Ryanair Holdings PLC (RYAAY) 2019 Q3 法說會逐字稿

Hello, and welcome to the Ryanair Third Quarter FY '19 Results Call.

(Operator Instructions) And just to remind you, this is being recorded.

So today, I am pleased to present Michael O'Leary, Chief Executive; and Neil Sorahan, CFO.

Please begin.

Okay, good morning, ladies and gentlemen.

Welcome to the Ryanair Q3 Results Conference Call.

I'm here with the management team in Dublin, and Neil is joining us from London, where he was doing the PR this morning.

As you'll see, all of the results were released this morning on the website at 7:00.

We have an MD&A -- or a video MD&A on that, which should address much of the questions that might arise.

A couple of quick themes.

While the EUR 20 million loss in Q3 was disappointing, we take considerable comfort that all of it was due to weaker-than-expected airfares.

There isn't the cost issue here.

But lower prices is good for our current and for our future traffic growth, bad for our competition.

Ancillary revenues have performed strongly in the quarter, up 26%, and helped us to offset higher fuel, higher staff cost and higher EU261 cost.

Ryanair has the lowest unit cost of any EU airline.

And this gap is widening.

We take delivery of the first 5 737 MAX game-changer aircraft from April.

These aircraft have 4% more seats, are 16% more fuel-efficient and they will drive unit cost efficiencies over the next 5 years.

Unlike other airlines, we won't be talking about adding lower-cost aircraft and then seeing our aircraft and ownership cost rise faster than our traffic.

With these aircraft, you'll see our aircraft and ownership cost rise at a slower rate than our traffic growth over the coming years.

The industry, however, continues to be bedeviled by the overcapacity, particular in the short-haul Europe.

As consolidation continues and weaker European airlines fail, some of them are currently up for sale at the moment.

The airports around Europe are increasingly keen to attract Ryanair's dependable, high-load factor traffic growth.

And David and the team are going through an extensive series of negotiations with airports and potentially new bases both as we conclude the winter '19 schedule and we're also beginning to focus on the summer 2020.

Balance sheet remains strong with EUR 2.2 billion of gross cash.

And we emphasized again, we own 93% of our aircraft fees of more than 450 aircraft.

And 60% of that fleet is unencumbered.

In December, Lauda acquired the remaining 25% of Laudamotion we didn't already own from Niki Lauda and his family.

Lauda has had an exceptional -- is heading for an exceptional year 1 start-up loss.

That loss has been reduced from an estimated EUR 150 million to approximately EUR 140 million.

Most of this loss is accounted for by the very late release of Lauda's summer '18 schedules due to the takeover of the airline from Lufthansa.

Lufthansa showed up late with some fewer aircraft than expected at very expensive lease rates.

Ryanair was able to supplement that fleet by giving Lauda 10 of our 737 aircraft last summer.

But it meant that the schedules were very late on release.

And therefore, we priced most that schedule through last summer at very low prices just to fill.

And we are a much better situation now with Lauda going into the second summer of 2019.

The airline will operate 24 aircraft, up from 19 last year.

But of that 24 aircraft, only 5 will be 737s.

Lauda will operate 19 Airbuses.

We expect the losses will narrow very substantially in the year 2 of operation, down from EUR 140 million to a figure of anywhere between EUR 50 million to breakeven, which is a wide range.

But we really don't know what the final outturn on yields, particularly the peak summer yields will be in that German to Palma market.

But we are reasonably optimistic.

Underneath that, Lauda is growing presence in the Vienna market very strongly.

I think one noticeable development in the last 6 months has been that level has scaled back its growth plans for Vienna almost entirely and would seem to have slowed down their announced growth plan very significantly.

By year 3, which is summer 2020, Lauda will be operating its summer fleet of Turkey aircraft, we have letters of intent already signed, and will grow to be carrying 7.5 million customers and will be trading profitably.

And the big trend at the moment remains higher oil prices and lower fares due to overcapacity at markets.

The past 4 months, we've seen a wave of EU airline failures, Primera in the U.K., for example.

Germania are currently seeking a buyer in Germany.

That's about a 30-aircraft charter airline.

We understand that, rumors, they weren't able to meet their January payrolls last week while Flybe in the U.K. are also for sale.

The big one obviously is Norwegian, who have announced a significant multiple base closures through this summer and into the winter.

And I think the key development on those base closures is they're all bases where they're competing with Ryanair: Las Palmas, Palma, Tenerife, Edinburgh and Belfast.

And they will cut their Dublin base from 6 to 1 aircraft.

They are trying to refinance themselves.

But we would expect to continue to see not just in Norwegian but among other loss-making low-fare airlines further contraction, further consolidation in the winter of 2019.

Brexit remains a major concern on our horizon.

The risk of a no deal remains worryingly high.

We have obtained a U.K. AOC to protect our 3 U.K. domestic routes.

But that's a tiny part of our overall operation.

We will and have plans in place to proceed to place restrictions on the voting rights and the share sales of non-EU shareholders, which for a period of time after a hard Brexit will also include U.K. nationals -- U.K. citizens.

We do that to ensure that Ryanair will remain at all times an EU-owned and EU-controlled airline.

In terms of forward guidance, we are on track.

Our profit guidance for the remainder of FY '19 is to be in a range of between EUR 1.0 billion to EUR 1.1 billion.

And that is excluding the Laudamotion losses of about EUR 140 million in the first year.

We have reasonable visibility on Q4 bookings now.

But we can't rule out further cost to airfares and our slightly lower full year guidance if there are some unexpected Brexit and/or security developments over the next 8 weeks.

I've been a bit taken aback by some of the commentary that come from competitor airlines in recent weeks on their announcements of their December quarter results.

It seemed to us they were all covering over the fact that their airfares have been disappointing.

None of them seem to have met their original ambitions for stronger airfares during the winter.

They were all pretty poor in terms of cost containment as well.

And it seemed to us they were trying to distract from those poor results by hoping and praying that the summer '19 yield outturn affairs will be stronger.

We see no evidence of that at the moment.

As of this morning, we have now 18% of our seats sold for the period from April to September.

The average fare is 1% down on last summer, which is nothing catastrophic.

It is a stronger performance than pricing this winter or indeed last summer.

But I think it is -- I would urge everybody to be cautious on pricing this summer.

If Norwegian gets refinanced, there will still be idiotic loss-making capacity out there in the marketplace.

Germania may not survive.

But there are other airlines out there losing money.

There is excess capacity there this summer.

And unless there is a more meaningful take out of short-haul capacity, we expect that airfare -- the traffic growth into summer '19 will be strong.

But we expect it will be at the cost of airfares, which I think will be flat to slightly down in summer '19.

And we see no evidence of the kind of promised or mythical affair increases that were being promised on the Wizz and easyJet conference calls in recent weeks.

