Ryanair - Earnings Call - Q1 2026

Transcript

Operator (participant)

Hello everyone, the Ryanair Holdings Q1 plc FY26 earnings release will begin shortly. Thank you for your patience. Hello everyone, and welcome to the Ryanair Holdings plc Q1 FY26 earnings release. My name is Nadia, and I'll be coordinating the call today. If you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad. I will now hand over to your host, Michael O’Leary, Group CEO of Ryanair Holdings, to begin. Michael, please go ahead whenever you're ready.

Michael O’Leary (Group CEO)

Okay, good morning, ladies and gentlemen, and welcome to the Ryanair Q1 results conference call. I'm joined by all of our usual crew. Neil, the CFO, is in London, as is Eddie Wilson, dialing in from London. The rest of us are here in the office in Dublin. As you've seen this morning, we report a strong Q1 profit after tax rising to EUR 820 million. Compared to a prior year Q1 PAT of EUR 360 million. Traffic grew 4% to 58 million passengers at 21% higher fares. Q1, as we have repeatedly told you, is artificially strong, mainly due to weak prior year comparison. Last year, we only had 1/2 of Easter in April, and we were in the teeth of the OTA boycott through Q1 into Q2 last year. If you go back two years, we made EUR 660 million in Q1 of 2023.

That fell last year with the Easter and OTA issue down to EUR 360 million in Q1 of 2024. We recovered strongly to a more normalized EUR 820 million in Q1 2025. Over the two-year period, the Q1 profits are up about 24% rather than this morning's reported up 128% against weak prior year comps last year. Still a good number and a good performance. The Q1 highlights include traffic grew 4% to 58 million. As you know, our traffic growth is being constrained by Boeing's delivery delays. Revenue per passenger rose 15%. Average fares were up an artificial 21% in that quarter. Ancillary revenues up 3% on top of 4% traffic growth. The number I'm most pleased with is unit cost control. Unit cost inflation was up just 1%. The cost gap between us and all our other EU competitors has widened materially during Q1.

We took delivery of five Gamechangers in Q1, bringing the total Gamechanger fleet to 181 aircraft at the end of June. This summer, we're operating over 160 new routes in a total of 2,600 routes. We bought in Q1 opportunistically 30 spare LEAP-IB engines from CFM. We got a significant discount on that engine order, and therefore it's a judicious use of our money in order to protect resilience as the fleet of Gamechangers rose to 181 aircraft. We were very pleased that Ryanair were added to the MSCI World Index in June. Expect to be added to the FTSE Russell in September. Just turning, I won't dwell too much on these numbers as they speak for themselves. I want to stress again, Q1 fares substantially benefited from having a full Easter holiday in April, weak prior year comparisons, and marginally stronger than expected close-in bookings.

Operating costs rose 1% per passenger as our jet fuel hedging largely offset a significant ATC fees increase and higher and indefensible environmental costs as ETS allowances unwind and SAF mandates impact. However, we're well hedged for the next two years. With FY26 almost 85% hedged at $76 a barrel, and we now have 36% of FY27 hedged at just under $66 a barrel, a 13% saving. The balance sheet remained strong. At the end of the quarter, net cash was up at EUR 2 billion, leaving us well positioned to repay the two large bonds we have over the next 10 months, including an EUR 850 million bond repayment due in September and EUR 1.2 billion in May of next year, which we now expect to repay from our healthy internal cash resources.

As I said, we welcome the addition to the MSCI World Index and expect to join the FTSE Russell following their semi-annual review in September. In terms of fleet, this summer we have 181 Gamechangers in the fleet. That is an increase of 25 aircraft from June 2024. That will facilitate our constrained growth of 3% this year to 206 million passengers. We remain confident the 29 remaining delayed Gamechangers in our 210 order book will deliver well ahead of summer 2026. We take heart from Boeing's recent confirmation they expect the MAX aircraft, the MAX-7, MAX-10 to be certified in late 2025, which would put us on a well-on course for on-time contractual deliveries of our first 15 MAX-10s in the spring of 2027.

In fact, Stephanie Pope wrote to me last week confirming those first 15 deliveries, her confidence in those first 15 deliveries in the spring of 2027, which we think is good news. Overall, the trend we have been highlighting over the last year or two, which is severely constrained European short-haul capacity, will continue, I think, for the next five years out to 2030, principally driven by the two big manufacturers, Boeing and Airbus, remaining well behind on their aircraft deliveries. Many of Europe's Airbus operators working through their pattern with the engine repairs and EU airline consolidation continuing. These industry capacity constraints, combined with Ryanair's ever-widening unit cost advantage, our strong balance sheet, our low-cost aircraft orders, and industry-leading ops resilience will, we believe, facilitate Ryanair's controlled, profitable growth to 300 million passengers by FY 2034. I would just want to touch briefly on the outlook.

As you see in our numbers this morning, FY26 traffic remains on track to grow just 3% to 206 million passengers. This is due to heavily delayed Boeing deliveries. We expect very modest unit cost inflation in FY26 as the delivery of more Gamechanger aircraft, our advantageous fuel hedging, and effective cost control across the group helps to offset increased ATC charges and higher enviro costs. While summer 2025 travel demand is strong, the Q2 fare increases will be lower than the exceptional Q1 increases. If you remember in Q2 last year, fares fell by 7%, but we now expect to recover almost all of this 7% fare decline in this year's Q2. I think that'll be much more of a read across the full year rather than the 21% fare increase in Q1.

The final H1 outcome is, however, heavily dependent on the strength of close-in bookings for the remainder of July, August, and September. As is normal at this time of the year, we have zero H2 visibility. We've only 6% of our seats sold for the second half of the year. And our prior year comps normalize. And last year's modest delivery delay compensation we got from Boeing in the second half of the year will also roll off this year. The second half will be a bit more challenging. It therefore remains too early to provide meaningful full-year PAT guidance. We do, however, cautiously expect now to recover almost all of last year's 7% full-year fare decline. And this should lead to a reasonable net profit growth in FY26, given our continuing excellent unit cost control.

The final FY26 outcome will remain heavily exposed, though, to adverse external developments, including the risk of terrorism. Tariff wars, macroeconomic shocks, including conflict escalation in the Middle East and Ukraine, and of course, European ATC strikes, mismanagement, and short-staffing, which continue to bedevil our operations. With that, I'll turn over. Neil, do you want to highlight anything in your MD&A before we open up to Q&A?

Neil Sorahan (CFO)

I'll probably just emphasize a couple of points that you made there. One, the balance sheet is a standout. With strong liquidity and the fleet's unencumbered. As you said, that places us very strongly now to repay those bonds, the EUR 2.1 billion bonds, over the next two years. I think we're in a good position there. Very pleased with the performance on costs, up 1% on a per passenger basis in the first quarter. Again, very much on track for modest unit cost inflation for the full year, somewhere between 1%-3% on an annualized basis, depending on where spot fuel goes and what the final schedule looks like over the balance of the year. Ancillaries, strong performance of 3% on a passenger basis. There was some Easter benefit in there. Again, no change to the guidance of 1%-2% increase in ancillaries over the course of the year.

Traffic into Q2, we're probably looking at traffic coming in just under 61 million passengers, so about 2% growth in traffic there, 3% on a full-year basis to 206 million. The business is in good shape and a solid set of numbers in Q1. Thank you, Michael.

