Ryanair Holdings plc (RYAAY) Q1 2025 Earnings Report, Transcript and Summary

Yes, no problem. Thanks, Michael. I think I’ll turn first to costs in the quarter. As previously guided, we saw costs modestly up as we saw the benefits of our fuel hedging offset much of the nonfuel inflation coming through the likes of the annualization of productivity pay increases and of course, the impact the Boeing delivery delays. Balance sheet’s in very good shape. We finished the quarter with EUR4.5 billion in gross cash. That was after EUR0.5 billion and we’ve spent about EUR250 million on the buyback, which we all know started in May during the quarter. Net cash improved from EUR1.4 billion to EUR1.7 billion. And just on the buyback, as Michael said, we’re now over halfway through the program at this stage. It’s going very well, a little bit ahead of expectations on that. And Michael, I’ll hand over to yourself. Michael O’Leary: Okay. Thank you. I think before I open up to questions, I’m going to deal with the first question, what does material mean -- we don’t know what material means. Although clearly, we think the pricing -- the minimum floor on price falls into Q2 is going to be above 5%. Could it get through double-digits? It could. It is -- it doesn’t look that way at the moment, but pricing on closing bookings is getting weaker as we have moved through July -- we see no reason why that will change in August and certainly no reason why it would change in September. We are now going on a front foot aggressively, and we will continue to aggressively advertise low fare availability. We will maintain our targeted 95%, 96% load factors. We have a much lower cost base than any other airline. And if the fares are going to be materially lower this year, then that’s what it’s going to be. We repeatedly guide everyone that our fair guidance, to the extent, that we give fair guidance is always dependent upon close-in bookings. And the reality is that during June and also now into July and August, which is surprising given the capacity constraints close-in pricing is materially weaker. It is down on where it was prior year. Why? We don’t know. We look around and we see the consumer spending under pressure all over Europe. There’s no one market where we’re seeing any material strength or weakness. We think the consumer is under significant pressure across Europe. Interest rates are materially higher. Mortgage loans, et cetera, are materially higher. Most consumer-facing operators are under pressure, and we believe that is being translated into air travel. People are traveling. We are growing strongly, although we’re growing at a slower pace than we had originally budgeted to because of the Boeing aircraft deliveries but we are having to increasingly discount to fill our flights. We think that’s good news for passengers, even if it means short-term pain for shareholders. I share your pain, obviously, but we’re better off at the moment. If the consumer is under pressure and there has to be price discounting, then we will lead the price discounting, and we’re going to continue to lead that price discounting through July, August and September. I will now open it up for questions, please.

[Operator Instructions] Our first question today comes from Stephen Furlong from Davy.

Michael, you talked about ATC there firstly. I seem to remember that they were recruiting or investing in Carl through, and I was just wondering if you heard anything from Eurocontrol that maybe by next summer, things will have normalized? Or would you be not optimistic about that? And then the second thing, I was just wondering about cost inflation in the industry. Do you think that whether it’s staffing or operations, it’s sticky. And if it is and the pricing isn’t, do you think that the industry, in theory, could have lower margins post-pandemic than pre? Michael O’Leary: Thanks, Steve. Yes, Eurocontrol is a mess. And I think even Eurocontroller in denial -- the figures they’re producing shows that Europe -- I mean year-to-date, European flights are 5% below 2019. They’re 3% below -- in the month of July, they’re 3% below 2019. And yet we rail against Euro Control about their performance and the performance of the ANSP, that keeps us all flow capacity is up 10%, 20% at record levels. We’re not at record levels. We are putting a lot of pressure as our other airlines, by the way, when you really drill down into it, they compete. There are -- there is a marked increase in storms, thunderstorms over Europe this summer, but that would affect punctuality through the day, where we are highly critical of Eurocontrol and the ANSP is we’re typically having about 1 in 4 or 1 in 3 of our first wave departure flights early in the morning being delayed by capacity restrictions. When there’s no aircraft up in the air, there’s no reason why -- the only reason why first wave flights are being delayed is because they don’t have enough staff deployed for the summer schedules. I talked over the weekend to other competitor airlines, and they’re seeing exactly the same thing, in fact, worse. And so if the first wave of flights are delayed, it is because -- and we are aware that the French are materially understaffed on the first phase -- the German of Eurocontrol covering up this massive underperformance by the French to German and the Hungarian in particular. And actually by the air traffic control this summer is much worse than it was last year. Last year, we had 53 days of French ATC strikes. In many respects, that was easier to manage. You just cancel the flight everybody knows is a French ATC strike, okay, and you cancel the flights and you re-accommodate passengers. The problem we’re having at the moment and all airlines are suffering this is across Europe, we’re having massive can or delays on the first wave of flight, no way of picking that up during the day and then you’re running into cancellations on later flight that evening either because crews are running out of ours, our curfew airports won’t let us say in late, which we understand. And give you just an example of that, over this weekend, now it was compromised by Friday’s computer failure. Our ATC delayed more than 1 in 3 of every Ryanair flight this weekend. So ATC delayed 37% of our flights on Friday, 35% of our flights on Saturday and 35% of our flights on Sunday, and we’re the largest airline in Europe. It is a shambles of understaffing, miss management and I would point out that ATC fees have increased by 15% over the past 3 years since 2019. So we’re being scammed for significantly higher ATC fees by these government monopoly ANSPs, who then don’t properly staff and recruit and staff for the schedules that we’ve already filed some 6 months ago. So it’s getting worse. Cost inflation, look, I think there are areas -- I mean we’re seeing among our competitors are seeing some material cost inflation. Labor is obviously one where number of our competitors are out there now conceding significant pay increases. Much of that is to catch up, but the pay increases that Ryanair negotiated with our unions and our pilot 2, 3 years ago. The Lingus pilots and had an increase in 2019, whereas the Ryanair pilots have had increases in 2024’ we also built in pay increases in ‘25 and ‘26. However, our pilots are flying larger aircraft. These aircraft are burning materially less fuel. So I would think on the labor side, while it’s challenging out there, our pilots are materially more productive. We are seeing some airports where we operate where, particularly in Portugal, where you’ve airport monopolies like Vinci, who own ANA in Portugal, are significantly increasing airport fees because they have a monopoly down there. We are negotiating though a lot of growth incentives at discounts for growth. I would point to Italy, in particular, where a number of the regions in Italy have scrapped the municipal attacks, something that we certainly applaud and would welcome. So there’s a balance. I mean I think there is -- as capacity will be constrained for the next 2 or 3 years, I think we are facing a period of cost inflation generally within the airline industry. But as capacity is constrained, I think that will be reflected in higher airfares, particularly among our high fare competitor airlines across Europe. It’s just we’re not seeing it this summer because the consumer, I think, is under pressure with higher interest rates and certainly average airfares are lower than they were in summer of 2024. Now we did -- in 2023, we did benefit from 2 years in summer ‘22 and summer 2023 of double-digit fare increases, maybe this year is just a rebalancing. But ultimately, over the medium-term, I think airfares will be higher in Europe. They’re materially lower in Europe than they are in North America, and we do tend to trend up behind North America. Eddie, anything you want to say on airfares?

