Ryanair Holdings PLC (RYAAY) 2008 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Ryanair First Quarter of 2008 Conference Call.

(OPERATOR INSTRUCTIONS)

I would now like to hand over to today's Chairperson, Mr.

Michael O'Leary.

Sir, please begin your meeting and I will be standing by.

Okay.

Thank you, Frances.

Good afternoon, ladies and gentlemen.

Welcome to the Ryanair First Quarter Results Conference Call.

Normal format, I'm here with a group of the guys in Dublin, Howard Millar is in London because he's doing the PR today.

I will just briefly run through the results for you, run through the MD&A and then we'll open it up to questions and as many answers as we can manage.

Firstly, all of the results, the shareholder presentation, the MD&A has all been published on our website www.ryanair.com, together with the guaranteed lower fares in Europe.

So, if you want either our results or the lowest fares, please feel free to visit the website at your convenience.

As you have seen this morning, we announced record first quarter profits, up 20% to EUR139 million, after tax.

Traffic in the quarter grew by 18% to 12.5 million.

Revenues rose 22% to EUR693 million.

Ancillary revenues grew strongly by 53% to EUR117 million, primarily again due to the increased penetration across the entire range of ancillary products.

Something we've been talking about for the last number of years.

Ancillaries now are on target to account for 17% of total revenues and we expect this will rise to about 20% over the next 3 years.

Unit costs, over the quarter, have risen by 5%, primarily due to doubling of airport charges in Stansted, significantly higher airport charges at Dublin Airport and also a significant one-off increase in staff costs.

Staff costs rose 34% to EUR75.9 million.

That was due to our volume growth, a significant step up in cabin crew recruitment and there's also about EUR7 million of that is a provision for share options which were granted during the quarter.

In terms of key issues, obviously for us it continues to be tackling costs.

A lot of the slighly raised guidance for this year does not come from a more buoyant view on the yield environment, it comes from locking away our renegotiating costs and locking away those costs for the rest of the year and that's where the improved guidance is coming from today.

A significant amount of that is coming from reducing our sitting, 7 of our 40 aircraft on the ground in Stansted this year.

Stansted, the BAA Stansted has become a real problem for us.

Now only is it by far and away our most expensive airport in our universe, but the service we are getting there and our passengers are getting there currently is nothing short of appalling.

As you know the airport has doubled prices or its charges to Ryanair in April of this year.

And bad enough, to be paying double the charges we're presently paying, but to suffer on top of that woeful security services, long queues, frequent passenger and flight delays because passengers can't get through unmanned security -- or under-manned security at Stansted.

It's just simply unacceptable.

Passengers are also now suffering significant difficulties being stuck in long queues, getting through passport control on arrival into Stansted.

Now, we have many cases of passengers who are spending more time either trying to get through Stansted security on the way out or passport control on the way back in, due to understaffing, than they are onboard our aircraft.

Part of our strategy with that then, we have talked to Stansted over the last number of months.

We have been ask -- or trying to negotiate a lower cost airport agreement or discount through the difficult winter period.

Being a monopoly and a price incentive monopoly, they've basically told us to go away.

And so accordingly, we've decided to sit 7 aircraft on the ground there this winter.

We will ground them from November through to probably early March, although we will probably fly them at some stage over the Christmas period and again with Easter coming in early March.

Some people have been asking why we won't lease them out.

Well because we can make some money for them over the Christmas period and again at Easter, which is coming early in March.

And frankly, there isn't much of a wet lease market for aircraft available from November through to mid-December, can we have them back again at Christmas, and then we give them back to you at January until about the end of February.

We will see some ad hoc lease business come from those aircraft, but fundamentally it is a bizarre situation at Stansted that it is now more profitable for us to sit aircraft on the ground than it is to fly them.

That will generate a significant cost savings for us at Stansted this winter.

The aircraft where we have those slots for 40 aircraft, the aircraft will fly again from Stansted next summer.

But essentially as Stansted continues to overcharge for the fairly (expletive) facilities and the appalling service we have to endure over there, we're frankly not going to fly flights where we're going to lose money by setting very low fares and paying very high airport charges.

We have complained about the BAA monopoly and the Stansted overcharging at Stansted to the regulator in the UK, the Civil Aviation Authority.

They have all the regulatory power or -- they have all the regulatory spine of a poodle.

Every time the BAA wants something the CAA will roll over and recommend it.

We are viciously opposed to the CAA's recent recommendation that Stansted has no market power and therefore should be dedesignated.

We've recently had a meeting with the Competition Commission highlighting tell that the CAA are idiots, that Stansted has doubled the charges -- BAA has doubled the charges at Stansted this year, which is a prima fascia evidence not just of market power but in fact of monopoly power and abuse of monopoly power.

We're strongly urging the Competition Commission to break up the BAA airport's monopoly.

Anybody who's gone through a London airport this year will realize this monopoly just doesn't work and the idea that Stansted will be allowed to waste another GBP4 billion, building a second runway in a second terminal that should be built for less than GBP1 billion is simply unacceptable to us.

Sadly, we have similar issues here at Dublin Airport, our favorite Irish airport monopoly, again run by a bunch of idiots.

The evidence of that is more -- has been highlighted more recently with the DAA's confirmation at the weekend that they managed to spend EUR47 million on consultants last year.

That was equivalent to the EUR50 million total for annual profit they made in 2005.

More recently, we're objecting to their proposal to extend Terminal 1 with a new shopping area.

It doesn't -- they've already confirmed to [onboard canola] that this new shopping area won't add whatsoever to passenger capacity.

And it's passenger capacity is the problem at Dublin Airport, not bloody shopping space.

More recently the DAA have also confirmed they have a new plan now to spend EUR450 million in total upgrading and refurbishing Terminal 1, which is the awful facility our passengers endure at the moment.

And at the same time, they propose to reduce the capacity of Terminal 1 by 40%, from 25 million passengers back to 15 million passengers per annum.

Only in a regulated La-la land like Dublin would a -- and a government owned airport monopoly get away with proposing to spend EUR450 million upgrading a terminal facility whose capacity they intend to reduce by 40%.

Sadly again, in Ireland we have an airport regulator who's an idiot.

He issued an updated report yesterday on the DAA's application for an airport charges increase.

While finding in his report that Dublin Airport have significantly -- having found in his report yesterday that the costs proposed by the DAA for the T1 -- Terminal 1 expansion are very high relative to benchmark evidence and also found debatable evidence suggesting that the DAA has designed a new second terminal with considerable excess capacity over what normally might be expected, he has decided in his wisdom to do nothing.

Which is, as you know, the preferred course of action for most aviation regulators.

That is to sit on their hands while the airport monopolies (expletive) away our money and then turn around and try to charge our passengers significantly higher airport charges.

We therefore will continue to oppose both at the planning stage and in the courts the plan of the Dublin Airport Authority to waste hundreds of millions of pounds building facilities that we neither want nor use and also to lavish EUR50 million a year on idiot consultants submitting reports to a hapless aviation regulator.

