Ryanair Holdings PLC (RYAAY) 2021 Q3 法說會逐字稿

Hello, and welcome to the Ryanair Q3 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, everybody. Welcome to the Q3 results conference call. I'm here with Neil Sorahan, Eddie Wilson, among others. I don't propose to go through the press doc in any great detail, and it's on our website from 7:00 this morning.

A couple of quick points. As will see, in Q3, traffic was down effectively almost 80% to 8 million passengers. That was still significantly more traffic than any of our competitors carried during the period. We finished the quarter with EUR 3.5 billion of cash, and we've extended the Stansted low-cost deal for 4 years out to the end of 2028. We've also secured the easyJet slots for 7 based aircraft in Stansted. And we would expect to take all those up as soon as we're allowed to or the travel restrictions are removed.

We continue to make significant progress on our environmental policies. We obtained the first-ever rating with CDP of B minus, which makes us the highest-rated airline in the world. We are pleased with the timing and also the modest price discount of the Boeing MAX aircraft. We increased the order of 210 aircraft prior to Christmas.

Fundamentally, remember these aircraft will give us 4% more seats, but lower in our fuel consumption by 14% (sic) [16%], and will give us materially lower operating costs going forward for the next 4 or 5 years. And unlike many of our competitors, we continue to own over 90% of our fleet, most of it unencumbered.

The key issue, obviously, that bedevils us and our industry for the next period of time that remains, is COVID-19. The lockdowns and restrictions have been exacerbated into Q4, so out to the end of March. We expect another significant drop in traffic during that 3-monthly period, probably down something between 2 million, 2.5 million passengers. That will take our full year traffic down to a number of between 26 million to 30 million passengers.

On the upside, however, we take great comfort from the stunning success of the U.K. vaccination program. The U.K. vaccinated 0.5 million people on Saturday and on Sunday over the weekend. They are on target to vaccinate 50% of their entire population by the end of March. And certainly, all the high-risk categories, everybody over 50, nursing homes, hospitals, et cetera, et cetera. And we think this is the way out of the COVID-19 crisis, widespread and effective vaccination, particularly at the high-risk groups, will remove the need for travel restrictions or lockdowns, particularly, I think, in Europe as we move into the summer.

There's no doubt that Europe has fallen behind the U.K., Europe and Ireland. They need to get their finger out to catch up. But I suspect that there will be a -- more vaccines licensed between now and the end of March, and a significant spike upwards in the production of vaccines.

We still expect Europe to catch up and have vaccinated half its population by the end of June. And once all of those high-risk groups or the elderly are vaccinated, then we think there is a -- likely a strong return of -- or a repeal of the travel restrictions, which will lead to a strong snapback, I think, in air travel and holidays, particularly in times of the school holidays and summer across Europe.

And 93% of the deaths to date from COVID have been in the over 65-year category. And once that group is vaccinated in the U.K. and across the rest of Europe, then we see a strong return to air travel this summer. And therefore, we're continuing to keep the pressure on, particularly in countries like Ireland, where the COVID continues to be mismanaged by the government and the national -- or the National Health Service or the national health agency.

They're continuing, on a daily basis, to kind of a diatribe of misery about cases and hospitalizations. They studiously avoid any mention of vaccinations and we want to know why they're not -- like the Danes for example. The Danish government is announcing on a daily basis the number of people who are vaccinated that day, how many have received the first vaccine dose and a second vaccine dose, and Ireland should be following a similar course.

The only way to get out of this is not further lockdowns, that the WHO confirmed, lockdowns will not get rid of coronavirus, nor with zero Covid, which is a failed policy. Vaccinations is the way out in this. It's the way to significantly reduce both death, hospitalizations and illness in COVID.

And we need an answer as to why our Chief Medical Officer in Ireland, [in an effort] who have mismanaged obviously every aspect of this crisis to date, is not on a daily basis -- they're holding a daily press conference, and they should be announcing the daily numbers of vaccinations because that's the only way you embarrass these civil servants into accelerating the vaccination program.

Looking out into the next year, and I know we'll get to it on the Q&A, please don't ask us for forecast because we are not in a position to give you any. We have a wide range of traffic that could, at the low end, be 80 million passengers at upper end, 120 million passengers.

We think that there will be a modest recovery in traffic into Q1, that's the April, May, June quarter. A lot of that depends, again, on what the -- how many in the Europe -- what travel restrictions are removed by European governments once their population -- or the high-risk population becomes vaccinated. There will be a very substantial travel recovery into the July, August, September period. We're already seeing a significant spike upwards in bookings into that period for people are taking the chance and also taking advantage of our no-change fee policy or taking a chance on making summer holiday bookings on flights, particularly to the sunny destinations of Europe.

We believe there will be a very strong recovery in short-haul European city break holidays, short holidays because -- mainly because of capacity reductions, but also because the long haul will take much longer to recover. I think there will be a much slower range of vaccination in the Southern Hemisphere. And that will, I think, lead to still a very high risk to long-haul travel. Therefore, people will holiday much closer to home in Europe.