Michael O’Leary (Group CEO)

I'd like to ask Eddie Wilson, give us your current view on current trading as CEO of DAC. Current trading into the second quarter of the year, please. I'd just ask Juliusz to give us some comments on the legal regulatory environment before we open up to Q&A. Sorry, Eddie, go ahead.

Eddie Wilson (CEO of DAC)

Yeah. The Q2, I mean, fares are robust. I mean, almost all across the piece there, we've put extra, we've been growing strongly in those markets where we've been getting a cut in taxes and growing aggressively in regional Italy, also into Sweden, into Hungary. And you'll see that a lot of the regions, particularly in Spain, France, and also in the U.K., are under serious pressure because of uncompetitive costs. So it's a robust fare environment pretty much across the piece.

Michael O’Leary (Group CEO)

Good. And Juliusz, anything you'd like to raise on the regulatory side?

Juliusz Komorek (Group Chief Legal, Regulatory Officer and Company Secretary)

Thanks, Michael. Just maybe on baggage. Everyone is familiar with the big case we have in Spain in relation to cabin baggage and a positive decision a few weeks ago where the court suspended the enforceability of that decision and also the payment of the big fine that we discussed in the last call. Helpfully, also, there are discussions ongoing in Brussels about potentially regulating the minimum size of cabin baggage. The dimensions that are being discussed are smaller than what we currently allow. That would obviously be helpful. Slow progress in Brussels in terms of overflights. We would like to see more done on that front. A lot of talk about competitiveness on the back of the Draghi Report in the European Parliament and in the European Council, but very little actual action. We need to see more in that respect.

Michael O’Leary (Group CEO)

Okay. Thanks, Juliusz. Just before I open up, I would draw everybody's attention. It might help to shorten some of the questions. We've seen in recent weeks some of our competitors reporting slightly poor outlook through the summer, price sensitivity on traffic, challenging prior year comps. I think they were on the opposite of our OTA boycott. This time last year, we were in the teeth of the OTA boycott. It now appears that some of the OTAs were moving some of that traffic across to our competitor airlines, although most of it went to the tour operators, TUI and Jet2. As a result, this year, of having now resolved that with our approved OTA transactions, we're seeing the reverse of that.

While our competitors have tough prior year comps because they benefited from our OTA dispute last year, this year they have challenging prior year comps and a tougher outlook on the environment. We're on the reverse of that. Unusually for Ryanair, we have weak prior year comps through the first and second quarters last year. We are seeing robust demand into the summer of this year. Traffic is modestly ahead, as we would expect it, 1% or 2% up on the same day last year, but the pricing is reasonably strong. At the full year, we thought we would recover most, but not all, of the 7% fare decline last year. We've upgraded that slightly or modestly this morning. We now expect to recover almost all of last year's 7% decline.

That is because, I think, one, we have the two halves of Easter in April, and two, we fixed the approved OTA, and we're seeing those stronger forward bookings, holiday bookings, coming through to us in the first half of the year, something I believe we had lost out of the tour operators, some of our airline competitors last year. We're on the inverse of what our competitors were, to some degree, complaining about in recent weeks. Okay. With that, Nadia, if you'd open up to Q&A and keep everybody to no more than two questions, please.

Operator (participant)

Of course. If you would like to ask a question, you may do so by pressing star, followed by one on your telephone keypad now. If you do change your mind, please press star, followed by two. When we're preparing to ask your question, please ensure your line is unmuted locally. Please leave yourselves to two questions. Our first question goes to Stephen Furlong of Davy. Stephen, please go ahead.

Michael O’Leary (Group CEO)

Stephen, hi.

Stephen Furlong (Senior Equity Analyst of Transportation)

Yeah, hi, Michael. Okay, two questions. Maybe one for you, Michael, and one for Neil. How do you think, I mean, it's speculation, but the tariff thing will play out. I saw there in the paper today, Embraer were saying that. Might add $9 million for the price of jets, and their U.S. customer base. Won't pay it, and therefore they'd almost have to slow or stop production. And then from Neil, I was just wondering, what is needed for you to look at locking in this attractive. Dollar rate on the future aircraft deliveries, given that would be a significant benefit on the capital side for a longer term on the pricing, et cetera? Thanks a lot.

Michael O’Leary (Group CEO)

Thanks, Stephen. Okay, quick answer on the tariffs, nobody knows. What we suspect will happen is, I think, Trump will continue to probably delay the imposition of tariffs on the 1st of August into maybe September, October, until a trade deal is agreed with the Europeans. There's increasing optimism, certainly in Washington, that commercial aircraft, aircraft leasing will be exempt from U.S. tariffs. There is a risk, though, that the EU Europeans are going to be looking at reciprocal tariffs, which might target pharma and commercial aircraft. That would be as damaging to Airbus's exports into North America, particularly on the long-haul aircraft side, as it would be to Boeing, who do not have that many deliveries into Europe. Nevertheless, I think the risk is reciprocal tariffs. I think it's unlikely, but in our agreements with Boeing, Boeing are liable for the tariffs, not Ryanair.

We have fixed price agreements on our aircraft with Boeing. We would, however, want to work with Boeing, though, to minimize the imposition of tariffs. We have a number of things we could do. One, we could delay the deliveries through August, September, October. We do not actually need those aircraft until summer of 2026. We might, working together with Boeing, delay some or all of those deliveries while the Americans and the Europeans resolve any tariff dispute. Secondly, there is a possibility we could take some of those aircraft onto the U.K. register, where we have Ryanair U.K., and there are no tariffs on commercial aircraft in the Europe and the U.K.-U.S. trade agreement. I think tariffs are unlikely. To the extent that they are imposed, I think they are likely to be short-lived.

While Boeing are liable for the tariffs, we would work with Boeing, I think, either by delaying deliveries or perhaps looking at taking some deliveries through the U.K., which would be a way of allowing Boeing to deliver aircraft to the Ryanair Group without attracting tariffs from the States. Neil, maybe you want to talk about the dollar, locking in the dollar on our aircraft orders. I might get Tracey McCann here as well then to add some commentary to that.

Neil Sorahan (CFO)

Sure, Stephen. Thanks very much. Yeah, the euro dollar has obviously moved very much in the direction that we would like in relation to locking in the CapEx on the MAX-10. The one blocker is whether we'll get hedge accounting or not. So the number you asked, what do we need to do? We probably need to get some clarity with our auditors as to what they will need to see before they're happy that we can get hedge accounting, whether that's the certification of the 10s or whether it's the greater certainty that we're getting from Boeing that they're going to deliver on time. We've seen the dollar move from probably somewhere around $1.05, $1.06 when we placed the order back in May 2023 to somewhere likely over $1.20 if we were able to do something on it.

We'd like to hedge, but won't do it unless we get the hedge accounting. That's important because we don't want the volatility and the noise on the P&L.

Michael O’Leary (Group CEO)

And Tracey?

Tracey McCann (Ryanair DAC CFO)

Yeah, just to add to that, we are looking at other stuff. Not just aircraft, Stephen. Where we have opportunities and we can do anything, lock in the dollar on the likes of maintenance or recent engine deals, we have done so.

Michael O’Leary (Group CEO)

Good. Well done. Thanks, Stephen. Next question, please.

Operator (participant)

The next question goes to Jaimie Rowbotham of Deutsche Bank. Jamie, please go ahead.

Michael O’Leary (Group CEO)

Jaimie, hi.

