Ryanair Holdings plc (RYAAY) Q3 2019 Earnings Report, Transcript and Summary

Hello. And welcome to the Ryanair Third Quarter FY ‘19 Results Call. Throughout this, all participants will be in listen-only mode, and after, there will be a question-and-answer session. Just to remind you, this is being recorded. So, today, I am pleased to present, Michael O’Leary, Chief Executive; and Neil Sorahan, CFO. Please begin. Michael O’Leary: Okay. Good morning, ladies and gentlemen. Welcome to the Ryanair Q3 results conference call. I am here with management team in Dublin and Neil is joining us from London where he was doing the PR this morning. As you will see, all of the results were released this morning on the website at 7 o’clock. We have an MD&A tele or a video with MD&A on that, which should address much of the questions that might arise. A couple of quick themes, while they -- the €20 million loss in Q3 was disappointing, we take considerable comfort that all of it was due to weaker than expected airfares. There isn’t a cost issue here, but lower prices is good for our current and for our future traffic growth, bad for our competition. Ancillary revenues have performed strongly in the quarter, up 26% all -- and this helped us to offset higher fuel, higher staff cost and higher EU261 cost. Ryanair has the lowest unit cost of any EU airline and this gap is widening. We take delivery of the first five B737 MAX gamechanger aircraft from April. These aircraft have 4% more seats, are 16% more fuel efficient and they will drive unit cost efficiencies over the next five years. Unlike other airlines, we will be talking about adding lower cost to aircrafts and then seeing our aircraft’s ownership costs rise faster than our traffic. With these aircrafts, you will see our aircraft and ownership costs rise at a slower rate than our traffic growth over the coming years. The industry, however, continues to be bedeviled by overcapacity, particularly in short-haul Europe. As consolidation continues and weaker European airlines fail, some of them are currently up for sale at the moment. The airports around Europe are increasingly keen to attract Ryanair’s dependable, high load factor traffic growth, and David and the team are going through an extensive series of negotiations with airport and potential new bases, both as we conclude the winter ‘19 schedule and we are also beginning to focus on the summer 2020. Balance sheet remains strong with €2.2 billion of gross cash and we emphasize again we own 93% of our aircraft fleet of more than 450 aircraft, 60% of that fleet is unencumbered. In December Lauda acquired the remaining 25% of Laudamotion we didn’t already own Niki Lauda and his family. Lauda has had an exceptional -- is heading for an exceptional year on start-up loss. That loss has been reduced from an estimated €150 million to approximately €140 million. Most of this loss was accounted for by the very late release of Luada Summer ‘18 schedules due to the takeover of the airline from Lufthansa to France that showed up late with some fewer aircraft and expected that very expensive lease rates. Ryanair was able to supplement that fleet by giving Lauda 10 of our B737 aircraft last summer. But it meant that the schedules were very early on release and therefore we priced most of that schedule through last summer at very low prices just to fill. We are in a much better situation now with Lauda going into the second our summer of 2019. The airline will operate 24 aircraft up from 19 last year but of that 24 aircraft only five will be 737s. Lauda will operate 19 airbuses. We expect the losses will narrow very substantially in the year two of operation down from €140 million to a figure of anywhere between €50 million to breakeven, which is a wide range, but we really don’t know what the out -- final outturn on yields particularly the peak summer years will be in that German to Palma market, but we are reasonably optimistic. Underneath that, Lauda is growing its presence in the Vienna market very strongly and I think one of the noticeable development in the last six months has been level has scaled back its growth plans for Vienna almost entirely and we have seem to have slowed down their pre -- or their announced growth plans quite significantly. By year three, which is summer 2020, Lauda will be operating a summer fleet of 30 aircrafts. We have letters of intent already signed and we grow to be carrying 7.5 million customers, and we will be trading profitably. And the big trend at the moment remains higher oil prices and lower fares due to overcapacity at market. The past four months, we have seen a wave of EU airline failures, Primera in the UK, for example, Germania are currently seeking a buyer in Germany, that’s about 30-aircraft charter airline. We understand there are rumors they weren’t able to meet their January payrolls last week. WOW, Flybe in the U.K. are also for sale. The big one obviously is Norwegian, who have announced a significant multiple-base closures through the summer and into the winter, and I think, the key development of those base closures is they are all bases where they are competing with Ryanair, Las Palmas, Palma, Tenerife, Edinburgh and Belfast, and they are going to cut the Dublin base from six to one aircraft. They are trying to refinance themselves, but we can -- we would expect to continue to see not just in Norwegian, but among other loss making, low fares airlines further contraction, further consolidation in the winter of 2019. Brexit remains a major concern on our horizon. The risk of a no deal remains worryingly high. We have obtained the U.K. AOC to protect our three U.K. domestic routes, but that’s a tiny part of our overall operation. We will and have plans in place to proceed to place restrictions on the voting rights and the share sales of non-EU shareholders, which for a period of time after a hard Brexit will also include U.K. nationals, U.K. citizens. We do that to ensure that Ryanair will remain at all times an EU-owned and EU-controlled airline. In terms of forward guidance, we are on track. Our profit guidance for the remainder of FY ‘19 is to be in a range of between €1.0 billion to €1.1 billion. That is excluding the Laudamotion losses of about €140 million in the first year. We have a reasonable visibility on Q4 bookings now, but we can’t rule out further cost to airfares and/or cycling to our full year guidance if there are some unexpected Brexit and/or security developments over the next eight weeks. I have been a bit taken aback by some of the commentary that come from competitor airlines in recent weeks on their announcement of their December quarter results. It seemed to us they were all covering over the fact that their airfares were had been disappointing. None of them seemed to have met their original ambitions for stronger airfares during the winter. They were all pretty poor in terms of cost containment as well, it seemed to us they were trying to distract from those poor results by hoping and praying that the summer of ‘19 yield out total airfares would be stronger. We see no evidence of that at the moment. As of this morning, we have now 18% of our seats sold for the period from April through September. The average fare is 1% down on last summer, which is nothing catastrophic. It is a stronger performance than the pricing this winter or indeed last summer. But I think it is -- I would urge everyone to be cautious on pricing this summer. If Norwegian gets refinanced they would still be idiotic loss making capacity out there in the marketplace. Germania may not survive, but there are other airlines out there losing money, there is excess capacity there this summer and unless there is a more meaningful take out of short-haul capacity, we expect that airfreight the traffic growth in the summer ‘19 will be at the strong, but we expect it will be at the cost of airfares, which I think would be flat to slightly down in summer ‘19 and we see no evidence of the kind of promise or mythical fare increases that were being promised on the Wizz and easyJet conference calls in recent weeks. We have set out this morning, as well as some guidance for our shareholders. We are moving towards a Group structure, which is planned along similar lines of IAG. A very most senior management team will oversee the development of four separate airlines subsidiaries, Ryanair DAC, the Irish-based airline Laudamotion, Ryanair Sun and Poland, and Ryanair U.K. Each will have their own CEOs and management teams, but reporting to me as the Group’s CEO. We think this group structure will enable us to deliver a cost and operating efficiencies. Each of these airlines will compete with each other for both capital allocations, aircraft to deliveries and will also compete with each other to lower our costs. We in the Group structure will also give us the option to look at other small scale M&A opportunities and I emphasize small scale something like the success of development of Lauda over the last six months. In terms of Board succession, there was some uncertainty on that or some concern from some shareholders. We have announced this morning. I have agreed to enter a new five-year contract as the Group’s CEO. I will replace myself as the CEO of Ryanair DAC the Irish airlines between now and the end of the year. The Board has also set out its succession plans this morning. Thankfully, David Bonderman and Kyran McLaughlin have agreed to lead the Board for at least one more year until December of 2020. In the meantime, San McCarthy has agreed, the former Kerry Group CEO, who joined our board 2017. Stan has kindly agreed to take on the position of Deputy Chairman from April 2019 and he will transition to Chairman of the Board of Ryanair Holdings in December of 2020 to succeed David Bonderman and Kyran McLaughlin, who have indicated they don’t wish their names to go forward for reconsideration at the September 2020 AGM. So David and Kyran will serve at least something between another 12 months to 14 months, but then will not go forward to the September ‘20 AGM. With that, Neil, I am going to hand you over to you and give a quick run through the M&A and some key themes on the cost side.

