Ryanair - Earnings Call - Q4 2025

Transcript

Operator (participant)

Hello everyone and welcome to the Ryanair Holdings FY 2025 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 our host, Michael O'Leary, Group CEO of Ryanair Holdings, to begin. Michael, please go ahead when you're ready.

Michael O'Leary (CEO)

Okay, good morning ladies and gentlemen. Welcome to the Ryanair full year results conference call. We have all of the management on various calls as I'm now trying to distribute some of the questions around as best we can. I'll take it briefly. You'll have seen this morning we released the numbers on the ryanair.com website. We reported a full year profit after tax of EUR 1.6 billion compared to a prior year profit after tax of EUR 1.92 billion. The reason for the decline in profitability was due to a 7% decline in airfares last year, a number I think we're particularly proud of. That fare decline drove traffic growth of 9% to a new record of 200 million passengers despite repeated Boeing delivery delays last summer. While average fares were down 7%, units and ancillary revenues were up 1%. Total ancillary revenues were up 10% with 9% traffic growth.

I think the most stunning number coming out of this morning's numbers is unit cost per passenger were flat last year, which means we've meaningfully again widened the cost gap between us and our competitor EU Airlines. If anything, that strengthens our ability to grow over the next decade. Despite Boeing delivery delays, we took delivery of 181 Gamechangers at the end of April. We have 618 aircraft in the fleet for this summer. We are constrained in terms of growth because of those delivery delays. There are still 29 aircraft we'll take this winter for summer of 2026. That means we can only grow by 3% this year to about 206 million passengers. We used the profit warning last year as an opportunity to increase the share buyback. We bought back 7% of our shares last year and have canceled them in their entirety.

I think overall a reasonably good year in a very tough pricing environment for Ryanair. We move into this year then with the kind of unusually for us with weak prior year comps, particularly in Q1. We're already seeing that now. We have a full Easter in this year's April compared to only half of Easter in last year. We've also fixed the OTA boycott last year. We now have almost all of the significant OTAs are approved and are booking strongly into this summer, which is why we look into this summer. Forward bookings are running close to 1% ahead of where they were at this time last year. We're pricing up certainly very strongly in Q1. Pricing in Q1 is up about 14%-15%. Q2 is a little bit early to say yes.

We have only about 30% of the bookings in the system for Q2, but pricing looks like it's up 4%-5%. We're not going to get quite back all the 7% decline we had last year Q2, but it looks like we'll get back a significant proportion, if not all of it. Touching on the balance sheet, gross cash is a bit stronger than we had expected, again, primarily due to Boeing delivery delays. At year-end, gross cash was EUR 4 billion. Net cash was about EUR 1.3 billion. That's why we've brought forward another share buyback this year. We're ahead on long on cash because of the Boeing delivery delays and because we have that spare cash, we think it's timely to return it to shareholders.

The big challenge for us in the next year in terms of cash flow is we have EUR 2 billion of maturing bonds, EUR 850 million in September, EUR 1.2 billion in May of 2026. We plan to pay down all of those bonds out of our internal cash balances. That will mean Ryanair will this time next year be entirely or almost entirely debt-free and sitting on a fleet of 650 aircraft, totally unencumbered and debt-free. We would plan to continue to return excess cash to shareholders, but we will not have a lot of excess cash for the next year or two as we pay down debt and begin to fund the step up in the MAX 10 deliveries. The relationship with Boeing, our Boeing's performance has continued to materially improve in the last 12 months.

We think the new management team led by Kelly Ortberg and Stephanie Pope in Seattle are doing a terrific job. The aircraft fuse lines are coming out of Wichita in a timely manner with very little, no defects being carried forward. That is increasing Boeing's ability to step up its manufacturing. I am heartened by the fact that in April, Boeing delivered 45 aircraft compared to just 24 aircraft in April 2023. We expect that will continue. Boeing now are reasonably confident that the MAX 10s will be certified later this year, the MAX 7s first, the MAX 10s before the end of the calendar year. That would put us in good shape, we think, to take delivery of our first 15 MAXes in the spring of 2027.

