Hello, and welcome to the Ryanair Q1 FY23 results conference call. Throughout the call, all participants will be in a listen-only mode, and afterwards there'll be a question and answer session. During the Q&A, in the interest of time and fairness, please limit yourselves to two questions per person. Just to remind you, this conference call is being recorded. Today, I'm pleased to present Ryanair's Group CEO Michael O'Leary. Please go ahead with the meeting. Okay. Good morning, ladies and gentlemen. You're very welcome to our Q1 results conference call. We're here with the senior team, me, Eddie Wilson. Neil Sorahan is on the call from London, where he's covering the media stuff this morning. Tom Fowler, our Director of Sustainability, and Tracey McCann, the Ryanair CFO, and Peter Larkin, the Head of Investor Relations. You'll have seen this morning, so we released early this morning both the Q1 results. We've done the usual video Q&A is all available on the Ryanair.com website. I assume we'll take that everybody has seen that. I'll just do a couple of comments here on a couple of themes, and then we'll open it up to Q&A as quickly as we can. This morning, obviously into a reasonably strong post-COVID recovery, we see we've reported a Q1 profit after tax of EUR 170 million. I would point out that was well below the pre-COVID Q1 profit after tax of EUR 243 million in the equivalent quarter in FY 2020. But nevertheless ridiculously ahead of last year's the three hundred million loss in the same quarter or the same quarter last year, which was heavily disrupted by both by COVID. A couple of highlights that, and the number of EUR 170 million excludes an EUR 18 million exceptional unrealized mark-to-market net gain on jet fuel caps. Couple of headlines in the quarter. Obviously, traffic is recovering strongly to 45.5 million from 8 million in the prior year. That would have been better if April hadn't been badly damaged, both in terms of passenger numbers and yields over the Easter holiday period by the Russian invasion of Ukraine in late February. I think that's a theme I'll return to in the Q&A. You know, we are clearly seeing a strong recovery. There's clearly pent-up demand, but it is very fragile and capable of being damaged at very short notice if there is adverse COVID or adverse Ukraine developments as we suffered in Q2 and Q4 of FY 2022. Nevertheless, we're performing very strongly this summer. We've taken delivery of 73 of the Boeing 737 Gamechangers ahead of the summer peak. We have our peak summer capacity through July, August, and into September is on sale. We're running about 115% of our pre-COVID capacity. We seem to be the only airline in Europe that's running significantly ahead of pre-COVID. Certainly, the only major airline running significantly ahead of pre-COVID capacities. Unusually, we're well staffed to cope with that. We're not seeing the same disruptions or flight cancellations that many of our competitors have suffered this year. Although we are suffering material disruptions to our schedules, mainly because of an abysmal performance by European air traffic control and some airport staffing shortages, airport staff disruptions. Nevertheless, the key to the earnings for the remainder of this year is where fuel is very well hedged. We're 80% hedged for the remainder of FY23. We've also materially increased our FY24 fuel hedging. It was at 30% last week. We're up to 35% this morning at around $92 a barrel. I would also point out we're very well hedged on the currency, so that all of our CapEx out to FY26 is hedged at 1.24-1.25 dollars to the euro, which will be a major cost saving to us going forward. Whereas, competitors who are not hedged on their CapEx will be paying significantly higher costs for their aircraft acquisitions. A notable development in recent weeks is we've now extended the majority of our leased A320 leases for a four-year period from 2024 to 2028 at very significant lease monthly lease rental savings running at around between 25%-33% for the next six years. Touching on a couple of themes. I think our environmental and sustainability themes continue to be front and center. We're very pleased that this summer we're operating 73 of the new Gamechanger aircraft. They are delivering 4% more seats, but burning in actual fact between 17%-18% less fuel and notably cutting noise emissions. In fact, the mostly positive feedback we're getting from customers and crew is how quiet it is to travel on the aircraft. We continue to invest heavily in the space sustainable aviation research center with Trinity College. In the quarter, we announced a partnership with Neste to power up to one-third of all of our flights from Schiphol, Amsterdam with a 40% SAF blend. In April, Sustainalytics ranked Ryanair the number one airline in Europe and the number two airline globally for our ESG performance. In terms of the social, I would touch on the fact that again, the commitment we made with our people and our unions during the COVID pandemic was that we had negotiated pay cuts with the majority of our unions as an alternative to mass headcount reductions. I think that's, as a result of that, we were able to keep most of our pilots and most of our cabin crew employed and more importantly, current during the COVID-19 pandemic. I think that's one of the reasons why Ryanair has recovered so strongly into the post-COVID recovery, is that we're not having to retrain loads of pilots and loads of cabin crew. Unlike a number of competitors who let go thousands of pilots and cabin crew, we kept our people employed. We did obviously participate in furlough schemes, but the critical thing is we kept them current. By flying them once a month, in some cases on flights that were largely empty, we had the pilots and the cabin crew ready and available to us this summer so that as the market began to rebound very quickly, we're able to run not just our pre-COVID volumes, but also 115% of our pre-COVID volumes through the summer but avoiding the kind of staff shortages that many of our airline competitors and indeed many of the airports around Europe have suffered in the run into summer of 2022. We expect that will continue through the peak summer. We are fully staffed. I think that has vindicated the decisions we made at the time to keep people or try to keep people employed, but negotiate those, pay reductions, which were critical to our ability to keep them and people employed, during the COVID pandemic. We've made very significant progress, during the last quarter, and that continues on accelerating the pay restoration agreement, which we reached with the union. To date, we've now reached deals with over 80% of our—the unions representing over 80% of our pilots. The only ones now left outstanding as a result of, agreements lasted with the French pilots and the Spanish pilots are we have, the Belgian pilots and the Irish pilots. You know, it's a matter of significant regret that the unions in Belgium and Ireland are sitting on their hands or playing games as a result of which our pilots in Belgium and in Ireland are not participating in the pay restoration that 80% of their colleagues across Europe have agreed and negotiated. We would again call on the idiot Belgian union and the somewhat less intelligent Irish or the Irish IALPA union to get on board these pay restoration negotiations. We want to see the pay of our people restored, and we are disappointed that these restorations are being held up by small unions playing games, which really have no upside to them. Cabin crew restoration negotiations have already made significant progress, and we would hope that that will continue. There has been a lot of PR about strikes and disruption here this year on Ryanair. Actually, it's been more PR and noise than in reality. We have continued to operate more than 99% of our flights through June, July, and expect we'll do so into August. There were some minor disruptions over the weekend in Belgium, but again, more than 50% of the Belgian-based pilots and cabin crew reported for work. We operated more than 90% of our schedules this weekend. The delivery on the ground and on the day is very good, and I would caution investors that a lot of the PR is just that PR by unions in Belgium and Ireland who should know better and should explain to their pilot members why the pay restoration of our pilots in Ireland and Belgium are being delayed by their game playing when the pilots unions in Italy, Spain, Portugal, Germany, and everywhere else around Europe have now already agreed these pay restorations. Our pilots are participating and are enjoying those pay restorations. We want to see that continue. Touching again on the operating performance. Again, the decision to work with the unions on the pay cuts has been vindicated in recent months because we're fully staffed at a time when most of our airline competitors, also airports and handling companies across Europe appear to be short-staffed. We expect that to continue, and we see no reason why we won't be operating at 115% of our pre-COVID capacity through the two peak months of July and August. Over the last two years, as numerous airlines have gone bankrupt, many legacy carriers, most notably Alitalia, TAP, SAS, and LOT, have only survived as a result of really radical reductions in their fleet and their passenger capacity. This has seen, I think, a once in a lifetime jump in our market shares. We are making extraordinary market share gains in Italy, where we're now up above 40% market share. In Hungary, where we enter the market competing with Wizz Air, we're now up to 30% market share. In fact, market leadership. Poland, we're growing strongly. Ireland, we're up to 56% market share. In Austria, where you remember in Vienna two or three years ago, it looked like everybody wanted to be going to Vienna. Now it's essentially down to Ryanair and Austrian Airlines, and we are again making remarkable market share gains. Boeing, we expect that those gains will continue. Boeing are scheduled to deliver over 50 more Gamechangers to us this winter ahead of summer 2023. We are concerned about Boeing's ability to make those deliveries on time. Already they're kind of mumbling about delivery delays, which we don't understand and won't accept given that Boeing have already confirmed they're producing 31 aircraft a month from June of this year. They'll produce more than 200 aircraft between this and the end of the year. Out of that, they're scheduled to deliver us 21 aircraft. We will not accept any excuses from Boeing on delivery delays when our deliveries account for just about 10% of what they already confirmed they are producing. Boeing remain a major area of concern for us. Approximately 50% of that summer 2023 capacity is now on sale. We recently announced a new base in Belfast International, a fourth base aircraft in Venice this winter. We're adding capacity in Vienna. We commenced flights from Bologna-Forlì, which is our 30th Italian airport, all of which are booking well and