Ryanair Holdings PLC (RYAAY) 2014 Q1 法說會逐字稿

Thank you very much.

Good afternoon, everybody.

As you will have seen this morning, we announced that Q1 profits, as previously guided, fell 21% as traffic grew 3% to EUR23.3 million.

Average fares fell 4% during the quarter, principally due to Easter falling outside of the quarter and the impact of the June French ATC strike, but revenue per passenger rose 1% primarily due to strong ancillary growth.

As we have previously guided, higher fuel costs and the timing of Easter led to Q1 profits falling EUR21 million to EUR78 million.

Ancillary revenues grew strongly by 25% to EUR357 million.

Principally the continued growth of reserved seating, priority boarding, and higher admin credit card fees.

Unit costs rose 4% in line with the increase in sector length.

Fuel increased 6% to 47% of total operating costs.

Excluding fuel, Q1 costs rose by 6%, slightly faster than sector lengths due to a 2% rise in flight crew pay on the first of April and increased euro-controlled Spanish airport and Italian ATC charges.

We are well-hedged for FY2014 at approximately $98 per barrel and 70% hedge for H1 FY2015 at $93 a barrel.

We have also recently extended our H1 currency hedges on dollar weakness to deliver a 3% cover on our fuel cost per passenger for the 70% already hedged into H1 FY2015.

Seven new bases this summer Eindhoven and Masstricht, Krakow, Zadar, Chania, Marrakesh and Fez performing well.

We are currently working on plans to announce more new routes and new bases later this year as we continue to exploit significant growth opportunities in markets where competitors including Air Berlin, Alitalia, Iberia, LUHF, and SAS are cutting back.

With ongoing negotiations with Manchester Airport Group, who are the new owners of Stansted, offer a multi-year growth deal which would reverse six years of record traffic declines.

But there is no guarantees yet that any deal will be concluded.

You will read my usual rant there next about the UK Competition Committee inquiry, a complete and utter waste of time.

Although these guys are determined to ignore every shred of evidence that the last 6.5 years have thrown up which shows that, one, Ryanair has no influence over Aer Lingus and, two, that it hasn't led to any lessening of competition.

We find ourselves in the remarkable regulatory Middle Earth where on the one hand the European Commission prevents us from acquiring Aer Lingus on the ground that competition between the two airlines has intensified.

But now the Brits have decided that after 6.5 years of evidence of intensified competition suggests that we should be forced to sell down some or all of our stake on the grounds that competition might be lessened in the future.

This is a complete bogus waste of time.

Only would it appear in a regulated industry like the airline industry.

And we intend to fight the UKCC on the beaches, on the heels, in the trees, and wherever else we can find some misguided, politicized, premeditated regulator determined to force us to sell down our stake in Aer Lingus despite the fact that Aer Lingus carries very few, if any, UK consumers at all.

It is, however, a sideshow so I don't want to waste too much time on it on the call.

In terms of looking forward, as you know we have recently approved a new order for 175 Boeing 737-800 aircraft.

They are delivered during the period September 14 to December 18.

We have also on the back of that firm order now raised our growth targets by nearly 40% to 110 million passengers by FY2019, previously 100 million, and our fleet will grow to 410, previously 375.

The strength of the balance sheet remains a feature of Ryanair that is unmatched by any other airline in the industry.

That strong cash position, as well as the certainty of our CapEx spend over the next four or five -- two to three years has allowed us recently to declare that we will return a further EUR1 billion to shareholders.

At least EUR400 million would be returned this year by share buybacks.

We have just completed EUR177 million of that, so there is about EUR230 million to go.

And then up to EUR600 million either in share buybacks or a combination of share buybacks and special dividends next year, subject always to there being nothing unusual or untoward about current few years and profitability trends.

This further (inaudible) in returns over the next two years will bring to over EUR2.5 billion the cash rate returned by Ryanair to shareholders in recent years, more than four times the EUR580 million we originally ranged.

In terms of outlook, we still expect Q yields to rise despite last year's very challenging post-Olympic-boosted comparables, although we have noticed in recent weeks that yields on the closed-in summer bookings have been slightly weaker.

We ascribe to the heat wave in Ireland, the UK, and Northern Europe.

Never has rain been so welcome as it has been this week.

We don't expect that trend to continue, but it has undoubtedly been weak closed-in and we have seen that with tour operators in the UK and some of the airlines, many of the airlines, in fact, engaged in price discounting in late July/early August.

Something we haven't seen for a number of years.

As ever though, and I think what separates us, is our cautious outlook.

We are only reporting the Q1 guidance.

We have some degree of visibility on Q2.

We have no visibility over the remainder of the winter and, therefore, we continue to be cautious.

We expect market conditions to continue to be tough characterized by recession, austerity, high fuel costs, and the spread of excessive government taxes.

Mostly recently the Walloon government in their idiocy has announced a plan to levy an air travel tax in Charleroi from the first of January, despite the evidence that the evidence that the Dutch and the Germany this has been very damaging to their air travel.

While we expect full-year traffic to grow 3% to EUR81.5 million, again, because we have no visibility over next winter yields and on the basis of the recent yield for the closed-in summer bookings does not continue for long, we feel no reason to change our full-year profit after tax guidance which remains at between EUR570 million and EUR600 million.

Howard, do you want to take the MD&A?

Yes, I will just bring people through the summary, Michael.