Okay. Thanks, Michael. Well, just to echo Michael’s comments earlier this morning, guests grew strongly in the quarter to 33 million customers. That was driven by a 6% reduction in average fare. However, ancillary has performed very strongly, which meant that total revenue per guest was up 1% in the quarter. Fuel, as expected increased by 32% to just over €570 million. However, other unit costs, ex-fuel we are up 6% in line with expectations and actually below the growth in passenger numbers. As a result, profit after tax come in at €20 million of a loss in the quarter. Balance sheet very strong, BBB+ rated balance sheet, €2.2 billion gross cash, and as Michael said, 93% of the fleets owns -- only 7%f the fleet leased and the vast majority unencumbered. So a very strong balance sheets cost, as I said, very much under controlled. Michael O’Leary: Okay. Thanks, Neil. Okay. We will open up for questions-and-answers. And as I said before, we are going to limit everyone to just two questions please, so we get two with some reasonable speed.

Thank you. [Operator Instructions] And the first is over the line of Daniel Roeska at Bernstein. Please go ahead. Your line is now open.

Then two questions if I may. One on the Group structure. Could you elaborate a little bit more on the elements of the IG model you would be planning to adopt. So what are the individual airline fees going to be able to decide or be responsible or is that more kind of the labor arbitrage game, is it to cause plus, is it a full P&L, kind of where do the commercial functions and writer lab fits in that environment? And secondly on the topic of M&A, every other airline unit cost in Europe is more expensive than Ryanair and until now it seems organic growth has always been a little bit better than inorganic growth. So what factors have changed in your assessment of the strategic growth opportunities for Ryanair to make M&A more compelling at this point in time? Thanks. Michael O’Leary: Thanks, Daniel. Okay. I would not going to get into details the Group structure on this call. I think we will be able to feed that out more appropriately to shareholders when we do the full year result road show in July. Suffice to say that there will be a small Group of staff headed by myself, Chief Executive. They will be a Group Finance and a Group Legal. But underneath that the individual airline’s CEO will have responsibility for running each of the individual airlines. They will be responsible for their own cost management and out of that cost management will come aircraft allocations and capital allocations. And to add that there will be some central functions, but they will largely more all be handled by Ryanair, most notably Ryanair Labs, that we will run the sales functions as we do currently of Laudamotion, Ryanair Sun, those are through the Ryanair or the ryanair.com website, which is now the world’s most visited airline website. In terms of the M&A and the organic growth, the focus will continue to be on where we can replicate effectively our kind of unit cost efficiency and for that, I would give you the example of what we are doing in Laudamotion. It was an airline that was being bought out of over the forced divestment out of the Lufthansa purchase for Air Berlin. It had a reasonably high cost base having come out of Air Berlin. But having said that, we have, in the space of less than 12 months, now replicated a very low cost operating aircraft fleet, 30 A320s, with an average monthly lease rate of under €200,000 per month, it is using Ryanair’s kind of low cost technology. The sale is done across the Ryanair website. The efficiency is there, moving towards 25, 30-minute turnarounds and you will see Laudamotion, certainly, by next year begin to mirror Ryanair type margin. That’s why, I think, I’d say, we would look at small-scale M&A where there’s an opportunity to take over what our not necessarily shell companies but very small AOCs, one or two small AOCs, where we can reverse some of our organic growth into those AOCs and that would make sense from our point of view in places like Ryanair Sun, that Ryanair in Poland. I mean, I’d put that in some perspective. In Poland, for example, it has -- Ryanair Sun had a very successful first year in the Polish charter market, but it is now taking over Ryanair schedule flying in the Polish market and it’s doing that because there are tax advantages for our Polish pilots and Polish cabin crew moving to the same type of contract employment that LOT, the national airline in Poland has promoted. And therefore we were able to replicate. We can get a lower operating cost in the Polish market by replicating that type of structure that LOT and Enter Air have benefited from. So we would see opportunities across the Group opportunistically to lower cost in certain markets where there are local considerations that make it sensible for us to do so. We will give you more details on what that Group structure and how we see it working on the July full year results road show. Next question?

Our next question is over to the line of Jarrod Castle at UBS. Please go ahead. Your line is open. Michael O’Leary: Jarrod, hi.

On the fuel hedging, you had hedged kind of 52% at 718 [ph] at the half year results and now we are at 90% at 709 [ph]. So just I am trying to understand why some of the fuel benefit doesn’t seem to be coming through in the hedge ratio kind of where you are hedging? And then, secondly, just looking at the balance sheet, you should continue to throw some cash, should we be expecting some further capital returns in the next month? Thanks. Michael O’Leary: Okay. Thank you. Yeah. We took it beyond the fuel on the half years which was in September, we are always bottling that time with €84 a barrel. The forward rates were -- we were trying to get forward rates under €70 a barrel at that time. We tried to close that out and we finished -- by the time we finished closing out the hedge for that we had 90% of FY ‘20 hedged that €71 a barrel. We are very delighted with that success as oil we spot on was €84 a barrel then in the space of about four weeks about $84 a barrel down to under $60 a barrel. So what looks like a very clever hedging strategy quickly became a not so clever hedging strategy. And I think our general view is that fuel is likely to trend slightly back upwards. We are a bit out of the market at the moment compared to staff. We are looking now at hedging out into FY ‘21. But, again, based on current spot rates, we are trying to get forward rates out at around or under $600 per ton. Again, we don’t do fuel hedging here to try to beat the market. We try to use fuel hedging to give us cost certainty for the next 12 months. On the balance sheet, the balance sheet remains strong. I think our position has been consistently that, yes, we would like to do another capital return to shareholders, but I think it will be done in the context of once we have some certainty on the outcome of Brexit and we very much hope will have certainty in the outcome of Brexit. In the event of a hard Brexit, obviously, we would have a slight -- we would have, for a period of time depending on how many of the U.K. shareholders don’t reflag into Europe. We may have a small surplus or a majority of non-EU shareholders. I think we would be timing another share buyback, at the same time as we would be imposing restrictions on all non-EU shareholders, voting and share sale restrictions. But the timing of a share buyback would facilitate some of those shareholders being able to dispose of their non-EU shares to -- they could participate in the buy back. So I think the timing of a further share buyback would be very much driven by some developments on Brexit over the next couple of months.

