Ryanair Holdings PLC (RYAAY) 2027 Q1 法說會逐字稿

Okay. Good morning, everybody. Welcome to the Q1 results call. You'll have seen the results issued this morning, Q1 profit after tax of EUR538 million. That's a 34% decline on last year's Q1 of EUR820 million, primarily due to the impact of the large spike on oil prices on our 20% unhedged and also the fact that the first half of the Easter moved -- in Easter holiday fell into prior year Q4.

Q1 highlights include traffic growth on track, grew 6% to EUR61.3 million. Revenue per passenger fell 5%. Average fares were down 6%. Ancillary revenues were flat. Unit cost rose 5%, which is an impressive number at the unhedged Q1 jet fuel prices doubled to $151 per barrel.

FY27 jet fuel remains 80% hedged at $67 a barrel. Developments in recent weeks, as we took advantage of some price weakness on the forward rates, and we're now 15% hedged for the entirety of FY28 at about $85 a barrel. The underlying growth into the summer continues. We are operating three new bases this summer Rabat in Morocco, Tirana in Albania, Trapani in southern Italy and in total, over 130 new routes. And we're pleased that the final EUR1.2 billion bond was repaid in full out of internally generated cash flow, leaving the group essentially debt-free.

Touching briefly on a couple of points and then before I hand over to Neil. Scheduled revenue dipped 1% in Q1 to EUR2.91 billion as traffic grew 6%, but at 6% lower fares. Q1 fares, which benefited from a full Easter during April 2025, required stimulation as the Middle East conflict led to consumer hesitancy, concerns about EU jet fuel shortages, economic uncertainty and later bookings. However, our conservative hedging policy means, with 80% of our fuel hedged at $67 a barrel, the group's earnings are largely insulated from periods of extreme volatile oil prices as currently and this will materially widen our cost advantage over all of our other EU competitors. As I said, we've recently extended those fuel hedges for the first time into FY28, now 15% hedged at $85 a barrel.

Having repaid the EUR1.2 billion bond in May, at the quarter end, gross cash was just over EUR2.8 billion, again, an impressive figure after EUR1.3 billion of debt repayments and EUR0.5 billion in CapEx. Liquidity is further boosted by the group's EUR1.1 billion revolving credit facility, which is mostly undrawn a sensible strategy at this time of the year when we're generally -- when cash flows are strong. We're now 90% through the EUR750 million share buyback program. The average price is EUR26.35 per share. However, over the coming year, following the main repayment of our bond, our funding priorities are: one, the MAX 10 aircraft CapEx and the first 15 of those aircraft are coming in the spring of 2027; shareholder dividends; the completion of the current buyback program, which we think will run out until around the AGM in September, while rebuilding gross cash back to EUR4 billion, which is where we were when we entered the COVID and that we believe that's a sensible number to help us cope with unforeseen eventualities, such as COVID or the current war in the Middle East.

In terms of touching on fleet, Boeing continues to expect the MAX 10 certification in late summer 2026. I spoke about two weeks ago, and they expect the MAX 7 to be certified in the coming weeks. And they're reasonably confident that the MAX 10 will be certified either in late September or mid-October. They have protected our first 15 delivery slots in the spring of 2027. So we are growing increasingly confident that we will have the first of those aircraft in advance of summer '27.

And with 300 of these super fuel-efficient aircraft, remember, 20% less fuel, but offering 20% more seats per flight, due to deliver by March 2034, it leaves us in very good shape long term for cost efficiency or cost efficient growth and we believe profitable growth. As I said, this summer, we're growing ahead. Top line growth is strong, three new bases in Rabat, Tirana and Trapani but with only 4% of FY27 traffic growth, our scarce capacity is being switched away to those states, regions and airports, cutting aviation taxes, lowering fees to incentivize growth. The example we've given are Albania, Morocco, regional Italy, Slovakia and Sweden, and we are withdrawing material capacity, flights and traffic away from high tax, high cost markets like Vienna, in Austria, Dublin here in Ireland where costs have gone up 10% this year. Germany, we're closing the Berlin base at the end of the summer and region of Spain.

Over the medium term, we expect European short-haul capacity to remain constrained until at least 2030, principally as the two main manufacturers remain well behind on aircraft deliveries. Those industry capacity constraints combined with our very widening cost advantage, our strong balance sheet, our low-cost fuel-efficient aircraft order book, and industry-leading ops resilience will, we believe, facilitate Ryanair's sustainable, profitable growth to over 300 million passengers by 2034. In terms of outlook, FY27 traffic remains on track to grow 4% to 216 million passengers. Much of that growth is front ended. So in H1, we expect to grow by 6%.

We will cut back our schedules into the winter, and we expect to deliver only 2% traffic growth in the second half of the year. Our unit cost leadership continues to widen. We've seen the results reported by many competitors in recent weeks who have seen unit cost increases of high single-digit, low double-digit. We're this morning reporting low single-digit cost inflation.

Jet fuel remains 80% hedged to March '27 at $67 a barrel, and that helps us to offset a $300 million increase this year in EU and bio taxes, significant crew pay increases under new multiyear CLAs and higher maintenance costs. While summer '26 volumes are strong, the booking window remains closer in than last year, which further reduces visibility. Despite the recent slight uptick in volumes and less price stimulation, Q2 pricing is trending modestly down year-on-year. That is a decline from where we were on the full year results, and we were hoping that Q2 pricing would be -- generally would be flattish year-on-year. They're now trending modestly down low to mid-single digits.

And the final H1 fare outcome remains heavily depend on the strength of close-in bookings in August and September, but they will not be sufficient to make up for what will now be a fair decline in the second quarter. As is normal this year, we have zero H2 visibility. And so there's no point in trying to provide any meaningful guidance for full year profit after tax guidance at this time. And with that, I'm going to hand over to Neil Sorahan, CFO. Neil will take us through the key points of the MD&A, please.

Okay. Thanks, Michael. Not a huge amount to add to what you've already said there other than to guide people back to the fortress balance sheet that we have quite uniquely 620 fully unencumbered Boeing 737s on the balance sheet, very pleased at going debt-free back in May. So a rock-solid balance sheet, which puts us in a very strong position over the next number of years to capitalize on every opportunity. that comes to us.

Hedging, again, well insulated for the current financial year, 80% hedging at $67 a barrel. The key swing factor as was the case in Q1 for the rest of the year is going to be where the 20% unhedged fuel goes.

Otherwise, unit costs strong, and I would guide people to Slide 4 in our presentation. You can see the gap between ourselves with easyJet and everybody else is only getting wider. And I would expect that to continue to be the case, particularly as we start to take in the MAX 10 aircraft, 20% more seats, 20% more fuel efficient from next year. So good cost control. in the business.

Some of that was down to having the extra aircraft. You recall, we were left short last summer. So with better productivity as a result of having all those aircraft in there equally grew by 6%. So we were spreading the cost over more passengers. So it might tick up slightly into the second half.

We're only growing by 2%, but expect very strong cost control on a full year basis. Ancillary solids grew pretty much in line with traffic, so EUR24 per passenger delivered in the quarter and the buyback, as Michael said, progressing very well. Thanks, Michael.

Thanks, Neil. Just before we open up to Q&A, I want to touch on a couple of sort of more recent news events, which I want to touch on. The Thessaloniki aircraft, where we had the fan blade issue and depressurization event last Friday 10 days ago, -- we welcome the NTSB is now in charge of the investigation. They have released the aircraft to us yesterday. So we're now engaged in repairing or replacing the engine and repairing the skin of the aircraft.

That was a dramatic event, particularly for passengers on board. depressurization is always a frightening event, particularly when all the masks come down.

However, it took place in the climb of the aircraft, all passengers and cabin crew were belted in at the time. So some of the more salacious reports that somebody -- one passenger was halfway out the window, out the window, head out the window, nobody was out any window. They were all belted in. One passenger did suffer minor injuries. One pregnant lady was taken to hospital.

They've both since been released. And we are actively supporting the NTSB investigation into what happened in that aircraft.

