Ryanair Holdings PLC (RYAAY) 2003 Q3 法說會逐字稿

Welcome to today's Ryanair Q3 results conference call. (OPERATOR INSTRUCTIONS).

Just to inform participants that today's conference call is being recorded.

I would now like to introduce your Chairperson today, Mr. O'Leary.

Please begin your meeting, sir, and I shall be standing by.

Good afternoon ladies and gentlemen.

Welcome to the Ryanair Q3 conference call.

I am here in London;

Howard and Michael are at separate locations in Dublin.

Normal format, we'll go through a statement, then MD&A, and open it up for questions.

Today, or this morning, you will see (indiscernible) these results are all posted on our Website in the financial news page.

Released financial results for the quarter ending 31 December showing record profits and traffic figures while passengers benefited from fares there were on average 11 percent lower than the equivalent quarter last year.

Traffic in the third quarter grew by 54 percent to 6.1 million, while average fares declined by 11 percent.

Total revenues rose by 37 percent, operating costs rose by 42 percent, significantly less than the rate of traffic growth, as unit costs fell by 8 percentage points.

Our after-tax margins declined from 23 to 19 percent for the quarter, and adjusted net profit after-tax rose by 10 percent to EUR47.5 million.

This quarter marked a number of important milestones in our growth, as follows -- one, we overtook (indiscernible) to again become Europe's largest low fares airline; two, we overtook BA's (ph) token U.K. and European traffic, making Ryanair Britain's favorite airline; we selected two more new European bases in Rome and Barcelona, one of which started flying this morning, the other starts early next month; cumulative after-tax profit margin continues to be significantly over 20 percent, and closing cash balances at the end of the quarter amounted to a record EUR1.12 billion.

As is consistently highlighted in previous quarterly statements, we remain very cautious in our outlook for fares and yields.

Based on initial bookings for the first three calendar months of 2004 -- that is quarter four of '03, 04 -- we now expect that yields during this final quarter may decline by between 25 to 30 percent over those recorded in the comparable quarter last year.

These reductions in fares are significantly greater than the 10 to 15 percent range recorded over the first three quarters.

If these lower fares and yields occur, bearing in mind we have not completed yet even the first month of this quarter yet, then we would expect net profit before exceptions for the fiscal year to reduce by up to 10 percent, from a net profit of EUR239 million last year to approximately EUR215 million for the third fiscal year.

We're very pleased with the strong growth in traffic and profit for the third quarter, which demonstrates again the success of our strategy of rapid capacity expansion across new bases and new routes over the past year.

The year reduction of 11 percent, although greater than originally expected, has stimulated a 54 percent increase in traffic, whilst an 8 percent reduction in unit operating costs has ensured that our strong probability continues.

Early indications for yields in our fourth quarter suggest a marked further reduction of between 25 to 30 percent, due to -- one, our continuing substantial capacity growth; two, the launch in January and February of two new bases at Rome Ciampino and Barcelona Girona; three, the impact of the Sterling's continuing weakness against the euro.

The majority of our traffic still originates in Sterling, we report in euros; four, intense price competition all over Europe as the result of enormous capacity growth, particularly from chronically loss making start-up airlines and flight carriers.

There is therefore considerable downward pressure on fares and yields, as many of these loss making making airlines try to compete and survive.

Despite this difficult market, Ryanair continues to profitably develop new routes, new bases, and grow market share.

In many cases, Ryanair is leading the downward pressure on prices and yields, but unlike our competitors we continue to generate more leading profit margins as a result of our aggressive cost management and lowest cost base.

Ryanair's strategy continues to be successful all over Europe.

Traffic has grown by over 50 percent so far this year.

We have in the space of 12 months launched 4 new bases in Europe. 73, or 50 percent, of 146 routes are still in their first year of operation.

While we now expect after-tax profits for the current year to dip slightly, our annualized profit margins will still be in excess of 20 percent, and Ryanair will continue by some considerable distance to be the world's most profitable airline by margin.

We've seen a number of these cycles in the industry before.

Ryanair continues to grow strongly and profitably, even during periods such as now when fares and yields are being lowered at a faster rate then we originally predicted.

Our response to these market conditions will be to continue to lower fares and yields.

We will continue to exploit our huge cost advantage over our competitors and tightly manage further cost reductions so that we can continue to deliver industry-leading low fares and profit margins.

Our determination to continue to reduce fares and yields is strengthened by our experience in recent quarters, where many competitors have been forced to reduce their frequency and capacity, or withdraw altogether from markets where they compete with our low fares.

Looking forward to the next fiscal year '04/'05, it is impossible in the current climate to make accurate forecasts on fares and yields other than to state that Ryanair will always offer the lowest fares in all markets.

Despite this overall caution, we expect the yield decline next year to be of a lower order of magnitude for the following reasons -- firstly, we do not expect any further weakness of Sterling against the euro; secondly, from May onwards, Ryanair's rate of capacity growth will fall from over 50 percent in each of the past two years to just over 20 percent per annum; thirdly, initial bookings suggest that the two new bases at Rome Ciampino and Barcelona Girona will be significantly stronger performers than some of the new routes and bases launched in previous years.

An indication of that is the fact that the load factors for February and March in both Barcelona and in Rome are already above the system-wide average.

We are confident that the average seat cost for the coming year will continue to decline strongly, thanks to continuing cost reductions, the higher proportion of more efficient 737 800s in service, re-delivery of the Buzz BAe146 aircraft, and other recent leasings.

The weaker U.S. dollar will also have a positive impact on fuel, aircraft, and spares costs, whilst there will be continued strong growth in ancillary revenues.

We are also initiating a detailed review and reduction of certain elements of our cost base which include -- A, reducing airport and handling costs where Ryanair continues to deliver exceptional growth, while at the same time reducing capacity at those airports that do not share our commitment to lower air fares for consumers;

B, we're already in discussions with the lessors to reduce to market rates the lease costs on some of the former Buzz aircraft.

These leases are already the subject of legal dispute and in pending proceedings, and if these are not successful then the aircraft will be returned and Buzz Stansted Limited the company will be wound down and closes;

C, we are renegotiating our long-term maintenance contracts on the basis of our larger fleet size, and we are reexamining the timing of our fleet deliveries in order to ensure the capacity growth is maintained at 20 to 25 percent for the next number of years.

Even in light of this revised profit guidance for the current year, Ryanair will continue to be one of the world's fastest-growing, and certainly the world's most profitable airline by profit margin.

Our net after-tax margin will continue to exceed our benchmark target of 20 percent for the current year, despite an enormous and certain reduction in fares and yields.

Our response to competition in all markets will be to beat it by offering lower prices, number one customer service and continued cost reduction.

Like Southwest in the United States, Ryanair's model is successful.

It is by some distance the lowest cost operator in Europe.

We continue to enjoy the support of the traveling public, and we remain tremendously profitable, as well as enormously cash generative.

Our cash balances at the end of Q3 exceeded EUR1.12 billion.

Some of our loss making competitors will continue to cut back routes or terminate them, some will consolidate, and some will disappear over the coming years.

But we remain determined to ensure that Ryanair, the lowest cost airline in Europe, continues to grow and continues to be profitable.

We are building here for the long-term, and we believe that investors can continue to share our confidence in this growth story.

I'll hand over now to Michael Cawley, who will take us through the MD&A for the quarter.

Howard, Michael I think.

Howard?

Hello?

Can you hear me now?

(indiscernible) Howard?

Profit after-tax, excluding exceptional cost of 6 million net of tax on goodwill of 0.6 million arising from the Buzz acquisition, decreased by 5.1 percent to RUR41 million.

This profit also includes an additional depreciation charge of EUR0.5 million relating to an adjustment of residual value of the Boeing 737 200 aircraft that was retired earlier than planned.

Adjusted profit after-tax, excluding goodwill of 0.6 million and exceptional costs, are comprised of aircraft depreciation of EUR0.5 million and leasing cost of EUR5.5 million net of tax, increased by 10.2 percent to 47.5 million.

For the purpose of the MD&A and discussion and analysis below, it is by reference to the adjusted profit and loss account, excluding exceptional costs referred to above.

Therefore, for a summary then, profit after taxes increased by 10.2 percent to 47.5 million, compared to EUR43.2 million in the previous quarter ended December 31, 2002, driven by continued strong growth in passenger volumes and tight cost control, partly offset by lower average fares.

Operating margins have decreased by 2.6 points to 23.6 percent, whilst operating profit increased by EUR11.4 million to 60.1 million compared to the (indiscernible) period in last year.

Total operating revenues increased by 37.2 percent to EUR255 million, while passenger numbers increased by 54.4 percent to 6.1 million.

Scheduled passenger revenues increased by 37.5 percent to EUR216.4 million, due to strong passenger volume growth off by a 10.9 percent decline in average fares during the period.

Ancillary revenues increased by 35.4 percent to EUR38.6 million, which is less than the growth in passenger volumes and reflects strong growth in non-flight scheduled revenue, (indiscernible) and hotel revenue, offset by the cessation of the charter program, as Ryanair replaced charter capacity with (indiscernible).

Ancillary revenues were also negatively impacted by the strength of the euro versus Sterling, as 65 percent of ancillary revenues are denominated in Sterling.

Ancillary revenue, however, excluding charters, increased by 45.4 percent, and now accounts for 15.1 percent of total revenues compared to 14.3 percent in the quarter -- in quarter three of fiscal '03.

Total operating expenses increased by 42 percent to EUR149.9 million, due to the increased costs associated with the higher level of activity -- primarily staff costs, fuel, route charges, depreciation, and airport and handling costs associated with the growth of the airline.