On the good news front, we shortly submit our appeal to the European Court of First Instance on the European Commission's recent decision to block our offer for Aer Lingus.

As you know, the offer is now dead in the water, although it would have been anyway even if the regulator had approved it since the government and its -- the trade unions who control 45%, 47% of the company weren't interested in accepting our offer.

It's interesting, however, though that since the withdrawal of our offer, which was at EUR2.80 per share, the Aer Lingus share price seems to be stuck somewhere below EUR2.50, which would seem the market would share our view that there is a better way forward for Aer Lingus, but Aer Lingus's management don't seem to be aware of it yet.

Nevertheless, we intend to continue to grow strongly over the coming winter.

I would caution everybody, there seems to be a -- there is some excess euphoria this morning with this morning's results.

This morning's results are good, but they're not great.

The yield performance has been moderate, we've had flat yields but 18% traffic growth.

Unit cost increase of 5% is simply unacceptable, but we're going to be engaging in -- continuing to fight with airports which has been the principal cause of that cost increase over the coming months and years.

We have pretty good visibility on yield for the remainder of the second quarter, or the summer period and we therefore could be -- are pretty confident that the yield -- there'll be a small decline in yields in the second quarter.

We have, however, no visibility and very few bookings at the moment for the two winter quarters and we would be very cautious about the outlook for yields this winter.

We think it will be a very difficult winter.

If you look at our principal market in the UK, passengers are now being robbed by the government for double airport departure tax.

On EU destinations that's now 10 pounds per ticket.

On non-EU destinations, like our London/Morocco route, passengers are paying up to GBP40 for a one-way ticket.

Add that -- combine that with the doubling of costs and charges at Stansted Airport, add to that the abysmal service that passengers are suffering at Stansted Airport and we think many people will continue to believe this winter, look it's just not worth flying through these (expletive] airports at these high government taxes.

And Ryanair simply won't be in a position to continue to lower fares or to absorb these increasing taxes and these increasing airport charges.

So, we would be very cautious for the winter on yields.

We have little visibility and therefore we believe that the yields in the second half will still -- are still likely to fall by between minus 5% and minus 10%.

However, thanks to the cost reduction measures which we've implemented in the first half of the year, the significant cost reductions that will arise by grounding 7 aircraft, 7 Stansted aircraft this winter, that will allow us to take out or to slow down the recruitment, winter recruitment of some pilots, some cabin crew.

It will certainly significantly reduce losses made by operating some of these new routes and new route development during the winter period.

We do now believe that we can give you a slight raise in the guidance for this year.

So profits this year we expect now to rise by somewhere of the order of 10%, whereas previously we were guiding 5% increase.

One final point, in the last 2 months, as you know we announced a share buyback.

We've completed at the moment about two-thirds or sorry, a bit more than that, we've bought back about 2.5% of the issued share capital, acquired about 37.6 million shares at a cost of about EUR187 million.

The authority -- the shareholder authority for such a [payer] buyback expires at the AGM on September the 20th next.

Okay, with that, Howard, I'll hand over to you.

Can you take us briefly through the MD&A?

Okay, thanks Michael.

Profit after tax increased by 20% to EUR138.9 million, compared to EUR115.7 million in the quarter ended June 30, 2006.

These results reflect an 18% increase in passenger numbers, flat fares, including checked in baggage revenues and very strong growth in ancillary revenues.

The growth in revenues is offset by a combination of increased airport costs, which rose by 50% to EUR101.8 million, arising from the doubling of airport charges at Stansted and higher charges at Dublin Airport, along with a one-off step up in staff costs due to higher cabin crew ratios, which rose by 34% to EUR75.9 million.

Total operating revenues increased by 22% to EUR693 million, which was faster than the 18% growth in passenger volumes as average fares remained flat and ancillary revenues grew by 53% to EUR117.1 million.

Total revenue per passenger, as a result increased by 4%, while passenger load factor decreased by 2 points to 82% during the quarter.

Total operating expenses increased by 25% to EUR535.5 million due to the increase level of activity and the increased costs associated with the growth of the airline.

Fuel, which represents 36% of total operating costs compared to 39% last year increased by 14% to EUR190.4 million due to a decrease in the U.S.

dollar cost per gallon, a positive movement in the dollar exchange rate versus the euro and a reduction of fuel consumption arising from the installation of winglets.

Staff costs rose by 34%, reflecting an increase in cabin crew crewing ratios and airport and handling charges, increased by 50% to EUR101.8 million, arising from the doubling of airport charge at Stansted and higher charges at Dublin Airport.

As a result, unit costs increased by 5% and operating margins decreased by 1% to 23%, whilst operating profit increased by 15% to EUR157.5 million.

Net margins remained flat at 20% for the reasons we've just discussed.

And earnings per share increased by 19.7% to EUR0.0898 for the quarter.

Turning to the balance sheet, the strong growth in profitability continues to positively impact the balance sheet with total cash increasing by EUR91.3 million to EUR2.289 billion, despite funding a EUR40 million share buyback, we'd only started the share buyback at the 30 of June and an additional EUR96.6 million in capital expenditure, largely from internal resources.

Total debt, net of repayment, increased during the quarter by EUR23.2 million.

Shareholder's equity at June 30, 2007 increased by EUR94 million to EUR2.634 billion compared to 31st of March, 2007 due to the EUR138.9 million increase in profitability during the quarter.

The (inaudible) -- sorry, the exercise of EUR2.9 million of share options, and a further EUR7.5 million arising from the impact of IFRS accounting treatment for derivative financial assets, pensions and stock options offset by the share buyback, as I mentioned above, of EUR40 million.

I'm just going to address some of the questions - or a part of some of the questions we know will come up.

You will note during the quarter that depreciation and amortization was 2% lower than the comparative quarter last year.

This reflects a number of issues, which I'll just deal with.

Firstly, as you're aware, since our 2005 deal with Boeing, we're now adding new lower cost aircraft into our fleet.

Our fleet deliveries are obviously being positively impacted by the strengthening of the euro against the dollar.

However, we've also just recently entered into agreements with Southwest for 20 of our aircraft.

This has turned our attention to look at things like residual value.

Historically, residual value was 15% of the original costs of the aircraft, we've now increased that to 15% of the market value.

We've also looked at our maintenance or amortization provisioning and we have used a historical exchange rate of EUR1.20 to the dollar and given the recent movement over the last 2 years or so, we've now increased that to 1.30.

This has particularly an impact on the engine maintenance.

And also, our experience, having gone through the first cycle of heavy checks on the aircraft, the 8 year heavy checks, these checks are coming in less than we originally estimated.

The combination of these factors has meant that our depreciation amortization has not grown in line with the growth in the number of hours we've flown or indeed the aircraft is operated.

And 50% of the reduction in depreciation amortization is due to the residual value impact and 50% is due to lower amortization due to the impact of the exchange rate.

The full year impact, we would estimate, of these is about EUR20 million.

And as I said, 50% is reflecting the positive impact of residual value, 50% due to lower amortization charge.

