Ryanair Holdings PLC (RYAAY) 2012 Q2 法說會逐字稿

Good day, and welcome to the Ryanair half-year results 2012 conference call.

Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr.

Michael O'Leary.

Please go ahead.

Okay, thanks.

Good afternoon, ladies and gentlemen.

You're very welcome to have here our conference call.

I'm here in London.

Howard Millar joins us, but he's in a car on the way to Heathrow.

So we'll try and keep the call as short as we can, lest he gets cut off.

Michael Cawley, I think, is on the call or may be joining the call.

He's also traveling as well this afternoon.

As you'd have seen this morning, we issued the results together with the investor presentation.

It's on the home page of the Ryanair.com website.

Look either on the red line News page -- the red line News headline or on the Investor page.

I will run through the details of it now.

As you have seen, we announced a 20% increase in the half-year profit to EUR544 million.

Revenues were up 24% to EUR2.7 billion.

Traffic grew 12%.

Average fares increased 13%.

Unit costs rose 13% due to 6% longer sectors and a 37% increase in fuel costs.

Excluding fuel, sector-length adjusted unit costs were flat for the first six months of the year.

I think these are a very strong set of results and a testament to the strength of the Ryanair lowest fare, lowest comps model, which continues to deliver robust traffic and profit growth, despite higher oil prices and the economic difficulties in Europe.

The 13% rise in average fares, which includes our optional baggage fees, is due to the slower rate of head capacity growth, a better mix of new routes and bases, as well as rising competitor fare and fuel surcharges.

Ancillary sales rose 15%, slightly faster than the 13% -- or the 12% rate of traffic growth.

Again, we're continuing to stimulate additional streams.

The reserved seating trial has gone very well.

It's now been extended from 2 to 20 to 40 to 80 routes.

I expect by the time we get to next summer, it will be extended across the entire network.

We've recently launched the Ryanair Cash Passport MasterCard prepaid card in the UK and Italy.

This will be the card of choice for those of our Ryanair passengers who wish to avoid our optional admin fees going forward.

New routes and bases continued to perform well.

We started our 45th base in Manchester with two aircraft last week -- that's a rise to four aircraft next summer.

We've announced a 46th base in Wroclaw in Poland; the 47th in Baden-Baden in Germany.

And we're concluding or hoping to conclude our negotiations with Warsaw Modlin Airport, which will become our 48th base this side of Christmas.

The recession on higher oil prices continued to force competitors to consolidate, cut capacity and routes.

That's creating or putting further downward pressure on airports who continue to come to Ryanair if they want to grow their traffic.

Unit costs increased 13% -- again, largely due to longer sectors, and a 37% increase in fuel.

Excluding fuel, as I said, adjusted -- sector length adjusted costs were flat.

That's despite a pay increase, higher euro control fees, and a significantly higher charge than Dublin Airport.

Dublin Airport continues to be hugely uncompetitive, having been described recently that charges by Aer Lingus as insane, and even by Etihad as too excessive.

And when you look at the money Etihad are spending on Mancity, if they think that charges in Dublin are too excessive, they really have to be completely out of line.

We're 90% hedged on fuel for FY '12 at about $82 a barrel.

That's up 12% on last year, but significantly below current spot prices.

We've recently extended the hedging position into FY '13.

We're 90% hedged for the first half of the year at $99 a barrel, and 50% for the second half of the year at about $98 per barrel.

Balance sheet remains very strong, with over EUR3 billion in cash despite returning EUR931 million to shareholders over the past three years.

We've significantly reduced net debt during the first half of the year from over EUR700 million by about 50% to EUR370 million, despite spending another EUR85 million on the share buyback.

We've taken advantage of lower interest rates to fix almost 60% of our existing debt for the next seven years at all-in rates of just under 4%.

The long-term dollar hedging program would also ensure that our 35 Boeing deliveries in calendar '11 and '12 are funded at a dollar exchange rate of $1.43, again, significantly better than current rates.

