Ryanair Holdings PLC (RYAAY) 2021 Q2 法說會逐字稿

Hello, and welcome to the Ryanair H1 FY '21 Results Conference Call. (Operator Instructions) Just to remind you, this conference call is being recorded.

Today, I'm pleased to present Michael O'Leary, Group CEO. Please go ahead with your meeting.

Okay. Good morning, ladies and gentlemen. Welcome to the Ryanair Half Year Results conference call. You'd have seen this morning that we have released the half year results on the website. There is a comprehensive slide presentation and a Q&A on the website. So I would take it all that as read or seen. And then I'll just give you some comments on top of that. So as you've seen the results this morning, covered a 6-month period to the end of September. A first quarter, we were essentially grounded, successfully returned to service in the 1st of July. We've run with about 60% of that capacity through the summer season, following all the ECDC and EASA health measures. And that has been successfully implemented. Conscious of the need to prioritize the balance sheet and cash, in September, we raised EUR 1.25 billion, a EUR 400 million equity placing, which was led by the management team. And we've also raised an EUR 850 million eurobond. That means that today, we've got -- the half year, we've got closing cash position just at over EUR 4.5 billion. We will need that because in the next 12 months, we have over EUR 1.5 billion of debt repayments due. The U.K. government, EUR 600 million loan is due for repayment in March. And we have our 2014 -- the first of our commercial bonds, the 2014, EUR 850 million issue is due for repayment in June.

Some of the key challenges over the last 6 months, the Ryanair customer service teams and labs have cleared an unprecedented backlog of customer flight changes, COVID-19 cancellation refunds and voucher issues. All of that backlog has now been eliminated. We have refunded our vouchers of EUR 1.5 billion worth of bookings. We have no backlog in refunds now. And if there are customers out there who still haven't received a refund, it's because they haven't requested it or they were one of that small number that are stuck, having moved and made bookings through screen scraper -- unlicensed screen scrapers, where we have fake customer contact details or fake payment details. And we've set up a procedure where they can apply directly to us and bypass the overcharging scam artists' screen scrapers and obtain their refund directly from us.

COVID-19 crisis though has clearly caused the closure of a number of EU airlines, huge long-term capacity reductions that many of Europe's legacy carriers who are receiving unbelievable quantums of state aid, Air France, KLM, Lufthansa, receiving over EUR 10 billion each, Alitalia, that over EUR 3.5 billion. Similar sums or recurrent sums in SAS state aid and others. We believe this, indeed, the state aid will distort competition for many years to come and allow those flag carriers, failed flag carriers to engage in below cost selling for many years. We have already initiated the first 2 legal cases in Europe against the SAS state aid and the French refund of aviation taxes, but only to French airlines. We expect to receive decisions on those cases this side of Christmas.

However, I think it's important today we don't get stuck in the details of -- the short-term kind of details of the current situation with Europe moving back into second lockdowns. There is a bright future ahead. We have taken advantage of the COVID or used the period of COVID-19 crisis to radically restructure our cost base. We have now reached agreement, at least, say, with almost all of our pilots and cabin crew. That will involve painful pay cuts, and productivity paying reductions through the winter period, but it's a much better alternative than job losses. We have minimized the number of jobs losses we have, and we can't put out further job losses, particularly at some bases in Spain and Portugal, where -- Belgium, where mechanical unions, frankly, have their head in the sand and are still trying to insist on not taking pay cuts or opposing pay cuts and in those circumstance, I think it's inevitable, we will have job losses at some of those -- in some of those smaller countries.

We're also looking to work in extensive negotiations with airports about growth incentives, returning or where we can return traffic quite quickly. I think we took great, I think, comfort from the recent experience with the U.K. Canaries market when the U.K. added the Canaries to their green list 2 weeks ago, our daily target of 2,000 bookings was 40 -- was exceeded by a 14 fold, we took 28,000 bookings in the first day, 25,000 in the second day. And that, I think, if anything, confirms our view that there will be a very strong snapback. There is huge pent-up demand for air travel across Europe, particularly short-haul European Air travel. We think the long-haul recovery will take longer. But the short-haul snapback will be strong and it will be immediate, and we are well placed to cater to that.

Again, we saw, for example, tour operations, charter airlines being slow to respond to that reopening of the Canaries, where we were able to add extras for Christmas travel almost immediately and responded strongly to that.

A couple of other key themes. We are clearly in continuing dialogue with our partners. Boeing. We are now confident as are they and the FAA and the asset that the MAX 8 will return to service probably sometime in late November, early December. That, we believe, will lead to our aircraft, the MAX 200, the game changer being certified, probably in early 2021. We are hoping to take the first delivery of those aircraft at the end of -- sometime in February. That would allow us to take, I mean, we have a limited capacity to take new aircraft deliveries at about 8 months. It would allow us to take something of the order of about 30 aircraft between February and early summer. That figure might fall to 25 or so, but it depends on when we can get the first one.

We have extensive MAX simulators up and running and extensive training programs for our pilots. We still think this is a great aircraft, all of the pilots who have flown this and flown the sim think a terrific aircraft. Operationally, they understand it well. It's flies and handles very well. But from a financial perspective, it gives us 4% more seats and a compelling 60% lower fuel consumption per seat, as well as delivering 40% lower noise emissions. We think that the game changer aircraft will be a key component of us significantly lowering our aircraft ownership cost base for the next number of years. And I contrast that with many of our competitors who are engaging in sale and leasebacks of their fleet at distressed prices and paying high financing costs, which will significantly widen the cost gap between us and all other EU airlines for the coming -- over the next, I think, 5 or 10 years, widening the gap between Ryanair and our competitors across Europe.

We will, therefore, I think, respond our remerge of the COVID-19 crisis with a lower cost base, with a compelling growth model, with significant incentives in place across many airports, many of whom want to recover their lost traffic quickly. And those that are -- come up with the best incentives will recover their air -- will recover that traffic faster than others. And in a marketplace in Europe where structurally, a huge amount of capacity has been taken out and will not return, we aim, particularly with the game changer aircraft order to be able to fill those gaps and deliver or restore traffic at many of Europe's airports.

As the risk of a no-deal Brexit remains high, we hope before the end of the transition period, the U.K. and Europe will at least agree at trades deals, cover air travel. They had a bilateral arrangement agreed before the end of 2019, which was at the first, at Brexit, but we believe that there will be a trade deal, at least one that will cover air travel that will allow the free movement of people and the deregulated airline market in the U.K. and Europe to continue.