The detail is attached to the release we have made.

Profit after tax decreased by 21% to EUR78.1 million compared to EUR98.9 million the quarter ended June 30, 2012, partly due to a 4% reduction in average fare and an 8% increase in total operating expenses offset by strong ancillary revenues.

Total operating revenues increased by 5% to EUR1.342 billion, primarily due to strong ancillary revenues which grew by 25%, significantly faster than the 3% increase in passenger numbers, to EUR356.5 million offset by a 4% reduction in average fare.

Total revenue per passenger as a result increased by 1%, while load factor remained flat at 82% compared to the quarter ended June 30, 2012.

Total operating expenses increased by 8% to EUR1.238 billion due to an increase in fuel prices, a higher level of activity, and operating costs associated with growth of the airline.

Fuel, which now represents 47% of total operating costs in both the current and comparison period, increased by 6% to EUR576 million due to the higher price per gallon paid and the increased activity in the period.

Unit costs, excluding fuel, increased by 6%.

Wherever, including fuel, unit costs only rose by 4%, the same stage length increase.

Operating margin increased by 2% to 8%, whilst operating profit decreased by 22% to EUR103.3 million.

Net margin as a result was down 2 points to 6% compared to June 30, 2012.

Basic earnings per share for the period was down 21% to EUR5.42 compared to basic earnings of EUR6.86 in the previous period.

Balance sheet then.

Gross cash increased by EUR33.7 million since the end of March to EUR3.592 billion and gross debt fell by EUR97 million to EUR3.401 billion.

The group generated cash from operating activities of EUR535 million which funded net capital expenditure of EUR237.3 million, a share buyback, as Michael mentioned, of EUR177 million, and debt repayments during the period.

As a result, the group had a stronger net cash position which amounted to EUR191.2 million at the end of the period.

With that I will hand you back to Michael.

Thanks, Howard.

Okay, we will now open it up for questions and answers please.

(Operator Instructions) Stephen Furlong, Davy Research.

Just can you go through just a bit on the cost side and particularly the airport costs?

I know they are up in the quarter, but I think that is phased out of the comps as we go later on in the year.

Maybe talk about Spanish airport costs.

Then just about airports in general, I know you mentioned about maybe your ongoing negotiations with MAG in Stansted.

Maybe you could just talk a bit about that.

Also, Dublin isn't mentioned here, so I am assuming that is kind of down the pecking order in terms of opportunities.

That would be great.

To add, to be honest, of what is in the MD&A on airport costs, as you know, we and the other airlines have been vociferously complaining about the crazy idea of the Spanish government to keep hiking airport fees.

They are trying to dress up Aena for a privatization.

That has destroyed traffic across many of the Spanish airports where total air passengers at Aena airports have fallen from 220 million to under 180 million over the past five years.

But never underestimate the ability of government to destroy the economy.

In a country where there is 50% youth unemployment and they should be stimulating tourism, they are taxing it.

In terms of negotiations, again, the flavor we tried to communicate at the full-years and at the investor days was we are a plague here.

We can barely get into the office for crawling over the bodies of airport management here on a daily basis in here worried about their incumbent airlines cutting traffic, taking up more routes.

Will we grow there; will we add some more aircraft and more capacity?

We ourselves have the discipline for the remainder of this -- out until September 2014 now that we don't have any more aircraft additions and, therefore, it is hard for us to allocate more capacity to new airports unless we churn from some airports at the bottom of our pile.

That process continues, but we won't do any developments on it, I think, until about September when we start to finalize the winter schedule and also update on how the discussions with Stansted have gone.

As the discussions with Dublin, unfortunately, have pretty much ended, we made them a proposal.

They came back with a counter proposal.

We got close but, ultimately -- and I think the difficulty for us as it is with many other airports, and it's a conversation we've had with Dublin Airport, is that we have no appetite for paying higher airport fees, even if it is a significant discount off Dublin's very high airport charges.

But we have a litany of other airports around Europe where the costs are extremely low or significantly lower than the discounted levels Dublin is offering us.

The discussions are still ongoing with Stansted.

I think it is about 50/50 as to whether they will be concluded or not.

We are still making some progress, but there is still a gap to be closed.

And I think it would be fair -- there is a gap between the amount of growth that MAG wishes to see at Stansted and how competitive their charges will be.

The more growth they want -- and we are very happy to deliver them growth -- then the lower the discounts are we are looking forward.

Remember what we are essentially looking for is the reversal of the price doubling that went on at Stansted in 2007 under the failed BAA monopoly and the inadequate CAA regulatory regime.

Regardless of whether we do anything at Dublin or Stansted this winter, we have a myriad of other airport offers on the table.

The challenge for us I think in the next 12 months where we really will have -- we have no capacity growth, is to be very selective and very disciplined about where we allocate our capacity because it has got to come from somewhere else within the system.

It becomes a little bit easier once we get to September 2014 when we start taking the delivery of the -- the new aircraft deliveries on the run into summer 2015 and summer 2016.

It is also one of the features of America with the discussions with the airports at the moment where they recognize -- in fact, I think one of the characteristics over -- if you are looking forward to summer 2014, 2015, and 2016 is there is very little aircraft capacity additions in Europe.

Generally, easyJet has very few deliveries.

Even their new order essentially only commences around 2018.