Costs continued to increase at a lower rate than the growth in passenger numbers, principally reflecting the increased operational efficiencies arising from the higher proportion of 737 800 aircraft operated; however, they increased at a faster rate than the growth in revenues due to increases in yields, as described above. (indiscernible) expenses declined significantly by EUR7.1 million, due to lower deposit interest rates and higher interest payable arising from the increased level of debt during the period.

Net margin of the results of the above declined from 23.2 percent to 18.6 percent, whilst net profits increased by 10.2 percent to EUR47.5 million.

Adjusted earnings per share have increased by 9.6 percent to EUR6.27 cents.

On to the balance sheet.

Cash and liquid resources have increased by EUR64.4 million, from EUR1.060 billion at March 31, 2003, to EUR1124.7 thousand million at December 31, 2003, reflecting the increased cash flows from the possible trading performance during the period.

Nine additional aircraft were delivered in the period, one of which was financed via an operating lease, and these -- in addition to aircraft deposits -- accounted for the bulk of the EUR338 million incurred in capital expenditure.

This was part funded by the draw down of long-term debt, which increased net of repayments by 135.6 million during the period.

Shareholders funds at December 31, 2003 have increased to 1.457 billion compared to 1.241 billion at March 31, 2003.

I'll now hand you back to Michael for the Q&A.

Thanks, Howard.

One further thing I wanted to touch on before we open up to Q&A -- we sent out a notice to the stock exchange last week saying we were bringing forward their results presentation to today from the 3rd of February, because we originally received notification from Brussels that the decision on the Charleroi case would be forthcoming next week on the 3rd of February.

And we wanted to separate, or at least deal with, the financial results from the roadshow this week in advance of -- to give us time to deal with the Charleroi decision next week.

It would appear that as a result of that, the decision, or the draft decision appears to be being leaked in Brussels; it's coming leaked out from the commission.

We received, or our people received a briefing on it on Monday evening.

I stress that we have not seen the text of the document, and therefore, there are still some gaps in our understanding that won't be cleared up until we see the final draft of the document.

But what we have gathered thus far is as follows.

Firstly, the spin coming from the commission is that it is a balanced decision with some positives, some negatives.

This is completely untrue.

This is about as negative a decision for low-cost air travel, competition, and low fares in Europe as it is possible to have drafted.

The jest of it is as follows -- quite uniquely, the commission appears to be trying to ban or declare illegal any discounts on landing charges or handling charges at a publicly-owned airport, such as Charleroi, in this case; they're also coming up with an entirely arbitrary limit on marketing support that would limit those marketing supports to a 3-year period.

We have tried to inquire why three years, why not one year, why not 4.5 years, and all we get is -- well, 3 years seemed like a nice round number; and there is a further concerning finding in it, in that originally we had been (indiscernible) we are strongly of the view that this would only apply to publicly owned airports -- obviously, such as Charleroi, some of the French airports and some of the Spanish airports.

There is some provision in this agreement whereby the Commission appears to be trying to use the Charleroi decision to impose or reverse this kind of communist non or uncompetitive framework or rules on the entire industry in Europe.

There is a phrase that says the guidelines established in the Charleroi case will become the precedent, and in order to have a level playing field, shall also become the guidelines for even privately-owned airports who have been (indiscernible) who are or have been in receipt of public funds.

Now, we're not quite sure what that means, but it seems to be an attempt by the Commission to -- firstly, prevent publicly owned airports from allowing any discounts on passenger or landing charges, and then to further extend that by somehow trying to back it into privately-owned airports where they are or have been in receipt of public funds.

This is a pretty bizarre decision, particularly in the case of Charleroi, where for example, Ryanair is profitable.

The airport, which had no traffic prior to our flying there in 1998, had no traffic.

And the airport itself is now profitable and very happy with the deal.

If the decision comes out like this, there are a number of consequences.

One, clearly, we'll appeal the decision straight away to the European court, and it would seem to be so bizarre we would be very hopeful of overturning it; secondly, however, it finally deals or (indiscernible) deals with the belief of a number of other airports, and indeed, governments, that this was a Ryanair issue or a Ryanair problem -- it would only apply to Ryanair.

This decision, if it comes out in this form, will apply to almost every other, certainly low fares airline, including the likes of easyJet, who have deals at Berlin Schonefeld (ph).

Now I know their line is that, oh, we don't receive subsidies; well, it is exactly the same as Ryanair's line; we don't receive subsidies either.

We go negotiate discounts but we don't believe that discounts negotiated by a privately-owned company represents subsidy -- it is simply a discount.

But it would clearly call into question the Berlin Schonefeld deal.

If they can extract or extend this to such an extent that it applies to publicly-owned airports, or privately-owned airports that have a public element, it would also apply to London Luton -- one of their bigger bases -- Liverpool, and a number of the other bases where they operate as well.

This was raised yesterday in Brussels at the launch of the European Low Fares Association, where the ten members were equally clear in highlighting that, of course they receive discounts and negotiate discounts on both landing and handling charges at many of the airports in which they fly to, and that this decision -- if it is implemented -- would clearly increase their costs at those airports and force up the cost of air travel.

This decision as drafted is about as negative as it is possible to get.

It will clearly have the effect of increasing costs at airports, if airports are somehow -- we're not quite sure how -- but airports are to be denied the right to provide discounts on landing and handling charges, and it would clearly increase air fares for passengers all over Europe.

It is difficult to conceive how anybody like the European Commission, which purports to be advocating competition and deregulation, could possibly draft such a backward judgment that sets back competition and deregulation by about 5000 years, or at least takes us back to Stalinist Russia of about 1916.

Having said that, if the decision comes out in this format -- and I know we've been asked (indiscernible) already here you this morning -- bizarrely, one of the airports that would be least affected by this decision would be Charleroi.

Because we're the only airline flying to Charleroi and Charleroi is already profitable at our discounted arrangement, it would seem on the surface of this decision that all Charleroi has to do is to redo its published landing charges to reduce the published rate of landing and handling charges to the actual rate we pay, thereby eliminating any discounts whatsoever and bringing Charleroi within the terms of -- the terms of this bizarre finding.

It would, however, have very damaging impact on a number of -- so Charleroi and Ryanair would seem to be least affected by this decision if, as I said, the final decision takes this format.

It would have much more damaging consequences, say, at French regional airports, like -- and I use for example, Strausberg -- where previously Air France were flying Strausberg to Paris, paying the full charges and charging outrageously high airfares, were on the point of pulling the London service, Strausberg came to us and offered us a low-cost deal in order to deliver them a lot of passengers on the service -- we went and delivered -- increased the traffic from 2000 a month with Air France to 20,000 month.

It would appear to us that the French regional airports couldn't do that, because they couldn't be in a position of reducing the charges for all the airlines, like the Air France service to Paris and the Ryanair air service to London, because they would simply lose money.

It would also appear, though, that if that is the case -- and one of the other guidelines here is that the airports must recover all their costs.

That being the case, then it would seem that most of the French regional airports will be confined to just having an Air France feeder service to Charles Degal (ph), that that feeder service will now have to pay for the entire operating costs of the French regional airports -- and we estimate conservatively at Strausberg that it will quadruple Air France's passenger charges, given that it would be the only service at the airport, in order that the airport will not (indiscernible) a loss.

We had a very interesting development yesterday as well, where Munich airport announced, I think the figure was a loss of a billion for the coming year, EUR1 billion for the coming year.

And, clearly, under these new guidelines, the airport will have to pass on those costs to the major airlines flying there, which is principally Lufthansa.

We estimate that that will increase Lufthansa's charges at Munich by 20-fold on a per-passenger basis, rendering Lufthansa probably bankrupt At Munich airport.

So this is the extent of the ludicrously stupid nature of the decision thus far, we take the view that this decision, as we have been briefed, is going to come out next week, that it will be in this format.

And that is why the Commission is leaking it out already.

There are a number of things that the politicians could do to interrupt this, but we suspect that it's going to cause uproar in European aviation, simply because it pretty much renders any discounts on landing or passenger charges at publicly-owned -- and maybe some privately-owned airports -- now illegal, requiring them to charge full charges.

We still don't know, for example, what full charge is at an airport.

And again, if you take the example of Charleroi, Charleroi had no traffic before we went there in 1998, yet it had air traffic control, baggage handlers, check-in people and all the rest of it.

It's very difficult to understand what exactly the full cost of that should be, but clearly no regional airport -- or no airport that is empty like Charleroi -- can now ever compete for traffic if it has to recover its full costs under these kind of quite bizarre rules.

That is our interpretation of the basis of the briefing we received on Monday evening.

We think this is a decision that is going to be very damaging for the entire low fare sector across Europe.

Do not believe those who in other low-fares airlines who wish to pretend that this won't apply to them because they don't receive subsidies; we don't receive subsidies either.

We have negotiated large discounts at under-used airports in recent years, which we pass on in the form of very low airfares.

Southwest Airlines in United States, for example, has a record over the years of getting cities and states to compete against each other and coming together with exceptional cost deals on airport facilities.

In some cases they throw in the kitchen sink.

You cannot have a competitive airline or air transport industry in Europe if you're going to have an uncompetitive airport regime as a result of a bizarre and backward-looking decision from the European Community.

But that appears to be the way we're going.

We're limited in the amount of answers we can give, (indiscernible) we've tried to on the Charleroi decision, until such time as we see the actual text of the decision.

But that is our briefing on it, based on what we have seen thus far, which is largely a briefing we got on Monday night and some of the spin that we have seen coming from the European Commission in the interim.

With that, we will now open it up to questions and answers.

We will try to deal with your questions and answers as best we can.

Just before I do so, bear in mind everything we say today is on the basis of -- this continues to be another very strong year for Ryanair. (technical difficulty) by 50 percent.

Our margin for the first time since (indiscernible) in 1997 there will be a small dip in profits.

There has always been, and was always going to be a year, when there is going to be a dip in profits.