We've set out this morning as well some guidance for our shareholders.

We're moving towards a group structure, which is planned along similar lines to that of IAG.

A very small senior management team will oversee the development of 4 separate airline subsidiaries: Ryanair DAC, the Irish-based airline; Laudamotion; Ryanair Sun in Poland; and Ryanair U.K. Each will have their own CEOs and management teams but reporting to me as the group CEO.

We think this group structure will enable us to deliver cost and operating efficiencies.

Each of these airlines will compete with each other for both capital allocations, aircraft deliveries and will also compete with each other to lower our costs.

We think the group structure will also give us the opportunity to look at other small-scale M&A opportunities.

And I emphasize small scale, something like the successful development of Lauda over the last 6 months.

In terms of board succession, there was some uncertainty on that or some concern from some shareholders.

We have announced this morning, I have agreed to a new 5-year contract as the group CEO.

I will replace myself as the CEO of Ryanair DAC, the Irish airline, between now and the end of the year.

The board has also set out its succession plans this morning.

Thankfully, David Bonderman and Kyran McLaughlin have agreed to lead the board for at least 1 more year until the summer of 2020.

In the meantime, Stan McCarthy has agreed, the former Kerry Group CEO who joined our board in 2017.

Stan has kindly agreed to take on the position of Deputy Chairman from April 2019.

And he will transition to Chairman of the Board of Ryanair Holdings in the summer of 2020 to succeed David Bonderman and Kyran McLaughlin, whom have indicated they don't wish their names to go forward for reconsideration at the September 2020 AGM.

So David and Kyran will serve, I believe that is something between another 12 to 14 months but then will not go forward to the September '20 AGM.

With that, Neil, I'm going to hand you over to you.

He gives a quick run-through the M&A and some key themes on the cost side.

Okay, thanks, Michael.

Well, just to echo Michael's commentary earlier this morning, guest grew strongly in the quarter to 33 million customers.

That was driven by 6% reduction in average fare.

However, ancillaries performed very strongly, which meant that total revenue per guest was up 1% in the quarter.

Fuel, as expected, increased by 32% to just over EUR 570 million.

However, other unit cost ex fuel were up 6% in line with expectations and actually below the growth in passenger numbers.

As a result, profit after tax came in at EUR 20 million of a loss in the quarter.

Balance sheet, very strong, BBB+ rated balance sheet, EUR 2.2 billion gross cash.

And as Michael said, 93% of the fleets owned, only 7% of the fleet leased and the vast majority, encumbered, so a very strong balance sheet.

Cost, as I said, very much under control.

Okay, thanks, Neil.

Okay, we'll open up for questions and answers.

(Operator Instructions)

(Operator Instructions) The first is over the line of Daniel Roeska at Bernstein Research.

So two questions if I may.

One, on the group structure, could you elaborate a little bit more on the elements of the IAG model you'd be planning to adopt?

So what are the individual airline CEOs going to able to decide or be responsible for?

Is that more kind of a labor arbitrage game?

Is it a cost-plus?

Is it a full P&L?

Kind of where do the commercial functions and Ryan Labs sit in that environment?

And secondly, on the topic of M&A, every other airlines' unit cost in Europe is more expensive than Ryanair's.

And until now, it seems organic growth has always been a little bit better than inorganic growth.

So what factors have changed in your assessment of the strategic growth opportunities for Ryanair to make M&A more compelling at this point in time?

Thanks, Daniel.

Okay, I won't or not going to get into details of the group structure on this call.

I think we'll be able to feed that out more appropriately to shareholders when we do the full year results roadshow in July.

Suffice to say that there will be a small group staff headed by myself as Chief Executive.

There will be a group finance and a group legal.

But underneath that, the individual airline CEOs will have responsibilities for running each of the individual airlines.

They will be responsible for their own cost management.

And out of that cost management will come aircraft allocations and capital allocations.

And there will be some central functions, but they will largely, for the moment, be handled by Ryanair, most notably Ryanair Labs.

They will run the sales function, as we do currently, of Laudamotion, Ryanair Sun and those are through ryanair.com website, which is now the world's most visited airline website.

In terms of the M&A, the organic growth, the focus will continue to be on where we can replicate effectively our kind of unit cost efficiency.

And for that, I would give you the example of what we're doing in Laudamotion.

It was an airline that was -- being bought out of (inaudible), a divestment out of the Lufthansa purchase for Air Berlin.

It had a reasonably high cost base having come out of Air Berlin.

But having said that, we have, in the space of less than 12 months, now replicated a very low-cost operating aircraft fleet, 30 A320s with an average monthly lease rate of under EUR 200,000 per month.

It is using Ryanair's kind of low-cost technology.

The sales is done across the Ryanair website.

The efficiencies, they are moving toward 25-, 30-minute turnarounds.

And you will see Laudamotion certainly by next year begin to mirror Ryanair-type margins.

That's why I think I'd say we would look at small-scale M&As, where there's an opportunity to take over what are not necessarily shell companies but very small AOCs, 1 or 2 small AOCs, where we can reverse some of our organic growth into those AOCs.

And that would make sense from our point of view in places like Ryanair Sun, Ryanair in Poland.

I mean, if I put that in some perspective, in Poland, for example, it is -- Ryanair Sun had a very successful first year in the Polish charter market.

But it is now taking over Ryanair's schedule flying into Polish market.

And it's doing that because there are tax advantages for our pilots -- Polish pilots and Polish cabin crew moving to the same type of contract employment that LOT, the national airline in Poland, has promoted.

And therefore, we were able to replicate.

We can get a lower operating cost in the Polish market by replicating the type of structure that LOT and Enter Air have benefited from.

So we will see opportunities across the group opportunistically to lower cost in certain markets, where there are local considerations that make it sensible for us to do so.

We'll give you more details on the one on group structure and how we see it working on the July full year results roadshow.

Our next question is over to the line of Jarrod Castle at UBS.

On the fuel hedging, you had hedged kind of 52% at $71.8 at the half year results and now we're at 90% at $70.9.

So just -- I'm trying to understand why some of the fuel benefit doesn't seem to be coming through in the hedge ratio to kind of where you were hedging.

And then secondly, just looking at the balance sheet, you should continue to grow some cash.

Should we be expecting some further capital returns in the next 12 months?

Okay, thank you.

Yes, we do have (inaudible) the fuel at the half year (inaudible) in September.

Spot oil at the time was $84 a barrel.

The forward rates were -- we were trying to get forward rates under $70 a barrel.

At the time, we tried to close it out.

And we finished -- or by the time we finished closing out the hedge, we had 90% of FY '20 hedged at $71 a barrel.

We're very delighted with that success as the spot oil was $84 a barrel.

Then in the space of about 4 weeks, it was $84 a barrel down to under $60 a barrel.

So what looks like a very clever hedging strategy quickly became a not-so-clever hedging strategy.