In terms of outlook, and I know we have lost the question. It is impossible in the current climate to give you any kind of outlook for the remainder of this year. You will have seen over the weekend, the U.K. returning to a second lockdown. Ireland has -- was already entering a second lock down 2 weeks ago. We draw your attention to the fact that lockdowns are completely ineffective. And I would quote the WHO, who have said that governments should do everything possible to avoid brutal lockdowns because it doesn't actually get rid of the virus. We've already learned that from the first ineffective lockdown, and we'll learn it again for the second ineffective lockdown.

Nevertheless, I remain an optimist. I do take my lead from Dr. Fauci in the U.S. who has predicted that there will be one or more vaccines probably approved by the health authorities this side of Christmas. The key issue then is when will there be commercially available or widespread availability of a vaccine at least to cover the high-risk groups, the over 70s, the people who are working in the health service and the nursing homes. And we would hope that, that will be by the end of Q1 or Q2 of next year. That would allow us at least to rescue most, but not all of the summer peak travel period. And hopefully, then we see finally leave the COVID-19 crisis behind us. But at this point in time, as you know, our last guidance, which we gave out in October was for traffic of 38 million for the remainder of this year. I think that will probably get paired backwards, but not as a result of the second wave of lockdowns, we've been asked frequently this morning, will we be canceling more flights to and from the U.K.? The answer is we don't expect to.

We had already done severe surgery to our November and the first half of December flight schedules. It is likely, though, that we will not be able to run a 70% load factors through that period. We might see the load factor fall 60%, there might be some judicious capacity culling within that. But we're talking maybe a couple of million passengers below the 38 million. But -- and we will continue to manage that on a weekly basis. FY '21 will continue to be hugely challenging. And in fact, for that reason, we can't provide any updated guidance. We do expect to still carry 38 million or slightly less than maybe it's between 38 million to 35 million passengers in FY '21. A lot depends on how strong the Christmas is and there is reasonable bookings there for Christmas, but it depends on whether European countries are out of lockdown at that point in time or not. We do need an end to these failed lockdowns. We are calling on European government to be much more aggressive on test and tracing. For example, in Ireland where we're testing -- have a capacity test, 100,000 people a week. We should be testing 1 million people a week and that's what this government in Ireland should have done during the first lockdown back in the spring. But unfortunately, in Ireland, we're being run by a bunch of doctors and not by a government here, and the doctors continue to mismanage everything from nursing homes to wheat factories, to face masks, as well as lockdowns. But nevertheless, we are where we are and as an airline, we'll have to continue to try and manage our way around it.

Our key objectives during this period have been to conserve cash, strengthen the balance sheet, preserve as many jobs as possible. Even if the price of that job preservation will be pay cuts for management for our front-line people, less flying hours for our frontline people. It's better that they are less busy during this winter but still in a job so that together, we can all respond aggressively and grow strongly once we emerge out of the COVID-19 pandemic.

The Ryanair Group will emerge from this period with a lower cost base, a stronger balance sheet, we will be able to fund lower fares and have new lower-cost aircraft to capitalize on these growth opportunities, which will inevitably emerge once we emerge from the COVID-19 pandemic. Neil, do you have anything you want to add on the MD&A?

I don't have a lot to add, Michael other than thank you for all the work that you've do on the cost saving over the past number of months. I think that came through in the half, where we saw operating costs down 67%, albeit not enough to offset a 38% reduction in revenue, but we worked very hard to improve what was already the lowest cost base of any airline in Europe. The balance sheet, also underpinned by the equity raise and the eurobond that we did last month, put us in a relatively good position as we reorder the next 12 months or so, all refinancing risk now removed. I would flag that there was some more hedging effectiveness. In the quarter. We took an after-tax charge of EUR 214 million. It's primarily due to the fact that we could pull back our winter capacity from 50% to prior year's 40% prior year capacity. And so in effect, real -- moving what would have been a charge in Q4 or Q3 into the second -- sorry, the first half of the year. We're probably coming near the end of the hedging effect and particularly as we look into next year, where we're relatively under hedged as we wouldn't anticipate any hedging effects to next year. From a cash perspective, we've already settled about 70% of the adverse hedging this year. So balance sheet in good shape, cost base, getting better and MAXes hopefully coming next year, which will improve the cost base further.

Okay. Thanks, Neil. We'll open up for Q&A, please. We're going to restrict everybody to 2 questions. And the obvious ones, the first ones, which would be, what will the yield be like and the traffic be like next year is we don't know.

Go ahead, Lee.

(Operator Instructions)

Our first question comes from Jarrod Castle from UBS.

Just kind of slightly -- nuances on some of the stuff you've already said on the Q&A on your website, but you obviously had some good cash control over the summer. And obviously, we'll burn through cash as you normally do over the winter. But can you potentially give some kind of range on what you're thinking this will do to the balance sheet as you progress through winter? I'm not asking for an exact number, but just any color that you can give, Neil, Michael? And then secondly, just again, not asking on yields. Otherwise, I know you're going to get cross with me. But in terms of your willingness to achieve a 60% to 70% load factor, as you said, there's pent-up demand. But would you be prepared to act aggressively on yields to achieve that load factor? Or is it a case of being conservative in the current environment at the moment on maybe some people you can't even motivate to fly given the current environment?

Thanks, Jarrod. Two quick responses to that. I mean the difficulty for us, it's impossible to give you any guidance on cash flows through this winter. The challenge there is, normally, in a normal year, we would have a huge surge of bookings and cash coming through in January, February, March, as people make their Easter holiday bookings, their summer holiday bookings for that Christmas onwards period. And we have just no idea. I mean, I think it will be strong, but we have no idea if there is a third lockdown going on in January or February, where we see that normal surge of cash flow and summer bookings coming through. There is no doubt at the moment that the booking profile is incredibly late, which is why we think there will be very little impact on us from the government announcement over the weekend. And November is already reasonably well booked. But -- and I think it's a judgment issue there. Normally, what we've done through this crisis and reasonably successfully, we said, we will roll with a 70% load factor. And if we don't think we can achieve central factor, we cut the capacity. We will use pricing to deliver those. But nary -- not -- we don't -- we're not giving away [19] EUR 1 airfares. We're not doing sort of free travel. There's no point. And the ancillaries are strong. So where there's reasonable pricing, and we think there's a reasonable prospect of operating to a 70% load factor, we will do so. In fact, this week, we'll announce our October traffic statistics. The load factor in October was 73%. So going to wait. And that is a -- the reason we do that is, one, obviously, to keep the aircraft, the pilots and the cabin crew flying. But two, it also means operating in those kind of load factors. We're about as close to breakeven and as close to kind of cash neutral as it is possible to get in the current climate, mainly allowing for the fuel hedging effectiveness. So that's a reasonable way to go forward.