Thank you. Michael O’Leary: Thanks, Jarrod. Next question.

Our next question is over the line of Savi Syth at Raymond James. Please go ahead. Your line is now open. Michael O’Leary: Savi, hi.

Hi. Just two questions, Michael, you indicated the opportunity. If that opportunity will present itself you would consider accelerating the MAX growth. Would that be incremental growth or would that be kind of accelerating retirements in return? And then, Niel… Michael O’Leary: Sorry. Just go back on that. I didn’t get that question. We consider opportunities to what?

To accelerate the MAX growth. Michael O’Leary: To accelerate the MAX growth?

Yeah. Is this the opportunity to rose and I know you mentioned you would consider getting more MAX aircraft, and then, I am just wondering if that would be accelerating the retirements or it should be kind of incremental growth? And then the second question just on the cost. It’s helpful to kind of indicate kind of flat to down cost looking forward. Just wondering if you could kind of talk about, Neil, kind of the trends of some of the bigger cost items as you kind of exit this year and head into next year? Michael O’Leary: I mean, we are always willing to accelerate growth if there is a cost opportunity to do so. I mean, if that were to require some collapse in aircraft values or some crisis in the aircraft. Now I suspect both Airbus and Boeing are presently facing a lot of canceled orders or aircraft redeliveries. But I would imagine at the moment in the next 12 months or 24 months our fleet growth any -- and so any on-plan fleet growth is likely to take place on the Airbus side through Laudamotion. We have been struck by the ready availability of reasonably low cost Airbus A320s, good eight-year to 10-year-old second-hand Airbus A320s. Coming back on the market, it seems to me where leasing companies are stopping these airlines with new NEOs and taking back delivery of very clean reasonably young CEOs. We have seen -- when we first started trying to procure a fleet for Laudamotion 12 months ago. I think we have seen the lease rates on those second-hand Airbus A320s go from over €200,000 a month back down to -- up to 10% below. We are looking at lease centers now between $170,000 per month and $190,000 per month. And certainly, we have -- that would encourages to accelerate Laudamotion -- the fleet growth in Laudamotion from 19 aircrafts last year, 24 aircrafts in summer of ‘19 and up to 30 aircrafts in summer of 2020. If we see some further opportunities on the second-hand Airbus side, I think, we would jump on those. I don’t foresee much of the MAX side at the moment. I mean, it is -- will be new aircrafts to us. We are taking five this year. Next winter we take 50 of those aircrafts. I think half of that -- those 50 will be reallocated to Ryanair Sun and go onto Polish register, probably, half would be on the Irish register. I wouldn’t see us accelerating that growth much beyond that at the moment. I think it will be a big jump for us to take 50 MAX next winter and I am putting those aircraft into a lot of bases where they will not be familiar with dealing with the MAX aircraft. So, if there’s any accelerated growth I think in the 12 months or 18 months, it would be through Laudamotion or through some small-scale M&A.

Got it. Michael O’Leary: And, Neil, do you want to take the cost point or …

Yeah. I mean, I suppose, Savi, just to be clear, we are doing our budget at this time of the year, so we haven’t got the full year numbers yet and I will give more color on that in May. But as we move into next year, we start to see the costs, for example, on the staff line stabilize with the 20% pay increases factored in. We start to see the benefits coming through on the MAX although we only really have five MAXs operating this summer while 10% of the fleet will be MAXs by the end of this financial 2020. It’s really summer 2020 where we see the huge benefits. Airport and handling, we continue to see good opportunities there and we have nearly 20 leases going back next year as well, which will drop down the aircraft rentals line. So we will see it stabilize and then beyond that starts to drop on a per passenger basis.

Okay. Michael O’Leary: I think we are reasonably confident the unit cost next year will be flattish -- flat slightly down. The only one that I think will still be out of control will be the EU261 compensation claims. We are expecting another torrid second calendar quarter. We think the understaffing in U.K., German and repeated strikes in French ATC will reappear in April, May and June again of this year because none of those problems have been addressed. But so with the exception of EU261 cost, we are reasonably optimistic that unit cost will be flat to slightly down in the next 12 months.

Helpful. Thank you. Michael O’Leary: Next question please. Next question please.

Now we will go to the line of Duane Pfennigwerth at Evercore. Please go ahead. Your line is now open. Michael O’Leary: Duane, hi.

Most of my questions have been asked. Michael, how do you see your job changing in the new structure, what are the things you will be excited to do that you could not do previously? Michael O’Leary: I don’t think there will be that much change in the new structure. I mean, for the next 12 months I will still be the Chief Executive of the airline. I am spending a reasonable portion of my time at the moment working with Andreas who’s the Chief Executive of Laudamotion, with Michal, the Chief Executive of Ryanair Sun, oversee the development of those airlines and allocating aircraft and capital to those companies. So I think it will be an evolution over the next year or two. The key challenge is to get the right Chief Executive for Ryanair the airline in place by the end of this year and then hold his or her hand over the next 12 months, so that we don’t lose the focus on cost and we continue to run. But then continue to encourage each of the airlines to compete actively for capital and aircraft. I mean it’s big opportunity for us in the next year or two certainly as group of airlines is to encourage much more competition between Ryanair, Laudamotion, Ryanair Sun to compete for aircraft, because they can use those aircraft more profitably or at lower cost than other airlines within the group.

Thanks for the thoughts. Michael O’Leary: Thank you, Duane. Next question, please.

We now go to Stephen Furlong from Davy. Please go ahead. Your line is now open. Michael O’Leary: Stephen, hi.