And then into the third quarter, which will be December quarter and the March quarter, we expect most, if not all, of the European populations will have been vaccinated at that stage or at least be down to the very youngest quartiles who are not at great risk of being -- suffering illness or death from COVID.

And then gradually, as we move through 2021, the acceleration in the vaccine program, allowing for the various incompetencies of national health services, will remove restrictions and allow us to return to travel.

When we do, we're returning to the benefit of the new Boeing 737 MAX, much lower operating costs, thanks to the remarkably efficient engines, 4% more seats in it. The model discounts will be negotiated with COVID on that. We're still waiting for the 8200s to be certified by the FAA. We hope that will take place sometime in mid-February -- mid-end February. After then, we hope to license the aircraft sometime around maybe early, mid-March, and we will be in a position to take our, of course, delivery at -- towards the end of March.

We're in very active negotiations with a whole series of airports across Europe who are looking to us to add -- give them more aircraft, give them more routes and more traffic.

We know the continuing developments among competitors, cutting capacity, closing bases -- I mean we had a wonderful example last week of Wizz. For example, closing the Trondheim base in Norway, plus they'd opened only 6 weeks previously, as a further indication of that. We believe nobody will be able to compete with Ryanair's cost base on our operating efficiency once we return.

And we are spending money at the moment, and I would highlight it again. Keeping -- flying some aircraft to keep the aircraft current, to keep our pilots and cabin crew current. We're stepping up the recruitment of cabin crew where it will be the bottleneck to a rapid recovery this summer. We are training and recruiting many hundreds of cabin crew at the moment. We may have those on the payroll. We certainly have them trained, some beyond the payroll, some beyond furlough schemes. But we need them trained and licensed to be able to fly in order to underpin our strong and rapid recovery through the summer of '21 and into the (inaudible) of '21.

Neil, that's all I have to say. By the way, [is there] anything you want to add on the MD&A or on the finances?

Just a couple of small points. It was a difficult quarter, but I was pleased with the performance in costs, which are down 63%. Ancillary also performed relatively well, about 2% on the passenger basis, driven by the priority boarding and reserved seating.

The balance sheet is BBB rated, one of the strongest in the sector. And as you said, Michael, the 80% of the Boeing fleet unencumbered, our conservative value of just over EUR 7 billion book value. We also finished the quarter with a strong cash balance of EUR 3.5 billion, and this was after more refunds and charge-backs going out, over EUR 200 million in fuel swaps, some of the barrels from the spring and the summer being paid. And so I thought a relatively good performance in the quarter, given all the headwinds that we had.

And Eddie, it might be useful -- just before we open up the Q&A., could you give people a quick flavor of the [tense] negotiations with the airports and with the unions, and how they come along in recent months?

Yes. Just on the staff costs, we continue to take advantage of the various payroll and furlough schemes. And whilst we're recruiting cabin crew, we're mindful of some of those schemes don't allow recruitment onto the payrolls at the moment.

So it's just balance those to try and have enough people ready that if we do have that snapback in pent-up demand of the airports, it is -- we've [announced] today on the extension of the Stansted deal, our low-cost deal there for a further 4 years into 2028. And we continue to work on our largest bases. Some are moving more quickly than others, but there's a gradual awakening that there's going to be less capacity.

I mean some of the -- in European markets, some of the airports are hiding behind -- we'll be waiting to see what happens. But as we continue to make enhancements, we've made enhancements in Treviso, a new base in Beauvais, up and running extra aircraft in Naples.

So we're moving along at a steady pace, but it's going to take a while for some of those airports. And it may be too late for them because we're going to have to make decisions when we finalize the traffic for the summer, and there will be less capacity there. And those airports that step up to the plate will be rewarded. So we are making good progress on airport hubs.

Good. Okay. Thanks, Eddie. Okay. We'll open up for Q&A. And just a warning, we'll keep it as tight as we can we're -- because we're going on an investor call from 11:00 onwards.

(Operator Instructions) Our first question comes from Daniel Roeska from Bernstein.

I'll limit myself to one. Let's hope the question numbers go up, as the profits increase again. Could you talk a bit about the state of your multi-brand approach?

You removed the Lauda-branded side. The flights are again displayed with Ryanair logos with an operated by tag, and so there's no sign really of Lauda. But at Malta -- yet you're taking delivery, you said this morning, of branded planes.

What are your plans for the publicly visible brands? And is there any role for multi-brand internally between the different opcos?

Yes. There's going to be no great change in the strategy other than we're no longer selling Lauda as a public brand. Lauda will be doing -- is doing self-service, flying for other airlines within the group when they return with the Airbus aircraft, hopefully, later on this summer.

Malta Air, we continue to sell. Malta Air will take some aircraft that will be branded as Malta Air. Some of the first 6 or 8 of the new deliveries from Boeing will be branded as Malta Air. And Buzz continues to expand in Central and Eastern Europe, but now has taken over most of the Ryanair bases.