Jaime Rowbotham (Equity Research Director)

Hi, Michael. Two from me. Just coming back on the cabin bags. Juliusz mentioned the good news out of Spain, but not the bad news from Brussels that the MEP voted in favor of legislation preventing you from potentially charging extra for hand luggage. So where do you think we'll get to on this? Will sense prevail when it comes to the ability to charge separately? Second one, we know where you're adding capacity. So Sweden, Hungary, regional Italy, Poland. I just wondered, has there been any reaction from airports or countries where you've been reducing capacity, like in Spain? Have any incentives been offered? Thanks.

Michael O’Leary (Group CEO)

Okay, sorry. Where cut capacity? Coming back, the suggestion from the Parliament is no legal status. It's part of a Parliament discussion with the Commission on revised rules. Firstly, the first idea out of the Parliament is that everybody's entitled to bring two free bags on board. It's unimplementable. They don't fit in the aircraft. There isn't room on largely full aircraft for one small carry-on bag and one large trolley bag. We can fit about 50% of the passengers can bring a trolley bag, and we use that using the priority boarding service. Any rule that would alter that would be infringing EU rules. Regulation 1008-2008, which guarantees the freedom of airlines to set pricing and policies, and we don't believe that will happen.

I think it is unlikely to play out, but there's clearly going to be some kind of negotiation between the Parliament and the Commission on passenger rights. We're supportive, though, of the Commission's proposal to define what one free carry-on bag should be. It's quite a large bag at 40 by 30 by 15 cm. We allow 40 by 30 by 20 cm, which is quite a substantial bag that fits under the seat anyway. That will, we think, undermine or expose the illegality of Minister Bustinduy's mad cap bag fines, which were imposed only on the low-fare airlines in Spain. We would like to see that put behind us. There will always be some tension and debate, I think, between the Parliament and the Commission on passenger rights.

If the Parliament was doing its job, it would be getting much more aggressive about protecting overflights during ATC strikes and rolling back fare environmental taxes on intra-EU air travel while we exempt the most polluting long-haul flights to and from the EU. The Parliament has always been a home for crazies and therefore less than intelligent kind of suggestions coming out of there is to be expected. On airports and countries where there are countries who are, we're cutting capacity. Germany is the most notable example where they have no aviation policy whatsoever. Germany is the least recovered state or country post-COVID. They're operating at about 83% of their pre-COVID capacity and still declining. It's gone down from 85% last year to 83% this year. We have moved capacity out of airports where they're increasing fees, like Berlin. We closed the base in Frankfurt, Maine.

We have reallocated our capacity to those countries and regions where they're abolishing environmental taxes and coming up with much more competitive airport fees. We recently reversed, for example, three years of capacity cuts at Warsaw Modlin Airport. I was out there in Warsaw two weeks ago where we announced a five-year growth deal where we would treble our traffic at Warsaw Modlin on the back of a newly signed six-year growth agreement agreed with the airport. There's lots of that kind of capacity growth available to us. Dublin continues to be a disappointment. We opened and paid for a second runway in 2022. Through government failure to act, we elected a new government in November of last year.

The government program published in January promised they would scrap the artificial and illegal cap at Dublin Airport, "as soon as possible." Seven months later, they're all about to go on three months of holidays, and nothing has been done to scrap this cap, which is indefensible in a government that has a 20-seat majority and are five years away from the next election. Irish government inaction continues to bedevil our growth. We submitted a plan to the previous government offering to grow from 20 million-30 million passengers over the next five years to 2030. We're the only airline that could do that with low-cost, fuel-efficient, and noise-quieter aircraft. Yet, despite the fact that we have paid for the infrastructure of a second runway at Dublin Airport, we now have not one but two caps. There's a 2007 road traffic cap limiting traffic to 32 million.

Last week, the local council and the planning appeals board came up with another mad cap, limiting the total number of movements arbitrarily to 35 million flights a year, which is pretty much where we are at the moment. Both of those caps are illegal under EU law. They're contrary to the freedom of movement. You can't artificially restrict the EU citizens' freedom of movement, and they're certainly contrary to the EU-U.S. Open Skies Agreement. We believe the American airlines will get aggressive on that. Germany and Dublin would be the two examples I would highlight to you where, through government policy failure in Germany and inexplicable government inaction in Ireland, we can't grow. We can't and are not growing. We have far more opportunities to grow all over Europe, particularly, as I say, in countries like Sweden, Hungary, and regional Italy, where they're abolishing taxes.

Eddie, anything else you want to add to that? I might ask Juliusz just to come in on the cabin bag regulatory situation in Europe.

Eddie Wilson (CEO of DAC)

Yeah, just quickly, I suppose. I mean, it has taken some time for this message to trickle up post-COVID where we're now seeing the sort of pinch point of there isn't short-haul capacity to go around. While that's still on deaf ears for sometimes, you can now see that playing out, particularly in regional airports. Like in France, they put up the taxes, and now you have the French Transport Minister saying this is a terrible thing, even though he actually introduced it, and they may actually have to go backwards. I think they know that there is bad news coming for French regional airports.

Same thing is playing out in Spain, whereby Aena has a monopoly there, and you've got the regional airports that are 65% underutilized, and that's going to be politically unsustainable in the medium to long term, whereby Ryanair, while we're still growing in Spain at low single digits, that's at the larger airports, largely at the expense of the regional airports where we've closed the number of airports, and there's more to come this winter. On top of Germany, then you can see it also playing out in the U.K. with APD, which is going to go up by GBP 2 this year, and then OPI thereafter.

That's going to hit the regions particularly badly, like places like Scotland, Northern Ireland, particularly out in the regions there where they're just not going to be able to compete for the incentives that are elsewhere in places like Sweden, regional Italy, and Hungary.

Michael O’Leary (Group CEO)

Juliusz, do you want to add anything on the parliamentary rules on baggage or passenger rights?

Juliusz Komorek (Group Chief Legal, Regulatory Officer and Company Secretary)

Just one thing. The issue of cabin baggage came up in the EU Court of Justice in 2014. The conclusion there was.

Michael O’Leary (Group CEO)

The Whaling case.

Juliusz Komorek (Group Chief Legal, Regulatory Officer and Company Secretary)

The Whaling case. The conclusion was that the only item of cabin baggage that must be free is an item that can accommodate the passenger's precious and indispensable items. The court at the time did not put dimensions on it, but it is generally accepted that a bag that fits under the seat is big enough to accommodate precious and indispensable items. That would be your personal computer, your wallet, some medications, a bottle of water, those kinds of things. Everything else that can fit in the cabin can be charged for. That is what passengers want. Passengers do not want all passengers to bring a 10 kg bag to the gate because they know that this will delay the departure of their flight. The policy which Ryanair currently applies and which has been copied by many airlines in Europe works.

Consumers know it, and the European Parliament will figure it out just in their own time.

Michael O’Leary (Group CEO)

Thank you, Juliusz. Okay, next question, please.

Operator (participant)

The next question goes to Harry Gowers of JP Morgan. Harry, please go ahead.

Michael O’Leary (Group CEO)

Harry, hi.

Harry Gowers (VP of Equity Research)

Yeah, morning, Michael. Just first question. I noted you called out the better-than-expected close-in pricing in Q1 and was wondering, is that something you've seen continue as a trend into Q2 so far? Second one, probably one for Neil. Total unit cost per pax +1 in Q1 and ex-fuel was +3. Is that the rate that we should be extrapolating across the full year, or is there any reason to highlight why those numbers are ones that we shouldn't be dragging outwards over Q2, Q3, Q4? Thanks a lot.