I think our general view is that fuel is likely to trend slightly back upwards.

We're a bit out of the mark at the moment compared to spot.

We are looking now at hedging out into FY '21.

But again, based on current spot rates, we're trying to get forward rates out at around or under $600 per ton.

Again, we don't use fuel hedging here to try to beat the market.

We try to use fuel hedging to give us cost surge over the next 12 months.

On the balance sheet, the balance sheet remains strong.

I think our position has been consistently that yes, we would like to do another capital return to shareholders.

But I think it will be done in the context of once we have some certainty on the outcome of Brexit.

And we very much hope we will have certainty on the outcome of Brexit.

In the event of a hard Brexit, obviously we would have a slight -- we would, for a period of time, depending on how many of the U.K. shareholders don't reflag into Europe, we may have a small surplus or a majority of non-EU shareholders, I think we'll be timing another share buyback at the same time as we've been imposing restrictions on all non-EU shareholders, voting and share sales restrictions.

So the timing of a share buyback would facilitate some of those shareholders being able to dispose of their non-EU-held shares to -- they could participate in the buyback.

So I think the timing of a further share buyback would be very much driven by some developments on Brexit over the next couple of months.

Our next question is over the line of Savi Syth at Raymond James.

Just two questions.

Michael, you indicated the opportunity -- if the opportunity presents itself, you would consider accelerating the MAX growth.

Would that be incremental growth?

Or would that be kind of accelerating retirements in return?

And then...

Sorry, Savi, just go back.

I didn't get that question.

We consider opportunities to what?

To accelerate the MAX growth.

To accelerate the MAX growth.

Yes, if the opportunity arose.

And I know you mentioned you would consider getting more MAX aircraft.

I'm just wondering if that would be accelerating the retirements or if it would be kind incremental growth.

And then the second question, just on the cost.

It's helpful to kind of indicate kind of flat to down cost looking forward.

Just wondering if you could kind of talk about, Neil, kind of the trends of some of the bigger cost items as you kind of exit this year and head into next year.

I mean, we're always willing to accelerate growth if there is a cost opportunity to do so.

I mean, but that would require some collapse in aircraft values or some prices in the aircraft.

Now I suspect both Airbus and Boeing are presently facing a lot of canceled orders or aircraft redeliveries.

But I would imagine at the moment over the next 12 or 24 months, our fleet growth, any unplanned fleet growth is likely to take place on the Airbus side through Laudamotion.

We have been struck by the ready availability of reasonably low-cost A320s, good 8- to 10-year-old, secondhand A320s coming back on the market, it seems to me, where leasing companies are stuffing these airlines with new neos and taking back delivery of very clean, reasonably young ceos.

We have seen -- when we first started trying to procure a fleet for Laudamotion 12 months ago, I think we've seen the lease rates on those secondhand A320s go from over EUR 200,000 a month back down to -- up to 10% below.

We're looking at lease rents of now between EUR 170,000 and EUR 190,000 per month.

And certainly, that would encourage us to accelerate Laudamotion -- the fleet growth in Laudamotion from 19 aircraft last year, 24 aircraft in summer of '19 and up to 30 aircraft in summer of 2020.

If we see some further opportunities on the secondhand Airbus side, I think we would jump on those.

I don't foresee much on the MAX side at the moment.

I mean, it is -- will be new aircraft to us.

We are taking 5 this year.

Next winter, we take 50 of those aircraft.

I think half of those 50 will be reallocated to Ryanair Sun and go on the Polish register, probably half will be on the Irish register.

I wouldn't see us accelerating that growth much beyond that at the moment.

I think it will be a big jump for us to take 50 MAX next winter and putting those aircraft into a lot of bases, where they were not being similar with dealing with the MAX aircraft.

So if there's any accelerating growth, I think, in the next 12 or 18 months, it would be through Laudamotion or through some small-scale M&A.

And Neil, do you want take us through the cost point?

Yes.

And I suppose, Savi, just to be clear, we're doing our budget for this time of year, so we haven't got the full year numbers, yes.

And I'll give more color on that in May.

But as we move into next year, we start to see the cost, for example, on the staff line stabilize with a 20% pay increases factored in.

We start to see the benefits coming through on the MAX, although we only real have 5 MAXs operating this summer.

While 10% of the fleet will be MAXs by the end of financial '20, it's really summer 2020 where we see the huge benefits.

Airport and handling continues to see good opportunities there.

And we have nearly 20 leases going back next year as well, which will drop down the aircraft rentals line.

So we'll see it stabilize and then beyond that, start to drop on a per passenger basis.

I think we're reasonably confident now that unit cost next year will be flattish -- flat, slightly down.

The only one that, I think, will still be out of control will be the EU261 compensation claims.

We're expecting another torrid second calendar quarter.

We think the understaffing in the U.K., German and repeated strikes in French ATC will reappear in April, May and June again of this year because none of those (inaudible) have been addressed.

But with the exception of EU261 cost, we are reasonably optimistic that unit costs will be flat to slightly down the next 12 months.

Now go to the line of Duane Pfennigwerth at Evercore.

Most of my questions have been asked.

Michael, how do you see your job changing in the new structure?

What are the things you'll be excited to do that you could not do previously?

I don't think there'll be that much change in the new structure.

I mean, for the next 12 months, I'll still be Chief Executive of the airline.

I'm spending a reasonable proportion of my time at the moment working with Andreas, who is the Chief Executive of Laudamotion; with Michael, the Chief Executive of Ryanair Sun, overseeing the development of those airlines and allocating aircraft and capital to those companies.

So I think it will be an evolution over the next year or 2. The key challenges to get the right Chief Executive for Ryanair, the airline, in place by the end of this year and then hold his or her hand over the next 12 months so that we don't lose the focus on cost and we continue to run.

But then I would be and continue to encourage each of the airlines to compete actively for capital and aircraft.

I mean, I think the big opportunity for the next year or 2 certainly as a group of airlines is to encourage much more competition between Ryanair, Laudamotion, Ryanair Sun to compete for aircraft because they can use those aircraft more profitably, are at lower cost than the other airlines in the group.

We now go to Stephen Furlong at Davy.

Just two quick ones.

I mean, can we just go back to the leases on the Lauda aircraft?

And I'm just into -- in the -- what's the tenure or the time of those leases?

And is the ultimate intention to refinance those leases with owned aircraft down the road from either Boeing or Airbus?

And then just a second quick one, I was just wondering, usually it's around this time last couple of years, there's been some kind of branding, marketing push, like Always Getting Better.

Is that planned for this year?

Yes, leases at the moment, the tenure of those leases are 5 years.

So we did -- and we're redelivering at the moment the 9 Lufthansa -- very expensive Lufthansa aircraft.

They will be delivered back to Lufthansa starting in January.