Hello. Yeah. Hi. Hi, Mike. Hi, Neil. Just two quick ones, just go back to the leases on the Lauda aircraft and I am just interested in the what’s the tenor of the time of those leases and is the ultimate intention to refinance those leases which owned aircraft down the road from either Boeing or Airbus? And then just a second quick one, I was just wondering usually it’s around this time last couple of years as being some kind of branding marketing push like always getting better, is that planned for this year? Thanks. Michael O’Leary: Yeah. Leases at the moment, the tenor of those leases are five years and so we did, and we are redelivering at the moment the nine Lufthansa, very expensive Lufthansa aircraft. They will be delivered back to Lufthansa starting in January and the last will be gone in June. So we have the first. At the moment, Laudamotion will have this summer -- are for summer ‘19 -- in summer ‘19. So we will have a fleet of19 Airbus aircrafts on five-year leases. We have already signed the LOIs for another 11 aircraft -- Airbus aircraft for next year before December ‘20 with five-year leases. So they will run through until 2023, 2024. We are having -- we are accelerating our what was called dialogue with Airbus. I mean, the initial -- the kind of initial discussion with Airbus last year we are about to buy Laudamotion, we need aircraft for delivery in 2019, 2020 so we can grow and listen, look, we don’t have aircraft in that period. Now that these lease -- I mean, I think, there are significant opportunities for us in the lease market and I would have no difficulty at the moment that these kind of prices continuing to use operating leases into ‘21, ‘20 or ‘22. We certainly see the Laudamotion fleet growing from 30 aircraft in December 2020 to 40 in 2021 to 50 in 2022. We would be talking, I think at the end of those leases though, which is starting around 2023, we would like to see new aircraft either from -- preferably from Airbus or from Boeing coming through and replacing those operating leases. But if there is real value, I mean, typically, our story any time you get operating leases that are under €200,000 a month, that’s a pretty good deal and with the help of Ryanair backing, the airline is not paying, Laudamotion will not be paying maintenance reserves or security deposit, although it is providing for maintenance on an hourly basis. So I think we would be reasonably non-doctrinaire about it. If operating leases are cheaper, we do operating leases. But if we can secure fleet of new aircraft directly from Airbus then we would be happy to do so. And I think a lot will depend, I’d say, Airbus and Boeing I think are beginning to feel the pressure with the likes of Norwegian canceling orders and deferring deliveries even easyJet and Wizz deferring some deliveries recently so hopefully they will be some opportunities there. Branding and marketing opportunities Kenny is straining at the leash, was on a monthly basis wanting to announce new branding and marketing strategies. I think what we wanted to do though was not focus on those yet. We wanted it we had obviously a second profit warning in January, pricing is weak. We wanted to get the kind of board succession, management plan, group structure out of the way now. I think you will see a not sort of rebranding but you will see some branding and marketing initiatives that we are concluding at the moment announce probably sometime in late February early March for both Ryanair and for Ryanair Sun and also in Laudamotion, so sometimes pre the kickoff of the summer schedule.

That’s great, Michael. Thank you. Michael O’Leary: Thanks, Stephen. Next question please. Come on, next question.

We now got to James Hollins of Exane. Please go ahead. Your line is open. Michael O’Leary: James, hi.

Hi. Can you hear me? Michael O’Leary: Yes. We can.

Yeah. Sorry. So first on summer capacity obviously you are dismissing out of hand or easyJet and Wizz are saying. I mean just putting some numbers on easyJet talked about they were competitor routes capacity being up about 2% in the summer. I mean you have obviously done that work yourselves on how you would initially see your own competitor capacity as earning if you could put a number on it? Secondly, just on the German market, I think it’s obviously been a very tough period with you easyJet, Lufthansa themselves sort of growing into able in work. Maybe just give us an update on how you see the German market on capacity trading etcetera into the next few months I think you specifically said Lauda was looking quite good on that market maybe just the wider market in general? Thank you. Michael O’Leary: I mean and we don’t wishing to speak ill of my competitors. We thought most of the commentary that surrounded their summer 2019 stuff was just blind optimism, coming from airlines who in recent months have promised us don’t worry about higher oil prices, because higher airfares will cover higher oil prices. We didn’t see there was any basis for that. It’s all right for somebody to quote that and say, well, there’s only 2% of capacity growth at that marketplace this summer. The reality is none of the airlines have sufficient visibility on the two summer quarters this year. We generally have stronger advanced bookings than anybody else, and as of today, we have only 18% of those seats sold. It is far too early to be guiding optimistically for this summer, particularly if Norwegian doesn’t go bust between now and -- they survive into the summer and there will still be capacity out there. I mean, we could take you through this summer in a Norwegian closing basis where they can be below us and it’s all what they do. But like, fundamentally, I think there’s still overcapacity out there in the marketplace. There are market segments, I mean, we see Spain and Portugal a little bit weaker this year because a lot of that traffic is going back to Turkey and Egypt. Germany is a torrid market at the moment and will continue to be a torrid market. I think even easyJet, who we are also confirming that the Berlin base will lose money for a second year in operation, no sign of stronger yields out that marketplace. So, at this time of the year, I think, it’s wrong to be promising good news or optimism particularly when it comes from airlines who have been making up -- repeatedly making optimistic noises on fares only to subsequently disappoint. I think, the best guidance I can give you at the moment is that we have sold 18% of our summer seats and the average fare is 1% below where it was at this time last year. Now it’s not 7% below, it’s not 5% below. It is marginal at best. But I think everybody should be much more cautious in this summer than either easyJet or Wizz were on their calls, but it seemed to me they were, I mean, most of them were trying to duck and dive on cost. They didn’t want to talk about cost. It was all, oh, don’t worry about the cost. The fares will rise this summer. It was more manana, manana, you get out to them at the time of the year. In our case, we are generally much more cautious because we are good on cost and we are much more cautious on forward booking. And David, do you want to give them just a taste of what you are seeing in the German market? David O’Brien: Well, you have pretty much covered it there, Michael. Now, the difference this year is that I do think that by the end of the year that could be something of a shakeout as Germania goes, that could change things somewhat in the market. But I think when you are talking about a 2% change to your competing route capacity you are really looking at the wrong thing and struggling in the wrong area, because it’s choice in Germany that’s happening now. People have choices all over the place not on specific routes, but to many different destinations and as Michael said Turkey and Greece has opened up along with some elements of North Africa. So, we still have more than 70 million seats to sell for this summer. We are in no position to give any sort of particular guidance there. I can say the Canary’s, in particular. Germany would be a weakest market, competing as it does with some of the other longer or medium haul routes into Turkey and the like. On a slightly positive side but not in any great volumes, we are very content with the bookings on our new capacity into Jordan, into Israel, but these are very -- and the Ukraine but very peripheral I have to say. Michael O’Leary: Okay. Thank you, David. Thank you, James. Next question please?

It’s over to Damian at RBC. Please go ahead. Your line is now open. Michael O’Leary: Damian, hi.

Hello. Thank you. I hope you can hear me? Michael O’Leary: Yeah.

