back.

And then we think we're looking at maybe 90% of pre-COVID normal volumes for the second half of the year, the December quarter and the March quarter.

Still uncertain as to what the yields will be.

But I think, firstly, we recover the volumes first, and then I think the yield recovery will track the volume recovery.

And there are -- the only market that's kind of slightly out of date are (inaudible) Ireland where we continue to suffer woeful mismanagement of both COVID and of the vaccination by the government.

We still have a remarkably ineffective mandatory hotel quarantine.

They introduced a hotel quarantine, we're the only country in Europe with a mandatory hotel quarantine.

When they first introduced hotel quarantine here, they required the Israelis who were 80% vaccinated [at stage 2] to stay in hotels, despite the fact that we have no direct flights to Israel.

There has been various amendments to that.

But I mean it is monumentally ineffective.

I mean having a mandatory hotel vaccination program in Ireland, when you've an open border with the north of Ireland, it's a bit like requiring people to wear face masks, but over their eyes instead of their mouth and noses.

There have been some changes.

We still require the U.K. (inaudible) for example, if you fly into Ireland from the U.K., you have to quarantine at home for 14 days despite the fact that you're coming from a country with 66% vaccinations.

Yet you can drive across the border with the North of Ireland have no vaccinations.

In fact, we'll probably welcome you in with open arms and a big hug.

So it is mindlessly stupid.

It is completely ineffective.

We've already have about 20 cases of the Indian variant here in Ireland despite having no flights from India.

We never have had any flights from India.

It's probably coming over the open border with Northern Ireland, but none of our -- the minister of our health or minister of transport have come up with a coherent policy.

We are pushing hard for the lifting of these absolutely absurd and ineffective quarantine requirements.

The hotel quarantine should be abandoned straight away because at the moment, if you are flying today from France originally, you'd have to quarantine.

But if you drive over the borders of Holland or to Spain, you can fly in here with no hotel quarantine, which, of course, makes it completely redundant and ineffective.

But that hasn't stopped the Irish government pursuing it as they have pursued most redundant and ineffective policy to date.

But thankfully, Ireland is a very small part of our overall marketplace.

And therefore, it really will have -- but Ireland, I think will continue to lag with the traffic and tourism and jobs recovery this summer as long as we have a minister for transport who's incapable of coming up with a recovery plan that's been sitting on his desk since July of last year, and he still hasn't gotten around to reading it or implementing any of it.

But we were -- Ireland will lag, but thankfully, Ireland is a very small part of our overall business.

Balance sheet remains very strong.

We have been very successful.

I think the particular finance team, Neil and Tracy preserving cash over the last year.

It is remarkable that we've seen 80% of our business blown out of the water in the last 12 months, but still finished the year with 3 point -- over EUR 3 billion in cash.

We have a bond to repay at the end of June, which we have more than sufficient funds for.

We also have the U.K. CCF to repay by next March.

Cash flows have dramatically reversed in recent weeks.

We've now gone cash positive, having been previously been cash negative, and we expect that, that will continue through the summer as bookings and volumes continue.

Nevertheless, we do see an opportunity there.

We've announced today that we're going to issue another bond, hopefully, in the next day or 2, capitalizing on the very favorable recovery story that I think is now apparent, but also with the very favorable financing rates and terms that were available out there.

We would use these bonds for the repayment of the existing bonds and also to fund our CapEx and aircraft deliveries.

That takes me on to the third theme, I'd like to touch on, which has been the very disappointing performance of Boeing in delivering out our Gamechanger aircraft.

As you will all be aware, the Gamechanger aircraft was delayed for some considerable period of time for almost 2 years.

But it was certified by both the ASA and the FAA on the 6th of April last.

We had expected them to take deliveries of 6 aircraft in April and 8 in May.

Sadly, I'm disappointed to report that 8 weeks later, we still haven't seen the delivery of any aircraft.

We think the management of Boeing in Seattle are -- have been very complacent.

They have not managed the regulatory relationships with the FAA or (inaudible), and they certainly haven't managed the customer relationships well.

We've been basically kept in the dark for the last 8 weeks, constantly changing dates and broken promises about the first delivery.

In fact, we had a delivery team with pilots and engineers over there 4 weeks ago.

I had to bring them home because Boeing without any notice changed the delivery date by about 2 weeks.

Boeing (inaudible) there are -- as small problems arise on the aircraft, we can say the electrical wiring, Boeing seem to poo-poo it to both the regulators and their customers.

This is not an issue with [timing].

We have a [delivery] in a day or 2. And the regulators are rightly saying to Boeing, no, we won't see the (inaudible) and the detail.

And delays which Boeing promised the customers would take a day or 2 are taking 4, 5, 6 weeks to deliver.

We've been very disappointed with that progress.

We think Boeing -- certainly, the team on the ground in Seattle need to get their act together.

They need to treat their -- the regulators with much more, I think, seriousness and address regulator concerns much more effective -- efficiently and effectively as they've done in the past.

And the flow of information to customers has been abysmal.

I would notably separate the Boeing management in Chicago, Dave Calhoun, Greg Smith who are continuing to do a stellar job in turning around Boeing.

But they are being let down, I think, by very disappointing performance by the team in Seattle who really do need to get their act together.

I'm disappointed today on the 17th of May, we still have no idea when the first of these aircraft will be delivered despite the promise on the first week of May that they would be delivered on the 14th of May, and that has since moved back to 26th of May.

We have no idea whether we're going to get any aircraft in May.

And we briefed at the Board, we don't want to take aircraft in June because we're dealing with our own recovery and volumes.

But there's been radio silence from Boeing for about the last week.

I think it's disappointing and unacceptable.

Certainly, if they're treating their -- the regulator with the same radio silence that they're treating customers, I'd be very worried about the deliveries of these aircraft.

I do believe these are short-term issues.

I do believe they will be resolved.

We are very confident there we will take delivery about 60 of these new Gamechanger aircraft in time for summer of 2022.

And we need these aircraft.

I mean we are dizzy at the moment with the number of [airports] who are engaged in -- actively engaged in growth discussions with us.

You'll have seen, and I think it's telling in this morning's announcement that cumulatively, we've announced 8 new bases for the next -- this summer and into this winter.

And so very interesting capital cities Stockholm Arlanda, Zagreb in Croatia, Riga the capital city of Latvia as well as bases in Billund, Zadar and we have 3 bases in -- on the Greek Islands as well.

There's enormous demand for these aircraft out there.

I think one of the lasting legacies of the COVID-19 pandemic is that when Europe does recover in the summer of 2022, there's going to be about 20% less short-haul capacity in the marketplace.

Airports are beginning to realize they are going to suffer significant traffic decline.

And that Ryanair is one of the airlines that would be taking delivery of 60 aircraft in the next 12 months.

That can fix some of these challenges.

I think that's why we've been able to -- we've also I think much more significantly been able to significantly extend growth incentive schemes with our bigger bases in Stansted out to 2028, Bergamo to 2028, and now [Brussels Charleroi] out to 2030, which locks away over a longer timeframe, very significant cost advantages over the competitor airports in Heathrow, for example, who as usual with that overcharging monopoly of introducing customer departure tax of GBP 10 to make up their COVID losses, never mind the fact that the Heathrow customers have suffered greater losses than Heathrow has.

But in terms to indicate the extent to which we would have a pricing advantage over those airlines in airports like Stansted and in Charleroi, (inaudible) and Bergamo, (inaudible) . But we have very significant demand for new aircraft and for growth in the Italian airports, the Spanish airports, in the U.K. and in Central and Eastern Europe.

Sadly, the only market where we don't [vary] demand for capacity growth and new routes is Ireland where, again, we have a minister for transport who hasn't a clue to go -- as to what he is going to do about encouraging a recovery of traffic and tourism on and off (inaudible) Europe.

But don't get me started on Ireland.

I think we got the last issue I wanted to brief you on and that is our -- the extraordinary progress we've made in our environmental agenda, I think, in the last 12 months over the new -- our Director of Sustainability Thomas Fowler, he may not be pretty, but he's very effective.