And the last will be gone in June.

So we are the first -- at the moment, Laudamotion will have this summer -- or for summer '19, they will have a fleet of 19 Airbus aircraft on 5-year leases.

We've already signed up LOIs for another 11 aircraft -- Airbus aircraft for next year for summer of '20 with 5-year leases.

So they will run through until 2023, 2024.

We are having -- we are accelerating what we'll call dialogue with Airbus.

I think the initial -- the kind of initial discussion with Airbus last year as we're about to buy Laudamotion, "We need aircraft for delivery in 2019, 2020, so we can grow." And they said, "Look, we don't have aircraft in that period." Now that these lease -- I mean, I think there are significant opportunities for us in the lease market.

I would have no difficulty at the moment at these kind of prices continuing to use operating leases into '21 or '22.

We certainly see the Laudamotion fleet growing from 30 aircraft in summer 2020 to 40 in 2021 to 50 in 2022.

We will be talking -- I think at the end of those leases though, which is starting around 2023, we would like to see new aircraft either from -- or preferably from Airbus or from Boeing coming through and replacing those operating leases.

But if there is real value, I mean, typically or historically, anytime you get operating leases at under EUR 200,000 a month, that's pretty good deal.

And with the help of Ryanair backing, the airline is not paying -- Laudamotion will not be paying maintenance reserves or security deposits, although it is providing for maintenance on an hourly basis.

So I think we'd be reasonably nondoctrinaire about it.

If operating leases are cheaper, we do operating leases.

But if we can secure a fleet of new aircraft directly from Airbus, then we'd be happy to do so.

I think a lot will depend -- I'd say, Airbus and Boeing, I think, will begin to feel the pressure with the likes of Norwegian canceling orders and deferring deliveries.

We see even easyJet and Wizz deferring some deliveries recently.

So obviously, there will be some opportunities there.

Branding and marketing opportunities, obviously Kenny is straining at the leash almost on a monthly basis, wanting to announce new branding and marketing strategies.

I think what we wanted to do though is not focus on those yet.

We wanted it -- we had obviously a second profit warning in January, pricing is weak.

We wanted to get the kind of board succession, management plan, group structure out of the way now.

I think you will see a -- not from a rebranding, but you will see some branding and marketing initiatives that we're concluding at the moment announced probably sometime in late February, early March for both Ryanair and for Ryanair Sun and also in Laudamotion.

So some time pre the takeoff of the summer schedule.

We now go to James Hollins at Exane.

So first, on summer capacity, obviously you're dismissing out of hand what easyJet and Wizz are saying.

I mean, just putting some numbers on easyJet, talked about their competitor route capacity up about 2% in the summer.

I mean, you've obviously done that work yourselves on how you initially see your own competitor capacity.

I was wondering if you could put a number on it.

Secondly, just on the German market, I think it's obviously been a very tough period with you and easyJet.

Lufthansa themselves, sort of growing into [billion] worth.

Maybe just give us an update on how you see the German market on capacity trading, et cetera, into the next few months.

I think you specifically said Lauda was looking quite good on that market, maybe just a little wider market, in general.

I mean, we're not wishing to speak ill of my competitors.

We thought most of the commentary that's surrounded their summer 2019 stuff was just blind optimism, coming from airlines who in recent months have promises, "Don't worry about higher oil prices because higher airfares will cover higher oil prices." We didn't see there was any basis for that.

It's all right for somebody to go out there and say it when there's only 2% of capacity growth in that marketplace this summer.

The reality is none of the airlines have sufficient visibility on the 2 summer quarters this year.

We generally have stronger advanced bookings than anybody else.

And as of today, we only have 18% of those seats sold.

I think it's far too early to be guiding optimistically for this summer, particularly if Norwegian doesn't go bust between now and they survive into the summer and there will still be capacity out there.

I mean, we could take you through this summer, Norwegian are closing bases where they compete with us and it's all whoop-de-doo.

But like fundamentally, I think there's still overcapacity out there in the marketplace.

There are market segments.

I mean, we see Spain and Portugal a little bit weaker this year because a lot of that traffic is going back to Turkey and Egypt.

Germany is a torrid market at the moment and will continue to be a torrid market.

I think even easyJet were also confirming that the Berlin base will lose money for a second year in operation, no signs of stronger yields out that marketplace.

So this time of the year, I think it's wrong to be promising good news or optimism, particularly when it comes to airlines who've been making up -- repeatedly making optimistic noises on fares only to subsequently disappoint.

I think the best guidance I can give you at the moment is that we have sold 18% of our summer seats and the average fare is 1% below where it was last -- this time last year.

Now it's not 7% below, it's not 5% below, it is marginal at best.

But I think everybody should be much more cautious into this summer than either easyJet or Wizz were on their calls.

But it seemed to me they were -- I mean, most of them are trying to duck and dive on costs.

They didn't want to talk about costs.

It was all, "Don't worry about the cost, the fares will rise this summer." It was more the mañana you'll get out of them at this time of the year.

In our case, we're generally much more cautious because we're good on costs and we're much more cautious on forward booking.

David, do you want to give us a taste of what do you see in the German market?

Well, you pretty much covered that, Michael.

Now the difference this year is that I do think that by the end of the year, there could be something of a shakeout.

If Germania goes, that could change things somewhat in the market.

But I think when you're talking about a 2% change to competing route capacity, you're really looking at the wrong thing and struggling in the wrong area because it's choice in Germany that's happening now.

People have choices all over the place, not on specific routes but to many different destinations.

And as Michael said, Turkey and Greece has opened up, along with elements of North Africa.

So we still have more than 17 million seats to sell for this summer.

We're in no position to give any sort of particular guidance there.

I can say the Canaries, in particular, and Germany will be a weakish market, competing as it does with some of the other longer- or medium-haul routes into Turkey and the like.

On a slightly positive side but not in any great volumes, we're very content with the bookings on our yield capacity into Jordan, into Israel.

But these are very -- and Ukraine but very peripheral, I have to say.

It is over to Damian Brewer at RBC.

I have two questions, please.

First of all, coming back and following up on one of the things you mentioned about capital allocation.

Could you talk a little bit more about the profit decline for Q3 and whether that was across the piece or whether there were certain locations or bases that dragged that down?

I'm guessing, given the base cuts that's already been the case and given you talked about MAX allocation and half of that to the Polish register.

But can you elaborate a little bit more on what that does mean for the MAXs that get allocated on the Irish registration on the assumption that I assume the capital follows the highest returns?

And then secondly, you talked about ticket fares.

But can also elaborate a little bit more on ancillaries?

Was it just the priority boarding and bag policy change in Q3 that improved?

And how much of that rolls forward into the summer?

Thanks.

I mean, characterizing the property plan in Q3 as was stated, I mean, there weren't significant geographic segments.

It was spread across the piece.