Initial indication would suggest it looks like a foreign object damage to the engine on takeoff out of Thessaloniki, but we don't have that (inaudible) I can't say that definitively. There will be a draft report issued in about 28 days and then a more detailed report. The US NTSB has done a couple of these before.

Two of them took place at Southwest. And we think they're the best people to investigate and report on the issue.

The aircraft was 18 years old. It has nothing to do with aging aircraft. The engine had been fully serviced and overhauled, I think, within the last two years. So there's nothing to do with either age of aircraft or engines. We welcome in the last week, the Irish government has finally 18 months after the program for government has passed the legislation enabling the Minister of Transport to lift the Dublin Airport cap.

We're now -- we welcome that. It is badly needed given that the cap was 32 million and traffic at Dublin Airport this year is heading for 37 million. We now call on the minister to actually lift the abolish the cap. We do not want to raise this 40 million or 42 million and have to go back through all this nonsense again, abolish the cap.

There is a physical limit on traffic at Dublin Airport. two runways gives you capacity for about 60 million passengers. That should be what the cap is at 60 million passengers. And we should now get on with growing traffic at Dublin Airport. growing tourism and economic activity on and off the island of Ireland using its main gateway.

We also welcome the IAA's provisional recommendations last week. They recommended that Dublin Airport fees be cut from summer '27 onwards on the basis that traffic is ahead of the DA's projections. Surprise, surprise, their capital expenditure is way behind what they had included in the previous projections. And we believe that all airlines will commit to growing at Dublin Airport if the high fees at Dublin are reduced.

We've already stepped forward our commitment, we will add 2 million seats at Dublin next year. Some of those aircraft will be churned away from higher-cost airports like Vienna, like Berlin, -- but there's no doubt in our mind that Dublin and Ireland is set for a period of rapid new route and traffic growth led by Ryanair if the IAA recommendations are implemented in their final report, which we think is due in September, October.

Pricing this summer is softer than we had hoped for. We had hoped that the close-in bookings would dramatically recover. Close-in bookings remain strong, but they're not sufficient to make up for the amount of price discounting we've done through -- we've had to do in the first half of the year. So we think pricing will continue to be soft. If I were guiding you, I'd be moving to low to mid-single-digit decline certainly through in the second quarter.

We don't see any significant falloff, but -- the resumption of hostilities in the Middle East don't help the situation. Clearly, oil prices have taken off again.

But it also creates that consumer hesitancy, that nervousness about people traveling and booking. We think the rest of Q2 will be strong, but the second half of the year will need more discounting, although we expect a lot of capacity to be taken out of the system, the European system in the second half of this year, particularly by our competitors who are losing money hand over fish are copiously losing money and can't compete with us at these low prices.

But nevertheless, it would be what it would be. The one little bit of upside I would give you on second half pricing is both halves of Easter will fall into March. Easter is very early next year. So we'll have almost all of Easter in March in. So Easter will come into this year's Q4, which should be positive for pricing in the second half of the year.

And lastly, it wouldn't be a quarterly set of results without some more utterly useless regulation out of the European Union. The European Parliament, and now the European Union, last week were considering amendments to the ETS legislation, which will bizarrely extend the damaging harmful and discriminatory ETS to places like Morocco, Turkey and Greece, but not to the middle -- sorry, Morocco, Turkey and Albania. -- which currently are exempt.

They of course, they don't have the bottle to exempt to extend it out to American, Asian and other carriers landing and taking off in Europe who still account for the majority of Europe's CO2 emissions. The one way to fix this utter discrimination of Europeans is to abolish ETS or at least move it into line with CORSIA, but no, that would be -- that would improve the competitiveness of European aviation and the European economy. And useless Von der Leyen couldn't come up with anything that would actually improve the competitors of the European economy other than giving speeches about it.

There's also a missell by the European Parliament. They are introducing new legislation, again, which makes European airlines less competitive in order to eliminate the -- to bring into the family seating and family pricing. they now -- or sorry, not the family seating, the carry-on bags. So you've had the lunatics in the European Parliament running around trying to assert the right of passengers to carry two free carry-on bags despite that they don't -- the minor equipment that they don't -- there isn't enough space on board the aircraft for them.

The solution of these geniuses is that we'll now change the advertising so that airlines in Europe in about the next 12 or 18 months will now have to advertise a price that includes the two free carry-on bags despite the fact that more than 50% of our passengers don't pay and don't want two free carry-on bags. But Europe's airlines will now have to advertise a higher fare than the lowest available airfares. And more than 50% of passengers, we know, will opt out of those higher airfares by opting out of the second or the free carry-on bag.

So we have yet more ****** useless regulation coming out of Europe. Instead of making Europe more competitive, they now have required the airlines to advertise fares that are higher than the lowest available fares in the system, and we will be extending ETS instead of abolishing it or bringing it into line with CORSIA. The parliament are overselling this as everybody would be entitled to bring two free bags on board, you won't. You -- airlines if we're advertising fares will have to advertise fares that include the second free or the second carry-on bag. But we believe -- continue to believe that more than 50% of passengers will still opt out of the free second carry-on bag because they want the lowest airfares, which is we will no longer be allowed to advertise because those geniuses in the European parliament would prefer that we advertise higher fares that are available in the system.

Welcome to Europe where things never get more competitive. They just get further more regulated and more ***** regulation getting in the way of actually offering people the lowest available airfares. This is a solution to a problem that doesn't exist. More than 50% -- 99% of passengers want the lowest airfare. And there's been no complaints from passengers who want to pay for it -- if they wish to bring a second carry-on bag, they're happy to pay for it.

But that wouldn't stop the clowns in the European Parliament from inventing a regulation.

Anyway, that's my quarterly rant over. We'll now move on to the Q&A session. And as everybody said, as we have already said, limit to two questions, and we sit through this as quickly as possible. Back to the moderator, please, for the Q&A.

(Operator Instructions)

Jamie Rowbotham, Deutsche Bank.

Jamie, hi.

Hi, Michael. Two from me. So just coming back on the unit revenues for the September quarter. When I read that you've seen an uptick in vols and less price stimulation, I thought the guide for summer fares might be nudging up. You've seen the need to downgrade it from broadly flat to modestly down. Can you just explain the apparent disconnect there?

What's changed exactly? It seems like better trends, but inferior guidance.

And then on the unit costs in the June quarter, maybe for Neil, obviously, fuel is what it is. Airport and handling and staff look very well controlled. Maintenance is up -- that's partly the nonrepeat of the supplier compensation. But I wanted to ask about ownership. It's up about 15% on a per passenger basis.

Are there any material one-offs in the D&A that you'd care to pull out? I saw there was a comment about increased NG maintenance and a provision for midlife LEAP engine shop visits. Thank you.

Okay. Thanks, Jamie. I'll deal with the revenues at last, and I'll ask Neil to deal with the cost. Couple of things on the revenue side. Yes, look, we have been saying all -- from the start of the year, we started before the war kicked off in Iran at the end of February, pricing into the summer looked like it was going to be up mid-single digits.

Pricing in Q1 was always going to be slightly down, partly because of the first half of Easter moving out. But prices weakened once the war in Iran started in February, March. Nothing unsignificant, but we've had to open up or keep stimulating forward bookings. Close-in bookings and the booking pattern is moving later. The people are making up their mind to travel slightly later and then pay slightly higher fares.

But it's not sufficient to make up the discounting we've had to do or the discounting we do well in advance. We go into every month typically with about between 75% or 80% of the seats sold on the first day of the month. Therefore, we have only 20% of the seats left to sell during the month. When we came out -- when we had this the 60-day ceasefire about a month ago, we did notice and out that part of that is also moving into the summer schedule. We did notice a little bit stronger on the close-in bookings.

The pricing is a little bit better on the close-in bookings, but it's not sufficient to make up for the high -- or the volume of discounting we've done well in advance. We did say at the end of the full year results in May. We were hopeful that Q2 would be flattish. It's now moving down low to mid-single digits I would personally think it's moving it closer to mid-single digits to low single digits. I would -- if it's going to be weak, it's going to be weak.