Michael O’Leary (Group CEO)

Thanks, Harry. I mean, let me deal with the pricing. We are seeing stronger close-in pricing. The load factors, we're running about 1% ahead of where we were this time last year. We have fewer seats to sell close-in. Certainly, we're engaged in less discounting, particularly as we move through Q1 and Q2, I think because of the approved OTA distribution. I would caution, again, average fares went up 21% in Q1. I think about 2/3 of that was accounted for by Easter and the approved OTA boycott. I think the like-for-like comparison of average fares in Q2 being up around 7%, recovering last year's 7% fare decline, is probably closer to what the underlying trend is through Q1 into Q2, and I hope that would continue into Q3. As we're saying this morning, we expect to recover almost all of last year's full-year 7% fare decline.

The close-in as we move into Q2 is strong. That is also fragile. It is why we continue to be a little bit cautious on the kind of Q2 and full-year guidance. If we have some safety event, terrorist events at European cities, something untoward or crazy or damaging comes out of the way, I do not see tariffs affecting short-term booking flows. In fact, we're sitting here in a monsoon in Dublin this morning, which is probably good for close-in pricing, certainly out of Dublin for the next couple of weeks. The opportunity, I think, is we still see strong close-in bookings pricing up, but that is also fragile in that that could fall over as we move through July, as we move through August and September into the second half of the year. Eddie, anything else you want to add on close-in pricing?

Then we go to Neil on unit costs.

Eddie Wilson (CEO of DAC)

No, I don't think. You've covered that all comprehensively.

Michael O’Leary (Group CEO)

Okay, Neil, unit costs?

Neil Sorahan (CFO)

Yeah, sure. Harry, I'm going to go back to my opening comments where I indicated that we're still guiding modest unit cost inflation on a full-year basis, somewhere between 1% and 3%. We were 1% in the first quarter where we saw traffic grow by 4%. It'll be slower traffic growth into Q2 and the second half to get to 3% on a full-year basis. I mean, it all hinges on whether we're between, say, 1% and 3%. It hinges on what happens to spot fuel over the balance of the year. It depends on what happens on the final schedule that we load, where is that going to be? And indeed, staffing in advance of next summer. I think it's fair to just stick with that modest unit cost inflation, and it'll be somewhere between 1% and 3%, and I won't be breaking it out more than that.

Michael O’Leary (Group CEO)

Okay, thanks, Harry. Next question. Thanks, Neil.

Operator (participant)

The next question goes to Dudley Shanley of Goodbody. Dudley, please go ahead.

Michael O’Leary (Group CEO)

Dudley, hi.

Dudley Shanley (Head of Research)

Morning, Michael. Two questions for me as well. First of all, possibly to follow up on Harry's question a little bit, but to think about it more longer term. Following the modest unit cost inflation this year, how do you think about the unit costs over the next few years? Obviously, you have a good fuel hedge in place, but it's the other lines like staff, maintenance, airport deals. How should we think about that? The second question is, Michael, you've been making a lot of noise again recently about ATC, particularly in France. Have you seen any tangible signs that progress can be made there? Thank you.

Michael O’Leary (Group CEO)

Okay, I'm going to offer the first one over to Tracey McCann here on the longer term. What's your view on longer-term unit cost? Neil, feel free to add in at the end of that. As deal, I'll talk about French ATC, and I might bring in Juliusz as well on that. Tracey, off you go.

Tracey McCann (Ryanair DAC CFO)

Yes, I suppose in terms of next year, Dudley, we're about 36% hedged on the fuel with significant cost savings. Again, it's important to point out that we are seeing increased environmental and staff costs offset in that. Again, this year, we've seen a significant increase in ATC charges. We will probably see modest inflation over the next number of years, but we will have, as we start to ramp up into delivery of the Gamechanger aircraft, we will get the benefits of them incremental seats, and we will get the benefits of the fuel burn. I think the fact that we're financing the aircraft out of cash, again, unlike our competitors, we don't have them high financing costs. I think the key is we will have inflationary cost increases, but the gap between us and the competition will continue to widen.

Neil Sorahan (CFO)

Yeah.

Michael O’Leary (Group CEO)

Okay, Neil, anyone to add to that?

Neil Sorahan (CFO)

The gap is the key point. Everybody's acutely aware of our slide four on unit costs, where we've now seen the next nearest competitor move from what was over 50% of a gap to nearly 80% of a gap. I expect that to remain in place. We'll have a big competitive advantage when we build our engine shops over the next few years. We'll have a big advantage when we take in the Gamechanger aircraft with the extra seats. I think, Dudley, we'll remain very much head and shoulders above everybody else when it comes to unit costs for the foreseeable future.

Michael O’Leary (Group CEO)

Okay, thanks, Neil. ATC, I mean, I'll give you an example. The French recreational strike on the 3rd and 4th of July, they this year couldn't think of anything to strike over, so they came up with they're using old equipment and they're short-staffed. Their solution to that was to go on strike on a Thursday and Friday of the bank holiday weekend in June. No great surprise there. That cost us because Europe still hasn't acted to protect overflights. We were forced to cancel 700 flights, canceled 130,000 passenger journeys. If they had protected overflights, particularly from the U.K. and Ireland, who are more susceptible to overflight cancellation when the French go on strike, 90% of those flight cancellations would have been avoided. We canceled 130,000 passenger journeys, average fare EUR 65, about EUR 8.5 million of a revenue loss.

Now, clearly, we canceled the flights, so we also have cost savings. If you take a kind of 20% net margin on EUR 8.5 million, those two days, we lost probably something on the order of about EUR 1.5 million of net profit just over two days. In fact, we also picked up costs because we had rights to care. Expenses to reaccommodate those passengers, which again, because we're not allowed to recover from these unions because they have immunity from prosecution under ATC, have immunity from prosecution. There is a simple solution to this. It's a solution that's already adopted by the Spanish, Italians, and the Greeks, and that is protect overflights during national ATC strikes. It doesn't fetter somebody's right to go on strike, but it means that the French local flights will take all the hits, and you protect the overflights.

If the Commission did nothing more than separate the upper airspace, Eurocontrol can run the overflights over France on a day when France is having an ATC strike. We find it indefensible that Ursula von der Leyen or Ursula von der Leyen again still won't take any action on this issue. It's a reasonably simple measure. It would be one of the most politically popular things the European Commission could do. In the face of post-Brexit to demonstrate how it's delivering a single market on behalf of Europe's citizens. It does mean upsetting some French unions, but I think that's always a cause well worthwhile. The more you can upset French unions, the better. Utter incompetence and inaction on it. Von der Leyen runs around talking about making Europe competitiveness. We need to be competitive in response to Trump's tariffs, in response to the Draghi Report.

When you give her a very simple solution like protect overflights during national ATC strikes, no action whatsoever. Are we making progress? Not much, although we are continuing to campaign. We've now persuaded all of the European airlines under A4E to campaign for overflight protection during national strikes. We still haven't seen much action out of the Commission. I think if we keep campaigning, we keep calling and explaining how simple this would be, we might get somewhere. I'm afraid I can't point to any immediate action on it yet. Juliusz, anything else you want to add?

