Ryanair Holdings PLC (RYAAY) 2014 Q3 法說會逐字稿

Okay, good afternoon, ladies and gentlemen.

You are all very welcome to our Q3 results call.

As you will have seen, we have put the detail of the press release, the full MD&A and the investor presentation has been on the website since early this morning.

You'll find it on the investor relations page of the Ryanair.com website.

I will, therefore, just do some summary remarks on this and we'll open it up to questions.

I am joined here in Dublin by the usual crew.

I have Howard, Neil, Jimmy, John and David O'Brien is sitting in as well, our new commercial -- our head of commercial.

Michael Cawley should be joining us from London.

And as you'll have seen this morning, the Q3 loss of EUR35 million is in line with the previous guidance and may lead you to a 9% fall in average fares and weaker sterling.

We responded to that weaker pricing environment quickly last September with aggressive seat promotions and lower fares.

That has stimulated traffic across all markets resulting in a 6% growth in Q3 traffic and a 1% rise in multi-load factors.

Ancillary revenues have continued to perform well and have grown by 13% during the period.

Excluding fuel, Q3 sector length adjusted unit costs fell by 9% as we continued to deliver industry-leading cost control.

The new routes and bases are performing well.

In December, we opened four new Italian bases in Rome, Fiumicino, Catania and Palermo in Sicily and Lamezia in the south of Italy.

We have also announced four new bases for spring 2014 at Brussel-Zaventem, opens at the end of February, Athens and Thessaloniki in April 1 and Lisbon on April 2.

Advanced bookings in these new routes are well ahead of expectations.

We expect these new bases to provide substantial growth opportunities for Ryanair, particularly as we begin to take deliveries in September 2014 of our new 175 Boeing 737 aircraft order.

Over the next five years, as we grow from 80 million to 110 million customers annually, we expect a significant proportion of this growth to take place at primary airports such as Dublin and Stansted, Lisbon, Rome, Fiumicino and Brussel-Zaventem where high fare incumbents are financially weak at restructuring.

In Q3, we announced a series of initiatives to further improve our already industry-leading customer service.

In addition now, therefore, to the lowest fares, the most on-time flights, the fewest lost bags, the fewest customer complaints and the youngest fleet, Ryanair passengers are now enjoying an easier-to-use website, a free small second carry-on bag, quiet flights in early morning and late evening, a 24-hour grace period to correct minor bookings, significantly reduced boarding card and airport bag fees and a new service to cater for groups and business travel across the network.

This weekend or the weekend just gone, we returned to allocated seats on all flights.

As a result of which our passengers can now preselect their chosen seat onboard either when making their original booking or during the 30 days prior to departure when they have to come back in and check in online.

The uptake of reserved and allocated seating has grown significantly in the last weeks of January and it now appears that the sales of reserved and allocated seats will exceed the revenue lost from cutting of some of these airport and bag fees, which were paid by very few passengers.

We hope this should addition enable us to continue to deliver strong growth in ancillary revenues during FY15.

We are also continuing to roll out an extensive overhaul of our website and digital strategy.

This process started last November when we launched a new easier-to-use website, reducing the booking process from 17 to 5 clicks.

In December, we launched the My Ryanair customer registration service, which has had a very significant uptake among our customers allowing them to securely store their personal and payment details on board so they don't have to keep typing it in every time they interact with the website.

We are on target to roll out mobile boarding passes in April, a new travel product by the end of May and we will have a brand-new significantly easier to use website by the end of April and an industry-leading mobile app by the end of June.

In addition to these digital improvements, we are also broadening our own distribution base.

We are very pleased to have been the first low-fare airline to partner with Google's European Web search function currently available in most of the major EU markets, but with more EU countries to follow.

We think the Google flight search function will become the price comparison website of choice for consumers all over Europe and we look forward to continuing to work closely with Google so that everybody keying in cheap flights or low-cost flights around Europe will see Ryanair's flights and inventory and the important thing is the ranking in the Google system on short haul is that the lowest fares are ranked top of the page and therefore, we would expect to be ranked top of the page in 99.9% of all searches.

In addition to that, we are in continuing negotiations with a number of the major GDS systems.

I don't want to comment too much more on that other than to say that we expect to be available in one or more of the GDS systems by probably mid-year of 2014 and we think that this combination of the improved Ryanair website available on a strong or powerful price search functions like Google and GDS availability will significantly widen Ryanair's distribution and give us an entry into or make us much more visible to corporate travel agents and the larger business houses, particularly as we expand our services into a number of major airports over this year.

In terms of fuel, as you know, we are 90% hedged for FY14 at a cost of about $98 per barrel.

We have taken advantage of recent oil price weaknesses to hedge out next year at approximately $96 a barrel, but together with the benefit of the weaker dollar, it means we have locked away fuel cost savings of approximately EUR80 million for FY15.

The balance sheet remains one of the strongest in the industry.

By the end of Q3, we had completed just over EUR400 million in share buybacks.

We announced a systemic share buyback program to be completed by the end of March for another EUR70 million, which would bring us to almost EUR490 million, the total of buybacks done this year.

That is about EUR90 million ahead of the original EUR400 million we planned.

We remain on target to return another EUR500 million to shareholders next year and our ambition is to probably pay another one-off or a special dividend sometime toward the back end of FY15.

In terms of the full-year guidance, the market pricing remains soft, but is no longer declining.

Because we reacted quickly to last autumn's weaknesses with a range of lower fares, seat promotions and a recently increased advertising and marketing spend, we are seeing significantly stronger forward bookings in Q4 despite the fact that we don't have Easter in Q4 this year.

And forward bookings into FY15, particularly Q1 of FY15, are running significantly ahead of last year's Q1 even allowing for the fact that Easter is in this year's Q1.

Thanks to the earlier launch of these new bases in Italy and Brussel-Zaventem and rising load factors, we expect our full-year traffic to rise slightly to about 81.5 million.

Based on current visibility, we expect the Q4 yields to decline by approximately 8%.

I think about half of that is the absence of Easter in this year's Q4, so an underlying 4% decline, but this is better than the original projection of 10% for Q4.

As full-year traffic will be slightly stronger, our focus on cost control delivers a 4% fall in Q4 ex-fuel unit costs.

We are now confident that the full-year net profit outturn will finish in the range of EUR500 million to EUR520 million has previously guided.

We've put the -- the MD&A is up on the website and rather than ask Howard to read through it, I think we will assume everybody has seen it so that we can maximize the time for questions.

Just before I open it up to questions, please, I know we do this every year on the Q3s, we are not going to give any guidance into FY15.

Please don't ask for yields, loads or anything else out into FY15 other than the fuel hedging, which we have now done.

But other than that, we'll try to answer any questions you have as best we can for the remainder of this year and any of the business issues that you'd like us to touch upon.

Okay, Leanne, could you open it up for questions, please?

(Operator Instructions).

Savi Syth, Raymond James.

Hey, good afternoon.

Just on your commentary about growth coming from primary airports in the future, I was just wondering what kind of pressure that will add to cost and maybe what the airport handling cost per passenger -- what the difference is between primary airports and secondary airports today?

Thank you.

In terms of costs, primary airports are more expensive than our average at the moment, but they would be a relatively small proportion of the overall airport traffic for us in FY15.