No. I mean like no more than what you said already in terms of that. The demand is there, but the consumer is reacting to pricing, and that is generally across the piece across -- generally across markets throughout Europe. So it’s a question of you’re trying to ratchet up fares first and the consumer has reacted to generally a softness out there at the moment. Nothing else really.

The next question comes from Jarrod Castle from UBS.

I mean just on fares, I don’t want to spend too much time on it, I think a lot get said. But I mean you say demand is there, but you’re having to stimulate, which does suggest that not everything as well on demand front. And I mean I guess you’ve acknowledged that the consumer is feeling some pain at the moment as well. But I mean, I guess, has it surprised you just how quickly things have deteriorated because it seems still like in June, things might be okay. So has there been a step change, I guess, is the question around that. And then just coming back to costs as well. I mean, by far, you’re the industry leader. I don’t think it’s even a question. But this is the second year of extra cost going up. I mean, when we look out, I guess, to March ‘26, do you see kind of inflation abating and I guess, extra cost being much more stable from here on out? Michael O’Leary: Thanks. Are we surprised at pricing? Yes. We did see a weaker Q1. Partly, that was the move of the first half of Easter into Q4. But at that point in time, we had about 30%, 40% of the Q2 bookings in. We were on target. But I mean Q2 was certainly softening like we were moving down -- if you go back to our original sort of expectations rather than guidance on pricing. We started off the year, we’ll be up maybe 5% to 10%. That was an attempt on our part to walk back from up 20% last year. It won’t be a third year 20%. In Q1, we’re now saying, it won’t be 5% to 10%. It will be maybe 0 to 5%, it’s getting weaker. And I think we might have been -- so I think there was reasons to believe that the peak would be -- that the price would be strong into the peak, it hasn’t been. And everything here is dependent upon the close-in bookings. And the closing bookings, we are having to continue to stimulate close-in bookings. So volume is there. I mean we are growing, by far and away, the largest area in Europe, we are growing at about 8% to 10% above this time last year. June was the first month, for example, where we’ve ever carried more than 19 million scheduled passengers. We didn’t even do that in August of last year. But the total in bookings are materially weaker. We have for each of the last 4 weekends attempted to close off some of the cheaper seats and drive people obviously come in -- and each weekend, we’ve been running 50,000, 100,000 bookings less than target, and we’re opening up again on Monday, Tuesday. So it’s not that we’re not trying -- but ultimately, the consumer is king. And if the consumer won’t pay those higher fares, we simply will accept that, that’s the way the market is going to be this year. I look around the marketplace, Jarrod is carnage all over any of the consumer-facing stocks Ocado. -- carpet right going into liquidation all the luxury goods, we’re not necessarily luxury good, but the consumer is under pressure. And we have had 2 years of very strong price growth. We’re not -- I thought we would have modest price growth this year. I mean what has surprised me is how weak pricing has been despite the fact that capacity still hasn’t recovered to 2019. And that I think is the greatest surprise. But if closing pricing is weaker than we expected, we live with that. We will respond and are responding immediately by opening up some cheaper seats close in, which is why we’re hitting our kind of target 95% load pace during the summer months. But we now accept that Q2 is going to be materially weaker on pricing. It is going to be above 5%. It could be 10%, it could be into a double-digit number. At the moment, it doesn’t look like it -- but the trend is downwards and weaker. So I would rule nothing out, and it could well be a double-digit decline in pricing in Q2 and then if it’s double-digit price in Q2, all bets are off in Q3 and Q4. We will simply go into Q3 and Q4, load factor active, price passive. And that is the way it will be. In terms of cost, again, yes, there is a -- I mean our cost increase is modest. The unit cost increase. It would have been better if we had got all the aircraft deliveries from Boeing. We are 20 aircraft short of what Boeing and contracted deliver. We have recruited the pilots. We have recurred. We are over crude on pilots and cabin crew. -- mind you, given the amount of ATC disruption, we’re in a reasonably fortunate position is that we have significantly better on-time performance than almost any other airline in Europe, but we are burning through huge amounts of crew hours both pilots and cabin crew trying to deliver schedules where ATC are delivering -- yesterday, for example, we were looking at 2 and 3 hours stock delays through the middle of a Sunday in -- the second last Sunday in July. So will unit cost besides, Yes. Do I believe that will continue out into 2026? I think it will moderate itself, but a lot of that depends on Boeing delivering those aircraft. And we’re already now focused on our 2025 deliveries and as of our last conversation with Boeing on Friday, some of our spring 2025 deliveries are going to be delayed into the peak summer of 2025 again. Now the numbers will be a lot less. We will certainly have the benefit of the 20 delayed aircraft deliveries this summer, which we will get before the end of the year. But we will be -- we will have less capacity in December ‘25 than we are originally scheduled to have with our Boeing delivery. And then we’re into 2 years of essentially no capacity growth at all. And if the consumer is going to be under pressure for the next year, 18 months, that might not be the worst place to be. But at this point in time, all we can see -- and I caution here, as of today’s date, we have 95% of July already sold. We’ve only 74% of all sold. So we have another 20%, 21% of the bookings to take in August with only 40% of September sold. So we have -- when we go back here, we say -- we don’t have visibility. We really don’t have visibility. Our numbers are heavily dependent on the close-in bookings. And whereas, as is currently the case, close-in bookings are materially weaker in terms of price. That’s what it will be, and that’s where we’re going.