We regret the continuing decision of the Ferrovial BAA airport monopoly here in London to further delay the sale of Stansted.

We think that the competition -- to their judicial review challenge to the competition appeal tribunal is pointless, since all that happens is that it gets referred back to the Competition Commission, who have now, on three separate occasions, recommended that Stansted be sold.

While the BAA delay that sale, they continue to raise prices at Stansted, where airline charges have doubled over the past five years.

And while they double charges, Stansted traffic has declined by almost -- by over 30%.

And it's clear that I think what Ferrovial BAA are doing is increasing the profitability of Stansted in advance of a trade sale.

And that airlines and consumers are the loser.

Traffic continues to fall -- even in the BAA's other UK airports return are delivering traffic growth; Stansted is continuing to suffer declines.

And we've seen most recently EasyJet's announcement of moving three aircraft from Stansted to Southend, of all places -- again, because of the high and uncompetitive costs at Stansted.

Dublin traffic continues to fall.

They doubled the charges over the last three years at Dublin and it continues to lose passenger numbers.

In 2010, traffic has declined by 10%.

I think it will be flat in 2011 or maybe a small decline.

If the underlying trend continues to be downward, but 2011 is artificially inflated by the large growth in April and May as a result of the volcanic ash closures in the previous year.

But recent months, September, October, have shown 2%, 3% traffic declines, and we think that will continue.

We regret the failure of the new government in Ireland to deliver any change or reform in its airports or tourism policy.

They, again, seem to be, like the previous government, seem to prefer commissioning consultants' reports.

And as you know, if you want change, a consultant's report is the last place you'd start.

But while they're passing around with consultants, the DAA is raising costs; traffic at Cork, Dublin, and Shannon are continuing to decline.

We're again calling on the government to change that policy.

It didn't work under the last administration.

It won't work under the new administration.

We believe the only way forward in Ireland is to break up the DAA, sell off Cork and Shannon, and sell off one or both of the Dublin terminals, so that you get real competition, lower charges, and a better customer service into where the DAA -- to deliver our growth, where the DAA monopoly has failed.

We kind of welcomed last week's provisional agreement under which BIAGBA will buy BMI from Lufthansa.

We think it's another -- just another inevitable consequence of the consolidation process among Europe's high-fare airlines.

The fact that IAG and BAA will control over 60% of the short hauls south of Heathrow will mirror Lufthansa's 60% share of Frankfurt's slots and Air France 60% of Charles de Gaulle's slots.

We believe this takeover will be rubber stamped in two nanoseconds by both the European Commission and the UK competition authorities, not least the UK's OFT.

It will highlight again the blatantly discriminatory treatment of the Ryanair's previous 2006 [bailout for] Aer Lingus, where the EU Commission suggested that Ryanair and Aer Lingus coming together at Dublin would threaten the very fabric of European aviation, when, which case, it was prohibited.

They rubberstamped yet Air France acquiring KLM; Lufthansa acquiring everything else; and BAA merging with Iberia and now with BMI.

And you have to ask the question -- we have the OFT under John Fingleton wasting public money over here, investigating a five-year-old failed merger between two non-UK airlines -- which, if they were put together, would have given Ryanair and Aer Lingus jointly control over about 80% of the traffic at Dublin airport.

Yet Dublin airport is operating at less than 50% capacity and there's loads of spare capacity at Dublin.

There's no such thing as a slots at Dublin airport, because if you want one, you just ask for one; there's plenty of space.

Yet they rubberstamped BAA acquiring British Midland, where at Heathrow, where there's massive slots restrictions, and slots are trading for up to EUR20 million per payer.

Again, I think it's just a complete waste of public monies in the UK by an overpaid bureaucrat in the OFT, where the evidence of the last five years is that the Aer Lingus have ignored every suggestion or every initiative proposed by Ryanair, where we clearly have no influence; or as the EU Commission previously found, we have no (inaudible) factor or the [EU] controlled either.