We expect the European short-haul capacity will remain constrained out to 2030 as many of Europe's Airbus operators are still working through their pattern with the engine repairs. The two big manufacturers, Boeing and Airbus, are well behind on their aircraft deliveries. EU consolidation continues. I think the consolidation is also driving that benign pricing environment. Certainly, as Lufthansa tests control of Alitalia in Italy, we're seeing strong upward pricing movements in Alitalia. We would expect the same to take place in Portugal when one of the majors buys TAP. As the largest airline in Italy and the largest airline in Portugal, we would expect to continue to benefit from that trend. One of the more notable regional developments has been on the ownership and control side. Following an extensive consultation period with regulators and investors, the board removed the ownership restrictions in March.

It means EU, non-EU shareholders are free to buy the ADRs or the ordinaries without restrictions. We will continue to maintain the voting restrictions. Non-EU shareholders can't vote at the AGMs. In recognition of that development, the MSCI index recently confirmed Ryanair's inclusion in the MSCI World Index at the end of May. We would expect to be included in one or two other of the bigger world indexes before the end of the year. I want to touch briefly on the fact that Howard Millar has chosen not to seek reelection at the next AGM. Howard has been CFO from 1992-2014, a period of about some 22 years. He has been an NED for the last nine years, has made an enormous contribution to the success of Ryanair.

In fact, without himself and Michael Corley together when we floated in 1997, we would not be where we are today. I want to recognize that and thank Howard for his effort. Turning briefly to the outlook, as we tried to communicate this morning, we expect the FY traffic growth is constrained. We expect to grow by maybe just 3% this year to 206 million passengers because of those 29 Boeing delivery delays. We have agreed with Boeing we will take those deliveries at the back end of this calendar year, through September, October, November. We are guaranteed we will have all of the 210 game changers well in advance of summer 2026. Nevertheless, growth this year will be constrained to 206 million. We will pick it up again or recover to 215 million in FY 2027.

Following a year of flat unit costs, we expect very modest unit cost inflation in FY 2026. The delivery of more game changers, strong jet fuel hedging, and cost control across the group helps to offset most of what are very egregious increased route and ATC charges and higher environmental costs, the unwinding of the ETS and the introduction of the SAF blend mandates. However, and I know it'll come up in the call, we think that unit cost will be modest, maybe up 1%-2% where we are this year. To date for summer 2025, demand is strong. Peak fares are trending modestly ahead of the prior year. We think we're up 5%-6% in Q2. The question is what happens for the remainder of the year. Q1 fares are on track to finish at mid-high single percent ahead of Q1 FY 2025.

Some of that is the week prior year comp and the fact that only half of Easter was in last year's Q1. Both halves of Easter are in this year's Q1. We expect Q2 pricing to recover some, but not all of the 7% decline we experienced in prior year Q2. As I said, we have only about 30%-35% of Q2 bookings in the system. The final H1 outcome is therefore heavily dependent on close-in bookings and the peak summer yield. As is normal at this time of the year, we have zero H2 visibility. Therefore, we do not think we can give out full year guidance other than to say we cautiously expect to recover most, but not all of last year's 7% fare decline as we move through the year. It could be better than that. It could be worse than that.

It depends on what happens in the geopolitical environment as we move through the year. That should lead to a reasonable net profit recovery or growth in FY 2026. Two years ago, we recorded a profit of EUR 1.93 billion. Last year, on the back of 7% lower fares, that fell to EUR 1.6 billion. I think you'll see a reasonably strong recovery in that through for the remainder of this year. We're not willing to give guidance at this stage. That's because the remainder of Q1, Q2 are heavily dependent on close-in pricing. The one thing I would draw to your attention, though, is the opportunity in terms of lower cost oil going forward. We had already hedged about 85% of our FY 2026 fuel at $76 a barrel. Last year, we were hedged at $79 a barrel. We secured a 4% saving.