We have a decision to make in November, which is why I think we will let the load factor probably decline to about 60% in November, just because the bookings in November are so weak, we don't want to collapse the business entirely. We would like to keep that kind of those skeleton sites operating. And we aren't down to kind of skeleton flight levels across Europe. But there is demand for those flights, people are moving for work reasons. People -- there are off today to work in the health services across Europe who are traveling to and who commute using Ryanair services. And we think that will continue. So will we continue to -- are we dumping prices to maintain a 70% load factor? No, we are clearly below our budgeted yield though for the month of September and October. But we are -- it is a reasonably sensible -- and where we don't think we could get to a 70% load factor, we would take out that capacity. That's why we've already cut -- or we've already announced we're only doing 40% of our normal winter capacity. That is less in November. It's a bit higher around the Christmas period. But it is a very moveable beast and the real challenge is we have no idea what will happen to the bookings over Christmas and into the January, February, which is normally one of the high points of the booking period. Our busiest week for bookings annually is always that second or third week in January, and we just have no idea yet what that will look like when we get there in January. Next question, please.

Our next question comes from Daniel Roeska from Bernstein.

In your comments this morning, you highlighted the opportunity for growth as other airlines retreat over the next couple of years. Why haven't you announced any new bases or specific growth plans yet kind of compared to others? And then staying on that topic of growth, could you comment how you're currently thinking about deploying that growth in the upcoming years? Is it more strengthening existing bases or new bases? And if it's new bases, kind of which geographic focus do you think can yield the most attractive return for you?

Okay. Thanks, Daniel. We have announced 1 new base which is both a -- outside Paris opening in late January, but it's only a 2- or 3 aircraft base. I mean, the reason we haven't announced more here is because we haven't concluded negotiations with airports yet. I mean, there are extensive negotiations going on really across the piece, across Europe. In a lot of cases, those airports don't know how much capacity they're actually going to lose. I mean European airlines are allowed to hold onto their slots. The use them or lose them has been suspended for this winter. It will probably be suspended 'til summer 2021 as well. But if you look at some of the legacy airlines like Lufthansa, KLM, Air France, who have retired a huge amount of their capacity of 25%, 30%. We think a lot of that won't reemerge or won't be restored. And there will be enormous growth opportunities for us. Now clearly, those airports who already been most affected by closures, for example, to fly the Germanwings level they're already quite aggressive. But there's more to do. And how will we deploy the growth at the end that will be opportunistically. We will deploy the growth to those airports who want to grow or return their rare -- restore their traffic fastest. And they will be from our largest airports at Dublin and Stansted down to our smallest airports and many new airports who -- where we presently don't fly.

The more the airport works with us to have a return or an incentive, even if it's a short to medium-term incentive, that's where we will deploy that capacity. We will be opportunistic and entirely flexible. But it will spike back very quickly. I think the experience we had with the Canaries traffic 2 weeks ago is an indication of the level of pent-up demand there is, particularly for short-haul European air travel.

Mean I think any people who have been locked up for the last -- being locked up over the last 9, 12 months, there is an enormous desire for them to go traveling again or to bring the kids on holidays, go back to the beaches of Europe. And I think that would be reflected in very strong travel patterns into next summer as long as there is a number of vaccines are announced and there is some reasonable availability of vaccines by the end of Q1, Q2.

You talked about the hub-and-spoke carriers is, in principle, is the hub or the spoke more interesting for you?

In principle, Daniel, what's more interesting to us is those airports who offer us the lowest cost base. We don't really care. I mean, we're at hub airports and we're at spoke airports, but we are very minded to grow back very well. And I know -- I'll give you an example, for example, you take Stansted, which is our largest airport. I feel no great compulsion to restore traffic growth very rapidly as Stansted. If, for example, there's a unique opportunity in Spain or in Italy or in Germany, or particularly in the area in the central and Eastern European airports. Will we return and reopen at Stansted? Yes, of course, we will. But whether we snap back from prior to the shutdown, we're nearly 30 million -- close to 30 million passengers in Stansted. Whether we go back there -- I use it only as an example. It's not the nature of the disclosure with Stansted. But whether we go back to 25 million passengers in the first year or just 15 million passengers in the first year will entirely depend on the nature of the discussions we have, not just with Stansted, but also with the other airports across the piece. And we're certainly seeing quite aggressive negotiations or offers on the table to us from a -- particularly a lot of central and Eastern European airports, who've been very badly, I mean, devastated by much more uncanny cutbacks and lockdowns by their lovely governments.

Our next question comes from Savanthi Syth from Raymond James.

I have 2 questions. Assuming you get the 30 MAXes planned. Just curious what your CapEx for kind of second half will be and maybe generally, what the next couple of years might look like? And then just given the near-term lower cost and if you're -- assuming you get the MAXes expected, just curious what level of operation you need to get back to in order to achieve the kind of 30, 31 per tax cost you achieved in prior -- prior to this crisis?

Well, I'll come back to Neil on the CapEx question of that. I mean, I'm not particularly worried about -- there isn't an absolute number on cost per passenger at 31. Like, I think what we emerged -- are just our cost per passenger will be meaningfully lower than it has been historically. We will have lower pay, lower wages, you will certainly have much lower fuel, we will lower aircraft costs, lower airport costs. And I think we'll have higher yield because there is no doubt that there will be constraints on capacity coming out of COVID, and maybe there is a vaccine debate in Q1, Q2. There will be a very strong summer period next summer. Now I know that's a big if. But there will be a very strong summer. And we -- the airlines across Europe would not be able to respond or restore that capacity quickly. Again, I go back to the example 2 weeks ago when the Canaries opened up. We were back there. I mean, it's incredible. We finished flights within -- I mean, we didn't even know before the Canaries government has announced that the Canaries will see the huge spike upwards in bookings. We were adding extra flights into the Canaries for the Christmas period within 24 hours. Tour operators, charter airlines and some of the legacy carriers were scrabbling around, not able to add flights. They've already cut their schedules. So I think you will see us respond very quickly, but I think pricing in a recovery environment would be much stronger than we have had historically, because so much capacity has been taken out of the system. But are we -- is it [31] or [35] or [27], no idea. It would just be lower than we had in the past. Neil, CapEx?

Yes. Thanks, Savi. So there won't be a huge amount of CapEx in the second half of this year. In fact, most of the CapEx would be really maintenance-related and even at that, where we're doing less lines, so less on the maintenance side, it's too soon to give numbers on what the Boeing CapEx might be because we haven't finalized delivery schedules. So I'm not going to give CapEx for the next few years. But hopefully, in the next few months, we'll have come to some kind of conclusion we're following and we'll start giving guidance at that stage.

Our next question comes from Mark Simpson from Goodbody.

