Ryanair Holdings PLC (RYAAY) 2009 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Ryanair half-year results conference call.

At this time, all participants are in a listen-only mode.

Later, we will conduct a question-and-answer session and instructions will follow at that time.

(Operator Instructions)

Just to remind you all, this conference call is being recorded.

I would now like to hand over to the Chairperson, Mr.

Michael O'Leary, CEO.

Good afternoon, ladies and gentlemen.

Welcome to the Ryanair half-year results conference call.

I am here in London with Howard Millar, who is with me.

And at various other parts of the globe, we have Neil Sorahan, Michael Cawley, Jimmy Dempsey, and some others dialing in.

As before, we had an analyst briefing this morning.

That is on -- a webcast is on our website and the full details of the results -- the management discussion and analysis and the financial results have been published on the website, www.ryanair.com.

So as you can see, this morning we announced half-year profits of EUR 215 million, a 47% decline on last year's interim profits.

Traffic grew by 19% to EUR 32 million, as average fares, which include checked-in baggage charges, fell by 4% to EUR 47, while total revenues grew by 16% to EUR 1.8 billion.

Unit costs, excluding fuel, fell by 6%.

I think achieving a half-year net profit EUR 215 million in what were very difficult trading conditions, in particular with record oil prices, is a testament to the strength of Ryanair's lowest fare model.

Similar revenues grew during the year by 28% to EUR 322 million, and now account for almost 18% of revenues as against 16% last year.

Unit costs, including fuel, rose by 21%.

Fuel now accounts for more than 50% of our total operating cost, as the cost per barrel over the half year doubled from US$63 a barrel to US$125 a barrel.

Spot prices have fallen recently quite precipitously down to as low as US$60 a barrel, as the worldwide recession is said to have collapsed in consumer confidence and underlying demand for oil.

Our fuel hedging position for this year remains unchanged.

We are 80% hedged into Q3 at US$124 a barrel.

We are totally unhedged for Q4 and would expect to be able to buy oil at significantly cheaper prices which reflect the decline in spot.

In recent months, however, there's been a significant disconnect has emerged between the spot and forward prices, resulting in Q1 and Q2 for next fiscal year pricing at a premium of between US$17 to US$18 a barrel over spot rates.

In addition, the hedging markets are proving very illiquid, which partly explains these high premiums.

Nevertheless, we've taken advantage of the recent falls in the past two weeks of oil prices to hedge 25% of our Q1 and Q2 fiscal next-year supply at an average of US$77 a barrel.

This locks in a substantial saving over the US$125 per barrel paid in the first half of this fiscal year, which were reflected in the accounts published this morning.

We continue to closely monitor fuel prices, as well as the forward premium, to see if we can find opportunities to extend our hedging program at or below US$70 a barrel.

High oil prices and the global recession have, as we predicted, caused a string of airline bankruptcies and a continuing trend towards consolidation in Europe.

Recent failures include Alitalia, Excel Airways, Futura, LTE, Sterling, and Zoom.

We believe more loss-making European airlines will go bust this winter, either because of unsustainable losses or insufficient cash reserves.

Airline consolidation will continue as flying carriers in Europe merge into three high-fair fuel surcharging groups led by Air France, BA, and Lufthansa, and Ryanair will continue to compete with these major carriers, all of whom stubbornly refuse to reduce their fuel surcharges to reflect the recent decline in oil prices.

From Ryanair's point of view, our ongoing trading is strong.

The new base at Birmingham, Bologna, Bournemouth, Edinburgh, Reus have performed well as consumers flock to Ryanair's guaranteed lowest fares and low fuel surcharges, particularly in a recession in Europe.

We have recently announced three new Italian bases which will start next summer -- Alghero and Cagliari in Sardinia, and Trapani in Sicily, in which we had hoped to capitalize on Alitalia's cutbacks and to grow rapidly, particularly in the Italian domestic market with those very strong traffic flows to and from the islands.

Advanced bookings this winter are slightly ahead of our target, although this is largely due to repeated price promotions resulting in lower than expected fares.

Sadly, in Ireland, the government has taken a retrograde step by recently announcing plans in the budget to initiate a EUR 10 air-travel tax, which will discriminate against air transport, as it is not applied to competing trains or ferry traffic.

We've called on the Irish government to replace this stupid, regressive flat rate tax with a fairer or more progressive percentage rate as a tax on the fair paid.

This flat-rate tax is grossly inequitable.