Norwegian has a few around the edges, but at their cost base I wouldn't hold my breath on a lot of growth.

We, I think, are increasingly seeing us being the only show in town if you want -- at an airport at least -- to deliver significant growth.

There is undoubtedly enormous opportunities unfolding in countries like Poland where Wizz Air and LOT are cutting their capacities, in Italy where Alitalia is cutting capacity, in Spain where Iberia is cutting capacity.

Although we don't much like the airport fees structure in Spain at the moment, so we are unlikely to grow there.

And certainly in Scandinavia where SAS continues to implode.

That is clear.

That is great, Michael.

Thank you.

Michael, if I might add to that, one of the things we have seen in Q1 was that the Italian air traffic control charges had been frontloaded.

That is because the increase happened in July of last year.

So once that becomes annualized in Q2 the rate of increase in airport charges will start to slow down as we go through the remainder of the year.

So quarter one is slightly distorted by the fact that the comparative last year didn't include those quadrupling of air traffic control charges.

And obviously we have those higher unit charges, as Michael as well mentioned, which will continue for the remainder of the year.

Thanks, Howard.

Next question, please?

Damian Brewer, RBC.

Good afternoon.

Two questions if I can.

I just wanted to explore the interaction between your fuel costs and your staff costs, if possible please.

I just noticed the flown-outs are up 9%.

Obviously the station (inaudible) don't seem to be up as much, nor do the amount of sectors flown.

So could you explain what is going on there?

Are the aircraft flying a little bit slower?

Are you changing the way you are flying the aircraft?

And what is that doing to your staff costs in terms of the staff hours used and how would that develop going forward, if you continue down that trend?

How much of that efficiency have you got in place and how much more to come?

And then the second question really just ancillary revenue.

How much of the change in the ancillary revenue per passenger was from the reserve seating?

How developed is that and again how much more of that process do you think there is to come once we get through to the second half this calendar year when you are lapping its introduction?

Thanks, Damian.

I will take the second one first.

We don't break down the ancillaries under the quarterly numbers, but I think we have given you the three highlighted areas, which was significant growth in priority boarding, the reserved seating, and also the admin credit card fees.

I think it is fair to say that we have continued to see a drift of business-type passengers switching to us, particularly in those markets where we have decent frequencies, two or three flights daily.

There is an increasing trend, I think, towards people becoming aware of the reserved seating facility.

And then combine that with the reliability of the punctuality of the operation, which has been phenomenal, particularly in the last two quarters.

We are running above 90% punctuality with the exception of the three days of the French ATC they are running around 94%.

And that allies to very low prices.

It is a compelling business-type proposition, although we try not to fall over ourselves courting business passengers.

You are not going to see us on GDS's, we are not going to be selling through travel agents or any of the other business type products that just add to costs.

But I think there is -- we have been, I think I would say, for about the last 18 months pleasantly surprised by the uptake of reserved seating and also by the fact that the reserve seating hasn't cannibalized priority boarding.

It has had some impact, but originally the concern was it would simply eliminate all priority boarding.

It hasn't and you have seen it has continued to develop that by, one, increasing the number of reserved seats.

It is now up to eight rows of reserved seats.

And also beginning to yield manages stats by using a degree of pricing on some of the longer -- during the peak periods on the longer routes and on some of the businessy-type roots where there seems to be -- where the growth is very strong.

In relation to the fuel costs, (inaudible) cost issue here, one of the big focuses for us in the last two years has been we have begun to get very active on the fuel management side.

One of the things that we have been very good at, and unlike most other airlines, we have this kind of formula on telemetry on all the aircrafts.

It's called OSDM; I think it's operational flight data monitoring.

We get all the high speeds and everything else that the planes are flying at.

We are now able to manage our flights in order to require our pilot to comply with what we have termed the approved flight profile, which is the takeoff speeds, the cruise speed, the decent, the landing -- all that kind of stuff.

So in actuality what we are doing is encouraging or requiring pilots to fly slightly slower.

It also means they are flying slightly safer.

You have less rapid descents, less rapid takeoffs, and that is having a very significant -- it has a minor increase in flight times, which does have an impact on staff pay and on sector length, but a very significant gain on the fuel side in terms of the fuel consumption.

And when fuel is running now 47% of comps versus revenues, total comps, obviously anything that reduces our fuel.

You have seen this raise its head occasionally.

We have some of the more misguided pilots unions around Europe.

We publish these monthly fuel tables which are portrayed by the misguided unions as some attempt by us to get our pilots to fly with less fuel.

In actuality it has nothing to do with fuel loads, but it has everything to do with essentially flight speeds and flight profiles.

But it is being misused by a lot to say this is Ryanair skimping on fuel.

We are flying with too little fuel.

What the fuel tables do is they manage fuel burn and the fuel burn is not driven by whether you fill your tank full to the brim.

Fuel burn is driven by whether you are driving at 140 miles an hour or 60 miles an hour -- 140 miles an hour with the air conditioning on and the windows open as opposed to driving at 60 miles an hour with the air conditioning off and the windows closed.

We will not take any bullshit from the pilot unions.

We know they are a bit distracted at the moment agreeing pay costs and job costs in airlines like Alitalia and Iberia.

And so you will continue to see some mewling and puking from various pilot representatives about our fuel use tables.

But as you can see on the fuel side they are a very effective tool which enhances safety by encouraging and requiring our pilots to fly the approved flight profiles and at the approved flight speeds.