Next question comes from Alex Irving from Bernstein.

Thinking about the demand change is structural or cyclical, I don’t ask what the Fed is going to be next summer, but do recent demands in fares change your own internal steady-state expectation of where net income of passenger is like to be as we go into F ‘26, F ‘27 and beyond? And then second, on ancillaries, right, broadly flat per passenger year-over-year this quarter. Is that basically just Easter moving? Would you think that is slowing down too how should we think about the path of ancillaries for passenger going forward? Michael O’Leary: Neil, I might ask you with ancillaries. Is demand is structurally cyclical. Look, I think the price -- there’s nothing wrong with demand. The pricing is cyclical, -- the consumer -- I mean our guess is the consumer is under pressure out there, and they’re simply not willing to pay off even for close-in bookings. When we try to close off -- some of the cheaper seats at the moment, bookings die. When we open up again, bookings recover. And we are still -- we’ll grow this year from 183.5 million passenger last year towards 200 million. Do we think there’s any longer-term change in the trend of people traveling across Europe? No, we don’t. But it may -- if -- but I certainly am of the view they’re going to be price sensitive for the remainder of this year and maybe into summer 2025, unless there’s a material change in interest rates or consumer disposable income. And it seems to us that the consumer across Europe is under pressure at the moment, and that’s -- they’re going to be more price sensitive. That’s good for our model. We do have a wider cost gap between us and every other airline in Europe. We are adding more aircraft if and when Boeing deliver them. We’re adding more aircraft with more seats that burn materially less fuel. So not alone are we hedging better into FY ‘25 and FY ‘26 but we’ll also have a higher proportion of the fleet will be burning materially less oil and carry more passengers. And we believe that the MAX 10, if and when they get certified and delivered in 2027 onwards, will structurally lower our unit cost base. And so we believe we have material cost advantages going forward. Over the medium-term, I see no alteration to the supply dynamics in the European sector. There will be less airlines operating Europe there will be offering less capacity nobody the A320 ground this will continue for summer ‘24, summer ‘25 but at the moment until the consumer spending begins to improve, I think we should be bearish on pricing and expect pricing will continue to be down year-on-year. Neil, ancillary?

On the ancillary side, as you saw, we were flat on a per passenger basis. Different products doing different things. Seats are running ahead of budget and ahead of last year, as is onboard spend, test coffee, the duty free. Our early boarding is a little bit tougher this year. So it’s not rising at the same extend. So I think now at this stage in Q2, we’re probably looking at flattish ancillary again. And beyond that, it’s too hard to call, but you’re probably looking flattish with a fair wind marginally up, but no better than that.

The next question comes from Harry Gowers from JPMorgan.

Michael. First one, just on the weakness in Q2 fares. I mean, is this completely network-wide in terms of the weakness? Or is there any particular pockets, geographies or any particular passenger cohorts that you might be able to call out? And then second one, I mean, the buyback is obviously running well ahead of schedule, 50% done? Is it a base case for you guys that we might get another announcement or an extension in a few months’ time? Michael O’Leary: Thanks, Harry. No, it’s network-wide -- given our scale, and I think we’re all this of that, wherever we are pricing -- if we’re pricing aggressively, we tend to be pricing aggressively across pace. There’s no one market where we’re doing lots banking 1999 seat sales, 20% off seat sale. -- is not wood market where we’re suddenly pricing upwards. So it is across the piece. It seems to be system-wide and no unique markets there. On the buybacks, as I said, we’ve indicated previously that the buyback, we expect to complete the EUR700 million buyback by the September ‘88 it is no secret that the Board is looking at maybe a top-up buyback, but that would be a decision that will be taken probably at the Board meeting at the AGM. And if we have something to announce it, we announced either at the AGM or the second quarter or half year results in November.

The next question comes from Dudley Shanley from Goodbody.