Nevertheless, we'll continue to fight the OFT's wasted and pointless investigation of our minority shareholding in Aer Lingus.

I would point again to last week's request from Ryanair that we [owe] for an EGM of Aer Lingus, which -- surprise, surprise -- Aer Lingus have rejected on the basis that apparently we haven't requested the EGM in the proper format.

The last time we checked, it has you -- we simply write in a letter in the English language requesting an EGM; but apparently Aer Lingus have invented some new format for EGM requisitions, which we will -- our lawyers are now trying to ascertain.

In the meantime, however, Ryanair' capacity cuts this winter means that traffic in H2 will fall by 4%.

In November, by the way, for those of you with a nervous disposition, the traffic decline will be 10%, down almost 500,000 passengers, as we ground up to 80 aircraft due to higher oil prices.

And we target those groundings at the expensive monopoly -- expensive regulated monopoly airports, largely Dublin and Stansted.

While the H1 yields were slightly better than forecast, we nevertheless remain cautious in our outlook.

Based on the current Q3 bookings where we have good visibility, and almost no visibility into Q4, we now expect that yields in the second half will rise by up to 14%, which is a rise -- previously, where we were guiding 10% to 12% -- slightly better than previously guided.

Accordingly, we think it's appropriate now that we raise our full-year net profit guidance by 10% from EUR400 million to EUR440 million.

I think that increase of EUR40 million in guidance is a -- nicely rounds out the year.

But it is, obviously, subject to the final outturn of Q4 yields, which could be a little bit better than expected; could be a little bit worse than expected.

We expect to be able to update the markets on that shortly after Christmas with the year three -- with the Q3 numbers.

Howard, I will hand over to you for the MD&A, please, if you would.

Okay.

Thank you, Michael.

The usual health warning with the MD&A -- all figures and comments are by reference to the adjusted income statement, excluding exceptional items.

There was no exceptional items in the H1 ended 30 September, 2011.

However, there was one in the prior period.

That was a charge net of tax of EUR27.9 million, where the estimated cost relating to the closure of Aerospace in April/May 2010, due to the volcanic -- Icelandic volcanic ash disruptions.

Therefore, adjusted profit after tax increased by 20% to EUR543.5 million compared to EUR451.9 million at the half year ended September 30, 2010, primarily due to a 13% increase in average fares and strong ancillary revenues, offset by a 37% increase in fuel costs.

Total operating revenues increased by 24% to EUR2.712 billion, as average fares rose by 13%.

Ancillary revenues grew by 15% -- [faster than] the 12% increase in passenger volumes to EUR486.5 million, due to improved product mix and higher Internet-related revenues.

Total revenue per passenger as a result increased by 11%, while [float] factor remained flat at 85% during the period.

Total operating expenses increased by 26% to EUR2.061 billion, primarily due to an increase in fuel prices, the higher level of activity, and operating costs associated with the growth of the airline.

Fuel, which represents 44% of total operating costs, compared to 40% in the prior period, increased by 37% to EUR907 million due to the higher price per gallon paid and a 20% increase in the number of hours flown.

The unit cost, excluding fuel, increased by 6%, [and] adjusted, they remained flat.

Including fuel, unit cost rose by 13%.

Operating margins as a result decreased by 1 percentage point to 24%, while operating profit increased by 19% to EUR650.5 million.

Adjusted debt margin was down 1 point to 20% compared to September 30, 2010.

Earnings per share for the period was EUR0.3662 compared to adjusted earnings per share of EUR0.3047 at September 30, 2010.

On to the balance sheet.

Gross cash increased by EUR184 million since the 31st of March 2011 to EUR3.1246 billion.

The group generated cash from operating activities of EUR456.6 million, which funded net capital expenditure of EUR26.5 million; debt repayments, and an EUR85.1 million share buyback program.

Gross debt as a result decreased by EUR152.6 million to EUR3.496 billion.