The new aircraft order will significantly transform the way we grow and the way we grow by reducing our impact on the environment.

These aircraft have 4% more seats.

They burn 60% less fuel, 40% lower noise emissions and a significantly reduction in CO2 emissions as well.

We're making very significant progress on our other green -- already announced green agenda going plastic free in the next 5 years.

We're 80%.

We're way ahead of our target for that.

In the last 12 months, we've signed up for a new partnership with Trinity College in Dublin, a sustainable aviation research center, which we're investing EUR 1.5 million in that research over the next 5 years.

We have become one of the lead members of the CNBC global forum -- environmental forum.

We have set an independent target for ourselves, a goal to achieve about 12.5% of our flights being powered by sustainable aviation fuels by 2030.

This is a more ambitious target than any other airline in Europe.

And we are also working with our friends and colleagues in A4E and with the European commission to advance research and production of sustainable aviation fuel over that 5-year period to get to 0 carbon emissions by 2050 and also to continue to reduce our fuel consumption and make flying with Ryanair ever more greener than it was before.

Every passenger switching to fly in Ryanair from a legacy airline in Europe is already reducing their environmental impact by 50%.

We are determined to continue to go faster, further with our environmental -- with ambitious environmental targets that will make Ryanair not -- continue to make Ryanair the Europe's greenest, cleanest airline.

With those 4 themes, I'm now going to hand to Neil Sorahan.

Is there anything particular you want to raise on the financial results or the balance sheet, and then we'll open up for Q&A.

Yes.

So as I highlight, Michael, that I'm very pleased with the progress that we've made on cost, long-term savings over the next number of years, particularly on the life of aircraft.

With Gamechangers coming in, we've locked in significant savings for at least the next decade, which will make us significantly more competitive than everybody else.

I'm pleased with the deals that we're doing on the airports, particularly the long-term deals and more to be done on that front.

And then, of course, the balance sheet's in real good shape, BBB rated.

85% of the lease unencumbered at a conservative book value of EUR 7.3 billion, and EUR [3.15] billion cash.

As Michael alluded to, we've got a debt investor call following this call later this morning, and we would hope over the coming days to potentially tap the Eurobond market.

Okay.

Thanks for that, Neil.

Okay, without further ado, let's open up for Q&A.

(Operator Instructions)

(Operator Instructions) Our first question comes from Duane Pfennigwerth from Evercore.

I wanted to ask you about limitations, any limitations you have on flexing back up?

Obviously, the travel restrictions and demand pacing, this hasn't been an issue.

But how quickly could you restore capacity back to 100%?

And are there any rate limiters on capacity restorations, such as training or fleet maintenance?

A quick hit and then I'll ask Eddie to comment on the detail for [moment].

The way we're running the schedule for the next, I'd say, 6 months.

Essentially, we have published about 80% of our normal pre-COVID schedule.

And we expect maybe to cut back rather than me trying to add up.

So we are publishing -- we probably have a seat capacity out there of about 10 million seats through June, July, August, September but we're looking probably at raising it for October and November -- into October, November.

And the expectations we're probably cutting back then from about 80% to maybe 75%, 76%, [66%, 65%.] At this stage, June, I think we would have to cut back more than that.

June could be 30% to 40% to 50% normal.

July, August, September, I would be reasonably hopeful we get to 66%, 70%, maybe 75% at a push as long as there's no untowards development in the next number of weeks and the restrictions continue to be lifted as vaccines are rolled out.

Eddie, is there anything you want to add?

Yes.

The short answer is that there aren't really any restrictions at all.

If you look at last summer when we got back up to 60% very quickly, and you've got the issue of pilots on average going in to check, say, every 45 days.

So we've been able to keep 80% of those in check, and that means that the other 20% then just bleed into that.

So it's really 100% in check, but like it's at any point in time, it's 20% [down] but it's only for a period of a number of days.

So pilots, no issue whatsoever in terms of scaling up to the level that Michael talked about and beyond.

The aircraft probably causes more problems to keep on the ground than actually keep in the air in terms of moving them around and making sure that they're all current.

But we -- like engineering's done an outstanding job here in keeping all the aircraft current on demanding procedures, et cetera.

So I don't see any issue at that.

On the cabin crew side, we have over [krugers] on the cabin crew side because the workforce there in some markets where you've got people coming from different jurisdictions, may be in receipt of furlough and may not be ready for work.

But I think we will be -- I think we've more than enough redundancy to go against that.

So I don't see any limitation really.

It will be a hard job getting back up, but there are no black holes here or any gaps whatsoever.

The only thing I'd add as well, Duane, that our pilots are now trained as well for the MAXes, for when they start to arrive in.

So no issues on that front either.

I did have a follow-up if you have the time.

(inaudible) Go ahead.

Sure.

Sorry.

Just on travel restrictions out of the U.K. Can you reflect on like what's been surprising so far and how you see them evolving in time for this summer?

I think the most surprising thing is that over the last 6 weeks, the customer base seems to be largely ignoring the travel restrictions in the short term and booking out into the back end of June, July, August, September.

People are moving ahead of the government restrictions.

So just to explain that, the U.K. added Portugal to the green list 2 weeks ago.

There's an expectation that Italy and Greece which are on the amber list, will get added to the green list at the end of May.

Spain is a little bit further behind, but probably gets added to the green list around mid-June.

But generally, almost I would -- we see a very strong recovery in bookings from a U.K. leisure booking out past the [Canaries], (inaudible) Spain, Portugal all the [holiday] destinations through the back-end of June, July and into August that coincides with the U.K. school holidays.

Equal, say it again, there's less restrictions on people traveling the Germans, the Scandinavians, the Benelux countries, but they've certainly been on the move, very strong bookings over the weekend.

And everybody, I think, seems to be discounting the short-term restrictions because there's an issue in the U.K. over the weekend about this Indian variant.

And yet, this (inaudible) is a 24-hour news cycle.

It has to cover some bloody variant.

But the (inaudible) over the weekend they look -- all the evidence has suggested that the vaccines are effective against the Indian variant as they have been against the South African, the Brazilian and the Kent variant as well.

So people seem to be -- I think in (inaudible) taking a view that by the end of June, 80% of Europe adults would have received the first dose vaccine.

The U.K. would be close to 80% fully vaccinated.

And they're moving again, there will be various jurisdictions.

I think that's reasonably fair as long as there's no untoward development the next couple of weeks.

Our next question comes from Muneeba Kayani from Bank of America.

So can you talk about how we should be thinking about load factors for the July to September period?

And would you keep capacity so that loads remain around 70%?

Or would you target a higher load?

And then secondly, just looking out a bit further.

Europe is looking to kind of replace flights with trains and short haul.

We've seen that from France recently.

How are you thinking about that in terms of demand for short-haul travel?

Okay.

Thank you.

Two good questions there.

I think we will be (inaudible) positive, trying to make a reasonable judgment.

But to give you a flavor for that, I think we have clearly not have -- there's been enough capacity out there for May.

It's likely that the main load factor would jump to, I think, could be 74%, 75%.

I think we are minded though, I certainly (inaudible) Eddie and myself are (inaudible).

We are likely are minded [the processes] there are more capacity available in June.

I would run the risk that the June load factor could fall to low 60s because we want to make sure we have as much capacity out there in June.

But we certainly won't run any capacity if we think we have a load factor of less than 60%.

But it's very important to us that we encourage travel, particularly outbound travel in June because that then will be where -- will underpin a lot of what we do in July.

And I think we have been trying to aim for 70% plus load factors through July, August and September.

And again, going back to what the previous answer to Dwayne, we'll have maybe 80% of normal capacity out there and be trying to cut back 4 or 6 weeks in advance, but I think the likely load factor evolution is May 70%, low 70%.

June, it could fall.

But because we're overstimulating with capacity and I would take a hit on yield as well into June, in the interest of driving as great a volume recovery into July, August and September, which are the 3 key travel months for the year for us.

I really wouldn't worry about Europe.