strongly. Again, thanks to the 210 Boeing 737 order book and the extension of the A320s, we believe Ryanair is well on track to grow from 149 million passengers pre-COVID to over 225 million passengers by FY26. Just to touch briefly on the quarter, again, a couple of highlights. I wouldn't underestimate the extent to which the first quarter was badly damaged by the Russian invasion of Ukraine. Easter, which was in the middle of April, suffered a big hit to passenger numbers and also to fares, as passengers kind of recoiled from air travel on the back of the Russian invasion of Ukraine. As a result of that, average fares were down 4% in the first quarter. Ancillary revenues, though, continued to perform strongly as traffic builds and has now risen to over EUR 22.50 per passenger. I'm pleased to say that, as the numbers this morning indicate, lower costs, we continue to be very efficient. We're seeing significant improvements in our unit costs. A lot of that has been delivered by the 73 Gamechangers, where again, we have 4% more seats, but 16% less fuel consumption, and we have bought those aircraft from Boeing at very competitive prices. We're pleased to say that, in Q1 we saw the unit cost per passenger drop to just under 30 EUR per passenger, which is a very significant milestone for us. Our FY23 fuel requirements are 80% hedged at 65% jet swaps in, $53 a barrel and 15% caps at $78 a barrel. I'm pleased to say we've taken advantage of the recent softness in oil prices to increase our fuel hedging. As of this morning, we're up to 35% hedged into FY24 at approximately $92 a barrel. Yes, there'll be a modest increase in our oil prices into FY24, but we think it's certainly manageable and certainly in the context of the kind of underlying airfare growth we're seeing at the moment. I never thought at a time when Europe's largest airline is delivering 15% capacity growth, we would also be seeing double-digit underlying airfare increases into the peak summer period. Some of that is the very strong pent-up demand, and we are also seeing significant passenger transfers from other airlines who are canceling flights at last minute. The only concern I have in that is, you know, our bookings still have not recovered. The advanced bookings are still not recovered to where they were prior to COVID. We're still running 7%-8% behind where we were today for July, August and September. The gap is closing, and we would hope that it will continue to close as we move through the period. I think what we're seeing is load factors, though, continue to build strongly. We saw in May, for example, load factor of 92%. In June, the load factor rose to 95%. We think we're going to hit 96% for July, although we still have a couple of days left to go to the end of the month. There is still a strong underlying recovery with double-digit capacity growth, huge market share gains and double-digit underlying airfare growth during the peak months. The real challenge for us is whether that will be continued into the winter. The balance sheet as a result of that has strengthened materially. Net debt at the end of the quarter, end of June, fell to EUR 400 million or EUR 0.4 billion, which was down from EUR 1.45 billion at the year-end of the thirty-first of March. 90% of group's fleet of Boeing 737s are unencumbered. Despite peak CapEx this year and next, and also the obligation to repay two bonds, one in March 2023 and one in August 2023, we still expect to improve the balance sheet to a broadly zero net debt position over the next two years. It's the strength of our balance sheet, which ensures that the group is well positioned to exploit what are very significant growth opportunities that exist in a post-COVID Europe, where many of our competitors who are unhedged are simply unable to compete with us on cost, are withdrawing from competition with us in our markets. That said, and that's the good news. The outlook is cautious. I, again, can't expect the current performance in Q1 is good, the performance in Q2 is strong, but it is hugely dependent on there being no more adverse news flows either on COVID or on Ukraine into the second half of the year. I go back and I would draw your attention to the fact that when we, you know, Omicron last November dealt us a huge blow across Christmas, December, January and February. We carried 10 million passengers in November. That fell to 9 million passengers in December. We were down to 7 million passengers in January and only 8.7 million passengers in February. That's the point we keep making, is that the recovery is very strong, both at the volume level and at the pricing level, but it is hugely fragile. Now, I remain optimistic that because of the high vaccination rates in Europe, we hope that there won't be any further negative COVID developments, but we can't ignore the risk of new COVID variants later this winter. We see in Australia at the moment a large flu. It seems to be a combination of both flu and COVID at the moment. We don't know what's going to happen in Ukraine. It seems to be a war of attrition over there now. I mean, as long as it is confined to Ukraine, then we could see a strong or a continuation of this strong recovery into Europe. I think it is sensible at the moment to foresee some adverse developments on COVID or to watch out for some adverse developments on Ukraine. That's why really we can't give any guidance this year for the full year. Nevertheless, I think into the second quarter there is strong pent-up demand, strong volume growth, strong underlying airfare growth, and we are clearly benefiting from capacity shortages and staffing shortages. I think that Ryanair is making significant market share gains. One, because of our capacity growth, but two, because we are clearly providing a much more reliable service than many other airlines and airports through to the second quarter. When the schools go back in September, again, we will be significantly exposed to any adverse news flows on COVID and on Ukraine. Second half of Q2, we have limited visibility, and that's because we're heavily dependent on what is the average fare that's being paid by the people who are booking late, and people are booking later into Q2 than the days of pre-COVID. We've zero visibility into H2. We typically lose money in the second half of the year. We don't lose a lot of money. We don't expect to lose a lot of money into second half of this year, as long as there is no adverse news flows on COVID or on Ukraine. We are, however, and we do expect to grow FY23 traffic to 165 million passengers. That will be up 11% on pre-COVID. We'll continue to be load factor active yield passive in all of our markets, and we will continue to take significant share from competitors in those markets. Despite being one of the best hedged airlines in Europe, high oil prices will lead to increased costs on the 20% of our fuel that's unhedged, into the second half of FY23. Therefore, given the later booking profile, the lack of visibility, volatile oil prices, and our nervousness at potential adverse news flows on COVID and on Ukraine, we can't give you any meaningful guidance here for the full year. We would hope to be in a reasonable position to give some kind of more accurate or some kind of guidance for the full year when we get to the second half results, which will be in late October, early November. Other than that, business is performing well. Operationally, we're doing well. I think caution is the key word for the remainder of this year. Neil, anything else you want to add to and then I'm gonna ask Eddie Wilson here just to give you a quick update or commentary on the pay recovery discussions and the union, our union relationships. Neil? No, not a huge amount other than just to echo that the cost base is in a very strong position. We're seeing the benefit of having the 73 extra Gamechangers in the fleet this summer, not only on the fuel line, but equally on the ownership and maintenance side of things. Balance sheet has well improved, as Michael highlighted, down to EUR 0.4 billion net debt. We do have significant CapEx into the second half of the year. We expect the cash flows to remain strong for the balance of the year and very well hedged. Nothing really else to add, Michael. Okay, thanks. Eddie, do you wanna give us a quick update on unions and pay restoration and any other items you wanna highlight from an operational point of view? Yeah, I mean, it's just on the union discussions. What we have is on the pilots union side, we had the developments last week with the SEPLA, the Spanish pilots union, and SNPL, the French pilots union, coming to an agreement with us on pay restoration. Largely that means of their 20%, they get 10% back straight away. Then the other 10% is scheduled for next April and contingent on, you know, we get through that fragile recovery. I think they're sensible discussions in terms of pay restoration. You'll always have disagreements with unions in terms of the timing of this. But I think they have progressed very well. As Michael alluded to there earlier, I mean, like things like that are happening in Belgium, where, you know, over 50% of the pilots showed up for work this week. Because of the large amount of inbounds into Charleroi and Zaventem from elsewhere in the network, particularly the sun destinations, you know, like 90% of the schedule operated on time and we are operators. They should return to those discussions. We'll be hopeful that we'll be able to close out the remainder of those discussions because every month that goes by unions that don't conclude deals are leaving money on the table. We will continue to work with them to do that restoration. Just on operational resilience, while we are fully crewed across the network, and in those bases where we self-handle, we are also fully crewed. We still operationally, like we've got much lower punctuality than we've had at this time of year, and that does put strain on moving crews around. Nevertheless, having the right number of crews has helped us to get through that. I wouldn't underestimate the difficulties that we've had with ATC this year, which have taken almost 20 percentage points off our punctuality. We would hope that that will change for summer 2023. It is challenging in terms of operational resilience. We are confident that we're gonna be able to complete our schedules too, as the way we've been for the peak summer period. I'm sure those are Tracey McCann, the Ryanair DAC CFO. Tracey, anything you want to add on in terms of cash flows or- Well, just to reiterate what Neil said, cash flows have been very, very strong. We finished cash over EUR 4 billion. Net debt fell to EUR 0.4 billion. That's despite EUR 400 million of CapEx going out this year. There's another EUR 2 billion of CapEx for the remainder of the year and just over EUR 2 billion next year. We're on track to get to that net zero position over the next two years. Okay, thanks, Tracy. Okay, with that, I will open up to Q&A, please. Thank you. Just as a reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. Our first question comes from the line of Savanthi Syth from Raymond James. Please go ahead. Savi, hi. Hey, good morning. Just two questions. On the Lauda front. I'm just kind of curious, you know, pre-COVID, there was an expectation that kind of Lauda's not profitable and getting to break even. Curious with the changes that you're making, you know, how that operation is looking, you know, as profitability recovers. From the second question, just curious on capacity, you know, 15% above pre-crisis on this summer. How is that looking for the winter and then kind of early expectations for next summer? Thanks. Okay, thanks. Savi, thank you. We've never made any commentary on Lauda profitability and don't propose to start doing it now. There was significant material changes in. I think the challenge faced by Lauda at the moment is there was a huge capacity growth in Vienna. You had lots of kind of people entering the Vienna market. We had Austrian Airlines, Lauda, LEVEL the BA subsidiary with easyJet with an Austrian AOC. You know, Vienna is an expensive airport and materially lower airfares. I think we see now a very bright future for Ryanair. I mean, we operate in Vienna under Ryanair. We sell under the Ryanair banner, but most of the capacity is delivered by Lauda. I would point, Lauda operates from 4 bases. It's Vienna. Sorry. Vienna, Stansted, Palma, Zagreb and Zadar. About half of Lauda's capacity is in Vienna. We see very strong growth in market share and profitability in Vienna, but not getting into specific numbers. I think there will be highlight in Vienna at this point in time, so almost like Italy, competing, I think, with Austrian, which is incredibly high-cost and inefficient. It's a bit like competing with Alitalia over the years in Italy. I would expect us to continue to take meaningful market share from Austrian and Vienna. We have set ourselves an objective of overtaking Austrian, become Vienna's number one airline, over the next 2, 3 years. In terms of capacity, we will run through this summer with the peak months at 115% of pre-COVID capacity. I would expect that we will trim some capacity in the second half of the year. I mean, only because we don't want to expose ourselves to the 20% of unhedged fuel. It's a bit early to say yet, but I would expect second half of this year capacity to run at, I think, single-digit growth over pre-COVID, but not 15% above pre-COVID. It all depends on whether we get the 50 aircraft delivered at Boeing or scheduled to deliver to us. I am very worried about, you know, what's going on in Boeing, as they are already mumbling about delivery delays. We're due 21 aircraft this side of Christmas, you know, which should be of no issue to Boeing, given that they're gonna produce 200 of these aircraft between June and December. Already they're mumbling about possibly not being able to meet those schedules. They can't deliver 21 aircraft to one of their largest or the second largest customer in the world, then I worry. We are demanding explanations from Boeing. If you're making 200 aircraft between now and the end of December, there's no reason why we can't get our 21 aircraft this side of December and 30 aircraft between January and April. As I have said on previous calls, the Boeing management in Seattle do not merit much, very little confidence in the Boeing management in Seattle. You know, I have a high regard for Calhoun, but unless or until something is done about the management in Seattle, the management and the delivery in Seattle, then I would continue to be a worrier. Yeah, some will ask as well, where are we on pricing on the MAX 10s? We're nowhere. Haven't heard back from them. They, you know, they're not of any kind of competitive pricing at the moment, but we would hope eventually they'll get there. Thanks, Savi. Next question, please. The next question comes from the line of Alex Irving from Bernstein. Please go ahead. Morning. Hi. Morning, gentlemen. Hope all is well. Two for me, please. First on closing bookings. I wonder where the media reports on disruption airports are having a dampening effect on closing demand. The quarter you referred to looks good, but is that more from strong performance in earlier bookings? Any color you can provide on that, please. The second question is on pay deals. Appreciate you've been restoring pay with your unions, but does that end with restoration? Clearly, inflation is running quite high. We've seen other unions economy-wide asking for pay increases to keep pace with that. Are you having similar conversations with your unions? And how should we think about staff costs going forward? Thanks. Okay, thanks. On closing bookings, no. I mean, I think if anything, closing bookings and closing fares are being materially moved upwards as a result of the kind of media reports of disruption. They're not media reports. A lot of our competitors are suffering material disruptions, and they're cutting back capacity. There were analysts out there, you know, earlier in the year who were predicting that capacity would run this summer at 100% of pre-COVID. We believed it would be down around 80, 85%. I think we've been somewhat vindicated. While we're running at 115%, almost every other airline in Europe seems to be cutting capacity, particularly peak capacity, including some of the other, such as, not so low-cost carriers. All seem to be operating at around 80, 85% of their pre-COVID capacity. I mean, if you take something like the UK, we've seen a notable strength in our close-in bookings at airports like Stansted, at Bristol, at Manchester, Glasgow, Edinburgh, all those bases. Partly, I think refugees fleeing from either Gatwick, Heathrow, and probably I'd say this weekend from Dover and Felixstowe as well realized that the only safe and reliable way off the island in a post-Brexit world is Ryanair or Stansted. Also I think there seems to be a significant strength into airfares at some of the regional airports. I said Bristol, Manchester. In those cases, they seem to be as a result of disruptions at competitor airlines. In many cases, a number of competitor airlines who are canceling flights under 14 days are booking Ryanair flights or booking their passengers or disrupted passengers onto Ryanair flights. In actual fact, we see that the strength of, you know, and we're seeing low double-digit price increases through the second quarter is, if anything, a result of concerns, media reports about disruptions at other airports and at other airlines rather than. We're seeing no slacking off in our bookings. Sorry, Eddie, you want to come in on that? Yeah. No, just, no, I was gonna come in on the pay deal. Whatever. Sorry, I didn't hear. You want me to finish on the pay deals? Look, there's a sequence to this thing. Yeah, sorry. Sure. Firstly, it's pay restoration, and then when we get out, we've done pay restoration, then we go on to pay, you know, more medium, longer term pay. Eddie. Yeah. No, on some of those deals already what we've locked away is that pay increases for April 2024, April 2025 and April 2026. They bring us out until March 2027. They're in the order of approximately 2%. Yeah. Yeah, the pay restoration deals already include pay increases built in and negotiated with them. You know, our concerns remain just those two countries. Well, not because of any issue with the unions, but just that our pilots are suffering, are missing out on pay restoration because you've two unions who are playing games, and we wish the game playing would stop. I mean, if you look, for example, in Ireland, they want to go to the WRC, but we've no business going to the WRC yet. They haven't even entered into negotiations with us. While they're faffing around in the WRC, our pilots are losing out on the pay increases in July, with the pay increase in August, the pay increase in September. You know, they should get on and agree to pay restorations first. It will be pay restoration first. The pay restoration deals include pay increases. What drives all of this will still be is getting back to. Remember, within the pay restoration themselves, if you take that we've restored, if you take the 20% pay cut for some of the pilots that was agreed during COVID, their restoration was 10% this year and then 6% and 4% over the next two years with an understanding that if we get back to pre-COVID profitability this year, and that's anything north of EUR 1 billion profit after tax, then we would accelerate that. We'd bring forward the 6% and 4% and pay a second 10% in April of next year. Somebody's gonna ask me, what does modest profitability this year mean? The answer to that is we don't know what modest profitability is this year. Everything we're driving towards is hopefully or trying to work profitability back up to north of EUR 1 billion this year so that we can accelerate that pay restoration. The critical thing that drives us this year is to try to get back to pre-COVID profitability so that we can enhance or accelerate the restoration of pay, and put everybody back at least to where they were pre-COVID by April of next year. Next question, please. The next question comes from the line of Mark Simpson from Goodbody. Please go ahead. Mark. Yeah, good morning. I have two questions. First on ancillaries. It looks as though you're kind of hitting a level which is, sort of higher base than you'd anticipated. I'm just wondering with dynamic pricing, load factors hitting mid-90%, next year, could we go higher still? I mean, are we seeing, you know, a better performance on ancillaries with, you know, better momentum looking into next year? On the balance sheet, yes, obviously, fantastic kind of net debt number, EUR 400 million, at the end of June. We saw accruals, you know, plus unearned income of about EUR 3.8 billion at the time. I'm just wondering if you kind of take the concept of net debt with own cash, which has been historically when you've paid out dividends or done buybacks kind of circa EUR 2 billion, that looks like the number at the end of this year. Are we getting close to a position where your balance sheet allows you to start buying back or paying out divs? Okay. Neil, why don't you do the first one, the ancillaries, give us a view, and then I'll ask Tracy just to comment on the balance sheet. Okay. Well, Mark, ancillaries, as you said, performed well, EUR 22.50 in the quarter. We would be hopeful that as we track up towards the 165 million passengers in the year, that we'd retain somewhere between EUR 22-EUR 22.50 for the full year. Beyond that, you're right, we do continue to look at various other initiatives and dynamic pricing, but we're a long way away from looking at our budgets for next year. I think I'll be just happy to deliver EUR 22.50 this year, and then we can talk about next year when we get to that place. Tracy, balance sheet net debt shareholder return. When do you think we'll be looking at returning some of the money to shareholders? I think as we said, you know, we're