Two questions for me, if I may. First of all, just on Boeing. I was wondering if you could give us an update on what’s going on there. Because the last thing we heard from a lot of customers was that things are improving slowly. But they seem to have taken a little step back for you guys, based on what you said earlier. And then second of all, if we take a step back and think about the medium term, as the current order comes to an end and there’ll be a gap before the MAX 10s arrive. How should we start thinking about network optimization in that scenario? Michael O’Leary: Okay. Thanks, Dudley. I think it’s fair to say we believe the situation in Boeing has improved, but we’re still running into glitches. We had thought we were going to get 7 aircraft in July. That’s now -- we were going to get 10 aircraft in August, that’s now 8. So cumulatively over those kind of 2 key months, we’re going to be 5 aircraft short the greater concern at the moment, but it’s developed as recently as last Friday is our deliveries in 2025, we’re originally supposed to get 29 deliveries between the end of February -- February to the end of May. They’re now moving towards March to the end of July. And we don’t yet have a handle. So we’ve said going back on Friday, please explain why these are moving. There’s no reason why these should move. I think there is a risk of labor disruption in Boeing in October when the contracts come up for renew. But we’re getting a little concerned. I don’t want -- we can’t have a second summer in’ ‘25, what we’ve had this summer where we’re constantly shopping and changing schedules because of Boeing aircraft delivering a week or 2 weeks later than they had originally promised. But overall, I think Stephanie Pope is doing a good job. There is at least management on the ground in Seattle where there’s someone we can talk to. It’s just the schedules are set and move slightly backwards. The bigger issue there, if they leave us if we’re 10 aircraft short for summer ‘25, it’s not the end of the world, particularly in this softer pricing environment, we will still have probably the goods of 30 or 40 additional air of capacity growth for summer ‘25 or summer ‘24. The bigger issue now is getting the Boeing to MAX 7 certified in the first half of 2025. The MAX 10 certified in second half 2025 which would then mean we would not expect any delays in our -- the first 17 -- we our first 17 MAX 10 deliveries in the spring of 2027. But it is important that Boeing hit those MAX certification date and also that there are planned step up in production, both they and Airbus are planning steps up in production or Boeing has to recover back towards 36, 40 aircraft a month, that they achieve those dates, otherwise, we run into delays on our spring 2027 deliveries. But -- that’s not really germane at the moment. I think where we are at the moment, we -- particularly in this softer consumer spend environment, I think we’d be reasonably relaxed to take the remaining 49 aircraft deliveries were due from the end of July this year up to the end of July next year. And then -- very little capacity, no capacity growth in summer ‘26, very little in summer ‘27. That’s probably the right phase to be with no capacity growth in Europe as we would hope consumer spending will recover over the next 2 or 3 years in a marketplace where capacity remains constrained. Over the medium-term, we are already -- we have always been engaged in network optimization. We are constantly churning our aircraft roots. I mean, we’ve had the example this week, our Bordeaux, who we have a 2 or 3 aircraft base in Bordeaux. They materially -- they basically waste on our agreement the cost dramatically escalated. So we announced the closure of Bordeaux. Within a week, if we announced that closure, we had 6 other French airports on looking for those aircraft. Now it’s likely those aircraft will churn outside of France elsewhere because we have better growth at better cost elsewhere. We had planned to put 3 aircraft into Dublin this summer. Again, we have this mad capacity cap at Dublin Airport and an incompetent green transport minister who won’t do anything about it. So those 3 aircraft to them went into Italy where they’re scrapping the municipal tax and 1 aircraft went to Poland. So we are continuously churning, but there will be -- and we are having more aggressive, more kind of aggressive discussions with a number of airport partners into the winter of ‘24, summer ‘25 because there is going to be a greater rate of churn, particularly of either underperforming airports or those airports where costs are increasing. Portugal is likely to be an area of focus there. We’ve already closed the Ponta Delgada base. I think it’s likely, given the cost increases, the material base will close and whereas Italy, for example, where municipal tax being rolled back and costs are falling, we’ll see a greater allocation of aircraft. Eddie, anything you want to add to that in terms of --

It’s really sort of, I suppose, 2 phases. I mean like we’ve done a huge event of work over the last 2 to 3 seasons on utilization. Now it’s looking the quality then of the -- what frequencies we have on it, but that also feeds the cost. You’ve called out most of them there -- and if you look in places like Morocco, where we still have some element of utilization that goes, we tag on domestic, but the one other call out I would give that has a structural cost problem there is Germany. And so you’re now having taxes or charges per passenger there and north of EUR55, close to EUR60 as what you would see as a secondary major airport in Germany. And they will be front and center along with Portugal, you say, and other high-cost countries and regions in this churn. So the churn will be more than it has been in previous seasons because we’re not growing as much and that there are less alternatives out there for airports. So there will be there will be a big focus on that now over -- particularly over the next number of weeks for summer ‘25 and then beyond.

The next question comes from Jaime Rowbotham from Deutsche Bank.

Michael, two from me. First one, obviously, you’ve talked again today about the constrained intra-European supply. But obviously, one could argue, stubbornly that at last year’s price point is actually now oversupply rather than undersupply, which is why you’re having to lower the fares to fill the planes. You touched on this earlier. How bad would it have to get to start practically moderating down the capacity growth for summer ‘25 rather than it coming organically by the Boeing delays? Or do you think the consumer just comes roaring back from whatever is weighing -- because you just mentioned growth in ‘25, then on in ‘26, ‘27. I just wonder whether there may come a point where the other way round starts to look like a better plan to allow the consumers some breathing space. . Second one for Neil, maybe on the nonfuel unit costs in Q1. The maintenance line came in lower certainly than I expected. And you mentioned on Page 6 of the release of supplier credit in there, presumably from Boeing. Have you -- as I suspect you might have a fair bit of credit stored up, allowing that line to be lower than normal for the rest of the year? Or would there indeed need to be further delays for this not to go back to being higher maintenance cost in the coming quarters? Michael O’Leary: You broke up in the middle of that. But I mean if I understand the gist of the question is, would we in a softer pricing environment, would we not -- I don’t know, take delivery of or not deploy those aircraft for summer 2025. If that’s the question, answer is no. In a softer pricing environment, we will take the capacity, and we will fly it more if we can. We will take more market share from competitors given that we have a much lower unit cost base, we will accept lower margins and lower pricing. And if that means we push some more competitors out of our markets, then that’s the way it will operate. We prefer periods of recession where consumers are under pressure because that’s when we grow best and lay down the kind of market shares for improved medium-term kind of profitability, et cetera. So we will take those aircraft. I would take them as early -- as early as I can. In fact, we’ve already said to Boeing, United ones you were talking walking away from MAX 10 in ‘25 or ‘26 is the data that we take them at our pricing. So no, if there’s a consumer pricing is not, that’s our marketplace, we will grow and try to grow faster in those markets at lower margin. We have a much lower cost base. The unit cost base, if we grow faster, will be slightly enhanced or improved -- but at the moment, the Boeing delivery delays are constraining our ability to grow and are also at the edges damaging our unit cost performance. But overall, our cost base is -- our cost advantage is widening over all of our competitors and they’ll have to decide for themselves what they want to do in response to our lower pricing. And Neil, do you want to take the second half of that question?

I will do. Jamie, yes, you referred to the maintenance line there. The reason modest cranes from Boeing into Q1, not material -- we have an agreement with them in relation to compensation. Again, confidential. They’re very heavily motivated to get the aircraft in on time. So if aircraft are coming in on time, then it won’t really be a particularly material number. If there are significant delays, then that number could get bigger, but for the Q1 was totally immaterial.

The next question comes from James Hollins from BNP Paribas.