I mean this idea of transiting short haul onto trains is just another hidden state aid to the legacy carriers.

I mean the French are designing this madcap scheme where all short-haul flights will be banned unless, of course, you're hoping that you're connecting through Charles de Gaulle, which of course you can end to a short-haul flight.

But the only people who will be hopping through Charles de Gaulle will be Air France passengers.

So all that would mean is that Air France will now have a monopoly of short-haul travel through power connections through Paris.

French passengers or connecting passengers will be screwed for even higher airfares by an airline group receiving the second-largest quantum of state aid subsidy from the French and Dutch governments.

I mean it's -- trains are not competitive with low-fare air travel on anything over 2, 2.5 hours.

And what we do is go overseas as well.

So we're talking, you don't get to the Canaries, the Balearics.

You can't get on or off the island of the U.K. or Ireland really on a train.

Okay, you have the channel total but that's very expensive.

And really only facilitates travel to Paris and Brussels.

The growth that we're looking at out in Europe I think in the next 5 years of which is fundamentally underpinned by, I think, about a 20% reduction in short-haul capacity, the bankruptcy of Thomas Cook, effective closure of Norwegian as a pan-European airline is now a domestic Norwegian operation.

Flybe will disappear -- Flybe alone was 8 million seats a year.

So these are very, very substantial cutbacks.

Alitalia reduced the fleet by 25%, by 30%.

TAP reduced it by 25%.

Those -- that capacity's not coming back.

Well it is coming back but it's going to come back on Ryanair Gamechanger aircraft and we are adding new bases and more frequent new routes in Italy, in Spain and in Portugal.

We're pushing the Portuguese government hard to open Montijo airport, which is the secondary airport for Lisbon.

And so I think they -- but really, we don't see trains.

I can't think of any routes we operate of where the only -- those markets where trains are really a feature is London-Paris, London-Brussels.

And Madrid, Barcelona and Milan, Rome, we don't fly in any of those routes.

It comes James from BNP Paribas.

First of all, look, the first question is on Boeing compensation.

I assume there's a very nervous relationship manager today.

But I was just wondering if your Q4 '21 included any cash compensation?

I think you said that your Q3 results it might and maybe just a quantification, if you could.

And the second one is for, I would regards incredibly handsome Thomas Fowler.

I was just wondering if there are any near-term headwinds on environmental taxes coming in by country, i.e., in the next sort of few months?

And on the flip side, any positives from maybe better air traffic management regulations during the next 12 months?

Okay.

Just on Boeing, I mean, clearly, I think the relationship is somewhat fraught at the moment.

But until Boeing starts delivering these aircrafts, and the difficulty we have is we have wrote to Boeing in Seattle 10 days ago and said can you give me an update before we do our full year results on deliveries, where we are.

I haven't even got the reply 10 days later.

They know that we're coming out today with full year results.

And one of the reason I can't give you an update is because despite being Boeing's largest customer in Europe, we can't even get them to reply to a letter even over a period of 10 days.

It's frustrating.

I think it's short term.

But if they're dealing with the regulator, and I think that seems to be a kind of from a complacent attitude to the regulator as well, I don't think the ASA appreciates being kind of fogged off , but there is nothing to see here.

So they just need to get their act together in Seattle.

These are still builders of great aircraft.

The Gamechanger is a phenomenal aircraft.

We have a very good relationship.

And I think Boeing have done terrific work at the group level.

And Dave Calhoun and Greg Smith have transformed that company.

But having good leadership is one thing, but you need to delivery on the ground in Seattle if you're really going to start delivering these aircraft.

And I think it's interesting that concerns the regulator.

The regulators are rightly nervous about what's coming out in Seattle, and they want all the I's dotted and the T's crossed.

And we as the customer want to see that as well.

And we have received some additional compensation from Boeing for these delays in Q4.

Clearly, I'm not going to divulge the figure, but it's not a meaningful or substantive number.

Because most of our focus in our rediscuss with Boeing has been on getting the aircraft delivered and advancing our discussions on a Max 10 order.

And both the deliveries and discussion on the Max 10 order have been hijacked by these unexplained and continuing delays in delivering the Gamechanger aircraft to us.

We had hoped to have 4 deals this summer.

And now we don't know if we have any.

And environmental taxes I think is a risk.

I think I would be -- I'll have Thomas to giving you his own views, but I think it's less a risk in the near term, next year or 2. I mean if you look at the kind of financial damage that's been done to the balance sheet, particularly the flag carrier airlines around Europe, the France -- Air France, Alitalia, TAP, SAS, they're all essentially bankrupt.

They will be insolvent without 30 billion of crack cocaine stage A doping.

And I'm not sure they're in a position to be paying much by way of environmental taxes.

But it is clearly on the agenda, I think, over the medium term.

We think we're very well positioned with the Gamechanger aircraft coming with our environmental commitments.

We are by some considerable distance leading the pack in Europe.

But that won't -- it won't leave us -- we won't be immune from environmental taxes.

But I think the risk is less in the short- to near-term year or 2, but more going forward.

I think it would be -- one thing we've been calling for, there's the kind of remarkable schizophrenia with environmental taxes in Europe at the moment where they're really taxing intra-European travel and/or the travel to and from Europe is tax exempt where despite whether the long haul commits to about 50% of Europe's emissions, none of it is paying any taxes because the Europeans can't get agreement from the Americans, the Russians, the Indians or anybody else on each of these environmental taxes.

So I think we're in favor of aviation paying its fair share.

But it's quite clear that, that can't just be locked on to a short haul in European aviation.

I mean the Dutch, for example, are incenting, connecting traffic through Schiphol, which means basically KLM are paying no environmental taxes.

But all of the short-haul competitors in and out of Holland are paying ETS.

Like it's manifestly discriminatory and unfair.

It's giving a holiday or relief to the most inefficient, most polluting airline and penalizing the most sufficient, which is the short-haul airline.

Tom, is anything else you want to add other than your...

The only big change is obviously, the U.K. ETS team now stands alone, but there should be no material impact financially because it gets the same -- it just the fleet follow (inaudible) the U.K. ETS.

And France is talking about a blended mandate of 1.5% from January '21 [on back].

So that's the only near term (inaudible) the rest is more medium term.

And what's our approach to the U.K. announced that aviation will now be tuned into U.K.'s overall emissions and what impact does that have for our business?

Yes.

The impact would be obviously if they put in a blended mandate around taxes, so the risk goes for those events in our 12.5% goal on (inaudible) should be well above our mandate that the U.K. brings in.

So again, we'll work on that and over the next 12 months or so.

But the U.K., as they roll out (inaudible) the end of June (inaudible).

Our next question comes from Sathish Sivakumar from Citigroup.

Michael, I have 2 questions.

So firstly, on the unit cost.

So with this new airport deals take at 737 fleet, how should one think about the unit cost in FY '22 and '23 versus FY '20?

And then the second one, just more around the (inaudible) comments that you made over the last 6 weeks, have you started to see any early indication towards extended summer, i.e., booking towards October versus the normal periods?

Okay.

Just -- I'm going to ask Tracy to deal with -- our CFO, to deal with the unit cost one.

I'm going to ask Eddie Wilson to talk about the booking curves.

I didn't quite hear the end of the second half of that question.

But again (inaudible).

Okay.

Just on unit cost we will see a modest increase in FY '22 compared to FY '20.

You have to remember I think we're (inaudible) the costs as we return to full use of our aircraft and return to normal level back, so I think that's important to take into account.

And we continue to monitor costs that are within our control.

So (inaudible) maybe over the next coming year because of an (inaudible) cost over the last 2 years.

But again, staff cost, airport costs and aircraft and ownership and we would be (inaudible).

Yes.

I think you said there's a push coming from Europe at the monopoly, so EUROCONTROL, some of the monopoly state-owned airports where they all -- we have our like Heathrow, we have our COVID losses for last year.

The airlines and (inaudible) have to pick up those losses as well as pay for next year's cost.

So yes, there is going to be a kind of a back layer on EUROCONTROL and some airport charges.