Our dip in profits will take us from a record year last year, when the margins were about 29 percent, down, we believe this year, to about 24 percent.

That margin is still a greater margin than any other airline anywhere else in the world.

The underlying model continued to be robust, we continued to grow very strongly.

Unit costs in the last 12 months were reduced by 8 percent, which was ahead of our target of 5 percent, it's just that the fares fell by further than we expected.

I think we are in a period, obviously, of intense competition in Europe.

There is undoubtedly a land-grab going on.

We have built most of the architecture, or the network architecture over the past two years, with seven bases on the continent of Europe.

The next closest to us in terms of size of scale, easyJet has one base in Geneva, and as that investment is to come yet, we already have it done.

And I think that is reflected in the faster start of or the faster performance of the two new bases in Rome and Barcelona.

So I think -- although I would say this, investors should be conscious that it is another good year -- the margins are north of 20 percent, the profits will still be north of 200 million.

Nobody else comes close, and we have over 1.1 billion in cash.

So if there is going to be intense price competition and fare wars for the next year or two years while the market sorts itself out in Europe, then we say Godspeed; let the games commence.

Okay, that is the end of mine.

We will now open it up for questions and answers.

(OPERATOR INSTRUCTIONS).

Chris Avery.

J.P. Morgan.

Two simple questions, maybe the answers aren't so simple.

First of all, what would the year to March '05 be looking like without anything coming out of Brussels?

You would be at 20 percent capacity growth for the whole fiscal year, yields would be catching up.

Would you have been looking for earnings growth as strong as something like 20 percent if it had not been for the EC?

And the second thing is can you just help us a bit with aircraft deferrals that you have alluded to but not given any detail on?

We have nothing in our figures to '05 that takes any account of the Brussels decision yet.

We would still at this point in time to the next year, given the aircraft deliveries we have, we see capacity growing by 20 percent, traffic -- load factors coming up a couple of points, so traffic growing by 22 percent.

We would still, absent anything in Brussels, expect airfares next year to fall by about another 5 percent, and operating costs to fall by another 5 percent.

That would leave us about in line for, heading for a 20 percent increase in profitability, off the lower base that we're now going to record this year.

We now believe, based on nothing other than the first quarter is (indiscernible) than that, that the yield decline for the next 12 months will be somewhere greater than 5 percent and lower than 20 percent.

Remember, our benchmark yields comparable year on year will be significantly lower than they were last year.

And what drives that is the competitive situation in various markets.

Now, we will meet with a lot of investors and analysts over the next couple of days.

There are significant underlying changes taking place in the marketplace (technical difficulty) are -- as long as our competitors are reducing their capacity very significantly.

In some cases they are (indiscernible) routes the months some cases they are reducing capacity very significantly, in some cases they're (technical difficulty) routes.

In some cases they're reducing capacity on our existing routes.

And in some cases, like with our new bases in Rome and Barcelona, some of the German airlines have canceled route launches even before they have decided -- even before the commencement date of flying, as a result of our launch of their own Barcelona bases.

So I think the situation as we have tried to (indiscernible) this morning is just too uncertain on yields, so we expect traffic growth next year 22 percent; we expect operating costs to fall by another 5 percent; and therefore, absent any move on Sterling, (indiscernible) of the gods where the yields will fall.

Regardless of that, we will still record another very strong year of traffic growth, we will still be very profitable, we will still be very cash generative.

And if there's going to be fare wars through the next year, then we say fine, we will offer lower fares than anybody else.

start here

The second half the question (indiscernible) the next 12 months.

We are looking, based on our initial firm orders which is a little bit lumpy over the next three or four years.

Not by a lot, this is not going to change anything significantly.

We may be differing three or four aircraft one year, bringing some forward by a couple months.

We just want to have a much more phased delivery of capacity growth for each of the next four or five years of about 20 percent per annum.

And I say that against the backroad -- I am certain that there will be a lot of analysis yet that said we grew too fast and -- 60 percent capacity load issue was much too much.

To which I would answer, well, we did 55 percent capacity growth last year and we did a 59 percent increase in profits.

Part of the down turn this year is related to an absolutely exceptional year last year, and we were the first people to warn all through last year this will not be continued -- these are exceptional results.

Nevertheless the results for this year will still be the second year, set of results, in terms of profit margin, cash margin, balance sheet -- we have ever recorded.

Okay I will stop there, thanks.

Robin Horine.

Robin Horine.

CSFB.

I've got two questions.

You're quite positive or confident in your outlook regarding Rome and Barcelona for '04, '05, I just wonder what is behind given that they were contributory sectors to today's profits warning?

And the second question is that over the first three quarters of the year, we saw a marginal improvement in the yield trend going from -15 percent in Q1, to -11 percent and in Q3, and suddenly we got hit by this whammy of -25 to 30 percent in Q4 -- I just wonder what changed significantly between Q3 and Q4?

Thanks, Robin.

Barcelona and Rome -- we're quite bullish only to the extent that the initial indication, the initial loan factors, are advance bookings through February and March -- which are the first two full months of operation -- our head in the system wide load factor for the Company -- the more established routes.

That is the first time that has happened to us in our experience before.

However, some of that is that is on the basis of very low introductory fares and offers, at January and February.

Which does have an impact on the yields in January and February.

Now, it does not account for half or quarter or even 10 percent of the yield decline in the first quarter.

We don't have an explanation for the yield decline in the first quarter.

We speculate that there is intense price competition, I mean -- we see Easy Jet, for example, have launched two seat fares in the month of January, where tax inclusive prices is below the taxes on those routes.

Easy Jets has position on that where it's not that many seats, it was about to 250,000 or 400,000 seats -- yet, (expletive) -- you're still selling seats at below the taxes and charges you have to pay.

BA is black advertising all over the U.K. in January with seat fares everywhere -- we know that, for example, last week might travel light -- which we wouldn't really wage as much of competitor -- but it operates on the Dublin/Birmingham route.

It is selling seats at one pound for -- during the period of the Cheastnum (ph) racing festival, which, for those of you in the know, is a bit like the equivalent of the HADGE in Ireland U.K. and on the Dublin/Birmingham route.

There is a lot of stupid competition out there, and a lot of airlines lose a lot of money.

And frankly, about the only reason we can explain why yields have suddenly fallen from a fairly consistent 10 to 15 percent in the first three quarters, to 25, 30 percent in the fourth quarter, is somebody dumping prices all over the place, and we are dumping them more than anybody else.

There isn't much of an impact on Sterling in the fourth quarter, and Sterling, obviously, in the first three quarters has had a major impact -- and remember, the impact we have on Sterling in Ryanair is the opposite impact in, say, someone like Easy Jet.

We have the majority of our traffic arises in Sterling, Sterling is significantly weaker to the euro, but we report in euros.

It artificially reduces our reported yields.

It artificially enhances Easy Jet's reported yields, because they have 35 or 40 percent of their traffic arising in euros, but because they report in Sterling, they get kind of a gain on that euro.

That is fine, there are swings and roundabouts in all of these things.

But, at the end of the day, the honest answer is we don't know why the yields have declined by so much in the first quarter.

Certainly some of it in January was due to the fact that we thought January was going to build more rapidly than it has, the load factor for January would be about 70 percent, we are not at the end of the month yet, would be about 70 percent, that would be about 6 points down on January in the previous year.

Now, we had already signaled that to the markets.

But that is a little bit worse than it was in previous months where the GAAP was 2 or 3 percent, and yet despite that -- you know, it is not that we've gone for yield in January, when the slightly lower load factor, we are getting full load factors in January and poor yields.

What do I think, the other part, oh yes, (indiscernible) the question, Robin?

Yes, it does.

But just kind of this one small question.

Given the effect that yields are going to be down 25, 30 percent Q4, Ryanair can weather that. they're going to be a lot of players out there in the market who cannot weather that.

That is my view.

A lot of the new startups.

Do you think we're going see some consolidation in that respect?

I suspect not.

Because, experience in this industry would tend to make you believe that -- don't, if you're hanging out there for consolidation or for people to go boss, you will usually be disappointed.

And that is why we have been very conservative.

As we have been very conservative in the last five or seven quarterly reports.

We keep telling the market we expect fares and yields to go down.

They have now gone down, and we think for the next twelve months they're going to go down further.

I think it just, that what will happen is that -- that those airlines who are losing enormous amounts of money presently and you can name them yourself, will just lose simply more money.

We may make less money in the next 12 months, we may make the same amount of money, we may make slightly more amount money -- it all depends on yield.

But at the end of the next twelve months, you're looking at -- you know, Europe's only transcontinental airline with two bases in Ireland, three bases in the U.K., two bases in Italy, one base in Germany, one base in Scandinavia, one in Spain, with 146 routes, crisscrossing the continent -- there's not a flag carrier airline, there is not a low fares airline that has this geographical spread.

And I think one of the things are looking at -- one of the reasons why the Rome and the Barcelona bases seem to have started so quickly is that we are actually just linking up the points here now.

But it's going to be an awful lot more difficult for other airlines -- whether it's Easy Jet or Air Berlin, Germania, German wings, to open up bases in Rome and Barcelona and Brussels and Frankfurt because we are there already.

Alright.

Thanks very much for that.

Jim Parker.

Michael, good afternoon, Jim Parker, Raymond James.

Did you say how much Sterling accounts for the 25 to 30 percent decrease in fares?

Very little, about a quarter of it.

It accounted for about half of the 12 percent decline in the first three quarters.

And I think it's just under, (indiscernible) I think it's less than -- (multiple speakers)

It's about 5 percent, Michael.

About 5 percent of the 25, so 5 points of the 25 to 30 points in Q4.

Michael, do you have any ability to read into April, May type bookings and what fares might look like in the seasonal pickup in traffic?

I think, no, at this stage it is too early even to be definitive for the fourth quarter, for the first calendar quarter, which is why we are being quite pessimistic this morning.