But again, most of the selling is done across the ryanair.com platform. They're -- the other group airlines are providing lift to Ryanair. Ryanair is the main brand. Ryanair is the main website and selling vehicle. And it makes sense for us, therefore, to continue to promote Ryanair as the main sales brand. But with the operating capacity and the lift being provided by other group airlines, in our case, Malta Air based in Malta, and Buzz based in Central and Eastern Europe, and in a post-Brexit world, Ryanair U.K., or RUK, will do the very small number of U.K. domestic and U.K. [tsunami] new destinations that will be flying.

Does it then make sense to kind of talk about profitability with the opcos? Because essentially Malta Air and Buzz are just wet leases into Ryanair DAC.

No, it doesn't. I mean quite frankly, it doesn't take -- make more sense to talk about operating profit at the moment until we see the vaccine [for] COVID. I think we'll still -- there will be some segmental reporting in the annual accounts. But in reality, we want to maintain simplicity while the multi-AOC strategy gives us more operating efficiency and operating cost benefits. Remember, one of the key reasons for the multi-air -- the multi-brand strategy was so that we could have people employed in local countries, paying local taxes and moving away from the Irish. And in the case of Laudamotion, the [Austrian] insisted that they want to tax everybody across Ireland -- in Ireland across Europe, in Ireland or in Austria.

But why not just paint...

Sorry. That's 3 questions, Daniel. I got to penalize you or levy or fine you for the next one. We'll give you the third one and that's it.

Go ahead.

Go ahead. One quick question. Sorry.

Look, I just want to say, why not paint everything Ryanair then?

Because ultimately, if I take everything of Ryanair, I still have to fall back on the Irish government's insistence on taxing rights here for our pilots who are based at Italy or in Spain or in Portugal. The unionization, we negotiated local pay deals. They wanted local contracts, and therefore, local taxation in all of those countries.

And there are operating efficiencies, too, to having, what I'd say, multi-AOCs rather than multi-brands, have never been hugely impressed or stressed by branding. But having multi-AOC data is more efficient.

For example, our Italian pilots who are now employed by Malta Air, but on the multi-AOCs have it much more efficient, because they qualify for the same allowances and tax benefits that our Italian pilots do. And there is a significant benefit for our people in having those local contracts and local tax arrangements as well as an operating cost saving to Ryanair, having local pay and local taxation in those countries.

Our next question comes from Duane Pfennigwerth from Evercore.

Just given the more favorable aircraft economics, some of the airport deals you've highlighted and some of the staffing efficiencies, could you give us a sense for what percent of your capacity would you be able to hit? Kind of your old unit cost profile, whether that's 70%, 80%, 90%?

And then once you get back to 100%, how much of a tailwind do you feel like you have locked in? How much lower could unit costs be?

I'm not trying to skip the first half of the question, but I recall -- if it is what's our capacity recovery like this year, the -- or next year, the honest answer is we don't know.

But we're operating, I think, something at the moment -- I mean and these are very movable figures, I think we're looking at maybe something like 20%, 25% in Q1. It could be between 50% and 70% in Q2. That is the September quarter.

The December, March quarters, 3 and 4, it's probably something between 75% and maybe 90%, possibly 100%. You'll move to the higher numbers, the faster, the more aggressive or more successful the vaccine rollout program is. You'll move to the lower numbers if there's delays in the vaccine licensing rollout, et cetera.

So it's really very movable, and that's why we have such a wide guidance on the traffic into next year deciding between 80 million to 120 million, compared to our 2019 number of 150 million. And then the following year, we think we'll go back into strong growth. If you go from that 80 million to 120 million, we think up to -- it will be something north of 150 million, could be 160 million and 170 million.

Will the operating cost be lower? Yes, they will. By how much? I don't know. But the key drivers going forward for the next, I think, foreseeable next 2 or 3 years. We have negotiated pay deals, our pay costs with our pilots and our cabin crew will run this year and next year. Then we give that back. And we have promised to restore that over a 3-year period, which is, I think, fair and reasonable. That will give us lower salary costs.

We have much lower aircraft ownership and operating costs as we take more of the Gamechanger aircraft. We'll have significantly lower fuel costs because I think longer -- over the medium term, oil prices will be much more stable, something in the $40, $50 per barrel. But our aircraft will be burning 14% (sic) [16%] less fuel while carrying 4% more passengers.

Airport costs will be lower. I think ATC EUROCONTROL charges, where there will be less ATC delays because of significantly less capacity across Europe. And I think you're going to see many more European governments and airports roll out recovery incentives in -- through the remainder of '21 and into '22 when they realize that Lufthansa and Air France and KLM have no intention of coming back with a lot of their original capacity.

There will be a, I think, competition between state and airports to try to participate in that recovery earlier.

So if you go back to Slide 4 of our presentation, which is our operating cost slide, that shows how much lower our operating costs are than any other airline on a per passenger basis, we don't mention RASMs, CASMs because no passenger yet has ever bought a RASM or a CASM ticket.

Most of those operating cost lines, the gap between us and our competitors will get materially wider. You look at, for example, easyJet, who now have own their -- very little of their fleet. I think they own about 35% or 40% of their fleet. We will own all of our aircraft.