Two questions -- great. Two questions please. First of all, coming back and following up on one thing, you mentioned about capital allocation. Could you talk a little bit more about the profit decline for Q3 and whether that was across the piece to what there were certain locations or bases that drag that down. I am guessing given the base cuts that’s already been the case and given you talk about Max allocation of half of that to the Polish register. But can you elaborate a little bit more on what it does mean for the Maxes that get allocated on the Irish registration on the assumption that I assume the capital follows the highest returns? And then, secondly, you talked about ticket sales. Can you also elaborate a bit more on ancillaries, was it just priority boarding and bag policy change in Q3 that improved and how much of that rose forward into the summer? Thank you. Michael O’Leary: Thanks. I mean, Damian characterize again, the profit decline in Q3 it was spread there. I mean there weren’t significant geographic segments. It was spread across the piece. As you know we were predicting a 2% decline in average fares this winter and that was against the prior year comp that we thought was reasonably benign. If you remember the prior year, we had the rostering screw ups and flight cancellations. So, if anything, we thought it would be reasonably benign prior year comparator and we were genuinely surprised by the fact that airfares across these particularly into the Christmas -- those bookings on Christmas were weaker than we had expected in the past. And there’s been some sort of misanalysis that somehow this is a -- something to do with the unions or lack of passenger confidence in place. We had no evidence of that at all. No disruptions over Christmas and even when we did have, I mean, there’s a very small number disruptions last summer. We didn’t get any impact on the fares because we manage our way through it very well. And actually there is too much capacity out there this winter and there has been reflected in significant pricing downwards and that was reflected in both the pricing commentary on the calls by Norwegian with easyJet, everybody else is out seeing the same story on short-haul Europe. The only difference for them is they are all promising treats tomorrow or this summer and I don’t see really any fundamental basis for that unless there was a big shake out of a Norwegian or a Germania or something else. Next winter, there’s certainly going to be a big shake out of Norwegian bases closing, capacity being taken out of the place. They will lose another couple of hundred million this summer. So, I think they will have to come back to more -- doing more refinancing. I have long held the view that Norwegian is a turkey that isn’t going to survive and you may see that impact next winter and into the summer of 2020. On ancillary, generally speaking, the ancillary performance across most segments has been increased penetration. The large movers of the dial in Q3 was the increasing propensity of customers choosing to take up the priority boarding, the reserved seat service, and -- but there was also improved performances of the others mainly across Ryanair Labs, Ryanair routes did well, car hire is performing reasonably well, fast track as a parlor through airport is also performing well. So, the continuing ability of Ryanair Labs and the commercial team to monetize those additional services continues to drive that ancillary performance.

And that goes through to next summer? Michael O’Leary: Yeah. It should do.

Okay. Thank you. Michael O’Leary: Next question please.

It’s Ruxandra Doser of Cheuvreux. Please go ahead. Your line is now open. Michael O’Leary: Ruxan, hi.

Yes. Hello. Good morning. Just one question, you mentioned 18% of capacity between April and September being sold at this stage that fell down 1%. I suppose the current booking refer particularly to the start of the summer schedule. So if you adjust for the positive effect from Easter, what is the underlying share decline on bookings that you see in April at this stage? Thanks. Michael O’Leary: I think it’s the continuing trend. I mean, you are right to highlight the fact that Easter is in April. Now, we don’t have that many bookings in the system yet for future, the current, the second quarter which is essentially June, July -- July, August and September, which would be where a lot of the higher yielding traffic will come through. But, and again, so which is why I think that we should be cautious and I would be reasonably -- I am not pessimistic for pricing this summer but I am much more conservative than competitors who were out there last week, frankly, with very little visibility of the summer bookings talking of pricing.

Okay. Thank you. Michael O’Leary: Thank you very much, Ruxan. Next question.

Okay. We are now over the line of Kathryn Leonard at [Technical Difficulty]. So please go ahead, Kathryn. Your line is now open.

Hello. Good morning, everyone. Michael O’Leary: Yes. Kathryn, go ahead.

Hi. Just follow up further on the ancillary point made by Damian. Just I think when we last spoke, you guys talk about priority boarding and the allocation meeting peak penetration around about the time of November 50%. I think since then the Group has increased the availability of price boarding. You previously, Michael, spoke about that peaking at 50%, because it wasn’t priority if more than 50% of the plane could be a priority board. As I understand is now 100% and the plane where I took recently all 100% of the priority boarders were privileged? So firstly the question is how sustainable is that, I thought the idea going forward was once we reach penetration that the yield management of those products should then give additional growth into FY ‘20. But that doesn’t seem to be happening. You seem to just be increasing the number that is available to you. So how do we think about the ancillary growth at FY ‘20 if you are at penetration already, okay, fine you have raised the bar a little bit. But and then you have mentioned about Ryanair rooms obviously being a small contributor the amount of credit that you are giving is reducing the contribution overall the bottomline. How should we think about 2020? Michael O’Leary: I think we should continue to see increased penetration of past the base through 2020, Ruxan. We have capped the priority -- the priority boarding is capped at 100%, I mean, it’s a minor it’s a fraction over one, eight, nine, it’s a fraction of 50%, but that was always the cap we haven’t raised the cap on that. The priority boarding is now the only way that you can have capacities can bring to carry-on bags onboard. So in many ways, the description of priority boarding is slightly historical. It’s really the way that those customers who want to bring both carry-on bags onboard can bring both carry-on bags or they still enjoy priority boarding. We have changed some of the pricing algorithms on the seat allocation. There has been some yield management there and we are beginning to ban the pricing of priority boarding. So if you take that 50% is the fractional 50%, but there’s one price for the first 20% to book there’s a second price ban for the second 20% that book it and then the third price for the last 10% to book it. So we are beginning to ban them it’s not really yield management but there is it is clearly capable of being monetized in favor of encouraging people to take it preferably at the time of booking. But the point I make is correct, we are still building meaningful penetration growth per passenger on those other products. Yes, we are not making huge return from rooms because of the we are giving away most of the commissions but it is still building, car highways still building, our fast track to airport to still be airport car park use the already, labs is doing a stunning jobat very low cost of increasing customer uptake of these optional services and we see that continuing into the following year. You won’t see a big jump upwards. There’s no kind of killer conversion like we have with priority boarding this year, but you will have a full year of penetration of priority boarding and reserved seating into next year.

Okay. And then just secondly on the net debt, Neil, are you able to give any guidance on what you expect the net debt to be for full year And just in the context of the other question on the share buyback you said that, I think previously you have said you are comfortable with the net debt position, sort of €200 million to €300 million. So based on whatever guidance you are about to say, I mean, how does that sort of come into, I know that Michael’s comments are on Brexit, but taking aside any hard Brexit and any incentivization or facilitation you use to share buybacks just on an underlying basis?

Well, based on where the numbers are at the moment, Kathryn, we would expect to be somewhere around €500 million-ish on the net debt at year-end balance sheet and in very strong position. Michael O’Leary: Okay. Thanks, Kathryn. Next question, please.

It’s over to the line of Mark Simpson, Goodbody. Please go ahead. Michael O’Leary: Mark, hi.

Mark, your line may be muted. Can you unmute your line, please.

Yeah. Now can you hear me? Hello. Michael O’Leary: Yes. Go ahead, Mark.