Handling costs tend not to be that much -- there is a little differential, but not that much.

And I would also point to the fact that, at a number of these major airports, increasingly, these major airports are coming to us recognizing that the flag carrier or the incumbent is likely to cut a significant proportion of its existing either domestic or intra-European travel.

Now, therefore, we would point to a 10-year growth deal for example at London Stansted, the fact that the growth at Dublin is now taking place because the Irish government have, and to be fair to them, been quite visionary in scrapping the travel tax.

There will be some airports, such as the Zaventems and the Fiumicinos, where the average -- the airport or the passenger fees would be higher than our average, but they will form a relatively small proportion of our overall traffic next year.

So whereas there will be a small rise I think in the average of the airport and handling costs into FY15 and FY16, it won't be significant or material.

Understood.

And then just on the retirement plans, your fleet plan, has there been any change on the timing of the retirement of the 60 aircraft?

No, Savi, we've pretty much run with the plan we gave out in November, which would see our fleet rise to 410 aircraft by March 19.

All right, great.

Thanks, guys.

Thank you very much.

Sure, Savi.

Stephen Furlong, Davy.

Yes, hi, guys.

Just two ones.

Can you just talk about the allocated seating, where you see it changes in any way the business?

Obviously, it's a revenue benefit, but in terms of any turnaround times at any airport or have you just double-checked that and how that works, particularly with some of the bigger airports?

And the second just question, with the aircraft starting in September, maybe Howard can just talk about the financing plan of that.

That would be great.

Okay, I asked David O'Brien, the new commercial or head of commercial to sit in and having previously come from operations, I can think of nobody better to give us a briefing on how the allocated seating has gone over the first 2.5 days and then I'll ask Howard to do the aircraft financing.

So David?

Yes, we launched on Saturday; it was a very significant change.

However, there has been no identifiable effect on punctuality; it has gone well.

We opened a helpdesk in Dublin for any of our airports who have difficulties and from 2000 flights, we had four queries.

So we closed the desk on Sunday morning.

We are satisfied it should have no material effect on our operational performance.

I think it's safe to say we still have some customers boarding with allocated seats and thinking it's still free seating, but it is not (multiple speakers).

That will go over time.

It will vanish over time.

So it has had no operational penalty whatsoever.

Okay, that's great, David.

Thanks.

Okay, Stephen, in terms of aircraft financing, well, I think we flagged up earlier on in the year that with the change in Ex-Im financing, we previously paid a one-time fee of 4%.

That is now down to not quite double; it won't be far off doubling.

That means that it's now opportune for us to look at perhaps using more of a capital market product to fund our business.

Within that, we would be looking to increase our range of financing, including unsecured debt or perhaps EETC product down the line.

So we need to look at whether we get a rating or not.

We are currently evaluating that process and that would be the precursor to doing either unsecured or indeed secured financing using EETC.

Over the medium term, I would expect that we would have a mix of what we have done traditionally, be it sale and leaseback type transactions and also some Ex-Im financing, but I think the capital markets at this point in time are particularly attractive.

So we should look to take advantage of that.

Great, Howard.

Thank you.

Thanks, Howard.

Alexia Dogani, Goldman Sachs.

Yes, good afternoon.

I had three questions, please.

Just firstly on capacity for next year, can you give us an update whether you have changed the timing of the lease retirements over the summer and how the 11 aircraft that are going to be delivered by March are slightly spread out of the winter season?

Then my second question is the recent reallocation of capacity towards primary airports, where have you funded that growth from, i.e., where have you taken aircraft out to put into Athens, Rome and Brussels?

And then my last question is just when we start thinking about unit costs, clearly you have flagged the fact that advertising costs will be higher year-on-year and IT costs.

Is there any other sort of cost items we should be thinking about when we look at next year?

Thanks.

Thank you.

Howard, do you want to take the capacity question?

Yes, well, obviously, as you quite rightly pointed out, we have launched new bases at Zaventem and in Italy and Athens and Thessaloniki as well.

To assist us with additional lift over the summer, we have entered into some short-term lease arrangements, which will see us get an additional five aircraft.

Those aircraft become available to us in May and we plan to run them through to September to give us that additional lift we need to satisfy that demand.

In terms of our other handbacks, we did extend during this year some of the -- 8 of the 10 aircraft leases, we extended those in favorable terms.

That also maintains our capacity of just short of 300 as we move into April and then we will have those additional five aircraft that will operate across the summer from May, so kind of peak capacity in terms of aircraft.

We have about 303 aircraft as we move across the summer, which, if my memory serves me right, is similar to what we had last year with 305.

And taking the second part of the question, Alexia, the reallocation of the capacity, you're not talking about a lot of capacity here.

We have two aircraft allocated to Charleroi -- sorry, no -- two in Athens, we have four in Rome Ciampino and four in Zaventem.

Most of that -- some of that aircraft too have come from Charleroi.

Most though will come from the reallocation of aircraft away from Spain where, for the last year, the government has been -- the government and IE now have been doubling airport fees and the EUROCONTROL taxes.

There is also some reallocation within Italy to find the aircraft for the Fiumicino bases.

So generally speaking, the reallocations, they are taking place within markets and some aircraft coming out -- still coming out of Spain compared to this time last year.

We will be relatively flat in terms of capacity through the summer even with the lease-ins, but we begin to take the deliveries in October from Boeing and one of the things we believe is that, obviously, with new bases in place like Zaventem and Lisbon, Athens and Fiumicino, they will be grounding fewer aircraft next winter and flying more business type flights from those major cities during the winter period.

In terms of the marketing costs and IT costs, remember, if you take our unit costs and it's on page 4 of the investor presentation, we have the lowest unit costs in the industry.

Our total sales, marketing and other costs, which is largely the converse of our ancillary revenue costs, are EUR2 per passenger.

We intend to triple the advertising and marketing budget this year from about a spend of about EUR12 million last year to a spend probably EUR35 million, EUR36 million, but that is less than EUR0.50 per passenger on a unit cost base.

You really won't notice it.

And while we intend to commit that kind of spending, if the advanced bookings remain strong or the forward bookings remain strong, some of it may not get spent.

We will do a little bit of advertising and marketing.

We are also looking particularly at television advertising to support the launch of the new website, which is due sometime around April and also to do a bit more of the brand-led advertising kind of focusing not just on -- historically we have always just gone out there with a cheap price advert and really we have won the argument on pricing.

Nobody comes close to us on pricing anymore, but we will be doing a little bit more on customer service, punctuality, family product, better website, etc.

IT costs, yet we are recruiting some more IT staff resources, we are taking a lot of that, particularly the website development and the front-end development in-house ourselves, but again it is not material.

It would be in the less than a couple of million a year in terms of salaries and costs.

You won't notice it.

So there is no fundamental cost curve coming at us over the next 12 months that we can see.

The only thing that we can't see yet is whether there is any kind of surprises on EUROCONTROL fees or the kind of European bureaucratic price increases like (IESA).

But generally speaking, with volumes in Spain declining, Italy fairly wary and actually, in fact, some of them are now introducing discounts, I don't think you are going to see a repetition of the kind of major government-led price rises in Italy or in Spain that we've seen in the last two years.