on track to get to that net zero position by the end of FY24, and I think until we've prepared the balance sheet, I think we can't see returns until beyond that. I think it all depends on when we get to that net zero, and then we look at it when we return to shareholders. Yeah, I agree with both of those. I would just point out on the ancillaries, you know, we expect kind of the big performers the last couple of years, which is the priority boarding, reserve seating to level out at current penetration. We have high hopes for duty-free sales on UK flights. That's about 40% of our flights touch the UK. We would expect to see something there, hopefully duty-free sales might come through in the next year or two. I think the reasonable outlook is that it'll level out at around EUR 22.50 until we do some new development. I agree. I mean, I think on balance sheet, again, you know, there's a very strong kind of recovery in the cash flows this year. As long as that is not disrupted later on this year by adverse COVID and/or Ukraine developments, we would expect to get back to net zero net debt in the next two years. That's. Bear in mind that covers a period when we have over EUR 1 billion in CapEx each year for the next two years. EUR 2 billion each year. EUR 2 billion each year. We also have that then repayment. We have an EUR 850 million bond to repay in March 2023, and there's a EUR 750 million in August 2023. There's a lot. We're generating a lot of cash, but we have a lot of debt and CapEx to fund over the next two years. I think again, much higher up in our list of priorities would be the pay restorations and dealing with pay with all of our people once we're sure we're back to kind of. You know, again, if we don't have negative kind of COVID in Ukraine this winter, pay restoration, you know, and looking at pay increases going forward for the next couple of years would be number one. CapEx number two. The bond repayment is number three, and I'm afraid shareholders will just have to wait in line. I wouldn't expect anything on the shareholder return side until we get back to zero net debt by FY24. Next question, please. The next question comes from the line of James Hollins from BNP. Please go ahead. James, hi. Hi. Morning. Yeah. Just coming back on the Boeing issues. Now, you gave a pretty lively response last time I asked about it. I'm just wondering, I mean, that seems to have kicked them up the arse, and they have actually outperformed on deliveries ahead of the summer. I was just wondering, you know, what's going on here, why you are now suddenly very pessimistic on their ability to deliver, I think, it's only 20 aircraft by end of calendar year, or whether this is just your way of giving a further kick. Then on stepping it strategically, probably for you as well, Michael, just wondering if there's any particular areas you're kind of putting your boot onto the throat of some of your competitors in Europe, as you see them floundering. whether kind of these price increases would suggest there's no sort of price wars going on across your network? Okay, James. Thank you. Firstly, you know, I wouldn't get too pessimistic about Boeing. But I will certainly come back at you that Boeing outperformed on delivery this year. They didn't. If anything, I mean, we were supposed to get all of our aircraft by the end of April. We eventually finished up taking about half of deliveries through May and into the first half of June. We didn't get the last aircraft until about the fifteenth of May, sixteenth of June. That's really painful for us because we had all those aircraft on sale through the end of April, May and June. You know, we were actually canceling flights, had to take capacity out of the system. We delayed aircraft growth in places like Zadar and Zagreb and in Vienna because Boeing were short on delivery, short on the aircraft. Now, they did deliver 70. We took delivery to 73. We were originally supposed to take 65 aircraft. That's 'cause Boeing asked us, could we take some of these additional aircraft? Remember, these were the aircraft that Boeing had built pre-COVID or during COVID, but that were grounded because of the MAX capacity. They'd been grounded and not delivered. So they were late delivering aircraft that were built two years ago. Now, you know, they. That doesn't inspire confidence. They are now this winter, we have to take aircraft that haven't been built. We are very supportive of Boeing's step up in production. You know, we took a lot of confidence from the fact that they've stepped up to 31 aircraft a month. In fact, we had a meeting with Stan Deal and David Calhoun themselves here in Dublin back in May, where we were assured that the Ryanair deliveries for this winter would take priority, that we wouldn't have a rerun of these delivery delays. In the last two weeks, we're getting letters from Boeing telling us there might be problems with 21 aircraft this side of Christmas. Like, I don't understand why there's gonna be problems with 21 aircraft this side of Christmas if you're gonna make 200 of these planes from June to December. It's all part of the same, you know. Management in Seattle is always, you know, long on talk and big on assurances and short on deliveries. They need to get their finger out. You know, I think there needs to be new management in Seattle, but that's not my decision. That's David Calhoun's decision. You know, we've heard nothing back from them. You know, they were at Farnborough last week, and they had a reasonably good week. You know, 100 aircraft to Delta and 40 aircraft to Qatar. So it doesn't set the world on fire. These are aircraft, the MAX 10s, which Boeing isn't even sure it's going to get certified before the end of the year. In which case they may have to go back unless there's a legislative change in Congress. The cockpits have to be redesigned, which will not deliver commonality. I remain worried. I don't wanna be too pessimistic about Boeing. I said the right thing is we remain worried about Boeing and Boeing delivery. Boeing are great on talk and short on delivery. What we want to see is less talk and more delivery. Growth in Europe, I mean, again, look, we have never been an airline that goes after market shares or, you know. The fact is that, you know, the airports around Europe, I mean, we put 25 new aircraft into Italy this year. We're in a marketplace where Alitalia has reduced its fleet by almost 40%. We, you know, think it's logical that ITA would be sold to Lufthansa, but that means there'll be no growth by ITA in Italy. It'll just be serving the Frankfurt and Munich hubs. We've seen significant growth in Portugal. Again, where TAP's fleet has been reduced by 40%. We've opened a new base in Madeira. We're adding capacity in Porto, and we'd like to add more capacity in Lisbon, but again, Lisbon capacity remains artificially constrained. Remarkably, despite the fact that the EU required TAP to give up 16 daily slots. The 16 daily slots went to easyJet, you know, an airline, and that has not been growing in Portugal, in fact, has been retrenching in Portugal. We fail to understand why the TAP slots go to an airline that is not growing in Portugal, but other than because TAP don't want to have any more competition from Ryanair down in Portugal. Continue to call for the opening of Montijo Airport in Lisbon, which is the second airport in Lisbon. The government keep kicking it back. Remarkably, they're more interested in protecting TAP from competition than they are in growing the tourism business in Portugal. We are continuing to see very strong growth in Italy, in Spain, where Norwegian have cut significant capacity. In the UK, where Thomas Cook, Flybe and cutbacks by easyJet and BA this summer are assisting our growth. Very dramatic growth in Central and Eastern Europe. Even in a post-COVID environment, we're growing very strongly in Hungary and Budapest in Wizz's home market, we've now overtaken them. In Poland, we're seeing very strong growth. TAP and Lufthansa has not returned to its pre-COVID capacity. In the Baltic states, in Romania, in Slovakia, you know, very strong market share growth. The fares are higher this summer. I'm not sure whether that's a short-lived, but I think if there is no adverse COVID or Ukraine developments, we are going to enter into a period, I think of three or four years of modest airfare growth. It is inevitable, so we're well hedged this year and into next year. I mean, I think there's going to be significant capacity cuts by a lot of our competitor airlines this winter, because Wizz, easyJet and others who are not as well hedged as we are, simply would blow their brains out, based on their planned capacity, given that they're unhedged. I think you're gonna see material capacity cutbacks into this winter, which should sustain a reasonably strong underlying fare environment. I think that capacity constraint over the next year or two, allied to higher oil prices and continuing environmental, probably taxation, should see, I think, a medium-term period of upward airfares in short-haul European air transport marketplace, particularly where a lot of this capacity that's been taken out is never going to return. Next question, please. Thanks. Thanks, James. The next question comes from the line of Jarrod Castle from UBS. Please go ahead. Jarrod, hi. Hi. Good morning, everyone. I just wanna touch on ex-fuel unit cost. You're at 30 EUR per pax now, which is broadly in line with where you were pre-COVID. You know, you're obviously putting in a lot higher capacity. You've spent two and a half years taking out costs. You know, are we gonna see a lot of improvement, I guess, in 2Q? I also noticed, just related to that, you know, your crew expenses are very high, EUR 800 million versus normally, you know, EUR 100, EUR 200 for the quarter. I'm wondering if there's a lot of ramp-up costs in that number. Then just the second question on pricing. You're selling summer 2023, 30% on sale. What would you normally be selling? I know it's the answer is probably gonna be no, Michael, but any color on directionally, is pricing better than where you were, you know, where you are at the moment or flat or down? Anything on rates? Thanks. Yeah. Thanks, Jarrod. You know, I don't wanna undersell our cost performance in Q1. You know, it is below 30. It's not the same as it was before. We were at 31 before COVID, so it is kind of notably down. That's only with you know, the load factor in the first quarter because of the impact, particularly of Ukraine and April. The load factor over the first quarter was only kind of 92ish%. Pre-COVID, that would have been up around 96%-97%. I do think we will have a strong performance in the second quarter. The load factor will be higher. We would hope to get to 96%. We expect to get 96% from July. I hope we get to 96% in August. September will come off a little bit again, and all of that is on the assumption there's no negative news flows. I would expect our cost performance in the second quarter to maintain or