We don't understand why rich passengers on EUR 3000 transatlantic airfares only pay the same EUR 10 tax as price-sensitive short-haul passengers, who, on many Ryanair flights, particularly into the West of Ireland, pay an airfare of less than EUR 10.

This flat-rate tax has already failed in the UK and Holland, where traffic at many airports is now in steep decline.

It is inevitable that Irish traffic and tourism will suffer a similar traffic decline next year.

While this tax will seriously damage -- further damage our investment in Aer Lingus, who are almost entirely exposed to Irish-originating traffic and whose load factors in both long-haul and short-haul markets are steadily declining, its impact on Ryanair will be minor, since just 15% of our traffic originates in Ireland.

However, our base at Shannon, where average fares are less than EUR 10 all winter long, will be particularly hard hit, and we expect to reduce flights and traffic at Shannon by up to 75% from November 2009 if this penal flat-rate tax is implemented as announced.

In the UK, we will continue to campaign for the removal of Mr.

Harry Bush, the hopeless CAA regulator, as well as the early sale of Stansted by the BAA monopoly.

Mr.

Bush has rubber-stamped almost every BAA cost increase and CapEx proposal, including the crazy plan to waste GBP 4 billion on a second terminal at Stansted, despite the unanimous opposition of all Stansted Airlines.

He also stood idly by in recent months while airlines and passengers at Stansted suffered lengthy security and passport queues, suffered repeated baggage-belt failures and had to pay a doubling -- suffered a doubling of airport charges in the past 18 months.

The result of this regulatory incompetence and then failure has been the first decline in Stansted traffic for the last 20 years.

The proposed sale of Gatwick by the BAA monopoly is just the latest trick by the BAA to try to avoid the Competition Commission authorities' recommendations, which was to force the sale of the Stansted and Gatwick in London and one of the Scottish airports.

We are continuing to campaign for real competition and better passenger service, and believe this can only be delivered through the early sale of Stansted as well as Gatwick, and the early sale of one of the two Scottish airports.

Competition can deliver better facilities, better passenger service at lower prices where the incompetent CAA regulator has patently failed in the UK in the last 15 years.

We have implemented our plans to ground 15 Stansted aircraft and four Dublin aircraft this winter, following the further unjustified increases in the already-high passenger charges at these airports.

Despite these reductions, we still expect Ryanair's traffic will grow by 9% this winter and overall by 14% to EUR 58 million for the full year.

The economic recession has caused consumer confidence to collapse.

Ryanair fares are now even more attractive as consumers are becoming ever more price-sensitive and trade down from a high-fare fuel-surcharging airlines like Air France, BA, and Lufthansa.

As more airlines go bust this winter in Europe and the wave of European consolidation continues, the strongest survivors will be those airlines much like Ryanair, who are well-financed, have a strong balance sheet, and the lowest cost base.

The outlook for the remainder of this fiscal year is entirely dependent upon fares and fuel prices this winter.

We believe the recession will be steep and will continue to drive down both oil prices and the average airfares.

We are continuing to respond with aggressive price promotions to keep Europe flying and to maintain our market-leading load factors.

Although we have limited visibility, we now believe that average fares in the second half of the year will fall by between -15 and -20, leading to losses in both the third and fourth quarters, which will eat up most of the profits made in the first two quarters.

Our full-year average fare could fall by almost up to 12%, although these lower fares would largely be offset by lower fuel costs, particularly in Q4.

As a result, our previous guidance remains unchanged and we remain confident that we will break even for the full year.

We do, however, expect continuing bankruptcies and consolidations to create ever more opportunities for Ryanair to grow.

If oil prices remain at US$80 per barrel or below next year, then our earnings will rebound strongly.

Every $1 below our average price this year of US$110 dollars a barrel will reduce our costs by US$14 million.

We do have a significant cost advantage over most of our European competitors, many of whom next year have already hedged a significant proportion of next year's fuels at significantly higher levels than current market prices.

This will force competitors to further increase airfares and widen the price gap between them and Ryanair's lowest fares and our guaranteed low fuel surcharges.

With one of the strongest balance sheets in the airline industry, EUR 2.1 billion in cash, and the lowest cost base, Ryanair is strongly positioned to take advantage of these opportunities, which will inevitably arise from the financial crisis in the economic recession over the coming years.