Following the Trump tariff announcement on Independence Day, we saw a material fall in oil prices, which we will pick up that at the moment. On Friday, Brent was at $62 a barrel, Jet was $67 a barrel. We will pick up meaningful savings on the 15% unhedged for the remainder of this year. We did jump on the oil price weakness following the tariff announcements to hedge 40% of next summer's, in other words, H1 FY 2027. We've hedged 40% of next summer's oil at $66 a barrel, a 13% saving compared to this year on a cost base of EUR 5 billion is our annual oil price. We think there's a material possibility of, we think there's a real possibility of making material oil price savings, not just for us, but for the rest of the European industry.

I think in advance of President Trump's trip to the Middle East last week, we thought one of the more significant developments was the fact that the OPEC+ producers abandoned their production cuts three weeks before he visited the Middle East. I think we expect the U.S. administration will turn its attention towards increasing supply and reducing oil prices in advance of the midterms next year. There may be a short-term or medium-term gain for airlines in general, but Ryanair in particular, as we move forward for the remainder of FY 2026, where we have weaker FY 2025 comps. That is all I want to say at this stage. Neil, I will hand it over to you in terms of anything you want to draw attention to in the MD&A, and then we will open it up to Q&A.

Neil Sorahan (CFO)

Thanks, Michael. I'll just re-emphasize maybe a couple of the points that you made. Just focusing on costs, as previously guided, we were very pleased to come in flat on a unit cost basis. This was as a result of our strong hedging, which helped offset productivity pay increases that we had and other Boeing delay-related costs that came through the business. As Michael just said, we continue to be well hedged into the current financial year at about $760 a metric ton. A meaningful dip on our hedging rate of $660 a metric ton out to FY 2027, where we're over 40% hedged in the all-important first half and about 35% in the second half of the year. That lends us about 36% on the year. Liquidity was very strong. It helped a little bit by the timing of Boeing delivery delays.

We came in with just under EUR 4 billion gross cash, EUR 1.3 billion net cash after EUR 1.6 billion CapEx, and EUR 1.9 billion shareholder returns, including the EUR 1.5 billion buyback. We will be launching the EUR 750 million buyback in the open period, which starts tomorrow. Later on this week, that EUR 750 million buyback will formally launch. On the liquidity side as well, I would point out that we increased our revolving credit facility back in March. We upsized it from EUR 750 million-EUR 1.1 billion, most of it undrawn at this point in time. It gives us lots of flexibility and additional liquidity should the need arise. Finally, I would point to our rejoining the MSCI at the back end of May. I think this is an important development on the back of the ownership and control review. Michael, I do not really have much more to add.

Michael O'Leary (CEO)

Okay. Eddie, you want to add anything or from a kind of just a commercial general trading point of view for the summer?

Eddie Wilson (CEO of Ryanair DAC)

Just from a general, demand is solid. We have taken the opportunity with restrictive capacity increases, which we will be catching up later on in the year with Boeing, with further extracting cost decreases at some of the major hubs that we fly into. We are much more picky about where we allocate that capacity. That is going to continue into next summer, where we pretty much have all of those aircraft allocated in our own mind. There is still a small number still to be allocated. That is about it. Good.

Michael O'Leary (CEO)

Okay. We will open up for Q&A. I will try and move some of the questions around. We have all the wider management team on the line. Moderator, if you'd open it up, please. We're going to stick every to two questions, and we try and get through as many as we can. Neil has to leave at 11:00 A.M. our time, but we will try and get it wrapped up by 11:00, 11:15.

Operator (participant)

Thank you. If you would like to ask a question, please press star followed by one on a telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your line is unmuted locally. We ask you please limit yourself to two questions. Our first question goes to Jaime Rowbotham of Deutsche Bank. Jaime, please go ahead.

Michael O'Leary (CEO)

Morning, Jaime.