Net debt has fallen from EUR709 million at March 31, 2011 to EUR372.2 million at the period end.

With that, I'll hand you over back to Michael.

Thanks, Howard.

Okay, Pauli, let's open it up for questions, please.

(Operator Instructions).

Stephen Furlong, Davy Research.

Great quarter, Michael.

Can I just ask about the aircraft market?

Maybe just two questions.

One, where you see it now in terms of the health or otherwise of the orders of the various manufacturers, particularly as you talk to most of them about a future deal?

And the second thing I was wondering about, I saw it was kind of highlighted in this statement.

I thought it was interesting the way you've locked in 60% of your debt at just over 3.7% for the next seven years.

So just in terms of going forward for some competitors as well, and thinking just in terms of the aircraft finance market, do you think that's fundamentally changed with different things happening, particularly with branch banks, et cetera?

That'd be great.

Thank you.

Thanks, Stephen.

I mean, like, the aircraft market is fairly locked up at the moment.

Both Boeing and Airbus would have you believe that their order books are full out to about 2015, which is notionally true, except a lot of the orders are from airlines that have either gone bust or can't raise any financing.

I think the financing will be addressed, though, in the short-term by manufacturers simply by financing their own aircraft deliveries.

I don't see any other way.

The financing market is largely dried up.

We have continued to have access to financing, but as you know, it's on the back of [existing] bank guarantees.

So we have a AAA-rated financing instrument.

I think it does make sense for us at these kind of low interest rates to lock away our financing costs.

It gives us that cost certainty over the medium-term, and allows us -- it gives us a lot of freedom to deploy our cash, whether it's in share buybacks or dividends or something else.

That, to us, seems to be the sensible way to go about it.

I think the big dynamic will be what happens for the consolidation in the next year or two.

If oil remains at $100 a barrel, there will be further failure this winter.

There will be further consolidation.

More recently, for example, you saw -- who was it?

-- Air Berlin, for example, deferring some of their aircraft oil delivery this winter and next spring by two or three years.

We remember, of course, Aer Lingus, whose ability to time aircraft deliveries at the top of the cycle remains undimmed, ordering $2.4 billion worth of longhaul aircraft two years ago against a -- while Ryanair opposed it at the EGM, they still rammed it through.

And then six weeks later, announced that they were deferring all of the longhaul orders out till at least 2018, having entered into commitments for 2.4 billion worth of aircraft financing.

So, I think the next big dynamic in that would be the Chinese, if they do produce the C919, if it does fly -- they're talking about the first flight in 2014, commercial deliveries in 2016.

If they hold to those dates, and I would be fairly confident that they will -- I mean, they're a very impressive operation, Cormac -- very serious, very impressive; almost limitless resources to invest in this project.

I think that would put a huge hole in the order books -- certainly, the shorthaul order books of Boeing and Airbus as well.

And that might be the next step change in the aircraft value cycle.

But for the moment, our aircraft values are hot but there doesn't seem to be any new aircraft or availability of new aircraft.

Secondhand aircraft values are remarkably weak.

We've sold no aircraft now for two years.

So I suspect there's a bit of a disconnect between secondhand aircraft values and the order books.

But we really don't care; as to where the business is and Ryanair at the moment, we're very happy to be at the end of our aircraft orders.

We look forward to not buying any aircraft for a year or two, allowing the cash reserves to build up very strongly over the next year or two, and find more imaginative ways of spending some of that cash back to shareholders.

At the moment, the debt markets, they're completely shot to pieces.

As I said, I think very few airlines are able to finance aircraft or order deliveries at the moment where Ryanair is.

I think manufacturers, though, will step into the breach and provide that kind of financing in the short-term.

And other than that, I mean, the only kind of [development] we've seen on the aircraft financing side was while we're locking away seven-year money at under 4%, Air Berlin, we know, just recently has announced a bond of $100 million bond-raising and they're paying about 11.5% money -- like just crazy stuff.