We are celebrating these strong half-year results today by launching a 1 million seats with 1 million seats on sale for EUR 10 for travel Mondays to Thursdays plus Saturdays in November, December, and January on 250 routes across Europe.

These EUR 10 seats are available for sale this week only on our website at www.ryanair.com.

I will now ask Howard to take you through the summary of the MD&A, please.

We will start with the usual health warnings.

So for the purposes of the management's discussion and analysis, all figures and comments are by reference to adjusted income statements, excluding exceptional items.

Two exceptional items arose in the half year.

They totaled to EUR 119.2, consisting of a EUR 93.6 million impairment of the earning shareholding, and an accelerated depreciation charge of EUR 25.7 million on aircraft to be disposed in the financial years 2008/2009 and 2009/2010.

So therefore, adjusted profit, excluding exceptional items, decreased by 47% to EUR 214.6 million compared to EUR 407.6 million in the half year ended September 30, 2007, primarily due to a 101% increase in fuel costs.

Total operating revenues increased by 16% to EUR 1.81 billion, slower than the 19% growth in passenger volumes, as average fares declined by 4% due to the absence of Easter in the half-year and lower baggage penetration rates.

Ancillary revenues grew by 28% to EUR 332.1 million during the period.

As a result, total revenue per passenger decreased by 2%, whilst load factor was down 1% during the period to 85%.

Total operating expenses increased by 44% to EUR 1.574 billion, primarily due to the increase in fuel prices, the higher level of activity, and increased costs associated with the growth of the airlines.

Fuel, which now represents 50% of total operating costs compared to 36% in the half-year ended December 30, 2007, increased by 101% to EUR 788.5 million due to the increase in the cost per gallon and an increase in the number of hours flown, offset by a positive movement in the US dollar exchange rate to the euro.

Unit costs excluding fuel fell by 6%, and including fuel, they rose by 21%.

Operating margins fell by 17 points to 13%, while operating profit increased by 49% to EUR 236.4 million.

Net margin as a result decreased to 12% from 26% in the previous half-year for the reasons outlined above.

Earnings per share for the period was EUR 0.1444 compared to EUR 0.2661 in the period ended 30 September, 2007.

On the balance sheet, gross cash remains strong and amounted to EUR 2.1 billion at September 30, 2007.

The group generated cash from operating activities of EUR 177.7 million and (inaudible) EUR 78.8 million from the delivery proceeds of the sale of four Boeing 737 800 aircraft, which part funded a [33.1] million share buyback program and a capital expenditure incurred during the period.

The capital expenditure of EUR 260.5 million largely consisted of advance aircraft payments and future aircraft deliveries and delivery of five new aircraft in the half-year.

The long-term debt, net of repayment, decreased by EUR 65.4 million during the period.

I'll hand it back to Michael now.

Thanks, Howard.

The only thing we have to add to that is we issued this morning at 10 o'clock to our October traffic figures confirming that our passenger traffic for October increased by 18% over October 2007.

We grew from 4.52 million passengers to 5.3 million passengers.

The rolling 12-month traffic was at 56.8 million passengers for the rolling 12 months at the end of October.

And the load factor was 85% in October '08, which was the same as it was in October '07 at 85%.

The strong traffic growth figures again underline one of the trends we tried to deal with in the analysts' call this morning, which is we are seeing a marked switch of passengers trading away from high-fair fuel-surcharging airlines like British Airways, whose traffic was down 6% in the month of September, and continued very strong growth by Ryanair.

We are certainly the fastest-growing airline in Europe.

The only one that can make up close to us is easyJet, although if you strip out their figures, the GB Airways acquisition, their underlying growth we think is about 6% or 7% year-on-year.

We are still growing at almost 20%.

So we see a real flight of passengers towards Ryanair, where they can be guaranteed the lowest fares and no fuel surcharges as well.

And we intend to continue to capitalize on that through the winter with aggressive price promotions underlining all the time that the only place you can find the lowest fares is on Ryanair, and trying where possible to put as much pressure on the competition as we enter a recession and with passengers getting much more price-sensitive.

With that, if you'd like, we'll open the call up to questions and answers, please.

(Operator Instructions) Jim Parker.

Good afternoon, Michael and Howard.

It's Jim Parker with Raymond James.

Howard, I would like to know since your fuel hedges are well below -- excuse me, your hedges are well above the current oil price, do you have any cash collateral that you have to put up for these hedges, and how much would that be?

Jim, this is something that has only come up in the last number of weeks.