Yeah. Okay. Thanks. Look, two. One positive transformational improvement is what the term expected to happen on digital platform by the year end. Can you give us a bit more sort of specifics behind that that phrase? And then the other part which is probably sort of take a level of disagreement to your comments in terms of December yields from the competition. I mean you could point to Wizz sort of the ticket RASK being 5% on that quarter. I mean there is this perception and it’s perception reality that there are people concerned about booking with Ryanair in the peak holiday season and that this is the reason why there’s this large spread between the performance of yields from your competition and what you are revealed for this quarter. I think there is a spread there. But I am not quite sure other than this idea that there is a slight biased hesitation. Why that spreads there? Michael O’Leary: Okay. Thank you, Mark. No. We won’t give you any supportive details in digital platform, because, I think, Kenny will be going his big reveal on that at some time. It will be part of the customer experience, customer service improvements that we will be rolling out some time at the end of or middle of -- end of February, middle of March. I mean, December yields like the kind of guidance you were getting from Wizz and easyJet here if you go back six months earlier they were talking up fares much more aggressively. Now to be fair, Wizz has caught a lot of winter capacity. They grounded considered a part of their winter capacity to try to manage their yields. That’s why their cost performance was particularly poor. I mean neither of these two were able to manage their unit costs. They are always dreadful. The conference calls are always distracted by lots of positive and optimistic future sounds on fares and yields, but none of it ever recovered their cost management. I disagree, but we reserve the right to disagree with your call on customer confidence. I mean I’d point to the fact that if you take our numbers this morning we have 9% at 8% traffic growth in the third quarter. Load factor is unchanged at 96%. Yes, it is that lower than previous airfares. But I get no sense of they -- in the marketplace there’s any concern about passengers making bookings with Ryanair. There was no threat of strikes over Christmas. I suspect here we have no threat of strikes through January, February. And that covers a period when we did close bases. If somebody asked, I have forgotten -- when Damian asked the question what was the impact of the base cost? Actually our base costs were tiny. We closed Bremen, which was a two-aircraft base. We closed Eindhoven that was a four-aircraft base. In the Eindhoven case, we flipped the aircraft out of Holland. The same four aircrafts are still flying to and from Eindhoven. In the case of Bremen, the aircrafts were flipped out of Germany. But we allocated the capacity elsewhere. So, when we cut those bases, it’s not like we would hit that capacity underground and try and manage the business for higher fares, which is what Wizz seemed to have done this winter and yet their cost performance was atrocious. This is the airline that, for three or four years, has been promising that they will overtake -- they will beat Ryanair on unit cost because they have got some super, dupery, biggery, shinery new A321neos and yet their aircraft ownership and maintenance costs keeps rising faster than their traffic growth. These guys are adding more expensive aircraft, not less expensive aircraft and the cost gap between us and them continues to widen as it does with easyJet despite the fact this the year where we have had a step up cost -- step up change in labor costs, not through unionization. We had a step up in labor cost to head or to get ahead of the unionization issue, which is why [inaudible] and the team have made such great progress over the last six months putting in place agreements in most countries across Europe on recognition, and we are now working actively on CLA. We see nothing, I mean, at the moment, if you take our advanced bookings into this summer, they are in line with where they were this time last year for the summer of 2018 when we did have lot more threats of strikes, indemnity, and frankly, I don’t agree with the perception and we -- our numbers this morning I would say undermined those perceptions.

Fair point. Okay. Thanks. Michael O’Leary: Thanks, Mark. Next question please.

We are now over the line of Gerald Khoo at [Technical Difficulty]. Please go ahead. Your line is now open. Michael O’Leary: Hi, Gerald.

Hi. A couple of questions. Firstly, you talked about anticipating more aircraft control problems this summer. But you said that you think it’s going to be at its worse and that showed the peak periods of April, May, June. I am just wondering why you think it’s going to be worse than in the peak of summer. And secondly, I am just wondering whether you could give an indication on where Laudamotion’s average fares and ancillary revenue per passenger sits versus the Group average and whether you think that’s preliminary at the moment and whether you think that they can converge on the average or exceed it. Michael O’Leary: Okay. Thanks. On the ATC problems, I mean, I think historically the worst of the ATC problems tend to take place in that quarter, April, May, June and will run on to the first half of July. That’s usually because the French starts striking around April, May and June. We have still short staffing in the U.K., in Germany and the cars grew ATC that flows over in the magistrate. But the French tend not to strike in January, February and March. We also then April coincide with the switch over to December schedule. So it’s always the month where ATC falls over, because you get all the charge of capacity coming into the marketplace. They are still understaffed. You get all these euphemisms about ATC capacity and all the rest, which is just a euphemisms for fleet short staff. In our view the air traffic controllers in France will then resume striking again through April, May and June, and that’s why typically it tends to be at its worst through those three months. It tends to improve into July and August won’t because the capacity gets -- they get a bit more used to the summer capacity and two, because the French air traffic controllers and their families tend to be going on holidays in July and August so they tend to stop striking in July and August. And that’s just the way it is, they just been historically that way for the last number of years. The French are at their most revolting in April, May and June, but it is exacerbated by the staffing shortages particularly in what is a very mismanaged service in that in the UK and in Germany. I don’t want to break out this states the Laudamotion pricing and ancillaries. Laudamotion or I’d say in general term, the Laudamotion pricing is ahead of the Ryanair pricing. But we would expect it to be materially better than Ryanair pricing with during the peak summer months at those high yielding German airports down to Palma. I would expect out Vienna which is where there is a big push on I mean Laudamotion has grown from four aircraft in Vienna last summer to eight aircraft this winter to 11 aircraft in the summer of 2019 and it would grow again to probably 14 or 15 aircraft in the winter of 2019. The Vienna yields at the moment are similar to Ryanair’s yields. But on balance going forward, we would expect the Laudamotion yields once the German market settles down and we build a large presence I mean Laudamotion will be the number two airline in out of Vienna this summer. I think we will see the level appear to have given up on Vienna as a project and with we will see Wizz start to withdraw capacity in the Vienna market where they are as is always the case on able to compete with Ryanair are Laudamotion on cost or on price. Ancillaries in Laudamotion is still slightly behind Ryanair but catching up rapidly, yeah, some of that is historical you know they subcontracted out the in-flight sales activity for the first year of operation. Ryanair has taken that over or it becomes more Ryanair airlines from the 1st of April or 1st of March this year. So I think you will see ancillaries in the next 12 months and Laudamotion begin to mirror Ryanair ancillaries. But the underlying airfares in Laudamotion should be slightly higher certainly through the summer period. Some of the costs are slightly higher as well because they have kind of the German airports and at Vienna. They are pretty close to published rates.

Okay. Thanks very much. Michael O’Leary: Yeah. Next question, please.

It’s over to the line of Neil Glynn at Credit Suisse. Please go ahead. Your line is open. Michael O’Leary: Hi, Neil.