We're now well into the peak period of July and August. And I think it is trending weaker rather than stronger. The ceasefire has broken down. The US has run, what, say, 7 or 8 nights of bombing in Iran, we are where we are.

I think the people -- largely the decisions on summer holidays have been made. The one other one that runs across that is the World Cup does have an influence on things as it has had before. And I think there will probably be an uptake now that it's over. People do tend to slightly postpone their travel arrangements until those competitions are done and out of the way. But again, I don't see any recovery in Q2 pricing now.

I think it is heading for down mid-single digits on last year. And if it is, it is, then we just get on with it. I would not be optimistic for the second half of the year with the -- I think pricing is going to be weak. It will need more price stimulation. The only two things that change that there are going to be meaningful capacity costs coming out of competitors.

Aer Lingus, for example, last week announced significant fleet reductions that they're going to take their capacity down by 6% from the winter. You have the easyJet M&A situation going on, at the valuations that they're currently talking about there, there will have to be some meaningful I would say capacity cost in easyJet if whoever acquires those kind of valuations -- and then we are waiting to see what we'll do apart from losing money heroically. But given that neither easyJet nor Wizz have any are not particularly well hedged once you get into the third -- our third and fourth quarters of the year. Again, we expect meaningful capacity cutbacks. And then you have all of Easter at the end of Q4, which will give Q4 at the back end of the year, a little bit of a lift.

But I would be bearish now on pricing, and we will simply revert back, there's a war going on in the world. There's a lot of uncertainty, and therefore, it's going to be price passive, load factor active, we will hit the traffic target of 4% on the year. And the pricing would be whatever the pricing will be. We are much more focused during these periods on taking out more cost the airport churn negotiations are going particularly well. We're looking forward to delivery of the MAX 10s, which now we are more optimistic about in the spring of next year, and those aircraft will give us some capacity additions in the summer '27, but on an aircraft at a 20% more seat and burn 20% less fuel.

Neil, do you want to take the unit cost, please?

Yes, sure. No problem. Jamie, I think you're happy enough with the staff and the airports and all of those costs, which performed particularly well over the first quarter, the unit cost ex fuel just up 2%. On the ownership, nothing that we didn't flag with the full year numbers. In May, we flagged at that stage that we're starting to accrue up to the amortization for the LEAP on the A200 mid-life hospital visits.

And so you're seeing the start of that coming through. Equally, just given that the NGs are a bit older, the duration between checks is more frequent. So just reflective of that. And then, of course, we have 29 additional aircraft in the fleet this summer that we didn't have at the same time last year. Do I expect it to continue at this pace for the rest of the year?

No, it will slow down a bit as we go out over the balance of the year.

Okay, thanks, Neil. Thanks, Jamie.

Next question, please.

James Hollins, BNB Paribas.

Hi, thanks very much. Michael, just giving you an opportunity for another rant. Didn't have much comment on the airport cues. I think you've been quite widely published in media on that. Do think there's any sign that might be okay for the rest of the summer? Is there -- are there any countries lifting or pausing the EES regulations, which might help.

And I guess I'm asking, do you surmise there's some weakness around that in terms of the bookings as well? And then on Neil, just to follow Jaime's question, do you -- I mean you did less than or around about 2% ex fuel cost per passenger in Q1. You say it's upticking a little bit in H2, is around 2% to 3% a sensible number for the full year? Thank you.

Thanks, James. I don't think airport queues are really that significant certainly in the second quarter. We have identified about 15 airports mainly in Portugal, Spain and some Italy where the border controller understaffed and there are significant dues. All of the European countries have an power to derogate or to suspend the EES requirements until October, which is a more sensible time to implement them. The European mis-designed this system.

It should have been done online. When you're pricing all this online, only the Europeans would invent **** like this where you need border guards doing one thing. They're typing into systems and airports coming into the summer period. So it's another European screw up, but is it going to stop people traveling through the peak summer? No, it isn't.

And then will the queues ease off once you get out into the third and fourth quarter? Yes, they will. But the EES, if they really want to control this system should be moved online. The airlines have all the passport details. We have all that information.

And it should be something that not beyond the wit of man or mankind. But again, it's just another example of where Europe under [Ursula] von der Leyen can't organize a **** in a brewery, are hopelessly inefficient. And we'll talk all day and all night about being competitive while really introducing more regulations make us less competitive. But no. So airport queues are frustration.

It's not something that is unheard of in Europe at this time of the year. And the alternatives meters are stuck in Dover for longer is not going to make any difference either. Second half of the question, Neil.

Yes, James. Yes, it will tick up a bit in the second half of the year, particularly as we get towards the back end, and we're getting ready for the summer of 2028. We didn't give a guide and I said at the May numbers, it should be margin below mid-single digits. If you want to be prudent in your numbers, probably two, four is a better guide than to trade. It won't be above mid-single digits.

Thanks, Neil. Thanks, James.

Next question, please.

Alex Irving, Bernstein.

Hi, good morning. Two for me, please. First is on winter capacity. How do you see that evolving for the sector and how do you see the probability that they get a meaningful capacity reduction at competitors? Second one, I want to come back on easyJet, where you talked about the likelihood of capacity cuts. If there were any parts of the easyJet that were to become available for sale?

Would there be any elements, say, slots or an Airbus sub fleet that might be of interest to Ryanair? Thank you.

Okay. I think it's an opportunity. I ask Eddie Wilson, Ryanair DAC CEO. Eddie, do you want to give us an overview on winter capacity and likely competitor cuts?

Yes. I mean, you're looking at the moment there of -- if you look at the market that it will just be winter capacity would be about 5%. We don't think that's realistic. I think that's likely to be pared back significantly. Ryanair, we will be growing by around 2% this winter.

And some of that has been driven by the fact we'll have -- we'll have two aircraft, just a few timing that will be will be in maintenance. We'll have two less aircraft actually this winter. So it's -- but we do expect to see our competitors pull back that we can't see any way that the market is going to grow by 5%. We will continue how we allocate capacity during the winter as we've had in previous years as we have pared back capacity in the shoulders in November and in late January and then sort of micro manage the capacity growth in close to Christmas and the October bank holiday.

Yes. So I mean we are flexing our capacity expanded this winter. I mean, some of that is because 20% of our fuel is unhedged anyway, but we are still going to deliver 4% traffic growth for the full year. Just to touch on the easyJet valuation is a fairly -- I think they -- the Board and management have done a good job with the valuations that they're currently on offer. But if VC money comes in and pay that kind of money for easyJet, I think it's inevitable that they will want to do something to monetize some of the fleet or the order book or they certainly want to get, they'll have to be getting airfares up at their [fortress] airports.

If they're going to get any kind of VC or return on currently, the market cap is about GBP 5.5 billion. Wizz will continue with -- Wizz will just blow their brains out this winter. They don't have any few significant fuel hedging in place. They have expanded capacity far too much this summer. Some of that is driven by the only way you can keep the Ponzi scheme afloat is to keep taking aircraft and then doing sale and leasebacks and recognizing that through the P&L, the full year results, they reported a profit of EUR1 million, but with EUR630 million or EUR640 million of sale leaseback profit, supplier compensation and ForEx gains.

And you can think of the underlying business, therefore, lost EUR640 million, the full year when oil prices were $70 a barrel, God bless than when oil is up at $130 or $140 a barrel. So we think it is inevitable. airBaltic are floundering around in Eastern Europe, may or may not survive. We think the government will keep them alive. There's elections coming up in Latvia in October, November.

I think they were out this morning saying that they're talking to a number of investors. We do think airBaltic will probably be acquired by Lufthansa who already own 10% of it. But the consolidation process will play itself out. And I think we have to look today on the quarter numbers. The immediate short-term outlook is weak, pricing is weak.

We see that as an opportunity to take out unit costs and to materially widen the unit gap between us and competitors on unit costs -- but over the medium term, our growth and our market share gains are accelerating, and that growth will take place on aircraft that will be materially more profitable for us. What bits would be of any interest, any bits of easyJet came up for sale? No, it would be the simple answer. If you take the various bids easyJet aircraft orders, no, their Airbus they wouldn't be particularly cheap either, so it wouldn't be attractive to us. easyJet holidays came up for sale?