Two questions. You're obviously not giving sort of firm guidance, but you have talked in the Q&A about a 50% to 80% of summer '19 capacity potentially being your target for the summer '21. I'm just wondering what the variables are between that range? And is 80% the max that we should assume? And then talking about MAX, obsessed by the idea of you taking MAX 10 in the future to further drive down your unit cost. Can you maybe comment around your view of the MAX 10 and what kind of ambitions you might have behind that? So now I'm sorry to squeeze 1 last quick clarification, Neil. TCFS, you've got it down as of March repayments. But is it likely that the government will roll that out for at least another year?

Okay. Neil, answer the last question. Let me do the first one, we're giving a very wide range, 50% to 80%. The real bearings though, what drives that is availability of a -- widespread availability of effective -- or multiple effective vaccines and how that will impact government's ability or willingness to lockdown economies or reopen economies. There's clear European -- many of the Continental European economies are hugely dependent on travel or tourism. Even Ireland, which is an island off the periphery of Europe, is usually dependent on travel and tourism, but that hasn't stopped our government basically shutting the entire -- cutting the entire -- shutting the entire islands down. It's easier to get out of North Korea at the moment than it is off the island of Ireland. And so the wide range of 50% to 80%, which is -- that's over the full year that we're talking like something like 75 million passengers to maybe 100 million, 120 million passengers is entirely dependent upon the timing and availability of widespread vaccines in Q1 or Q2 next year.

Is 80% our max? We think so. I mean, we think even if there was a virus that they are -- not virus, a vaccine available by the end of Q1, we would still struggle -- I mean, there's just because of the obligation of layout capita or high recruitment and training, promoting pilots, having enough lines flying this winter to complete all the trading we need to do. We think that it would be tough to get any higher than 80% of our 2019 max. We could overweaken that extras and things like that. But we don't think that there's any prospect next year that we would add, carry more than 120 million or maybe 130 million, 125 million passengers or being if -- there was a vaccine widely available in the first quarter. But clearly, the earlier a vaccine is available, the higher that number will go. And we're guessing, we're standing in the dark, but that's the best we -- I told we can give you. On Boeing -- of the MAX 10, we have continued our intensive discussions with Boeing around compensation, pricing of our existing MAX order. We are looking at additional aircraft orders, most, I would focus around the MAX 200, the game changer, which will significantly lower our operating costs going forward for the next number of years. Boeing are not in a position to engage in discussions on the MAX 10 at the moment. They have pushed back the production delivery of the MAX 10 by anything up to 2 years, I think, Neil, is it?

Yes.

About 2 years. And so they're not really at a point where they can give us any deliveries of Max 10 or discuss pricing. We have, though, and we've agreed with Boeing that we will be first in the queue when it comes to a discussion on Max 10 availability and pricing, and it's certainly something we would be looking at going forward. But we were already the lead operator, the lead customer for the MAX 200. We have incredibly favorable pricing from Boeing as a lead customer of the MAX 200. And the fact that they give us 4% more seats at no extra cost and 60% lower fuel will transform our cost base for the next number of years. Competing as we will be with airlines who've been doing sales and leasebacks, selling aircraft at such prices and leasing them back at what are very disadvantageous financing costs in the current climate. And Neil then on the TCFS.

Mark, our intention at the moment is to pay that back in March. But you're right, we don't have to make that decision until we get into kind of the back end of March. And there is a possibility, if we want, to roll it over for the year.

Next question comes from Stephen Furlong from Davy.

Yes. I presume revenue management systems are pretty redundant at the moment. But I was just wondering how -- the importance of Ryanair labs and the work it's been doing during the crisis. It -- just might talk about that. And then maybe just go back on the competitive landscape into next year. It seems that there'll be huge chunk of capacity permanently out of the market. I don't know if that's your view, like the likes of which, maybe growing Gatwick or domestic Norway, maybe. But beyond that, would you agree that a lot of the capacity coming out would be permanent? Or do you think it's more -- or you think it would come back post-crisis -- pan -- crisis?

Okay. I have Eddie Wilson here, the CEO of DAC. So I'm going to ask him to just give his view on the revenue management systems and pricing. Just on the competitive landscape, I mean, you look around the system, we think at best, we'll only be able to operate 80% of our capacity soon next summer. Air France, KLM already announced 20% capacity cuts. Alitalia are focusing strongly on a number of routes massive short-haul capacity cuts. easyJet with a 51 less aircraft by September '21, no growth thereafter to 2025, IAG, 68 less deliveries over the period 2022, their winter capacity cuts at 70% and it's all across the piece. If you look across who has aircraft orders into next year, most have been deferred out of 2021 into 2022. With -- as far as we understand, to have about 19 aircraft, so it's reasonably small compared to was -- we'll take delivery of something of the order of over 30 aircraft. We will be the airline with the largest additional or spare capacity into 2021. And we are certainly, I think, the airline that most of the European airports are looking to offer traffic restoration pretty quickly. And we will be delivering that traffic restoration on meaningfully lower cost aircraft with much lower operating cost. I go back always to the slide on our investor presentation on aircraft ownership costs. We keep hearing from Joe Varadi of Wizz that they'll have lower aircraft costs than Ryanair yet every time we add an aircraft, the gap between Wizz and Ryanair gets wider and wider. We will be taking lower cost aircraft, he's taking higher cost aircraft and the gap between us gets bigger and bigger. And Eddie, I guess, will talk on revenue management systems and what's our philosophy in terms of pricing and bookings going forward.

Yes. I mean, I think if you look just -- Steve, you're talking there about labs before I get into that, I mean, like we have -- our ability to leverage labs during this crisis has been phenomenal, particularly on the customer service side and our business intelligence teams, they were able to sort of be very flexible on actually coming up and managing that amount of refunds and the ability to get ventures and things like that. But clearly, the -- we are -- the curves on the revenue side are completely different now. I mean, there's not a lot more closer end bookings because people are concerned about whether there's going to be lockdowns or whether they can travel or not. And we are working with our revenue management and people in labs on that as how we're going to adapt that going forward because it's going to be, particularly when bookings start to come back in, how they -- our traditional sort of curves won't necessarily be applicable. So there's a lot of work going on there at the moment. The good news is that the ancillaries are still -- were both particularly on -- at seat from priority boarding and less so on the in-flight. But having that amount of people here and being able to use them has been a real benefit for us, and we're learning a lot from this as to how people are at -- the profile of bookings.

And to be clear, like, Ryanair labs has done a remarkable job, and we had a backlog of nearly $1.5 billion of refunds, and they have now eliminated that backlog. We've issued refund vouchers to all of the customers who are affected by the COVID-19 cancellations. You will repeatedly hear quotes on the BBC, talking about when we'll eliminate the backlog. It's done. The only people who are left out there are people who haven't applied to us directly for refunds, but it's been done and labs' done a remarkable job. John Hurley is here, smiling furiously at me. But they've done a terrific job. And going forward, as Eddie said, it is the nature of the beast. We now have a very narrow booking window, typically about 28, 30 days out. But we are much more flexible in the way we can deploy the aircraft. If we think we're going to be below 70% load factor more than 2 weeks out, we'd take out flights. The challenge for us, in most cases, actually one of the flights, one of the -- one flight of the two-flight, that rotation will have a load factor of higher than 70%. And so it needs to operate.