Juliusz Komorek (Group Chief Legal, Regulatory Officer and Company Secretary)

No, Michael, that's a great summary. Thanks.

Michael O’Leary (Group CEO)

Okay, thanks, Dudley. Next question, please.

Operator (participant)

The next question goes to Alex Irving of Bernstein. Alex, please go ahead.

Michael O’Leary (Group CEO)

Alex, hi.

Alex Irving (Senior Equity Research Analyst of European Transport)

Hey, good morning, gentlemen. Two from me, please. First of all, if I can come back on your fares. You say you expect to recover some, but not all, of last year's decline in Q2. If I look at your Q1 versus two years ago, you're up, and Easter 2023 was well into April. How confident are you that this summer's fares are beat down, not up, on two years ago? Is this just you being prudent in the face of the external risks you've highlighted? The second question is around the investment in 30 spare LEAP-IB engines. I understand they were cheap, but why was this necessary at all? Are you concerned about underlying reliability issues, and therefore should we be concerned about possible lower asset productivity or higher maintenance costs over the long run? Thanks.

Michael O’Leary (Group CEO)

Okay, let me take both. Look, I mean, where are we on fares?

They were down 7% last year. Q1, we're up 21%. Q2, I think we're tracking for almost up, almost somewhere between 6% and 7% at the moment. The reason why I can't be confident is how fragile we are, how dependent we are on those close-in bookings through the remainder of August and September. As of today, we have 73% of August sold. We have only 40% of September sold. If there's no great change, then I would be very confident that we'll be up 7% in the second quarter. It is very fragile to any short-term adverse news flow, terrorism, safety events, something like that. Overall, looking out over the 12-month period, I think we're reasonably optimistic now. I think we have improved the narrative, Alex, over from the full-year results call, where it was we expect to recover most, but not all.

Now we're at almost all, which I think is a modest upgrade, but still heavily subject to any impact on close-in bookings through the remainder of the year. If I look at the second half of the year today, we have 6% of the seats sold. We are very heavily dependent on those trends that may affect both boost or adversely affect close-in bookings. But 30 LEAP-IB engines, why now? Is there anything untoward? Look, the reason we bought 30 LEAP-1B engines is primarily we did a deal with CFM, where CFM were offering us an exceptional discount. I think they wanted a deal. I think they may have had some financial deadline. They had some spare engines. They were willing to heavily discount them for a quick sale. We were willing to buy them for a quick sale.

We have more spare LEAP-IB engines as a result of this than we need for a fleet of 181 aircraft. I think we'll be up to what? We've got 120 spare engines? In total, we have 120 spare engines. That's not for the LEAP-IB. It's for everything. We have more spare engines than we need. As the Gamechanger or the MAX-3 grows with the 300 Gamechanger order, we will still be short spare engines. We moved at a time when CFM was offering us a deep discount for a quick sale. We got a deep discount, which we can kind of bank on the balance sheet. We have spare cash, and we think this is one of these areas where we can deploy spare cash sensibly. We are a little bit over. We have too many spare engines at the moment.

Given that we know we're taking delivery of 330 aircraft over the next 10 years, it's a sensible, short-term, opportunistic investment at the moment. Have we any other concerns about—no, frankly. We don't have any concerns with the LEAP-IBs. We believe we are moving aggressively towards announcing one or two spare engine MRO shops in-house. We'll have announcements of that towards the end of the year. We are pretty confident that it'll be another bonus or differential between us and our competitors that we'll be able to maintain our engines in-house, whereas everybody else—our competitors, certainly in Europe—will be exposed to third-party engine maintenance, which is getting radically more expensive from 2028 onwards. Also, the turnaround times have wildly escalated from typically around 65 days to something closer to 150 days, which will put a lot of burden on our competitors.

We know already with the pattern with the engine repairs, a lot of Airbus short-haul aircraft are grounded in Europe last year, this year, and probably again into next year as well. That, in turn, is creating opportunities for us to grow at improving airfares and improving our profitability. Thanks, Alex. Any next question, please?

Operator (participant)

The next question goes to Jarrod Castle of UBS. Jared, please go ahead.

Jarrod Castle (Research Analyst)

Hi, and well done on a very good set of numbers. Two from you. I mean, one of your low-cost competitors was closing down their Abu Dhabi base, and they've spoken about putting that capacity more into central and eastern Europe. Just interested in your thoughts on how you see the competitive environment there going forward. Then secondly, maybe one for Neil. You said that CapEx is going to be EUR 2.2 billion, but could be higher on tooling. Is there any way you can maybe just give us a bit of magnitude depending on the scenarios on how much higher that could be? Thanks.

Michael O’Leary (Group CEO)

Oh, CapEx. Okay, Jarrod, I'll take the first one. Neil, I'll let you deal with the CapEx. Firstly, Alex, Jarrod, obviously, I feel compelled to explain that Wizz is not a low-cost competitor of Ryanair. It's a high-cost competitor of Ryanair, and therefore not really a competitor at all. We were somewhat, I think, surprised at the excuses they came up with for the withdrawal from Abu Dhabi. Apparently, mostly it was because it's a desert out there, and therefore it creates significant cost penalties on engines, to which we said, "Why are you not closing your base in Saudi Arabia, which is equally a desert with an engine penalty?" Wizz has always been, let me see, what's the phrase, inventive when it comes to explaining commercial failures and flip-flops on strategy. A couple of years ago, they were going to expand aggressively into Vienna and Italy and challenge Ryanair.

They quietly retreated out of both into the Middle East, which was going to account for a third of their traffic. They now appear to be retreating out of the Middle East back into apparently central and eastern Europe, also announcing a multi-year growth deal at Modlin, which will see us increase the traffic in Modlin by threefold over the next five years. Wizz, on last Friday, announced a two-aircraft base in Modlin, which, by the way, I think is good for Modlin. We welcome more. If Wizz wants to base more aircraft in central and eastern Europe, all it will do is highlight the enormous cost advantage and price advantage Ryanair has over Wizz and all of our other competitors. In every market where Wizz has attempted to try to enter or compete against Ryanair, they've ultimately failed and withdrawn. I think that trend will continue.

To the extent that they're going to reallocate their—I mean, the real problem for Wizz in trying to compete with Ryanair or grow in central and eastern Europe is they're growing good aircraft that they have bought very expensively from their principal shareholder. They then refinance them at ludicrous kind of sale and lease back, recognizing madcap profits in its balance sheet, which they then mortgage over the next 5 or 10 years. The more they grow, the more the gap widens between their very expensive aircraft financing and our much lower cost depreciation charges. On top of that, we have lower aircraft costs, lower labor costs, lower sales marketing costs, in fact, lower every cost. We will be debt-free from mid-2026 onwards, whereas they're mortgaged up to the rib balls.

I think their net debt position at the last number was about EUR 6 billion, with a market cap of about EUR 1.1 billion or EUR 1.2 billion. I continue to believe that the consolidation process in Europe will ultimately see Wizz taken out by somebody, whether it's a venture capital. I'm surprised that some of the Middle Eastern airlines haven't moved on Wizz given the collapse in their market cap. They do at least have a fleet of aircraft. The aircraft are very expensive, but that's never really worried the Middle Eastern investors over time. I don't believe Wizz will be operating in Europe in the next three to five years as an independent carrier. Certainly not if their strategy is to move into more competition with Ryanair.