So, in the financing markets, they're very difficult.

I think that is helpful to define our business model for the next 12, 84 months, because there's no VC money; there's no airline startups in Europe.

I think capacity will continue to be -- that they will continue to be very disciplined.

And with developments like BAA acquiring BMI means more and more shorthaul capacity will be taken out by the flag, creating better opportunities for Ryanair to grow.

Okay.

Great, thank you.

Jim Parker, Raymond James.

Just regarding your [states length], it appears that it may flatten out here a bit.

Just curious in the second half of this year and for fiscal '13, what will be the year-to-year change in your states length?

Well, we're still talking about a 6% for this year increase in sector length.

It will be slightly less -- it was about -- just over 6% in the first half of the year; slightly less in the second half of the year; and overall, 6%.

In terms of next year, we really don't know at this stage.

Obviously, we don't have the schedule in place.

But our feeling is that sector length will continue to decline.

Howard, just what do you think cash might be one year out?

So you're at 3.1 billion now, what's your outlook, say, one year out?

Well, (multiple speakers) really much beyond the end of this year, I think is too difficult, Jim.

I think what we were talking this morning is that (multiple speakers) --

Significantly higher, Jim.

Yes.

(multiple speakers) Maybe we can address it another way is that we expect our net debt to fall to about 200 million by the end of the year, which obviously presupposes a significant rise in the cash balance as we move to the end of this year.

Okay.

(multiple speakers)

(multiple speakers) As you move out to the end of '13, a lot depends on yields next year, profitability next year.

We really don't want to get into forecasting a number because it's too inexact at this stage.

But clearly, the CapEx declines a way very significantly next year and the cash balances will rise significantly.

Okay.

And do you have an estimate of the proportion of your seats that are in, say, close-in airports and how that might look going forward?

Sorry, Jim -- what's a close-in airport?

That's what --?

A close-in are the traditionally more central located airports, where you mentioned that you're getting a lot of offers to bring aircraft to more airports.

I'm curious.

And I guess Barcelona was most recent foray into (multiple speakers) --

Yes.

-- a central-type airport.

What proportion of your seats are now in closer-in airports and how that might change over the next year or two?

In all honesty, Jim, with European airports, it really doesn't make a difference, with a couple of minor exceptions like Frankfurt [Hand], which is about -- and Skavsta, which is about 100 kilometers out.

Ciampino, which would be the secondary airport for Rome, is closer than Fiumicino -- there's really no difference in yields in Girona than Barcelona El Prat at the moment.

So it depends -- you described Stansted as a far-out airport, or a close-in airports.

Look, it's clearly London's third airport.

So we wouldn't break that down by way of analysis, but there's no material difference in the yields between our airports across the peak.

So I don't think it's an analysis that would actually help in understanding of the model.

I think the key dynamic in the business model at the moment is we are significantly and deliberately slowing down the rate of capacity growth.

And that, combined with fuel surcharge and fare increases by competitors, has striven our second year of double-digit yield increases on the backs of 6% longer sectors.

Okay.

All right, thanks.

And Jim, if you look at the slideshow, you'll see on page -- I think it's 13, where we show the impact of the slowing growth on average fare.

And that's well worthwhile having a look at.

Okay.

Thanks, Howard.

All right, cheers.

Thanks, Jim.

(Operator Instructions).

Brian Devine, NCB Stockbrokers.

I'm just wondering in terms of if you have decent airport deals, would you be looking to use operating leases in the summers of fiscal year '14 and fiscal year '15 if there's no airport -- aircraft deal done?

And (multiple speakers) --

No.

Okay.

The answer to that question is no.

We don't believe in operating leases.

We don't work for leasing companies.

They're generally silly and high-cost.

What I think you will see us do, though, is through the summer of '13 and '14, is to churn more of the existing fleet and churn some of either the lower -- the underperforming routes and bases are those bases that are causing us or giving us grief, like, for example, in Girona, at the moment, where the Generales haven't honored the five-year growth deal; or Alicante, where [IE] are screwing around trying to force us to use and pay for air bridges, which we neither need nor want to use.