But of all controllable ones we have, aircraft, the larger airport deals we've done, unit cost will fall.

Eddie, the question on the booking curve, anything you see in the last 6 weeks?

Well, I mean, what we handle to give you particularly -- but on the booking curves first, they're much shorter than they have been in terms of reacting to the certain news of the lifting of restrictions, which you can definitely see now over the last 5 to 6 weeks that people on the basis of what they see themselves in terms of vaccination levels and the news of mortality rates, [hospitalization] are beginning to (inaudible).

But what we have been very reactive is that in terms of extending the summer and putting capacity where demand is, we've made big adjustments in, say, Spanish domestic market and even more adjustments in the Italian domestic market.

We've opened 3 bases in Greek IMEMs to take account of what I think most people believe is going to be an opening up there as well particularly from the U.K. So we've been very agile on the ground, we think there is going to be -- we believe there is going to be an extended summer.

And we're well positioned for that, and we've reacted to date.

And we at least have the ability here flexibility with our crews and aircraft to do that in the widest amount of bases that are out there.

So we are particularly well positioned there.

And any response coming from the opening of bases in Billund and...

Yes, we had -- I think it's sort of instructive like what we are doing good base deals in terms of costs and long-term fixing of costs.

You do have -- or we did have prior to this, I suppose sort of Mexican standoff with a lot of airport thinking that everything is just going to bounce back.

And when they see things like Ireland and Billund to a lesser extent (inaudible) Scandinavian air like we have some major airports there like Copenhagen ringing us the next day and saying when are we opening in Copenhagen.

We've already got 2 million passengers in Copenhagen.

(inaudible) For example, Copenhagen is a good example where they have their 2 of -- their largest customer is getting smaller with SAS and (inaudible).

And then you've got Norwegian who try to make their way out of bankruptcy with a fraction of the capacity that they had previously.

I mean we're really the only show in town.

I think you can see that places like Arlanda has got some of the major airports in that neck of the woods to wake up to the fact.

The same thing happens in (inaudible) as well where we've never been there previously.

And you've got airports that realize that if they kept some of that (inaudible) and secure that capacity that they're going to be left out in the cold.

So every airport deals -- I mean we do make the next one easier.

But it is taking -- as Tracy says, it's taking a (inaudible) in, particularly in the airport side because you have some airports that are good at raising cost and you have the service -- the ATC providers increasing cost as well.

But in the medium to long term, it's only going one way in exchange for capacity an airport costs are going to go down.

Our next question comes from Jarrod Castle from UBS.

Just exploring the 200 million passengers, the bulk of deliveries, what happened before '26.

I mean could you get there before kind of 2026, Michael?

I guess related where you see extra unit costs?

And then just secondly, I mean, just thinking about the summer, can the airports actually cope with, let's say, 70%, 80% of volume, in fact, comes through at the moment.

I know you've got a very different network to most.

But certainly, it looks like some large primary airports with de minimis volumes are struggling at the moment even to cope given [curing] time and everything.

Two good questions.

Yes, I mean, there's a possibility we could get 200 million passengers earlier than '26.

But if it's the back end of '24 or '25, I wouldn't -- I don't think it's that kind of significant a number at this point in time.

The critical thing here is to recover the 150 million a year we had pre-COVID.

And I think we will be very strongly into that number as long as there is no disruption to the vaccine rollout, that we are pretty much vaccinated across North America and Europe by September, October this year, then we think we will be back to pre-COVID numbers through calendar 2022 into our FY '23.

I would be very disappointed if we're not doing north of 150 million in FY 2023, particularly with demand Eddie's identified from new bases, new airports.

But 200 million, '24, '25, '26.

We could get there earlier.

I think there will be strong demand.

And I think what really is yet to be felt, particularly in a number of airports, how much capacity has actually been taken out of the system in Europe.

You're going to see significant undercapacity in Germany, in Poland, in Italy, in Spain, in the U.K. domestic with Flybe having disappeared.

And some of that will have to be replaced.

And can the airports cope?

Yes, I think the answer to that is can they cope with any pre-COVID volumes?

It depends on the airport.

If you're a large connecting airport, the Heathrow, (inaudible) Schiphol and Frankfurt main has been very -- I don't think they can.

But I think they'll be given -- remember, the long-haul is not going to recover very quickly, certainly not in December of 2021.

But there's going to be -- the real risk here is arrival delay.

I don't think you will see much by way of departure delays, but arrival delays, documentation, particularly in British arrivals are rising in no longer part of the EU into non-EU queues.

Demand for vaccination evidence or negative PPE evidence is going to be -- a lot of that's on arrival is going to be difficult.

And if you're -- But if you're a short-haul point-to-point airline, really, arrival is not our problem.

We'll still be getting [penalized] on departure.

If you look at our airports, I think they will be able to put -- if we're talking about 10% to 15% of normal capacity in May, getting to 25%, 30% normal capacity in June, 60% in July, and then hopefully, maybe a bit more 70%, 75% through August, September, October, most of our airports and I'm thinking, Dublin, Stansted (inaudible) and Bergamo, they will spool back up very readily.

The tourism airports in Portugal, Spain, were largely along that would be inbound traffic through June and July.

I think you'll see those spool back up very quickly.

They do have large infrastructure there.

They're not dependent on a lot of connecting traffic.

I think the real problem area will be connected -- connectivity and connections across home airports.

But thankfully, we operate none of that traffic, and we operate very few of those airports.

Our next question comes from Savanthi Syth from Raymond James.

I realized only 20% booking for July through September.

But I wonder if you could share the fare that you're seeing for that time period, just how it compares versus pre-crisis just from a magnitude standpoint?

And then regarding the kind of aircraft for the next few years, you're getting 50 to 60 per year.

How many do you expect on a net basis to grow over the next few years generally?

And along those lines, I wonder what you're seeing from a used NG pricing these days?

We've heard on the A320 side, it's maybe 20 to 30 below kind of pre-crisis aircraft pricing.

But I wonder if the NGs are holding up better.

Okay.

Thank you.

I'm going to ask Neil to touch on the NG pricing.

As (inaudible) were lower than they were pre-crisis, but pre-crisis we will be going into.

We'll be talking to you in the first week of May, we have 50% of the bookings in for June, July, August, that [high flyers].

We are materially lower than at the moment, but building very strongly.

So I would expect fares to be lower through the summer of 2021.

And then I would expect to strongly recover through the winter of '21 and summer of '22 towards pre-COVID level.

The thing -- I mean we're driven first by less repair of volumes for us, and we worry about the pricing after that.

Repair volumes [of course], pricing would follow.

Net aircraft Neil, I mean, we're adding 60 aircraft.

We'll be taking out 10 or 12 aircraft a year.

But...

I mean the plan at the moment is that we take out the balance of these aircraft, which includes the (inaudible) , A320s and then we'll opportunistically sell some aircraft over that period of time in probably clips of 5 to 10 aircraft at a time.

So can't give you the exact fit by year yet Savi, because we will be somewhat opportunistic.

But the A320 starts to go out from the winter of 2022, and they have gone over a kind of 4- to 5-year period at least.

On the NG, the NG pricing is holding up relatively well.

The NGs are still seen as the replacement for the 400s for cargo conversion.

The A320 doesn't really convert very well over to cargo.

So we're still seeing interest and demand in getting access to our kind of 15-year-old plus NG for cargo conversion.

So we'll be interested in disposing some of those aircraft over the next couple of years [at best].

Our next question comes from Jaime Rowbotham from Deutsche Bank.

Just one from me.

I just wanted your thoughts on the cost of these carbon offsets and the EU ETS.

So I think precrisis, you were spending about EUR 150 million on these when the price was around EUR 25 a tonne.

Prices since more than doubled to around EUR 56 a tonne now.

Obviously, appreciate the 737 Maxes will bring down emissions per passenger.

And obviously, you'll be delighted to have enough passengers for this to become a problem again.

But I think the free allowance of these is eroding at around 2% per annum.