We welcome the competition, as it will demonstrate that they'll blow their brains out even faster than they have done in the deserts of the Middle East. On that, Neil, CapEx, do you want to touch on that or Tracey?

Neil Sorahan (CFO)

Yeah, I will. Jarrod, it's a cautionary note that there could be upside on that 2.2, depending on the timing of tooling or otherwise for the engine shops. That very much depends on where we get to in negotiations. If there's a benefit, for example, in taking stock sooner or paying sooner for some of the plant and equipment to get deep discounts, we may look at it. We are in the midst of negotiations at the moment. Do not have any numbers. Do not have any timings at this point in time other than a cautionary note that you may see a little bit of upside on the CapEx. If you do, it's because we have locked in an advantage on the MRO going forward long-term.

Michael O’Leary (Group CEO)

Thanks, Neil. Tracey, anyone out on CapEx? Or Neil cover it all?

Tracey McCann (Ryanair DAC CFO)

I think that's pretty much covered, yeah.

Michael O’Leary (Group CEO)

Okay. Next question, please, Nadia.

Operator (participant)

The next question goes to Santhi Syth of Raymond James. Santhi, please go ahead.

Santhi Syth (Managing Director)

Hey, good morning.

Michael O’Leary (Group CEO)

Savvy, yeah.

Santhi Syth (Managing Director)

Yeah, just on the—you called out on the video calls, environmental costs going up from EUR 4 per pax to EUR 5.30. I realize your cost gap should be widening, but is there a risk that you end up getting a larger share of a smaller pie, or is demand strong enough to kind of absorb all these costs going forward? A bit of a longer-term question. The second one is just a quick follow-up on CapEx. I wonder if you could kind of give an update to some of the comments you made on fiscal year 2027 and beyond, just related to with this engine, CapEx coming in.

Michael O’Leary (Group CEO)

Okay, we come back to you, Neil, on the CapEx. Thomas Fowler here, who's our Head of Fuel and Enviro. Thomas, you want to tackle Savvy's question on enviro cost? Will demand over time or fares cover rising enviro costs?

Thomas Fowler (Head of Fuel and Enviro)

I think in the short term though, over time it will, because I think the competition will have to raise fares to cover the enviro cost. I think one thing we have done, we have had this cost for the last 12 years as we have grown. Yes, our costs will increase, but I think the cost of the competition will increase further because, particularly over the last four years in ETS, their free allowances have covered their ETS exposure. Ours have not. I think what will happen is, as we saw with oil prices in 2008, we saw fuel surcharges coming in. You will see them increase, whether it be enviro surcharges or increase in fares. As long as we have our cost-loading advantage, I think we should be able to cover it, Savvy.

Michael O’Leary (Group CEO)

Okay. Neil, you want to touch CapEx at Y27 and beyond?

Neil Sorahan (CFO)

Yeah, I've no real change to what I would have said back in May. I would still anticipate, Savvy, that the CapEx dips below EUR 2 billion next year, and then the year after that will be somewhere between EUR 2.5 billion-EUR 3 billion as we start to ramp up PDPs and deliveries of the 10 start to come in. I wouldn't have much more to add than the commentary I gave back in May, other than we've taken the engines in now for this year where you're seeing us at the EUR 2.2 billion for the current year, and we should still be below EUR 2 billion into next year.

Michael O’Leary (Group CEO)

Thank you, Savvy. Next question, Nadia, please.

Operator (participant)

The next question goes to James Hollins of Exane BNP Paribas. James, please go ahead.

Michael O’Leary (Group CEO)

James, hi.

James Hollins (Head of Transport and Infrastructure Research)

Yeah, one for Eddie. One for you, Michael. Eddie, on this rail, maybe just run us through your plans there and whether kind of the situation there has led to some pockets of overcapacity this summer, like you saw in the Canaries in the winter, and whether you expect that to normalize. Michael, maybe just take us behind the scenes of your conversations with Stephanie Pope or Kelly from Boeing on the MAX-10 certification. You seem way more confident than you have for a long time that it will get certified pretty soon. Maybe just run us through why that confidence is coming from. Thank you.

Michael O’Leary (Group CEO)

Thanks, James. Eddie, maybe you took Israel. You might add Jordan into that as well, which has obviously also affected our service to Israel and Jordan with the current Middle East instability and our deal with Stephanie Pope.

Eddie Wilson (CEO of DAC)

Yeah, I mean, what had happened there was we were in the height of the summer, and when things escalated. Particularly with Iran, we took the issue, obviously, first of all, from a safety point of view, but we had to take a longer-term view after that risk assessment and say, "Look, we're going to reallocate that capacity." The difficulty is that once you put that capacity on sale, reversing that back in, and what may seem like tensions have come down, but it's in July and August, September, took the decision to leave that until the end of the summer, until the end of the summer season. We have been talking to the Jordanians in particular, who are anxious to have us, are anxious to have us back in there. And we're currently talking to them.

We still haven't—we would have had upwards of about 100 weekly frequencies into Tel Aviv, significantly less into Jordan, but Jordan is a good market, particularly for the wintertime. We'll take a view on that because what we're doing at the moment is we're assessing the winter allocations. We're down to the last couple of airports and countries, particularly where we continue to put the focus on costs as to where that capacity is allocated. Israel and Jordan will be in the mix on that, but obviously for different reasons. We haven't finalized for the winter yet, and we're still talking to them.

Michael O’Leary (Group CEO)

Okay. James, in relation to Boeing, I continue to believe Kelly Ortberg and Stephanie Pope are doing a great job. Stephanie Pope, in particular, I mean, there is no doubt that the quality of what has been produced at the hulls in Wichita and the aircraft in Seattle has dramatically improved. In fact, we have scaled back. We no longer have engineers based in Wichita. They are not allowing any hulls to be moved to Seattle if it has any defects. Every hull is moving defect-free. That is speeding up the production in Seattle and also materially increasing the quality of what is coming out of Seattle. All I can point to you is originally the 29 delayed aircraft were due to come to us in the spring of 2026.

They asked us, "Could we take them early in August, September, October, November, 2025?" We said we would, even though it does not suit us from a cash point of view. Given pre-pass experience, if we could secure the aircraft early in advance of summer 2026, we would and we would take them. I still think they would deliver those early. I think she is doing a great job. I think she has taken about one week off in the last number of months. She actually went over to India following the 787 crash just to be there on the ground in India. You call Stephanie, she is in Seattle, there is a problem, you can pick up the phone and call her. I think herself and the rest of the wider team there in Seattle have really got on.

They completed a pay increase of 40%, so morale has improved significantly. Attendance has improved. They are doing a good job, and they are delivering those aircraft. Much more important than that in the short term is the progress on certification. I think the new administration has been a bit more supportive of Boeing. The new head of the FAA, I think, is still to be approved by Congress, but we expect that imminently. I was a bit concerned about certification of the aircraft. Stephanie had previously promised that Boeing would tell us one way or another by the end of June whether we were going to get—whether they were going to deliver the MAX-10s to us in the spring of 2027, or we would change back and take more additional more A200s. She has now confirmed in writing that we will get the MAX-10s.