So I think we will still be able to open up new routes and bases, but it will be at that stage by churning some of the other routes and bases.

Thanks.

Just in terms of -- with the Irish passenger fare in terms of where the yield increase is fairly constant across locations --?

Yes, generally across the system, the yield increases have been relatively spread across the system.

The difficulty in Ireland, though, it's one of those markets where we are making the least amount of money.

In fact, we actually really lose money for most of the year in Ireland because of the high airport costs, relative to the average airport costs across the network.

We suffer in Ireland from having our most -- the DAA airports are now, with the exception only of Gatwick, the most expensive airports we fly to.

Ireland still has the remains -- the remnants of this passenger tax, where -- which is one of the reasons why traffic continues to decline.

Traffic at Shannon and Cork has imploded, but it's not well-known yet because the DAA are suppressing the numbers.

They only release the traffic figures at Dublin, which last month, declined by 3%; whereas at Shannon, they were down something of the order of 20%.

So Ireland is probably the least profitable market we have at the moment because of the high-cost government airports and the remnants of the government tax.

Thanks very much.

So if there was any way that I could just stop it from churn in 2013 and 2014, it will be Dublin, followed on by Cork and Shannon, unless there's a change in government policy.

Penny Butcher, Morgan Stanley.

My question is just a follow-up for Howard.

In regards to the fuel cost guidance for fiscal '13, the EUR250 million that you cite in the slide presentation or around the (multiple speakers) per passenger, is that just the price component of fuel inflation?

Does it include the volume that you intend to grow next year as well?

No, that's the total increase in the fuel bill, including volume.

Including volume, as well.

Okay.

Yes.

Yes.

Right.

Thank you.

So that's 250 million -- I should hesitate to add at current rates.

At current spot -- if current (multiple speakers) spot rates prevail?

(multiple speakers) Yes.

So taking existing hedge and assuming everything else was hedged at the current rate that apply into fiscal 2013.

Okay.

But remember, there isn't much of a volume increase next year anyway, Penny.

No, I figured as much.

I was just trying to reconcile (multiple speakers) -- I was trying to reconcile that with your -- the fiscal '13 table shows approximately sort of 25% price movements for the first three quarters and then zero.

And how you were just getting to the 250 million, I wasn't quite sure.

Yes, we ran what our expected volumes are at the hedging rates and at current market rates to drive that number.

Okay.

Great.

Thank you very much.

Okay.

Sure, Penny.

Who's next?

(Operator Instructions).

Gerard Moore, Merrion Capital.

Just a follow-up maybe on Penny's question there.

Howard, could you maybe tell us what level of currency benefit are you taking into account in order to get to that 250 million increase?

The second question then was really just on ancillary revenue.

I was wondering if you guys could say a few words on how satisfied you were with the performance in the quarter, and what your outlook is for the rest of the year?

Then, thirdly, please, just in terms of given the good level of cash generation that you are achieving and that you are likely to achieve in the coming period, do you see any potential for making a special dividend above the EUR500 million that we've -- that you've kind of talked about already?

And the last question is on the pension issue for Aer Lingus.

If we assume that Aer Lingus did make some kind of contribution to the members in order, perhaps, to remove all ambiguity over this issue, maybe to avoid industrial action, do you think -- could you imagine such a scenario where, as a shareholder, you would support Aer Lingus making a contribution?

Thanks.

Howard, do you want to take the first one, the currency and the (multiple speakers)?

Yes, we're using our hedging ratio, which we talked about today at 1.43 in those calculations.

That gives us about a 6% benefit on the average rate this year.

Okay.

Thanks.

Okay.

Ancillary revenues in the quarter and the rest of the year, we've been very -- I mean, I think I'm happy with the performance.

Ancillary revenues are up 15%; traffic [rolls] was 13%.