So with fuel locked away, lower-cost aircraft being delivered, a reasonable mix of growth incentive schemes at secondary airports helping us to fund somewhat more expensive growth at primary airports and the ownership and maintenance locked away.

The reality, we think the cost story into FY15 is going to be one of continuing cost discipline plus or minus sector length.

Okay, great.

And are you willing to give us a guidance sector length?

Honestly, no, because it is still too early.

Much depends at the moment still on where -- how we finalize.

We are now working to finalize the winter schedule and a lot depends on where -- which routes and a lot of those negotiations are still underway.

Okay, great.

Thank you very much.

Thanks, Alexia.

Oliver Sleath, Barclays.

Yes, good afternoon, everyone.

Just three questions please.

First on GDS, I know you are reluctant to talk too much, Michael, but I just wonder if you could say, because you are on the Navitaire system, does that mean that you can add GDS functionality with relatively less or added cost versus somebody like easyJet who has a spoke system?

That's the first question.

The second question is just could you comment on the kind of yield trends you are seeing in primary airports like Fiumicino and maybe forward bookings at Brussels compared to your network average?

It sounds like everything is fairly subdued right now with little promotions, but any color you could add there.

And then just thirdly for Howard, what should we think in terms of ancillary revenue growth for Q4 given it sounds like uptake on allocated seating is a bit stronger than you had previously expected?

Thanks.

Thanks.

Yes, in the discussion of the GDS system, because we are on Navitaire, they can take a straightforward -- an API, which is a feed directly from Navitaire.

It's not like flicking a switch.

There is some kind of programming work that will need to be done, but we are talking a matter of weeks from -- if we reach agreement with one of the GD -- one or more of the GDS -- it would be a matter of weeks to turn it on, no more than that.

So it is a relatively straightforward process.

Most of the discussion at the moment obviously though focuses around whether we are going to allow them to have access to all of our fare inventory and we are disinclined to give them access to our very lowest prices, which we think we should continue to distribute through the Ryanair.com website and across price comparison sites like the Google flight search.

And also cost.

And we are down to very, very small -- it's going to be very cheap distribution if we decide to proceed with it.

But clearly there are certain risks with opening ourselves up into travel agency distribution and everything else, but if we are going to go after that business market, which we are and there's a combination of the business market and primary airports, we do need to have some GDS distribution there.

I don't think we will be on all of the GDS systems, but we will certainly be, I suspect, on one or two by mid-year and then we'll see where it goes from there.

On yield trends, again, it's far too early to say.

I mean we've just launched the Rome base just before Christmas; the Lisbon base is coming at the end of February, as Zaventem is coming at the end of February.

What we see at the moment is very strong forward bookings at those bases, but have relatively low yields because we go in there with lots of cheap seats making a virtue out of the fact that low fares have finally arrived for the first time in Zaventem, in Lisbon, in Athens and in Rome Fiumicino.

But really we won't get a good feel for the yield profile until we actually have been flying the base for a month or two and you get that mix then of the people who book early for the cheap seats and the kind of walk-up fares of which there would appear to be quite a few.

They are closer in the walk-up fares, the business type fares, which are typically booked in the day or days prior to travel.

So thus far, and it will be no great surprise, we have very strong forward bookings on those, the primary airports but because we are selling seats at a fraction, typically 40%, 50%, 40% of the cost of the incumbents, we won't have a good feel for the yields until we have been in there for a couple of months and established a position.

And Howard, on the ancillary?

Yes, ancillary revenues, there is a couple of moving parts to that.

Firstly, you may recall we increased the admin charge on March 5 last year from EUR6 to EUR7 or GBP6 to GBP7 sterling.

So that will annualize in the early part of March.

So we will still get some benefit of that through January and February.

We have, as part of our customer initiatives, reduced some of our charges so that will be a [net] negative.

However, the early indication is that reserved seating is going -- or allocated -- and allocated seating is going well.

So overall, for Q4, we would expect to see certainly high single digit, possibly 10% increase in ancillary revenue per passenger over that period.

Okay, thanks, guys.

That's all very clear.

Thank you.

Jarrod Castle, UBS London.

Good afternoon.

Two or three questions.

You've spoken about GDSes, you've spoken about Google flight search.

Would you ever look to do any kind of direct tie-ups with OTAs or land-based travel agents or the likes of BCD in terms of business travel agents?

Secondly, can you just confirm I guess profitability at the primary airports, is this in-line or better or worse than the secondary airports, kind of just general commentary around that?

And then just a quick one, Alitalia, you have got Lufthansa talking about any potential aid from Etihad as being unfair competition.

How do you see the scenario panning out?

Is it better that kind of Alitalia kind of continues to exert through some form of kind of aid or do you think kind of market forces should kind of let it be, so to speak?

Okay, thanks.

Direct tie-ups with agents, again, we wouldn't rule it out, but I'm not sure what value an agency would bring to us.

I mean clearly by putting ourselves, either by going -- hosting on GDSes -- at some point perhaps later in this year, we are going to be available to -- travel agents will appear on the green screen.

We are not willing to pay the travel agents so -- but that model has largely changed.

Travel agents may charge their customers a fee on top for the Ryanair service, but I think it's important that we are available, particularly with those agents who are in business houses, who now don't effectively see the Ryanair offering on their screen that you put the Ryanair screen up there.

And an awful lot of the business houses are now operating on the basis of a fee.

So they will give the business the lowest fare that they can see and get paid a fee for it.

To be honest, I have never heard of -- I'm not sure who the agency was, BDS.

We haven't heard of them, but that is not to say that we wouldn't at some point in time in the future.

Where some large agents could demonstrate that they would bring some value to us and not be kind of cross-selling against us, which is in the past what agents tended to do, then we certainly wouldn't rule it out, but it is not on the agenda at the moment.

Profitability at the primary airports, honestly, again, too early to say.

I think what will depend ultimately is that (inaudible) -- our entry at the primary airports is where will the yields fall?

Undoubtedly the primary airports are a little bit more expensive.

It depends on what the ultimate yields will be there, but, again, we are trying to at least tap into that marketplace that has been where clearly there is a move of the market towards the low-fare carriers.

Unfortunately, they had many primary airports, they've never had exposure to a low-fare carrier because Ryanair hasn't been there, but they will get exposure to us at a lot of those airports over the coming weeks and months and I think there will be a significant uptake for us.

If you look at it, clearly, we are not going to be, for example, places like Gatwick are full, but we will offer quite significant competition and choice to airlines at Gatwick.

For example, we go into the Lisbon market, we will be offering flights from Lisbon to London at a significant lower -- at significantly lower fares with a business product via Stansted and that will -- I think there will be a significant -- we will take a significant chunk of that market.

But, ultimately, profitability will depend on yield, but we will have the benefit of having larger aircraft, lower cost base, much more efficient operating costs and if we add some kind of commensurate yield profile to the cost profile of the primary airport, then they should be as profitable as our existing operation.

And remember, our existing operation, which is largely focused on secondary airports is still the most profitable airline in Europe by a distance.

Nobody comes close to us on margins.

Some -- there's others out there that report kind of pretax numbers and various other EBITDARs and EBIT somethings.