They will come to delivery date in the first quarter, in the first five months of 2027. We are getting MAX-10s. She has helpfully confirmed that in writing. I think they have been helped. Some of their other customers, United most notably, have deferred MAX-10 deliveries, have converted some back to 800s. I think that probably has helped things. They are shortly, if not already in September, they expect to go up. They have hit rate 38 in May. Again, in June, we'll do so again in July. They expect to be allowed to go up to rate 42 by the FAA sometime in September, October this year. I think the situation continues to significantly improve. That is not to say they do not face challenges. If something else falls off an aircraft somewhere, something untoward happens. That plan could get derailed.

Certainly, everything that I think Kelly and Stephanie Pope have done in the last 12 months has been impressive. The delivery has been impressive. The quality of what is getting delivered is now top-notch. I would be much more bullish and long on Boeing than I have been for the last, I think, three, four, or five years. It is not without challenges or problems, but I think they really are getting on top of it and now are delivering aircraft earlier and are ready to go up in production as well from September. I am much more hopeful, and clearly, they are much more confident in their own delivery and certification process as well.

James Hollins (Head of Transport and Infrastructure Research)

All right, thanks.

Michael O’Leary (Group CEO)

Thanks, James.

Quick question, please, Nadia.

Operator (participant)

The next question goes to Muneeba Kayani of Bank of America. Maneeba, please go ahead.

Muneeba Kayani (Managing Director and Head of European Transport and Hotels Research)

Good morning, Cap. Most of my questions have been answered, but I just wanted to ask what's your latest thinking on cash return to shareholders? I know you have your buyback right now, but you had EUR 2 billion of net debt as of June. Realized the bond repayments and CapEx commitments you've talked about, but what's your thinking on another share buyback at this point?

Michael O’Leary (Group CEO)

I mean, I think we're not doing anything. We've announced another share buyback program of about EUR 750 million. I think that will run over the next 12-18 months. I'm a little bit—I think we in the board are a little bit sensitive that the share price has been rising strongly, lots of new shareholders coming on the register. I think if anything, we don't want to be bidding the share price up against them. If there's plenty of demand for our shares, we would rather let the market solve that. We expect the current buyback will run out until the middle of next year, middle of 2026. I see no reason to address additional shareholder returns over and above that. We have a number of very significant challenges. We've just over EUR 2 billion of bond repayments in the next 12 months.

There are going to be other opportunistic CapEx things like the 30 LEAP-IB engines, and we want to have a balance sheet to be able to address that. Having paid down that bond debt, we should be down to gross net cash of the order of about EUR 2 billion. I'd like to see that grow towards EUR 3-4 billion over the next year or two. While we continue to fund, the CapEx will step up in the next year or two as we start to get into the Boeing MAX-10 orders. The overriding, I think, assurance shareholders could take from the board has been that whenever we identify that we have excess cash, it will be returned to shareholders in the form of dividends and our share buybacks. We have a share buyback already committed out to the middle of 2026.

There is another dividend due for payment in September, subject to AGM approval in September, I think of about EUR 200 million odd or about EUR 0.22-EUR 0.23 a share. Our commitment on returning spare cash to shareholders remains unchallenged. We will continue to shepherd cash zealously and maintain a reasonably conservative balance sheet because we're in a very cyclical, capital-intensive business. The business is subject to unforeseen shocks. The way to weather our way through those shocks is to go into them with large cash reserves in the balance sheet where we can do attractive deals on distressed aircraft parts or distressed engine purchases as those opportunities arise. Thanks, Muneeba. Next question, please, Nadia.

Operator (participant)

The next question goes to Rory Cullinan of Research RBC Capital Markets. Rory, please go ahead.

Michael O’Leary (Group CEO)

Rory, hi.

Rory Culinan (Non-Core Executive Director)

Hi, good morning. Firstly, would you be able to quantify the contribution of lower crewing ratios to the impressive staff unit cost performance in the quarter, where they stand and where can they get to? Secondly, it looks like you have paused fuel hedging in the quarter, which looks well timed, but when should we expect you to resume fuel hedging for year 2027? Thank you.

Michael O’Leary (Group CEO)

Okay, maybe Tracey asked you to address maybe the lower crewing ratios. It's more by reference to the fact we had higher crewing ratios last year because of the Boeing delivery delays and they're coming back into. And then I might ask, actually, Thomas Fowler to touch on fuel hedging and when we expect to increase our fuel hedging position. Tracey, crew ratios?

Tracey McCann (Ryanair DAC CFO)

We did have the crewing ratios did fall in the fourth quarter, but it's just, again, they were too high because of the delay in the delivery aircraft. We just had slower recruitment. We will see that probably ramp up again as we ramp up for next summer. For aircraft deliveries, and we will have moderate pay increases as well.

Michael O’Leary (Group CEO)

Thanks, Tracey. Thomas, do you want to touch on fuel hedging? I might ask Neil to come in on the back of your remarks.

Thomas Fowler (Head of Fuel and Enviro)

Yeah, look, Rory, I think when you look at what we did at the end of May, we were doing a fair bit of hedging when the oil price was down. Obviously, as you said, the price has been volatile over the last few weeks. We will go back to hedging probably at some stage in the next few months due to our policy. We have done so much hedging in May. We were ahead of where we were in the previous year. We will just be opportunistic now to start to hedge again when we see the oil price normalize a bit.

Michael O’Leary (Group CEO)

Remember, the OpEx is well hedged as well. Sorry, Neil, go ahead.

Neil Sorahan (CFO)

That's exactly what I was going to say. Tracey mentioned earlier on, we've been building on the euro dollar. We've been taking advantage of the weaker dollars, which also plays into our fuel line. We're in the peak summer period. Spot oil for jet is elevated at the moment. We've got big volumes, so we can move the market against ourselves. I think we'll happily sit until we see the opportunities again in the market and go back in at that time, as Thomas said.

Michael O’Leary (Group CEO)

Okay, thanks, Rory. Nadia, next question, please.

Operator (participant)

The next question goes to Jaina Mistry of Jefferies. Jaina, please go ahead.

Jaina Mistry (Equity Analyst)

Hi, thanks for taking my questions. Two questions, please. Just first, is there anything in particular that's driving strength in your ancillaries per passenger in Q1? The second question. It's related to an earlier question around medium-term OpEx inflation. Let's just say that unit cost inflation over the medium term is positive. With SAF coming on, EU ETS, etc., would you feel comfortable adopting a price growth strategy against a backdrop of slightly higher than average cost inflation?

Michael O’Leary (Group CEO)

Sorry, adopting a price strategy, was it?

Jaina Mistry (Equity Analyst)

Yes.

Michael O’Leary (Group CEO)

Price increase strategy, is that what you said?

Jaina Mistry (Equity Analyst)

Yes, correct.

Michael O’Leary (Group CEO)

Okay. Maybe Eddie, do you want to come in on ancillaries in Q1 and the trend in ancillaries? We are up 3% in Q1 against traffic growth of 3%.

Eddie Wilson (CEO of DAC)

Yeah, I think a lot of this is just down to the work that's going on in labs and what is happening in terms of pricing models and adjusting those. Also, we've made some decent headway on the mobile app, which is a significant part of our bookings now, and how that actually has been amended in recent months in terms of how bags are presented, priority boarding is presented. We're seeing some upswing in there. Better penetration, better matching of products based on demand. As we say on these calls all the time, this is sort of incremental growth all the time in tweaking these models based on what demand is out there for those particular products.

Michael O’Leary (Group CEO)

Tracey, any more to add to Eddie's comments? Sorry, Neil.