Neil Sorahan (CFO)

Jaime, hi.

Jaime Rowbotham (Equity Research Analyst)

Michael, ticket reps for PAX down only 5% in March without Easter, then up potentially, as you said, 14%-15% in June with Easter. The net of those two is very strong, even considering some tailwind from the resolution of the OTA issues. Have you been surprised by that strength and maybe by geography? Where do you see it mostly coming from? One for Neil, presumably too early to ask for detailed non-fuel cost guidance, but can I ask about CapEx? You mentioned in the deck taking the first 15 MAX 10s in spring 2027. Would you be willing to give a steer on the phasing of CapEx over the next three years, please, through to fiscal 2028? Thanks.

Michael O'Leary (CEO)

Okay. I'll take the first half of that. I mean, Eddie, you contribute as well. We're not that surprised with the strength of Q1. I would caution it is weak prior. It is more driven by weak prior year comps. We have half of Easter was in March last year. We have both halves of Easter this year in March. We have strong growth because last year we were growing capacity by 9%. We added 17 million passengers last year. This year, we're only growing capacity by 3%. I think you have a combination of weak prior year comps, very strong Easter because you have two halves of Easter in April. We, the largest airline in Europe, are only growing our capacity this year by 6 million passengers instead of 17 million passengers last year. You're creating a more benign pricing environment across Europe generally. We will be the beneficiaries of that. I think Q2 is probably a more accurate reflection of the underlying trend. We think at this point in time, Q2, and we did have a very strong Q2 last year.

We think Q2 will price up 4% or 5% at the moment. That could get to 7%-8% if the close-in pricing remains strong. It could weaken if there's some unforeseen events, like terrorist events in Europe, but who knows. Geographically, because we're in constrained capacity, we've been trying to allocate more capacity to those countries and regions who are abolishing taxes, regional Italy, Hungary, Sweden, and those airports who are still incentivizing growth. I'll ask Eddie maybe to add a couple of words to that. Neil, you might comment on the CapEx. Eddie.

Eddie Wilson (CEO of Ryanair DAC)

Yeah. I would echo you've largely touched off all of the points there. I mean, I wouldn't run away with what has happened as we close out Q1. It really is down to an exceptionally strong Easter. They were weak prior year comparables as well. We've about 30% of the bookings in for peak. We are running just ever so slightly ahead on volumes. Again, wouldn't run away with this in Q1 at all or translate that into Q2. No real things on the geographies. I mean, it's a small part of our network, but the only sort of call-out job is that there are, not a call-out even, is that there is less huge amounts of capacity from all operators from different areas post-COVID. There seems to be some restriction on accommodation down there. Other than that, it's right across the board in terms of demand. That's the only sort of call-out I have on that. Yeah.

The only other one we do there is, and the one market that has constrained itself has been Dublin, obviously, where the new government, which has now been in place for five months with a 20-seat majority, still has not passed any legislation to scrap the Dublin Airport cap. We have successfully got a legal injunction against it, but it has held up growth that we would otherwise have deployed in Dublin. We are growing reasonably strongly in Cork and Shannon, but they are very small markets. Dublin is being constrained by government inaction. Five months into the lifetime of this new government, it is time for them to start passing legislation before they all bugger off on summer holidays in the next couple of weeks.

Michael O'Leary (CEO)

Neil, CapEx?

Neil Sorahan (CFO)

Yeah. Jaime, good morning. You are right. I'm not going to give you an awful lot of color over and above what we've already put out there. We're talking about EUR 2 billion, maybe a bit higher this year, depending on the timing of aircraft, engine shops, and other spares and parts. The PDPs on the MAX 10 are going to ramp up relatively slowly over the next couple of years. You'll see a drop down in CapEx into FY 2027, somewhere below EUR 2 billion. It will start to creep up again into FY 2028. It will probably be a mid EUR 2 billion-EUR 2.5 billion-EUR 3 billion territory that year. As I said, it ramps up relatively slowly this year and next, and with only a small number of aircraft, 15 coming in ahead of summer 2027. There will not be too many delivery payments on the 10 at that point in time as well.