So without a sudden fall in the price of the carbon credits, looks to me like this line item could be almost doubling from precrisis levels towards EUR 300 million.

Is that fair?

And is there much you can do near term other than hedging to avoid an even greater headwind if the price keeps rising?

Okay.

Well, the case there, James, is that near term, we already have this covered.

What we're sitting on surplus credit that we did in June in FY '21.

So we're effectively covered for FY '21 and some coverage in fact in FY '23.

We would have locked all the way at levels under EUR 25 and EUA.

But I agree with you post that period, we would anticipate that the cost will go up.

And that's something that we will manage through our hedging program over the next 12, 18 months.

But no short-term concerns at the moment.

And Thomas, do you want to add anything on, bit a color there?

Yes.

Look and obviously Jaime the big part is (inaudible) out there now.

And we just need to understand how the (inaudible) and EPS work together from 2024 onwards.

So that fund is still up in the air and given the legislation's only gone through.

So we'll keep an eye in the near term.

We're covered for the next year or so (inaudible).

As of (inaudible).

Clearly, there's far fewer ATC delays, re-routing and that's lower fuel burn.

And the lower fuel burn, not insignificant either, master savings the next 12 months on EU 261 kind of costs pre-COVID too because punctuality at the moment admittedly within much lower operations, running at 95% on an ongoing basis.

Our next question comes from Carolina Dores from Morgan Stanley.

Two for me.

First, Michael, you mentioned in the Q&A that CapEx for the second half of this year should be around EUR 1.2 million, EUR 1.3 million, and then peaks at EUR 2.3 million, EUR 2.5 million by fiscal year '23 with your current assumption of delivery.

How should we think about net CapEx?

Is there still going to be some inflow from compensations through the year?

Or does that stop once you start receiving these -- the MAXes.

And my second question is longer term.

How should we think about the planning of the sustainable aviation fuel?

Is there something that you should readily start adding 1%, 2%, 3%, 4% blending to the fuel?

Or should we get 15% in one goal?

And if that requires any upgrades on engine?

Okay.

I (inaudible) Tracy will take the first half is the CapEx question.

And Thomas, maybe will address the second, blending of the SAS.

Okay, Carolina, the net CapEx will very much depend on whether we sell aircraft or not and when we sell those aircraft.

As regard to supplier compensation, when the aircraft are coming back into the fleet, then there will be no more supplier compensation.

As we said on the pre record, we've agreed fair compensation in relation to the delays.

That's pretty much true at this point in time.

So the best here we can give you is as we did on the prerecord, gross CapEx, including maintenance, somewhere between EUR 1.2 billion and EUR 1.3 billion for FY '22.

And then depending on the delivery profile of peak CapEx in FY '23, FY '24, which would be in the region of EUR 2.3 billion, EUR 2.4 billion per annum before it starts to drop back.

Tracy, anything you want to add to that.

(inaudible) aircraft.

Okay.

Thomas (inaudible).

On the (inaudible), I think over the next 12 or 24 months, we have informed (inaudible) for Trinity first.

So any step that we will take will be out in front of the regulatory -- the regulatory things I mentioned France, maybe 1.5% next year, but -- and then beyond the next 24 months, we may look at taking a couple of percentage here as we see increase in production of that.

But we will stress too that we will be better positioned than almost any other airline in Europe.

And so to the extent that we do have those blending mandates, the ASA blending mandates, we will be ahead of the rest of the competition.

It will widen the cost gap between us and most other EU airlines.

Our next question comes from Hunter Keay from Wolfe Research.

Michael, you talked about the unauthorized agents processing bookings.

How many -- what percentage of your volume comes through these unauthorized agents both before COVID and now?

And is there a second part to that?

Just kind of curious what percentage of your bookings or your volumes is being processed through bookings.

It's very difficult because -- it's very difficult precisely.

We saw (inaudible) we saw that pre-COVID, they were running at something like between around 10%.

I think they're learning out of COVID they are running higher than that.

Some of them are quite sophisticated.

I mean we usually kind of look at anybody coming from possible bookings from (inaudible) through a PNR source so that's -- but where -- that's an OTA.

And some of them are more sophisticated to give us multiple kind of sources, different multiple ID codes.

So we think it's higher now where we think it's probably, in the running to COVID, about 20%.

And they have been a real pain in the a** in terms of disrupting our customer service.

With most of our customers who were disrupted, we were able to give vouchers, refunds out to customers pretty seamlessly.

We have had a huge problem with a very small core of customers who many of them unbeknownst themselves are stuck having made a booking through a nonauthorized screen scraper, where we have a fake customer contact detail, a fake customer e-mail and a fake payment detail.

Like virtual credit cards, it's used by the OTA.

So they have been a real pain in the a**.

It illustrates, reemphasizes in our mind the extent to which regulators have failed to tackle these OTAs.

The CAA has done nothing about them.

The Spanish (inaudible) has done nothing about them.

They continue to, to me, it seems to be just computer fraud, but again the regulators won't tackle the issue.

We are doing as much as we can to encourage customers to book directly with us for 2 reasons.

One, you won't get stabbed for a candidate, hidden add-on or hidden fee by these OTAs.

And two, if there's a disruption, now we needed to communicate with you, you get the e-mail or the text message directly from us.

We have sent out millions of emails and text messages over the last 12 months but they finished up in some kind of OTA box.

And never got any further.

Customers complain they haven't heard from Ryanair.

Well, you haven't heard from us, because we only have a fake contact detail from you.

And it is -- I really can't understand why the European Commission and regulators will not tackle this issue where you have people inserting themselves into the transaction between the consumer and the airline, overcharging the consumer, misquoting them for higher fares than actually we're charging and then giving us or scamming us with fake payment details and fake customer contact details.

But it can take you -- Eddie, anything you have...

Yes.

I mean...

I think those are (inaudible).

Yes.

I mean like sort of pre-COVID, I don't think people even understood what an OTA meant, but I think the consumers now know that they are -- there's no contact with the airlines, they're being disruptive.

We've been able to -- we've got increasingly sophisticated from the last side in terms of identifying these bookings beforehand.

So there would be a cat-and-mouse game on this.

But as well as that, we've brought in sort of a price check.

They're on the front page now of our website, so the people can check how much I've actually, put in your PNR number and you can see how much your fare was and what the OTA is charging you.

We've got a verified seal as well so that people can see that they're booking directly with us.

So I think times have changed, you see on the beach there recently we have decided not to sell any holidays and this summer as well.

And I think that's sort of indicative of the fact that they just don't have the background, or a lot of these OTAs do not have the sort of back office to deal with this and the disruption that came from COVID.

I think we are winning the battle I think consumers.

And they want to get value and want to be in contact with the airline.

So I think we're in a good place on that.

Our next question comes from Mark Simpson from Goodbody.

Two questions.

First off, you mentioned, Michael, that you're going to take MAX 8 in June.

I'm just wondering with that target of 60 by summer '22, how you intend or would like to stay the MAX 8 deliveries over the next 12 months?

Second question, one for Neil.

Obviously, you've got your bond call later this morning.

I don't have an indication of size.

But in terms of liquidity, I mean, I felt that the September '25 EUR [86 million] bond was actually the back-to-back financing for paying off the one in June.

So is there kind of -- given the fact your next big commitment to the CCF in March '22, is there a kind of implicit you want EUR 3 billion of liquidity as a sample of benchmark?

It just seems you didn't necessarily have to go to the markets now with this bond call.

Okay.

Thanks, Mark.

Just talking on the MAX 8, and then the original phasing was we expect to get 14 now.

Originally, we expected 25 in advance of summer '21.

Because of the successive delivery delays, that was cut back to 14.

And now we're not sure if we get any before the end of May.

We're reluctant to take aircraft in June.

We're getting back busy trying ourselves.

We don't want lots of pilots and engineers stuck out in Seattle waiting for aircraft deliveries.

But it's something we will review with the Boeing team once we hear from them or we get some white smoke on the first delivery.

We would like to get some of those aircraft in during the summer to get pilots, cabin crew, customers used to flying on them before we get to next winter.