It is certainly too early to be -- have any visibility on the quarter into April, May, June.

And what really confuses is that it is the first time April, May, June, would be the first quarter --certainly in my twelve years, or whenever it is, in this Company -- whereby we have a significant decrease in the rate of capacity growth.

We have never been there before, we don't know what the effect of that is.

Okay.

And one last question, regarding the EU's pending ruling here.

What would be the impact on this all publicly owned airports -- what would be the impact at Dublin, Manchester, Birmingham?

Where they are publicly owned?

What would be the impact on us or on those airports?

Yes, on those airports?

Would they have to do a flat rate charge for everybody?

What would happen on those airports?

Well, of the ones we would know presently.

Birmingham airport is publicly owned, it has a discount deal in place for -- it might travel light, that would have to be terminated.

Dublin has a discount deal in place with (indiscernible) on new routes, (indiscernible) would be devastated, the flotation of our (indiscernible) would probably just disappear over the hill.

And I think we will also be having a much closer look at the arrangements with Air France and some of the other flag carriers at the bigger French, German and U.K. airports.

Because there are clearly some discounts being earned, there, by those airlines on landing and handling charges.

I mean -- I know of no airline, even the high-cost guys like BA and Air France, that haven't negotiated some discounts, somewhere, on landing or passenger charges.

It's a bit like the rack rate in hotel rooms -- almost nobody pays it.

But, you know -- it is very difficult to get into the detail of this until we see the wording of this decision.

But it is almost something as bad as -- it seems to be the equivalent over here of -- you know, Wal-Mart was paid the same -- should not get a bigger discount than Kmart because that would be unfair, and we should really have a level playing field for everybody in the bloody market so everybody -- all the supermarket should have the same purchase cost.

You know, we go to Charleroi (ph) because it doesn't the same facilities as Zaventem.

We go to Charleroi precisely because it has a discounted cost base.

There is a reason why Southwest Airlines uses Ilif (ph) airport in New York instead of JFK.

And there's a reason why they at Providence, Rhode Island, instead of Boston.

Yet in Europe, you seem to have a couple of bureaucrats who want to have a one size fits all.

That is going to principally (expletive) up the low fares airlines -- the entire airline sector -- screw or retard the ability of underused, secondary, or regional airports to develop any new routes whatsoever, to no benefit other than maybe to benefit of a couple of high-cost airlines and a couple of high-cost airports.

It wouldn't be the first time that Brussels made a complete balls of regulating an industry.

So really, this is not practical, this decision -- it cannot prevail?

I mean -- on the basis of the briefing we've receive so far -- and I keep going back to that -- to us it is impossible to try to artificially put constraints on the operation of a free market.

And how bizarre the decision would seem to be is that the one airport that doesn't appear, won't appear to be affected by such a ruling will be the very airport that's being investigated in the first place.

So, I think at this point in time, our general disposition to the market and to investors is -- this is about as negative as it can be, but not just for Ryanair -- for the entire industry.

But it wouldn't seem to on first reading to have much of a negative implication for our continued operations at Charleroi.

You know, there could be a lot of movement between, the briefing we got on Monday, or what is being leaked out, and what is actually in the final decision.

And we just don't know.

We tried (indiscernible) while we were trying to -- the results this week and then give everybody kind of a credible input on the actual decision next week -- so we are still kind of commenting on rumor and speculation.

Okay, thank you.

We will see tomorrow at the conference.

Jonathan Wavo (ph).

Yes, good afternoon, Jonathan Wavo, HSBC (ph).

Just a couple of points of clarification on earlier questions.

You talked about, in a statement you gave four reasons for the bigger fall in yields in Q4.

From what you have been saying, it seems that the most important of those is the price down thing you said -- is that correct?

I would say that that's correct, yes.

I mean, none of the other three reasons could possibly account for the increasing, the increase in the year's decline from 12 -- 11, 12 in the first three quarters to 25, 30 percent in the fourth quarter.

It is principally, we attributed to market and (indiscernible) price jumping across most markets, particularly in the U.K. market and particularly in Germany.

Okay then, and leading on from that, you were talking in response to one of the earlier questions about the prospects or yields going into next year.

And I think you said, originally, you were expecting a 5 percent fall -- now you expect something greater than 5 percent but less than 20 percent?

Is that correct, with your outlook, for the next fiscal year?

Yes, but -- and again, I don't want anybody to confuse this with a forecast.

I'm comparing that with our general model -- our general model is 22 to 25 percent traffic growth, 5 percent yield decline, five percent operating costs decline.

We believe on the basis of what we have seen in this quarter that if this continues into the next year, then clearly the yield decline would be greater than 5 percent.

But, we are in an area where there is a number of variables here that we've never encountered before.

The capacity growth from May onward would be much less.

The comparable yield of the previous year will be much less as well, and therefore the declined, the percentage charge would be less again.

We just don't know.

Until we get some six or some hold on what is happening with other airline yields in the first quarter, the first half of this year, and is it reflected in their fares and yields, we just won't know, I think.

Okay and then just one further question.

In the statements you also referred to a number of initiatives in trying to enrich the cost base.

I just wondered if you to give us an idea of which one of those elements you see the most potential for cost savings?

No, because we see potential for cost savings across all of the cost categories -- there is not any one unique cost category that we see -- I mean, there is nothing out there anymore that is going to be a significant sales move -- from travel agent distribution to Internet distribution.

The biggest cost gains, I mean, there are enormous cost gains being locked away at the moment, on the dollar weakness; and we're locking those away with our forward hedging policy on aircraft purchases, which are transforming our aircraft costs on our balance sheet in euros -- fuel and aircraft spares.

But, because of our hedging policy, you won't see the real big gains until probably towards the end of this calendar year.

On fuel and on aircraft purchases they could be spread over the medium-term through the depreciation charge.

But other than that we are -- I mean, what we're talking about trying to achieve over the next twelve months is to reduce operating costs from a planned 5 percent, increase that reduction to maybe somewhere between 8 and 10 percent -- but we're not going to get operating costs by down by 15 or 20 percent.

Okay, thanks very much.

Jerry Gale.

Jerry Gale of Good Buddy Stockbrokers.

Just three questions.

The first is in relation to the current quarter.

Is there any point in arguing here that part of this yield decline is being caused by the 60 percent extra capacity you yourselves put onto the system and that you're forcing competitors who are suffering from lower load factors (indiscernible) much lower fares?

Or do you have any anecdotal evidence that that there is actually extra seats being (indiscernible) onto the system by your competitors in this quarter ever since last year?

And the second point is in relation to fiscal year March 05.

The range you're talking about of yields down greater than 5 percent, maybe as much as 20 percent.

Given those yields down 15 percent this year, and you're turned 60 percent onto the system, why would you even be thinking those yields could fall as much as 20 percent in the year to March 05 when you're own capacity is only going up 20 percent?

And the third question relates to the Sharwall (ph) ruling.

Is it your understanding that when the ruling comes out, if it says things about the various airports -- did those rules stand subject to the appeal, or are they suspended subject to the appeal?

In other words, will they have a material effect on numbers immediately?

Or will we have to wait for a court hearing?

On the current quarter, I think that -- the easy answer is -- oh, (expletive), we just put in too much capacity -- we put in 60 percent capacity growth.

Our answer to that is, yeah, maybe there's something around edges that we have quote or notionally too much capacity growth.

But I would contrast that with the previous fiscal year ended March '03, when we delivered a 53 percent capacity growth and a 59 percent increase in profit.

Contrasted with the first three quarters and capacity growth was of the order of Midwest 50 percent -- and yet the year decline was 11 to 15 percent.

We believe that in quarter four, something unusual is happening on yields that we have not forecast before, and we really haven't quite got our figures on it.

We suspect that it is a market (indiscernible).

I have no doubt that some competitors will be out there today going -- no, our (expletive) ears are going through the roof.

And, you know -- we wait to see when they produce their results.

I suspect that it's a market phenomenon -- are we driving some of it?

Absolutely.

And the one thing is -- for those of our competitors who are on this conference call, and I promise you their fares are going to get much lower and much worse all year.

So revise your forecast.

Fiscal '05 -- yes, you are right.

But, partly again we are in uncharted territory ourselves.

The capacity this year will only grow by 20 percent.

Most of that capacity is on new routes at two new bases in Rome and Barcelona.

All of the capacity growth is front ended rather than back ended.

So, should we forecast, maybe, the yields will be stable next year or might even rise by a couple of percentage points -- in which case we make an absolute ton of money.

No, frankly, I don't think we should.

I think we should always continue to be conservative.

We should continue to be, if anything, pessimistic.

In a circumstance -- and in a situation when we are in the 28 day of the first month of a quarter where the yields look like they're going to decline by somewhere between 25 and 30 percent. (indiscernible) than a wider broad range of the yield forecast for the next fiscal year of somewhere between 5 to 20 percent, with only 20 percent capacity growth and with a lower base comparable for the previous year, I think would be over -- would be optimistic.

And hey, if it's better than this, you know everybody makes a killing, but I would rather if we're going to have a trading statement, I would rather only have one trading statement in a year, or in two or three years, and not different trading statements every quarter.

On Charleroi, our understanding, Joe, is that the rules, when they come out, can still be -- the imposition of those rules can still be headed up by the transport or the transport ministers.

I understand, although I'm in London, that the Irish transport minister has called for some kind of -- I don't know, review or something of what's going on, because I think they have begun to work out that this is going to have a devastating impact on (indiscernible) as well as Ryanair.

Whether that has any (technical difficulty) I don't know.

We are also -- I mean, one of the interesting things that we got on the briefing we received on Monday evening is a very interesting scenario that if they find here that some elements of the deal in Charleroi are State aid, and must be repaid within two months, that our next board of call will be to ask the European commission what they have done about the Olympic Airways stating decision for about 4 or 5 years ago, where they were due to pay a fine of -- I think a repaid state aid of over EUR200 million.