Jaime Rowbotham (Equity Research Analyst)

Thanks, guys.

Michael O'Leary (CEO)

Thanks, Neil. Next question, please.

Operator (participant)

The next question goes to Stephen Furlong of Davy. Stephen, please go ahead.

Michael O'Leary (CEO)

Stephen, hi.

Stephen Furlong (Transport and Logistics Analyst)

Yeah. Hi, Michael. Can I ask you one question on the EU and just get a few questions on that? And regulation, post-Draghi and stuff, you're seeing any signs that they're less inclined to regulate? I'm thinking of the challenges with the SAF and delays in deliveries just makes the whole net zero thing a challenge for the industry. And then also the noise they make about retaliatory tariffs with Boeing. And then the other thing maybe for Neil, just talk again about the rationale for A, paying back the bonds, and B, for the upsizing of the facility, the revolver. That'd be great. Thanks.

Michael O'Leary (CEO)

Okay. Thanks, Stephen. No, I'm sad to say we've seen very little action from the EU.The Draghi report, I think, was a very positive development last year, but there's been no action on it. If you want to call out EU inaction on regulatory, it is the failure to take any action on ATC reform. We've given them two very simple but basic ATC reforms. One, protect overflights during national strikes. No action whatsoever. Ringing of hands and saying, "Oh, it's a national competence." It isn't a national competence. It's a single market, and you can't close down the skies over a single market just because the French air traffic controllers want to go on strike. They're entirely free to go on strike, but there is no impediment to continuing to overfly France during a national strike. The Italians, the Greeks, and the Spanish protect overflights during national strikes, and the French should be required to do likewise.

More locally, we have this lunatic Spanish minister running around trying to force all airlines to take unlimited bags on board free of charge. It is a clear breach of EU regulation 1008, 2008, which gives the airlines the freedom to set prices free of national interference. We are still calling on DG Move to take action on this. They have written to the Spanish, but they have not yet started the enforcement proceedings, and they should. SAF, I would be more optimistic. It is now clear that the oil majors are cutting back development of renewable fuel. There will not be a SAF supply to meet the mandate in 2030. The only logical development would be to move back those mandates. I think it will come, but it will come slowly. Europe could do much more in terms of rolling back regulation and making air travel more competitive.

The one very significant thing would be to move from the environmental taxes in Europe away from ETS towards Corsia, which is what the international long-haul airlines pay. The European airlines should be moving environmental taxes away from ETS, which are more towards Corsia, so that we're all paying Corsia rents, and then everybody is operating off a level playing field. Again, no action whatsoever. As always with the European Union, particularly Ursula von der Leyen, lots of talk and head nodding and no bloody action whatsoever. We'll keep pushing, and we'll keep campaigning. I do think, and the airlines, I do think we'll see some move back.

I think the campaign for ATC reform is unarguable, and the campaign to move environmental taxes towards Corsia, where European citizens will be paying the same environmental taxes as non-European citizens, those two cases are unarguable and should be implemented. Neil, you want to come back in on the rationale for the bond repayments?

Neil Sorahan (CFO)

Yeah, sure. Good morning, Stephen, and thanks for the question. Yeah. At the moment, as has been the case for some time, cash continues to be the cheapest form of finance for the Ryanair Group. We finished the year with over or just under EUR 4 billion in cash. We're sitting at over EUR 4 billion in cash at the moment. So we're planning on the base of paying down the EUR 850 million bonds in September. That bond is a coupon of 2.875%. If we were to refinance that today, we would pay somewhere in excess of 3.5%.