They've been doing sale and leasebacks at the stressed prices and high financing costs. We have lower-cost financing. Same with Wizz, for example, we were adding these aircraft, but again, our expenses, sale and leasebacks, unable to compete with us on price at any of the airports where we compete with them.

And we've seen more recently, they retreat from Trondheim. I think it's indicative of -- that they probably over expanded into markets where frankly, their business is unable to compete with the likes of Ryanair. It appears that Trondheim is not even able to compete with Norwegian, which is a fairly low bar, but it is what it is.

And I think the critical thing is that our -- the price gap -- the cost gap between us and every other airline in Europe will materially widen as we start to take delivery of a significant flow of the Gamechanger aircraft, not just in summer '21, summer '22 and summer '23.

Our next question comes from Savi Syth from Raymond James.

I understand it's your position that vaccines should replace testing, quarantine and other travel restrictions. But I was wondering if -- where you have confidence that countries are going to take that stance. And if you have any -- is there any country opportunities that stand out where maybe the government action is supportive of a faster traffic recovery or where you expect more of the competitive capacity to be removed?

I mean I think, Savi, it's my -- it's a personal view, once you -- if you take the U.K. who are certainly leading the world at the moment in the vaccine rollout program, with significant success, I think. And I've been very critical of the U.K. government in mismanaging a lot of the COVID response. But they deserve credit for the success of the vaccine rollout program.

I think politically, it will be very difficult for governments like the U.K. government, to lockdown the population beyond the end of March when they're able to announce that 50% of the population have been vaccinated, including all the high-risk groups, the over 50s, the nursing homes and the hospitals.

And vaccinating those high-risk groups means you have a significant decline in morbidities, hospitalization, death and rates of sickness. Yes, you may still have COVID in the community, but if you have COVID passing around in young people who typically do not suffer significant illness or are unlikely to be hospitalized, and certainly don't die from COVID, particularly as we move into a summer period, I think there is likely to be huge political pressure on those politicians to ease -- and governments to ease the restrictions.

And people will want to go back on holiday. If you've been cooped to up at home for the last 12 months, home schooling with children, you do not want to be locked up. You want to go and book summer holidays. And even the experience last year, before there was ever a vaccine, there was a significant recovery in holiday travel through June, July and August when we returned to flying, having been completely shut down in April, May and June.

And maybe, Michael, on the second part of that, is there any kind of [significant] countries where you see the competitive capacity coming out more so? Or is it just generally across Europe?

I think it's been -- I mean it's been generally across Europe. I mean if you look at the U.K., for example, Flybe have gone plus 8 million seats. Norwegian have completely disappeared, and they had probably about 4 million or 5 million seats in the U.K. market. Thomas Cook has gone bust. In Germany, Germanwings has gone bust. But Lufthansa has already reduced its short -- its capacity by 20%, 30%.

Across Europe, even the legacy airlines, who are receiving huge amounts of state aid, are materially reducing their capacity, both short-haul and long haul. Alitalia looks like it may be paid out again by the Italian government, but the fees is going to be cut by about 30%.

These are huge capacity reductions, and they create enormous opportunities for airlines like Ryanair to go into those spaces. As Eddie said, we joked on the easyJet withdrawal from Venice and Naples, the Norwegian withdrawal, not so much from Gatwick, but in Spain and Italy, has created huge opportunities that we are actively negotiating expansion at those airports. And the most important one of all of those has been the 4-year extension of the low-cost deal at Stansted.

We now have a low-cost -- a growth incentive scheme at Stansted that runs up to 2028, and we will all have forgotten COVID by the time we get to 2028. We will have materially lower airport handling costs in Stansted than any other airline we'll have at Gatwick or at Heathrow.

And thanks to the agreement with easyJet on their base aircraft flow, we will account for about 90% of the capacity, certainly, the overnight capacity at Stansted Airport, with a materially lower cost base that airlines will have at Gatwick or at Heathrow.

And I think you'll see the recovery in Gatwick and -- or in Gatwick and Heathrow would be meaningfully slower because of the absence of long-haul traffic. I think long haul is probably going to take 2 years to recover, partly because I think, in many cases, the Southern Hemisphere countries will not be as aggressive with rolling out the vaccines, and that's where you'd like to see more of these vaccine variants like the Brazilian one and the South African one. There will be more of those in the Southern Hemisphere.

Our next question comes from Mark Simpson from Goodbody.

Just want to pick up that comment earlier that ancillary was kind of okay.

I'm sorry. Speak up. Can barely hear you.

Yes. Sorry. Can you hear me now?

That's better. Yes.

Yes. Just on the ancillary front, I mean, it was up 2.2% revenue per pax in the quarter, which I think Neil described as okay. I feel it's sightly disappointing. We're seeing it up in double digits in the second quarter, it obviously been up in mid-teens through the previous 4 quarters.

I'm just wondering whether there's anything specific in the sense, annualization of a change? Or can we expect that to reaccelerate going forward, because, as I say, I don't think it was that -- actually, that spectacular this quarter, that performance.