Apparently, five years later, it is still has not been collected, not one cent of the fine has been paid.

And not one iota of the instruction from the commission on the state aid ruling has been implemented by either the Greek government or Olympic Airways.

But, it would seem to be, again, you go back to this bizarre situation we find ourselves in, that state aid rules which were designed to prevent governments bailing more money into their flag carrier airlines, and which were ignored twice by the French government in the case of Air France, are still being ignored by the Greek government in the case of Olympic -- are now, somehow, to be used to prevent a privately owned low fares airline competing with these flag carrier airlines, ostensibly to the benefit of the flag carrier airlines.

So, again I come back to where we were previously -- until we see the draft of the decision, and how they propose to make these, you know, quite extraordinary findings -- implement them or make them stick, we really won't know how they get applied.

But our understanding is that they apply even while an appeal is going on.

But, clearly, in the case of Greece and Olympic Airways, they have not really applied at all.

And there is indeed an appeal going on in the case of Greece and Olympic Airways.

Okay, thanks.

Just add to that, and I think what Michael was saying there is that capacity is back-end loaded rather than front-end loaded.

So there'll be a lower rate of growth in the first six months, and a much larger rate of growth in the second half when we have the extra deliveries.

Travis Anston (ph).

Guilder, Beckman & Howe.

Michael, it sounds like on the fares that (technical difficulty) wide range, ands we'll have to wait for a while to narrow that down.

Agreed.

To narrow down that minus five to minus (technical difficulty) focus on that.

It sounds like under the E.U. draft, your bases are mostly okay; it's primarily the French cities that have an issue. (technical difficulty) airports.

To the extent that the draft would only apply to the publicly owned airports, it would affect a couple of the French airports, some of the Spanish airports, and not a lot else.

To the extent that they somehow try to extend it beyond the publicly owned airports to part-publicly owned or somehow publicly financed airports, it would have much broader implications for our airports and also for the airports -- just about every airport in Europe.

I know of no airport in Europe, even that's privately owned, that hasn't had some element of public funds somewhere.

The very fact that when we went to Charleroi first five years ago, it had an air traffic control, it had baggage handlers, it had check-in staff, it had ramp staff, fire brigade staff, all sitting around doing nothing except handling diversions.

Your back end -- is it supposed to come at full cost (indiscernible) marginal costs -- what is what the hell is it supposed to cover?

It's just a decision that doesn't make any economic sense (technical difficulty) at this point in time we would believe that even if it is (indiscernible) they can only make it stick to the publicly owned airports, and that would only affect us at those publicly owned airports where there is another carrier operating who is paying the full charges, which would be largely the French regional airports.

It would not, we believe, effect Charleroi, because Charleroi -- since we're the only carrier there -- could simply reduce (indiscernible) charges, our actual charges.

It wouldn't affect an airport like (technical difficulty) or some other airport like -- I'm trying to think of one -- Carcassonne (ph) in the south of France, where we are the only airline flying there.

They just reduced the (indiscernible) of public charges to what we actually pay.

So there would be lots to analyze and decide when this decision is published, but it seems to be -- I think maybe our best hope is that this position is so bizarre it is probably (technical difficulty) implement legally unsound, and just defective.

We do not know.

If these airports are carrying only general aviation traffic, they're losing money; they still have five departments of people sitting around.

Yes, but if they are going to have -- if part of the ruling is that the airports must cover all of their costs, well then maybe the general aviation has to (expletive) pay for the entire airport before we show up, and then the marginal cost of us showing up is going to be bugger all anyway.

Like what happens to Munich if they lose a (indiscernible) this year, well hang on a second, now Munich is not covering its cost, clearly it has to increase its charges to Lufthansa and others.

You (expletive) cannot have (technical difficulty) servants trying to design rules that make everything a level playing field.

That's called North (expletive) Korea, and everybody is starving there.

This market works well.

The European commission has successfully followed a policy of deregulation and competition for the last 20 years that has transformed air travel in Europe, that has transformed regional airports.

I mean you take a country like Ireland, we may as well close down Ireland for the next couple of years if all of a sudden you can't have discounts and low fares and everything else.

And everyone must be the same charges.

It just doesn't work.

Looking just briefly at fares, you've got (technical difficulty) holidays in the U.K. coming up in February, if I'm correct.

And fares then are also (indiscernible) as much as for those normally high-level traffic as they are for January?

No, we are seeing the fares in February and March will be somewhat higher than they are in January based on advanced bookings; the load factors will be somewhat higher in February and March then they were in January.

But they should be anyway.

They will still be significantly below where they were last February and last March.

Now last March was impacted by having Easter at the end of the month.

This year Easter is in the middle of April.

But around the edges, there is still a significant decline in underlying yields that seems to be a market-wide phenomenon.

We can't (indiscernible) any other explanation.

And we are not out there charging these incredibly low fares because we are a charity; we are out there because every other airline in the market, from EasyJet right up to British Airways, is engaged -- in some cases -- below cost selling, in the case of EasyJet, and in some cases (indiscernible) in DA, every seat they sell is below cost selling.

If there is irrational competition going on out there, I would rather be the one that has the 20 percent-plus margin and a billion in cash and we would be more irrational than anyone else.

Andrew Loebenberg (ph).

ADM (ph).

Two questions.

Are you standing by your guidance that you think the net margin can stay above 20 percent into the future (indiscernible) the uncertainties surrounding the Brussels shenanigans?

I thought I heard you say that the 20 percent net margin would be delivered this year, but I am not sure I caught what you were saying going forward. (indiscernible) can I ask about marketing costs, because you carried 6 million passengers in the quarter, and you spent EUR1 million on marketing.

That seems a mighty low number.

I think our guidance at the moment is that for the current year, our net margin after-tax will be somewhere in the order of the low 20s, we suspect, although it is not a forecast (indiscernible) we're talking about 24 percent.

So it's 20 percent assuming 215.

Assuming?

Assuming 215 million.

(indiscernible) the margin would be 20 percent (indiscernible) --

(multiple speakers)

Yes. 26 year-to-date.

Sorry.

Okay.

For the coming year it all depends on where the yields fall.

If the yields fall by five percent and the operating costs we know will fall by a minimum of five percent, then yes the margin will stay above 20 percent.

If the yields fall by more than that, it depends on where we are against where we are this year.

And I can't be any more definitive than that, because as this current quarter would indicate, we are in a new yield environment -- which is where we always thought we would be.

Our guidance to the marketplace every year for our every quarter for about the last eight quarters says that there will be -- continue to be yields, (indiscernible) declines.

On the second point, which was --?

Sorry, can I just follow up on that?

Yes.

In terms of your guidance, you are sort of just quarantining the potential impact on any costs from Brussels, and not considering them at this stage because it is too uncertain -- is that right?

Yes.

Okie-doke (ph).

I think -- now again, the basis for that -- although we had not really considered the basis for that -- but even on the basis of the briefing we had on Monday evening, we think that this decision if this becomes the final decision really won't affect the cost base at Charleroi, for (indiscernible) Charleroi reasons I've already identified. (technical difficulty) will have a knock on affect, because I think the Air Frances and Lufthansas will be suing, not just Ryanair, but EasyJet and other operators that French air -- French regional airports and other publicly owned airports around Europe for the next 12 or 18 months, and that will have to unwind itself.

The issue on the marketing costs, remember -- the marketing costs are low, but they are also -- and Howard will correct me on this if I get it wrong -- but they are net of continuing -- or somewhat the marketing contributions we received from some of the airports, including some of the new airports.

Are you able to give us any guidance of the scale of that net contribution?

No.

Jolly good.

Thanks.

Edward Stanford.

I wonder if you could help with a couple of cash flow issues.

Are you still looking at capital expenditures this year (indiscernible) roundabout 560 million, and next year of about 700 million?

Can you give some thoughts on -- help us with the number of planes you expect to take on lease for this financial year and for next financial year?

And finally, do you expect to end up with net debt at the end of this financial year?

Howard, do you want to take that?

I will just maybe take them in reverse order there.

In terms of operating leases, we have taken 4 deliveries of 10 that we would expect this year.

And that probably pretty much is (indiscernible) done in terms of the next year or so.

Next year we would see ourselves probably using more debt, although as in these cases, we are opportunistic.

If we get the right offer, we would certainly consider it.

Over a longer-term plan, our objective would be to have about 75 percent to 70 percent of our aircraft financed through debt, and the balance through operating leases. (indiscernible) currently, by the end we have this set of deliveries, it'll take us up to 51 737s, (indiscernible) give us approximately 25 percent of our fleet through operating leases.

Moving on then to cash flow, obviously, our cash flow -- the shape of it will slightly change because, obviously, operating leases will not be part of our capital expenditure this year.

So while I don't give you our cost of aircraft, clearly, in this deal we will be lower than we would have projected at the start of this year.

Next year, I think you quoted, there's obviously a mix also of aircraft deposits.

And during this -- for the nine months our capital expenditure, including aircraft deposits was 340 million.

We do have some capital -- advanced deposits to make between now and the end of March.

So I would be anticipating capital expenditure to rise by another 45 to EUR50 millions.

So topping out the year at a shade under EUR400 million.

Next year your guidance is the best we can give at the moment.

We're looking at something like 725 to 750, and we really -- because we are going to more than likely finance all the aircraft through debt, that number is still where it stands.

Mike Powell.

It would appear that that question has been withdrawn, sir.

The next question today comes from Angus Franklin.

Bailey Gifford (ph).

I just wanted to ask you, you said in the past that you would be prepared to pull out of some routes if airport charges are forced upwards.

How would you like to redeploy that strategy, especially in light of the fact that total capacity will be rising by about 20 percent anyway?