Our next question comes from James Hollins from Exane BNP.

Just wondering on redundancies themselves. I know you're talking about mainly focusing on pay cuts in 5% to 20%. I was wondering, I think you're staff base was 18,000, what we should be thinking about for, I guess, the end of this fiscal year? And secondly, probably for Neil, on the Boeing side of things. I know you're not talking about compensation. But obviously, you've started that process, EUR 250 million coming in already. Is the best way to think about CapEx next year, the same southwest. You basically said that we net 0?

Okay.

On the CapEx, the discussions are ongoing. Some of that includes the timing of cash flow, some include -- we're finished on that but it's very difficult to give you numbers, but we will be trying to keep as much cash in the business for as long as we can, James. I don't think there's much more color I can give you this side of announcing what we finalized, we're following on that front.

Yes, and on the headcount issue, I think it's not helpful to focus on job losses, although there is likely to be more job losses this winter at those number of bases or cabin crew bases in Portugal, Spain and Belgium, where we haven't got agreements. Where we have reached agreements with all of the pilot bases across Europe with the vast majority cabin crew bases, that we're reasonably confident won't be any more job loss. We are participating in furlough schemes where they are available. In some cases, in the U.K., for example, the furlough scheme is punitive because the employer has to pay out of the first third of the salary. And we simply can't participate in those, we won't fund those kind of salaries. But we are keeping pilots and cabin crew flying, admittedly on the basis of we're paying them less, but that's better than sitting at home on the dorm in the U.K. this winter. It's more helpful, I think, to look at it in the round. And that is in the half year, the staff cost decreased by 60%, which was due to flight hours, recruitment free, some job losses. I mean, more of the job losses have been in head office and in overhead functions rather than in pilots, cabin crew, engineers, and participating in the government support schemes. And I think that will continue to be the case. We are very conscious. I say, ending, our utmost priority here is to keep the aircraft fleet flying even if there are these planes where we do1 or 2 flights a day through the winter, keep as many pilots and cabin crew current as we can so that we can pounce on these growth opportunities and return quickly to more normal scheduled levels of flying as soon as there's a vaccine or they -- where we emerge out the end of this COVID-19 crisis. And an awful lot of our competitors, for example, who have grounded aircraft for 6, 9 months, their pilots would have gone out of hours, their cabin crew would have gone out of hours, their aircraft will need a heavy maintenance shop visit before those planes can come back in the air, whereas we're keeping everything ticking over while still delivering 60% to 70% reductions in our total payroll costs. So James, I guess, the question is, don't focus on the headcount to the moment, focus on the payroll cost savings while still keeping us there, keeping us there very flexible and keeping our pilots and cabin crew current.

Our next question comes from Jaime Rowbotham from Deutsche Bank.

So just -- you've alluded to the U.K. government, 1 minute, it puts Canary islands on the safe list and you take a load of bookings. The next, it imposes a national lockdown and tells people not to travel unless for business purposes. Is there anything more you can just say in terms of what you're going to have to do now to manage this latest development in Q3 in terms of capacity and also things like refunds? Second thing, a more simple boring one. In terms of the Brexit-related risks you've highlighted, could you just remind us what percentage of your current shareholder base is U.K., please?

Okay. Let me add -- do the first one first. I think Q3, we'll manage it on a day-to-day basis. Yet, still, the U.K. government is -- has whiplash from the numbers of U turns they're performing not just COVID but on Brexit as well. And we think that the capacity, we've categorized it to 40% of prior year, they -- close-in bookings are reasonably strong, but anything out 6, 8 weeks or more than that is weak. That means we don't have a big refund liability out there, it's not like we were back at March this year, but we lost the bookings to the summer, therefore a huge contingent liability. We don't have that at the moment. There is a spike of bookings at Christmas. When they add the Canaries to the list, we saw a big surge in bookings to the Canaries. But it was largely for people who would normally go to the Canaries with their families at Christmas and New Year. There isn't a lot of people out there booking on -- travel out with holidays booked in the middle of November because schools are open. There's no -- so what we have booked for November is largely business or essential travel anyway. And we will expect most of that to travel. But I would be perfectly open. The 38 million could fall 36 million. It could fall 35 million. We don't know, but we're down at pretty much rock bottom levels of traffic and capacity at this point in time. But if there's any kind of error or any changes, there would be changes to the slight downside. On refunds, we have almost no refund liability left because we have no forward bookings out there. And I've made clear this morning in the PR, whatever price we're operating, we'll operate. People do not have a refund entitlement on those flights. The flight is operating and you don't have a -- you don't get a refund, although you can take advantage of our change, we've waived change fees for any of the bookings that have been made recently. That will then take 'til the end of January of this year. Which is one of the reasons why we might have a slightly lower load factor in November, it might fall to say, 60% from 70%. If it begins fall less, then we'll take out some capacity. So we have a very flexible cost base at the moment. We have a very flexible capacity base. And I think if you look at everything we've done since we went back flying on the first of July, Ryanair is the only airline that delivered a 70% load factor every month since the first of July. We look at easyJet load factor, fell 54%, Wizz' load factor down around 64% last month. We have delivered -- we deliver exactly what we say we will, and we have a very flexible capacity and cost base going forward. On Brexit, who the hell knows. I mean, the best thing we can say is, look, there was a unilateral agreement to cover flying announced between the European Union and the U.K. government before December of last year. It obviously wasn't needed because there was a transition agreement. We suspect there will be some kind of agreement that will be cobbled together because Johnson & Gold will U turn again. Having lied on just about every aspect of their Brexit policy. But if there isn't, I think we don't factor in our -- the EU and U.K. or the EU non-EU is still running at about [54, 46] we do have the provisions in place to this -- to remove the voting right from non-EU shareholders in a hard Brexit, if there isn't a trading recovery in aviation. But we would expect to be well recovered, but we're not breaking out what our U.K. shareholding is. It's not a thing we've ever given out and nor would we start now. I'm just going to say, Juliusz, I think you want to add on the Brexit dimension, Juliusz Komorek, our group CLO.

Just one thing perhaps, which is that if there was no-deal between the U.K. and EU27 post January '21, we will activate our Brexit ownership and control solution, which Michael described. The essential element of which is its application of voting rights for many new shareholders. And that will protect our EU licenses, which we have in Ireland, Malta, Poland and Austria at the moment. And we would hope that this application will be a temporary solution until the number of EU27 shareholdings exceed 50% again.