Just on the revenue, clearly, you very well flowed the consumer problems. I’m guessing 5 new bases see some route and maturity in there as well. I was wondering if we could lay any blame on your revenue management systems and maybe not building the load through the booking cycle as well as it should and if that’s something you need to address. And the second one, 74% sold for August. Thank you for that number. wondering if you might put a number on what you’ve actually sold at and whether the guidance is all down to an assumption of late bookings weakness. Michael O’Leary: Yes. Okay. On the revenue management, no, I wouldn’t put any blame on the -- in actual fact, they’ve done a terrific job in a -- they noticed that we pick up faster none with anybody else that pricing is getting softer. When we were the first ones out in March, April, talking about pricing being softer than we had expected, we were the only ones every no, no, in-we’re not seeing any. And then 2 or 3 months later, they’re all seeing much the same thing. But I don’t worry about what they generally take. We -- at the moment in July, we went into July about 1.5% ahead of target where we were in target bookings, which is why we thought now, okay, let’s turn off some of the cheaper seats and price up into July. Every time we’ve attempted to turn off. We have struggled to make sales that we failed to hit our either daily or our weekend volume targets, and we’ve had to open up again. So we went into July about 1.5% ahead of target. As of this morning, we’re still 0.5% ahead of target. So we’ll finish July just at or marginally ahead of targets. Now -- we have had a shed loaded cancellations during July over 400 this weekend, mainly due to the computer system and ATC delays over the last 3 days. But you will see us hit impressive load factors and traffic volumes in July. But at the moment, we’re about 0.5% behind the target for August, and we’re about 0.5% behind for September. We need to get that back towards being 0.5% ahead. We want to go into each of these months slightly ahead of target so that we have the availability to open up or close off or open up as we need. So no, the revenue management system is bang on where it needs to be. They have done everything they can to try to price up into the peak summer months. In fact, we’ve fallen 1% again target as we move through July, but we’re still 0.5% ahead of target. They protested August and September, but we’re 0.5% behind in August, September, we will close that up over the next couple of weeks. So Yes. No, I think the revenue management team are doing an excellent job. Our philosophy here is to be load factor active, yield passive. Now we get tried in the last couple of summers to be more yield active because we had such strong demand into the post-Golden recovery. I’m surprised at the weakness of pricing, given that Eurocontrol’s own numbers confirmed this year, Yes, while capacity is up in July, it’s 4% higher year-on-year, it’s still 3% behind where it was in 2019. But there is no doubt that the consumer is more price sense. -- talked to one of the long-haul carriers a week ago and told me the transatlantic is softer this year than it was last year. Everything just points to the consumer spending being a little bit softer than we had expected. And I thought we’d originally been cautious in guidance this year that summer pricing fares be up 5% to 10% after 2 years we weren’t have cautious enough, but we have zero visibility. What was the second part of the question? That was the revenue management system. Oh, yes, can I give any indication of what that pricing is in July and August. Given it through it this morning. It’s in -- the pricing will be materially lower than it was in 2023. And I’m not willing to define what materially lower means [indiscernible] it is above 5%, and it could be double-digit. It’s not double-digit yet, but I think the way it’s trending, it could well be double-digit by the time we get to the end of September for Q2.

Next question comes from Sathish Sivakumar from Citi.

I’ve got 2 questions here. First is on the fleet to crewing ratio -- so obviously, yes, ATCs are impacting right now. But as we go into the winter, how should we think about that ratio? Would you see that turning back to 2019? And if at all, when do you get back to that level? And the second one is, given that you’ve got to do some price simulation now, what does it mean for winter capacity -- do you see some scope to optimize winter capacity again, both mid-beta weekend as well. Michael O’Leary: Okay. Thanks, going to ask Eddie with the first half, which is the crew ratio, and then I’ll do with the winter capacity.

Yes. I mean the crewing ratios are very strong. I mean, with both with pilot and cabin crews and particular, pilots -- you’ve got a plan a full 18 months out. And we would have been -- like in previous years, we would have been down at 5 ,5.2 crews for aircraft. We’re now around 5.8 crews. Cabin crew are probably in a more healthy state -- and we have needed those for the disruption that we’ve had to run standby crews, particularly as the days if you’ve got delays and you have to call in standby crews in the late evening to do the final sector sometimes. And many of our competitors just don’t have that resilience built in into their crewing, which means that there are substantial significantly more cancellations. But are we going to pare it back. We’ve always said that we will pare a bike, but not until ATC is fixed. We’ve gone through all the other areas of resilience that we’ve bolstered up over the last number of seasons, both in our operations control center here by doubling the capacity there and the sort of physical footprint of it, along with a lot of new systems that are now critical for us in planning disaster days like last Friday, and I think we’re significantly better at that. Yes, we would like to get crew levels back, but now is not the time to do that. We need those crews. But over time, yes, there’s some headroom there for us to pull down. Michael O’Leary: In terms of winter capacity, Sathish, there’s no change -- we have -- as you know, we’re on track, we think, to get very close to 200 million passengers this year. That would be up about 8%, 9% year-on-year. Q1 traffic is up 10%. And traffic. We think there might be a fraction below that. It could be 9%, 10%. Second half of the year, we expect it to be up kind of 8% to 10% as well. We are -- there are some pinch points there. Dublin, for example, because of the cap we may well not get stock for the extra flights we normally do at Christmas, but we will redeploy those aircraft to doing Christmas extras elsewhere. -- our response to weaker pricing will be -- if it’s going to be a weaker pricing this winter, we will accept weaker pricing, but we will deliver the traffic, we wouldn’t and cut back the capacity growth. We wouldn’t add it either. I mean if you take 20 aircraft, we’re expected to get from Boeing this winter, we don’t plan to deploy those aircraft. We will need them for next summer schedule, April, May and June, but it will be steady as she goes and we will take the pain on the pricing. Tracey, anything you want to add in there in terms of winter capacity.

Yes. So we just continue to do -- we always do a network optimization. We will reduce capacity in the stock to trading period midweek in Jan and February, March, and with 3 new bases for the winter [indiscernible] and Tenerife and then we continue with Wintersole and expansion in Central and Eastern European markets. Michael O’Leary: Okay. And Morocco, I think would also be a mark where will grow meaningfully in Morocco this winter were winter so, but also a growing domestic presence in the Moroccan market.

The next question comes from Savanthi Syth from Raymond James.