So hope that's cleared up that item for people and will help them with understanding third quarter.

I'll pass back to you, Michael, for questions.

Okay.

Thanks, Howard.

Frances, can you open it up for questions now please?

Thank you, sir.

(OPERATOR INSTRUCTIONS)

Our first question comes from the line of Stephen Furlong.

Please go ahead with your question, announcing your company name and city location.

Yes, it's Stephen Furlong from Davy in Dublin.

Good afternoon, everyone.

Okay.

Just a couple quick questions.

One, maybe on the revenue environment you could talk to me about whether the strange weather pattern we've having in the summer, record bad weather in Northern Europe, has it any impact on bookings in the Q2, maybe late bookings, July/August/September period?

The second question, I note that the Q1, the ancillaries were exceptional and maybe you could just give some color as to where those ancillaries have been particularly strong and do you see that continuing.

And then, finally, you might just go back again, Howard -- maybe this is for Howard.

On the depreciation, had a couple of questions on that in terms of your move from cost to market values and where do you get those values?

Are they from appraisers?

Or how did you determine that?

And, kind of corollary of that, you wouldn't be concerned if there's some downturn in the market and by your own admission, the market's very hot right now, and whether that is not being a conservative stance or not.

Okay, thanks, Stephen.

Revenue environment at the moment.

It's hard to know whether weather patterns have that much effect on us.

What drives the revenue environment and the bookings is our -- the rate and aggressiveness in which we launch seat promotions.

I think there was no doubt that the -- one of the reasons we ascribed them -- and the full year results slightly weaker bookings was to the exceptionally good weather we had in Ireland and the UK in April and May.

Currently we've had (expletive) weather through July and August -- sorry, through June and July.

But I think that margin is around the edges.

It's certainly helping been bookings at the moment, but then we've been very aggressive with seat promotions for the last 2 months, probably overly aggressive.

We've been out there aggressively marketing the price guarantee.

The price guarantee seems to be having -- is a very good message.

This is where we're offering, if you can find a lower fare at any other -- than any competitor in any Ryanair route we will refund double the difference is proving a compelling message because it's one that travels across all markets in Europe.

But I wouldn't get too hung up on the weather.

Good weather, bad weather, I don't think it will make that much difference around the edges.

Ancillaries, there haven't -- I mean, there's been no single exception of things.

They've all -- we've been working hard on penetration.

If you remember, we've been saying for the last 2 years and ancillaries were then 15%.

We expected with increase penetration, it would rise to about 20% over a 5-year period.

Looking at the number, clearly baggage is now in there in the comparables this time.

Last year -- the one that isn't [footed] relatively in overall terms because it's small is priority boarding fees are in there and baggage, or the excess baggage is in there.

But we've had a very good performance in terms of penetration uptake across the board, at hotels, car hire, a jump in in-flight spending as well through, we think, more focused product on board and more aggressive pricing on board as well.

Howard, you want to switch on back on the depreciation point?

Yes, in terms of the appraising value, we used a report prepared by three different appraisers.

We took the lower end of the range.

We haven't reviewed our residual values since 1999, since we got the first delivery.

So some, almost 9 years later, we've had a look at it, and yes, you're right, Stephen, the market is particularly [harsh].

It's particularly hot at the moment.

But we took a conservative range, the lower end of the range, and given, for example, there is indent inflation into market prices, this is the indexation -- or escalation --

Sure.

-- we don't expect to be revisiting this for some time.

So, I think it is a lower end of the range, conservatively priced and I think it's appropriate if every so often we would try and revisit this issue.

And 8 years to me is a good interval.

Now, have you anything else on that, Stephen?

No.

That's great.

That's great.

Thanks.

I would stress, as Howard has said, we're talking about 15% of market value as opposed to 15% of the original purchase price.

So it's not a -- it's not a significant number although multiplied across the seats of 130 aircraft it becomes an important number.

There's an argument at the moment, which clearly we've rejected, given that we're now selling these air -- selling some of our 7-year-old aircraft, for pretty close to what we originally paid for them, that there shouldn't be any depreciation at all.

Now, that would clearly be far too optimistic a view, particularly in a cyclical business.

But we're not talking about any kind of -- it is still a very conservative depreciation policy.

That's great.

Thanks, Stephen.

Our next question comes from the line of Chris Avery.

Please go ahead with your question, announcing your company name and city location.

JP Morgan in London.

Three quickies.

What happens to the 70 odd pilots who fly these seven 738s at Stansted over the winter?

Do they just go on short time working?

Secondly, do you depreciate the aircraft while they're on the ground, presumably you don't.

And finally, when does the On-Air telephone start?

Thanks, Chris.

Firstly, the 70 odd pilots, they will continue to work through the winter, but we will slow down the rate.

If you remember last winter, but if you go back two years ago, we had a shortage of pilots because of the bottleneck in training and simulator availability and we had to ground some aircraft on short notice and lease in some planes.

Last year we probably over-cooked the recruitment and probably over-recruited pilots.

This year we think we have a better balance, but by grounding 7 aircraft we are going to delay some of the pilot recruitment into the first quarter of next - of fiscal '09 and we get rid of some holidays and some backlog of leave.

We will also allow maintenance to take or to undertake a significant -- we're going to skew a lot of our maintenance this winter into November, December, January, February, which will give uss more kind of useable hours during the spring and the autumn period.

There's a lot of reasons, but I mean the core reason is simply to save the egregious charges we're being hit with by Stansted.

And (inaudible) also by having a -- taking the number of spare aircraft up to 10 or 11 aircraft, it will significantly improve our already market leading punctuality throughout the winter because we simply have spare aircraft at most of our European bases throughout this winter.

Depreciation, we would still depreciate the aircraft while they're on the ground.

It's -- depreciation happens on an annualized basis.

You can't not depreciate the asset just because you're not using it.

And On-Air -- we're still working with On-Air hand set costs.

They've achieved some of the regulatory hurdles in recent weeks.

We would hope to have the first aircraft fitted by the end of this calendar year and begin to see revenues.

We're running a trial period.

It will be in the last quarter, the last quarter -- this fiscal year, or the first quarter of calendar 2008.

We would expect then that rollout then to have - we'll have a significant proportion of fleet fitted for the summer of calendar '09.

Calendar '09 or '08.

I'm sorry, my apologies.

Calendar -- summer of calendar '08.

Oh, thank you.

Michael O'Leary.

Fiscal '09.

Very good.

Thanks, Michael.

Thanks, Chris.

Our next question comes from the line of John Mattimoe.

Please go ahead with your question, announcing your company name and city location.

Good afternoon, John Mattimoe from Merrion Stockbrokers in Dublin.

Couple of questions if I may.

First off, just in relation to the demand backdrop, has there been any change in the general demand environment since you updated 8 weeks ago on the full year results?

Secondly, then just in relation to the yield trends you've outlined your expectation for the summer.

Just in relation to Q3 and Q4, you posted this, Michael, in your opening comments.

But the reasons why you're expecting it all for Q3 and Q4, is it mostly because the seasonality would be exacerbated by things like the APD and so on and that just exacerbates the price sensitivity in the quieter months?