Thank you.

Very thorough.

Neil Glynn, Credit Suisse.

Good afternoon, everybody.

First of all, if I could ask a question with respect to May and June average fares, would be interested to know how they developed year on year.

Then a second question on the ancillary side really leading towards your other costs.

So other cost were only up 1% on a per passenger basis in the first quarter at the same time as ancillaries were up 21% or so.

I know that is obviously a function of priority boarding and reserve seating on having a cost attached.

But it leads me to the question in terms of as you grow your ancillary revenue through in-flight improvements, etc., are there further cost savings to be gained or can you grow that attractively without attaching cost?

Thanks, Neil.

We are not going to be breaking down the yields by month here.

As you will see from the results, the average fare fell 4% for the quarter.

Most of that was due or a significant portion of that was due to Easter falling outside the quarter.

And, frankly, if you want monthly yields you are on the wrong conference call.

On ancillary revenues, I think a lot of the ancillary revenue comes from the growth in the quarter has been driven by we have highlighted the significant areas, which is the payment admin fee, the priority boarding, and the reserved seating.

Obviously, whereas the admin fees do have a cost impact, much of the development of the yield management on priority boarding and reserve seating has no commensurate cost increase.

And so the margins have widened a little bit on the ancillary revenues.

Understood.

Thank you.

If I could just follow up with one more for Howard just on the FX hedging.

Howard, would it be possible to confirm exactly what US dollar hedging there is in place at the moment?

Yes.

We are fully hedged out to the end of this year and we have extended our hedging into FY2015 H1, so we say we have 70% of our fuel hedged in H1.

We also have 70% of the currency, which enables us to say that on a cost per passenger basis what we have hedged will fall by 3%.

And I trust that is at around 131, 132?

Yes, any time you see about 131, 132 we are generally active.

Great.

Thank you, Howard.

That will be a target number for us.

Tim Marshall, Redburn.

Just a quick question, the second-quarter yield guidance seems to be at least 5% compared to last year.

Would that have been materially different without the recent weakness you have seen in the heat wave on bookings, or really there wouldn't have been a comment on that had it not recently happened?

It is not -- we don't expect the recent closed-in weakness to continue through the second quarter.

It's hard to -- what weaknesses?

It's hard to come up with a reason for it; it has been relatively recent.

In the closed-in last year in Q1 bookings and yields were strong.

We think a lot of it has to do with the unusual heat wave here in Northern Europe where people are postponing traveling abroad.

We were blessed with rain and heavy ground conditions here last year; a lot of people pissed off and going away on a holiday.

So it is not built into the Q2, so we don't expect it to recur in the Q2.

But, and again I would temper everything we say today with a degree of caution, if it does continue into Q2 then 5% yield guidance on Q2 may not be achieved.

But at this point in time we don't expect it to.

It started raining again in Ireland and the UK 10 days ago and by the time we get to the end of Q2 the kids are back in school anyway.

So we would expect, based on what we see to date, certainly on the forward bookings, we are comfortable with Q2 and the full-year guidance.

But we will have to wait and see what the closed-in bookings look like as we move through July, August, and into September.

Great, thanks a lot.

Put it the other way, if we thought there was a reason to be concerned we would be taking down the Q2 guidance at this point in time.

We don't see any reason to be concerned, but we would keep a weather eye out for yields and what airlines would generally be doing about pricing in the next couple of weeks.

You just have to watch it yourself as we will.

I suppose you have taken the guidance down slightly by reducing the fuel cost guidance by EUR30 million and not changing the net profit guidance.

Was there a discussion around that?

No.

I don't mean to be clever, Tim, but if the guidance was EUR670 million to EUR700 million, the guidance is still -- or EUR570 million to EUR600 million.

What moves within that, frankly, at the end of -- really some of the analysts have been a bit -- feedback this morning, oh, easyJet were much more buoyant and happy.

Yes, easyJet is reporting on the way to their fourth quarter.

It's very easy; if we were giving you numbers for the half year now we would be quite -- it would be very easier to give them to you.

It's a difficulty for us at this time of the year.

We are reporting on Q1's, we have good visibility on Q2's, and we have a bold notion what will happen for the winter.

So I think caution is the proper way to approach Q1 numbers.

Don't waste too much time on them.

It is much more important what we will see in Q2.

The only trends we have really noticed to Q1 is we are doing a little bit better on the fuel, a bit of (inaudible) and bit of hedges coming in a little bit lower.

Our fuel management is working very well and the yields have been a little bit softer for the closed-in stuff through the back end of June into July.

No more than that.

Back end of May into June.

Great.

Thanks, Michael.

Andrew Light, Citi.

Hi, Michael, Howard.

Just three questions.

First of all, your thoughts on potentially another aircraft order now that Boeing has gone firm on the specification and we are likely to see some acceleration on there?

Secondly, have you had a chance to assess what might be the impact of these new European commission-proposed guidelines on airport financing and the ability to provide aid to start-up costs for new routes and so forth?

Third, and just a little one.

This new aircraft advertising initiative you announced recently; can you put an order of magnitude what that might mean in terms of revenue for all 303 aircraft, for example?

Okay, let me start with the middle and work my way back.

The aircraft advertising initiative I think it will be relatively small.

We don't know how much business it will generate.

It is an interesting product.