Just a question on -- another question on just the fare booking environment. Some of your competitors have talked about maybe the book booking season extending a bit further out. I wonder if you’re seeing anything on that front. I know you mentioned September is only 34% book, so maybe too early, but -- and then on the second question, I was kind of curious what the significance of the win against the bookings.com on Friday was? Michael O’Leary: Okay. Sorry, you broke up a little bit -- the first question, the summer bookings are they likely to extend lumber is a seasonal extent.

You’ve had some competitors talk about maybe bookings extending longer than normal. So the peak may be being a little bit longer. I’m wondering if you’re seeing any of that. Michael O’Leary: Our monthly traffic -- at our monthly traffic have our summer schedule runs through to the end of October. The traffic does dip down in September and October, but we would expect to see strong load factors I would kind of slightly counter that is that we’re in a weaker pricing environment. So I think we will see strong bookings through September and October. What we don’t yet know is what the pricing mechanism will be of October, as we stand today, we have less than 20% of the seats sold for October. So I wouldn’t hold too much short the summer travel period is extending. We’re a short-haul year-round operator. We do cut back, as Tracey said, capacity meaningfully in the winter. But during the summer, which we in due September, October, we keep going. But we keep going at weaker pricing, currently, the pricing margin is materially weaker. The win over booking.com last week, I think is seismic. We had 7 days or 5 days in front of a jury and ports in Delaware. We were -- and the verge of the jury is comprehensive. We won on almost every -- we lost only 1 of 12 points on our [indiscernible] against booking.com, which means we have now -- our jury has now established that booking.com were in breach of the U.S. Computer Fraud and Abuse Act. They also found that the but -- they were the deceptive trade that they had knowingly and with intention to an intent to defraud have been illegally screen scraping our website -- we had so much evidence of booking.com scamming consumers by overcharging them for Ryanair airfares and Ryanair ancillaries, booking.com at a battery of lawyers arrived in and saying, no, we don’t do that. We own that. We don’t do that. It was kind of trump in defense and the jury has shut down. I thought also quite significant that the jury found in our favor on all of bookings counter suit against those, which is that we had to famed booking.com by calling them overcharging pirates that we have somehow engaged in unfair competition against a EUR130 billion travel be hemo and that we were engaged in deceptive trade practices. I mean, I was surprised that booking.com allowed us to go into port, given that the evidence against them of what the scamming that have been going on them illegally or illegally scraping our website and using it to overcharge customers for -- overcharge customers and then try to cover it up with the -- by giving us fake e-mail addresses and big payment details. They came not to -- I think what was notable is that booking.com took us off sale about 4, 5 months ago in the run-up to this case. And they’re kind of depends we don’t sell Ryanair anymore. No, but when you did, you were scanning them, I think it is -- what’s interesting is, no, whether they appeal or not, we don’t know. I’m not sure there are any grounds for appeal but that might not stop them anyway. But I think it will now be materially difficult for booking.com to scrap any airline’s website. Now other airlines who have higher affairs may not mind working with booking.com. We object to working with booking.com on the basis that they are going to overcharge our customers for our airfares. Booking.com have the same opportunity as all the other now approved OTAs. If you want a direct access to the ryanair.com website, you can have it, but only if you agree that you will not scam and overcharge our passengers and you must show and display our real airfares and our real ancillary prices, and you must give us the genuine customer e-mails and payment details. Almost every other OTA has now signed up for that with 2 notable exceptions, booking.com who also have KAYAK and in the states and eDreams, Spanish pirates in Europe. But we think ultimately, their models are now ultimately flawed. It’s fine for booking.com who do deliver meaningful distribution for hotels and accommodation, but they charge those hotels accommodation 16%, 20% for their services. It is not fine for them to try to insert themselves into the relationship between Ryanair and our customer in what is clearly an attempt by them to grab a huge volume of our bookings and turn around and try to overcharge us or the consumer. The reason they’ve been overcharging consumers of Ryanair Airfares because Ryanair won’t agree to pay them a fee for their non-existing services. We don’t need booking.com to sell Ryanair fares across Europe, and we have the lowest airfares. We’re surprised that other airlines do, but that’s a matter for them. But I think it means -- I think that the booking.com ruling is now, I think, the detail for OTAs illegally scraping the Ryanair website. And therefore, they will not be able to insert themselves into the relationship between us and our customer and then turn around and either charge the customer a fee or turnaround, charge Ryanair fee. So I think it is pretty seismic. We’re used to see what other airlines do in North America when, in our view, they should turn out and tell booking.com stop overcharging their customers, but that’s a matter for them. But we think the booking.com model -- and as far as it relates to accommodation is valid. They’ve made huge multibillion fortunes of it. But scamming customers for overcharged airfares is not going to work going forward after the Delaware ruling.

The next question comes from Duane Pfennigwerth from Evercore ISI.

Can you expand on the Board’s decision to change the exchange ratio on the ADS -- how do ADR holders navigate around the foreign ownership restrictions. And do you think this will help the ADS trade closer to parity with the locals from a valuation perspective. Michael O’Leary: Thanks, Duane. I mean, look, we’re trying -- I’ve always been with the challenge we have even in our own present buyback is the ADSs have always been a reasonably illiquid there closely held by a number of very large shareholders. And what we’re trying to do is to make them a little bit more or create a bit more liquidity in the ADS program. We do believe if we can do that, that it may help ADS liquidity I’m not sure it will -- until we resolve the ownership and control restrictions here in Europe, where we are pushing hard together with a number of other areas that there should be controlled restrictions but not ownership restrictions. I’m not sure that the gap between the European ordinaries and the ADS as were closed. And maybe I might ask Neil for a comment to that, and I might ask Juliusz from a legal point of view to comment on it as well. Neil?