We report net after-tax profits and nobody comes close.

So if the primary airports that we are entering are as profitable as our existing business, we will be very happy.

And the third one, Alitalia, look, I think we would always prefer that the market would determine these things, but there is kind of the political realities in countries like Italy, in France where obviously Air France continues to receive enormous public subsidies, but they are called PSOs, which makes them legal.

In Germany, Aer Lingus have -- or in Germany, Lufthansa have a quasi-monopoly in Munich, which is a publicly funded airport, which is another hidden subsidy to the likes of Lufthansa.

So we think the Lufthansas tend to cry when it's not them receiving the state aid, but they are very happy to have a monopoly down in Munich.

I think the reality is Alitalia will be rescued by somebody.

Clearly, the Italian post office is not the ideal candidate for rescuing Alitalia, but it is the only show in town at the moment.

If Etihad goes ahead and provides some funding to Alitalia in much the same way as they did with Air Berlin, I wouldn't be surprised to see Lufthansa and some of the others complaining about this, but I think it is going to happen anyway.

So I don't see much point in us complaining about it.

I think what will happen is that you still won't have the kind of significant and deep-seated restructuring that Alitalia needs, but we do believe that an Etihad investment would lead to a similar reorganization that has taken place in Air Berlin in the last year or two where there will be a dramatic cost in Alitalia's domestic and short-haul intra-European operations and maybe more of a focus on their long-haul and feeding traffic to and from airports in the Gulf.

But who knows?

Certainly, the feedback we have had from the Italian airports who are very exercised at Alitalia no matter what happens will have a significant cut and reduction.

Their domestic and short-haul intra-European operations have been very exercised to get Ryanair to go in there, establish bases and give them or guarantee them that we will be there and will add capacity as Alitalia continues to withdraw that capacity and that will continue to be the case.

So we are by far and away the number one airline in Italy, much significantly larger than Alitalia, a multiple of three or four times the easyJets and Meridian (inaudible) anything else.

I saw some kind of silly forecast there recently from some other airlines saying they were going to be the number two airline in Fiumicino, which they won't be.

They will be the number three airline in Fiumicino by the time we get finished with them because we have a very large and successful operation in Italy and it is going to expand very rapidly over the next couple of years.

Okay.

Thanks very much.

Thanks, Jarrod.

Tim Marshall, Redburn.

Tim, hi.

Hi, there.

Hi, there.

So first question is just in terms of all the changes that are taking place, the reserved seating, the website, GDS.

There is management changes.

Are there any areas which you are sort of most focused on in getting right or where the risks are perhaps highest?

I think the ones we are most focused on are the ones that we are addressing, but I mean the biggest challenge has been redesigning the website, making it much more usable and moving from a mobile app that doesn't work to one that will be lead, state-of-the-art by the end of June.

I mean this is a process that -- a lot of people think this process started last September, October when we had the (inaudible).

This process started almost a year ago.

So there is a major investment going on behind the scenes here in radically revamping the way we interact with customers, not just the service issues, which I think there's a lot of very positive feedback from customers on the service issues.

but much more key is to make the distribution.

I think for too many years, we have relied on the fact that we have a huge price advantage over everybody else and therefore, it doesn't matter how bad our website is, people will simply stick on it all day long.

Now we have 81 million people who will stick on it all day long, but, over the next year or two, we intend to go after that floating 10 million or 20 million passengers who actually are willing to pay a premium to avoid a less than optimal website.

Well.

we are going to give them a better than optimal website by the end of April, a super duper mobile app by the end of June and it is not going to stop there.

We are going to continue to invest heavily in our IT platform, in our digital marketing in the way we improve the website and make it easier for our customers to get the lowest fares so that we can get them on and off the website quickly, which creates more opportunity for other customers to come on the website and secure the lowest fares as well.

So I think many of the service things we have changed, which have looked like kind of tenets of biblical -- kind of tenets of biblical proportion here for many years, are not that difficult for us to do.

Although the allocated seating was a big logistical issue, as David has pointed out.

We rolled it out on Saturday morning with almost barely an issue.

But the website and the mobile development are big and they are I think the gateway to a period of very strong growth for us over the next two to three years where we are going to continue to segment our marketplace by getting the price-sensitive people who only want the cheap seats.

We are going to take them straight to that seat on that plane where that cheap price is available while also giving ourselves our targeting business passengers or people who want slightly different services such as the reserved seating in the front of the plane, boarding last, getting off first, whatever it is.

So I think the biggest challenge to us, and it has now been about eight months in the cooking, has been the redesign of the website and the mobile app.

Howard, do you want to -- what is your biggest challenge?

I think just the sheer amount of developments we are doing.

You may remember, Tim, in June in London, I spoke about the digital marketing strategy.

We've talked about our [Project Amazon], which is the My Ryanair.

In some cases, we're actually at some of this 12 and 14 months.

So it is a lot of development, but that development has been work done over a period of time.

Just delivering it on time, making sure it all works is our challenge certainly over the next couple of months.

And David, as you take over the commercial area, biggest challenge for you?

What interests me most since I've taken over this role is the volume of airports looking to engage with us on growth and the challenge is going to be to sort out the best from amongst those.

But it is more an opportunity than a challenge to be honest in that regard.

Jimmy, anything you want to add?

I think that -- well, one of the -- in the areas I look at in treasury, like one of the big challenges for the business is successfully going through the capital markets process and raising funding for the business over the next three to five years is a heavy delivery program coming from Boeing, but the business given the underlying balance sheet strength there, the underlying business should be rated favorably by the agencies, which will allow us to fund very successfully in the capital markets.

Okay.

Anything else, Tim?

Yes, two quick questions.

Just the first-quarter 2015 percentage of seats booked in terms of the comments on forward booking, what was the number there?

You're not getting it.

The number at this point in time too will be a little bit misleading because Easter is in Q1 and isn't in the Q1 prior-year comparable.

But even stripping out Easter, we are running significantly ahead in Q1 of where we were in bookings last year.

Now part of that --.

But is that in the region of sort of are we talking like 10% or are we talking like 25% just to get some idea as to --?

It won't -- honestly, it won't help you to tell you what the percentage is because -- but what I would say to you though, and again, now I will temper that with some degree of caution, what we have been doing in the past was effectively ignoring bookings more than four or five months out so we would be pricing up five or six months out because we weren't worried about it.

We were allowing competitors there to price close to us four and five months out and where we had the emergence of this kind of view of Ryanair's -- if somebody else is only GBP10 or GBP15 more expensive than Ryanair further out and then we would price down in the two or three months prior to departure because right we have got to get ourselves up to our targets, advance booking (inaudible).

So we'd be very aggressive and then there was -- a big price gap would open up between ourselves and the competition, but a lot of the price-sensitive traffic would already have booked with the competition at that stage because there wasn't that much difference between us.

Since last November, we have now been pricing down further out.

So whereas our loads are significantly higher further out, the yields are significantly lower, but we would expect that to, as we move through the month, we won't be pricing down as aggressively two and three months out.

We will still be pricing upwards into the day or day of flight.

In all cases, the policy remains to price below all competitors on all routes.