As you know, we were predicting a 2% decline in average fares this winter.

And that against the prior year comp that we thought was reasonably benign.

If you remember the prior year, we had the offering screwups, where we had to have flight cancellations.

So if anything, we thought with a reasonably benign prior year compare, we were genuinely surprised by the fact that airfares across the piece, particularly into the Christmas -- close bookings in on Christmas were weaker than we had expected in the past.

And there's been some sort of mis-, I think, analysis that somehow this is a -- something to do with the unions or lack of passenger confidence in flights.

We have no evidence of that at all.

We had no disruptions over Christmas.

And even when we did have -- I mean, there's a very small number of disruptions last summer.

We didn't think it had any impact on the fares because we managed our way through it very well.

And obviously, there is too much capacity out there this winter and there -- that has been reflected in significant pricing downwards.

And that was reflected in both the pricing commentary on the calls by Norwegian, with easyJet, everybody else was out seeing the same story on short-haul Europe.

The only difference between us and them is they're all promising just treats tomorrow or this summer.

And I don't see really any fundamental basis for that, unless there was a big shakeout of a Norwegian or a Germania or something else.

Next winter, there's certainly going to be a big shakeout of Norwegian bases closing.

Capacity will be taken out of the place.

They'll lose another couple of hundred million this summer.

So I think they'll have to come back doing more refinancing.

I've long held the view that Norwegian is a turkey that isn't going to survive.

And you may see that impact next winter and into the summer of 2020.

On ancillary, generally speaking, the ancillary performance across most segments has been that they increased penetration.

The large movers of the dial in Q3 was the increasing propensity of customers choosing to take up the priority boarding, the reserve seat service.

But there was also improved performances of the others mainly across Ryanair Labs.

Ryanair Rooms did well.

Car Hire is performing reasonably well.

Fast Track as a product through airports is also performing well.

So the continuing ability of Ryanair Labs and the commercial team to monetize those additional services continues to drive that ancillary performance.

And that goes through to next summer?

Yes, it should do.

Ruxandra Doser at Cheuvreux.

Just one question.

You mentioned 18% of capacity between April and September being sold at this stage at least down 1%.

I suppose a current booking shall serve particularly to the start of the summer schedule.

So if you adjust for the positive effect from Easter, what is the underlying share decline on bookings that you see in April at this stage?

I think it's a continuing trend.

I mean, you're right to highlight the fact that Easter is in April.

Now we don't have that many bookings in the system yet for the current, the second quarter, which is essentially June, July are -- July, August and September.

We should be where a lot of the higher-yielding traffic will come through.

But -- and I guess, this is why I think that we should be cautious, and I would be reasonably -- I mean, I'm not pessimistic for pricing this summer, but I am much more conservative than competitors who are out there last week, frankly with very little visibility of the summer bookings, talking of pricing.

We are now towards the line of Kathryn Leonard [Technical difficulty).

Just to follow up side on the ancillaries point made by Damian.

Just I think when we last spoke, you guys spoke about priority boarding and seat allocation meeting peak penetration around about the time of November, 50%.

I think since then, the group has increased the availability of price boarding.

You previously -- Michael stated about that peak at 50% because it wasn't priority.

It's more just the plane could be a priority board.

As I understand it, that is now 100 and the plane where I took recently all 100 of the priority boarders were (inaudible) privileged.

So actually the question is, how sustainable is that?

I thought the idea going forward was once we reach penetration that the yield management as those -- of these products will then give additional growth into FY '20 but that doesn't seem to be happening.

You seem to be just increasing the number that is available to you.

So how do we think about the ancillary growth FY '20 if you are at penetration already, ok, fine you have raised the bar but a little bit.

And then you've mentioned about Ryanair Rooms obviously being a small contributor the amount of credit that you're giving is reducing the contribution overall at the bottom line.

How should we think about 2020?

I think we should continue to see increased penetration of our passenger bases through 2020, Ruxand (sic) [Kathryn].

We have capped the priority boarding.

The priority boarding is capped at 100.

[It's a minor]it's a fraction over on 189.

That's a fraction over 50% but that was always the cap.

We haven't raised the cap on that.

The priority boarding is now the only way that you can add capacity.

You can bring to carry-on bags onboard.

So in many ways, the description of those priority boarding is slightly historical.

It's really the way that those customers who want to bring both carry-on bags onboard can bring both carry-on bags on board where they still enjoy priority boarding.

We have changed some of the pricing algorithms on the seat allocation.

There has been some yield management there.

And we are beginning to band the pricing of priority boarding.

So if you take that 50%, it's a fraction of 50% but there's one price for the first 20% to book, and there's a second price band for the second 20% to book it.

And then the third price for the last 10% to book it.

So we are beginning to ban -- they may stop reading yield management but there is clearly capable of being monetized in favor of encouraging people to take it, preferably at the time of booking.

But -- and then, the point I make is correct.

We are still building meaningful penetration growth per passenger on those other policy.

Yes, we're not making huge returns from Rooms because of the -- we're giving away most of the commissions.

But it is still building.

Car Hire is still building.

Fast Track to airport is still building.

Airport car park is still building.

Labs is doing a stunning job at very low cost of increasing customer uptake on these optional services, and we see that's continuing into the following year.

You won't see a big jump upwards.

There's no kind of killer conversion like we have with priority boarding this year, but you will have a full year penetration of priority boarding and the reserve seating into next year.

Okay.

And then just secondly on the net debt, Neil, are you able to give any guidance from what you expect the net to be for full year?

And just on the context of the other question on the share buyback, you said that, I think, previously, you said you're comfortable with the net debt position sort of EUR 200 million to EUR 300 million.

So based on whatever guidance you're about to say, I mean how does that sort of come into?

I know that Michael's comment around Brexit, but taking aside any hard Brexit, any incentivization or facilitation you used to share buyback just on the underlying basis?

Well, based on what the numbers are at the moment, Kathryn, we would expect to be somewhere around EUR 500-ish million on the net debt at year-end balance sheet and in very strong position.

There's over to the line of Mark Simpson, Goodbody.

Look, 2. One, positive transformational improvement is what the term expects to happen on digital platform by the year-end.

Can you give us a bit more specifics behind that phrase?

And then the other part, which is probably sort of take a level of disagreement to your comments in terms of December yields from the competition.

I mean, you could point to Wizz sort of the ticket RASK being up 5% in that quarter.

I mean, there is this perception and this perception reality is that there are people concerned about booking with Ryanair in the peak holiday season, and that this is the reason why there's this large spread between the performance of yields from your competition and what you revealed for this quarter.

I think there is a spread there but I'm not quite sure other than this idea that there is a slight biased hesitation why that spread is there.

Okay, thanks, Mark.

No, we won't give you any supportive details on the digital platform.