It should be attractive to some people, particularly given that we have access to 80 million passengers, all of whom have to board the aircraft bypassing the nose which is where the advertising is.

It is certainly a lot cheaper for advertisers.

We were previously pushing the tail fin, but the tail fin is a very complicated process of painting and repainting with the leading edges of the routers that have to be taken down and repainted.

This is a much simpler panel, but it is worth trying.

Again, it is a bit like the priority boarding/reserved seating.

Whatever it brings in will largely be straight to the bottom line and we will see how it grows.

The EU [guidelines] on airport financing, we think -- we welcome them.

I think there is a bit of a misunderstanding, as usual, because a lot of it gets reported this is the EU getting tough on Ryanair's airport deals.

In actual fact, it's precisely the opposite.

It is the EU reflecting in new regulations the findings of the European Court in the Charleroi case, which throughout the EU's previous bizarre claim that this was some sort of state aid.

What the new guidelines effectively say is that if an airport is operating in accordance with the MEIP, the market economy investor principle, i.e., with a view towards making a profit over a five- or 10-year period then these guidelines effectively don't apply.

If you are not operating on the market investor principle, i.e., you could lose money for a number of years as long as you are doing it to a growth trend that enables you to cover your costs then start-up marketing assistance is limited for two years only.

But you also then also have to show that you are able to cover your operating costs.

In other words, they accept the fact that whatever was the original cost to build Frankfurt-Hahn, which was covered by the US -- or NATO, or Brussels Charleroi -- I have no idea who built Brussels Charleroi -- it doesn't get billed to your airline customers.

We think this finally removes, based on our analysis of the current -- we have about 23 cases which are presently being investigated by the EU Commission as so-called state aid.

And, remember, those cases are only being investigated because (inaudible), one of our competitor airlines is lobbying a complaint.

Probably 19, 20, 21 of them will straightaway be dismissed on the basis that they are all operating according to the MEIP principle.

There will be one or two that may -- where they are not operating to the MEIP principle.

In those cases the aid will be limited, I think, to a couple of years, but there is 10 years for transition arrangements as well.

So even if the airport is clearly not making money and has no prospect of making money they can continue to do whatever it is they do for a 10-year period until the regulations come into place and then something else would have to change.

But I think, fundamentally, at 99% of all of our airports they will pass the MEIP principle.

Again, you go back to the Charleroi case.

Charleroi, which had 20,000 passengers before we showed up, is now making something of the order of EUR25 million to EUR30 million a year in profit and has grown to carry 8 million passengers a year.

So it will pass all those tests.

So I think the guidelines are very welcome.

They, in effect, put into EU guidelines the effect of the EU court ruling on the Charleroi case and remove the ability of a lot of our competitor airlines to be running around making spurious complaints that we are receiving state aid.

In fact, it is Air France and their ilk who continue to receive huge state aid in the form of legal PSO subsidies.

On the third one, again it is a bit early.

The potential aircraft order, as you know, at the time of the announcement, when we did the 175 aircraft order, we have a small senior team, Ryanair and Boeing, working on the MAX project.

Part of that is to finalize the design spec for Boeing and also the piping.

We are to meet again with Boeing at the senior level in September with a deadline for a deal by the end of the calendar year.

I am not particularly hung up as to whether we get a deal done by the end of the year or not, although if there is a favorable specs and pricing and delivery date then we would be very happy to do a deal.

But we will work with Boeing on that.

I wouldn't expect to see any new development or any announcement on that until much later in this calendar year or into the early part of the next calendar year.

It is really a matter for Boeing.

They have had lots of distractions over recent months with the 787 and whenever they are ready to sit down with us again and talk about the MAX we will be very happy to talk to them.

Okay.

Thanks very much.

Edward Stanford, Oriel Securities.

Good afternoon.

Just two questions, please.

One is I think you touched on -- you mentioned you are seeing perhaps a heightened level of discounting in the market at the moment.

Perhaps you could provide a little bit more color on that -- where are you seeing it and who is doing it.

Secondly, I hesitate to talk about Aer Lingus, but you have made your comments about putting the stake up for sale if anyone bids for the airline.

You appear to have ruled out bidding for the airline again.

And I appreciate that this is going to get bogged down with lawyers for many years, but is there a point at which you just turn around and say, I have had enough; I am going to sell the stake?

Let's deal with the color on the weakness.

I'm not sure how much color you want other than there is -- there has been a weakness for about the four or five weeks on the remaining closing bookings, which is usually where there is a degree of pricing strength.

We see most of that emerging out of the Irish, UK, and Scandinavian markets.

It is particularly prevalent, we think, in the UK, although we have also seen a lot of tour operators are out there holiday deals at the last minute etc., etc.

EasyJet are offering relatively cheap fares closed-in at those airports like Gatwick, which are normally held out as a paragon of high fares; they have lots of business-class passengers.

And we are doing the same thing.

We have taken, up until about two weeks ago our promotional fare was GBP22.

We have now taken it down to BGBP19.99.

Now if we don't sell that promotional fare within 40 days -- but again it is an indication that there is a little bit of weakness there closed-in so right now we will build up the forward bookings a little bit stronger.

As I said, we have been kind of sacrificing yields to ensure, as is always the case, that we maintain our load factors and our passenger traffic targets.

We will always be a price taker.

The yield will right itself whenever the yield rights itself.