No. We're not believers in that holiday model. But really, the holiday model is just stuck on to easiest fortress basis. What else is there? I ultimately believe if easyJet is bought by -- kind of by VC entity, the only way they were financed over time will be to sell off the order books monetize the fleet, there'll be more sale on leasebacks.

And then in time, I believe the easyJet business will be sold off to legacy carriers in Europe. Certainly Air France-KLM would be very interested in the easyJet based operations in Paris, Schiphol and Switzerland. And I think the Gatwick operation will be of great interest to the likes of IAG or Jet2 or somebody else. I think if those get done, it will kick off another round of I think the M&A will bring people like Jet2 and with more clearly interview for the M&A businesses and ultimately, will speed up the inevitable consolidation of European airlines into to four large carriers, Lufthansa family, the BA family, Air France family and Ryanair and we intend to grow organically, not by M&A.

Thanks, Alex.

Next question, please.

Savanthi Syth, Raymond James.

Hey, good morning. Two questions. Maybe on the EU passenger rights update, you mentioned. Just curious if there are any technology changes that you kind of need to make to be able to show maybe both fares on your web page. And just if you expect any kind of demand impact from having to show the higher fare. And then on the EU ETS changes, just curious if it was to be in place this year, how much more of a step up would you see versus the EUR200 million you were expecting? Thanks.

Okay. On the passenger rights, I mean, like at the moment, the way the legislation is framed, there's nothing we could do about it. The airlines now have to advertise a fair that includes two carry-on bags. Even though that's a fare that will apply to less than 50% of passengers booking onboard our flights. Passengers 99.9% will still get on -- go on our website, what's the cheapest airfare they'll see -- we will put lots of banners up on those airfares.

So we'll advertise a fair that has two free check-in bags. But click here and you can take EUR60 off your fare by opting out of the checked-in bag.

The idea that those morons in the EU parliament would have Europe's airlines advertising -- not advertising our lowest available airfares is just the kind of stupidity that you get in Europe. But that is what the regulation says. Of course, it's being missold by idiot parliamentarians out there. Oh, you're all allowed to bring two free cabin bags on board a plane now. Two free cabin bags do not fit on board a plane, and certainly not a 737 or an A320, and never mind the turboprops around Europe.

So it's just, again, more idiot regulation that makes Europe less competitive. And you want an example of what makes European air travel less competitive. ETS is right up there. We are the only economic block in the world where we are penalizing our own citizens with these ridiculous environmental taxes. The Americans don't do it, the Asians don't do it.

The Gulf carriers don't do it. The Africans don't do it. Latin Americas don't do it, but the Europeans do. And while [Ursula] von der Leyen is wandering around the world, giving speeches about making Europe more competitive. While the Draghi report continues to gather dust two years after its publication, with not one recommendation implemented.

The only thing they managed to do now is to consider -- they don't like the idea that Albania, Turkey or Morocco neighboring countries don't charge ETS. So they'll extend to Albania and Morocco. I suspect they will have trouble to extend it to Turkey, particularly with NATO. So even this mightn't get off the ground. Like the really way to fix both of this, the stupidity of only taxing the European.

If you're not going to extend those taxes to the Americans and to build -- and by the way, I have no difficulty with -- we should extend it to them. If you want to -- if you're really concerned about the climate change and flying, everybody who lands and takes off in Europe should pay their fair share. But of course, the European designed a system that only the Europeans pay an unfair share and the Americans, the Gulf and the Asian pay noting at all, we exempt them. But if you're going to exempt them, then you should also extend the Europeans. We believe the better way is to move everybody onto CORSIA.

CORSIA is about 85% cheaper than ETS and then at least you would be reducing the cost of air travel for Europe citizens, for families going on holidays in Europe, and you have a more level playing field in Europe. But that would confuse the European Commission who would be too busy giving speeches about competitiveness while doing absolutely -- in fact, they go the opposite way and make Europe less competitive with these ***** changes on what airlines can advertise at their lowest fares and the **** extension of ETS to neighboring countries as well. They've drawn a line well in 5,000 square -- 5,000 kilometers from Frankfurt which conveniently excludes Asia, America, everywhere but catches poor old Turkey, Albania, Morocco and maybe Egypt as well. So congratulations. Another complete ** up by the European Union when Mrs. Von der Leyen is promising competitiveness, all we get is more idiot regulation.

Next question, please.

Harry Gowers, JP Morgan.

First question, maybe you could just give us a little bit of an update on the CLAs with the unions, how to think about modeling that on the staff cost line. And was there already some impact from that in the Q1 or it doesn't really hit the P&L staff costs yet? And then second question, just coming back on those baggage rules coming into place from the EU and the carry on, which Michael, you covered quite eloquently already. But just from your perspective, do you expect actually any financial impact on Ryanair from that, whether it's on the revenue line or more kind of operational drag from trying to sort the bags out. Thanks a lot.

Okay. I'm going to ask Eddie maybe give you update on the CLA and then Tracey McCann will give the impact of the baggage rules.

Yes. Yes, on the CLA negotiations, we're almost through the summer now and the largest markets like Italy, for example, was completed earlier this year, both for pilots and cabin crew and subsequently, the other -- there's a number of other jurisdictions where their deals expired in April. So two of those were completed with -- in Romania and also in Denmark, and they extended both the pilots and cabin crew. And there are two then that are still in negotiations, but are reasonably well advanced, one on the pilot side and one on the unions are one on the cabin crew side, one of those currently under ballot at the moment. So -- and there are other -- the vast majority of the CLAs will mature next April, April '27, but there's already a number of unions that are looking at filling out as to whether they could potentially go early, and we would be minded to engage in negotiations on that.

So it's gone -- we -- you can never say never in terms of industrial action. But I mean, like we're almost into August and we're still in negotiations for the last two. As I said, the cabin crew one has got that one. I don't want to comment on the individual when has gone to pallet and the other one is still on the pilot side is still involved in negotiations. And so we will -- so the cost of bills have actually come through.

And earlier this year as well, we would have done the Spanish cabin crew as well, but that was from a previous round as well. So I think there's a lot of realism out there as well at the moment, like there are pretty much no opportunities in places like the Middle East. Mind you, they are a small number in Riyadh where they don't actually have aircraft. So that's particularly attractive for a small group of people who want to be paid and don't fly. And so -- but there is -- when you see the M&A activity that's going on in places like easyJet as well and what's likely to emerge this winter.

There's probably more of a focus on people really valuing what they have here in terms of promotional opportunities and also the -- sort of the security of employment on a well-capitalized airline and people know exactly what's happened in terms of deliveries that are coming over the next number of years.

Okay. Thanks, Eddie. Tracey, we think the new baggage rules, how will it impact revenues?

So we pretty much think it's going to be revenue news, what we've already seen in Italy and it's had no impact. So revenue neutral for us. And just to add, probably on Eddie, on the staff costs, as Neil said earlier, we will see some of the CLAs coming through later in the year. What's already been done is in the costs. And furthermore, as we do the CLA for the remainder of the year, we will see some staff cost increase.

I should say, that we are -- some of the discussions, there has been some delays in some of those CLAs with unions looking for backdated to the 1st of April, we will backdate nothing. Our principle is always, you do the deal, whenever you do the deal, we'll implement it, but you're not getting backdating. We closed the accounts for the first quarter that date. Just on the baggage rule, I think it will change probably the way we advertise. We probably won't do as much price advertising.

There's not much point in having a -- what would now be our kind of EUR29 seat sale if thanks to the idiots in the European parliament, we now have to include the second check-in bag. Our EUR29 seat sale would now become an EUR89 seat sale, which doesn't sound particularly cheap by in European terms. So I think you'll see us doing much more advertising, not focusing on price, but ending other ways to deliver value. And the website will -- all the website displays will show this mad pricing with the second carry-on bag. But with big banners, you can opt out of EUR60 of this fare and you can say you -- feel free to opt out.