Our next question comes from Muneeba Kayani from Bank of America.

Can you talk a little bit about how you're thinking about hedging? You said 40% for FY '22, kind of what's the assumption -- base assumption for that 40%? And just a clarification on ticket refunds, the EUR 1.5 billion, was that largely all in 2Q?

Sorry, maybe you broke up there a just repeat that last question?

Yes. So the ticket refunds, the EUR 1.5 billion, was that almost all in 2Q? Or was there a portion in 1Q as well?

Okay. I'll ask Neil to answer the second part. Hedging is about -- look, we would love to do any more hedging into next year, not because we don't fundamentally believe in hedging, but simply because the volatility in oil prices means we really should -- I mean, I think we should hold out and hope that low oil prices will remain reasonably low. We are about, what, 40% hedged into next year already.

Which would be the upper end of our tax forecast.

Yes. Pardon me?

That would be based on the upper end of our tax forecast.

No. It wouldn't. 40% hedging. The net forecast is at 72% of 50% to 80%?

Correct. So at the upper end of that.

No. Sorry, we have about 40% of fuel hedging. We don't see any circumstance in which we won't be operating about 40% of our capacity through next year. We're already operating about 40% this winter, despite the fact that there are more lockdowns in place. So we certainly don't see any further fuel hedge ineffectiveness into next year. Would we be willing at this stage to increase that hedge position? No. One, because we don't want to take a risk; two, the balance sheet, while strong, we don't want to put any -- under any further strain by extending our hedge lines; and three, frankly, I think when some economic activity resumes, we will see continue, I think, the continuance of heavy oil supply. And hopefully that over the medium term, oil prices will remain reasonably low, which will allow the airline industry as a sector to recover. And on the second one, Neil, on the hedging in Q2 or the refund in Q2?

Yes, on the refund, most of that was into Q2. We got our people back in the office from the first of June. So started processing the backlog at that point in time. I mean, we've done a huge amount of work, as we already said that last -- and the customer service team getting through that over the past 3 or 4 months.

Next question our next question comes from Ruxandra from Kepler Cheuvreux.

Two questions, please. First, a follow-up on the airport please. The basis that you close this winter are primary airports, will face a smaller airport. With a weaker balance sheet and before the crisis, will you continue to focus on primary airports where you are in direct competition with airlines that have received huge state support? Or do you expect at least temporarily to focus again on smaller airports? And second, I'm asking a lot of people, it might be a coincidence, but I do not know any person in Germany that asked to be reimbursed and has already been reimbursed for canceled Ryanair flights. You mentioned in the press statement this morning, almost all non OTA refund requests have now been dealt. Could you please be more specific on what you mean with almost all? And is Germany is a country where the refunding process has been slower than the rest of Europe? And considering the OTA refunds, it still has to be done. How high do you estimate the total cash at least to be reimbursed to passengers?

Okay. Let me touch on the airports first. I mean, again, I don't get distracted by the primary or secondary split on airports. We have closed some airports, I would hope temporarily for the winter, Cork, Shannon, Toulouse. We've closed Stuttgart and Düsseldorf, but they will be permanent closes. They're not reopening. We would expect Cork, Shannon and Toulouse to reopen for next summer, but that all depends on whether Ireland has reopened its connectivity to the rest of the world or whether we're still being strangled by a bunch of doctors mismanaging the economy here for the next -- over the next period.

Again, I go back to we are ultimately indifferent as to whether our growth will be a primary or secondary airports. It will be at those airports who need the growth most because they have been the airports who have come up with the best deals. We are already indifferent as to who the competition is at any of those airports because we have much lower cost base than all of them. Even the Lufthansa and Air France, KLM, yes, they'll all engage below cost selling. But we'll still be able to undercut their prices because we have a, I don't know, a, sizably lower cost base than they have. And eventually, they'll run out of their EUR 10 billion of state aid. In fact, I think they'll run out of the EUR 10 billion state aid pretty quickly anyway.

There is no -- honestly, on the German issue, I have no idea where you get that. You need to get out more, Ruxandra, or meet more people. We have refunded all of the German -- all of the German customers whose flights were canceled during the COVID, have either received cash refunds if they requested them or they receive vouchers. There may be some there who are expecting the refund to fall in the doors, but if they have a voucher, you talk to them to either use the voucher or request for cash refund. There is no backlog at all of refunds in Germany or any other EU countries at the moment. In fact, our current -- people applied to us last week for refunds or they -- cash refunds requests that came in last week have already been processed.

There is a small, and I would emphasize, a small number of passengers out there who go through OTA. I suspect it's probably -- it's a single bigger percentage of our total customer base. And the challenge we face with those is, because the screen scrapers are scamming those customers by adding hidden handling fees or inflating the price of the Ryanair fares, they don't want the customer they -- to be in direct content with the airline. They don't want the airline to refund the money directly to the customer, even though under EU261, that's what we're advised to do. We have put in place a procedure where those customers can actually apply directly to us through the website, and we will give them the refund directly to them. The reason we haven't done it so far is because we have a fake e-mail address for that customer that usually sends the e-mail directly to the OTA, who sit on us, or we have a fake -- a virtual credit card from the OTA, and we won't issue refunds to a virtual OTA credit card. We have -- littered with examples of where we've already processed refunds to people we thought weren't OTAs and yet these screen scrapers have been sitting on that cash for 2 or 3 months, keeping their business models going, whereas otherwise, they would have gone bankrupt.

But there is -- if you have somebody in Germany waiting for a refund, ask them to send us an e-mail straightaway requesting the refund and it will get processed in the next 4 or 5 days. We have, as we said, processed over EUR 1.5 billion in refunds and vouchers. And there is nothing -- there is no backlog left in the system either in Germany or any other EU country.

Our next question comes from Carolina das Dores from Morgan Stanley.

So two questions. One, if you have to reduce your flights significantly, is the EUR 60 million cash burn guidance that you gave us in at year-end results, is still a good estimate for your fixed cost base? And my second question is, how are you thinking about minimum liquidity? You have EUR 4.5 billion, at what point would you -- looking to raise more funds? And initially, you chose a mix of -- up through the summer of equity and debt. Would that be your preferred option? Or you would look at leaseholds? I guess, what do you think would be most attractive at this point?

Sorry, Carol, can you just repeat the first question? I wasn't clear. You said a figure of EUR 60 million or something, but I don't get -- picked it up.

EUR 60 million per week of cash burn was the guidance during the first lockdown. With your capacity going down significantly, is this your fixed cost base? Let's put it this way.