Most of our operations -- the joy we have Ryanair is because we have such a unit cost advantage over every other airline.

And that unit cost advantage is getting wider because the unit cost growth in most of our competitor airlines is actually running much faster than it is in Ryanair.

A lot of it's being covered up a bit by a good yield performance, but over the medium term yield performance gets competed away, whereas unit costs eat your breakfast.

So I don't think there is much more color I can give you on this.

It is a bit weaker out of Ireland, the UK, and Scandinavian in the last number of weeks.

Do we expect that to continue?

Not really.

We expect the weather to break and then people to go back to going, well, let's go back on holiday.

The Aer Lingus thing, without droning on and boring the arse off everybody, look, the Aer Lingus thing is a farce.

We have owned now for six, six-and-a-half years.

The dogs in the street here know no we have had no influence on Aer Lingus, which is why they keep making crazy commercial decisions like closing the Shannon base, then reopening it.

Opening a Gatwick base only to cut it back.

Opening a big Belfast base, then cut it back.

Ordering $2.4 billion worth of aircraft only three months later to cancel the entire order.

And most recently, for example, we voted against the election of Ireland's big trade union boss, a guy called David Begg, who would know more about airlines than I would know about being nice to trade unions.

He got elected to the Board of Aer Lingus because he knows nothing about airlines whatsoever.

But, of course, he is the boss of the Irish trade unions and the government must be nice to him and the government has appointed the entire board of Aer Lingus.

So we have no influence whatsoever.

I think what happened here is we got sucked into a -- when the EU ruled on our minority stake six-and-a-half years ago they said you don't de facto (inaudible) control, therefore, we are not going to force you to sell the minority stake.

The Irish Competition Authorities say, yeah, do have any de facto, you're (inaudible).

We are not going to force you to sell down because it's a minority stake.

But then six-and-a-half years later a bunch of dimwits in a basement in London somewhere called the OFT write a letter -- which at that time headed by a former Irish government employee called John Singleton -- write a letter to the UK CC saying we think UK's aviation could be shattered to its very core foundation and UK consumers, despite the fact that currently only about 10 of them any fly Aer Lingus in any given year, will be badly damaged if this six-and-a-half-year-old failed minority stake is allowed to continue.

The problem the UK CC has run into is that the third phase was prohibited in February this year precisely because Aer Lingus and the Irish government provided evidence to the European Commission that showed competition between the two airlines has intensified over the last six-and-a-half years.

And because competition has intensified and consumers are getting a better deal, we shouldn't be allowed to buy Aer Lingus.

Now the Brits are running around going, shit, well, we can't come up with a different finding because they have a duty, a legal obligation and sincere cooperation with the European Union.

They can't make an opposite finding, which is that competition has intensified, but they desperately seem to want to find some reason to force us to sell down the stake.

Because, let's face it, Ryanair acquiring Aer Lingus would be probably more significant for the UK economy than BSkyB buying ITN or ITB.

What they are doing now is they are running -- so they have invented three future concerns, one of which is that Ryanair might block Aer Lingus issuing new shares or a rights issue.

The problem with that is there is six-and-a-half years of evidence that we have written to them every year saying we will support any rights you want to make at any time, only because we want to prevent dilution.

So there is an inconvenience for the -- more inconvenience for the UK CC in that actually six-and-a-half years of evidence completely disproves that claim.

They then came up with a second even more fairytale one, which is that our share of stake would be used to block Aer Lingus disposing of Heathrow's slot.

Now there is an interesting phenomenon here in that if we use our stake to block Aer Lingus disposing of the Heathrow slot then that maximizes competition on the Ireland/London route between Ryanair and Aer Lingus and you think it would be good for UK consumers.

But apparently these dimwits have now decided actually because we might block the Heathrow slot sale, which would increase competition, we should be forced to sell down our stake.

Again, and somewhat inconvenient for the UK CC, they have managed to completely ignore the evidence of the most recent April 2013 sale by Aer Lingus of a pair of Heathrow slots to BA.

When they wrote to Ryanair and said do you have any objection, we said, no, we couldn't care less.

As long as you are getting market value for the slots, off you go.

So, shit, all the evidence has now been taken away from that one as well, which leaves the dimwits rather desperately scrambling around trying to invent the only remaining competition concern that remains which is that Ryanair's 30% stake would be used to prevent another EU airline.

And it can only be another EU airline because a takeover Aer Lingus has to result in, so God help us, some efficiencies for Aer Lingus making it a stronger competitor.

The only ones who can do that is another EU airline.

We have submitted six-and-a-half year's worth of evidence which shows repeatedly that no EU airline has any interest in Aer Lingus because it is too small, too peripheral, too much run by the government and the trade unions, and it can't compete with Ryanair in its home market.

But there is, and to be fair to them, at least some legal support for that concern on the basis that actually under Irish takeover rules, if we don't sell out our 29% stake we could prevent ourselves from being squeezed out.

So another EU airline could acquire the government's stake, get to 50.1%, but then couldn't get us off the share register.

So to be fair the dimwits in the UK CC they have a bit of evidence there.

The obvious way for us to remove any remaining shred of (expletive) credibility from this farce is actually to say, all right, if that is what you are concern is we will prove to you that nobody has any interest in buying Aer Lingus by irrevocably and unconditionally committing if any other EU airline wants to offer to buy Aer Lingus and if they get 50.1% -- never mind 70%, 75%, or 80%.