We have a program of 55 -- 50-day deliveries next winter from September through until April.

And so I see no reason.

I mean these are small and irritating delays that have moved from middle of April to the end of May.

They will get resolved.

I think we will see deliveries, some deliveries of the Gamechangers this side of the summer.

That, I think, will pay to -- like a lot of these aircrafts, there's 30 or 40 of these aircrafts already built.

So Boeing are ready and capable to deliver them.

I see no reason we won't get 60 aircraft for the summer of 2022.

And we would expect to have all those in before the end of April.

We're not taking deliveries in May and June of summer 2022.

Neil, on the bond?

Yes.

Mark, you're right, we are very liquid, very strong balance sheet at the end of the year, and we've been somewhat opportunistic, we don't need to go to the market, as you said.

But the best time to take money is when it's available and when it's cheap.

There is a lot of liquidity chasing yield at this point in time.

We feel now as we start to get ready to ramp up for delivery to kick in the second half of this year and into next year that had a 5-year bond benchmark size makes a lot of sense as the maturity profile fits in well and demand is there.

So yes, we're being somewhat opportunistic in our timing.

And I think particularly, Mark, demand in what appears to be a strong post-COVID recovery to (inaudible) the time I think to go to the bond market.

Just touch on the longer-term ratio, we have net debt of about EUR 2 billion at the end of the year.

Historically, we are trying to run the business kind of 0 net debt.

So very much the objective of the group in the next year or 2 will be to repair the balance sheet to repay debt and to return -- allowing even for an ambitious CapEx program.

I want to get back to a 0 net debt position in the next 2 to 3 years.

So anybody looking for share buybacks or dividends or share will have to wait as the balance sheet repair will be front and center.

Everything we do in the next -- in that post-COVID recovery period [upset] only CapEx.

And with the new deal we've done with Boeing on the Gamechanger, we increased the order size pre-Christmas in response to a modest further discount for Boeing.

These are exceptionally keenly priced aircraft.

I think will transform our unit cost base for the next not just 5 years, the next decade in Europe.

And will considerably widen the cost gap between us and every other airline in Europe, most of whom are taking much more expensive Boeing aircraft -- sorry, Airbus aircraft.

Our next question comes from Alex Paterson from Peel Hunt.

You mentioned earlier that you expect Ireland to lag in terms of recovery, but are there any other major markets you think won't be on the green list or similar by the end of June?

And secondly, just on the carbon credit, I think you're going to have a surplus this year.

Do you sell those or can you roll them over into subsequent years?

Thomas, you want to take carbon credits?

And I'll give my Ireland?

Yes.

On the carbon credit, no, we can hold on to them, we don't need to sell them.

So that's (inaudible) is gone now that we'll be holding on to them and using them for our exposures over the next 12 to 24 months.

And on (inaudible) small parts of our market, we live here.

We are, I think, deeply frustrated at the failure of the government to set out a plan for recovery of aviation.

It's not just confined to us.

Aer Lingus have now moved a significant portion of their fleet to Manchester.

They're talking about -- we're now selling Transatlantic and long-haul flights out of Manchester that should be operating from Dublin.

We've moved -- we closed the Cork base.

Remarkably, we would like to reopen the Cork base this summer.

But they're going to close the bloody runway down there for 2 months or 3 months in the autumn of this year to do runway repairs.

Like why they didn't do it in the last 6 months while nobody was flying is beyond us.

And there's a very active aviation community in Ireland, very active.

And I think a lot of good work been done by the national -- some national aviation counsel that consists of the Air Force, the airlines and the leasing companies.

We put on Eamon Ryan's desk last July, the Minister of Transport, a recovery strategy consisting of airport incentives, removal of taxes.

And we've heard nothing back from him, I mean he has been lamentably bad at coming up with a recovery strategy for Irish aviation at a time when we're still running this bizarre airport quarantine.

I mean we have an airport quarantine system that requires you to stay in a hotel at the airport if you come in from 25 European countries.

Over the weekend, you'd be delighted to hear that they released arrivals from Burundi, the deepest darkest Congo no longer had to quarantine in hotels.

Despite that, we have no flights from many of those bloody countries.

And yet If you're coming in here from Italy and France and Belgium, you still have to stay in the hotel.

But if you drive across the border from Belgium to Ireland, you can fly in here, not a bother.

All those quarantine countries, you could fly into Belfast from France, from Italy and from Belgium and drive down across the border where you'd be hailed or be welcomed in with open arms.

I mean it is insanely stupid, ineffective.

And all it does is it presents an image that Ireland is closed to overseas visitors despite the fact that they are flooding across the border with no (inaudible).

I counted yesterday, I was driving from (inaudible) I counted in the 1-hour drive I had 16 (inaudible) vehicles that drived in front of me on the motorway.

And yet (inaudible) Minister Ryan is keeping the country safe with an overly defective hotel quarantine.

In (inaudible) we are calling again on this government.

Look, the government is catching up in terms of vaccines.

We now are running at about 35% of adults have received the first vaccine.

By the end of May, we'll be pretty close to 60% of Irish adults would have received the first vaccine.

At that point in time, we need a plan for June and July.

Irish people are already booking their holidays now in Portugal and Spain into June and July.

But the government hasn't yet caught up with it.

And we have this myopic and stupid policy.

We have no transport.

There's no idea coming out of the transport department of what they're going to do to restart the aviation.

It's one of Ireland's critical industry.

So we've been very frustrated not just us, Aer Lingus, [Easy Jet] as well.

The hotel quarantine is absurd when you're the only European country with a hotel quarantine.

I heard our foreign minister saying, we're the only hotel -- country with a hotel quarantine because it's difficult.

No, it's not difficult.

It's just ineffective and completely stupid, which is why we're the only country in Europe with a mandatory hotel quarantine mainly from countries that have no direct flights to Ireland anyway.

So it makes no sense.

And we live and hope, but frankly, I think the government will be forced here to review this hotel quarantine, particularly for European countries.

I mean we still require British people, and U.K. is 66% vaccinated, British people arriving in by air to Ireland have to quarantine at home for 14 days.

But you can drive across the border from (inaudible) in fact, the pubs they'll be opening, and they will probably open the restaurants for you as well.

So none of it is a (inaudible) of thinking, but it is doing untoward damage to Irish aviation.

Our tourism industry is going to suffer because we are steeply lagging behind what's going on in the rest of Europe.

And the real challenge I think as Eddie Wilson has (inaudible) is that because we have no plan and lots of aircraft capacity has been moved out of Ireland by Aer Lingus, by Ryanair, and also by CityJet, and also has been moved out and it's not going to come back this summer.

We're not bringing aircraft back to Cork.

We moved out aircraft out of Dublin to places like Hampstead, and Spain and Greece where the recovery is going to be much faster.

And meanwhile, we have a transport minister who (inaudible) on a daily basis apart from mumble something because he ran a bicycle tour (inaudible) 20 years ago, he is an expert in tourism.

I mean as far as I can tell, he's a very nice guy, but he's an idiot.

Eddie, anything you want to add (inaudible)?

I don't dare (inaudible)

Maybe you disagree with my view of the transport minister.

(inaudible)

Our next question comes from Alex (inaudible) from Bernstein.

Firstly, please talk a little bit about the (inaudible) into new primary airports in Riga and Arlanda where there's been common carriers that wouldn't appear to have ability to leave that market.

How are you thinking about the risk of low profitability if competitors cut fares in response to your entry and are willing to run at a loss?

(inaudible) slow down a bit, it's very hard -- your line isn't great.

You just slow down please and give that question again on Arlanda Stockholm.

Yes.

Sure.

Is it clear now?

A bit better, just more (inaudible) speak a bit more slowly.

Yes.

Sure.

Sorry about that.

So on Riga and Arlanda, I was wondering whether there were common carriers wouldn't appear to have the ability to leave the market?

How are you thinking about the risk of low profitability if the incumbents cut fares in response and are willing to run at a loss?