Actually, we think more and more people opt out of it. But the same numbers are more will opt out where they think they can save EUR60. And therefore, we think there are no impact whatsoever. There will be some disappointment among consumers where, in some cases, they've been promised by parliamentarians or some of the more misguided consumer journalists that, oh, you're going to every allowed to bring two free bags on board, you're not because they won't fit. There is an interesting what happened actually when the plane is now more than half full.

Do we still advertise price? the answer is probably no because in theory, the first 50% of people had booked the fare that has included the last 50% people couldn't get on that plan with the -- bringing a free second carry on that because there isn't room for them. But detail or factual detail that has never bothered parliamentarians when they're reviewing EU 261. It's always here just in dense of new **** regulation that passengers don't need and not interested in, but we put up the advertising cost of airtime around Europe. Congratulations to the European parliament.

Another **** up regulation, making Europe less competitive instead of more. Juliusz, do you want to add to that, how many insightful presentation of our friends and colleagues in Europe in the Parliament and the commission?

It's hard to top this. But I think that advertising two prices is going to become the norm in the industry. So I think as we go through the booking process and you see your flight I think you'll be shown two prices; one with the bag, the other one without the bag and then when the airline sales of the space in the overhead lockers on a particular flight, it's going to have to be the lowest fare count to be advertised. So there will be no impact, as Tracey said.

Okay, thanks. Thanks, Julius.

Next question, please.

Stephen Furlong, Davy.

Michael, maybe it's Farnborough, just the day that's in it, but just comments about Boeing and Airbus talking about looking by 2030 to fund the new Jet program. Just -- I know you talked about the MAX 10, just general comments about that? Or -- and second thing then, just while I'm talking about the supply chain, maybe just talk about the engine shops and where we're at on that.

Okay. Touching renew jet program, look, it's all nonsense, but that's what they talk a lot of nonsense get talked as rubbish get to talked at air shows. Boeing and Airbus have -- basically, they're in the forte of delivering the A3, the 2321neos, Boeing haven't even certified the MAX 7 and the MAX 10. These are dramatic technological revolutions in air travel. I mean these are aircraft that carry 20% more seats than born 20% less fuel.

So from a climate environmental operating efficiency, everything there, these are brilliant aircraft. These are the aircraft that are going to fund the next 20 years of air travel. There will not be a need for new jet program for probably another -- I think probably the end of the 2040s you might be heading for 2050. Boeing and Airbus need to actually monetize these -- they put a huge amount of R&D into these. Boeing's balance sheet has suffered from the years of the MAX grounding et cetera, et cetera.

They need to rebuild their balance sheet, both Boeing and Airbus. The technology now, I think, is what we will have for the next 15 or 20 years. And the challenge is going to be the engine, not the airframe. So all this nonsense about hydrogen aircraft and electric ***** propulsion systems and all that. it is just airshow rubbish.

It will not be there in my lifetime, and I expect to live well beyond 2050. But I think what we should be very happy with is that the next generation of aircraft, the Airbus -- the Airbus neos and the Boeing MAXs will, I think, make to surviving our consolidated airlines that are still standing in the early 2030, very profitable for the next 15 or 20 years. And the last thing we need is Boeing and Airbus blowing their brains out, developing new engine, new aircraft, new jet programs, make money for the next 15 to 20 years. Repair your balance sheet, improve the quality of production, certainly invest in and improve the engine technology because as an industry, we do need to decarbonize. But we don't have any alternative to jet kerosene.

So -- but let's have more engines that carry more propulsion systems will enable us to carry more passengers while burning less carbon. Engines are going to be a real challenge or certainly engine maintenance engine cost going to be a real challenge for the next 5 or 10 years. So GE producing bumper results again over the weekend, margins rising into the mid-20% in Q1, about 2.5 billion of net profit, net profit. Engines are also going to be a real area of competitive advantage or disadvantage in the airline industry. Those airlines like Ryanair, who will in the next two years, have our own in-house MROs will have a significant advantage over the rapidly escalating cost of third-party engine maintenance and third-party engine spares and parts.

And again, it's one of the reasons why we don't need a new engine, new aircraft, our -- new jet programs. Engine -- cost of engine maintenance and engine overall is escalating rapidly. There is a worldwide shortage of capacity in that sector, partly to do with the Pratt & Whitney repair repairs, but just because the -- both the manufacturers are not willing to spool up MRO capacity to meet demand, they want to increase prices of that MRO capacity. We're very happy where we are. We are making significant progress on our two engine MRO shops.

We've put in place a supply contract with CFM who we are essentially partnering with on our two MROs, they want us to set up these two MROs. They know we won't compete with them. We're not going to do third-party engine maintenance for anybody else. But we will have a material cost advantage by doing our engine maintenance in-house in the same way that we've had a material cost advantage by doing all our airframes in-house for the last 10 or 15 years, and that will continue. So I realize it is Farnborough this week.

I realize everybody will be talking a lot **** about new propulsion systems (inaudible) until somebody gets a Star Trek travel and you start beaming people around the world beaming people instead of flying them. I think we're dealing with 737 MAXs at A3 or Airbus neo for the next 10 to 15 years. And these are going to have -- be transformative certainly of Ryanair's P&L and our balance sheet.

Next question, please.

Jarrod Castle, UBS.

Thank you. Morning, everyone. Michael, Neil, you've hedged 15% of full year '28 now. So I gather, it's not a stop process anymore for '28? Or is it still a little bit of a start-stop depending what fuel is doing? If you could give any color in terms of maybe the '28 view on hedging. And then another potentially contentious topic.

But Michael, have you changed your views on Wi-Fi on board and Starlink given another low-cost airline, Wizz, has decided to put it on board and I guess, the way they've looked at things from an economic perspective? Thanks.

Jarrod, we could be here for a very long time agreeing or discussing whether ***** Wizz is a low-cost airline. There aren't any other low-cost airlines in Europe, there's only Ryanair. Nevertheless, I'll come on to that fuel. Look, fuel prices are going to be very volatile for the next, I think, right up to the November midterms. We are going to -- my view is we'll dip in and out -- we thought when it got down risk got down to $85 a barrel.

It's a sensible place to start. We hoped we would see it drift further down below $80 a barrel. But obviously, to no great surprise, the ceasefire broke down and forward rates into FY28 this morning are above about $92 a barrel. So I think would expect us to be opportunistic, dip in and out. I don't expect in FY28, we'll be able to get to $67 a barrel, which where we are this year, but we'll be opportunistic.

I'm going to ask Tom Fowler, just to give you a Director of fuel and sustainability, give you some his view on that. And then just WiFi on board, Jarrod, again, we believe WiFi on board will be a significant benefit for consumers, but only when it's free. And we are -- the current technology militates against it being free you have to get but there's a 1% or 2% fuel drag. It comes as no surprise to us that someone like Wizz would be offering free Wi-Fi on board. It is just the loss making -- right way, and part of the deal is they've given away all the revenue to the supplier of the WiFi.

So it's just another stupid PR kind of stunt by them, but people in -- drowning people going down on the ***** Titanic were still playing violin as well. I wouldn't -- we would not be rushing to copy anything Wizz do. In fact, we probably do exactly the opposite. We do think Starlink system is very good. I also think the Vodafone system, there are a number of very good systems out there.

But I would wait until the technology they can fit the areas either in the nose cone, the baggage hold or the forward galley or the rear galley or something, where there is the dual penalty, then I think we will be honest -- and we will be keeping the revenue that will -- or the revenue opportunity will arise from WiFi. And there will be revenue opportunities even when it's free -- but would we be copying some of our competitors who can't shoot or walk straight and chew gum? no. Thomas, fuel gives a view on your general outlook.

Yes. Look, I tend to Michael, I think we'll be more opportunistic in the hedge and Jarrod will go in and we think the product made sense like when we see talk to ceasefire, I think it is going to be volatile over the next few months. They are going to be a dealer, they're not going to be a deal, and we just will be ready to go in and do the hedge as we see as we did in the last few weeks by doing 15% of each quarter for FY28. So I think that's the way we're going to manage it for the next couple of months that we see some normality in the oil market. It's just a very volatile market at the moment.

Okay. Tracey you want to add anything on that?