Okay. Mark, I think I beg there to differ with you on that. We're generating EUR 20.40 per passenger in ancillaries, which is up 2%. We're up just about 12% on a 9-month basis.

We continue to see strong penetration in the likes of reserve seating and the priority boarding. Onboard spend, which typically in a good year, would account for about EUR 250 million in revenue, is pretty much nonexistent at this point in time. That will bounce back in due course.

And the other products will bounce back. We have a very small customer volumes, 8 million, so we're not getting the opportunities to sell a number of the products that we would normally sell. So I'm quite pleased with the 2% per passenger increase up to EUR 20.40.

And I think I'll just add to that. As we emerge out of COVID, one of the areas that's going to open up again is duty-free on flights to and from the U.K., which would account for, what, about 20%, 25% of our volumes.

We will see, I think, a reasonable upward impact on ancillaries as a result of being able to sell duty-free onboard our flight from the U.K. -- to and from the U.K. And you'll see that coming through, while still growing our penetration on things like reserve seats, priority boarding. With COVID, it's been very good for the -- in the propensity of people to take up those ancillary services.

Clearly, with small passenger numbers, in-flight sales for things like teas, drinks and snacks has been down. But that will recover strongly once we get vaccinated and we move into a post-COVID world.

Just to follow-on, how are you going to manage the duty-free? Will that be kind of collect at the arrival? Or sort of collect before boarding? How do you manage that in terms of minimizing, let's say, the disruption from the process or the weight you're carrying onboard on planes?

Yes. Mark, it's Eddie here. Yes, don't forget, like we've been experimenting with preorder as well. So we're still working through what will be the best way to start to deliver that onboard like -- and we'll probably have smaller units as well onboard so that -- to make it more attractive.

So I don't think it's -- now that you've got various solutions that people can order from their seats and some of the technology we've been trialing as well. So I don't think we'll have the same sort of logistical issues.

I'd just add the point as well earlier, you're talking about the ancillary. Don't forget that on those ancillaries as well the key ones, they've gone up much lower load factors where you don't have people tapping into necessarily higher prices that you would see. So I think that's -- I think you will see ancillaries as well sort of have -- I think it's quite an impressive performance, given we didn't have high load factors as well.

I mean you're looking at things like the Canary Islands, Spain, Portugal, those are 2- and 3-hour flights. We still see a significant role for in-flight sales onboard those flights where there is a reason or pressing need for people to buy alcohol, things like that, particularly where there's a duty-free benefit for them doing so.

Our next question comes from Stephen Furlong from Davy.

Michael, just talking more generally about Italy and the Italian market. There seems to be a lot going on there with Alitalia shrinking. And obviously, you have your base at Venice and a couple of other places. And just generally what the tourism authorities -- or Southern European airports are saying about this summer, that would be useful. Because I think there must be a big opportunity in Italy.

I think there's still a lot of uncertainty. I mean one of the challenges for a lot of the airports is they're being told by the incumbent legacy, oh, don't worry all the capacity will return when -- despite the fact they may have reduced their fleet by 25% to 30%.

A lot of that capacity will not return. But they won't know quite how much they're going -- their airport or their traffic is going to be damaged until probably summer of 2022. But there are undoubtedly, the more kind of the large airports in Italy are -- we're already in -- with the new base done, with Venice in Treviso, were on to us even before easyJet has announced -- I mean they haven't closed the base there, but they've gone from 6 aircraft down to 2.

Naples, we were the first people they called once they got the smell that easyJet were going to kind of close the Naples base as well.

That trend continues across Europe. It's happening in Portugal. TAP, looks like we're taking about 25% of their fleet completely out. There is about 4 million or 5 million passengers who are out of travel. Now clearly, Faro, Porto, are very exercised. Lisbon, less so because, again, they're not quite sure what TAP are going to do or not do, and they're sort of heavily involved in the mass protection of TAP by both -- by the government in Portugal.

But those opportunities are not going to go away. There's no other airline out there that's taking delivery of 100 aircraft in the next 2 years or 200 aircraft in the next 5 years. And I think most of the other airlines that are out there will struggle to get most of their capacity back up and running even for summer 2021.

I mean the big challenge for a lot of the legacy airlines is the long haul is clearly not going to recover to summer of 2021. I think a lot of them won't even recover by 2022. And I know a lot of their short-haul planning is designed to feed or feed into or from their long-haul operations.

And now they can protect the slots through this summer, aided and abetted by the slot wafers. But all that means is it's just not going to fly those -- the short-haul aircraft or the long-haul aircraft. So I think we will see very -- we are already seeing very significant incentives with a lot of our airport partners for the summer '21. I think winter '21, they will get even better. And I would be prepared to grow aggressively in the winter of 2021, even on the back of lower airfares because, frankly, we have much lower costs that we'll be able to sustain those lower airfares, as a way of almost boosting our capacity and our forward book into the summer '22.

We will emerge out of this with a much lower cost base, much lower than any other airlines. And we should use that to lower prices to take as much market share as we can cope with in the recovery into summer '21 and summer '22.

Our next question comes from James Hollins from Exane BNP.