So how -- in other words, how are you planning to avoid a scenario similar to Vienna a couple of years ago?

And then my second question is on how you're managing the various airlines in the Ryanair Group?

So as you take deliveries of the MAX, what metrics, what scenarios will be used to decide where those aircraft go?

And on that, is your current set of [AOCs] the right number of AOCs?

Or would you want to add some or consolidate some and under what circumstance?

Okay.

If I think I got the first one, I'm going to ask Eddie to give you the detail on some kind of (inaudible).

Can I just add -- if I got the question right is that the incumbents are not reducing capacity, they are.

There has been very significant capacity reductions by Norwegian.

Because (inaudible) aircraft, I think, 25, 30 I'm not even sure that they would able to pay for the fuel for 25 to 30 aircraft.

SAS as well has significantly lowered their fleet.

I mean Copenhagen, Arlanda, Stockholm and Gardermoen in Norway are facing very significant capacity reductions.

But Eddie, maybe you want to give some more detail on that?

I mean like we wouldn't be in Arlanda unless we're doing it on the right cost base.

And as Michael said, there have been significant capacity reductions.

And that's why, I mean, from talking to Arlanda for the last 20 years, which is what we've been able to consider deal there.

So we're very happy with that.

I (inaudible) it's a fairly low risk base for us because we've been able to reverse -- we're able to reverse the majority of the traffic out of there.

It gives us a good foundation on which to grow on because we've already been in Riga for (inaudible).

And so we now have a very substantial presence within the Baltic region for joining up those airports.

And so you'll see out of Arlanda, we'll be doing sort of some domestic (inaudible) and also into (inaudible) as well.

And also (inaudible) as well.

So we're happy with the deal.

There are capacity reductions.

And I think we'll be setting the running up there in terms of fare levels and our competitors.

It gives a flavor just like Billund we were there before, we closed the base while we're reopening a base in Billund...

Yes.

(inaudible) The base was -- we would never close, Billund is only the difficulties that we had back in 2015.

And prior to 2017 that we ran sort of Irish contracts employment model, which has gone since 2017, 2018, so we are bound back in there on a completely different (inaudible) it's always been very successful that our base and destination for us.

So we're happy with it.

Delighted to be back there.

Eddie, you said one of the reasons we're receiving costs from Copenhagen and from Gardermoen as well in -- is because they are suffering very significant capacity.

Because I mean SAS is insolvent, they survived on enormous state aids being granted to by the Scandinavian government.

And Norwegian is -- (inaudible) a basket case.

It's now going to be -- (inaudible) here.

It's going to reemerge crystalis-like at about 15% of the fleet it has before the pandemic.

And even with that model, it's not going to make any money going forward.

But it seems they were treated large to kind of Scandinavian domestic operations.

I mean I would be amazed if it's not merged together with SAS sometime the next year to make a great Scandinavian champion in the aviation industry God help us all.

Just to touch on the other -- in the Ryanair group, I mean, the plan on the aircraft, if we took 14 aircraft in summer, 8 would be in the Ryanair colors, largely based in Stansted and maybe 1 or 2 in Dublin.

The focus will be initially our (inaudible) will be based at maintenance bases.

So we have engineering, we have pilot bases and cabin crew.

And we have 3 MAX simulators.

So we've trained all the pilots as well on the aircraft.

Three of the aircraft will come to buzz -- in the buzz colors.

It'll be based in Krakow.

And 3 would come in the malta air colors.

They are already painted in malta air colors.

We will base those in Bergamo in Italy.

As you know, Malta Air runs, most of our bases in Italy, France -- in Italy, France and in Austria or else Germany because -- again, you try to get each of the different AOC uses on those aircraft.

Have we enough AOCs?

I think we do.

We have Ryanair DAC now largely doing Ireland, the U.K., Spain and Portugal.

Malta Air doing Italy, Germany, France.

(inaudible) doing most of the Central and Eastern European countries with a capacity to grow.

And we also then have Ryanair UK or RUK.

In the U.K., AOC it's (inaudible).

We don't get very big.

But it could expand meaningfully if there was -- if the U.K. moves on its promise to reduce APD taxes in the next year or 2. I think we would respond by increasing the fleet in RUK.

At the moment, we just need RUK to operate the U.K. (inaudible) country that operates like Morocco, bases like that.

But we would certainly look at more U.K. domestics if there was a meaningful reduction in U.K., which has been promised for several years, but hasn't yet been delivered.

Would we look at other AOCs?

I don't think we need any more AOCs in the group.

But we would almost continue to be opportunistic, and I see no reason not to.

Our next question comes from Neil Glynn from Crédit Suisse.

We've been through a lot, so I'll just ask one question.

On the customer advisory panel, it seems like a very interesting move and remembering the strength of the commercial performance after you introduced, Always Getting Better, I'd like your view on, you've identified a few opportunities already through the call, things like OTA that you've clearly been focused on for years.

And so just interested, what does the customer advisory panel advance now beyond what you've already been working on in terms of improving customer service?

Neil, it's Eddie Wilson here.

I haven't gone through the whole sort of COVID disruption and trying to rearrange (inaudible) of the 29 million people.

We know the last year in that period in terms of ticketing with the support (inaudible), we didn't have that.

I don't know what we would have done in terms of being able to deal with the sheer volume of that.

We've learned a lot from that as to what we could do in a much slicker fashion.

And you're going to see a number of initiatives being rolled out over the next number of months.

I'm not going to go into the details on here.

But it'll be certainly, the sort of 99% people get the lowest fare, get there on time (inaudible) destinations, it goes swimmingly.

But for that less than 1% when it goes wrong, we're going to make that much, much, much easier to deal with.

And I see this on a customer panel and as part of an offset that sometimes we think we know all the answers.

And thus -- and we're going to start off that first meeting of that in Ireland.

We're going to move it around as well over the next year or 2 to our major markets and places, like in Spain and Italy, Germany, to get the -- to get input there.

I mean like we are largely run from Dublin.

And we don't have a lot of infrastructure on the ground in those places.

And it will be interesting to get their feedback on some (inaudible).

But we already are well advanced, not a wish list, but are well advanced on a number of initiatives on the digital side.

But I think you're going to transform customer service for when things are (inaudible) for disruptions and for when things go wrong.

(inaudible) experience of COVID, as we transform the way we process refunds, accelerate kind of customer information and address customer queries by reducing the timeframe typically from 4 or 5 days now to within 24 hours.

Our next question comes from James Goodall from Redburn.

I've got 2 quick ones, please.

So firstly, the 1.5 million bookings that you got last week.

How does that compare to normal pre-summer booking patterns?

So I guess what was that number in May 2019?

And then secondly, to clarify your comment on being 20% booked for peak summer.

Is that 20% of normal capacity or 20% of the published 80% schedule?

Yes.

1.5 million bookings last week is that -- normally, in pre-COVID times, we'd be doing about 2.5 million.

So we're running something of the order -- (inaudible) don't take this as gospel.

But that has mushroomed in 6 weeks from 0.5 million to 1.5 million.

In a normal summer, we would have 60% of our final passenger target for June, July, August booked at this point in time, but we'll be taking about 2.5 million bookings a week.

And so we're running at something about 2/3 of what would be normal.

When I say we were about 20% booked through the summer, that's 20% of our -- what we think will be the final numbers.

So it's very low.

We would normally be significantly better booked for the summer because people families would have already booked their summer holidays.

We don't have that in the system at the moment.

But we think, again, that's why you had such a very strong snapback in bookings over the last 6 weeks.

In many cases, for example, the U.K., Italy, France, Spain, even before the travel restrictions had been lifted, now they're all booking, with some degree of comfort and the knowledge (inaudible) if you're booking with Ryanair, you can make changes to that itinerary or those bookings without change fee or without any penalties.

But it is very strong, but it is still a long way short of where we would normally be at this time of the year, which is why I go back the answer I gave previously on yield.

So those are books should be made at lower fares than we would have been taking at this time of the year, pre-COVID as well.

But I'm very happy to accept a yield penalty in the short term while we repair volumes.