That continues to be the case even for example in recent weeks we've seen some sporadic price cutting by some of the smaller competitors here in Ireland where they were pricing up around 29, they came down to 19, we were at 15, we went straight away to 9. So if anybody wants to price down in our market, we would simply go -- without even thinking about it, we will go in and under and maintain a significant price advantage against them.

So forward bookings are significantly stronger into next year or into Q1, but Easter does distort that, but it is on the back of a significantly lower yield on those forward bookings than we had this time last year.

Okay.

I'm sorry to have two more questions, but, firstly, does the EUR80 million fuel cost savings next year include any impact from fuel burn savings?

And then my final question is just, on reflection, what would you suggest is the main reason for the drop in fares that we saw in the December quarter?

Thanks.

The main reason for the drop in fares -- well, we were out there opening up a lot of promotions and cheap seats.

What was causing the fare weakness through most of last summer, with the exception of August, which was very strong, we think there was just an underlying softness out there.

There may have been some little bit of Ryanair image.

There is underlying softness.

Funny enough, when we came out with the warning in September, we were followed within days by Norwegian, Aer Lingus, almost every other carrier with the notable exception of easyJet.

So I think the market was just that bit softer.

We responded very quickly as we tend to do with these cases.

We have clearly righted the forward bookings, the lows, the load factors are up.

Yes, it has been at the cost of lower yields, but, as you can see in Q3, where unit costs at sector-link-adjusted fuel, excluding sector-link-adjusted unit costs down 9%, down another 4% in Q4.

No other airline in Europe is delivering those kind of unit cost savings.

So the gap between us and all of our competitors across Europe is actually widening now even as we move into some of the space where we have allowed -- they've had -- we've allowed them to have a lead over us in the last 12 or 18 months.

All those gaps are going to get closed in the next six months.

Howard Millar In terms of fuel, Tim, we've done a lot of the -- we've taken a lot of the low-hanging fruit.

We've taken down our average burn per hour by nearly 6% since 2011.

So a lot of the easy ones have been done.

So it is difficult at this stage to see if there is much more [runners], but that doesn't mean we are not going to stop looking and we have a few things in mind that we are working on.

But certainly all of the big cuts have been done and anything else will be smaller and I suppose more difficult to eke out.

Great.

Thanks a lot.

Thanks, Tim.

[Susan Tout], Morgan Stanley.

Good afternoon.

Just one question on the December quarter yields, Michael.

Could you say what the yield decline was in constant currency in the quarter year-on-year?

Yes, with sterling, it was down -- sterling is the equivalent of -- has a 1% impact on the third quarter.

So 8% is just slightly over -- it is about 1.25% with the impact of sterling.

So obviously, the balancing then being just 7.75%.

Thanks very much.

Okay, thanks, Susan.

Edward Stanford, Lazarus Partnership.

Good afternoon.

A question on the exercise to improve your focus on customer service in the market and how long do you think it will take before the new messaging is accepted?

How are you going to measure the progress with that, please?

I think it's difficult to know.

There has been a ready acceptance of the message at least over the last several months that we are trying to change.

There may be some kind of skepticism as to whether it's real or just a publicity stunt on our part, but I think what you see -- certainly the feedback we have had from our customers since Christmas that the website has materially improved moving from 17 to 5 clicks to make a booking has been a very positive feedback on that.

The second carry-on -- small carry-on bag, very positive feedback on that.

We would expect similar very positive feedback from the allocated seating, which starts this weekend.

So every customer -- remember, we are carrying 0.25 million passengers a day.

Every customer is seeing what are real tangible changes on a daily basis.

I think when we move to the new website, the all seeing, all advancing website by the end of April then -- and it's associated with a program, an advertising program, a different approach to the media as well.

We are now trying to -- we are interacting actively with the travel journalists and that kind of space where previously we would have been pretty dismissive of them.

The GDS distribution availability and travel agent sites, this is not the kind of some sort of warm cultural rebranding exercise.

There are very real and very meaningful changes both in terms of our flight practices, our fees, out charges that customers are seeing on a daily basis every time they either book with us, fly with us or interact with the website.

So I think you will see certainly some of it translating to some more coverage of -- this change is real, they are serious about it, it is changing.

There is kind of a myth out there that Ryanair is immovable.

We have never changed since 1997 or whatever, or 1987.

Like whenever -- sometimes we may be a little bit slow to change, but once we get the message, nobody changes faster or quicker than we do.

And that comes from having a very flat management structure and a pretty young average age within the Company.

So I think I would be very surprised if you don't see some kind of meaningful improvement to our recognition of these changes through the second calendar quarter of this year.

Will you see it in the financial results?

Yes, but then that will partly be because Q1 will have Easter in it this year and a weak prior-year comparable, all the rest of it.

But you have just got to judge it for yourself and when we roll out the website and the mobile app in April and June, there's a business product in May, there is a family product probably by the end of May, it won't stop there.

We already have a team working on -- once we have redone the website by the end of April, where are we going next with the website?

We are looking at some of these Web retailers, best-in-class, the Amazons and some of the other booking.coms.

Having done that now what are we going to do?

We have teams of Web developers, programmers here and it's going to be a continuous improvement process, but you won't see -- the changes won't be as dramatic as the ones you'll see in April and June this year.

Thank you.

Thanks, Edward.

Next question please.

Penny Butcher, Morgan Stanley.

Hi, good afternoon, everyone.

Just a quick few follow-ups from Suzanne's question.

I just want to -- perhaps to ask another way some of the cost questions that have come up today.

Conceptually, going into fiscal 2015, you've obviously been quite explicit on the fuel guidance.

So looking at the cost ex-fuel, is it something that we could expect to continue, stage length aside, the run rates that you are exiting in Q4?

How should we think about it, that the reported number could actually be down given the volume growth that you are stimulating with the lower yields going into the summer season.

Is that a fair way to think about the nonfuel costs overall?

Honestly, it's just too premature at this stage, Penny.

We are not going to go there into -- other than obviously what we have given you on the fuel, which is a known into Q 2015.

It is too early; we haven't finalized the budget into the forecast into Q 2015.

All I would say, sector length adjusted, I don't think it will be materially up or down.

We would expect to continue to exercise a significant degree of cost discipline going forward, which will mean we will be significantly better than any other airline in Europe.

But that is about it at this stage.

It's too early.

Okay.

That's fair.

One other follow-up was with regard to sort of the well now pre-disposal to speak to the primary airports, and I think it makes it clear why Italy and certain markets are definitely keen to engage, but I guess you haven't really commented on, I would say, France and Germany as sort of country markets where there are arguably gaps in the primary airports.

Does it go back to your earlier point that perhaps the subsidy environment, it just makes it not worth your time or are there opportunities we could think about in France or Germany going forward as well?

I think, Penny, it's fair -- there are certainly opportunities in France and Germany going forward, but there is a much greater pressure I think on primary airports in countries like Portugal, in Italy, in Greece, in Scandinavia, in Belgium where you have an incumbent flag carrier that is either financially weak going through a significant restructuring or likely facing a significant cut in its short lossmaking short-haul capacity.

And I think there are more opportunities for us in those markets in the near term the next 12, 18 months.

I think, David, it is fair to say that is where we are seeing, and also and obviously in Central Europe, that is where we are seeing the most -- what is it -- positive --

Yes.