There's been -- there will be no fundamental change in ancillary revenues for the next, I think, 12, 18 months until we can generate something new on in-flight entertainment is the next one around the corner.

And for that, we're waiting for cheaper and more widely available bandwidth for in-flight entertainment.

We continue to believe -- you remember, we were guiding for a number of years -- we'd get ancillaries to 20%, and then we think they'll level out at 20%.

They're still running a little bit higher than that.

But as the yields rise over the next year or two by double digits, ancillaries will hover at or around 20%.

And I think that's where we expect them to continue to be.

Cash generation we expect will be strong for the next 12 months.

I don't think -- I mean, we've got to be careful here -- I think the plan at the moment is another special dividend before the end of FY '13.

I think it's reasonable to assume it will be of a similar magnitude to the last one, which was 500 million.

I don't think you should forecast -- I don't think you should expect it to be higher than that.

But I wouldn't rule out the possibility of maybe another share buyback, if there was share price -- material share price weakness over the next 12 to 18 months.

I mean, I think we continue to work with shareholders to take onboard their views to see if -- our objective is to drive the share price up, not to be dribbling out dividends to shareholders; and to try to use the cash we have to maximize capital appreciation.

So I don't think you should be [forward] -- be looking at or expecting at this stage, any more than a 500 million dividend.

On the pension issue for Aer Lingus, I think we would be very -- we're very strong on the issue that Aer Lingus has repeatedly -- in the 2006 IPO prospectus, which is a legally binding document, and in almost every annual account since, the Board and management of Aer Lingus have been assured all shareholders that they have only defined contribution pension schemes.

On balance, we think that they have a fairly good lead that we think their legal advice is sound.

The reason for that is we think if it wasn't sound, I think the unions and the employees would have taken them to court, looking for some of the rights, if it generally genuinely wasn't defined contribution.

I think the fact that the unions and the workers haven't gone to court lends us to believe that even the Aer Lingus legal advice is pretty watertight.

Our concern, however, though, is that the Board of Aer Lingus, which is largely a bunch of government appointees and political hacks, will, having reappointed -- although why they reappointed the head of the Irish trade union movement at the start of this year, God only knows why -- and will kind of do some backdoor deals.

We don't believe that there should be any additional contribution to the pension scheme.

If it's a defined contribution pension scheme, then it's a defined contribution pension scheme.

We're fed up with shareholder funds in Aer Lingus being raided or treated like a piggybank by the Board and the trade unions in Aer Lingus.

Last Christmas Eve, they shelled out 23 million of shareholder funds because the [ESOT] was going to break its bank covenants.

In March this year, they paid 30 million to the Irish revenue, which was the tax liability for individual employees who had accepted the leave, their redundancy payments.

And those employees should have paid their tax liability, not have the shareholders give them a tax liability.

But I think it's an interesting question there as to whether those employees have another BI -- should have a BIK tax liability on top because they seem to have gotten a huge redundancy payment then been rehired.

And then the company has paid their tax liability for them, as well.

And we're fed up with shareholder funds in Aer Lingus being raided or treated for a piggyback.

However, I wouldn't be definitive on it.

If, for example, there was some -- and I'm using this speculatively -- if there was some minor contribution made on top of the 100 million that was made when Aer Lingus [floated] in 2006, in return for an absolute guarantee that, thereafter, there would never again be another pension contribution come hell or high water, then I think, like most other Aer Lingus shareholders, we'd take a view on it -- a pragmatic view.

But our concern would be that if there's a contribution made to what are now clearly defined contribution schemes, this time around, in the face of some threat of industrial action, then that will happen again and again and again.

And that the vested interest of the unions and the employees will keep coming back and raiding shareholder funds for as long as the 900 million cash pile exists within Aer Lingus.

We think it's time that shareholders saw some return.

I do think we support the government's view that the government is willing to sell its 25% stake in Aer Lingus.

The Minister has said he'd sell it but only for EUR1 a share.