We have heard in the fuel markets that some carriers are being asked to put up collateral credit.

Thankfully, we are not one, and given the strength of our balance sheet, I don't anticipate that will happen.

But it is a feature that is starting to emerge for some of the weaker airlines.

So I think this is going to continue to drive these airlines out of business.

Not only if they are hedged, they have to put up the cash collateral, but they also have to take the mark-to-market.

And also, the fuel companies are also insisting that they be paid in advance -- handling operators and airports as well.

But for us, Jim, no impact.

Okay.

Michael, given that there's a great deal of consolidation going on, capacity coming out of the industry, does this change your growth strategy?

Meaning you've been adding a lot of new markets.

Does this cause you to do more fill-in and how is that going to impact unit costs?

Michael O'Leary Jim, it has certainly changed the growth.

It hasn't changed the rate or the speed of growth.

As you know, our aircraft orders were growing organically.

Our aircraft orders are firm within about a 24-month period.

So the total number of aircraft and the traffic growth is as previously outlined and forecast.

It is, however, changing the direction of that growth.

This time last year we were talking about the likelihood of opening up a base, a couple of bases in Central or Eastern Europe.

I think that's now been put on the back burner, as opportunities have arisen, particularly in Italy and Spain this year and in regional UK.

What's been driving that in regional UK has been the withdrawal of a lot of BA capacity from the UK market, and the fact that easyJet has stopped growing in the UK.

In Spain, it's been the consolidation of Iberia, the withdrawal of Spanair, the bankruptcy of Futura, and LTE has opened up significant capacity at some very interesting Spanish airports.

And in Italy, where Alitalia and Air One have now kind of merged, they are talking about very significant capacity reductions in Spain -- or in Milan, Rome, and on the islands -- has opened up opportunities for us in those areas that didn't exist 12 months ago.

So we have been kind of switching the focus of our growth, which would have been this time last year more based in Eastern and Central Europe to now going in and exploiting opportunities that are cropping up in regional UK, in Spain and in Italy.

And I think that's likely to continue this winter, with the possible exception -- I mean, there's some speculation that there may be some further casualties in Germany, airline casualties in Germany this winter.

And obviously, if that were to happen, I think we would see some significant opportunities in Germany.

We've been approached by three large German airports in recent weeks who have Air Berlin as a major customer, who all of a sudden -- and I don't know why, but seem very keen to try to get Ryanair to commit to opening up a base at their airport, if something were to happen to Air Berlin this winter.

Now, I have no more insight into Air Berlin and what's happening to Air Berlin, but there certainly seems to be some panic among the German airports that there may be some problems with Air Berlin this winter.

Okay.

I think Duane has a question as well.

Good afternoon, thanks.

Just wondering, with respect to your yield guidance, the sort of change there to down 15 to 20, can you talk about what you saw in October and is the update on yield guidance a reflection of what you currently see in your bookings or really an expectation or an anticipation that things are going to get worse from here?

Thanks.

(Inaudible) things are going to get worse.

I think it's fair to say in the third quarter we have a good book, but, obviously, clearly we know what October is.

We have good visibility into November.

Still a little bit left to go on Christmas.

I think the yield decline in the third quarter is likely to be a single-digit decline, but hovering somewhere around 10%.

So we think in the fourth quarter it could be significantly worse.

Now, remember, we don't have -- we do have Easter in the fourth quarter -- sorry.

Easter is in April, so the decline in the fourth quarter will be much more significant without Easter in the comparables.

But overall, we think it's going to get worse.

We think the recession is going to get worse.

The consumer sentiment and consumer confidence is collapsing, particularly here in Europe.

So I think of the yield decline this winter, where we are guiding -15 to -20, it would be the lower end of that range in the third quarter and towards the upper end of that range in the fourth quarter.

Okay, thanks.

Travis Anderson.

Gilder, Gagnon, Howe in New York.

I was just wondering whether the US$77 was an all-in number, including refining margin or taxes, or if that's strictly a per-barrel hedge cost.

Travis, you may have missed the webcast this morning -- probably in bed -- but certainly --

It's a little early for me.

It's a little early for you.

There's been a disconnect between what's going on in Brent and what's going on in jet fuel.

Up until recently, you've been able to take our cost per ton and divide by 10 to get the same price for Brent.

That has disconnected at the moment.

So, for example, when we were hedging at US$77 per barrel, Brent was down at US$60 dollars a barrel, with jet spot was at the equivalent of US$72 per barrel or 720 tons.