Tracey McCann (Ryanair DAC CFO)

Yeah, just to probably add a thought.

Neil Sorahan (CFO)

I would say as well, Jaina, we did have a positive impact from the ancillaries, which helped on the 3% uplift on a per passenger basis. I'd go back to my opening comments where I indicated on a full-year base, I still think it's kind of 1-2% per passenger growth for all of the reasons that Eddie has set out there and what labs are doing and everything else.

Michael O’Leary (Group CEO)

Tracey?

Tracey McCann (Ryanair DAC CFO)

Yeah, just I think it is important to highlight that Q1 is extremely strong. The same is fair because of that Easter impact as well, and very low comparable.

Michael O’Leary (Group CEO)

Okay, thank you. In the longer term, Jaina, on the unit cost inflation, firstly, I think. I've been generally long-term bullish on unit cost inflation. Whereas you have EasyJet and ways that others have already upgazed in recent years. We're about from spring 2027 onwards to get into a major upgazing as we move into the MAX-10. The bigger capacity aircraft will undoubtedly put downward pressure on fares and yields. With capacity generally across Europe heavily constrained out to 2030, I think fares will hold up reasonably well, if not continue to rise, particularly in markets like Germany or Dublin where government inaction means they're not allowing us to use the additional capacity that already exists. I think we won't need a pricing strategy. I think pricing will modestly rise between now and 2030 because of the overall capacity constraints.

I think we'll do better on unit cost inflation over that period. When we start taking delivery of meaningful numbers of aircraft that have 20% more seats but burn 20% less fuel, you get a 40% fuel cost saving per passenger, you get a saving in terms of staff efficiency, airport and handling cost efficiency for 20% more passengers. I think we're going to see an ever-widening, certainly unit cost advantage between us and our competitor airlines in Europe, depending on how many competitor airlines we have by the time we get to 2027 or 2028, given consolidation. I do believe that capacity constraints generally in Europe between now and 2030 will see prices continue to modestly inflate, particularly as those other airlines, competitor airlines who can't manage their costs, are forced into constraining capacity, increasing airfares.

That will send more and more traffic in our direction as we've seen this summer with the recovery in the OTA bookings into Ryanair, moving away from competitor tour operators and airlines. Thank you, Jaina. Next question, please, Nadia.

Operator (participant)

The next question goes to Gerald Khoo of Panmure Liberum. Gerald, please go ahead.

Michael O’Leary (Group CEO)

Gerald, hi.

Gerald Khoo (Transport Analyst)

Morning, everyone. Two for me if I can. Firstly, what's happened to stage length in Q1, and what do you think is going to happen for the remainder of the year? Secondly, some of your competitors have been talking about seeing later bookings. I was wondering whether you had seen the same reading between lines. I don't think you have, but maybe you're seeing the reverse. I was wondering if you could give some view on where the timing of bookings is falling, please.

Michael O’Leary (Group CEO)

Yeah, maybe I'll touch on the second one and ask Neil to do the stage length. I mean, I think what our competitors are talking about later bookings is, if you like, the reverse of last year's trend where we had a OTA boycott and the OTAs booked more with the tour operators of some of our competitor airlines. That's reversing this year with our approved OTA agreements. We're seeing a dramatic recovery in our OTA bookings. Those OTA bookings tend to book further in advance. They tend to be people going on holiday packages. We are seeing actually stronger advanced bookings and higher fares this year, but partly by reference to a weak prior year comp, whereas our competitors are seeing later associated bookings this year by reference to a better prior year comp last year because of our OTA boycott.

I think that's all you're seeing is difference between them and us. We expect that to continue to. Will continue through to the remainder of H1. Neil. Stage length in Q1 and for the rest of the year?

Neil Sorahan (CFO)

There's nothing notable to talk about there. In the quarter, we saw our flight hours at 4%, which is in line with our sector growth of 4% and traffic. Unlike a number of our competitors, we're not moving into longer sectors to drive it. I mean, the average last year was just over two hours. It's not going to be hugely dissimilar on a full-year basis this year for sectors.

Gerald Khoo (Transport Analyst)

Thanks very much.

Michael O’Leary (Group CEO)

Thanks, Neil. Thank you, Gerald. Nadia, next question, please.

Operator (participant)

We currently have no further questions, so I'll hand back to you, Michael, for any closing.

Michael O’Leary (Group CEO)

Okay, just before I close, I might ask Jamie, you might just update us on where we are on the share buyback program as of last Friday on the current program. I forgot to touch on that. Jamie Donovan, our Head of IR, where we are on the current update on the share buyback program.

Jamie Donovan (Head of IR)

We're at 60 million through Q1. That was at the end of June. So we're about a little under 6% or 7% and EUR 200 million-EUR 750 million buybacks.

Michael O’Leary (Group CEO)

Okay, thank you for that. Ladies and gentlemen, thank you for taking part in the call. Again, strong Q1, but do not get dissuaded. Let's not have any irrational exuberance. Q1 is artificially boosted by a weak prior year comp. Q2 would be much more, I think, like a normal year-on-year comparison. As I said, we expect to recover almost all of last year's 7% fare decline in Q2, but that is a long way behind the Q1 average fare increase of 21%. Overall, for the year, as long as the closing booking trend remains strong, as long as we do not encounter any unforeseen adverse developments on safety, terrorism, war, pestilence, or stupidity out of the White House, then I think we are set fair for a reasonably strong profit recovery in H1, and we would hope that that will continue on into for the remainder of the year.

Although we do have tougher prior year comps in the second half of the year. On the revenue side, because we did better in the second half of last year, having fixed the OTA boycott. On the cost side, we did have some modest supplier compensation in the second half of last year that will not be repeated in the second half of this year. Overall, I think we are cautiously optimistic for a reasonably strong profit recovery for the full year. Much will depend on Q2. We will be reporting Q2 to you at the end of October. You will see some of it in the traffic results for July, August, and September. All I can say is, apart from that, we will continue to be very disciplined and diligent on cost control. It is the thing that really separates us from all other airlines in Europe.

We look forward to repaying the two bonds, EUR 850 million in September, EUR 1.2 billion next May, which will make Ryanair uniquely debt-free going forward. We will continue to commit to return excess cash to shareholders. There will be another dividend subject to AGM approval in September. Jamie and the team will continue to roll forward the share buyback plan. We hope and expect that we will take delivery of the 29 aircraft from Boeing tariff-free between now and Christmas. Ultimately, Boeing will be successful in getting the MAX-7, MAX-10 certified by the end of this year. We can look forward with some degree of confidence to taking those MAX-10 deliveries in 2027, 2028, and also being able to move on the dollar or the dollar hedging of that CapEx. With hedge accounting in place. I have nothing else to add. Eddie, anything?

Eddie or Neil, anything else you want to add before we close off?

Eddie Wilson (CEO of DAC)

No, I do not have anything, Michael.

Michael O’Leary (Group CEO)

Okay. Nadia, thank you very much for your help. Thank you, Eddie and Jem. If anybody has any individual queries, feel free to call Jamie and the team. We are not doing a roadshow as is normal on the Q1. If anybody has any queries, please fire them into Jamie. If you want to come visit us at some stage over the summer, please feel free to do so. As long as you're flying with Ryanair and not one of our competitors, you'll be very welcome. Thank you very much, everybody. We'll all go back to work now. Thank you. Bye-bye.

Operator (participant)

Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect your lines.