Because I'm not -- say, Kenny will be doing his big reveal on that, as it sometime it would be part of the customer experience, customer service improvements that we'll be rolling out some time at the end of or middle of end February, middle of March.

On the December yields, the kind of guidance you were getting for Wizz and EasyJet, if you go back to 6 months early, they were talking of fares much more aggressively.

Now to be fair, Wizz has caught a lot of winter capacity.

They grounded a considerable part of their winter capacity to try to manage their yields.

That's why their cost performance is particularly poor.

I mean, neither these 2 are able to manage their unit cost.

They're always dreadful.

The conference calls are always distracted by loss of positive and optimistic future sounds on fares and yields, but none of it ever covers their cost management.

I disagree, but we reserve the right to disagree with your call on customer confidence.

I mean, I point to the fact that if you take our numbers this morning, we have 9% -- 8% traffic growth in the third quarter, and load factor is unchanged at 96%.

Yes, it is at lower than previous air fares, but I get no sense of -- in the marketplace, there's any concern about passengers making bookings with Ryanair.

There was no threat of strikes over Christmas.

I suspect we have no threat of strikes through January, February.

And that covers a period when we did close bases.

If somebody, as I per guided -- Damian asked the question what was the impact of the base cost.

Actually, our base costs were tiny.

We closed Bremen, which was a 2-aircraft base.

We closed Eindhoven, that was a 4-aircraft base.

In the Eindhoven case, we flipped the aircraft out of Holland, and they yield the same 4 aircraft that is still flying through and from Eindhoven.

In the case of Bremen, the aircraft were flipped out of Germany.

But we allocated the capacity elsewhere.

So -- when we cut those bases, it's not like we sit that capacity underground and try and manage the business for higher fares, which is what Wizz seemed to have done this winter.

And yet, their cost performance was atrocious.

This is the airline that for 3 or 4 years, we've been promising that they'll overtake -- they'll beat Ryanair on unit cost because they've got some super dupery, biggery, shinery, new A321neos, and yet their aircraft, their ownership and maintenance cost keeps rising faster than their traffic growth.

These guys are adding more expensive aircraft, not less expensive aircraft.

And the cost gap between us and them continues to widen as it does with easyJet.

Despite the prices of the year, for we have had a step-up cost a step of change in labor cost not through unionization.

We had a step-up cost and labor cost to head -- or to get ahead of the unionization issue, which is why Eddie and the team have made such great progress over the last 6 months, putting in place agreements in most countries across Europe on recognition, and we're now working actively on CLAs.

We see nothing.

I mean, at the moment, if you take our advanced booking into this summer, they're in line with where they were this time last year for the summer of 2018 when we did have lots more threats for strikes at the end.

Frankly, I don't agree with the perception, and we -- our numbers this morning, I would say, undermine those perceptions.

We'll now open the line of Gerald Khoo at Liberum.

A couple of questions.

Firstly, you talked about anticipating more air traffic control problems this summer, but you said that you think it's going to be at its worst in the showed peak periods of April, May, June.

But can you tell us why you think it's going to be worse than in the peak of summer?

And secondly, I'm just wondering whether you could give an indication on where Laudamotion's average fares and ancillary revenue per passenger sits versus the group average, and whether you think that's preliminary at the moment, and whether those (inaudible) you think that they could converge on the average or exceed it.

On the ATC problems, I mean, I think the -- historically, the worse of the ATC problems tend to take place in that quarter, April, May, June, and we run on to the first half of July.

That's usually because the French starts striking around April, May and June.

We have still short staffing in the U.K., in Germany and the cars grew ATC that flows over in the magistrate, but the French tend not to strike in January, February and March.

We also -- then April coincides with the switch over to December schedule so it's always the month where ATC falls over because you get all the charge and capacity coming into the marketplace.

They're still understaffed.

You get all these euphemisms about ATC capacity and all the rest, which is just a euphemism for being short-staffed.

In our view, the air traffic controllers in France will then resume striking again through April, May and June, and that's why, typically, it tends to be at its worst through those 3 months.

It tends to improve into July and August.

Wouldn't because the capacity gets you -- they get a bit more used to the summer capacity into -- because the French air traffic controllers and their family tend to be going on holidays in July and August.

So they tend to stop striking in July and August.

And that's just the way it is.

It has been historically that way for the last number of years.

The French were at their most revolting in April, May and June but it is exacerbated by the staffing shortages, particularly in what is a very mismanaged service in NATS in the U.K. and in Germany.

I don't want to break out this is the Laudamotion pricing and ancillaries.

Lauda -- or I'd say, in general terms, the Laudamotion pricing is ahead of the Ryanair pricing, but we would expect it to be materially better than Ryanair pricing with -- during the peak summer months at those high-yielding German airports down to Palma.

I would expect out of Vienna, which is where there's a big push on -- I mean, Laudamotion has grown from 4 aircraft in Vienna last summer to 8 aircrafts this winter to 11 aircraft in the summer of 2019.

And it will grow again to probably 14 or 15 aircraft in the winter of 2019.

The Vienna yields at the moment are similar to Ryanair's yields.

But on balance, going forward, we would expect the Laudamotion yields, once the German market settles down and we build a large presence -- I mean, Laudamotion will be the #2 airline in out of Vienna this summer.

I think we will see the level appear to have given up on Vienna as a project, and we'll start to withdraw capacities in the Vienna market where they are, as is always the case, unable to compete with Ryanair or Laudamotion on cost or on price.

And ancillaries in Laudamotion is slightly behind Ryanair but catching up rapidly.

Some of that is historical.

They subcontracted out the in-flight sales activity for the first year of operation.

Ryanair has taken that over or it becomes more Ryanair-like from the 1st of April -- or 1st of March this year.

So I think you will see ancillaries in the next 12 months in Laudamotion to begin to mirror Ryanair ancillaries, but the underlying airfares in Laudamotion should be slightly higher, certainly through the summer period.

Some of the costs are slightly higher as well because they have kind of, I think, German airports and at Vienna, they're pretty close to published rates.

It is of the line of Neil Glynn at Credit Suisse.

The first one, just on the Airbus engagement you mentioned earlier, Michael.

Just interested, do you need to agree a plan with Airbus to seat the U.K. AOC with Airbus planes perhaps at some point over the next 5 years or so to drive proper engagement at scale?

And then the second question just on culture in the context of the group reorganization.

Obviously, the culture have evolved through this decade, through all of us getting better in Ryanair Labs, et cetera.

But just interested in terms of how you think about a more, I guess, clunky organization relative to the lean Ryanair in the past.

Do you need to focus on managing those businesses with the U.K. and the DAC business in particular via internal appointments?

Or how do you think about maintaining the culture in a bigger organization?

Yes.

The U.K. AOC, I mean, lots depend on Brexit, if there is a hard Brexit.

I think the U.K. AOC will generally be a reasonably small operation.