So that price we've quoted is an all-in cost, including refining, differential, the crack.

And it's effectively $770 per ton.

Okay, thanks.

Neil Glynn.

Neil Glynn, NCB.

Just a couple of quick ones in relation to further on your yield guidance.

Can you highlight what kind of level of retrenchment you are factoring in in that yield guidance, particularly for Q4, as obviously there's a lot of variables still to play out between now and then?

Also, if you could give a bit of flavor as to your thinking on when we see the trough for demand, as Ryanair sees it, over the next six to 12 months or so.

Sorry, Neil, I don't understand.

What is the retrenchment in Q4?

The retrenchment from competitors across the market, whether it be further consolidation or simply capacity cuts.

I think most of the capacity -- the capacity cuts have already been announced for this winter, the schedules have been published.

What you are looking at and what we are expecting is that there will be further shocks to the system, there will be further bankruptcies between now and Christmas in Q4.

Don't think any of those will be seismic, although clearly, we haven't seen yet what the outcome is going to be -- the outcome of the Alitalia/Air One merger.

We think there will be further capacity cuts in the Italian market in next year's summer schedules.

There is significant retrenchment in Spain, as Spanair has cut back capacity very significantly, as have (inaudible) and Clickair.

Futura has going bust.

LTE has gone bust.

Which, for example, in the recent weeks has opened up I think slots for another four base aircraft in Madrid, whereas a month ago Madrid couldn't take any more aircraft.

But I would be looking to next summer -- I think next summer, and more likely winter of '09/'10, particularly if you've seen a Lufthansa consolidation with bmi, Austrian and SAS, there would be significant consolidation of cutbacks, I think, in the Scandinavian market.

If there is further rate -- if there's a merger between Air France and KLM/Alitalia, there would be further retrenchment in the Italian market.

And obviously, if BA does something with Iberia, I think you will see further retrenching both in the UK and in Spain.

Where will the trough for demand be?

I think it would be at its worst in the spring of next year.

It depends how long the recession lasts, but at the moment, certainly as far as the Irish and UK markets would be concerned, I would expect there to be another trough in the winter of '09/'10.

I think summer '09 will be okay because people will still continue to travel on holidays, all that kind of stuff.

But this winter will be very difficult.

I think next summer, particularly -- and the reason I would highlight our end of the UK is there are markets where you have the government engaged in taxing air travel.

You have this ridiculous flat-rate GBP 10 departure tax in the UK.

And then the Irish government following the same stupid policy of trying to tax their way out of a recession in Ireland.

I think the EUR 10 tax in Ireland on April 1 next year will have a very significant impact on visitor numbers to Ireland.

I expect visitor numbers to Ireland will be down between 5% and 10% next year, with Aer Lingus suffering most of that decline.

I think we will absorb some of that tax and won't notice it quite so much, because Ireland really only accounts for [15%] of our traffic.

The good news in all of that, though, is I believe that the Irish airports and in particular Dublin next year will suffer a precipitous decline in traffic.

BA, for example, announced on Friday evening that they were going to close the Gatwick-Dublin route; it would affect from the 1st of April next year, surely because of the impact of this crazy travel tax.

And I think you are going to see a number of other withdrawals from Dublin.

I'm not sure what kind of condition Aer Lingus will be in next year.

They continue to struggle on from crisis to crisis.

But I think the best that could happen at Dublin airport is a significant decline in traffic.

They will be opening the white element called Terminal 2, which I predict will be entirely empty when they open it in the spring of 2010.

It will be available for weddings, confirmations, and bar mitzvahs, for anybody who has a need for some entirely unused and empty space in Dublin City, because I'm not sure any of the airlines will be in it.

Aer Lingus are making mumblings about moving into Terminal 2, but frankly, given the way the Dublin Airport continues to increase costs and will have to charge up for the Terminal 2 facility, I'm not sure anybody will be in that facility, which will be exactly what the Dublin Airport monopoly deserve.

So I would imagine trough for demand is -- to answer the second part of the question -- would be this winter and again next winter; not so bad next summer.

But that could change tomorrow, for example, if there was a big bankruptcy in Germany, if there was another big bankruptcy in Spain, or if there was one or two smaller bankruptcies in the UK.

Bob McAdoo.

Avondale Partners in Kansas City.

As we think about the winter and the 19 airplanes that you're grounding, when do those come back?