No. Probably the only other thing is to say we have hedged some of the OpEx for it to cover ourselves as well. So we have about 18% of FY28 OpEx hedged as well at EUR120.

Okay, thanks, Jared. Thanks, Tracy.

Next question, please.

Muneeba Kayani, Bank of America.

Yes. I wanted to ask firstly around jet fuel supply, I think Neil was on TV saying that there's no shortage, but given the reescalation in the conflict, how are you thinking around jet fuel supply and any learnings from the last couple of months here on that? And then just wanted to go back on your comments earlier, Michael, around bookings. Could you give us a sense of what proportion of August and September is booked right now to understand the visibility on your guidance of this modest decline year-on-year on fares for the second quarter? And into the second half, why are you expecting pricing to decline and price stimulation if airlines start cutting capacity wouldn't that be good from a pricing perspective? Thank you.

Thanks, Muneeba. I'm going to hand over the first section to Tom Fowler and then I'll deal with the bookings. Tom, Jet fuel supply, do we think there's any issues?

No. Look, we haven't seen any issues today. I think as Neil what I said this morning, like we have good visibility now out into the end of August in most locations and in some of our countries out to the end of the year. And I think that supply situation, okay, what escalated for supply starts to fall off towards the end of September. Our demand that follow towards the end of September to the winter program.

So would be hopeful to see reserves fill back up providing, it doesn't escalate any further in the Middle East. But at the moment, we don't see any issues Muneeba coming our way in most locations are usual pockets of stuff we see that has an impact anywhere.

And if you remember, I mean, in the previous conference call, remember, the vast majority of Europe's jet fuel doesn't come through the Gulf. That supplies Asian -- the Asian market, all of Europe's jet fuel is coming from the Americas, West Africa, Norway and even Russian imports as well. So see no disruption on supplies.

Bookings, look, August today, we're at about 75% already -- or 75% of our final number is already in the system. September, we're running about 40%. And I expect fares will continue to decline, but there will be upside. That's because we haven't yet seen what competitors are going to take out of the system in the second half of the year. If spot oil remains up at around $130 a barrel, they're going to be taking out significantly more.

So I think it is unrealistic not to expect at this point in time, if everybody maintains the capacity they're maintaining, and we will be growing our capacity by 2% in the second half of the year, I think pricing will fall. With the one caveat that we have Easter comes into Q4, which we give and Q4 prior year comps are weak. So that can give the kicker there anyway. But I think there could well be meaningful upgrades on that kind of pricing outlook, depending on how much capacity is taken out of the system. Depending on an airBaltic or a Wizz Air fail going into this winter, there would clearly be very significant alternative.

As I've been giving you the example, Aer Lingus, for example, are already talking now about a 6% capacity reduction. Some of that is long-haul, some of it is short-haul going into the winter. So it's too early to give you any definitive outlook, Muneeba, for winter pricing, except I think we should expect it to be down low to mid-single digits with the prospect as capacity comes out if oil prices remain higher for longer, that pricing will move back towards flat or maybe even up a little bit, certainly and get a boost from Easter in Q4. But there's too much uncertainty over capacity.

Next question.

Conor Dwyer, Citi.

Hey, Michael. Michael, first question is just around a bit more medium term. Just thinking about growth this year is at 4%, and obviously fares are a touch soft so far in the year. And I guess the concern for investors stepping back and thinking about EUR14 per passenger, net profit is that it needs pricing strength. But obviously, your growth going to hit about 6% to 7% for the end of the decade. I'm kind of thinking about like what gives you the confidence that fares can be strong into that while that growth is accelerating?

And then the second question is primarily for Neil, just around -- obviously, the staff unit costs were quite strong in the quarter just gone. And that was somewhat helped by potentially more claims in the fleet. But one of the features over the last few years has been elevated crew ratios. I'm just wondering how much more is there to go on that over the next few years in terms of that coming down, given obviously, disruption costs are obviously doing quite well. It feels like the overall system is somewhat better set up for flying.

Thanks, Conor. I'll take the first half. Look, medium term, I don't see any change in our outlook. And in fact, what drives that medium-term outlook is every time our competitors produce a set of half year or quarterly numbers, and their unit costs are up 8%, 10%, 12%. And this is the ex fuel.

They can't control their costs. Their costs are escalating wildly. And the cost gap between us or Slide 4 is getting wider and wider.

Now there's only one thing they can do in that is a, cut capacity to get airfares up to pay for the higher unit costs or b, materially take a lot of capacity out or go bust, which I think is inevitable in a case of a couple of our competitors. And then you have the consolidation plays itself out. If somebody comes over the hill and pay GBP 5.5 for easyJet they're going to want to return on that, and they're going to take, I think, much more sort of dramatic action or structural action on. And what you can do with easyJet is move it out of Gatwick or move it out of Charles de Gaulle or move it out of Schiphol to where? like Stansted's full, Luton full.

So it is inevitable to my mind, you're going to see very significant capacity constraints imposed on the likes of an easyJet going forward, I think they will -- if you look at the two candidates looking at , they're both experienced in the aircraft leasing market. I think they will see -- and there's no doubt the easyJet order book and the easyJet fleet is an attractive asset, but that asset will get monetized. And so I think what's going to happen is the biggest upside on our is not that consolidation will take place in Europe, in the next four, five years, which it will -- it is that our competitors are struggling with unit costs. And the only way, therefore, they can manage those unit costs to pass it on the form of higher airfares. We are much better managing unit costs, but our fares will trend upwards behind price increases by our competitors.

And therefore, I think that gets us over the medium term. Take this year as one of those aberrations as award, the Middle East, Trump in the White House, the spot oil prices are over the place, and there's a bit of consumer hesitancy. That will dissipate, the Middle East will get resolved. People will go back to some degree of normality. And we -- we'll take another 5 or 10 points of market share of everybody else in the middle of all of that.

And then add to that, there's something happens to airBaltic, or Wizz or the people who can't shoot straight -- it will be nothing but upside in terms of capacity restriction and better pricing in Europe. Neil, do you want to take on the cost question or the staff cost question, Conor raised?

Yes. Sure, Conor. Firstly, as you rightly said, we were carrying too many staff last summer as a result of being left short 25 aircraft. So we're getting better productivity this year from those staff now that we've got the full complement of the MAX 8-200 in the fleet. We have front-loaded some of the pay in the CLAs this year, so it will be slower into next year.

Importantly, with the MAX 10 starting to come, that will obviously drive even more productivity with 20% more passengers on board. But in the near term, as we flagged some time ago, we will continue to take in high levels of cadets and apprentice engineers so that we've spooled up when peak delivery start to come along, will be self-sufficient for first officers and captains. But I don't expect anything much beyond that. So we'll be slightly elevated on the crewing ratios. ATC continues to be a problem, so you wouldn't want to cut back too severely heading forward.

But I think staff costs are relatively under control and the productivity from the MAX 10 is going to a big impact.

Okay. Thanks, Ian. Thanks, Conor.

Next question, please.

Dudley Shanley, Goodbody.

Good morning, Michael. Just a couple of questions. First of all, on airport deals. I'm just wondering in the current environment where you're talking about capacity being caught in the winter. whether you're starting to see any airports come to you with better deals? Or is it just too early for that?

And then the second question, just to follow up on Conor's question. Are you still confident that you can reach the EUR12 to EUR14 net income per passenger range over the medium term? Thanks.

Okay. Maybe I'll ask Eddie to -- the airport deals are getting better, but obviously, without naming names, but in general terms, what's happening?

Yes, look Dudley, I don't think you even have to wait until the winter time, I mean, because we've seen sort of a mark change over -- particularly over the last number of months where a lot airports are getting very nervous about some of their anchor tenants as to what's going to happen. They can see little prospects, they can see a little prospect for growth. And when things happen, like when we make an answer like the closure of Berlin or the five aircraft that are going to come out this winter out of Charleroi because taxes are going up. You can see -- you can see airports that the Board lights up here for the commercial department with others saying, but we can take those, we can do an improvement on the deal that we have, all volume related. And you can see things happening that we haven't seen for a long time where Dublin airport costs are actually going back this year.