Okay. So let me come back on those ones. So firstly, I mean, we have no idea. Again, the cash flows are impossible to foretell through the winter period because we have -- I mean, generally speaking, you have very weak bookings on log to Christmas, but very strong bookings easy after Christmas. We have no idea whether those strong bookings are going to emerge or not. Clearly, we'll be assisted, I think, strongly assisted if there is announcement of the vaccine license at this side of Christmas. But without some kind of insight into what the spring booking season will be like -- we have no idea what the cash flows will be. Minimum liquidity, I think you'll have to take us based on what we've already done. We have EUR 4.5 billion in cash at the moment, we have about EUR 1.5 billion in debt refund next year, that gives us the minimum of EUR 3 billion at the moment. I mean, we're certainly not going to go below EUR 1 billion in sort of the cash. But I -- it is very difficult to foresee that we would need to go back to the market for more equity or more debt given where we are at the moment. But clearly, there's all sorts of scenarios. There's no vaccine and COVID continues for the next 5 years, we will have to go back to the marketplace. We don't think that's likely. And nor do any of the medical experts, from Dr. Fauci to most of the Europe, the ECDC. There seems to be a reasonable event. There are many number of vaccines already in Phase III trials, it looks like they will be -- a number will be licensed pre Christmas but the question is how widely available those vaccines will become in Q1 or Q2 next year?

And there was a third element. Oh yes, on terms of aircraft financing. No. We have generally been always very conservative in aircraft financing. We, as you know, have about 80% of our fleet is unencumbered. We would continue to believe that we'll use a mix of equity and bond, our low-cost bond debt financings to fund our aircraft orders, we have the backstop of [AXIM] out there as well for a kind of a crisis eventuality. And we also have some flexibility built into the order with Boeing that we can postpone deliveries, kind of, that COVID-19 continues. But the price we're flying these aircraft at is well factored into our cost base. And as Neil has said, we have no cash outflows on CapEx between now and the end of March 2021, even despite the fact that we have what 30 -- up to 30 aircraft deliveries in the first half of next year.

Our next question comes from Neil Glynn, Crédit Suisse.

I could ask two, please, also. The first one, just following up from your last answer there, based on aircraft financing. I guess based on that, given the leased aircraft that are due to go back to lessors, am I right in thinking that you might actually get to a point over the next 12 months where you don't actually have 1 operating lease at the moment, or at that time? I just wanted to check that. It was quite interesting. And then the second point, I appreciate you don't have a crystal ball, and I understand your point with respect to the Canary Islands demand but just interested in terms of how you think about the next few years and leisure travel to cities, the recovery of that segment of the market and how that might influence your network strategy over the next couple of years. Do you think that there might be a structural change there where -- which may not happen, for example, in beach demand?

Yes. Okay. I mean, let me turn it to -- it's unlikely that we won't have subleased aircraft. We do have aircraft coming off-lease in the next year or 2. In all those cases, we're having discussions with the lessors. If there is a significant reduction in the lease rate or the monthly lease rate, we're happy to extend those leases. If there isn't or the lessor has some other use of the aircraft, and we're happy to let the aircraft go back because we're now into the spring of next year, we're into the MAX, the 200 delivery. So we are, again, opportunistic. Where there's an opportunity to significantly reduce these lease costs, then that we would extend leases, where there isn't, we would end or allow those leases to end. But no, I think it's unlikely in the next 10 months to get to this year where we have no lease aircraft.

Over the next, again, you're getting into this guy with respect -- I think you're making the same mistake is that, oh, it can be demand led where -- our growth is never demand led. Our growth is always opportunistic. It's where we see opportunities to -- where there's large growth incentives or where there's big discounts on published charges. That's how we place the capacity. And then we stimulate the demand. Clearly, we think there will be a huge return, I think, to the beaches of Europe short-haul in December of 2021. But if we are emerging out of the COVID-19 crisis, and we are -- there's widespread vaccines available, city travel will continue to be strong, one, because that's where the business travel will start from and we'll go to; and secondly, a huge amount of kind of work related travel, people commuting to jobs, commuting to work. I mean, with (inaudible) for example (inaudible) by the work in London. That will return very quickly. And then I think into next autumn, you will see a very strong return, aided in no small part, right, because you'll see lots of city-based hotels, quoting hotel room rates, lots of advertising and Christmas markets and reasons to go to Amsterdam or Madrid or -- these cities are hugely dependent on tourism -- rest. They'll need to see the restaurants, the hotels, and their kind of leisure industries, concert venues, et cetera recover their business. And I think you will see significant price stimulation by hotels and tourism destinations, which is I think the city traffic will return very strongly as well. I mean, I have no doubt, I listen to all this kind of sage analysis. I don't mean Sage as in the U.K., but these analyses, oh, it will take 2 years, 4 years, 5 years for travel to recover the bulls(expletive), it will recover very rapidly within about, I suspect, 12 months because of the huge price discounting that will go on by the hotels, the airlines, the providers. Pricing will stimulate a very rapid recovery. The question is how long then it will take. Is it 2, 3, 4 years for pricing to recover to 20 -- [1919] levels, and that is a much more -- I think that is a much more likely outcome. There will be very rapid volume recovery very quickly. But it would be price driven. The advantage in the case of Ryanair is that price -- pricing will be driven by a materially lower cost base across all the major cost items, that wages, fuel, aircraft costs, airport costs. We will have materially lower costs going forward across those, a, which will enable us to fund very aggressive pricing strategies, and I think then in terms of the city based market or the beach market, the hotel, the accommodation providers will actually also play their role because they will dump prices quickly to get the business back.

Our next question comes from Alex Paterson from Peel Hunt.

I'm not asking for yield forecast, just to be clear, but is there any color you can give on the impact of later booking patterns? So does that have a negative impact or actually given pent-up demand and lower capacity, will it make no difference or is it too early to tell? And just secondly, on the ineffectiveness charge, I think it was EUR 214 million. You say 70% is settled, which would be about EUR 150 million. But on the cash flow, it's showing as EUR 97 million. Are you saying EUR 53 million was paid out in the third quarter-to-date? And when would you expect the rest to be paid out, please?

Okay. Thanks, Alex. I'll let Neil answer the ineffectiveness, the second question. Let me see with the late bookings issue. I mean, what we're doing is momentarily, we are pricing into -- and half price through September, October, November at lower than the budget and lower than we did in the previous of September, October, November. But we're not in desperation pricing. Like we've taken -- a constant -- taking decision. We don't price down close-in. Within 14 days, if we're getting a booking, people have to travel, and we've seen some of our competitors. We've allowed them to price below us in certain markets where they're not well known, like, for example, Wizz, were out doing EUR 1 airfares in Italy, last, I think, a week or 2 ago. I mean, to measure the desperation of Wizz who don't have much of a presence in the Italian market anyway. We didn't bother matching it. And normally, we would always match and undercut our competitors. And the reason we're not matching it because, frankly, we have 70% load factors close-in. If somebody is booking close-in, there's a reason, and they have to travel. We are still being reasonably aggressive on pricing. With 30% off, 50% off, we do [99.9%] and [40%] now. But that's all typically beyond 2, 3 weeks out. We're not aggressive on pricing at the moment for Christmas because there's too much uncertainty. So the advantage late bookings is you're generally giving to people who have to fly. And therefore, we're not being that aggressive on pricing. Although we are considerably below where we would be pricing this time last year for those chosen bookings because in that last year, the load factor was 92%, 93%, and currently, it's at around 70%.