In other words, you might need more [motion ]at that time, or is it down to tougher year-over-year comparisons and maybe with timing issues such as the baggage fees rolling up through the last fiscal year?

The next question then was just in relation to unit costs, Howard.

The 5% decline that you referred to, is that on a per passenger basis or is it per seat.

And it should -- would it be roughly smooth over the 4 quarters, or will it be a little bit more benign in Q3 and Q4, given that you'll be drawing back your capacity in Stansted?

And then, lastly, just in relation to the aircraft, the aircraft [ibing] that you're having.

Just in relation to the reason you're doing it, is it mostly because of the high costs in Stansted, or is it just maybe because there's an increased seasonality in the network.

In other words, is it happening in other airports rather than just standard -- Stansted?

And, just in relation to the mechanics of how it's happening, will the 7 aircraft just sit in the tarmac most of the winter, or would there be just maybe midweek periods and then they might be used at weekends, or will it be moved to other airports?

And then, just in relation to the fact that that's bringing back your capacity guidance for the year, would that have any impact on any volume incentives in any of your airport deals.

And lastly, is this likely to be an ongoing feature in the model in the longer term that you'll be taking aircraft out of the network during the winters?

You sure you haven't any more there you want to slip in, too?

I'm sure you might -- I might think of one or two more, Michael, when you're answering those.

I'm having a hard job writing it all down.

Okay.

I'll ask Sean Coyle who's here with us just to take the first two, that is the demand backdrop and the yield trend, Q3/Q4 seasonality.

Okay, John.

The demand backdrop resource hasn't really changed.

I mean the yield fall just 0.5% have to be taken in the context of a couple of different things.

Firstly, the bag revenue is included within that yield drop.

So about EUR2 out of the EUR46 is additional bag revenue over and above last year.

And you remember, when we introduced the bag charge, only part of the passengers traveling in the first and second quarters, last year, were paying for a bag charge.

Passengers who had booked prior to a previous date didn't have to pay the bag charge.

Secondly, the year on year comparative ending at the winter includes a higher bag charge, which we had in the winter.

And therefore, we won't get the benefit of that this winter when we're looking at year on year yield declines, looking at the bag charge in the winter period.

Another element to consider in relation to the average fare just gone is that the APD in -- or sorry the PSC in Stansted, the higher PSC in Stansted and the higher PSCs in Dublin are included within those average fares.

So the underlying yield has actually fallen by more than 0.5% when you consider the fact that the PSCs of both of those airports are included in that average fare.

The demand scenario or the demand hasn't really changed since we last spoke to you.

Looking forward into the winter period, we would see the APD having a big impact.

That's part of the reason for the aircraft sitting on the ground over the winter period.

That higher bag charge, obviously in the winter, last year, gives us a bigger impact in terms of average fare declined winter on winter this year.

And generally, demand will be relatively soft over the winter period.

We don't have any visibility on it at the moment.

A very small level of sales from November onward, given that the winter schedule has now only been on sale for about a two month period.

We're seeing the same kind of booking patterns this month going forward as we had this time last year.

The traditional fill pattern.

But as to what the average fare will be for those months, we can't put a clear picture on it beyond the October period at this point.

Okay, thanks, Sean.

And can I give the unit costs here -- I'll give it to Neil Sorahan.

Neil, is it unit costs per passenger or per seat?

It's on a per passenger basis.

We're going to see a reduction there coming through the various items as Harold referred, the down of the aircraft on the ground in Stansted, the cheaper aircraft coming through on depreciation line.

Also the (inaudible - background noise) reduction from our fuel hedging.

We're 90% hedged out to the end of the fiscal '08.

So that will be coming through on a per passenger basis.

Key --

Sorry, Michael.

Just to clarify on that, will the 5% be relatively smooth over each of the four quarters or will there be any timing differences?

No, I think they're relatively smooth, John.

Okay.

Thanks, Neil.

Okay.

On the other issues, John, then the aircraft grounding, is it due to high costs at Stansted?

Yes.

We would -- as I said, we wrote to Stansted and asked for a break on the costs this winter, in which case we would have continued to fly those seven aircraft.

They basically turned around and told us to go away and you can understand why.

I mean if they're getting double the charges and suffering a 20% traffic drop, they're still way ahead of where they would have been the previous year and obviously the CAA, the regulator, haven't got the brains to pick this up.

We will keep the seven aircraft on the ground and it will not fit on the ground in Stansted again, if you sit them on the ground in Stansted you get stung for parking charges.

At almost all of our other bases, with the exception of Dublin, that other great regulated sales monopoly, we don't pay any parking charges.

So we'll simply take the aircraft out of Stansted, we'll park them -- spread them around, and have a kind of a spare, or a backup aircraft at more of our European basis.

We won't fly them at weekends, although we probably will schedule some of them to fly over the Christmas period, and then they will come back into service around the first or second week of March because Easter next year is early.

And we would want to be -- would be announcing some more new bases in the next couple of weeks.

A lot of those we would want to start serving those around the Easter period.

There will be some opportunity for us, again with some of the pilots to do some ad hoc and wet leasing stuff, but it will be Mickey Mouse in an overall context.

We'll pick up the money for over weekends when some other airlines are in trouble.

But it will be immaterial in the context of our overall numbers.

Our capacity guidance, I was running out of notes here.

I don't -- I mean will it be a future of -- will it be a feature of future winters.

You have to ask the BAA Stansted that.

If there's going to be a reduction of costs at Stansted, then no, we would rather fly these aircraft through the winter.

But if we're going to be screwed for a very high and unsustainably high airport charges at a (expletive) airport in Outer Essex in the mid of November, then frankly, no, it will be a recurring feature.

So it very much -- this is an issue of trying to reeducate some of these airport monopolies.

We may not have a choice in diverting the aircraft to other airport, but that doesn't mean we're necessarily going to fly these planes through the winter and lose money while we pay you.

And our capacity guidance.

I missed one, I --

Yes, Michael, it was just on the reduction and the capacity guidance or the traffic guidance.

Will that have a -- is there any potential that have an impact on your volume incentives in any of the airports?

Yes, no it won't.

Mostly we have no -- because we're now paying full published charge at Stansted there are no volume thresholds or anything else and its impact on other airports at the other end will be minimal.

I mean what we're trying to do is we'll be closing some routes for the winter and in most cases we've had discussions with those airports, they're more concerned to make sure they get them back next summer than they are worrying about any missed traffic thresholds.

So, it's of no issue.

Great.

Thanks very much for that.

Thanks, John.

Our next question comes from the line of Edward Stanford.

Please go ahead with your question, sir, announcing your company name and city location.

Good afternoon, it's Edward Stanford from Cazenove in London.

Just a couple of questions please.

First of all, just carrying on the theme of Stansted, clearly it's not a very satisfactory (inaudible) especially from your point of view.

What's the long term solution, do you seek to gradually migrate out of Stansted or do you just have to put up with the problems you're coping with at the moment?