Good morning, everybody. And the first one just on the Airbus engagement you mentioned earlier Michael. Just interested, do you need to agree a plan with Airbus to seat the U.K. AOC with Airbus planes perhaps at some point over the next five years or so to drive proper engagement at scale? Then the second question just on culture in the context of the Group reorganization. Obviously the culture has evolved through this decade through all of us getting better at Ryanair Labs etcetera. But just interested in terms of how you think about a more I guess clunky organization relative to the lean Ryanair in the past, do you need to focus on managing those businesses with the U.K. and the DAC business in particular via internal appointments or how do you think about maintaining the culture in a bigger organization? Michael O’Leary: Yeah. The U.K. AOC, I mean that depends on Brexit, if there is a hard Brexit. I think the U.K. AOC will generally be a reasonably small operation. It’s designed to be able to operate the three U.K. domestic routes and some U.K. non-EU route to U.K. to say Morocco or some of those markets. I wouldn’t convenience that ever being an Airbus fleet vehicle. I mean it will never be a large vehicle. Hopefully, we won’t need it at all, because there will either be -- there would be some agreement on a deal in Brexit. That was the -- I would have preferred a 21-month transition and then a more orderly or at least have a trade agreement in place. So, there’s little out there. There’s little possible disruption. So, no, I don’t see the UK AOC being an Airbus fleet. Laudamotion clearly will be an Airbus fleet and if there’s some other small scale M&A in the next two or three years maybe that. I think the advantage going forward with Laudamotion and Wizz, Ryanair, as we are now have a credible an Airbus operation and we have a credible Boeing operation and therefore if an opportunity came up. But I mean I said most of these opportunities will come out of competition divestments like if IAG had bought Norwegian, for example, Norwegian has a large presence in the Spanish market where opposite side you have IAG with Iberia’s Vueling and Iberia Express. I mean, I think that would have been -- there would had to be some competition divestments coming out of that. So I see the small -- when I say small scale M&A, I think it’s much more of facilitating competition divestment of our other large scale M&A, a bit like all, which is how the Laudamotion opportunity cropped up. We are not running around the place trying to buy things that lose money or lose money that we can’t turn around. And the second part, I forgot the second part of the question, Neil. What was it?

Culture. Michael O’Leary: Oh! Yeah. Culture. I mean, look, I think, we would take the view, Laudamotion has a distinct somewhat Austrian culture. They don’t get our jokes. They don’t like the swearing and much the same in I think in Ryanair Southern Poland. I would encourage each of the airlines that we want to encourage these airlines to have their own culture. We want to -- I mean I see the strength of this not unlike IAG being you have individual or Ryanair lines that competes with each other for capacity, for capital allocation and where an airline develops a cheaper way or a lower cost way of organizing itself, the rest of the other airlines in the group can’t decide whether they want to take advantage of that or not. So, no, I don’t -- I am not a great fan of these unitary kind of cultures or one culture fits all. We are Irish. We take our beatings, such as the rugby on Saturday, well, and we learn to get on with it. But again Laudamotion will I think have an Austrian AOC. It have an Austrian culture. I think certainly Ryanair Sun is Polish AOC and will have increased -- certainly has a Polish-Austria culture and we should encourage that. We should encourage those differences, because out of those different, they will come up opportunity. I think the critical thing that each of the airline CEOs will need to understand though that if you want to grow, you are going to compete with the other airlines for the next aircraft or the next 10 aircrafts, next 20 aircrafts. So go ahead and demonstrate that you can get better growth incentives from airports or better handling deals, you can do a better job, and then we will reward that with more aircrafts. No, and again, I am not unlike the way IAG have. I have always been impressed with the way Willie has managed IAG. The turnaround, for example of Iberia using different brands such as Vueling. He has driven a lot of cost efficiency in Iberia and in BA. And looking at kind of management succession, again, I think the way that Willie has taken care of Alex Cruz out of Vueling and put him into BA and there’s much more mobility between the management teams. I think also gives us an opportunity. I think it’s a big opportunity also for the management, the middle management team in Ryanair. While we have a reasonably stable senior management team, there was always a view here or a kind of a bit of a push back that my way forward is blocked. I can’t get further. How do I rise through the organization and we will be encouraging more people, now you rise to the organization by taking on -- you can become the commercial director in Laudamotion. The engineering director in Ryanair Sun could become the Ryanair engineering director. So I think it gives us more opportunity to cross pollinate the middle management or promote with the senior management positions. Again, the way IAG has managed to develop each of their airlines.

That’s great. Thanks, Michael. Michael O’Leary: Thanks, Neil. Next question please.

We go to the line of Johannes Braun at Mainfirst. Please go ahead. Your line is open. Michael O’Leary: Johannes, hi.

Yeah. Hi. Two for me as well, so firstly on that framework agreement that you had with the German pilot union recently, just wondering how comfortable are you to reach a full CLA based on that framework agreement. I think you have a deadline for the end of this month? And then, secondly on the new company structure. Just curious what will be the headcount of the new management team within the new structure compared to the old structure should include the operating units in that? Michael O’Leary: Okay. At the union agreements, we are making good progress. I think most notably we have announced both recently that the Spanish cabin crew have signed up a recognition agreement. We are moving to CLA with those. We are in active negotiations with the German unions on the CLAs. There is a commitment there on their side that the agreement would be finalized by the end of February. I am not -- wouldn’t die in a ditch over a deadline at the end of February, but we would like to see it done by the end of February. We have made some other agreements that we can’t yet announce because -- but they are significant because they are being balances at the moment and the unions have asked us not to comment on it publicly until they are over the line. So we have made very good progress. I think I have been struck by the amount of sort of negative foreboding coming out of analyst and both media, we will never manage this and never get done and really I think we have made extraordinary progress this winter with no disruptions. Does that mean we will rule out disruptions this summer? No, I think there, once we have unions, there will always be the threat of disruptions. But I think there will be far more threats than there will be active disruptions. But I would suspect occasional disruptions around Easter or into this summer are likely and if they happen, we will manage our way around them very successfully, as we have done in recent years or in --over the last 12 months. The new management team, it will start very small. I mean I think generally speaking, that would be me, a group legal function and a group finance function that is probably about three people and a dog and it will evolve I think over the next 12 months. We are not going to have a big group office, there isn’t going to be a lot of infrastructure. A lot of the group service that will be, as I said, kind of labs, some of the marketing will come out or will be driven here from Ryanair and will be then adapted or adopted by the other companies. I think where the other companies can operate or offer services at cheaper rates. We are moving some of the procurement out of Ryanair, for example into Ryanair Sun and we are certainly looking at opportunities to do more of the pilots training in Poland at the moment. Where again, I think, one of the challenges for us in recent years has been we have lots of Western pilots. Many of whom don’t like foresee themselves, won’t -- wanted to go and base themselves in Eastern Europe. I think we would want to be encouraging much more about Eastern and Central European pilot recruitment and training in the next number of years because they are equally at home whether they are working in Eastern and Central Europe or crewing in Western Europe as well. Next question, please.

Okay. Thank you.

We now go to Alex Paterson at Investec. Please go ahead. Your line is open. Michael O’Leary: Hi, Alex.