improve slightly on what we did in Q1, ex-fuel. Over the medium term, I think our cost performance will be materially better than any other competitor airline. The Gamechangers are delivered. We are delivering more traffic at materially lower fuel consumption. I think that will be key going forward. We have locked in significant airport and cost reductions over the medium term for the next number of years. I think there will be some upward movement in staff costs as we conclude the pay restoration negotiations, and we want the pay increases over the next medium term, two to five years. We want to reward our people who are delivering this industry-leading performance. You know, I think our first priority in a post-COVID once we get back to pre-COVID profitability and growth, I think it's our staff and our people to where we would be directing most of our energy first. I would want to see staff costs rise a little bit over time. Airports and handling charges, we expect to remain reasonably stable. Fuel is in the lap of the gods, although again, I think we are hedged materially better than our competition and will continue to be so because we have the balance sheet to be more aggressive on hedging going forward. I mean, we're still hedging at $92 a barrel into FY24, whereas jet spot at the moment is still up at $120 a barrel. By having the balance sheet to be able to go out well into the future, I think we're making material savings. Route charges, you know, I think will continue to rise despite the abysmal performance of ATC. You know, I would have a considerable sympathy for a lot of our competitor airlines this summer who are taking a lot of unfair criticism about their punctuality and cancellations when it's not their fault. An awful lot of this has been caused by air traffic control. The French as only they can decide to change the systems in the middle of the summer peak, not that they were ever particularly efficient in the middle of summer peak anyway. Depreciation, marketing, others will be materially down in the next couple of years because we're adding newer aircraft at reasonably low cost. We will not see the kind of EU 261 cost this year where we have no significant disruption cost because of our superior operational performance. I think this year or remainder of this year, we would expect to keep costs below EUR 30 ex-fuel on a unit cost basis, although some of that depends on what happens with load factor and capacity growth into the second half of the year. We will be staffing up in the second half of the year for our growth into summer of 2023. Pricing- Michael- Go ahead. Sorry, Michael, I was just gonna jump in there. I mean, you touched on a couple of issues into the second half of the year. We will see most likely route charges increase after Christmas, as they always do. We will start taking staffing into the fourth quarter of the year ahead of the summer peak for 2023. I think, Jarrod, just so you don't run away with yourself, if you were to put a 31 or just below a 31 in your full year model, that would probably be fair. We, you know, we'll try and beat that, but I think that'd be a reasonable forecast. Okay. Well done. On pricing, yeah, look, we've 50% on sale for next year is more than we would normally have, particularly of the growth capacity. But there, you know, there's no indication on pricing yet out to summer 2023. We can't even tell you what the pricing will be for the second half of August 2022, never mind summer 2023. All we can tell you is that at the moment, through what we've seen in July and August, it looks like the prices are rising by a low double-digit number. And I, you know, that is. I don't ever remember a time before in this industry where we were adding 15% capacity growth off a base of 150 million passengers and seeing a double digit. Normally, you'd see a double-digit price reduction. It is unusual. That could lead to a very strong profit recovery this year if there's no adverse COVID or Ukraine developments in the second half of the year. Frankly, we expect some adverse news flows just because this is a industry that is afflicted with bad news. Whenever you get things are recovering well, you get bad news. I would be cautious on pricing, although we are well in control of the cost. Next question, please. Thanks, Michael. Thanks, Jarrod. The next question comes from the line of Stephen Furlong from Davy. Please go ahead. Stephen, hi. Yeah. Hi, Michael. Hi, everyone. Just reading, you know, you looked at, you know, just go back to aircraft, reviewed 77 NG leases and decided to extend the Airbuses, the A220. Just might talk through that process. I'm wondering as well, with the leases going out to 2028, then presumably the growth of the airline could go beyond 225 million passengers, which tells me that you're not in any rush to do another deal with Boeing on the MAX 10. I mean, just on that MAX 10, even if it gets certification, where would hypothetically a larger aircraft, like some competitors of A220 ones, where would that be operated? Like slot-constrained airports or longer sectors? Thanks. Thanks. Some of that morphed into about six questions as far as I could tell. Anyway, we went out to the market, you know, to see what was in there. We were being opportunistic. You know, we're surprised, secondhand quotes on the 737, the NGs, were reasonably expensive, which I think validates our own depreciation policy on our existing fleet. Partly because there are various types of aircraft into the cargo conversion program into China and into Asia. We were surprised at the cost opportunities on extending some of the A320 leases. There does appear to be quite a split in the marketplace, on pricing that the Airbus NEO has been such a successful program that there's less demand, it appears, for the older CEOs on the A320s. I think there's also, if you went through the lessors of the Airbus, there's 29 of those aircraft, 2 of those going back at the end of this year, so we're down to 27. We think we'll extend leases on maybe 25 or 26 of those 27. We're fighting with price on price reductions with a couple of the lessors. We aim probably to extend 25, 24, 25 of those aircraft. We're looking at rate reductions of about a third on the monthly lease rentals. It's very meaningful and I think a lot of that is also based that a lot of the leasing companies want the Ryanair Group on their kind of customer list and are willing to kind of you know aggressively price to be able to stay there as a lessor to Ryanair or to the Ryanair Group. We have seen a very material reduction in those lease rates not just for the full year's extension but for the last two years of the existing leases as well. That's material. I think what it reflects is that you know the strength and success of the Airbus program. You know you want to buy a new Airbus NEO now you're looking at delivery in 2027 or 2028. Which again, I think highlights the relative underperformance of Boeing. You know, they can't get the MAX 10 certified this side of the year. You know, I would hope that Congress would look favorably on any of those extensions. I think we welcome the order from Delta for 100 and Qatar for 30, but I'm fairly sure they'll have walk away rights if the MAX 10 doesn't actually have a common fleet. Really everything in Boeing depends at the moment on getting the MAX 10 certified by the FAA, and that has to be done either this side of Christmas, and if it's not done this side of the end of the year, then they need a congressional and legislative change. I hope that, you know, we'll be into midterm elections in November. You know, this is not looking good. Meanwhile, you know, they were dealing with Boeing, who are mumbling about delivery delays on just 21 aircraft out of 200 that they confidently said they'd produce this side of Christmas. Much more important is the 30 aircraft that they're scheduled to safely deliver between January and April of next year, which will be critical to our summer 2023 growth. We are not willing to put up any more delivery delays from Boeing or excuses coming out of Seattle, so let's wait and see. Where would we go with those? I mean, if we got the MAX tens, or we took more MAX eights. Like, look, you know, we've never been in a situation with Boeing of, you know, when do we desperately want or need aircraft? We want or need aircraft whenever there's a pricing opportunity to buy, to order aircraft. We didn't order any aircraft through 2014 and 2019. We've ordered a bundle of aircraft, I think over 400 aircraft between 2019 and 2020 or 2018 and 2020. If we never ordered another aircraft from Boeing, you know, we would probably, you know, I think we would comfortably exceed our 225 million passenger target by 2026. You know, I don't want to get into raising targets because we're not in that business at the moment. We set it to an objective there to get 225 by FY26. We're confident we'll get there. Certainly, the extension of the Airbus leases will help that process. You know, we have to see what Europe looks like by FY25, 26. I still believe there will be very significant consolidation in Europe. I still believe that by the time we get 25, 26, there will only be four large airlines in Europe, which will be Lufthansa, Air France-KLM, IAG and Ryanair. That means that somebody is going to take out easyJet, Wizz, TAP, Alitalia, and probably SAS will be given away to somebody over that period of time. Then you may be in a different environment, not unlike North America, where, you know, there's less capacity growth, more mature markets and more upward pressure on underlying airfares. Particularly if in Europe we're going to continue to tax air travel or, you know, constrain food production, as our response to global warming. You know, 225, Stephen, over the medium term is the objective, but clearly the very advantageous lease extension of the A320 facilitate that. Where if we did do a deal on MAX 10s, we would have no difficulty operating those MAX 10s in almost every market in which we operate. I think the challenge faced by some of our competitors, most notably Wizz Air, whose load factors have fallen by 10%, is they're simply unable to compete with us in places like Italy, where their load factors are materially behind Ryanair. They're entering into a marketplace where Ryanair has lower fares, much more established presence. Wizz Air has no presence in the Italian market that we can see and are out there desperately engaged, slashing airfares, but operating with load factors that are typically 20 percentage points behind Ryanair in the Italian marketplace with bigger aircraft. They are not able to fill those bigger aircraft in markets where Ryanair has lower costs and Ryanair has lower fares. I know there will still be idiot analysts out there later on today producing research that says, yeah, Wizz will have lower costs than Ryanair, and it won't happen in this decade or the next decade or the decade after that either. Because what nobody factors in is the materially different