Secondly, just quickly on the share buyback?

Presumably you can renew the authority for the share buyback and do you have a schedule for when you wish to complete the amount to be returned?

And finally, just on the present demand weakness, do you have any greater handle on what's causing it?

Is it principally a passenger duty or is there some underlying economic weakness affecting demand as well?

Thanks, Edward.

First one, the long-term solution to Stansted, we remain convinced the only long-term solution to Stansted and Heathrow and Gatwick is to break up the BAA monopoly.

We think they would be far better served by having spinning those out into three separate competing airports.

Primarily because if they were three competing airports, the first thing each airport would do would be to start building additional facilities more efficiently and cheaply than the BAA can manage.

We have already offered -- repeatedly offered BAA Stansted that Ryanair itself would build a second terminal there and fill it.

We could build it at a cost of about GBP200 million or GBP250 million sterling, a fraction of what they're proposing to waste.

But while they continue to operate in a regime that rewards them by giving them twice their income instead of 5 or 6 or 7% of their CapEx, there's no way they're going to look at lower cost CapEx solutions.

And while you've a bunch of idiots at the CAA regulating it and signing off on this abuse, nothing's going to change.

We're hopeful the Competition Commission may call for the breakup of the BAA monopoly, and anybody who's passed through the London airports, there has to be a better way than these kind of developing these Black Hole Calcuttas where the overriding objective is maximizing the retail spend instead of making it a pleasant and easy experience of passengers to get from the check in gate to the boarding gate.

Will we renew the authority for share buybacks?

We will.

I see no reason why we won't.

I think we should have it there in an ongoing basis.

However we have a -- and I said this at the last, or when we had the annual results.

We will complete a share buyback program of about EUR300 million and then that's it for at least 2 to 3 years.

We're not revisiting in the mean time.

Do we have any timelines to complete the existing EUR300 million program?

No, we don't.

I think we'll do it whenever we see it be pricing opportunities to do so.

In other words, when it is advantageous in terms of P/E earnings for the remaining shareholders.

We picked up a lot of stock under EUR5, in fact, we bought no stock over EUR5 in the last couple of -- in the last -- during this program to date.

We're very happy.

If we can pick up shares in Ryanair stock at under EUR5, we think it's a great buy.

Would we pay over EUR5, I have no idea.

We continue to monitor it as it goes along.

I think we continue to take advice from Davy and from Morgan Stanley, but there's no time line, there's no pressure on us to complete it by a certain date or at all.

The demand weakness, if you go back again to what was going on 3 months ago, I mean our difficulty was we couldn't identify why there was demand weakness.

A lot of it we ascribed to a combination, particularly in the UK market of doubling of APD, the doubling of the Stansted Airport charges and also just how (expletive) the experience is getting through an airport, in and out of an airport like Stansted has a turn off factor.

I do think that that will -- I think that was largely, or primarily the cause of it.

We've responded to those concerns by -- out there being more aggressive in terms of price promotions.

We've seen that coming through with increased market shares, pretty much across the board in the last month or two.

So I think the price [we missed] was probably short term, but may well be again be revisited this winter.

The jury is out there.

It's getting through the London airport is not a pleasant experience.

The APD it really is the most unfair, regressive and egregious, unwarranted taxation.

Particularly the flat nature of it.

People buying GBP1 fares from Ryanair shouldn't be paying 10 quid to Gordon Brown for some notional environmental tax.

But we think the market's going to continue very price sensitive.

I do think over the medium term a price sensitive market is very much in Ryanair's interest because we have the lowest fairs.

And in any time there's going to be a price war or a fare war, we will win it hands down because nobody else can compete with us on price or on cost.

So, frankly, we welcome price wars and if there's going to be another price war this winter we would quite welcome it.

I'm sure some shareholders would not.

But you've just go to learn, this is a -- we're playing a medium term growth game here.

We intend to double the traffic and double the profits over the next 5 years and if there's the occasional bumpy winter, then there's going to be the occasional bumpy winters.

The only people who are going to worry about it are those people who are taking short-term positions in the stock.

Thank you.

Thanks, Ed.

Our next question comes from the line of Mr.

Jim Parker.

Please go ahead with your question, announcing your company name and city location.

It's Jim Parker with Raymond James.

Michael and Howard, good afternoon.

Just a few things here, one you're going to have gains on the sale of aircraft, I gather those are not included in your 10% earnings guidance increase?

That's true, Jim

Okay.

Now you talk about ancillaries going to rise from 17% of revenue to 20% over the next 3 years, can you elaborate a bit on the incremental items, on board telephone I guess is one of them, but what else is there?

Nothing.

There's no incremental items in that guidance.

That guidance of rising over the -- over a 5 year period from 15% of revenues to 20% of revenues is straightforward increased penetration of car hire travel insurance, hotels, in-flight sales and baggage and flight change fees.

Okay.

And it appears that Easy Jet's fares may be down as much as 7% or 8%, yours were off 0.5.

Can you explain the difference there?

Is it bag charges or what is it?

Our underlying fares in the last quarter have been down.

I mean Sean said, it is being -- we include the core baggage fares, the core baggage, that is the check in baggage payments in the passenger yield.

So the market is soft out there, the underlying yields are down.

We would -- obviously passengers in the winter carry less baggage than they do in the summer, but we would welcome that.

We want passengers with fewer bags.

Its not our long-term ambition is to actually have no checked -- well, very little checked in baggage and not have the baggage revenue.

W e would then have much lower airport costs.

So I think, yes, we did notice Easy Jet's average fares are down, Ryanair's average fares, stripping out the baggage fees, are down and we would expect that to continue through the winter.

Okay.

Thanks.

Thanks, Jim.

Our next question comes from the line of Mr.

Joe Gill.

Please go ahead with your question, announcing your company name and city location.

Afternoon, it's Goodbody Stockbrokers in Dublin and just four questions.

First off, in relation to your passenger staff and airport costs going up strongly in the first quarter and you've guided that's going to continue for most of this financial year.

And what's your thinking now in terms of how that's going to roll into summer '08 and summer '09 on a per passenger basis?

I mean are we going to get back to some normal levels, do you see it plus or minus CPI or what's the sort of thinking on that?

And second, in relation to the aircraft sales and Howard mentioned earlier in discussing the depreciation issue, there's 20 aircraft have now been sold.

Is that actually done and dusted, and can you give us some insight as to what that means.

And, in terms of financially, how does it come through the accounts at the end of the year whether it in the form of cash flows or the exceptional gains.

And thirdly, your marketing cost per passenger obviously rose quite a lot from a low basis, and year on year, in the quarter.

And again, how long is that going to be sustained?

And one of the key items within that, they're pushing it up.

And lastly, in relation to the parked airplanes, do you have any issues in terms of accessing slots at Stansted, is there any risk of the airport looking for some of them back and keeping them by not using airplanes.

Thanks, Joe.

The first part of the question didn't come through -- your line broke up.

You want to know the airport and staff costs, rising, how that would flow through to 2008, is it?