You can see in Spain where there's growing momentum, particularly at regional airports, where there's nobody coming to save those airports. And those airports that are nimble and know that they have to attract traffic are always back on to us about improving deals continuously, especially when they see aircraft coming up free from other bases. So it's a different place to be where airports are competing that aggressively. I haven't seen it in a number of years.

There's a number of the easyJet airports have been on to us recently?

Yes. I mean like you have places are overexposed there where you've got, say, Luton, you've got airports, particularly if you -- if you look at this sort of in a macro level, like easyJet have been gradually retreating from so they're initially up into Northern Italy and understandably a lot of the airports there are wondering when they're going to go back over the Alps or not or are they going to stay there in some of those key airports. But also you see as well with Wizz as well where a number of airports are where they see themselves being overexposed and that there's uncertainty. And you have Ryanair that's got the 300 aircraft delivery coming they just have to do it on our terms.

I'll give you one example. In the month of June, Vienna, where we reduced our capacity by some 10% in the last two years due to high cost and there's a mad EUR12 aviation tax in Austria, that EUR12 aviation tax rate is less than EUR140 million for the Austrian government. Meanwhile, over the border in Slovakia, the government has eliminated the aviation tax , cut ATC fee by 50% and Bratislava, the capital city airport in Slovakia has introduced very imaginative growth in center schemes. In the month of June, Vienna's traffic fell by 6%. Bratislava's traffic was up over 120% year-on-year.

Huge growth at low cost, and we are moving switching aircraft around taken away from Berlin. This year, for example, we had originally planned to grow traffic in Dublin by 10%. And we abandoned that plan. We moved three aircraft out Dublin, our traffic this year is flattish, I think, in Dublin. But because Dublin put fees up by 10% because they are regulated monopoly and good.

If the IAA's proposed draft proposal, which is to cut Dublin airport fees by 15% in December '27, we will charge in there with another 2 million seats. That would be 10% growth delivered just by Ryanair. This is in an airport that has a ***** capacity cap -- but Aer Lingus are talking about reducing capacity by 6%, we'd be charging in there next year with 2 million more seats, so delivering very dramatic growth. So I don't underestimate the extent to which we can churn those aircraft where a number of our competitors are stuck at fortress airports like Gatwick or Charles de Gaulle, they can't -- because If they leave, they'd lose the slots. They can't kind of move aircraft out of those.

Whereas most of our airports, we don't have slots -- are not too worried about them. We chop and churn all over the place. To encourage, and that's not to kind of penalize high-cost airports. But it's to encourage those other airports who want to grow aggressively, to be aggressive with growth incentives. And turning to the second part, which is again 12 to 14.

Look, I've given you my view in relation to second half or answer's question. I'm going to ask Tracey maybe to give you a more independent or rational view of how we develop over the next five years. Tracey, do you think we'll get to EUR12 or EUR14 profit per passenger.

I think if you look at last year, I suppose we were just under EUR11. And a lot of this comes down to the deals we've secured on costs. Eddie just spoke about the airport deals that are available out there. We're ready to open our engine shops in 2029, which again will give us cost advantage and we've that deal with CFM and cost advantage of the MAX 10. So we'll have 20% more seats.

So again, 20% upsell on ancillaries, revenue opportunities with no real incremental cost. We'll have the fuel benefit of the MAX 10 order 20% more fuel efficient. And it's how we finance some aircraft, we'll probably finance them out of cash or take low cost opportunities to finance them if we get them. And CLA deals that are ongoing at the moment, improved productivity on crewing and I think that's all the steps are in place to actually get us there. So I think it's a cost story, cost advantage story as well as the opportunities we'll get with capacity coming out of the market.

And remember, we're competing across Europe mainly with legacy airlines whose unit costs are 4 times and 5 times higher than ours. You have the likes of Wizz, for example, doing more sale and leaseback of their fleet, which is the only profit that they recognized in their P&L. But that means they have much more expensive aircraft and ownership cost going forward for the next number of years if they survive that long. And then I think if the easyJet are the subject of M&A, there is no doubt in my mind that the financing cost of that M&A will be passed on to easyJet. They will have to get airfares up.

And our strategy or our kind of contention in the last year of profit movement trial towards EUR14 to EUR15 per passenger is that most of it will take place on the yield pricing line. And I would still be confident that would be the case. But as Tracey identified, there's also significant and widening cost advances on the cost line as well.

Next question, please. Thanks, Dudley.

Ruairi Cullinane, RBC.

First question on ancillaries, has been quite flattish on a revenue per passenger basis for a few quarters. Now are you seeing less take-up of some of your ancillary products? And then secondly, on fair trends, has there been any sort of notable areas of weakness across markets in H1? Thank you.

Maybe I'll do ancillaries, Tracey, do you want to take it? Eddie, maybe do the fare trend.

Yes. So ancillary pretty much, as we said, flat in this quarter, but some of that is the Easter impact. So we've seen significant growth in the same quarter last year, we were up 3% to EUR23.08. We're still on track to see ancillaries grow about 1% to 2% for the remainder of the year and continue to do what we said it's about growing the total revenue now at the moment and starting to price between bag seats and bags so it's optimizing the price and dynamically across all them products that we're in control of.

Thanks, Tracey. Eddie, fare trends, obviously, we're not any particular.

Yes. I mean, the only -- I mean, if you look at it, I mean, there is a general story of I suppose the -- and what's happening in the Gulf at the moment and consumer sort of sentiment and certain uncertainty, which we saw earlier in the sort of -- in the booking season, which was around fuel supply concerns and then we could see the whole uncertainty as the war going on and the World Cup in that. But there's no real call-out except like obviously, you'll have places that you've got a lot more capacity going into, which would be into Central and Eastern Europe and, to a lesser extent, into the UK where some of that may be driven by capacity. But there's a real callout on a geographic basis.

Okay, thanks Eddie.

Next question please.

Andrew Lobbenberg, Barclays.

Classic call, this one. Can you tell us what's going on with the EU ownership stake and I think the ADR premium rising of late. So is there anything to say on the ownership and control situation? And then just another short simple question. You mentioned that the RCF is mostly undrawn suggested it's a little bit undrawn, but given that you've got pots and pots of money, why do you need to draw it at all?

Okay. Thanks, Andrew. I got to Juliusz, maybe take the ADR question, EU ownership and Eddie will give you the update and then maybe, Neil, I'll go back to you, why is the RCF mostly undrawn in the middle of the summer.

Andrew. So our ownership last reported 30% next report will be as of -- at the end of September, we'll give that in November with the H1 results. We have seen Europeans buying ADRs over the last few months, and this is a new development quite welcome and that could be behind the rising premium.

Okay. Anything else on ownership and control? No?

Not much. I mean there will be a revision of the law in Europe that deals with ownership and control rules that is due to start later this year and it will take about two years to go through the EU Parliament and the Council. It is still expected that EU 261 that ownership and control will be dealt with in that revision so that some changes will be proposed to modernize the rules to make more suitable to the capital markets as we know them today, where European money may well be managed by someone in the United States or the United Kingdom and the other way around. But we just have to wait and see what comes out of the European Commission. And then when it goes to the Parliament and Council as we've seen with EU 261, anything might happen.

So we just watch that closely keep pushing for more sensible set of rules that we have today.

Okay. Thanks, Juliusz. Neil, the RCF, why is it undrawn?

Andrew. Yes, we have about EUR40 million undrawn under the -- or sorry, drawn under the RCF we have a big pool of banks, and we like to let them leave a little bit of money on the table just to feel involved. No other reason that we could have paid it off. We decided to leave that sliver there for the banks.

And I would add to that, like we do expect we will -- as we move into the September, December quarter, we will draw down on the RCF. Now certainly, we won't need all of it. But bear in mind, we think the kind of comfort base we should be in terms of cash on the balance sheet is around EUR4 billion. As of today, we have gross cash ourselves about EUR2.7 billion, EUR2.8 billion. The RCF would take us, if we were to draw it all then we take it up to EUR3.8 billion.