If I get to 50.1%, we will automatically, unconditionally, irrevocably sell our 29.9% stake for exactly the same terms and conditions that they offered for the rest of the airline.

In other words, we are volunteering to be squeezed out.

What we now say to the UK CC is there you go, Noddy, Big Ears, and the rest of you, you now believe that somebody is interested in buying Aer Lingus, even though the entire market, including Air France and IAG have said they have no interest in Aer Lingus because it is a pension deficit with wings run by the trade unions and the Irish government.

But even if you could fantasize that somebody, an EU air, wants to come and take it, we have now removed any ability that you have to argue that somehow Ryanair will sit there and block this, because we will happily take our 29.9% stake off the table.

Having done all that and having provided all that evidence, we are convinced that these guys will still write a recommendation that not alone should we be forced to sell down our stake, that it should be sold out in its entirety, an even more draconian fix than was imposed on BSkyB and ITS.

Which is why it is a kind of bet to nothing for us, because they have to accept the evidence before them, which so far they have not.

Not alone have they managed to ignore it, they have actually excluded the evidence from the documents that they have published on their provisional thinking.

They are simply just ignoring the evidence.

But even if they don't do it and go ahead, we give ourselves incredibly strong grounds for an appeal here because these guys just completely were engaged in a process that is a farse, where they are ignoring the evidence and simply dreaming up their own (expletive) fairy tales to force us to sell down the stake.

We take now to the last question is why don't we just sell the stake?

I am blue in the face telling people we would sell the stake if only anybody would come and buy it.

There isn't anybody out there who wants a 29.9% stake of an airline which in recent weeks has proposed pissing away another EUR200 million of shareholders funds to top off a deficit in a pension scheme which the management and board of that airline has told the market in its IPO prospectus in 2007 and every single annual report thereafter it's a defined contribution pension scheme which we have no liability for.

So I think if I could clear any confusion in anybody's mind, if Willy Wallace or (expletive) or [John Sponetta] or whoever it is came after them, or the guy in Lufthansa or any other lunatic out there wants to buy a small, piddly regional airline in Ireland with a huge pension deficit where the board is run by the government and the trade unions, where they elect each other to the boards of that company, if they want to buy our 29% stake all you have to do is make an offer for the other bit of it.

The government, if you are non-Ryanair, will clearly accept the offer straightaway, because the only aviation policy this government has is anybody but Ryanair, and we will be irrevocably and unconditionally committed to selling our 29.9% stake.

All of which proves there isn't one shred of evidence available to the UK CC to support this asinine fairytale that our 29% stake is blocking any other EU airline from buying that shitty airline.

But please I don't want to waste any more time on our investor call on that (expletive) minority stake in Aer Lingus, which by the way if none of that happens we are very happy to sit there as a minority shareholder with no control or no influence whatsoever.

And it is not a matter of when it inevitably gets into financial difficulties, and it inevitably will as it continues to be mismanaged in the interest of its staff, unions, and not its shareholders, then maybe the situation will change.

And, as with every other EU precedent, where the FBA was allowed to buy British Midland but the UK CC and the OFT had no concern whatsoever, or about Iberia was allowed to buy Vueling, again the UK CC had no (expletive) interest in it whatsoever, we might be allowed to buy Aer Lingus at some point then in the future but who knows.

All I can tell you is that the UK CC come out with any ruling that says we have control influence over Aer Lingus or that somehow we are preventing Aer Lingus being acquired by any other EU airline we will appeal it up every hill, ditch, mountain, stream, and God knows wherever else until we get to the European Court of Human Rights.

Very clear.

Thank you.

Michael, it's Howard here.

On that note I have got to exit stage left here.

I have got to go and get the flight.

Talk to you soon.

By the way, I should say the problem with answering that question now is everybody is going to write we're obsessed with (expletive) Aer Lingus, yada, yada, yada.

We are not.

Suzanne Todd, Morgan Stanley.

If I can draw us back to the 2Q guidance if you don't mind.

In terms of the guidance we are under 5%, can I just clarify that is passenger yields you are talking about?

And maybe you can give us some color on stability of the (inaudible) yields, which are clearly very strong in the first quarter; that is what you're seeing in the second quarter?

It can be early yet in the second quarter.

Again, I think the interesting thing is we don't see any change.

There is not alternation to guidelines.

We expect the trends -- the yield to be up approximately 5% and ancillaries to continue their recent trends.

Great, thank you.

Can I just ask on the sector length?

You have been previously guiding for a 3% increase in the full year.

I understand that might be coming down slightly now.

Can you give us an idea of what you expect for the full year and also how it split in the first half and the second?

Don't change for the [Boeing leg].

We still haven't finalized the winter schedule which could be affected by the outcome discussions with MAG, whether there is some Stansted growth.

Until we can finalize the winter schedule we shouldn't be making any changes on sector length for the full year.

Okay.

So we keep around 3% sector length and the ex-fuel unit costs grew in line with that?

Yes.

Okay, understood.

Thanks very much.

Jarrod Castle, UBS.

Good afternoon, Michael.

Just two quickly.

One, can you say anything in terms of what you are seeing on the secondhand market and the ability to sell planes?

Secondly, you just gave an update in June about kind of potential funding, but since then we have seen British Airways do a double ETC fundraising.