Yes, just a -- they went up quite sharply a bit in this quarter.

Was there something else in there?

I thought there were 3 categories or was just airport and staff?

Just airport and staff.

Yes, principally, airport and staff next year we would expect will rise at a slower rate than revenues.

The regulator has come out this year and said that the DAA, the Dublin charges aren't - won't rise for another 2 years.

But clearly he's parking -- we believe there's going to be a significant rise there in 2009 unless he's going to restrain the kind of overspending that's going on at the moment.

And the situation in the UK is a little bit more unclear.

At the moment there's going to be an RPI increase.

The CAA has rolled forward the existing 5-year quinquennial review thingy so the charges will roll forward from April '08 to April '09 at the last year, the current review.

And then it depends on whether Stansted gets deregulated after that.

In which case we think they'll try and jack up the charges again, or does it continue to be regulated or does the Competition Commission recommend a break up.

It's too hard to say.

But those being the two big and most expensive airports, we would expect to see some price stability there next year.

And who knows, Stansted may even learn from this kind of overcharging at the moment and our cutbacks this winter that there's a better way here and that is offering lower charges to passengers instead of trying to scalp them every time.

Aircraft sales.

There will be sales there this year.

It would come through in the accounts in primarily in cash flow and as an exceptional item.

(inaudible) and you take out depreciation as well.

At the marketing cost per passenger.

There has been a rise, it's a relatively small number so don't get too concerned about the percentage increase.

It does include -- we put in there airport commissions are included in there from at the airports where they're selling things like excess baggage, change fees and the big increase in that is coming from those airport commissions where we pay the airport or the handling companies commissions on some of those passenger charges.

And it works very well because that's one of the reasons we've increased the penetration by rewarding them with a commission on the sales.

So instead of just waiting, everybody through there tends to be a little bit more eager to connect.

The parked are [cop] at Stansted.

The situation on slots is we would have the grandfather right to those slots this winter and summer, however by not flying those aircraft this winter, therefore we could not use them.

So we could notionally lose them this winter.

It's free for anybody else to come into Stansted and take up those slots for the winter if they want them, but they can't have them next summer because we would be using them again next summer.

We've no difficulty flying the 40 aircraft out of Stansted during the summer, but we're not going to fly the 40 aircraft out of Stansted during the winter at these high airport charges.

Frankly, and at the moment, it looks like Stansted have made just a bollix of the whole thing anyway.

We're not the only ones announcing significant cutbacks at Stansted.

Already this winter Air Berlin have announced significant reductions in Stansted, as have Sky Europe and --

From near to [worst]?

No, Sky Europe are moving too.

No, Sky Europe are actually moving to Lutein.

Air Berlin have a significant capacity reduction and Ryanair now a significant capacity reduction.

And if anybody else wants to come into to Stansted and take up these (expletive) slots at the very high charges that the BAA are letting, frankly they're more than welcome to them.

They won't last long.

Okay, and just 2 follow-ons.

On the aircraft sales, is it that you have sold 20 at this stage?

That's done and finished or not?

Another 10 coming through the accounts this year but have 10 -- have 20 actually been sold?

They're -- the contracts have been signed, but the deliveries haven't taken place yet.

Yes, okay.

And last thing.

Sorry, just on the buyback.

Has that passed back to your sales now from [federal roker]?

I think it passes back to us on Thursday this week.

Okay.

And then it remains active -- the open period is about a month from Thursday or 30 days from Thursday and then I passes back into the brokers or during the close period.

Oh, okay.

Thanks, Joe.

Our next question comes from the line of Mr.

Chris Reid.

Please go ahead with your question, announcing your company name and city location.

Hi there, it's Chris Reid from Deutsche in London.

I've just got, I think, three.

Just on the cash -- I'm sorry, with this detailed question.

The accrued expenses, the increase in that fell from EUR92.3 million to EUR36.3 on the cash flow million.

What exactly is this and sort of why has that fallen so much?

And then a couple that are less detailed.

Michael, I mean I suppose it would be really great if you were sort of taking this winter capacity cut back as a sort of an ongoing plan, because I guess it would indicate more capacity discipline in the tough times.

Are you sort of clearly saying that that's not the case and it's just a one-off, or are you going to leave your options open?

And then, the last one, just on the website, haven't seen -- I don't think you've moved already to an all-inclusive fare pricing structure.

Is that right?

In the UK is that right and is it time to sort of move to that fairly soon?

And how do you think that should affect the way that people use the website and book on the sales?

Thanks.

Thanks, Chris.

I'll take those in reverse order.

On the website, we are now all inclusive in all media advertising and on the homepage of the website.

The individual booking page at the moment can't be cut over to all inclusive because we're in the middle of changing over the entire software for the website to an updated version of open sky.

We expect that to happen by the close, end of this calendar year.

But the homepage, advertising, everything else is all-inclusive anyway.

But we're in ongoing discussions with the OFT on that.

But I think they've come around to the view, they've had a couple of meetings with the software providers themselves who now realize given the scale of Ryanair and the size of Ryanair it's impossible, or impractical to be -- to cut us over to make those booking pages as all inclusive to the booking process.

So the home page is all inclusive and then the final page is all inclusive, but the individual booking pages, which we would consider aren't advertising anyway, are not yet but will be, either by the end of this calendar year or the first quarter of calendar '08.

I think the issue for us, Chris, on the winter capacity cutback.

Look, if it's possible for us to operate these aircraft too in the winter then it makes sense to operate them.

If it's not profitable, then it makes sense to sit them on the ground.

You know we've had an exchange of correspondence with BAA Stansted saying you give us a break on the airport costs this winter, we operate these aircraft, we won't make a lot of money but at least we won't lose money.

You as well will get then another 1.5 million passengers this winter.

But these guys, have lost the bug and [one] of themselves.

They have a poodle of a regulator, they know they can get away with these kind of charges, and frankly, they're not minded to reduce the winter charges unless somebody like Ryanair and the other airline customers start cutting back capacity.

So I think it's important for us that we leave the carrot out there, even to a rapacious monopoly like the BAA, to say that these cutbacks this winter may not be a permanent feature, as long as you guys are a bit more customer sensitive in terms of the pricing, particularly during the (expletive) winter period.

I mean if all we do is say, no we're going to ground a bundle of aircraft every winter, then there's no incentive for Stansted to start lower charges, particularly during the difficult winter period.

And the accrued expenses -- I'm not sure the guys were able to follow the question, were they?

We can't track those numbers, Chris, so maybe what it might be, if we had to, would you just email Jimmy Dempsey or David here with the question offline, we'll give you the analysis.

Okay.

That's great.

Thanks very much indeed for that.

Thanks, Chris.

Our next question comes from the line of Andrew Light, please go ahead with your questions sir, announcing your company name and city location.

Okay, hi it's Andrew Light, Citigroup London.

Hi there.

Hey, Andrew.

I've got a question on the capacity, reducing Stansted from 42 less 7 planes.

Yes.

Is that from planned capacity or is that just based on the number of planes you have there right now?