price at which we buy our 737s compared to the ludicrous prices they pay for A321s, and that gap is never going to close. Let's wait and see. Next question is from Sathish Sivakumar from Citigroup. Please go ahead. Sathish, hi. Hi, Michael, good morning. I've got two questions here. Firstly, on the demand recovery. You said that the booking curve at the group level is 78% below 2019. Is there any market where you're actually seeing the bookings curve being weaker than the group level, or even stronger than the group level? Then the second one on the wage bill. We're done with 80% on pilots, while cabin crews are on 70%. The remaining gap, i.e., for the cabin crew, it's similar to the markets like, say, what we are seeing for pilots in terms of Belgium and Ireland? Thank you. Thanks, Sathish. I'll ask Eddie just to comment on the wage deals. On demand. Look, I mean, you know, we wouldn't get into that kind of granular analysis of the different markets. Some markets are stronger, some markets will be weaker. It's easier to get a look at it in the overall context. You know, at the start of January, we were running 20% behind pre-COVID volumes. At the start of April, we were running around 12% behind pre-COVID volumes. The start of July, we're about 7% behind our pre-COVID volumes. The gap is closing, but we're still behind and therefore still exposed to closer in bookings. That's why we're worried about the fragility of the recovery if there's any negative COVID or Ukraine development through September through the third and the fourth quarter. Eddie, we are dealing with cabin crew. Yeah. Just briefly. I mean, I think what you see is that as each of the pay deals in terms of restoration, and we've already answered on that, is that as they've come through, I think, you know, the remaining unions are coming under pressure, I think from their own people, because every month that goes by there's less of that restoration. We're talking to all those groups and, you know, we're coming to the end of the summer. We're entering into the winter, and I think that we will be in a good position to close out the majority of those deals. There, there's nobody that we're not talking to at the moment. As Michael alluded to earlier, there are a number of, we've had some difficulties in Belgium and Spain. You know, they're disproportionately portrayed in the media. I think, you know, people are beginning to see that, you know, other groups in other countries have they're well on their way to restoration and, there's a framework, for getting all of their money back over the, you know, hopefully by next April. I think the majority of those are moving in the right direction and will be closed out. Yep. I think that's fair. Next question, please. Hello? The next question comes from the line of Jaime Rowbotham from Deutsche Bank. Please go ahead. Jaime. Yes. Hey, Michael. Just one from me. At the end of the pre-recorded materials this morning, you understandably encouraged people to ignore the short-term news flow, focus on the long-term growth opportunity. In terms of that opportunity, what do you say to the people who worry that the achievability of growth gets tougher for Ryanair given already high market shares in developed markets like the 40-odd% you talked about now having in Italy? Thanks. I mean, you know, there's always been the naysayers, you know. There's always been somebody who 10 years ago thought easyJet had a better product or sorry, 20 years ago, BA, we'd never be able to compete with BA. You know, nobody would ever transfer to Ryanair. 5 years ago, easyJet had a better product. We'd never be able to compete with easyJet. For the last 2 or 3 years, we keep running this stunning bullshit as some Hungarian airline is going to have a lower cost base than Ryanair on a per kilometer basis sometime in 2035. And yet we just keep delivering. I mean, I think if anything, the growth opportunity for us is getting easier and will be easier as a result of the remarkable job that the wider management team in Ryanair have done during COVID. I mean, to have gone through COVID, keeping everybody, the pilots and the cabin crew current, keeping the engineers, keeping the aircraft current. The strength of the recovery. During COVID, we significantly renegotiated the price of the Boeing aircraft. We have done remarkable long-term airport cost deals that lock in, you know. I know with pretty ambitious growth targets there. You know, all of our bigger bases at Stansted, at Charleroi, at Bergamo and others, our cost base is locked away till 2028, 2029. Yet you look across the piece and you have Heathrow, you know, an airport that couldn't run a piss up in its own brewery are out there looking for 50% price increases this year and 50% price increases next year. Gatwick, I think, will be shortly following along. We have taken out remarkable quantity of cost out of the system. Are there cost pressures going forward? Yes, fuel will probably be up a little bit next year or two, but we will still do materially better than others because we can be more aggressive on hedging. Staffing, I think there will be pressure across Europe on staff generally. Labor will rise a bit. I mean, I still believe that there's so much cost pressure on so many of our competitors that particularly the legacy guys, airfares will rise over the next four or five years. I would think over the medium term, we will continue to take very material market shares in big markets where there's been huge capacity restructuring like Italy, like Hungary, like Austria, Poland, Spain, Portugal, et cetera. I mean, there is no country across Europe at the moment where our new team are not in very active negotiations with a whole swathe of airports who are desperate to recover their pre-COVID traffic. You know, we're doing very little in Germany at the moment, but have no doubt in the next two years as the entire German consumer gets screwed by Lufthansa and its overcharging. I was a victim of them myself during our full year results roadshow to buy a last-minute airfare, economy airfare from Frankfurt down to Zurich. A one-hour 40-minute flight, I got charged EUR 740, one way. Last week as we announced two new routes in Vienna this winter, a monopoly route in Vienna, Copenhagen are currently operated by Austrian. They're charging EUR 740 return on a one-hour 20-minute flight. We're entering the Vienna-Helsinki market, where currently it's only operated by Finnair as a monopoly, doing four times a week. They're charging EUR 800 return in economy. I mean, there are airfares and markets out there where. That's why these airports are desperately beating a path to our door, trying to get us to add capacity there. One, they know we have capacity, significant capacity growth for the next four years. As long as Boeing can deliver the bloody aircraft to us, we have significant capacity recovery. Two, their existing business is being rogered by monopolists like Lufthansa, Austrian and others who are charging just outrageous short-haul airfares. I think we will continue to be the beneficiary of that. The one thing I have no doubt on is that we will grow to 225 million passengers over the next four years. We already have the airports, the market, the aircraft deliveries to achieve that, and that takes us up to somewhere close to 25%-30% of European short-haul marketplace. I believe there will be capacity consolidation over that 4- or 5-year period, and we are poised with a very low cost base, particularly as the... Remember, in the next four years, we'd have 210 Gamechangers carrying 4% more passengers but burning 16% less fuel. It will occupy about a third of our fleet, and that will deliver very significant cost savings. I think we're entering into a 3- or 4-year period of very benign growth. We will be the only airline that will have the cost gap between us and all of our competitors will materially widen in the next number of years. Therefore, I think you'll continue to see us take very meaningful market share, capture market share from our competitors who have no chance of ever getting it back from us, unless we do something monumentally stupid. Given that we're an airline, therefore we're always prone to doing something monumentally stupid. Thanks, Jaime. Next question please. Next question is from Muneeba Kayani from Bank of America. Please go ahead. Hi, Michael. Muneeba, hi. Just on your fuel hedging. You said you're at 35% hedge for next year. How should we be thinking about your adding hedges for next year given we're currently at high oil prices? Is it a bit of a formulaic thing, or is it opportunistic, is my first question. Then secondly, in the US we've been hearing a lot about pilot shortages right now. Is that a risk for Europe, especially as Asia reopens? How are you thinking about that as you add to your capacity? Okay, I can do two. I'm gonna ask Thomas Fowler, Director of Sustainability to do the fuel hedge. I'm gonna ask Eddie to do the pilot shortages. You know. Thomas. Just on the fuel hedging, right. As Michael said earlier on, we have a strong balance sheet which gives us the opportunity to hedge out forward. With the curve in backwardation at the moment below spot, we see it as an opportunity we can to hedge which other competitors aren't able to do. We'll always continue to hedge a certain portion 12-18 months in advance. At the moment with the backwardation, we see that as an opportunity. We tend to be opportunistic, but you know, we also will accept that by the time we get kind of 6-10 months out, we want to be at 80%. Now, I'm not sure we'll ever again hedge up to 80%, but there will be a mix of hedges and caps. You know, we've consistently asked ourselves, should we hedge out 100% this winter? The reason we're only 80% hedged this winter is again Mm. We're not sure that there won't be COVID disruptions or Ukraine disruptions this winter. I keep coming back to the fragility of the recovery. You know, we you know, it features highly in a lot of the union negotiations, the pay restoration discussions. Guys, let's agree the restoration now quickly because this situation could get worse in the autumn. We could save more money by hedging up to 100%, but we just don't want to take the risk of hedging to 100% where there may well be more disruptions later on this year. Eddie, on the pilot. Yeah. I mean, we've been hearing about the pilot shortages for the last since I started here 25 years ago. I mean, if you look at what we're doing at the moment, I mean, if you look at the profile of where Ryanair, having moved to local sort of terms and conditions, our pilots are well paid. They're on a 5-4 roster, and they are usually in their hometown. You know, like whether that's in Lamezia in Italy or Santiago de Compostela in Spain. Like, we have a very good offering. We have 1,000 cadets this year in training who will be our. We have a very slick training machine here in terms of ab initio pilots coming in. They have the confidence that they're going to be promoters along with the growth. We have 225 million passengers that they've got a good chance of being promoted within three to four years. There is a compelling proposition on that within European short-haul. Yes, there'll always be the attraction of going to the Gulf or going to Asia, but I think people have seen what has happened during the COVID pandemic, where people were essentially thrown under the bus in a lot of those jobs. Those that were with Ryanair were you know kept current and kept in employment. I think those decisions people will be less likely to make those, given that there is the fragile nature of the recovery to move your families and that to the other side of the world. We have a good pipeline, an excellent pipeline of pilots. We have no worries about that at the moment. You know, where most are obviously all with all of our pilots are 737 pilots. You know, I think there will be a lot more turnover of Airbus pilots this winter between BA and Wizz and easyJet and now Jet2 moving to Airbus. I think there's a lot more movement of Airbus pilots around the place. 