And I guess the other question is, could you give us some help on aircraft deliveries so we can start thinking about what happens to depreciation or whatever as your new deliveries come on over the next six to 12 months?

And also, if something were to happen at Air Berlin, is that something that you could fill you in on a relatively short notice or is that something that would take another year or so before you'd actually try to fill in to pick up the slack over there?

I'll do the first part and Howard do the second and I'll come back in for the German analysis.

It's important to understand, we are not just sitting 19 aircraft on the ground this winter.

What we are actually doing is during the middle of the week, Tuesdays, Wednesdays, Saturday evenings, Sunday mornings, we're sitting almost 30 aircraft on the ground.

But on Mondays, Sunday evenings, Monday mornings, Friday evenings, the number falls back down to around 12 or 13 aircraft.

So we are really just flexing the schedule this winter, primarily at Stansted and Dublin, to take out the lighter flights, the midweek, the late evening, the early-morning weaker flights.

Because there's frankly no point in flying those aircraft at very cheap fares and paying those airports a very large per-passenger fee.

What that does give us though -- I mean, we clearly have capacity certainly between 10, 15 aircraft, if we wanted to -- if an opportunity arose somewhere in Spain, in Germany, in Italy -- and you know, clearly none of us know where that opportunity would crop up, and all I can give you is a feel for what the airports are telling us.

We don't know whether Air Berlin will go bankrupt this winter or not, but clearly some of the German airports are worried about them.

We would be able to offer -- and we have already offered one of the Italian airports, if there's a significant cutback in Alitalia's capacity, a 10 aircraft base, which we could start within about a two- to three-month -- with a two- to three-month lead time of any state this winter.

And I think that offer will be available to a German airport, a Spanish airport, or an Italian airport.

I don't think there would be kind of a significant bankruptcy in the UK that would require that kind of aircraft takeup.

I don't know if there may be -- clearly, Air Ireland are financially struggling in Ireland, and that would cause a further downward -- or an impact on Dublin Airport's traffic.

Although I imagine all the government subsidies they get would probably keep them alive for a couple of months more, anyway.

But clearly, we have spare aircraft and we have opportunities.

We could open -- as I said, we could use the 10 or 12 aircraft this winter.

We then take delivery -- between now and September 2009, we take delivery of -- I think it's say about 50 aircraft.

Then in the following year, to September 2010, we take delivery of another 48 aircraft.

And I'll ask Howard just to touch on the deliveries part of the question.

Yes, well, obviously, Bob, between now and the end of the year, we are presently running a fleet of 168 aircrafts.

We expect by the end of the financial year, net of disposals, that will be up at 195.

So that's 27 aircraft between now and the end of the year.

Now, that's subject obviously to timing at Boeing, but that's our best guess at the moment, and I think it's pretty a good one.

We have disposals going out.

We have 17 aircraft to be disposed.

We've already sold on eight, so this will be the end of the 25, the present 25 disposal program.

In terms of depreciation, clearly, obviously, we have accelerated depreciation on those aircraft to be disposed, which will run into the third and fourth quarters and into the first quarter of next year.

And obviously, the timing then of the Boeing deliveries will decide our depreciation over the winter.

Obviously, it's a favorable impact in terms of having it slightly later than expected delivery plan, but we have already factored those into our numbers in terms of our guidance of breakeven for the full year.

Okay, Then you talked about the 30 airplanes on the busy days of the week down to -- squeeze that down to 12.

When do you go back to -- when do you kind of roll all those back up and do kind of your full amount of flying generally on a daily basis?

What time of the year does that happen?

Essentially, Bob, by next April.

You have Easter next year is in the middle of April, and I think we'll be back flying the full program in Stansted and in Dublin.

I would imagine from, I'd say, the roll into April, maybe the first or the second week of April next year (multiple speakers) Easter.

Very good.

I Appreciate it.

Michael O'Leary That's on the assumption, by the way -- what could happen is we could get an opportunity in Germany or in Spain that would take eight or 10 aircraft straightaway, in which case we wouldn't get back up to the full schedule in Stansted or in Dublin until the Boeing deliveries come through.

And one of the upsides of the Boeing strike is we are going to have less ownership costs this winter, but we may have slightly later aircraft deliveries as we move into fiscal '09/'10, and we don't really know what the position is yet with Boeing, who told us they won't know for another two or three weeks until they try to rework the delivery program.