Just trying to get an understanding of the year on year change in capacity at both Stansted and overall in your network for the winter.

Well, there's 40 aircraft based at Stansted, last winter.

Okay.

There will be 33 this winter, so it's not a planned capacity, it's the actual current capacity.

If that makes -- I'm not sure I follow the question, but in total, we're taking out 7 aircraft out of 40 at Stansted, and it will be 7 out of total out of 140, as we enter the winter period system wide.

So system wide, it's not a significant capacity reduction.

At Stansted, it is significant.

What would be your growth in total seats be this winter then, year on year?

I have no -- I mean if we --

21%

21%.

Okay.

Down from?

(inaudible).

24.

Okay.

Okay.

Thanks.

And can you give us an idea of which routes you'll be pulling back on?

Yes, we've cut a significant number of our French destinations, we've cut kind of frequency on those.

We've taken out some of the higher frequency routes, we've taken out middle of the day frequencies and we've cut a number of routes then completely.

Things like Croatia will become summer only routes.

A number of routes across the network are being cut back.

Okay.

Just a couple of follow-ups.

Number one, on your long-term fleet plan, you keep that constant but you've lowered your 2011 passenger count by about 5 million.

Is that just an anomaly or are you planning to sell or cutback on further aircraft.

And secondly, can you give us an update on your hedging for fuel and foreign exchange?

We'll ask Jimmy Dempsey to take that.

In terms of our passenger growth at the 2011/2012, we do still have the flexibility and the Boeing delivery schedule hasn't changed.

We do have the flexibility to increase the capacity.

But in order to be reflective of what we're doing in Stansted now, we rejigged the numbers to show a reduction across the years just to show a comparison.

I forgot the other question.

But that increases from about 2 million reduction to 5 million within 2 years.

That's why I was trying to understand that, that big change.

It's about 4 million by 2012.

But that's just reflective of -- I can deal with this offline, Andrew, with you, but it's just reflective of a shift in capacity and across the winter months.

The good thing is, Andrew, on the cutback this winter of at Stansted and then having a lower passenger base, assuming that the same cutback would happen in subsequent years, but that's not necessarily in the plan.

In subsequent years we'll continue to talk to Stansted, and say if you're sensible on costs, we'd be happy -- we would be prepared not to reduce those capacity, winter capacities.

Okay.

And remember, we do have the option -- Jimmy, we did the option aircraft out there in the late years any ways if we want to increase the rate of growth again.

But it would be much more -- much tougher on airports like Stansted and Dublin and particularly the high cost airports, or the overcharging airports.

If you want growth now you're going to have to start coming up with lower costs, because we're not going to continue to grow here and pay these significantly higher costs simply so these regulatory monopolies can build (expletive) Taj Mahals.

And Jimmy, can you take the --

Our jet fuel hedging position still remains the same.

We've 90% cover across the next 3 quarters to the end of March '08 and we don't have any cover in place beyond that and we continue to monitor the market, although the prices currently in the market are higher than what we would have paid last year.

Our price going into this winter is 10% below last year's price.

So it's giving us a substantial saving there.

And our FX rate, in terms of the dollar rates, we're benefiting in terms of the weaker dollar, although on a sort of rolling 15 to 18 month basis.

We do have 85% of the next 12 months covered at a 1.34 rate, so we're benefiting from that weaker dollar at the moment.

All right.

Okay.

Thanks very much.

Thanks, Andrew.

Anybody else?

Our next question comes from the line of Mr.

Tim Marshall.

Please go ahead sir, announcing your company name and city location.

It's UBS in London.

Just one simple question on Stansted, in any of your talks with BAA, have they talked about seasonal pricing?

Because I'm just thinking back to how it's regulated, and tell me if I'm wrong, but is it not based on the average price through the year?

So they could in theory, charge you less in the winter and more in the summer.

The regulatory regime in Stansted came as a price cap.

They can do what they like below the price cap.

The reality is what's actually happening -- the bizarre thing that's going in Stansted at the moment is the price cap is set on a per passenger price.

And what they were able or what they're doing at the moment is they're in fact overcharging currently because they're able to argue that they under-recovered in the early years at the current quinquennium on a per passenger basis when the traffic was much lower.

They're now overcharging to make up for the under-recovery in the earlier years on a per passenger basis.

Despite the fact that their traffic is now 20% ahead of their original and the CAA's original forecasts.

So they were under-recovering per passenger in the early years when traffic was low.

They're now over-recovering on a per passenger basis, despite the fact that traffic is 20% higher than they had originally forecast and the morons in the CAA are simply sitting there idly on their hands going, well, there's nothing we propose to do about this, in fact we think poor old Stansted should just be deregulated now that they're screwing everybody.

But that business is based on volume and if they charged you less in the winter you might put more volume through.

And then they'd charge you more in the summer.

Well, hard to argue at the moment -- at the moment with Stansted, until you start cutting back capacity, until you start respond to this, Stansted would be out with you that their business is just screwing the maximum out of every passenger that ever goes through the building.

And they're perfectly correct.

I mean, the CAA came out with some notional nonsense in their determination, in fact this week on the Stansted determination where they were recommending dedesignation.

And said that, based on their price elasticity of demand, a 5% increase in cost at Stansted would lead to a 5% reduction in traffic.

And therefore, the BAA would be mad to do it.

Of course, this then ignores the reality, which is a 100% increase in costs at Stansted may lead to about a 5% reduction in traffic and therefore they're absolutely correct to do it on under this regulatory -- the fundamentally (expletive) up regulatory regime that exists over there.

And its just a case of the regulator over there is ineffective, he's long since been captured by the BAA.

The BAA are scamming everybody, they're overcharging for car parking, they don't provide the security staff they're supposed to provide, they're under-providing left, right and center and they're stealing money off airlines and passengers using those airports.

Okay.

Thank you.

Our next question comes from the line of Mr.

Neil Glynn.

Please go ahead with your question, sir, announcing your company and city location.

Hi, this is Neil Glynn from NCB in Dublin.

Good afternoon.

Hi, Neil.

How are you?

I've a few questions in relation to the prospects for European expansion.

And it was mentioned a couple minutes ago in relation to reducing routes to France.

Is that a function of the regulatory environment there, or is it demand, or is it a mixture of both?

Also, a considerable amount of new routes in -- launched in 2007 have been from UK and Irish airports.

Is that a reflection on the current view of the yield environment throughout Continental Europe?

Also, the amount of leased aircraft has increased significantly to 25.6% of the current fleet in Q1.

Is that just a timing issue?

Further, how are the new bases doing?

In particular, Madrid, which has obviously been pretty competitive from the start.

And, also finally, is there any news, or when is there likely to be news on the Eastern European maintenance base?

Thanks.

Thanks, Neil.

A quick one.

The reduction in the flights to France is that more because the French routes tend to be very seasonably.

They perform very strongly in the winter, the perform very poorly - very sorry, very strongly in the summer, with a lot of cell phone traffic from the UK and Ireland to regions of France.

There is very little French originating traffic because French don't tend to travel abroad.