But there's no -- we don't need the cash during the bumper summer period when cash flow is strong. But once you get towards September, and your -- the cash -- the inward cash is the winter bookings, but you still have a ramp up the summer payments. We go cash negative in the September and December quarter. We will draw down the RCF. I would not want us to go down to kind of EUR2 billion or below EUR2 billion gross cash and then have something on what happened.

This is a capital-intensive cyclical business that is subject to extreme shocks such as war in the Middle East or oil prices go mad and bookings weakened, Putin invades Ukraine, COVID, yada, yada app. So it is a sensible strategy. I think to have a reasonably sizable RCF there in place. As we've said in terms of our funding objectives for the next 12 months, it is to fund the MAX 10, the PDR CapEx out of internally generated cash flow, fund the engine shop, fund the balance of the share buyback fund. There's a dividend another share dividend coming in September and then rebuild gross cash back up towards about EUR4 billion a year.

That will take us at least another year. And so -- but our discipline with the RCF is draw it down during the winter period where you go cash negative, pay it back as you get into the summer period when we're cash flow positive. Next question, please.

Mark Zack, Kepler Cheuvreux.

Good morning.

Thank you for taking my questions. I have got two, if I may, and just maybe just short one on the ETS. Do you mind sharing what percentage of kind of revenues, the passenger is now newly affected by the 5,000 kilometer radius from Frankfurt wasn't before. The second question would be on the recent heat wave. I recognize the quarter was unusual due to Iran. But do you feel the extended heat period has also weighed maybe somewhat on maybe yields, so you need to stimulate?

And what do you expect your impact from, let's say, more of more heat or heat waves in the future, say, UK becomes a beach destination. What's the impact on the operations? Thank you.

I give the first one, I invite Neil or Tracey come in. I mean, look, the extension of the ETS would now I mean we'd be charging ETS on -- if implemented this way. We'll be charging ETS on EU traffic to Albania and Morocco. We have very little almost nothing going to Turkey apart where there's some charge charter stuff, but the tour operator will be paying that. So it would have a minor impact on us.

The fundamental impact on us and all the rest of European aviation is Europe has this mad system where we're taxing the *** out of European citizens starting within Europe and then exempting all the Americans, Gulf, Asians arriving in Europe, leaving Europe, despite that they generate more than 50% of European aviation CO2 emissions. It is a mad discriminatory indefensible system. And the European should grow some vertebra and either fair system, the taxes everybody arriving in or leaving Europe or stop taxing the Europeans altogether. But expecting von der Leyen to come up with anything that would improve the competitors of European aviation is -- we've been around for a long time. She's useless, and there will be no -- as the Draghi report gathers even further dust in Europe, there's been no reform on ATC.

There's been no reform on ETS and because Europe continues to be hopelessly uncompetitive market. Despite about that air travel is one of the few areas where Europe wipes the floor with the Americans. They're ahead of us in AI. They're ahead of us in energy security area. We wipe the floor with America when it comes to air travel and yet Europe keeps inventing new regulations to make us either less competitive with ETS or make us look less competitive with the new mad advertising regulations.

Has the heatwave had any impact on us? Not really. As someone who put his wife and children on flights to Portugal yesterday, despite a prolonged heat wave here in Ireland, there -- the Europeans are all still going to the beaches of Portugal, Spain, Italy, Greece, et cetera. I don't see that changing. Your occasional stuff that the French and all the others are going to keep coming to Ireland to get away, no sign of it.

I don't think -- look, one summer is not going to make any huge difference. I don't see that makes any significant impact at all. It allows newspapers to fill up rubbish during the quiet, during this kind of -- when the parliaments are all closed, they all are pricing ****. And I'm sure Sky in all those we'll be doing features, JV features now on global climate change and all the rest of it, most of which will be -- but no, we don't see any change in travel patterns. Eddie, any view on heatwave wave trouble patterns?

No, we haven't seen anything. I mean, like obviously, things like the World Cup and that I think you will see some see a bump bar right? We've seen that in previous tournaments as well. I don't think there's any systemic change in booking.

And Juliusz, the Poles , we're going to stay at home during the summer or keep heading for the beach of Bulgaria, Greece and God knows where else?

Keep going to Denmark.

Okay. Thanks, Mark.

Next question, please.

Axel Stasse, Morgan Stanley.

Hey, thanks for taking my question. Two on my side, please. Could you maybe just iterate how much we should look at CapEx for '28 and '29, considering the maintenance stop and the delivery of the Boeing. And second question, on the buyback beyond the EUR750 million, almost done. Conscious said you wanted to focus on aircraft CapEx, divis and the EUR4 billion gross cash level. but what kind of gearing should we look at to understand the leeway here on the potential buyback?

Is it 0.5 times, 1 times, just to have an understanding. Thank you.

Okay. Neil, do you want to take the CapEx and I'll do the buyback?

Yes, sure. No problem. A CapEx, current year FY27, unchanged from what we previously guided of somewhere close to EUR2 billion. If I look into the next year, we're probably somewhere in the range of EUR2.7 billion to EUR3 billion, and I wouldn't go beyond that in any kind of guidance at this stage.

Thanks, Neil. On buybacks, actually, look, we've been quite upfront. We said there will be another buyback this year. We'll finish the buyback probably around the time of the AGM in September. The AGM will get approval to continue buybacks, but we will not look at another buyback, I'd say until the spring of 2027.

We do go cash negative in the September, December quarter this year. We've already paid back a bond of EUR1.2 billion. We have funded dividends of EUR400 million this year, and we will have completed the EUR750 million buyback. So shareholders have done well this year. They'll just have to wait.

I think we will look at it again once we get a better handle on what the CapEx looks like through the middle of 2027, and that is when we'll be into the heavy engine shop CapEx then I think we will reassess. I would be -- I think we will continue to do buybacks. There just won't be another -- there won't be a follow-on -- there won't be a follow on one this 2026 when we complete the EUR750 million. You'll have to wait, I think, until either March or the full year results next year in May, and then we'll have a more definitive position.

Can I just add to that, Michael, just on the specific gearing question, look, we keep it very simple. We're going to build the cash back up towards EUR4 billion. Then to the extent the surplus cash, that will likely go back to the shareholders. Whether we take debt on or not will principally be driven by the cost of that debt. And we don't have any targets one way or another as to whether it's 2 times, 3 times, 4 times, 5 times or 6 times gearing on the balance sheet.

We'll keep it very simple.

And opportunistic. Okay. Thanks, Axel. Ladies and gentlemen, thank you very much for participating in the conference call. Again, I think -- I wouldn't get too upset over the weaker -- the weak near-term outlook -- it is what it is.

There's a war in the Middle East. We see this as a period of opportunity. We are aggressively churning airport -- there are a number of airports who are very concerned out there by the financial challenges faced by some of their incumbent carriers and are doing more aggressive deals with us. There is a lot of upside in the system over the next year or two, things like the Dublin Airport cap being lifted, the IAA bringing in price reductions here at Dublin. Pricing will be a little bit weaker than we had originally hoped this year.

Fine, if it is, it is, we think the prices will recover strongly in '27, '28 onwards, because the underlying fundamentals is our competitors' unit costs are rising rapidly, and they have no choice but to the constrain capacity or leave certain markets where they're unable to compete with us if they're going to get their airfares up. And in the meantime, what we have to do then is manage and nonsensical idiotic EU regulation, where they'll continue to invent new regulations that make aircraft in Europe by the less competitive or make it look like it's less competitive. But Ryanair will continue to find its way around those regulations and continue to take significant market share from our competitors as we move into a winter period where we expect a number of failures among those competitors. Okay. We're not obviously in Q1, but we don't do a road show.

Neil is meeting some investors in London. I think he's going to Switzerland tomorrow to try and drum up some more European interest. And if anybody wants to do a follow-up meeting or come to us and see us at any stage over the next couple of weeks, please feel free Jamie, who's Head of IR, be happy to set something up. Thank you very much, everybody. We look forward to seeing you in not too distant future.

Have a good remaining summer. Enjoy yourselves. God bless. Bye-bye.

Thank you for joining. That concludes today's call. You may now disconnect your line.