-- approaches from those airports?

Yes, absolutely.

And they also happen to be the host to the two pretty weak incumbents who are doing very little for them.

But we are still in discussions with a number of the German airports, with a number of the French airports who we have very good relationships with.

We don't have any bases in France, but we fly to 23 French airports, but I think there is a greater pressure on those primary airports where the incumbent is in kind of restructuring mode and that is where we are getting, I would imagine, certainly the most favorable offers at this point in time.

Is that fair to say?

That is fair to say.

I think the obvious thing though is we have very limited capacity to allocate.

We've pretty much allocated most of our capacity for pretty much all of the summer and into the start of the autumn.

You may have noticed, Penny, over the last year or so, we have increased our presence in Germany, opening up a few more airports, but certainly the state of Air Berlin isn't getting any better.

But I think as Michael said, look, we are taking the best opportunities that lie in front of us at the moment.

These places aren't going anywhere in the near term and perhaps when we get some more capacity rolling into FY16, it will be an opportunity to have a look at these places.

Okay, that's great.

Thanks for the clarity.

Thanks, Penny.

Next question please.

Robin Byde, Cantor Fitzgerald.

Good afternoon, guys.

Hi there.

Just two quick ones from me.

Just on the timing of a potential special dividend, assuming you pay, would that be within this calendar year, say beyond the AGM, so November time?

And then just on parked up fleet, can you just update us on how many aircraft you are currently parking up?

I think you were saying on the last call you are expecting 70 to 80 this winter.

Thanks.

Okay.

Thanks for that.

Special dividend this year, I would expect -- I'd be surprised if it is in the calendar year.

I think it'd more likely be Q4 of our fiscal year, so in the January-March period.

That is what we are working to at the moment and the winter groundings, we are down -- now, remember, it is a variable number.

I mean there is less grounded at weekends than there is midweek, but the number towards -- the (inaudible) -- we previously said 70 to 90.

We are now down at around 70 only because some of the Italian bases have now started moving, so take about 70.

Very clear.

Thank you.

Thanks.

Johannes Braun, Commerzbank.

Yes, hi, thank you for taking my questions.

Just three rather technical ones for me.

Firstly, can you comment on the currency impact you had on your unit costs in Q3?

And secondly, regarding your hedging, on what price are you hedged in terms of dollars for 2014, 2015?

And then, finally, just on the fuel guidance for this year, is this still confirmed at plus EUR130 million?

Yes, Johannes, that is confirmed at EUR130 million.

In terms then on our costs, I gave the impact on our average fare; was about 1.25%.

On unit costs, of the 6% saving, because we only have about 25% of our cost in sterling, so it translates roughly to about less than 1%.

So less than 1%, about 0.6% was due to sterling.

In terms of fuel for next year, while our average exchange rate this year is running just under $1.32, we expect about $1.34 as being the average for next year.

So if you take where we were in terms of fuel, the average price this year was $98 per barrel.

That is moving down by about 2% to $96 a barrel and then about another 2% on currency as we go from $1.32 to about $1.34.

All right.

Thank you.

Thanks.

Thank you.

Next question please.

Anand Date, Deutsche Bank.

Hi, afternoon, everyone.

A quick one from me.

I was just interested in what your thinking is for the timeframe you are planning to get any sort of payback from the brand strategy by advertising customer service improvement?

So if you are looking to change perspectives about how good Ryanair is, is there a point in time in which you say there might be yield headroom on the back of this?

Let's be careful here.

I'm not sure -- some of this is -- we're not expecting a payback per se.

I think a lot of what we have done in terms of the customer service -- look, this is an airline that last year carried 81 million -- this year carries 81 million passengers.

We have a maybe 2% load factor.

We have a 90% plus on-time performance record and enormous repeat business.

It works.

We service the 81 million price-sensitive customers we have are the 81 million customers who happen to need access to our specific airports.

It works.

So there is not something here that we are always going to make EUR0.5 million net after-tax profit -- EUR0.5 billion rather -- in add-back profit.

This is not something that is broken that somehow needs to be fixed.

We do generate a lot of media coverage, which, by the way, we are happy to run with, which is all this kind of Damascene conversion stuff.

We have been torturing people for 28 years and now we have suddenly woken up and we are going to be nice to people.

We have always been nice to people for 28 years by not charging disproportionately high airfares, by giving them on-time flights on brand-new aircraft and delivering a brilliant service.

Some of our aspects of it, however, where clearly there is an opportunity for us to move into more mainline airports, at those more primary airports, you have a large slug of the traffic, doesn't pay for its own tickets, is not particularly price-sensitive and does want a slightly different service, which is they don't want a free seat.

They want a seat in the front of the plane.

They want a reserved seat.

They want certain aspects of service, which, in our old model, we didn't -- we would have said hump you, you can take it -- it's the same for everybody.

If you don't like it, bugger off.

Going forward, we now want to welcome -- instead of telling that 10 million or 50 million people to bugger off, we say, look, come to us.

If you want a specific allocated seat, we have an allocated seat for you.

If you want to carry a second carry-on bag, done.

You want a business type product where you get fast-tracked through security, done.

We want to cater to all of those markets and the comparison I make all the time is kind of IKEA, [Liddle] and [ALDI] and you see Liddle and ALDI moving noticeably having 30 in the Iron UK market, broken into the market very dramatically in recent years on the back of price, but now advertising very heavily.

We use Irish beef or British vegetables for British consumers, quality at Liddle and we are doing the same thing.

So rather than present this as transforming what's the payback on our -- I mean most of what we are doing has no cost at all.

We did it -- there were reasons why we had certain policies in recent years.

Free seating was designed originally post Lockerbie to get everybody to the boarding gate because everybody had a checked-in bag and we needed to know who you were so that if you didn't show up at the boarding gate, we could get your bag off.

We no longer need it because now only 20% of people check in a bag and so the chances are if you don't show up at the boarding gate having checked in, either four and five of you haven't checked in a bag and if you are one of the few who has checked in a bag, there is only 30 or 40 bags in the hold of the plane.

We can get it off quickly without delaying the flight.

So a lot of what we are doing has no cost implication for us at all and we expect -- although I wouldn't want to put it into a cost-benefit analysis, we expect that there will be a very strong uptake in terms of the coverage of Ryanair.

We really are changing, we are trying to welcome families, in particular, business people as well.

We are catering for your needs.

If there is something that we are not doing that you think we should do, tell us and we will bend over double and do that as well.

So I expect to see -- I mean I think to the extent that we are going to see a payback, I think we are seeing the payback already even though most of the initiatives haven't really rolled out yet in the fact that we have much stronger advanced bookings.

We have had a very ready acceptance at a number of primary airports where we now haven't even started flying, but we have gone in there and everybody knows about us already in Brussel-Zaventem and in Athens, David got an enormous welcome down there because Olympic and Aegean are very high fare and there is not much alternative down there.

So I think we are seeing the payback immediately.

We don't expect to see it in terms of higher fares.

We didn't get into this business and we are not changing aspects of our service so that we can charge people higher fares.

I like periods like the last nine months where we can say our fares have gone down by 9% in the last three quarters because it puts further distance between us and our competitor and lowest fare always wins.