At the moment, Aer Lingus continues to struggle with a share that's about less than [$0.70].

I think the only way of getting the share price up above EUR1 is to eliminate this pension scheme uncertainty.

We saw there was a recent research piece by Marion -- produced a research piece that the share price would go back over EUR1 if the company came out and said definitively there'd be no more payments to the pension scheme.

(multiple speakers)

(multiple speakers) Sorry, I have to sign off, so I'll talk to you later.

Okay.

Okay.

Talk to you soon.

Okay, thanks, Gerard.

Cheers.

Bye.

To be fair to -- Marion came out and said, to be fair to the management, I think Christoph Mueller and Andrew Macfarlane, we've been heartened by how, I think, firm they've been at investor meetings, and at the recent investor conference in London, that there will be no further contribution to the pension scheme.

And that any such contributions would require prior shareholder approval.

The problem, though, is you have Barrington and some of the other dead wood on the Board of Aer Lingus have been singularly silent on the subject.

We can't seem to get any confirmation from them on this issue.

We've written, as we are entitled to do under Irish company law last week, to requisition an EGM of Aer Lingus on the subject of the covered-up report into this 30 million revenue penalty, and to get some confirmation from the Board that there'd be no further payments to these defined contribution pension schemes.

And all we got back on Friday was a stupid letter from Aer Lingus's lawyers saying you hadn't requisitioned the EGM in the proper format.

Well, we don't know of any other format other than to send a letter saying we respectfully request an EGM.

So, get on with it.

But I think it's just part of the ongoing process in Aer Lingus over the last five years where Ryanair has been ignored at every turn.

The Board has been propped up with government appointees and representative of other minor shareholders who are opposed to Ryanair's shareholder earnings, which is fine.

We don't have a problem with that.

But it does kind of upset us a little bit that you have bureaucrats, expensive bureaucrats, in the OFT here in the UK investigating our five-year minority shareholding in Aer Lingus, where we have repeatedly been ignored and our views ignored, as they have run the share price into the ground, down from years 3.20 -- over 3.20 a share down to less than 0.70 today.

(multiple speakers) So I think that the short answer to your question was, we'll actually -- we haven't got a decision yet on the pension scheme, but we certainly -- we are opposed to any further contributions.

But like all other shareholders, I think we take a pragmatic view if there was a suggestion made to shareholders, it would depend on how much it was; what was the contribution that was proposed; and was this really going to be the last and never again, or was there going to be another -- would this be the end of the threat of industrial relations from the vested interest of the trade union hacks and the employees?

That's very clear, thank you.

Just one extra question, if I can.

Sure.

Could you remind us of the guidance for the net CapEx for this year, please?

It's relatively small -- this is out to FY -- are we talking -- is that the question for FY '12 or FY '13?

Well, both, if you can.

Off the top -- is David Broderick on the line?

Have you got the actual numbers?

No?

Okay, I think an FY '12, it's around EUR400 million; and FY '13, it's less -- about down to about EUR100 million.

Okay.

Thanks.

But just check with David Broderick so that -- I can't stand over those net numbers -- I'm rolling through the papers here.

Go on and I'll come back to it if I can find the actual -- the detailed number.

Okay.

Thanks a lot.

Next question, please.

Sorry, got it here -- yes.

Gross CapEx in FY '12 is EUR500 million.

CapEx will drop to EUR400 million in FY '13 and to EUR100 million in FY '14.

Okay, next question, please.

There are no further questions in the queue.

(Operator Instructions) (multiple speakers) --

Wonderful.

Don't remind them, that's fine.

We've done the conference call this morning.

We're on a week-long road show.

Anybody wants any further questions, please route them to me, Howard, Mike Cawley, David Broderick.

Other than that, we'll see you all on one of the roadshow meetings in London, Europe, or the US for the rest of the week.

Thanks, everybody.

That will conclude today's conference call.

Thank you for your participation, ladies and gentlemen.

You may now disconnect.