Is that still something which is high up on the agenda when we are looking to fund the fleet?

Yes, I think our secondhand market -- we don't actively watch the secondhand market.

We are not buyers of secondhand planes, but we haven't seen a lot of people coming towards looking to acquire secondhand aircraft, so we assume the secondhand market continues to be relatively quiet and weak, which has always been one of the issues we had with the aircraft order.

The manufacturers were saying the order books were full to the gills, but the secondhand market was weak.

I think it continues to be characterized by weakness, but then you are coming into the second half of the year.

A lot of it depends on which other EU -- affected European airlines go bust between now and October/November.

We expect there will be some close between now and November, but I don't expect that there will be anything materially different.

Potential funding that we haven't done much on at the moment yet will, the EETCs will be significant.

We are doing a bit more marketing currently.

Howard came back after the full-year results and did a week in Asia.

I am going out there at the half-year results to destroy our reputation out in Asia as well.

We are conscious of the fact certainly in the future a lot of the funding and the funding available will be emerging from the Asian markets, where remarkably Ryanair is quite well-known largely because of what every other airline in Asia is out there trying to persuade the investors that they are Asia's answer to Ryanair.

Thanks very much.

(Operator Instructions) Donal O'Neill, Goodbody.

Two quick ones for me.

First of all, could you give us any guideline of the timing of the share buyback, the EUR230 million, EUR240 million to be done at some point this year?

And second question, you touched on new bases.

What are the new bases you are looking at for the remainder of the year?

Timing of share buyback I think we can try to continue to be somewhat opportunistic.

As I have said, in that what we have, and I hope was different about the last share buyback, actually is that there was a blend of ADRs as well as ordinaries.

Part of the problem for us, though, is that our ADRs are relatively tightly held and there isn't a lot of turnover in them.

I think what we will continue to do is to talk to as many of the larger ADR holders we have.

If at some point in time one or other of them wants to sell them a decent slug of ADRs, then that might be the trigger for a second share buyback.

We don't have any timing imperatives on us.

We have given ourselves till the end of the year.

I am surprised, although we have done EUR177 million so far, and I think we will try as best we can to balance it so that it's half ADRs, have ordinaries going forward.

But really I think what we try not to do is we don't want to drive the market artificially forward.

What we tried to do is do call out where there is decent volumes of shares for sale.

Then I think that incentivizes us to begin another or to start another buyback program, but there is not much point in us out there buying 100 here or 0.5 million shares there.

I think if that is the case we are just artificially pushing the market forward and I think that is the wrong thing from a shareholder point of view, because once you finish it will come back down again.

New bases, we have no comment on new bases.

As you know, we are engaged in multiple negotiations with multiple bases, multiple airports.

We have far more opportunities than we can handle.

There is a qualitative element to those discussions in that it is driving out much more significant airport cost advantages.

Not just in terms of the airport fees themselves, but also the handling.

And I think as those competitor airlines, like the easyJets and Norwegians and others that we wouldn't necessarily recognize as competitors, but as they continue to focus on slots at high-cost airports it seems to be kind of leaving the other airports more exposed or more keen to get us to fly there.

So we will continue to focus on the quality deals we can do.

Obviously, if we reach an agreement with Stansted we will let you know.

We will be announcing something very significant there.

If for some reason Dublin decides they want to talk to us again, again you will be among the first to know.

But I think an awful lot of the discussions we are having now with multiple airports will be around growth that will start in September 2014 once we start taking the next slug of deliveries and into summer 2015.

The next year there will be very little growth.

It will be 2% or 3%, and most of that will be winter growth, which will be slightly negative.

It's good for passenger traffic, but it will negative to yields.

It will be growing in the weaker two quarters, but we will be laying down a lot of costs and growth opportunities once we get to September 2014 and the new aircraft deliveries arrive.

Great.

Thank you very much.

(inaudible), Deutsche Bank.

Just going back to Q2 yields, I was just wondering how elastic is the full-year guidance to current bookings?

So if we imagine that the current trends continue, does it take two weeks, is it a month, or is it the whole of Q2 before you feel that you might have to comment on that number?

Honestly, that is a question that is nearly impossible to answer.

Like how elastic is a piece of string.

Look, we are giving you some flavor at the moment.

We have no reason to change the Q2 yields kind of outlook or to comment on the yield generally if you forecasted the yield to guidance.

We have no reason to change the full-year guidance.

We have highlighted there has been weakness in recent weeks on the closed-in summer bookings.

We think it's a relatively short-term weather phenomenon.

There is just no point in getting into it.

I think the most compelling thing if you take it in today's -- in relation to guidance is we still expect to hit our Q2 yield numbers despite the fact that the Q2 in the prior year had that big post-Olympic surge on yield.

There is nothing [all-to-all] so let's not waste a lot of time on giving more color and elasticity or anything else.

It is what it is.

Read the numbers.

That is fair.

There are no further questions over the telephone at this time.

Fine.

Okay, folks, thank you very much for coming on the call.

Obviously, John and the rest of the team are here in Dublin all week.

There is no roadshow on the Q1s.

Howard is in London today just briefing media and analysts.

If anybody has any follow-up questions, please feel through back to us by phone and we would be happy to take them.

And if anyone wants to come visit during the month of August, please do.

We are generally all around and we will see you then.

Thanks very much, everybody.

Bye-bye.