737s, we're by far the largest operator in Europe. As Eddie said, we're training 1,000 today. FOs have a tendency there where, you know, they get trained, want to go off, and it goes for a couple of years. You know, they come back pretty quickly. As Eddie said, I think we're seeing a lot less turnover in pilots and in cabin crew. I think they appreciate the fact that we didn't, as Eddie said, just dump them out the door during COVID when many of our competitive airlines did. You know, I wouldn't underestimate. I think there will be pay inflation over the next couple of years, particularly in some of the lower paid categories like the junior cabin crew, ground handling. You know, across Europe, there's going to be, you know, we're largely in full employment. I think there will be upward inflation at the lower end of the salary scale. You know, we're well crewed, and I think the strength of the cadet pipeline gives us confidence in the future. Next question, please. Next question comes from the line of Alexander Paterson from Peel Hunt. Please go ahead. Alex, hey. Hi. Yeah, after the current Boeing order, you previously said that you expect the fleet to be more for replacement, so capacity growth would slow. That would suggest that you'd need to be more yield active as you'd no longer have the capacity growth to absorb any cost pressures. Do you think the group has got the capabilities to develop ancillary revenue streams organically beyond sort of priority boarding baggage, that sort of thing? Well, the answer to that question is, you know, firstly, we're the ones who invented the ancillary stream on priority boarding. You know, we're the first airline to charge for check-in bags. When we started, every other airline from easyJet to BA, we would never charge you for a check-in bag. Then within six months, they're all copying us. We're also the airline that invented the priority boarding, the reserve seating. Again, all the competitors. "Oh, we'd never charge you for a seat." Within six months, they're all charging. Like, look, we have demonstrated more inventiveness and agility on ancillary revenues. We've led the way over the last 10, 15 years, and the rest of the industry has copied us. Yes, I have nothing but confidence in our ability to continue to inventively, you know, develop ancillary revenue streams. I would caution an awful lot of those ancillary revenue streams come out of our way of changing passenger behavior. You know, we don't want to charge for a check-in bag. We prefer to just not have the check-in bag. The fact that 20% of our passengers. You know, when we first started check-in bags, 80% of passengers checked in bag, now it's down to 20%. One of the reasons why we've been so largely undisrupted this summer is, you know, we don't have connecting flights going through hub airports. We're not missing thousands of bloody bags because we tend not to carry thousands of bags. One of the reasons that operationally we're so much better than many of these other airlines is we don't have to provide all these services. We don't overpromise and underdeliver. We tend to underpromise and overdeliver. I would again, I am of the mind. I think the more medium-term upside for our investors and shareholders is that as capacity growth in Europe slows down, and you know, there is no doubt that capacity growth in Europe is going to be flat. I think flat, if not slightly down for the next two or three years. That would be a combination of capacity that's been taken out of the system during COVID. Competitors who are unable to restore some or all of their capacity going forward because they're unable to compete with us in markets where we've taken huge market share gain. The fact that we ourselves will be slowing down our own capacity post getting to 225. You know, if you look across at North America, where for the last 5, 10 years, you've had four major airlines, almost zero capacity growth, strong upward pricing power among the four incumbent carriers. Europe is going to morph the same way in the next five years, the next decade. I think, you know, the attractiveness of an investment in Ryanair at this point in time is you get to invest in the lowest cost provider. I think the best run group of airlines in Europe, and the one airline that is going to be one of the big four surviving carriers. You know, if we get down to a market in Europe, which I believe we will, of Ryanair, Lufthansa, Air France and IAG, you'll have for the three very expensive legacy carriers rapaciously pricing their domestic and short-haul intra-European. Ryanair being the only one out there keeping them all honest. You know, with materially lower airfares and a material upside in the year-end pricing outlook over the next, over that period, over that consolidated period of time. Thanks, Alex. Next question, please. Guys, Neil, sorry, I'm gonna have to go. I know he's doing one or two investor meetings in London. So Neil, if you want to head off, and we'll make up the answers to the last couple of questions that we have left to do. I got three to cover you. Keep me honest here. Okay. Thanks, everybody. Thanks, Neil. Bye. Next question. Next question. Gerald Khoo from Liberum. Please go ahead. Gerald, hi. Thanks. Couple from me, if I can. Firstly, you talked about the two bonds that mature in calendar 2023. I just wondered what your thoughts are on refinancing those. Secondly, on the operational disruption issue. You talked about the benefit that you've had from keeping your staff employed and current. Now, how have you managed to keep your suppliers and external ground handlers, you know, how have you managed to get them to staff up to the right level? To what degree do you have confidence that that will remain the case through the rest of the summer? Okay. Bonds for 2023, I mean the two bonds we repay in 2023. I think certainly the present intention is we just pay those down out of internally generated cash flows. We're clearly moving into a higher interest rate environment for the next couple of years, and I would want to reduce and pay down debt despite the fact that some of these bonds are pretty low cost. If we were refinancing those bonds now, we would be looking at probably double the cost on the interest rate that we have on these bonds. I think we're minded now, and I think, you know, for the foreseeable future, we're all facing into a higher interest rate environment and a higher financing cost environment. Therefore, it makes sense for us to get back to zero net debt and begin to build up our cash balances. Then what has been for the last 10 years, a modest net financing cost will, I think in the next five years, become a modest net financing income, as our cash balances will outweigh debt. The operation is obviously still. I think one of the key things is that, you know, we have a lot of. We work closely with our service providers. You know, we knew coming into this summer that we were going to have operate at 115% of our capacity. We worked closely with, you know, we have Blue Handling, our contractor in Spain, in Stansted. We do our own handling here in Dublin. Not unlike those. We took the decision last November. You know, I take you back to the half year results presentation we made last November. We said we're gonna start hiring, start recruiting, start training pilots, cabin crew, but also handling costs through those two quarters to build up for the summer 2022 capacity growth. Now, we got, again, fried as a result of Omicron impact at Christmas. We got badly. You know, we took a lot of cost risk through April because of the damage done by the Russian invasion of Ukraine up to April. We didn't look that clever through Christmas or Easter. Now we look very clever. I think a lot of our competitors decided not to kind of engage in recruitment and training during that period of time. You know, I think that was a justified decision given the uncertainty caused by Omicron in November and Ukraine in February. We took a different decision, and I think that decision has been vindicated by our success of getting through this summer. At a lot of our airports, we also were able to kind of tip off, you know. I don't have a lot of sympathy for an awful lot of the stuff coming out of airports, particularly out of Heathrow. John Holland-Kaye came bullshitting on about nobody expected it. Yes, we did. We filed the schedules. We were certainly able to tell Stansted what we expected the summer traffic would be. Dublin again, we knew exactly what the summer traffic will be. We've been able to handle it. Dublin had some handling problems here in April and May. To be fair to the DAA, I think they have responded very well. They hired, you know, under a lot of political pressure and some unfair criticism. They have hired very well and very quickly, and I think their recent weekends in Dublin have been exemplary. Well done, Dublin Airport. I wouldn't often be complimentary of them, but I think their management team did a good job of recovering from a bad start in April and May. You know, the shambles in Heathrow, some of the security shortages in Manchester, Bristol, you know, they were avoidable. I can understand why, you know, some people were trying to be, you know, didn't want to recruit in February and March when, you know, we remember back in early March, we were still in the teeth of the Omicron cutbacks and the Ukraine, the Russian invasion of Ukraine. I think we just managed it better, but we also were able to give our suppliers, airports and handling companies a better heads-up. Our heads up, I think, has been a bit more accurate and a bit more reliable than what many of our competitors were able to deliver. I have no time. You know, I'm not a customer of Heathrow. I have no time for the bullshit that comes out of Heathrow, which is one of the greatest overcharging monopolies anywhere in Europe. Smarming on about need for, you know, large cost increases when, you know, they