So while -- I mean, what we need to do with close-in booking is to maintain -- be very flexible in terms of capacity, 3 and 4 weeks out. We need to be certain. If we're not going to get to that 70%, they'll have to take out a rotation or take out a flight. It's generally a rotation because taking out 1 flight would strand passengers. And we continue to manage that judiciously. And all that can again come back to the same point. We have managed a 70% load factor every month from July through to October. And no other airline has delivered that. Neil, the ineffectiveness charge.

The EUR 240 million ineffectiveness charge, as I said earlier, Alex, that, that's just front-loading from Q4 and Q3 into the first half of the year. We've already paid about 70% of our mark-to-market on hedges that have gone ineffective for the year-to-date, not putting the exact figure out there, but we're well through at this point in time.

(Operator Instructions)

Our next question comes from James Goodall from Redburn.

So 2, please. So first, on the renegotiation with employees. I'm just sort of trying to get a gauge on how the share of variable and fixed pay has shifted. So are you able to give us a gauge on what percentage of staff costs are now variable? And then secondly, on the MAX compensation from Boeing, I mean, how are you thinking about this? Are you looking to reinvest all of that into lower-priced aircraft? Or are you potentially going to take some cash there?

Okay. I'll do the second half first. I might -- Eddie just give you a general terms. We're not going get into specifics, but we'll give you general terms on the employee compensation. In terms of MAX, look, we are obviously in discussions with Boeing about the MAX aircraft. Compensation is not -- of foremost in our minds. We are much more focused on the pricing of the aircraft order. We are talking to Boeing about additional orders. And so -- but it is a complicated -- there are 3 elements to it. There is clearly compensation for the delayed deliveries, and we're now running 18 months behind. There is also some sort of the pricing of the existing order, and we're also looking at the possibility of adding to that order in the current environment. Boeing need orders and we are -- we believe we have very strong growth prospects for the next 2 or 3 years, where there will be, I think, a very sizable snapback in air travel, post-COVID and not that many airlines in Europe who can actually have the capacity to be able to deliver that or to carry that traffic. But really, I would postpone a lot of the discussion on MAX until such time as the max returns to service, and we have a credible or realistic delivery schedule from Boeing. We really can't conclude those discussions, which are pretty advanced but not concluded. Eddie, do you want to give a flavor for the HR head-on?

I mean the key to this was that we were -- head very early with our people also with the unions, with a very clear message. And those deals were out there, like -- and what we've got here is that we've got a 20% reduction for our pilots and up to 10% for our cabin crew and 100% of pilots are covered in that. And the key as well was that there was pay restoration over the next 5 years. So it was a simple message. And our people, I suppose, realize it's better than have job -- has hedged their bets on job security in the long-term and take the pain upfront. So it is a measure of the -- of how they went about this. It took a while for the message to sink in but eventually, it's about security, reductions in pay, pay restoration and have a very -- like lowers -- our pay rates are variable to our activity with the 20% reduction in the case of pilots. So it's a good deal for our people in the longer term, I would say, and they have taken the pain of that credit to them.

On our contract side, if you take some of the legacy airlines around Europe, there's a real problem building in some of those legacy airlines where they have all of their pilots and cabin crew off on government furlough schemes, which was all fine until the government furlough scheme unwind. I think when the vaccine emerges and governments no longer lockdown, look, the governments are going to be under intense fiscal pressure to end furlough schemes. And then you're going to have these airlines, the Lufthansas, the Air Frances, KLMs going, oh (expletive), the furlough scheme has ended. We now start paying these people, but we can't make them redundant because that's part of the terms of the state aid they get. They are going to be very -- and nor would they have gotten any, they have not negotiated any pay cuts. So we are in a very strong position going forward and it has been painful for our people. It has been painful for the entire management team. We've all taken a deep pay cut, but we will be much more flexible and much faster to reemerge from this with a restructured cost base. At a time when we'll be competing with the Lufthansas, and the Air France, KLMs and the Spanish airlines, all of whom are receiving these kind of job scheme furlough doping, but that's going to come to an end very quickly because European governments can't afford to continue on this cycle. And I think the challenge for those airlines at that point in time will be, oh, now we need pay cuts. And the airlines are going to go, "Go to hell with your pay cuts. You've had furlough support." And a lot of these furlough schemes are based on no pay cuts, no job cuts. So we've restructured and most of our competition hasn't. The notable exception to that would obviously be IAG who have kind of followed us, but we were out first and faster and we have the deals done.

There appears to be no further questions. So I will hand back to speakers for any other remarks.

Okay. Everyone, thank you very much for your attendance on the call. Clearly, this has been a very challenging 6 months for Ryanair. It's been a very challenging 6 months for the industry. I think it's important to finish on a more positive note. The coronavirus will end. Vaccines will be found. I hope it will be in time for a reasonably strong summer of 2021. But all I would assure you is that in the meantime, we have taken a lot of the painful decisions. We have restructured the cost base, we have a strong balance sheet. We are actively engaged with our partners, Boeing, and restructuring the aircraft order and I think there has never been a more exciting period or opportunity for growth, certainly in the European airline industry. And that's going to be the 1 market. I think that's going to rebound very strongly with huge suppressed or pent-up demand. And Ryanair will, in my view, be by far and away, the best positioned airline with the lowest cost base and with a new aircraft order coming through over the next couple of years to take up the challenge of that recovery, and it will lead to superior returns over the coming years. But the next couple of months through up to Christmas and maybe I expect this will be difficult and challenging, but rely on us, we'll continue to manage it as best we can. Thank you very much, everybody. We have an extensive road show taking place over the next 2 or 3 days. We are priming everybody. It virtually our meeting minute -- our meeting -- 30-minute meetings rather which means we can get through huge numbers of investors over the next 2 days. If you like a meeting or some kind of Zoom or online video meeting, (inaudible) but please talk to Peter, to Dave, or to Citibank or to Citi, and we will set something up for you in the next couple of days. Thanks very much, everybody. Good to talk to you, and I hope to see you soon when we have all returned to traveling and once the poor oppressed North Korean people of Ireland will have been allowed on and off the island once more. Thank you. Bye-bye.

This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.