Maybe I -- give that one to Michael Cawley, but before I do I would draw your attention to the example of Strausberg, where we shifted it up the road to Baden-Baden.

Michael, maybe you want to address that question?

Hello?

Michael Cawley?

Hello?

I'll take it.

We would -- again, depending on the outcome of the decision, we would be prepared, for example -- and I take the example of the ones that based on the briefing we have had it would appear, would be the French regional airports where we would now be expected to pay some kind of (technical difficulty) charge -- Air France are paying on some domestic feeder route to Charsegal (ph).

We would take the aircraft out of those airports.

We, however, are presently -- they would be spurs or spokes at the end of (indiscernible) base (indiscernible) Frankfurt base.

We believe we would have more than sufficient airports over the space of 12 months (technical difficulty) we're ready talking (technical difficulty).

Some are privately owned, some are publicly owned. (technical difficulty) get that aircraft to either a publicly owned airport that would be in a position like Charleroi, (indiscernible) very low published charge, or to a privately owned airport who the guiding or the routing would not apply to in the first place anyway.

You know, would we get away scot free?

No.

If it comes like this and it's as bad as this, it will cause us certainly a couple of quarters of pain in the (expletive) management time rejigging (ph) deals, and jumping around and doing this that and the other.

But we have been here before.

In the last quarter, we have closed nine routes that we thought were not working and moved them to other routes where we thought they would be better.

We previously dealt with the last of the Strausberg decision, and moved it up the road to Baden-Baden.

We've previously pulled out of other airports like (indiscernible) and Reminie (ph) in Italy and moved the aircraft elsewhere.

In the context of 146 routes, we are still not talking about a loss of route changes or reorganization.

So we think it would be manageable, but again -- and I stress -- it comes down to what exactly is in the final decisions here.

Remember it wouldn't just be confined to Ryanair.

For example, other airlines such as EasyJet at Marseilles and Toulan (ph) (indiscernible) at some of the other -- Bordeaux, French or Western French airports, from Southampton.

And (indiscernible) and Might Travel Light (ph) would also be equally affected.

Can you tell us how in the Strausberg example, by shifting -- by rejigging that route, what impact that had on average fares for that route?

I don't believe that you could take this as a guidance.

It didn't have much of an impact on average fares, but for some strange reason, the load factors have been significantly higher at Baden-Baden than they have been (indiscernible) at Strausberg.

Using amateur analysis we believe that because almost all of the Strausberg traffic has moved up the road with us to Baden-Baden, we have also taken a wider percentage of German-originating traffic and German visitors going to the German Baden-Baden area as well.

But you're talking a difference of maybe 8, 10 percentage points of the load factor.

The average fares have been pretty much the same as they were on Strausberg.

And finally, Michael.

In terms of the yield pressure you're experiencing at the moment, are there any particular routes that (indiscernible) affected disproportionately?

Maybe the Scandinavian routes for example?

No.

They were being disproportionately affected in (indiscernible) some of the worst of the Scandinavian routes were pulled at the start of January and replaced.

I mean, we pulled the once daily Stockholm/Oslo to (indiscernible) Stockholm (indiscernible).

We replaced, for example, the Stockholm (indiscernible) with a (indiscernible) Frankfurt.

And that has been much better.

So if anything in Q4, the Scandinavian situation has been a little bit better.

It seems to be -- there is no one market, there is no one market segment that has suddenly collapsed.

It just seems to be much lower fares and yields across all markets, with nothing performing particularly well and nothing performing particularly badly.

Do you want to add anything further to that?

Is Michael Cawley still on the call, or is he gone?

Okay, he must be gone.

Okay, thank you.

David Glamen.

(indiscernible) Associates.

You just answered my second question, but the first question I wanted to ask is -- in light of the yield pressure and in light -- in fact you talked about some lower load factors.

You had previously talked about having to, frankly, give away 20 percent of your seats this year.

Is the free seat percentage, is that staying?

Or is that going to increase or decrease given the amount of the yield pressure?

I suspect the free seat offers will increase, but that is not as a byproduct of the yield pressure currently.

We have had a plan for a number of years, and we see ourselves at some distant or some unspecified point in the future, that up to half of the seats will be sold free or the fare will be a zero fare.

That does translate itself -- and I would draw your attention to the ancillary revenues.

When we do free seat sales now, we do them on seats (indiscernible) that would otherwise fly empty.

We get significant spikes upwards in ancillary revenues, and we get a significantly higher average yield on the remaining seats in the period, because the advance bookings for that period are stronger.

But the more you do free seat sales, the less the public seems to be falling over themselves (indiscernible) (expletive) they've had free seats before, they will have free seats again.

I think it's more a marketing thing.

It's a bit like the supermarkets selling milk and bread below cost; you always have to have the notion (indiscernible) leader.

In this case for us it is not a notion of (indiscernible) leader since (indiscernible) it is free, the public does pay for the taxes and charges.

Which is a better fare than some of our competitors have been offering with their seat sales in recent weeks, where the actual (indiscernible) inclusive price was lower than the tax and charges.

Well as a follow-up, then -- do you typically -- are those taxes and charges, are those typically marked up or are those at cost?

At cost.

In some cases it is difficult to have them specifically at cost.

Because in some cases we would either have front ended or back ended rebates or discounts.

And you can't quite get an accurate handle on them all the time.

But in general measure, it is pretty close to what our cost, average cost would be at those airports over a full year.

I think, Michael, we should add that there is a significant no-show factor as well.

We have the ancillary switch which also make these quite attractive, and they are going at generally off-peak times.

The aircraft is paid for anyway.

We have a very low breakeven load factor, less than 50 percent, 57 percent.

So any incremental passenger we can get on board contributes to this, on some cases no shows, is money straight to the bottom line.

David Glamen And what was the (indiscernible) this past quarter?

Well, no-shows on some of the offers can range something like up to 15 percent.

But you have typically said in the past it is like 7 to 8 percent of passengers?

No, I think what we said over the year -- we said over the year that our no-show factor is 7 to 8 percent.

So that is taking your ordinary everyday sales.

On some of the specific, very low fare or free type offers, the no-show factor can be considerably higher.

I understand.

Just for the quarter what was the no-show factor?

The no-show factor -- I will give you that now, (indiscernible).

The no-show factor was about eight percent.

It was 6 percent, 6.7 percent, just under 7 percent last year.

So more or less the same.

I think I should reset again -- we don't do free seat sales because we make some (expletive) killing of no-shows.

Free seat sales are marketing tools that are designed to (technical difficulty) seats that won't otherwise sell.

They do dilute the average yields, but they are part of our marketing weapon, our marketing armory; no more than that.

Who's next?

(OPERATOR INSTRUCTIONS).

Peter Eavis.

Thestreet.com.

Michael, just a couple of questions.

First of all, you say in the press release that one of the ways you're going to reduce cost id by reducing capacity at those airports that do not share our commitment to lower fares for consumers.

Can you give me an idea of how many routes that would be and how many routes you will cut, and whether or not that will have an impact at all on growth going forward?

It won't impact on growth going forward, Peter, because where we reduce capacity at certain airports we would reallocate the capacity to other airports where the costs are lower.

What I can't give you an indication of which airports and in what quantity, what capacity yet, because we've just initiated these discussions today by faxing a number of airports our quarterly release, pointing out the fact that our yields are down 25, 30 percent in the current quarter.

And we want to discuss cost with them.

The second question is in regards to the whole EC stuff.

Is there any sort of ballpark number that you might be able to supply on how much operating costs might rise due to the decision over the next -- fiscal '05, maybe, and beyond?

And is there anything to the sort of conspiracy theory out there that you're sort of painting a rather dire outlook at this point in time in order to sort of apply pressure to the Commission in some way, or not?

Peter, I am surprised that you would suspect our motives.

How much will costs will rise?

The honest answer is we haven't a bloody clue, it all depends on what is in the decision.

I have tried to paint as honestly as I can how we interpret a briefing we got on Monday, on what is coming out of the decision.

What impact will it have on costs at Charleroi?

If the decision comes out that they just ban discounts, it will have no impact on the cost at Charleroi, because they've just reduced the published charge to the actual charge.

We may have to repay some moneys in previous years, but that will be a subject we will have to discuss with them.

But I think we won't be repaying any money until after Olympic Airways or the Greek government repays theirs.

But I just cannot put a number on this.

The only number we have seen thus far, and we have no idea where it comes nor can we calculate it, is that the leaks that are coming from the Commission -- which do start on the basis of this is a balanced decision, and it's some positives some negatives -- is that it would involve Ryanair in repaying between EUR3 million and EUR10 million.

Now if that is the total of our discounts at Charleroi for the last number of years on landing and handling charges, it is more than EUR3 million, then it's more than EUR10 million.

It's less than EUR20 million.

Therefore, it is not going to be materially in the context of a cash (indiscernible) of 1.1 billion, but we genuinely have no idea.

What impact it's going to have on the market?

Well to the extent that it blocks the other -- if it blocks discounts and charges at other publicly owned airports, there's a whole restructuring going to take place in the European airline industry that is going to generally increase airfares and increase costs around Europe.

Will Ryanair continue to maintain its price leadership over the rest of the industry?

Yes, we will.

We're simply not in a position to comment with any degree of accuracy on this until we see the decision.

Are we building this up much worse than it will be?

I don't (expletive) think so. (indiscernible) the three bits that we have that seem to be corroborated, and the leaks from the Commission which appeared in Le Monde newspaper yesterday, the Financial Times in Brussels this morning and in the Wall Street Journal this morning -- and we weren't leaking it to them -- were that discounts look like they're about to be outlawed, marketing supports are going to be limited to an arbitrary three year period, and there may be some attempt to expand this from publicly owned airports to privately owned airports.