can't run a piss up in a brewery. I think the airlines in Heathrow should be compensated by that overcharging monopoly for the egregious mismanagement that has been visited on them by Heathrow Airport. If you look at Gatwick, Stansted, Luton, all the other London airports have significantly outperformed this summer. Heathrow is a badly run, overcharging pissant monopoly. If you had a competent regulator in the CAA, which you don't, they would be taking much more affirmative action on behalf of the airlines and on behalf of consumers, rather than pathetically, I mean the DfT transport minister writing to the airlines last week in the UK asking us to ensure of our preparedness. You don't need to write to the airlines. Try writing to some of your airports, Heathrow Airport, which is where most of the problems lie. Next question please. The next question comes from the line of Johannes Braun from Stifel. Please go ahead. Johannes, hi. Yes. Hi, good morning. First question. You said earlier that you are prepared to cut back growth a bit this winter due to the high fuel costs, which you have to pay on the 20% unhedged part. I think you said single digit above pre-pandemic, down from 15 this summer? If fuel prices stay as high as they are into next summer, would you be prepared to cut back your growth for next summer as well based on the same logic, and also given the fact that you're only hedged by 35% for next summer? Second question, I guess that one would have been for Neil, but I'll still try. You said that you're fully hedged in terms of the US dollar in terms of the CapEx. To what extent are you hedged on the OpEx? Okay. Tracey, would you just say I have a question. Let's take the capacity question. Because the winter is very fluid. I mean, at the moment we believe we will not run at 15% of pre-COVID capacity this winter. We will cut back, particularly midweek unprofitable flying in November, first half of December, second half of January, February. I think our capacity growth and traffic growth in the second half of the year will be probably something 9%-10% of pre-COVID. If, however, I expect to see in the next number of weeks and months, material cutbacks by our competitors who are completely unhedged this winter and would blow their brains out. Mind you, a lot of them don't have a lot of brains, but nevertheless will blow what brains they do have out. We might opportunistically change that, because we've already hedged 80% of our fuel. This winter is a very fluid, I think, situation. You know, it's fluid if there's negative news flow on COVID and on Ukraine, and I think it will be more fluid or there's certainly going to be opportunities arising if we see material cutbacks by someone like, you know, AUA in Vienna who are unhedged. Wizz who are completely unhedged or largely unhedged this winter, or hedged at $120 a barrel. I don't think they're gonna operate the schedules that they have filed, and I think I expect to see that many of those airlines will materially cut their winter capacity this winter. Would we cut back summer? You know, we will go hell for leather in summer 2023 for two reasons. One, we will be better hedged than any of our competition. I think by the time we get to the second half results at the end of November, we expect to be probably certainly 80% hedged for the summer of 2023 period or for the first half of the year to be about 80% hedged because that's our rolling program. Whatever we're hedged at would be materially better than any of our competitors. I think there will still be very strong recovery of pent-up demand into the summer of 2023 on short-haul Europe, and we will still be building out material market share gains across Europe. Remember that full capacity, as long as Boeing deliver us 50 aircraft next year, that full capacity growth, that'll be another, you know, capacity will grow by 9%-10% in summer 2023. All of that capacity growth will be taking place on aircraft that carry 4% more passengers, but burn 16% less fuel. It'll be on Gamechangers. Eddie and the team are doing a terrific job negotiating, you know, very advantageous airport deals for that capacity growth into the summer of next year. Like the new base in Belfast, which opens in summer next year, is a low-cost traffic recovery scheme. The growth at some of the other airports that have already been announced is already very low cost. We will do, and no matter what the fuel price is next summer, we will go at full capacity through the peak summer period next year. The only question mark over that is can Boeing deliver us these aircraft as contracted before the end of April? As you know, I do not have great confidence in the Boeing management in Seattle. In fa ct, I have very little confidence in them, and therefore I expect them to continue to up deliveries or have delayed deliveries despite the fact that they have very few deliveries to make next year. That's where we are with Boeing. Tracey, do you just wanna give an update on the Yeah. The OpEx hedging and the view on, sorry, OpEx hedging is the second half of the question. For the OpEx for this year, we've 80% hedged at 1.15, and for next year, we've 10% hedged of the OpEx at 1.08. We're fully hedged, as you said already, on the CapEx at 1.24. That CapEx hedging runs out to FY23. Runs out to the end of all deliveries. Yep. That's amazing. Yeah. You know, if we weren't hedged on the CapEx, we'd now be paying a third more for those aircraft. Yeah. You know, a third more for those aircraft. Like, not only have we got very low cost dollar cost aircraft, but we've hedged away the fuel exposure as well at a time when few of our competitors who haven't yet, who are adding aircraft in the next number of years, will be adding fewer aircraft than we are. They'll be adding those aircraft at materially higher prices, and they haven't got the CapEx. You know, if you look at an airline like Wizz, the underlying story for Wizz is not just that they're unhedged on fuel, but they're also unhedged on currencies as well. The exposures they have on both OpEx and CapEx are going to blow what few brains they have left out. You know, they're not as which again is why I think there will be material capacity cuts by many of those competitors this winter. Those analysts who have, you know, for the last number of years been peddling the line that they'll have lower cost than Ryanair sometime by 2035 will have to revisit those insane models. Godspeed. Next question, please. Thank you. We have the final question from Harry Gowers from JPMorgan. Please go ahead. Yeah. Morning, Michael. Morning. Harry, hi. Morning. Spoken about the 7%-8% behind 2019 on bookings for Q2. Yeah. Are you able to tell us what percentage of seats on sale actually booked for Q2 or even out to Q3, if we can look out that far at the moment? Then it would have been one for Neil, but CapEx obviously H2 weighted this year. Anything to call out just on the quarterly phasing from Q2 to Q4? Thanks. Yeah. Okay. I'm not sure I wanna get into where we are at the moment for the second quarter. I don't think it's helpful. I mean, let's focus on the two fundamentals. One, on the first of July, we were about 7% behind for July, August, and September. And I think the only other material development on that is the July load factor is going through. June load factor was 95%. The July load factor is going to be 96%. Now that's 2% behind the 98% we did in July pre-COVID, in July 2019. So, we're behind on the forward bookings, but we're materially closing that up with closed-in bookings. Those closed-in bookings are coming to us at materially higher airfares. I would look to this at the moment as being a huge opportunity for us. We haven't pre-sold as well as we did pre-COVID, but we are selling during the month at materially higher airfares, the fares that are more than double-digit percentage points ahead. There's a short-term gain for us in the second quarter. That's again why I come back to the nervousness and our caution on the third and fourth quarters. If there is a negative news flow develop or new negative developments on COVID or Ukraine into October, November, December or January, February, March, then I would think the forward bookings will continue to improve into that period, but the closed-in bookings will get hit. You know, we saw that at Christmas with Omicron and at Easter with Ukraine. If that doesn't happen, then we'll have a very strong recovery for remainder of this year and a very strong recovery in profitability as well. The first objective of that would be to finish out the pay restoration discussions with our people. I would look to that as being a very positive, but a positive for which we should continue to keep a wary eye on negative news flow into the third quarter and the fourth quarter. Just CapEx? Sorry. Tracy, CapEx. CapEx probably pretty much the same in Q2 as we've seen in Q1 with the balance of the CapEx in the second half year, pretty much in line with the Boeing deliveries. Cool. Thank you very much. Thanks, Harry Gowers. Thanks, Tracey McCann. Okay, folks, I have nothing else to add. Because of the Q1 results and a lot of people are away on leave, we're not doing a roadshow. Neil Sorahan will be meeting a couple of the investors in London later on today. If you've any further follow-up calls, Peter Larkin is here manning the IR desk, and we'll be here all week. If you want to talk to any of myself, Eddie Wilson, Tracey McCann, or Neil Sorahan over the next couple of days, please give us a call and we'd be happy to take an individual call from you. In the meantime, may I wish you enjoy the remainder of the summer. I look at the Sky News coverage of big queues at Dover, cancellations at Gatwick and at Heathrow as good for the Ryanair share outlook, our performance. Operationally our teams have done a remarkable job, and our crews are doing a remarkable job in very difficult circumstances with, you know, particularly with the ATC delays and substandard performance. I would hope that, you know, the Ryanair brand continues to improve as we are recognized, I think particularly across the UK and Europe, as outperforming all the other airlines in terms of our punctuality and reliability this summer. We hope that gives a good platform to continue to build into the winter of this year and into the summer of 2023, as long as we have no more disruption or delivery disruptions with Boeing. Rest assured we'll keep doing our best and managing as best we can to eliminate those delivery delays and so that we can roll out continued strong capacity growth into this winter and into the summer of 2023. We hope that in time that will be reflected in a dramatically or a reasonable recovery of our share price and your investments over the next 6, 9, 12 months. Thank you very much, everybody. Good to talk to you and apologies Neil had to ring off early, but I think we covered everything else. Thanks. Bye-bye. This concludes the conference call. Thank you all for attending. You may now disconnect your lines.