You said it takes -- you normally -- once you decide to go into a new base or open up a new base or whatever in one of these potential opportunities, you need, what, 60 days?

You typically would want to have it in the system for 60 days before you -- selling it for 60 days before you'd actually start flying?

Is that kind of the spool-up time?

In an ideal world, I think yes, it's about 60 days for us to launch a new base.

But if somebody big collapsed and there was a large kind of -- there was a vacuum there, we could clearly do it in a much shorter time frame, maybe 30 days.

But I think the key thing, I think why the airports seem to be very attracted to us at the moment, is most of them realize that we could show up with 6, 8, 10 aircraft almost the day after somebody else goes bankrupt.

We wouldn't start flying those aircraft immediately, but we could be there on the ground and start selling those flights and those routes, and taking up those routes almost straightaway.

So if you like, we would offer a lot of those bigger European airports.

Many of them wouldn't even negotiate with Ryanair as recently as 12 months ago.

If you like, a turnkey solution that would have them back up and running, I'd say within -- something within 30 to 60 days.

No other airline in Europe has that spare aircraft capacity this winter.

Not easyJet, not BA, not Air France, not Lufthansa, nobody.

Got it.

Okay, thanks a lot.

John Goode.

John Goode, Goodbody Stockbrokers.

You've actually already answered most of my questions.

I was just wondering if you could give an update on your hedging of your CapEx and proportion of requirements that are hedged out to the future, please.

In terms of our CapEx, John, we are hedged as -- almost fully to the end of December -- sorry, to December 2011.

So we have taken a fairly long view on the capital expenditure program.

The average weight with us would be just under [$1.50].

In terms of operating expenditure, we have a shorter horizon on that; we have about an 18-month horizon.

And we've hedged about 90% of our requirement for the 18 months.

So that would take us pretty much out to the early part June of 2010.

Okay, great.

Thank you very much.

Jim Parker.

It's actually Duane as a follow-up, and Raymond James, Atlanta.

Just on your fuel guidance, the all-in fuel guidance, I'm wondering if that is consistent with the guidance you've provided in the past.

So the 124 in December and the comparison to last year, the fiscal '08 hedges you had in place, is that the same way you've always done it?

Yes, that's the same we've always done it, Duane.

There's no change.

It's still on a like-for-like, apples-for-apples basis.

Okay, thanks for that clarification.

And then just on the X fuel unit cost trend, by our math, down 7% in the September quarter.

How do you see that trending in the second half?

Thanks.

Duane, it's about 6% plus.

We see that obviously lower load factors as we move through the winter period will mean that we will have less passengers to spread the fixed unit cost across.

So we would expect to give back about half of that unit cost savings.

So we would see for the full year something in the range 2%, 3% net impact.

Down 2% to 3%?

Down 2% to 3%.

Thank you very much.

I think it's important, just to put that in context, that's against the background of average (inaudible) rising around 2%.

So stripping out fuel, we are back into a very disciplined cost reduction program that spreads across most sectors -- wages, aircraft, airports, handling, sales and marketing.

And we think that will continue not just into this winter, but out into next year as well.

Of course, there is every possibility that we may see some break on costs in Stansted and Dublin, too, when they realize the regulatory model of increasing charges doesn't work.

Thank you.

(Operator Instructions)

Okay, folks.

There doesn't seem to be any more questions.

That being the case, I would just like to say on behalf of Howard, myself, the rest of the team, the, thank you very much for tuning in to the conference call.

As I said, the webcast of the analyst briefing is up on the website, as are the details of the results.

We have the normal half-year roadshow program rolled out this week.

I am in London and across Europe.

I think Michael Cawley is in the UK and in Europe.

Howard and Jimmy Dempsey are in the US, and Neil Sorahan as well.

So there's a Ryanair roadshow coming to a town near you sometime in the next five days.

We hope we get to see everybody.

If not, or if anybody has any follow-up questions, please feel free to call us, either back in the office -- through David, back in the office, or give us a call; we'll all be back in the office next Monday.

Thank you very much for your time.

Hope to see later on this week.

And here's to an exciting and interesting winter, when hopefully a very deep, dark recession will continue to lower oil prices, significantly lower aircraft prices, and we will put in place very significant cost savings to return to substantial profitability in the coming years.

Thanks very much, everybody.

See you soon.

Goodbye.

Ladies and gentlemen, thank you for your participation.

This concludes today's conference.

You may now disconnect your lines.

Thank you.