Yes, I think that’s a fair comment in relation to the premium. There’s quite a large premium at the moment on the ADS compared to the ordinary shares. We did look to wane as where our ADSs are trading in absolute terms versus other airlines and travel industry stocks, and it’s ahead of by the way on considerable distance. So it makes sense to effectively realign to bring the price down close to 50 or 60 and ADS, which is where kind of we’ll get to following the split. And that may hopefully increase liquidity because we need that liquidity to not only finish the current buyback, but to also do future buybacks, so that we can get closer to 50% EU ownership and control and then see where we go from there. And I’m sure Juliusz may have some color on that. Michael O’Leary: Juliusz, I don’t know if you want to add anything on the ADS issue? And maybe I might also ask you since your team any comments do you have on the booking.com ruling in Delaware -- I should ask you to comments on that’s been on response to Sathish question so first to be ADS and secondly to be booking.com ruling?

The change of the ratio in ADS won’t immediately have an impact on our R&C situation. We are still over 48% EU owned at the moment and trending up slowly at this stage, but we think it is within sight that we will get over 50% at which stage the Board will be in a position to restore voting rights for non-EU shareholders. So it’s helpful in that context. And in relation to booking.com, I think one -- the only thing I would like to add to Michael said before was that this is the fourth significant ruling in the last 2 years in our struggle against screen scraping. The first of those was against last minute in the Paris Court of Appeal in 2022 when the court said that screen scraping of our website is equivalent to free riding on our investment. This was the case against last minute. We then had a ruling in Ireland against flight box, Polish provider of software for screen scraping, which essentially said the same thing that screen scraping is unlawful. And then the court of appeal of Milan, again, in the case taken against us by last minute, earlier this year, said that our objection to screen scraping does not amount to an abuse of dominant position. So it removed that hurdle. And now with the booking.com ruling in the U.S., I think it is fairly clear -- it should be fairly clear to all that screen scraping is unlawful and must not continue. So it really puts eDreams in a very difficult position as pretty much the last OTA that still continues to scrape our website.

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

I just wanted to ask on -- now that Lufthansa have to green light what’s your view on the Italian market? And any comments on the remedies that have been proposed, especially at [Lennata]? And then secondly, for Neil, just if you could remind us on the CapEx outlook for this year and next year. And I know you expect the MAX 10 certification next year. But if there are delays on that, how should we be thinking about the CapEx profile? Like when would you -- when are you scheduled to start pre-delivery payments on the MAX 10 for now? Michael O’Leary: Thanks, Muneeba. I mean, I’ll touch on the Lufthansa takeover. We welcome the ruling out of Europe. I think it’s slightly depressing that Europe is still slow to approve what is the inevitable consolidation of the airline industry in Europe. We believe and have long supported Lufthansa purchasing is the alternative is that the Italian taxpayer keeps bailing out here every time it loses money, which is an annual event in Asia. So we think it is long overdue. Obviously, we don’t think the remedies go far enough, although they are handing over slots in [Lennata] we are not interested in softer [Lennata] we do think easyJet or somebody will take up those stocks. But ultimately, it seems to us that the only way the likes of it TAP in Portugal, SAS up in Scandinavia are going to survive over the medium term is going to be some process of consolidation, whereby the high-fare legacy carriers gather or coalesce together. We will continue to expand across Europe with a much lower cost base than the other airline. And therefore, we think that, that consolidation process is ultimately good for our growth. We see strong growth in the Italian market. We do believe that ITA will do as they have done in every other merger that will be pivot it is capacity into feeding from Italy into the 2 big hubs in Germany, Munich and Frankfurt. There will be less capacity deployed doing O&D markets from Italy to Europe or Italy domestic, and we will certainly be adding more capacity into those marketplaces to ensure that Italians do not become the victim of Lufthansa’s very high airfares as German consumers are currently struggling with. The German market is the least recovered market. In Europe, it’s operating at about 82% or 83% of its 2019 capacity. And the Germans are now paying among the highest airfares in Europe as a result. But -- it is inevitable. I think that the consolidation process should continue. And we think there should be a much faster clearance process that should consist of handover slots at congested airports and [indiscernible]. And Neil, you want to touch on capacity and also what will happen if the MAX 10 certification slips, please.

Yes. Well, on the CapEx, Muneeba, but no change from the guidance that I gave back in May. So we’re looking at about EUR2.3 billion CapEx this year, although that’s predicated on all of the aircraft coming in this side of 31 March. Next year, we’re looking at somewhere between 1.1 and 1.2. So there could be a little bit of timing between this year and next year. Depending on Boeing deliveries. The MAX 10 doesn’t really become meaningful from a PDP perspective or from a delivery perspective of actually 2027 there will be the first PDPs due within the next kind of 12 to 18 months. We’d be hopeful, as Michael said in his opening comments that the certification process will have moved on and that will be taking our first aircraft as planned in the first half of 2027. So it wouldn’t have an impact. But if there was to be a move out, the first couple of years of PDPs are not that meaningful in any event.

The next question comes from Gerald Khoo from Liberum.