A question for Neil, actually. Just wondering if you could quantify your Q3 cash refunds as well as delayed EUROCONTROL payments, and how they might play out in Q4. Better still, give us some sort of steer on Q4 cash burn.

Okay. I'll give kind of high-level numbers here, James. We would have had over EUR 300 million gone out in refunds, about EUR 200 million in fuel swaps, and somewhere between EUR 60 million and EUR 80 million in deferrals in the quarter. So you can see that, that accounts for a big chunk of the EUR 1 billion movement in cash between Q2 and Q3.

I mean there's more...

And am I right there's no ongoing conversation?

Into Q4, relatively small on the fuel swaps. We'll be looking at probably just about over EUR 100 million. Refunds, we're caught up...

I don’t think...

On the refunds, we're caught up. So we're literally -- as we're casting flights, we're refunding within the exit number of days required by legislation.

There'll be nothing significant on CapEx. Some maintenance CapEx going through, some debt repayments, and that will be the key elements where we're kind of burning the cash levels that we were talking about back in the summer. So excluding any cash that we're generating, we're probably burning somewhere in region about EUR 50 million, EUR 60 million a week, gross payments.

Okay. And then anything due from Boeing shortly?

Well, we hope to see the first aircraft coming in soon. I think there'll be some additional cash coming in from Boeing in the fourth quarter. It will be significantly less than we saw in Q2.

And our next question is from Neil Glynn from Crédit Suisse.

Just on -- again, on the subject of airports, apologies. But last week, there was a mention of hub or primary airports in Western Europe reluctance to allocate slots to competitors to flight carriers.

You're obviously appealing against state aid. But I was just wondering to what extent are you actually seeing this kind of impact today. Or is it simply more, as you've touched on, that the airports don't have the necessary clarity and can't actually make the decision?

I mean I don't know what -- where that report came to be. It's rubbish. I mean firstly, airports don't allocate slots. There's nothing to do with them. The slots are generally owned by the airlines who either use them or lose them.

I mean there's a huge amount of slots there that will be -- have been freed up as a result of the closure of the likes of Flybe, Thomas Cook, Air Berlin. There will be a lot of slots that main legacy airports that will be held back through the slot waiver program. But that's largely at the big slot-controlled airports that we're not interested in, like Charles de Gaulle, Heathrow. There will be no slot available I think in Gatwick. It's one of the reason why Wizz will struggle to get into Gatwick is that there will be very few slots handed over in Gatwick. And easyJet looked like they've successfully moved to get hold of the Norwegian slots, and we'll probably block them out of that.

But I mean at any of the other airports, we want to grow at -- And I give you by way of examples only, Madrid, Barcelona, Rome, Fiumicino, Stansted, Dublin, Lisbon, we could do with some -- freeing up of some of the TAP slots. But if we don't get them in the short term, they'll come eventually.

But other than that, we will be expanding aggressively, I suspect, in Faro and in Porto. So there is no airport slot restrictions to our growth and expansion over the next year or 2. And we could happily allocate -- if I could get all 200 aircraft from Boeing in the next 3 months, we could happily allocate all those aircraft in the next 3 to 4 months, without any slot restrictions whatsoever.

But I think what is likely to happen at those main airports, the Charles de Gaulles, the Schiphols, Heathrows, their traffic recovery will be a lot slower only because long haul will take longer to recover. They will not be able -- I mean the legacy airlines will sit on the slots, fine, that's their problem. But if those big hub-and-spoke airports suffer for another year or 2, it frankly couldn't happen to nicer people.

In the meantime, the sensible or intelligent ones will already have done growth incentive agreements with Ryanair and be returning to very strong growth.

Our next question comes from Jaime Rowbotham from Deutsche Bank.

I wanted to also focus on cash quickly. Obviously, you'll hope that the next 2 quarters might bring in some cash in the form of bookings. If it doesn't, will you be happy letting the gross cash balance of the group move down from EUR 3.5 billion to EUR $2 billion with those debt repayments or possibly lower, I guess?

Or might you then call upon the unencumbered fleet that you regularly mentioned for some asset-backed loans? And just linked to that, you'll have seen the partially government-backed U.K. export finance loans extended to easyJet and British Airway. Is there anything similar that Ryanair could or would ever look to explore?

Yes. Okay. Yes, I think we're reasonably confident with the cash position at the moment. For the obvious reason, would be we expect a strong recovery into the summer of this year, and that will fire up the cash flows. I mean we'll be getting -- receiving in those bookings or the cash flow bookings, typically 6 to 8 weeks prior to travel. And the expenses don't go for 1 month or 2 months after travel.

But if that doesn't emerge, I'm still -- I think we're still reasonably confident with our cash position. We expect to repay the U.K. government loan of EUR 600 million in March. We have a bond repayment of EUR 850 million in June. We would expect to comfortably repay that from the current cash position.

I will be happy to see our cash run down to EUR 2 billion, EUR 1.5 billion, EUR 2 billion. I wouldn't want to see it go down below EUR 1 billion. But we have numerous sources of additional financing out there open to us at the moment if we want to tap into them.