I mean, you work it out. (indiscernible) do you think this going to do -- if this happened in the States and Southwest was told that Providence, Rhode Island, or in (indiscernible) airport in New York -- sorry, you've got to pay the same costs as JFK, hell, I don't know what impact it would have on them, but it would increase their costs.

Finally, I mean -- if I was an investor in your company, which I'm not --

Oh ye of little faith, Peter.

I'm not allowed to invest in anything.

Would I be thinking about whether or not you should be CEO of the Company, considering that you have been very, very confrontational with the Commission on this issue?

The started out saying that you would definitely win this, no problem.

You handled it in such a way that it may have contributed to the size of the defeat, if it's as big as you say.

Is this a time to reconsider your post as CEO of Ryanair?

Personally, I don't think it's a time to reconsider it, I think it's a time of interesting times and very interesting challenges ahead for the next couple of quarters.

Will there be some people out there who believe that my performance or my handling of the case hasn't contributed or has caused a negative decision in the Charleroi case?

Yes, I'm sure there are.

And I would find it hard to disagree with some elements of that.

I think if we lose that case, ultimately the responsibility rests with me.

And it would be up to the Board and the shareholders.

If they want to change me, they can change me at any time.

What would you say to any competitors that are planning lawsuits now to win damages from Ryanair for what they believe to be anti-competitive practices shown in the Charleroi decision?

Firstly we would say let's -- we would look forward to seeing them in court.

Secondly, we would not be aware of any competitors who operate on the London -- or on the routes we operate from Brussels/Charleroi But remember that the decision in this case will not be a decision that Ryanair has done anything unlawful, it will be a decision that Belgium has done anything unlawful.

One of our difficulties in dealing with this case is that we are not the defendant and nor are we the target, the state of Belgium is.

So I suspect that they would be initiating action against the state of Belgium.

However, the interesting thing about the case is that the complainant in this case, which is the main airport in Brussels, Zaventem, on the seven routes where we compete with their carriers out of Brussels/Charleroi, Zaventem has enjoyed increased traffic on those routes since Ryanair's launch of services to and from Brussels/Charleroi.

Which would be consistent with the experience across the U.S. and in Europe, namely that low fares and new services at regional or competing airports increased traffic, and lowered airfares across Europe, and certainly haven't damage Zaventem.

If anything they have been very good for Zaventem.

Damian Horth.

UBS.

A couple of strategic questions I suppose.

Given the performance of the yields, particularly over the coming depths of winter, does it not worry you that you have bought the wrong aircraft? 189 seats is the much harder aircraft to fill, particularly over the winter.

Are you concerned?

And none of the major (indiscernible) around the world have actually bought such a large aircraft.

Could that be the missing explanation for the yield decline over the period?

I don't think so, Damian.

Remember, we have been adding 800s for the last three years.

The additional seats pay a major contribution towards reducing our operating costs, and have continued to do so.

The operational performance of the aircraft has been quite extraordinary.

If you look at our operational performance in the past 12 months, we are the number one airline now in Europe for punctuality and fewest cancellations, operational reliability.

So we would think no.

If anything one of the things that is assisting our continuing cost reduction is the 800, the very low purchase price we got.

And increasingly over the next couple of years, the very low euro cost of these aircraft to us, given the weaker dollar.

Just another strategic question, I have also got a small financial question.

You mentioned land grab a lot of times, changing industry structure.

Does this mean that at least for the next couple of years that market share and growth comes well ahead of EPS growth for Ryanair?

I don't think so.

To that extent we've always been relatively passive about market shares.

We're not overly concerned about market shares.

Although we are pointing to it at the moment as at least, if there's going to be intense fare war with competitors across all markets, the fact that a lot of our competitors are withdrawing from competition with us.

The obvious competitor in Europe, EasyJet, has never yet added any capacity in markets where we compete with them.

And even in the markets where they would be the largest carrier, like London/Barcelona, for the first time ever they're selling lowest-ever fares as we sweep up behind them in terms of market share.

But we are not trying to be focused on market share.

We have over the past 12 months tried to establish strategic (indiscernible) new places in Scandinavia, in Germany, in Rome, in Milan, in Barcelona.

We've done that very successfully.

It's up to EasyJet this year to open up a base in Berlin and let's see how they get on.

Will a base in Berlin enhance their yields or reduce them?

Certainly based on our experience with the Germans market, it would reduce them.

But you know, that is a matter for them, not for us.

One last question, quickly.

What would it cost you to wind down Buzz, if you were forced to do that?

Very little, because I think we would be able to wind it down on the basis that the Buzz Stansted Limited, the separate operating company, which essentially only has the aircraft leases and employees in it, I think we would be able to wind that down in a very orderly fashion.

I think we would -- Ryanair would be able to take over the routes, fly them with our own aircraft, and in time I'm certain we would be offering jobs to many if not all of the employees of Buzz Stansted Limited.

But I am more confident -- I'm certain or I'm hopeful that we will be able to reach a mutually acceptable compromise with the leasing company in this case.

But they should be under no illusions, if we don't, we are going to stuff these planes back to them.

I thought (indiscernible) come back now to Peter Eavis, who asked me -- should I be reconsidering my position.

And as I think on my feet, I think (technical difficulty) my defense just over the last 12 months would be that the Company is still growing at over 50 percent; we still have the lowest cost base in Europe; we have the number one operational delivery in Europe in terms of on-time, fewest cancellations; fewest lost bags; no other airline in the world makes a 20 percent margin; and we have got 1.1 billion in cash.

But I accept that some people may question my performance, but I think am happy to stand over it.

(indiscernible).

I have no question.

Tom Jones.

That question has been withdrawn.

Michael, I'm going to have to head -- do you want to wrap it up?

No, I want to make sure -- like we want to stay here -- I'll stay until every question is answered.

Okay.

(indiscernible) another 15 or 20 minutes before I need to head for the airport.

Okay, I'll talk you later, then.

All the best.

Cheers.

Shane Matthews.

(indiscernible).

Michael, I just wanted to ask you a question.

Is there a sense that the sensitivity to prices has changed amongst the consumer?

You've obviously put a lot of cheap seats into the market in January, the traffic numbers seem a little bit disappointing, perhaps, than where we would have thought they would be.

You have already alluded to the fact that perhaps customers are jaded with free offers.

Do you think there's something else going on there?

I think, Shane -- it is very difficult for us on the 28th day of January to analyze exactly what is going on in the first quarter.

I don't think customers are jaded.

If you look at their traffic growth, it's still 50 percent month-on-month.

And I have looked at the (indiscernible) coming from flag carriers like BA and others in the last couple of weeks, and it's all -- we see the upturn, traffic is back, traffic growth is coming again.

They're talking about 1 and 2 percent traffic growth, but they are all overly silent about yields, or in some cases they said yields continue to show a decline.

I think we are in a period in the industry when Ryanair is undoubtedly leading the charge.

The low fares airline (indiscernible) sector generally is leading an enormous growth in capacity and enormous opening up of new routes, and there is a structural (expletive) kicking going out there.

Which we, from our point of view in our markets, we will win.

I do not believe at this point in time that this is a set of results or a set of forecasts that investors should be overly concerned about.

There has always been going to be a time when any market, where you have a couple of entrants above normal, super normal profits -- which undoubtedly we have had for the last number of years.

Now you have a whole (indiscernible) of start-up entrants, even the flag carriers reducing costs in their economy cabins, yields and prices decline, profitability declines -- although in Ryanair's case it falls from like 29 to 20 percent.

Every other airline in the industry year either has a single digit margin or no margin at all.

And I think it is too early for us to make any predictions until maybe we get to May/June time (indiscernible) the annual results; then we have a much better idea of what the summer looks like.

And the first quarter is always -- the first calendar quarter is always the (expletive) quarter of the year.

I think our general disposition has been -- look, here is a very good set of third quarter numbers, nobody else comes close.

The initial indications on the fourth quarter of the yields looks (expletive); if that is the case, the profits this year will be down 10 percent, and we've given you a much broader range of yields for the next 12 months, ranging from a decline of 5 percent to a decline of 20 percent.

I would be amazed if the declines are more than 20 percent.

I'm sure there is a possibility declines could be less than 5 percent, but wherever we can we are going to be offering lower fares than any other airline, and building an impregnable position across Europe.

And the fly in the ointment, then, is how the hell do we deal with whatever it is that comes out in the Charleroi decision?

But certainly at the moment it looks to be a complete dog dinner.

Mary Scalemi (ph).

That question has been withdrawn.

Jim Parker.

(multiple speakers)

I have a follow-up question.

Just having watched Southwest for many, many years, my question is will you promise me that you won't resign as CEO?

Because this company would not be anything near what it is and would not have a future nearly as bright if you were not there.

No, I think that is (expletive).

I think this company stands on its own.

It may have needed me 10 years ago.

There is a much deeper, wider management team at this company now than me.

I am sadly and depressingly replaceable and dispensable, and at some point in time in the future it will replace me.

I suspect it won't be in the near-term future, although I don't doubt there are some people who would like to see me resign or fired.

Look, we've had a very good run for the last 12 years;

I don't believe this run has ended, but we have much better, wider, deeper management than just me.

We couldn't run Europe's third-largest international carrier on my own, and in 2 years time, Europe's largest international carrier.

It really doesn't depend on me anymore, although I like to think I make my contribution.

But I think the question raised by Peter Eavis is a fair question.

There are undoubtedly some people who I irritate very badly.

We are undoubtedly a somewhat feisty and confrontational organization.

And I have little doubt that there are politicians and bureaucrats, and certainly high fares airlines around Europe, who are lobbying incredibly hard and incredibly vigorously to not just bring down Ryanair, but to bring down the entire low fares airline sector in Europe.

But as to my indispensability -- no, it's a myth.