But what we want to do going forward is we are warmer, you're going to like the service.

We are really trying to eliminate -- we are working to eliminate those aspects of our service, which unnecessarily teed people off and we no longer want to tee people off because we want everybody to like a flying with Ryanair not just for the savings in time and money, but also because we deliver a great product and great service.

Okay, that's interesting.

Could I ask a follow-up, if that's all right?

So it sounds as if it's still volume, very much volume, right?

You want to convert more people to just believe that Ryanair is a good product, which we know it is, etc., etc.

Do you think that is going to have an impact on your booking curve?

i.e., would you expect, all else equal, to be more booked earlier so now you will be yield managing the last 10 percentage points of load factor more aggressively?

Personally I think yes we expect our forward loads to be stronger.

I think that will have two effects.

One, it will result in higher load factors going forward into the next year or two and there has been a noticeable difference between say for example easyJet's load factors and Ryanair's load factors in the last two years.

I think a lot of that has to do with the fact that their website was more usable.

We'll eliminate that shortcoming in the next number of months.

So I think we'll have stronger forward bookings, all the people will be getting much lower prices on Ryanair than any other airline well in advance.

You'll have higher load factors and yes, I expect, but more by virtue of the fact that we will be flying to a number of more primary airports and actively going after that business traffic or the traffic that doesn't pay for its own ticket that we would be selling higher fares closer in.

Okay, that's really interesting.

Thank you.

Thanks very much.

Neil Glynn, Credit Suisse.

Good afternoon, everybody.

Just a question really on following your move into Fiumicino in Rome and obviously Zavantem in Brussels.

As you have -- the number of cities where you have more than one airport is obviously growing with that.

And I am just interested in terms of whether that changes the way you manage the business at all.

On one side, I could see maybe a better opportunity to tailor supply to demand or on the other side, on the cost side, maybe more opportunities to trade airports within the same city off against one another.

I wouldn't actually -- I mean we've been serving cities with multiple airports for many years, London being the most obvious.

We have been serving Luton, Stansted and Gatwick for many years now.

In fact, since the mid-1990s.

In Barcelona, we serve Girona, Reyes, El Prat.

In Rome, we now have Fiumicino and Ciampino.

In Brussels, we will have Zaventem and Charleroi.

And we actually, up in Stockholm, we have Bastorf and --

Skavsta.

So no, we don't tend to tailor the marketplace.

What tends to happen in a lot of those cases though is the people who are either living around the airport that we fly to or the people who want to travel close to that airport as a destination tend to favor our services at those airports.

For example, there are communities there that will not go to Ciampino or will now fly -- use us at Fiumicino and there is clearly communities who live in Barcelona will tend not to use Girona or Reyes, but would certainly use El Prat.

But the inbound market into those cities tends to be pretty flexible and will go to whichever of the inbound airport you want to use usually on the basis of price, timetable or airport destination.

So no, I wouldn't expect it to be tailoring it.

Although there is no doubt that, at the major airports like El Prat in Barcelona, Barajas in Madrid, the Lisbon, Zaventem in Brussels, Fiumicino in Rome, there is a higher proportion of business passengers, politicians, bureaucrats, the people, consultants, all the people who never pay for their own flight and who only can go to the expensive airport.

And I think we have a major growth opportunity for us in the next 12, 24 months both in seeing our load factors rise and in targeting those, particularly that kind of business traffic or non-price-sensitive traffic by virtue of having an extensive frequency and route network at those major airports.

Great, thank you, Michael.

Thanks.

James Hollins, Investec.

Hi, yes, the first question is on -- you talked about the market pricing no longer declining.

I mean historically you have talked about both the competitive environment and also the customer backdrop being a little bit tougher.

I was wondering which of those had got better or both?

The second one is on a potential split of the EUR500 million of dividends and buybacks.

I think you were deliberately guiding more towards a special.

I was wondering if you can give any guidance on that.

And the third one is a bit more general.

I mean this whole sort of consumer perception change -- I know it is something us analysts and investors talk about a lot -- is this something which is very much something you are having to talk about in the UK and Ireland because of the media coverage around Ryanair and indeed of yourself or is this something that having to do across Europe or in the rest of Europe, are you regarded just as a decent operator with a decent product?

I'll take those in reverse order then.

The consumer perception one is very much a story in Ireland, the UK and Spain.

In most other countries, in Italy, for example, the comparable is Alitalia.

Generally speaking, there is a very good -- Ryanair is very well-perceived.

In Central Europe in Poland for example where (inaudible) is the alternative, we're very well-perceived.

So it tends to be the kind of -- the negativity that surrounds both Ryanair and myself personally tends to be confined to Ireland, the UK and Spain.

And those are the markets where we are spending some considerable time, also me, myself, going mea maxima culpa going to get warmer and cuddlier, which is very much the drive behind a lot of the changes we have been doing.

The advantage of that too is there is a big appetite or market appetite out there for Ryanair is changing, they got it wrong, O'Leary is changing, da, da, da, da.

So we have garnered enormous press coverage in recent months as a result of the change.

Some of us say -- some of it is skeptical, some of it is well asking question is it real or just a PR stunt and it's absolutely real.

The split of the EUR500 million, as I said, we set out a plan.

It was to return about EUR1 billion to shareholders over a two-year period.

We have done -- by the end of March, we will have done about EUR480 million.

That leaves about EUR520 million due next year.

A special dividend I think will be no less than it was the last time, but that would be something of the order of about --

EUR486 million.

EUR480 million odd where there has been some share buyback.

So it is probably something of EUR470 million, EUR480 million special div and a couple of small share buybacks in and around that to bring it up to EUR1 billion returned to the shareholders over the two-year period.

And the first part of the question then, which was the market pricing, what we are trying to contrast is the kind of commentary we gave you in September, October, look, fares are falling, it's very steep, can't quite put our finger on why it is, da, da, da, yes, but year-on-year there is big near material declines.

Looking forward into Q4, you can see that the yield guidance is somewhat less negative than it was back then.

Into Q1 next year, it will be less, but, again, we had the Easter movement into Q1 and a weak comparable.

So I think whatever trend was emerging there in August, September, October last year, we have arrested it by responding quickly and aggressively with lower fares, price promotions and we seek to have generated a significant momentum into calendar Q1 and calendar Q2 of this year.

I wouldn't want to put it any stronger than that.

Okay, great.

And just a very quick follow-up.

Are you seeing any sort of crazy capacity moves in any areas or any routes, which give you cause for concern into sort of spring and summer this year?

Not really.

Most of the summer schedules are already out there.

You have some of the airlines, some of the mid-price carriers like Norwegian and [Whaling] have some aircraft orders into this summer.

I think most of that capacity is already announced.

Whaling have announced bases in Rome Fiumicino and Zaventem.

Strangely seem to want to compete with us, which we welcome all competitors.

We like competition.

Norwegian, they may still have some aircraft capacity coming this summer that isn't yet announced, but they have a lot of issues to juggle with at the moment given the 787 and the long haul issues, which are the challenges that they are dealing with.

But we don't see any meaningful capacity coming onstream during summer 2015 or summer of 2014 that isn't already announced.

And in fact, in many respects, I think we've probably announced more new route growth, certainly new base growth in summer 2014 than anybody expected.