Good morning, everyone. And can you just remind me why the ratio of staff to aircraft at Laudamotion is much higher than for the rest of the crew? Is that simply a function of using different aircraft i.e. Airbus, Boeing or is it just not integrated in the same way and therefore the scope to improve on that place? Michael O’Leary: Yeah. I mean we inherited a group of staff are mainly on the management side. We had heard that out of the divestment that came out of Air Berlin and it started off last year with a tiny fleet of just nine leased Lufthansa aircraft. In order to grab those slots, valuable slots in Berlin and do this off to Palma, we wet leased 10 of aircrafts. The management there have done quite a degree of pruning this winter. Some of the middle management people have been taken out and you I would be very confident that as Laudamotion moves to a Turkey aircraft fleet by this summer of 2020, none of which will be aircraft leased in from Ryanair. It will be operating at similar staffing ratios in fact maybe staffing ratios to Ryanair. The other issue that also with Laudamotion came it has a maintenance facility there. So Laudamotion has the ex Niki Lauda hangar on about 100 engineering staff there. So, it was kind of because it came out with divestment, we took everything that was there. We didn’t have a choice but to take the maintenance pay. So, it’s a bit just distorted. It will, by the summer of 2020, we operate yet the same staff the aircraft ratio with Ryanair.

I mean between 2020 and 2019, you actually have an increase in staff per aircraft. So, you go from about 47 to 52. I mean even if you take a hundred off maintenance. It still leaves you 48, rest of Group for 35 or so? Michael O’Leary: Yeah. I mean I am not sure those numbers are correct. I mean, we haven’t release staff per aircraft ratios for Laudamotion for 2020.

Maybe I am misinterpreting what you say jobs on the Laudamotion slide, slide 11. Michael O’Leary: Yeah. Look, I mean, that’s more PR than anything else. I mean that that’s the second slide for the press in Austria. Do you mind then, do you mind our PR slides, that they are all good news.

So there may be a few disappointed applicants then? Michael O’Leary: I am sure will be. We have lost a very excited applicant. But the actual we are getting down to the detail of how many jobs we will need to -- how many jobs will be employed to deliver a fleet of 40 or 50 aircraft. Don’t get too much deep over that for the moment. It went down very well with the Austrian Press, suffice to say. Next question. Thanks, Alex. You get the price for the price with the observant boy in the class this morning.

We now go to Malte Schulz at Commerzbank. Please go ahead, Malte. Your line is open.

Hi. Good morning. Thank you for taking my questions. Michael O’Leary: Hi, Malte.

First of all, on your negotiations with airports, you mentioned that they were quite keen on getting more Ryanair flights to the airport. Is there any concession we can expect from that or do you expect a significant progress on your airport fees? And second one is on your new structure limit, I mean, if you compare with AIG on the individuality of each airline, should we expect to say it’s and in the end also in terms of product difference between Laudamotion and Ryanair for its Ryanair Europe for example or even Ryanair U.K. or will it be mostly on a cost competition only but the product itself will be always the same? Michael O’Leary: Okay. Yeah. I think we are -- I mean there’s a lot of airports out there at the moment who are very nervous about the future of their Norwegian capacity, Germania capacity and some others there as well particularly airports who have FlyBe as a large base. But the way, what we are seeing is -- we are seeing very interesting growth opportunities there, airports pitching not just at Ryanair but also at Lauda interestingly enough as well seeing some very enlightened I know with this said forward-looking growth incentive schemes, which are now becoming I think more and more prevalent not just at secondary airports but also primary airports, and obviously, I can’t give you any detail on that, but we are continuing to encourage that process. Laudamotion, for example, has written out 250 airport -- new airports in the last week talking about their growth plans for the winter of 2019 or the summer of 2020, and it is meeting more than 20 of those airports in London next week, so within the space of seven days more than 20 of the 50 airports have taken up opportunities to be in London. They want to do it in London, so they can get everybody through the place in two days and I think that is a reasonable indication of the appetite that’s out there for growth. In terms of new structure, I mean, yes, there will be some obvious part of differentiation. I mean, the most obvious part of differentiations that Laudamotion with have Airbus aircraft and Ryanair filling up with Boeing aircraft. That I think will be the most significant product innovation. I would expect most significant product innovation. I would expect on short hold though that most of the service elements will converge because you know it works in one airline it should work in others. Laudamotion will in the next number of months I think be moving towards a the Ryanair model of you know priority boarding and bringing you know priority boarding using priority arty boarding to restrict the number of people who can bring two bags onboard the aircraft. It is facing challenges with the volume of free gate bags they are taking at the airport gates at the moment. But that’s not to say that there will be different I mean there’s a different for example in-flight product or some difference in the in-flight product in Laudamotion between Ryanair they eat more bratwurst or sausages or some stuff like that than what we do the Al Paninis. So the around the ages there will be some differences. They speak German, we speak mangled English but other than that, I think the aircraft would be the big area of differentiation and the products will largely not exclusively but will largely merge toward the whatever is the most profitable lowest cost provision. Next question please.

All right.

There are currently no questions in the queue. So I will pass it back to you for any closing comment at this stage. Michael O’Leary: Hey, Neil you got any comments you would like to make?

No, Michael, I think we covered it off there and so we will have the full year numbers out in May and we will update everybody again at that stage. Michael O’Leary: Okay. And we do a full road show in May where you know I will put more meat on the bones of both customer service enhancements this year, the Group structure and everything else other than that. I would just conclude by saying, I think we are facing a year of strong traffic growth. I would be cautious on the summer pricing. Unit cost performance into the next 12 months will be good. On like most of our competitors, we can manage our unit costs, and therefore, and I think we are excited about the growth potential in Laudamotion, particularly as we are now signing up aircraft leases reasonably to be opportunistic aircraft leases. And Ryanair Lab is continuing to monetize what is a very successful platform increasingly improving both the customer communications and the ability to convert customers into taking optional services. We are -- we will continue to have a -- we will have a weekly, monthly focus on punctuality. Our punctuality numbers have significantly improved in recent months. But we would be again very worried about that period to April, May, June, when I think all airlines are going to be in Europe as we launch our summer schedules are heading for a torrid time with air traffic control services that are not fit for purpose. And we are still not making much progress with the European Commission or the European Union in tackling the French striking French air traffic controllers. I mean it’s one of those another example of where Europe likes to put the best interests of tiny numbers of producers ahead of the interest of the millions of consumers and flights will be delayed and canceled as a result of a few French air traffic controllers. Other than that, we are reasonably happy. I think we have said out this morning management succession has been addressed, Boards development has been addressed, and therefore, I think most of the kind of ancillary concerns of shareholders over the last 12 months has now been addressed. The big issue for the next 12 months will be the rate and speed of airline failures and consolidation. Clearly, if oil prices rise back to $80 a barrel that rate and speed will accelerate. But nevertheless nobody can compete with Ryanair’s unit cost across Europe, nobody compete with our pricing and we would expect to keep pushing competitors out of the way or seeing them withdraw capacity for those markets where they compete way. I have seen their withdrawal capacity for those marks where they compete with us both through the summer 2019 and into the winter of 2019. Okay. I think that’s all I want to consolidate. If anybody has any further follow-up questions please direct them here to Shane O’Toole, our Head of Investor Relations, to Neil, who will be back here later on this afternoon. And with that, if anybody wants to come and see the operation or visit the operation please feel free to do so. Shane would be happy to facilitate the business. Thanks very much everybody. Bye-bye.

This now concludes today’s call. So thank you all very much for attending and you can now disconnect your lines.