Our next question comes from Johannes Braun from Stifel Europe.

I have actually 2 Germany-related questions.

Firstly, here in Germany, we have almost for certain the green party being part of the next government, potentially even leading the next government.

And over the weekend, they said that they have an agenda of banning short-haul flights altogether.

I mean I hear you argument that you have little exposure to routes that can be replaced by the train.

But for example, there's also new talks about introducing minimum fares for short-haul flights and all that.

So the political push against short-haul flights seem to gain momentum, so just curious how you deal with that?

And then secondly, Frankfurt airport is planning to increase fees by a mid-single-digit amount every [year from next year onwards].

Frankfurt I think was important for you precrisis to attack Lufthansa.

I was just wondering if those fee increases will change anything in your strategy there?

Yes.

Thanks.

I mean, first, I wouldn't worry -- look, everybody kind of regards the green party as opposition.

It's easy for the green party in opposition.

We have the green party in government in Ireland.

Those (inaudible) have been spectacularly unsuccessful in implementing any policy.

They are long on talk and short on delivery, but once you get into government, you actually have to deal with the day-to-day issues.

Would they want to constrain Ryanair and Lufthansa which would be a huge challenge for the German government, whether it's a green government or not?

They're not about to kind of bankrupt Lufthansa.

Well, sorry, it's already bankrupt.

But they're getting 10 zillion in state aid.

The green party in government will continue to give state aid to Lufthansa because Lufthansa is state aid junkie, I have no doubt that they would follow the policy of the French, and that will be trying to ban short-haul flights, mainly domestics, which is all they can ban.

But they have banned domestic short-haul flights with the exception of flights that connect into the long-haul, connecting hubs of Frankfurt and Munich.

So it's just another kind of hidden state aid to the legacy interconnecting carrier despite the fact that connecting flights are the most environmentally damaging and polluting way of traveling around Europe.

So in much the same way, we have a green Minister of Transport in Ireland who claims to have experience in the tourism industry and that he's an expert in the tourism industry, and yet we're waiting 10 months for any response to the tourism recovery program that's been sitting on his desk since last July gathering dust.

But I generally are much more -- I think the greens in government are better than the greens in opposition because the greens in opposition just talk rubbish.

And in government, they actually had to deal with the practicalities of getting people around in entire Europe.

Tourism is a huge employer even in Germany.

And the economy depends upon having low-fare aircraft.

Would we worry about the ban on short-haul flights in Germany?

No, we don't do any German domestics.

All of our flights are (inaudible) Germany to other EU short-haul destinations.

And we see very strong growth in that area in the next couple of years.

But we will be guarded and weary about increases in Frankfurt airport fees.

We think there will be a push at those monopoly airport.

Heathrow has already started charging their passengers and airlines another GBP 10 in departure fees to cover their COVID losses.

We think Frankfurt, Charles de Gaulle, Schiphol will follow suit to -- as best they can.

And there will continue to be this complete myopia, but there'll be exempt -- finding ways to exempt connecting traffic as the exempt of from ETS fees and from environmental taxes.

They'll try to do their best to exempt connecting traffic with Lufthansa across Frankfurt and unique hubs and try to penalize the short-haul point-to-point traffic.

Again, our best defense in all of that is we have mobile assets and mobile aircraft and we have no compunction of moving them around Europe where there are many more attractive airports, whether it's in -- I think the secondary cities in Germany will be an area of great growth for us, I think, in the next 5 years.

The places like (inaudible) in Europe or Cologne who has suffered a much more steep decline in their point-to-point traffic will have to respond, I think, with growth inventors.

Whereas I have little doubt that Munich and Frankfurt main will try to kind of increase fees, pass those on to Lufthansa and their customers.

Lufthansa will probably look for even more state aid from the German government so they can pay the higher fees at Frankfurt and in Munich.

And all the usual German inefficient state aid will circulate around the system and postpone any real reform into the future.

But we will be nimble, and we will find our way around that.

And we will still, I think, find significant opportunities to grow in the German markets because the German's love low fares.

They are not about to replace that with all going back on bicycles because you can't cycle to Palma.

You certainly can't cycle to the Iberia -- Iberian Pen and the Canaries, and that traffic will continue to grow very strongly.

Thank you.

We will just let to the constitute bond call.

But Tracy is still here if anybody has any financial questions.

We're going to have to cut this short the next 5 or 10 minutes.

So if we can speed up the questions please, and I'll try to speed up the answers.

Thank you very much.

Unfortunately, that's all we have time for.

So I will hand over back to the speakers.

Great.

Okay.

Can I just add, Juliusz is here with us as well.

Juliusz, one very quick commentary on Brexit and the post-Brexit the shareholding (inaudible) touch on those while we have you here.

And then I'm going to ask David, (inaudible) give us a quick contribution from Malta Air, Lauda and Buzz.

Thanks, Michael.

With the end of the transition period in December, we activated our Brexit ownership and control solution.

So 2 main changes for our non-EU shareholders.

The first one is the suspension of voting rights, which will remain in place until the balance shifts in favor of EU shareholders or there is a relaxation of the rules.

And then the second change is that U.K. nationals are not included in the ban that we have operated since 2002 on non-EU nationals purchasing our ordinary shares.

As a result, our EU shareholding is growing and will continue to grow.

U.K. nationals and other non-EU nationals can continuously invest through our AVRs, which are listed on NASDAQ, but not through the ordinary -- not through the ordinary shares in London or Dublin.

Thanks for that.

David, quick contribution for Malta Air and Lauda.

And then Neil (inaudible) you can give us an outlook on the Polish chart market.

David.

Okay, well, just to reiterate really what's been said, Malta Air with 120 aircraft has about 70% of that capacity on sale or ready to operate for Ryanair for the summer, but is capable of ramping up where necessary.

And secondly, to add that in our major markets where we have our base is Germany, Italy and Malta, we have reinstated C-19 government payroll program, so that will see us through to the end of the year.

And in France, those payroll supports are in place until the end of the summer.

So we're well placed to react to whatever wet lease business comes our way.

And (inaudible) if you want to also mentioned one of the current state over there, the travel restriction to and from Austria.

Yes.

On the Austrian situation is luckily easing up on the 19s.

Austria is going pretty much back to normal, hotels and restaurants are opening.

Also entry regulations are changing, which is important, which we see definitely a lot of more traffic to come.

As David said, we are ready as well (inaudible) the traffic.

Lauda is having at the moment 2 bases in Vienna and Palma.

And we are very looking forward to open new bases in (inaudible) this summer season.

Great.

Okay.

And finally (inaudible) just give a flavor what's happening in the Polish charter market.

Yes.

Sure, Michael.

So we have 46 aircraft in total in (inaudible).

Seven of them are dedicated for charters.

The rest, I mean, 40 -- 39 on wet lease.

The charters, we are continuing operating to (inaudible) and into (inaudible) Canaries and also Greece and Albania.

Tour operators still report low bookings due to existing travel restrictions, including PCR test for arriving passengers.

I think it will be the biggest challenge throughout the season as even these vaccinated passengers will be allowed or we believe that from testing children still requires providing negative PCR test in case of charters.

Majority of passengers are families with children.

But definitely, like we expect that for next few weeks, most of European countries will open.

Also Turkey which is very important market from charter perspective, we expect that to release all restrictions from Poland in June.

So the bookings will accelerate sales pickup, and we will target at least 50% of our summer '19 schedule.

Okay.

Thanks (inaudible) . Okay.

That brings us to an end of today's call.

We have an extensive Investor Road show taking place, commencing in 10 minutes time.

If you haven't had an investor call, you'd like would please contact us through Peter or the Investor Relations team or through (inaudible).

We'd be very happy to speak to you, particularly if you're a European national or European shareholder, we want to encourage more European ownership in the next number of months.

Thanks very much, everybody.

Hope to talk to you later on this week, and keep the faith.

The recovery is coming and I think it's going to be very strong.

Thank you very much.

Bye-bye.

Thank you.

Please now disconnect.