Although it's larger by virtue of churning some of the underperforming aircraft and routes elsewhere.

Thanks very much.

Thanks.

Andrew Light, Citigroup.

Andrew, hi.

Hi, good afternoon, Michael.

A couple of quick questions.

First of all, on reserved seating, are you able to comment on what you expect the takeup to be?

I think you've said in the past it's been like 30% to 60% when you were selling 45 premium seats.

And secondly, on load factor, I mean do you think you can close all of the 8 point gap or so with easyJet or is it partly just because you have got larger planes than they have?

Well, reserved seating, we have got to be careful of the number.

It is too early to say yet now because we'll have the combination of both reserved seating and allocated seating.

I think previously what we said there were flights where we had sold 40% and 50% of the reserved seats previously, but it wouldn't have been a number on an ongoing basis across the entire fleet.

It's not something I want to get into yet because I think if we made a guess at it, I think we would be wrong.

We have seen quotes from competitors saying that 25% or 30% of their seats are taken up or their allocated seats are being bought.

That seems to us to be a reasonable number.

But really it is too early to say.

I can't really predict how many will be taken up, but certainly every time we have added more reserved seats, there has been a significant uptake of the demand for those reserved seats, which is why I think one of the key things about moving to allocated seating is we no longer have to block off rows 3 and 4 for weights and balance reasons and now we have a much more consistent product.

Rows 1 to 5 will be sold as reserved seating.

And there is no doubt there is lots of flights that we will operate on particular routes during the week where we would expect to sell 100% of those seats will be taken up, but really we want to let it settle down over a four to six-month period before we would get an accurate handle on it, Andrew.

And I'd be nervous to say anything else other than that because it would set off expectations that may or may not be managed.

On load factor, I don't expect to close the gap with easyJet on load factor yet.

Although I think there is no doubt that our load factor will rise over the next year or two.

One of the interesting features of that will be the new website and I think one of the things that easyJet has done well in the last year or two has been these kind of price fees, the price kind of --

Fare finder you mean.

The fare finder feature where you kick onto a fare on easyJet and it takes you straight to the aircraft or the seat where that fare is available.

We will replicate that feature by the end of April and also not alone, but the difference will be that our fare finder fares will be significantly lower than easyJet's fare finder fares in all markets.

So I think we must take a lot of that very price-sensitive traffic back off easyJet where on the many routes where we compete with them because we have simply much lower airfares and that will be good for consumers.

I wouldn't expect -- there is an average load factor differential between us of about 6 or 7 percentage points.

We are hovering around 82%; I think they are around 89% year-round.

But it does give us and it depends on how successful our fare finder feature will be, and we think it will be very successful, it does give us an enormous headroom for profitable growth and expansion if we were to take up our load factor over the next two or three years by 2% a year or something like that.

I think there is a real opportunity for us to do that and keep the traffic rising by seeing our load factors rise.

I think to be fair to easyJet, and they have done a great job in the last year or two, the website is very usable and user-friendly and their load factors are significantly higher.

Those are two areas of significant opportunity for us while growing off a much lower cost base.

So I think we should have the humility to learn from our competitors when they are doing something well and I think we hopefully have that humility and make known we are not ashamed to be copying those aspects of the business that they do well.

It's just they don't to cost base as well as we do.

Got it.

Thanks very much, Michael.

Thanks very much.

Donal O'Neill, Goodbody.

Donal, hi.

Hi, guys.

Last but not least hopefully.

Three quick questions.

First one on pricing in Q3, can you just give us a sense of how that developed month-on-month, so October, November, December?

I guess my sense was that it was probably quite a bit stronger in December than the other two months.

Second question, in the current quarter, how do you see the competition pricing I guess given that it has been a bit of a long slow drag from September into now with pretty aggressive pricing across the market?

And the last question, we haven't heard any chat around an aircraft order for a while for a MAX order and I just wonder with our friends from Boeing in town a couple weeks ago were there any developments there?

Thanks.

Thanks.

I think it's fair to say the Q3 pricing, a lot of that was driven by the initiatives we launched at the end of August and September where we opened up the pricing for the route.

So I think it is fair to say the decline was easing -- the decline was at its greatest in October, slightly less in November, slightly less in December.

But some of that was kind of a byproduct of the fact that we had begun selling out November and December more aggressively from the end of August into September.

So the yield attrition, while the rate of attrition was declining as we went through the quarter.

Into Q4, it's hard to see.

We look around at competitor pricing; we see occasional sort of price promotions from some of the smaller competitors.

They are all pricing well above us and there seems to be some commentary out there that we are pricing like lunatics and we are damaging everybody's business and we are pricing too low.

I don't get any sense that we have the cost base, the unit cost base to be able to price down where we are pricing and still be profitable.

But we don't see anybody at the moment aggressively trying to price in our markets because we are significantly lower than everybody else and those occasional price promotions run by -- you'll see the occasional one from Aer Lingus.

We cover all of those by lowering our price again.

It seems to peter out fairly quickly.

On the aircraft order side of the house, discussions continue with Boeing on the MAX.

They have probably been interrupted somewhat I'd say over the weekend by the glorious victory of the Seahawks in the Super Bowl.

We don't expect to have any intelligent conversation with Boeing for at least another two or three days until they sober up again, but the dialogue continues.

I mean Boeing are continuing to develop the MAX.

We are -- I expect to have another round of talks with them, are scheduled for February, but all of our focus at the moment is on taking the first aircraft deliveries next September.

As I say, we are not under any pressure to take any more aircraft.

We have the order book now essentially full out to the end of --

Summer 2018.

-- but we are working closely with Boeing on the next order and as their own designs are evolving and they are still refining the engine efficiency at the moment, which continues to improve, we are in the tent as part of that dialogue and working closely with them.

I don't think I can say anything more than that.

We are not expecting to be announcing any new aircraft order for the next six, maybe even 12 months, but we will very much move at Boeing's pace.

We have told Boeing if they can produce the aircraft with a significant fuel saving, we will certainly be there and want to be there as one of the lead customers and that position hasn't changed.

Boeing themselves have said they want Ryanair to be the lead -- one of the lead customers for the new -- the MAX aircraft and that continues to be the case.

And just out of interest, would that potentially be on a larger gauge aircraft, a 195 or 197 aircraft?

I don't want to get into those kind of discussions, but it will be for whatever Boeing are working on.

I think most of the discussions are around aircraft weight and engine performance and that continues to be the case.

All of our studies and work at the moment continues to be on a 189 seat aircraft on a like-for-like basis.

Great.

Thank you very much.

Thank you very much.

Okay, ladies and gentlemen, thank you for participating in the call.

As usual, we are not doing a roadshow on the Q3 results.

We do the half-year and the full-year.

John and the team, we are here in the new low-cost palace at the new Dublin office.

If anybody wants to call us or come over and see us in the next couple of weeks, we'd be very happy to see you and in the meantime, we will keep our heads down.

You will continue to see significant developments on both the website, the digital platform and on the customer service and I hope that those developments will be rewarded over the coming few quarters with stronger bookings, stronger load factors and an improved net profit performance on last year.

Thanks very much, everybody.

Either see you or talk to you soon.

Bye-bye.