And in the winter then that traffic, the cell phone traffic dwindles because a lot of those destinations, particularly in regions in France don't have a high business content.

I would dispute your suggestion that the majority of the new routes this year are from Ireland and the UK, tt simply isn't correct.

There's a lot of new route launches, but most of -- the greatest increase in capacity has been in three new bases, in Marseilles, Madrid and in Bremen and that's where the majority of this year's additional capacity has gone.

We tend to make a bit more noise about the individual route launches from Dublin, and to a lesser extent from the UK, but there's far more capacity in these -- there's a far greater capacity of Marseilles, Madrid and Bremen.

The number of leased aircraft this year has increased, simply in line with our policy now of taking a certain proportion of the aircraft on operating leases and that has been well signaled to the market.

The Madrid base is going well in terms of traffic.

The yields aren't spectacular out of Madrid and the costs are high, but there's a land grab going on in Madrid.

I'd say we're probably the only airline making money to and from Madrid at the moment and we're quite happy to continue with that while the, Clickairs and the Vuelings and all the rest can blow their brains out.

And that has happened before in a few of these land grabs.

We'll simply be sitting there with the lowest costs and the lower fares when they all finish blowing their brains out.

And the last point I missed.

With the last section --

Was the Eastern European maintenance.

Oh yes.

The Eastern European maintenance base, we have it narrowed to two destinations at the moment and we would hope to select one by about the end of this calendar year.

In the meantime however, we intend to start on a maintenance, a large maintenance base in Stansted at the end of this month.

We should start building there around turn -- we go on site there at the end of August.

It should be open.

This will be I think about a 6 bay hangar.

It will be open in about a 12-month time for September of '08 and we're close to signing of a deal for access to a large hangar facility in Frankfurt Hahn, which should take care of most of our hangar facility requirements for the foreseeable future.

Does that answer everything, Neil?

That's great.

Thank you.

Okay, thanks.

Our last question comes from the line of Travis Anderson.

Please go ahead with your question, sir, announcing your company and city location.

Travis Anderson, Gilder, Gagnon, Howe in New York.

Michael, I was trying to think of a question I could get you to elicit a strong opinion on.

Go for it, Travis.

Well, I thought I'd just a little bit about where you stand on some of your greatest legal battles with things like the Air France insider position in Paris and also then just generally the competitive situation, what you're seeing other airlines do.

You mentioned Madrid, anything else?

No.

I mean I'll give you a quick flavor of the kinds of the legal issues at the moment.

Obviously, the European court of appeal, Aer Lingus decision will go in at the end of this month.

It's a very strong case, we've narrowed it down to a couple of key points that really focus on where they've broken every precedent they ever established.

It's the case will undoubtedly be helped if there was a move or a transaction involving Iberia or Air Italia in the meantime where clearly they'd flip flog again and go back to the previous precedent.

Anything that would help to demonstrate to the course that there's one rule for the flag carrier airlines in Europe and another rule for Ryanair, would, we believe, help the case.

Couple of other more minor legal cases.

There's a legal case starting very shortly in Italy, where ENAC, effectively the Italian CAA, are attempting to block or reduce the number of slots available at Rome Ciampino by nearly 30% from 140 daily movements to 100 daily movements this winter.

They've manufactured some pretext that there's some work on the runway and therefore they need to reduce the number of movements.

It's complete and utter (expletive).

It's just another way of the Italian government and the CAA trying to reduce the competitive pressure on Alitalia out of Rome.

We'll be looking for an injunction on that in the coming days.

There's a two cases pending against the Dublin Airport Authority.

We'll shortly be launching another one against the Irish Aviation regulator who ducked and fudged again yesterday in this decision.

I mean they really are just utterly hopeless.

But I'm not sure you'd expect anything more when you take civil servants and appoint them into regulatory positions, regulating government monopolies, what should you expect except nothing from them.

I think we'd have some success against the Irish regulatory here.

It's quite clear -- I mean, even he now is finding that the DAA are over-designing these buildings, that the costs are way above market, and yet he simply rolls over and rubber stamps them anyway.

So I think we'll have some success there.

And then in the UK we have about two court actions pending against the BAA in Stansted, but we're hopeful that the Competition Commission -- there's an awful lot of, I think, political support at this stage now for something to be done with the BAA.

Heathrow is a shambles.

Stansted is even worse than Heathrow, it just gets less publicity because most of the journalists tend to get stuck in Heathrow.

And any model or any business that operates a monopoly where the income is set at 5% of the amount of money you can spend on CapEx is bound to result in a situation like we have at the moment with a BAA where they just (expletive) away the money and then try to pass it on to us in the form of higher charges.

But that somebody as idiotic as the CAA would stand by and say that Stansted doesn't have any market power, or that the BAA, which controls 96% of the traffic to and from London doesn't have market power, it just goes to show how insanely stupid and incompetent these regulators are.

So we have some fun with the courts.

I saw some commentary recently that our time would be better spent if we spent less time suing people and more time running the airlines.

I think that shows an woeful gap, a knowledge gap.

You cannot operate in the airline industry in Europe without continuously suing governments, suing frank carrier airlines and suing idiot regulators.

It is the nature of the business over here.

It's why the European airline industry has been so (expletive) for the last 45 years because it's been run by governments and idiot regulators.

Unless you keep suing the (expletive) we'll simply go back to a model that will result in much higher fares and (expletive) services to the customer.

Only one airline delivers the lowest fares and the number one punctuality and the fewest lost bags in Europe and it's the only airline that's not owned by some government wanker or regulated by some idiot regulator.

And happily, Travis, you're a significant shareholder in that airline, as am I, and I think the future is bright.

Apart from maybe some bearish sentiment on yields this winter.

Okay.

And competitively, how are things looking?

Frankly, I competitively think they've probably never looked better.

I think the winter's going to be difficult.

We're going to kick the (expletive) out of every other airline competitor we have around Europe because we have the much lower costs.

We have much lower fares, and I think we have a compelling message for passengers now, particularly with a price guarantee.

I think you're going to see us put a lot more effort and resources in behind the price guarantees this year because it's a compelling message and no other airline is able to match it.

Okay.

Thanks.

Thanks, Travis.

Give my best to Dick.

I will.

Anybody else?

If there are no further questions registered so I'll hand the conference back to you for any closing comments.

Okay, Frances.

Thank you very much.

Folks, thank you very much for participating in the conference call today.

Chris, Jimmy Dempsey is going to call Chris Reid, and Jimmy Dempsey will call you back on that other point outline.

If anybody else has any other issues or queries they'd like to go through, please feel free to route them back into us.

We'll be here for the rest of the week.

And with that, may I thank you for participating.

As you know, there is no road show on the first and the third quarters, but we'll see you all on the half-year road show, which will be on the first week of November, and other than that.

C'est la -- we're continuing to drive the business forward with much lower fares and much more aggressive cost controls.

Thanks everybody.

Bye-bye.

Ladies and gentlemen, thank your participation.

This concludes today's conference and you may now disconnect your lines.

Thank you.