We have a huge unencumbered fleet. The bond market is open to us at much lower rates than -- for example, we looked at the U.K.-backed government loans. I mean easyJet and (inaudible) are paying about 3% cost of fund -- cost of financing on those loans. It wouldn't be attractive to us...

Heavily secured as well which (inaudible)...

We think we could readily -- we're, I would say, inundated -- we are inundated with offers from people who want you to lend us money, both on a secured and an unsecured basis, at typically half those rates or less. We haven't drawn them down because, frankly, we don't see the need to draw them down.

And I think people need to look more into the medium term. The vaccines are coming. The rollout is coming. There will be more vaccines licensed.

But nevertheless, we run kind of downside scenarios and delay scenarios. And there's nothing out there we can see at the moment that would require us to raise additional debt this year. But if we need to, we can and we're confident we can and we will.

Our next question comes from Alex Paterson from Peel Hunt.

I'm just wondering if you can give a bit more color on fares in the third quarter. So they were down about 1/3 on the prior year, a much bigger decline than in the previous quarter. Is that because of a different booking profile or change in mix? What's happened there, please?

Fares have been down. The booking profile has got much later. In the third quarter, people are only making bookings if they really needed to travel in a -- over a reasonably short horizon. And then with a lot more flying was being done on domestic routes in Spain, in Italy and in the U.K. than international travel. But also the December, that fourth quarter -- the third quarter is also a period where historically yields fall anyway. You're down -- you're not dealing with the high-yielding summer people going on holidays or school holidays.

We also lost our peak for Christmas.

Yes, at very short notice. I mean the U.K. brought in those -- or many EU countries brought in those U.K. restrictions on the 19th and 20th of December. We expect there to be a reasonably strong and robust recovery of fares into the summer of 2021 if, and again I keep going back to the vaccines rollout, people start moving again.

The yields would build slowly because clearly, our forward bookings in the summer are lower than they would be historically at this time of the year. But we think they'll recover strongly as vaccines roll out and people are more confident they can go on holidays during July, August and September.

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

Yes. I have 2 questions. Firstly, can you kind of quantify what percent of the fleet and crew are flight-ready right now?

And then secondly, in terms of the new aircraft, how are you thinking about it in terms of adding new bases or new frequencies on existing routes?

Okay. Well in relation to fleet and the crew, 100% are current. We're operating, as I said -- and we've consistently taken the view through the pandemic, even where we don't have sufficient flights, like when we were entirely grounded in the June quarter last year, we were operating empty flights on a weekly basis to keep the critical -- wanted to keep the aircraft current.

We will not -- we don't want the aircraft losing currency because they're going to go back in for May to December before you put them back in the air. So each aircraft, I think, has to fly once a week. That, we've maintained. We're maintaining all our crew currency as well. And so we're ready to pounce on any reopening and to rapidly accelerate into any reopening.

On new aircraft, again, as always, we will be opportunistic. The first couple of planes will largely go to the main maintenance bases. So Dublin, London, Stansted, probably Milan, Bergamo. And I'd say, Boeing will take their aircraft into Katowice -- or to Krakow or Katowice in Poland. Krakow in Poland, where we have substantial maintenance. But I think with a new aircraft type, we need to make sure that for the first couple of months, we're operating essentially from and to main maintenance bases, so if there's any issues, our engineers can address it immediately.

But other than that, I think as we roll into next winter and we begin to spool up from the first day 20 or 25 deliveries to the second 50 aircraft for summer 2022, the aircrafts will be allocated across those bases and those airports who are coming up with the best growth incentives. There are a number of airports, too, who are very attracted by the fact that these aircraft reduce the noise envelope by 40%. And so those airports that are under pressure, I think, from the environmental lobby are also incentivizing us to base these aircraft or fly these aircrafts to those airports.

But in general terms, the aircraft will be based and we'll fly to those airports who are willing to incentivize the aircraft. And we're having -- the nature of the kind of disclosures we're haveing at some of those airports is we won't be charged for the extra seats, we would be moving more towards a landing fee payment rather than a per passenger payment.

Now it would still only be a 4% reduction. But all these 4% reductions add up very quickly.

Our next question comes from Hunter Keay from Wolfe Research.

The 200 million passenger target by fiscal '26, can you get there if the MAX 10 is either canceled or delayed?

We certainly can't get there if it's canceled. But I don't see any likelihood of being canceled. Like the MAX was certified as return to flying in North America in December. There's been no issues with it. It's accomplishing many hundreds, if not thousands of flights taking on the wing in North America, in Brazil and Canada.

It has been released to return service here by EASA last week. We expect to see the first couple of flights on MAX aircraft here -- or the grounded aircraft return to service probably in February or March, as the European travel restrictions are lifted.

But -- so I -- assuming there is no significant interruption in either the MAX return to service or the MAX deliveries, then, no, we're very confident we'll get to 200 million passengers by 2026. If there is some unforeseen development or delay in the -- either the MAX air (inaudible) or in the MAX deliveries, then yes, that date might get pushed back.

Yes. No, Michael, I'm sorry, I'm talking about the MAX 10, specifically, the 737 MAX 10.