It's designed to be able to operate the 3 U.K. domestic routes and some U.K. non-EU route to U.K. to, say, Morocco or some of those markets.

I wouldn't convenience that being an Airbus fleet vehicle.

I mean, it will never be a large vehicle.

Hopefully, we won't need it at all because they will either be -- there'll be some agreements on a deal in Brexit that would -- I would have preferred a 21-month transition and a more orderly or at least have a trade agreement in place so there's little disruption.

So no, I don't think the U.K. AOC being an Airbus fleet.

Laudamotion clearly, will be an Airbus fleet.

And if there's some other small-scale M&A in the next 2 or 3 years, maybe that -- I think the advantage going forward with Laudamotion and with Ryanair is we now have a credible -- an Airbus operation, and we have a credible Boeing operation.

And therefore, if an opportunity came up -- but I mean, I sensed most these opportunities will come out of competition divestments.

Like if IAG had bought Norwegian, for example.

Norwegian has a large presence in the Spanish markets where opposite side you have IAG with Iberia Vueling and Iberia Express.

And I think that would have been -- there would have to be some competition divestments coming out of that.

So I see the small -- when I say small-scale M&A, I think it's much more us facilitating competition divestments of our other large-scale M&A a bit like all, which is how the Laudamotion opportunity cropped up.

We're not running around the place, trying to buy things that lose money that we can't turn around.

And the second part -- as regards the same part of the question, Neil?

Culture.

What was it?

Culture.

Culture.

I mean, look.

I think we would take the view, Laudamotion has a distinct somewhat Austrian culture.

They don't get our jokes.

They don't like the swearing.

And much the same I think in Ryanair, I saw it in Poland.

I would encourage each of the airlines that we want to encourage easyJet airlines to have their own culture.

We want to -- I mean, I see the strength of this, not unlike IAG being, you have individual our-line-airlines that compete with each other for capacity, for our capital allocations, and where an airline develops a cheaper way or a lower cost way of organizing itself, the rest -- the other ancillary group can't decide whether they want to take advantage of that or not.

So no, I don't -- I'm not a great fan of these unitary kind of cultures or one culture fits all.

We are Irish.

We take our beatings such as the rugby on Saturday well, and we learn to get on with it.

But again, Laudamotion, well, I think have -- it's an Austrian AOC.

They have an Austrian culture.

And I think certainly, Ryanair Sun is a Polish AOC and [increase certainly] has a Polish austere culture, and we should encourage that.

We should encourage those differences because out of those difference, I think, will come opportunity.

I think the critical thing that each of the airline CEOs will need to understand, though, that if you want to grow, you're going to compete with the other airlines for the next aircraft or the next 10 aircraft, next 20 aircraft.

So go ahead and demonstrate that you can get better growth incentives from airports or better handling deals, you can do a better job and then we'll reward that with more aircraft.

And no -- and again, I'm not like unlike the way IAG have.

I have always been impressed with the way Willie has managed IAG.

The turnaround for example of Iberia using different brands such as Vueling.

He has driven a lot of cost efficiency in Iberia and in BA.

And looking at kind of management succession, again, I think the way that Willy has taken sort of Alex Cruz out of Vueling and putting him into BA, and there's much more mobility between the management teams, I think also gives us an opportunity.

I think it's a big opportunity also for the management, the middle-management team in Ryanair where we have a reasonably stable senior management team, there was always a view here or kind of a bit of a pushback that my way forwards is blocked, I can't get further.

How do I rise through the organization?

And we will be encouraging more people, now you rise to the organization by taking on and you can become the commercial director in Laudamotion.

The engineering director In the Ryanair Sun could become the Ryanair engineering director, so I think it gives us more opportunity to cross-pollinate the middle-management or promote with the senior management position again, the way IAG have managed the development of each of their airline.

We go to the line of Johannes Braun at MainFirst.

Two for me as well.

So firstly, on that frame of agreement that you had with the German pilot union recently.

Just wondering how comfortable are you to reach a full CLA based on that frame of agreement.

I think you have a deadline for the end of this month.

And then secondly, on the new company structure.

Just curious what will be the headcount of the new management team within the new structure compared to the old structure if you include the operating units in that.

Okay, the union agreements, we're making good progress.

I think most notably, we have announced most recently that the Spanish cabin crew have signed up a recognition agreement.

We're moving to a CLA with those.

We are in active negotiations with the German unions on the CLAs.

There is a commitment there on their side that the agreement will be finalized by the end of the February.

I'm not -- wouldn't die in a ditch over a deadline at the end of February but we'd like to see it done by the end of February.

We have made some other agreements that we can't yet announce because -- but they are significant because they are being balances at the moment, and the unions have asked us not to comment on it publicly until they're over the line.

So we've made very good progress.

I think I have been struck by the amount of negative foreboding coming out of analysts and both media will never manage it and never get done.

And really, I think we made an extraordinary progress this winter with no disruption.

Does that mean we will rule out disruptions this summer?

No.

I think there -- once we have unions, there will always be a threat of disruptions but I think they will be far more threats than there will be active disruptions.

But I would suspect occasional disruptions around Easter or into this summer are likely.

And if they happen, we will manage our way round and very successfully as we've done in recent years or in over the last 12 months.

The new management team, it will start very small.

I mean, I think, generally speaking, it would be me, a group legal function and a group finance function.

That's just probably about 3 people and a dog.

And it will evolve, I think, over the next 12 months.

We're not going to have a big group office.

There isn't going to be a lot of infrastructure, a lot of the group service that will be, as I said, kind of Labs, some of the marketing will come out or will be driven here from Ryanair and will be then adapted or adopted by the other companies.

And then, where the other companies can operate or offer services at cheaper rates, we're moving some of the procurement out of Ryanair for example, into Ryanair Sun.

And we're certainly looking at opportunities to do more of the pilots training in Poland at the moment, where again, I think, one of the challenges for us in recent years, we have lots of Western pilots, many of whom don't like foresee themselves wanted to go and base themselves in Eastern Europe.

I think we want to be encouraging much more Eastern and Central European pilot recruitment and training over the next number of years because they are equally at home whether they are working in Eastern and Central Europe or crewing in Western Europe as well.

We now go to Alex Paterson at Investec.

Can you just remind me why the ratio of staff to aircraft at Laudamotion is much higher than for the rest of the group?

Is that simply a function of using a different aircraft i.e.

Airbus or Boeing?

Or is it just on integrated in the same way and therefore, the scope to improve on that, please?

Yes.

I mean, we inherited the group of staff are mainly on the management side.

We inherited that out of the divestment that came out of Air Berlin.

And it started off last year with a tiny fleet of just 9 leased Lufthansa aircraft.

In order to grab those slots, valuable slots in Berlin and Dusseldorf (inaudible) at Palma, we wait-listed 10 of our aircraft.