One for me, if I can. You talked at great length about the air traffic control delays. I was just wondering whether you might be able to quantify the cost in any way. And secondly, I think you mentioned that you extended the leases on some of the -- now with the A320s. How much scope is -- how much more scope is there to extend further leases? Or have you extended everything that you can already. Michael O’Leary: I mean, impossible to quantify the cost of the season. We’re coming into that. We’re now in the peak travel period. This time last year, we had 53 days of French ATC strikes. That will the strikes are easier in many ways to handle because you can’t fill the flight. And while we have right to care obligation, we don’t have compensation obligation. We are struggling over the last 2, 3 weeks with materially lower on-time performance. I mean, historically, our on-time performance this time last year was over 80%. At the moment, we’re struggling to get to 65%, 66% -- so 1/3 of our flights are being delayed. It is leading to some higher -- modest rate of cancellations of site because of airport curfews. And we are therefore responsible for more compensation. So I think there’s likely to be a modest uptick in our EU261 cost this year, but we haven’t quantified it. We don’t know how long this is going to last and whether the situation will improve. I spoke to a number of the other airlines in the A4E group, and they’re all equally frustrated as we are with momentum of performance of ATC, and it will encourage us to lobby harder for some more effective ATC reform when you’re able to deliver nothing or [indiscernible] got reappointed President last week, promising competitiveness and improved competitiveness despite 5 years of sitting on or at doing nothing about air traffic control. So maybe this might inspire -- we think the more -- if a few commissioners and parliamentarians of their flights delayed this summer because of ATC delays, we might see some action. The problem is most consumers just blame the airline. It’s our thoughts. So they blame the airline for the delay, they get compensated for the delay -- and yet, we’re not allowed to recover our EU261 cost for me, NSP or ATC providers because they’re generally immune from prosecution across Europe. So it’s just another lamentable failure in Europe’s ATC infrastructure, we need real effective reform, privatization would be far and away the best thing you could do with that loss, ensuring that they’re actually properly staffed and protecting overplay during national strike. On the [indiscernible], we have extended 3 of the lease out of [Prad 28] that we have about 25 or 26 is allowed to A3 -- run out -- we are not minded to extend the leases beyond that date, although the aircraft is getting old, I’m sure we could if we want to. But it was very much part of our vision that the MAX 10 deliveries are alternative A320 deliveries would replace those aircraft in 2028, and that continues to be the case. If there was a material change in the outlook. I mean the reason I should say we extended those 3 is we were able to extend those 3 aircraft without any increase in the lease rate, which was a significant gain for Lauda and for our shareholders. Lease rates have doubled in the last 12 months over the rates we’re paying for Lauda. But where that kind of value is available, we will have been taken. I think in all cases, the lessors want to keep Ryanair as a customer. And see value in having [Brian air] as a customer there. But aircraft leasing is not a big part of our operation. We own almost all of the Boeing 737 fleet. We have very little leasing left in place. And it’s mainly on the Lauda A320 fleet. And we wouldn’t see leasing as a way forward. Leasing has been -- the lessors that we see both the waning or [indiscernible] in their overpriced offices and overpriced automobiles. The world has moved in their favor. The cost of engine leases, aircraft lease is now, I would say, a record high -- and because I think that will widen or significantly increase the cost inflation many of our competitors suffering for the next number of years, whereas we own all our aircraft. We’re paying down the debt on those aircraft aggressively and all we have is a depreciation charge.

The next question comes from Alex Paterson from Peel Hunt.

Two questions from me, please. Firstly, I just wondered if there’s any regional variation in terms of the fair declines. Is it how stronger? Michael O’Leary: No, it’s all cost piece we on that question already.

Sorry. And then on the load factors you said that you were 0.5% behind for August and September. That was behind plan. Was planned flat on last year, i.e., our bookings moving later. Michael O’Leary: Yes. The plan is flat on last year. We said the -- sorry, the plan is not on last year, but with 9% or 10% additional seats this year. So the plan is flat -- we had aggressively priced into July. So we went to a 1.5% ahead of the target. The target moves on a daily basis. But we’re running 1.5% ahead in July, and that’s what we thought, right? We can now price up into July. And every time we try to price up, we may resist and we finished up opening up again. And as we’ve gone through July, we’ve moved from being 1.5% ahead of target. Today, we’re 0.5% ahead of target. Now we’re getting very close to the end of the month. So it’s likely it would finish modestly ahead of target but we’re 0.5% behind for August and September. So our efforts to price upwards have failed. The closed-in bookings there were meeting significant pricing resistance on close-in bookings and we’re having to open up again. And I think that’s reflected this morning in our commentary, which I accept is come as a surprise. I mean we’ve been surprised as well, but we’re not seeing any -- we’re not seeing the same kind of aggressive load factor build and pricing that we have seen in both of the last 2 summers and summer ‘22 and summer ‘23 when we were repeatedly closing off cheap seat close-in and bookings were running ahead of our daily targets. But it is against this time last year. So we would expect to hit the same load factors as last year. The traffic will be up about 9%, 10%. And but the material yields, the average fares will be materially lower in Q2, July, August, September.

Our final question today comes from Johannes Braun from Stifel.

Actually, just one left for me. And that would be on the free cash flow, which looks for Q1 actually pretty good despite the profits being down. You can see that it’s largely because of lower CapEx given the delivery delays of Boeing, but there’s also cash inflow from ticket prepayments, which are much stronger than last year, above EUR600 million. And I just wonder how this fits with your warning of significantly lower yields in the summer. Is it just the volume growth that I can see there? Or is there anything else that I missed? Michael O’Leary: Neil, do you want to take that on the free cash flow.

Yes, Johannes. Bookings traffic is strong. We’re taking in about 0.5 million or more bookings and ice at this point in time. So the cash continues to flow very strongly. Your road $0.5 billion in CapEx or slightly lower in the first quarter. But I expect the cash to continue to remain strong over the course of the year. I think that’s a factor of the volumes that are coming in and what they’re paying for deferred as far as are down, as Michael said, but yet the one where they were on a pre-coat basis. And that’s coming through in the numbers on the cash flow, EUR4.5 billion in gross cash, EUR1.7 billion net cash at the end of the quarter.

All right. So it’s largely the volume element compensating price element.

Yes. I mean there’s a steady flow of cash in every day, yes. Michael O’Leary: Ladies and gentlemen, with no other questions, we’ll wrap it up there. As I said, the -- we are surprised by the [indiscernible] is the pricing into the second quarter. It is heavily driven by close-in bookings and the close-in bookings we’re having to open up rather than close off as we move into the peak summer period. We think that will continue. Nevertheless, traffic growth will be strong. Cash flow generation will be strong. We will continue to focus on returning cash -- surplus cash to shareholders. The booking.com win last week was a momentous win. We think that is structurally significant for us going forward. And for us and for the industry going forward. And therefore, we will continue to deploy capacity. We’ll continue to be load factor active, price passive. We will still have strong profitability this year, although clearly, profitability will not be as strong as we had originally hoped for the full year. But if pricing is where it is, and we will continue to aggressively price in all markets so that we hit our traffic load factor assumptions. If anybody has any follow-up questions, they want Peter Larkin is here, Head of IR is here in Dublin. Neil is doing some investor meetings in London, I think, and Frankfurt to the next day or two but other than that, we will see you all either here for the AGM in September or on the half year results road show in November. Thank you very much, everybody. Good to talk to you.