Michael, you have a great management team around you.

That is true.

Despite me, not --

But you're at the helm, okay?

And you have done very well in the past, and I think in the future as well.

Liam (indiscernible).

(indiscernible) here from ABN Amro.

I was just wondering what you think of the proposition that maybe the high fare network carriers are learning to compete by offering lower fares and lower services between primary airports?

Is that (indiscernible) on your yields (indiscernible) have to offer lower, lower fares to attract those secondary (indiscernible)?

I wouldn't give that argument to much credence at the moment, Liam.

I see no evidence of any high fares airline that has learned to compete with our prices or our service.

I know, obviously speaking in Irish context, (indiscernible) have rightly been given a lot of credit for cost reductions and replicating a lot of the elements of the Ryanair model in the recent years.

But an awful lot of what they're doing is simply withdrawing from routes where they have faced head-to-head competition with us on the Irish/U.K. provincial routes.

They've withdrawn completely from London Gathrig (ph), London City, Dublin Bristol.

And they have reallocated aircraft onto new European routes, where they don't face competition from Ryanair, where they have the benefit of a 100 percent discounted arrangement from the publicly owned Dublin airport for a number of years on those new routes.

Now clearly, this negative decision on Brussels -- one of the first discount arrangements that is going to get (expletive) up on this is going to be (indiscernible) cost base on all these new routes out of Dublin to Europe.

British Airways has withdrawn from London; it has reduced capacity on London/Dublin; it's withdrawn altogether from Gathrig Düsseldorf (ph); it's withdrawn altogether from a number of the Gathrig routes.

So I don't think that is the case, but I think -- again, I say that we still don't know what's going on in the fourth quarter.

It undoubtedly has some impact all over the system, that British Airways are offering lower economy fares, (indiscernible) are offering lower economy fares, but not as low as Ryanair.

They haven't affected our load factors; they haven't affected our market shares, which continue to inexorably increase.

But I think they effect generally just the volume of people traveling, and the amount of money they are prepared to pay.

We have a follow question from Robin Horine.

I just wanted your clarification on the issue, if you thought that flying to secondary airports is an issue behind the yield pressure that you're feeling at the moment, given the fact that the (indiscernible) environment in Europe is seasonally very weak at the moment, and therefore choosing Barcelona as an example -- if people prefer to fly with EasyJet and British Airways on a cheap tickets, as opposed to flying with -- to Girona with Ryanair on a cheap ticket.

Which, Girona being 100 kilometers away from Barcelona center -- whether that was an issue putting pressure on yields?

Sorry, Robin.

For some reason the phone line broke up at the start of the question, but I got the second half which was the -- say, if you take the Barcelona performance.

The answer is no.

If anything our performance on Barcelona -- we are flying on the London/Barcelona route for less than 12 months.

And in that period of time we've gone from, obviously, a zero market share to in the month of December, a 29 percent market share.

The market leader on that is EasyJet with a 33 percent market share, but they fly to Barcelona from three different London airports -- Gathrig, Luton and Stansted.

We only fly there from Stansted.

At the rate we are growing, we expect to overtake them sometime in the next couple of months, even though it is not our objective to overtake them.

But we only fly there from one airport in London.

So it would appear now, what appears to be driving it is clearly Ryanair offers the lowest fares to Barcelona -- the fact that EasyJet have had to reduce and are offering special fares, lowest-ever fares on their Barcelona routes in November, December and January, would appear to suggest that they are feeling the competition and trying to respond, but at lower fares and yields. (indiscernible) Barcelona is just one destination of 146 destinations.

I think what will transform our presence in Barcelona this year is the fact that instead of just offering one destination out of Barcelona, i.e. London/Stansted, we will now be offering 16 destinations, because will have a base there.

And we're linking it up to places like Paris, Rome, Sardinia, Frankfurt, Stockholm.

We are just going to explode in Barcelona this year, even despite the fact that the airport is 100 kilometers outside of Barcelona.

It doesn't seem to have any effect on the traffic, and nor we suspect on the yields.

I'm not sure whether that answers the question, because as I said, we missed the first half of it.

So come back if it hasn't.

The first part of my question was the choice of secondary airports, is that having -- do you think that has an impact on yields in an environment where ticket prices are already low at the moment, seasonally at a very low period at the moment?

To come back on that, I think the choice of secondary airports undoubtedly has an impact on yields.

The yields (indiscernible) of the airports are lower, but the costs of secondary airports are fundamentally lower, which is why our margins are four times higher than anything EasyJet has ever recorded.

And we have a margin of 20 percent for the year when most of the European airlines are losing extraordinary amounts of money.

But clearly, this Charleroi decision -- if it proposes to impose some kind of Stalinist regime on airport charges that says secondary airports must have the same charges levels as primary airports, then yes, that is all up in the air again.

And we don't know what the outcome of that will be, but I think politically the European Commission will have an impossible task on its hands.

Because it is effectively going to close most of the secondary and regional airports around Europe.

Thank you, sir.

There are no -- oh, we have a follow-up question from Damian Horth.

To follow-up on Robin's question there.

Given that your guidance is virtually breakeven for Q4, and as you grow into a much bigger airline, with -- dare I say it -- a more traditional profile, do you think we'll see the seasonality of your business change to one which is more traditional, i.e., most of the profit occurring in the summer and breakeven or even losses in the winter?

Particularly as your route network changes and becomes sort of more focused on (indiscernible) destinations?

I don't think so.

I expect -- although, clearly, we're not going to do it in the fourth quarter if the numbers are -- if the yield decline is as we predict -- we expect -- the seasonality in our business tends not to be on the load factors but on the yield.

It is our objective to be profitable every quarter.

Now I hear a lot of contradictory (expletive) from competitors saying that we have a very seasonal model because we fly from -- to fun destinations and we make our money in the summer and we lose all our money in the winter.

And then out of the other side of their mouth they tell you -- well, we have a high percentage of business traffic, which is counter-seasonal because the business traffic is not flying in July and August, it tends to flying during the off seasons.

So I wouldn't believe what a lot of people say.

A lot of people just come up with excuses why they lose lots of money in the winter.

We -- the only excuse I can give you why we will lose money -- we made money in the third quarter and we lose a little bit of money in the fourth quarter is that the yields have fallen by 25 to 30 percent in the fourth quarter.

We will still be profitable for the winter six months and for the half year and for the full year.

We don't expect to be expanding, or see the business change to a raft of sun destinations.

We're never going to fly to the Ibiza’s (ph), (indiscernible), (indiscernible), (indiscernible).

And we continue to think that our growth will continue to be spread across our European basis, across our European routes.

But I don't like to go too much further out than the next 12 months, but for the next 12 months we will expect -- subject to the yields coming in roughly at 5 or 10 percent -- to be profitable, to be profitable in all four quarters.

But if the yields fall by more than that, that could change.

I think we're best off at the moment not making too many predictions, given that we can't even predict with great accuracy where the yields are going to be for Q4.

Thank you, sir.

There are no further questions at this time.

I would now like to turn the conference back to yourself for any closing or final remarks.

I would just like to thank everybody again for participating in the conference call today.

Michael and Howard have had to leave early.

We have (indiscernible) a roadshow going all over Europe, the U.K. and the U.S. for the next rest of this week.

I myself am in New York tomorrow; happy to meet anybody who wants to (indiscernible) at the Jim Parker Airline Conference.

I am in Boston on Friday.

I think I will leave you with a couple of thoughts.

Firstly, yes we have issued a trading guidance today that is a 10 percent decline in profitability.

I would regard this as an inevitable blip in what has been a very strong profit run over the past six years since we've been a public company.

The margins for this year will still be 20 percent.

We are still very profitable.

We still have a huge cash mountain, despite the fact that we offer the lowest fares in every market in which we operate, and it's up to our competitors to find a way to compete with us.

I think we are in a period of intense competition, where we are competing -- competition from a lot of loss making flag carriers and start-up low fares, or copycat carriers.

That may continue for maybe six months -- maybe a year.

But through that, we continue to expect Ryanair to grow in a disciplined faction.

The capacity and the traffic growth for the next year or two will be significantly lower than what we've delivered the last two years.

We suspect that the growth will be somewhat easier given that we will not be opening up radical new bases as we have in the last couple of years.

It will now be much more predictable growth, and we would expect to continue to deliver strong profit performance, strong traffic growth performance, and strong shareholder returns.

I fully accept that the share price will take a beating today and over the next couple of weeks, but we think it is an investment in the medium and long-term.

Southwest has had periods in its history where profits have taken a dip for a period of time, or the share price has taken a dip for the time -- it's still the mother and father of low fares airlines, and by now (indiscernible) the largest domestic airline in the U.S.

I might believe that Ryanair is building a similar position here in Europe.

Other than that, I think we will have hopefully the detail of the Charleroi decision next Tuesday or Wednesday in Brussels.

We will be going to Brussels.

We will be holding a press conference and we may even schedule an investor conference or a phone -- investor dial-in conference, just to brief people on what's in it and what our response will be to it.

Don't expect an early response, because I think part of our response will be dependent on talking to Charleroi Airport and seeing exactly what the government -- the Belgian, Irish and other governments are going to do with it.

But you can take it that not just Ryanair, but all of the other -- a lot of the European governments will be resisting strongly any attempt by the Commission to roll back 20 years of deregulation and low fare travel in Europe, and to impose some kind of Communist regime on airport charges which says that everybody pays the same high costs, so that we have a level playing field for the high fares, loss making flag carrier airlines.

With that, ladies and gentlemen, thanks again for participating today.

Hope to see you all on the roadshow today, tomorrow, Friday.

If anybody has any follow-up questions, please feel free to (indiscernible) through my office in Dublin.

And with that I will sign off.

Thank you very much.

Thank you ladies and gentlemen.

That concludes today's presentation.