The MAX 10, so MAX 10 is not factored into our numbers for the 200 million, Hunter.

Yes.

That's predicated on our existing orders.

The MAX 8200s.

The 8200s coming in and exiting some of the older aircrafts from the fleet. The MAX 10 would really be incremental growth from 2025 onwards.

And we are already in discussions with Boeing on MAX 10. Now the MAX 10 delivery has been pushed back because they have more issues to accomplish with the FAA, the asset to deliver to MAX -- or to get the MAX 10 certified.

But as soon as they start making them and delivering them, we would certainly be there looking to order them. We think the MAX 10 will give us yet another operating cost saving on top of the already impressive operating cost savings delivered by the MAX 8200s, the Gamechangers.

Our next question comes from Gerald Khoo from Liberum.

One from me. You've set out wide range for passengers for next year, 80 million to 120 million. I was just wondering what sort of load factor assumption underpins that. Are we still talking about the 70% that you're targeting at the moment? Or are we getting towards the sort of 90% plus that you get in a normal year?

Again -- I mean we're loosely looking at kind of -- we try not to run any operation. We don't have 70% load factor, but it's kind of predicated around a 70% load factor in the first 2 quarters rising to maybe an 85%, 90% load factor in the second 2 quarters -- or the second half.

Now we don't see ourselves going back straightaway to 93% or 94% load factors. But we do expect the load factors to build. And we will still be reasonably, I think, effective at maintaining reasonably high-low tax demand.

The one figure I look from both the Wizz and the easyJet numbers, that's because their load factor fell to mid-low 60%. We've generally maintained a load factor above 70% through the third quarter.

And we'll expect to do so again or there might be a bit of a struggle into the fourth quarter just because there's so few airplanes flying. But -- so I think we're operating generally 70% in H1, growing to 85%, 90% H2. It could be a little bit higher and that could be a little bit less than that.

Our next question comes from Duane Pfennigwerth from Evercore.

Yes. Can you speak to the significant spike upward in bookings that you referenced earlier in the script? Can you put that in context? Or put any numbers to it relative to what you have been seeing?

No. I wouldn't want to put any numbers. Look, I mean there's a significant back offer, but off a very low base. Since we ran the jab and go over Christmas into the New Year, we've seen a significant uptake in holiday bookings out of the U.K., in Germany, Spain, out of Ireland.

But as I said also, we're running materially behind where we would normally have been this time of the year for forward bookings into the summer holiday period. So we have a bit -- a way to go to catch up. We think that would be caught up very quickly once there's more confidence in the vaccine program and the removal of lockdown restrictions and travel restrictions.

We think it would snap back a very strongly, and I go back to the experience we had last summer when the U.K. removed the Canary Islands from their lockdown restrictions. There was a massive surge in bookings, almost instantaneously, not just onto our service, but most of the airlines operating between the U.K. and the Canaries.

I think you'll see more of that. But -- so I wouldn't want to over egg it or mislead people. There's been a significant upward spike in bookings, but off a very low base since Christmas for holiday travel to sun destinations in the summer. But we're still running well behind where we would have been this time last year for those destinations.

Unfortunately, that's all the questions we have time for, so I'll hand back to the speakers for any other questions or (inaudible)...

Okay. Thanks, everybody, for participating. We have a number of investor calls. And I think there's a number of group investor calls which we're organizing today and tomorrow. I mean a lot of this, we don't have much more information to give you. We are somewhat in the lap of the gods with the vaccine rollout program. But I think pretty quickly, the narrative during the month of February is going to move away from lockdowns and restrictions, towards vaccinations and the removal of restrictions.

And I think the success of the U.K. program is going to put enormous political pressure on the European division and on European national governments to get their finger out of their a(expletive) and accelerate the vaccine programs. Yes, there will be some production issues. But largely, with more vaccines, and particularly the Johnson & Johnson vaccine when it gets licensed, that would be -- the issue will not so much be about production and supply as delivery -- logistics and delivery into the population of Europe.

But I would be reasonably confident at this point in time that the success of the U.K. program will now be -- have to be mirrored across Europe and that we'll see a reasonable return to relatively high-volume travel in the -- our second quarter, that key July, August, September quarter.

First quarter will be disappointing because of the stringency of the lockdown in the January, April -- January, February, March quarter. Easter will be a write-off, and that will carry forward into April. I mean it may be sluggish.

But again, I go back to our key fundamentals. When we return, we will return with much lower operating costs, lower-cost aircraft, lower-cost airports, lower-cost fuel, more efficient aircraft and in a market where there would have been meaningful capacity reductions. And I think we will be moving very quickly to exploit those opportunities and to get people and the tourism industry back to work, hopefully, through the summer of 2021 and certainly, before we get to the autumn of 2021, autumn/winter 2021.

Okay, folks, thank you very much for participating. We look forward to speaking to you over the next couple of days. And if you want a call or to join one of the group calls, please contact Peter, Neil here in the investor relations team. We'd be glad to add you.

Thanks very much, everybody.

God bless. Bye-bye.