The management there have done quite a degree of pruning this winter, some of the middle-management people have been taken out.

And I would be very confident that as Laudamotion moves to a 30-aircraft fleet by this summer of 2020, none of which will be aircraft leased in from Ryanair.

It will be operating at similar staffing ratios, in fact, maybe staffing ratios to Ryanair.

The other issues that also with Laudamotion came, it has a maintenance facility there.

So Laudamotion has a -- Niki Lauda hangar about 100 engineering staff there.

So it was kind of -- because it came out of divestments, we took everything that was there.

We didn't have a choice so we take the maintenance space.

So it's a bit just distorted.

It will by the summer of 2020, be operating at the same staff aircraft ratio at Ryanair.

I mean between 2020 and 2019, you actually have an increase in staff per aircraft.

So you guys were about 47 to 52, I mean, even if you take that 100 off that maintenance it's still reaching 48 rest of the group for 35-or-so?

Yes.

I'm not sure those numbers are correct.

I mean, we haven't released staff per aircraft ratios for Laudamotion for 2020.

Maybe I am misinterpreting what you say jobs on the Laudamotion slide, Slide 11.

Look, I mean, that's more PR than anything else.

I mean, that's the second slide for the press town in Austria.

Don't mind our PR slides.

They're always good news.

So there may be a few disappointed applicants then?

And I am sure we'll be -- we have lost a very excited applicant.

But the actual -- the getting down to the detail of how many jobs we'll need -- how many jobs will be employed to deliver a fleet of 40, 50 aircraft.

Don't get too much deep over that at the moment.

It went down very well with the Austrian press, suffice to say.

Thanks, Alex.

You get the prize of the observant boy in the class this morning.

We now go to Malte Schulz at Commerzbank.

First of all, on your negotiations with airport.

You mentioned they were quite keen on getting more Ryanair flights to the airports.

Is there any confession we kind of expect?

Or do you expect a significant progress on your airport fees?

And the second one is on your new structure, if you compare to the IAG on the individuality of each airlines, should we expect to say, if -- and in the end also in terms of product difference between Laudamotion and Ryanair, Ryanair Europe for example, or even Ryanair U.K., or will it be mostly on the cost competition only, but the product itself will be always the same?

Okay, yes.

I mean, there's airports out there at the moment who are very nervous about the future of their Norwegian capacity, Germania capacity and some others there as well particularly airports who have Flybe as a large base.

And by the way, what we are seeing -- we are seeing very interesting growth opportunity there, airport pitching, not just at Ryanair but also at Lauda interestingly enough as well, seeing some very enlightened, I would have said forward-looking growth incentive schemes, which are now becoming I think more and more present, not just the secondary airports but also primary airports.

But obviously I can't give you any detail on that, but we are continuing to encourage that profit.

Laudamotion, for example, has written out to 50 new airports in the last week, talking about their growth plans for the winter of '19 and the summer of 2020, and it is meeting more than 20 of those airports in London next week.

So within the space of 7 days, more than 20 to 50 airports have taken up the opportunity to meet in London.

They wanted to do it in London so they can get everybody through the place in 2 days, and I think that's a reasonable indication of the appetite that's out there for growth.

In terms of new structure, I mean, yes, there will be some obvious product differentiation, I mean, the most obvious product differentiation is that Laudamotion with the Airbus aircraft and Ryanair, Boeing aircraft.

That I think will be the most significant product innovation.

I would expect on short, although, that most of the service elements will converge because where it works in 1 airline it should work in others.

Laudamotion will, in the next number of months, I think, be moving towards the Ryanair model of priority boarding and bringing out the priority boarding -- using priority boarding to restrict the number of people who can bring 2 bags onboard the aircraft.

It is facing challenges with the volume of free gate bags they are taking at the airport gate at the moment.

But that's not to say that there won't be different -- I mean, there's a difference for example, in the in-flight products.

There are some differences in the in-flight products in the Laudamotion but with Ryanair, I don't -- they'd eat more Rookworst of sausages or some stuff like that, we do the Al Paninis.

But around the edge, there'll be some differences.

They speak German, we speak mangled English, but also not, I think the aircraft will be the big area of differentiation and the product will largely, not exclusively, but we largely merge towards whatever is the most profitable lowest cost provision.

There are currently no questions in the queue.

So I'll just pass it back to you for any closing comments at this stage.

Okay, Neil, do you have any closing comments you'd like to make?

No, I think we've covered it off there.

So we will have the full year numbers out in May, and we will update everybody again at that stage.

Okay, and we do have a full roadshow in May where I think we'll put more meat on the bones of both customer service enhancement this year, the group structure and everything else.

Other than that, I will just conclude by saying, I think we're facing a year of strong traffic growth.

I will be cautious on the summer pricing.

Our unit cost performance into the next 12 months will be good.

Unlike most of our competitors, we can manage our unit costs.

And therefore, and I think we're excited about the growth potential in Laudamotion, particularly as we're now signing off aircraft leases reasonably -- opportunistic aircraft leases.

And Ryanair Labs is continuing to monetize what is a very successful platform, increasingly and improving both the customer communications and the ability to convert customers into taking optional services.

We are -- we have continued to have -- we have a weekly, monthly focus on punctuality.

Our punctuality numbers have significantly improved in recent months.

So we would be again, very worried about that period through April, May, June, when I think all the airlines are going to be in Europe as we launch our summer schedules are heading for a torrid time with the air traffic control service, that are not fit for purpose.

And we're still not making much progress with the European Commission of the European Union in tackling the French striking French air traffic controller.

And it's one of those -- I know there's an example of where Europe likes to put the best interest of tiny number of producers ahead of the interest of the millions of consumers, and flights will be delayed and canceled as a result of the few French air traffic controllers.

Other than that, we'll lead to be happy.

I think we have said, that was this morning, management succession has been addressed, board development has been addressed and therefore, I think, most of the kind of ancillary concerns of shareholders over the last 12 months have now been addressed.

The big issue for the next 12 months will be the rate and speed of airline failures and consolidation.

Clearly, if oil prices rise back towards $80 a barrel, that rate and speed will accelerate but nevertheless, nobody can compete with Ryanair's unit cost across Europe.

Nobody compete with our pricing, and we would expect to keep pushing competitors out of the way or seeing them withdraw capacity from those markets where they compete with us both through the summer of 2019 and into the winter of 2019.

Okay, I think that's all I want to -- Has anybody has any further or follow up questions, please direct them here to Shane O'toole, our Head of Investor Relations, to Neil who will be back here later on this afternoon.

And with that, if anybody wants to comment, see the operation or visit the operation please feel free to do so.

Shane will be happy to facilitate the visit.

Thanks very much everybody.

Bye-bye.

This now concludes today's call.

Thank you all very much for attending, and you can now disconnect your lines.