Cash continues to be the cheapest form of financing. We have another EUR 1.2 billion bond with an eye-watering coupon of 0.875% maturing in May of next year. Again, unless we saw a significant dip in share prices over the coming months, we would finance that also out of our own cash resources. The revolving credit facility is a great opportunity for our banking community to step up, put some balance sheets at risk while getting opportunities to participate with us on currency and on jet fuel and carbon hedging. We had an opportunity in March to increase the size of the revolving credit facility from EUR 750 million-EUR 1.1 billion. We upsized the banking group from 14-17, and we extended the term out to March 2030 from 2028. This is a very low-cost facility.

Most of it is undrawn, and to be honest, we probably will not draw much of it over that term unless there are certain shocks or opportunities that we want to jump on top of, but it is priced at a very low margin over your Euribor. It gives us lots of flexibility and lots of liquidity, and really, it is an umbrella if it starts raining.

Stephen Furlong (Transport and Logistics Analyst)

Great. Thanks, Neil. Thank you.

Michael O'Leary (CEO)

Thanks, Neil. Next question. Thanks, Stephen.

Operator (participant)

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

Michael O'Leary (CEO)

James, hi.

James Hollins (Senior Analyst)

Hi. Thanks. If I can come back on unit costs, unlike Jaime Roybotham, I am going to give it a go. If I did my maths correctly, you are looking at hedged fuel down about 4% year-on-year this year. You have talked about overall unit costs up 1%-2%.I assume that implies extra unit costs up maybe 3%. I think you've flagged double-digit increases in things like route charges. Maybe just Neil can give a bit more granularity on where else you're seeing some cost inflation or where you're doing much better than that. The second one, thank you for your comments on ITA. It was interesting about them pricing more or pricing up. Are you seeing any sort of irrational behavior by any competitors in Europe, whether it's on growing ridiculously or putting fares down? I would think maybe sort of Wizz Air as they grow again. Any comments for you, Sir? Thanks.

Michael O'Leary (CEO)

Okay. Thanks. I mean, there's not much more we give you in terms of color. I think it's a cautious guidance. The unit costs up 1%-2%. We still have 15% on hedged fuel.

That could kick in a significant saving, which would bring down unit costs. It might go the other way. The one call-out we would have at this point in time, though, is route charges, ATC fees, which are going up across Europe by another double-digit percentage for probably the world's most spectacularly shitty service. They'll all start no-showing for work starting next week at the start of June. Punctuality, which has been at record highs, we're delivering 85%-90% on-time performance up to the end of May. Last year, that fell to 60% in June, July, and August, and we expect the same to happen again. We should expect this every year, but what we're entitled to expect is some action from Ursula von der Leyen and her useless crew to reform ATC, and yet nothing happens. There are costs that are moving against us.

We've also done another round of pay increases with labor starting on the 1st of April. That's part of a long-term four- and five-year pay deals. But generally speaking, I think we're reasonably comfortable with where unit costs are. I mean, what we've been trying to do is to transition across to the MAX 10 deliveries, which we hope will happen in spring of 2027. And those aircraft will transform our operating costs. We get 20% more seats. They burn 20% less fuel. You can argue whether fuel over the near term will trend downwards or upwards. I think on balance, it'll trend downwards into the U.S. midterms next year. The issue for us in unit cost, Jaime, is not our absolute unit cost. It's what are the competition doing?

If you look at the reports from all of our competitors across Europe in the last year, they've seen unit costs rise from between 5%-15% in the case of one spectacular competitor who couldn't manage costs if it jumped up and beat them. They are increasingly exposed to financing and rising leasing costs, and all of those are rising rapidly. The unit cost gap between us and every other airline is getting wider. We have a unique 12 months this year where we have, unusually for Ryanair, week-prior comps. I think we will look good this year, but bear in mind that some of that is due to week-prior comps. Touching just on the pricing, there's nobody out there doing any irrational pricing because there's no real capacity growth.

Wizz are taking a couple of aircraft, but frankly, we do not see them in our marketplaces. They are still taking capacity away from our markets. They have closed three routes out of Vienna down into Italy this summer, where we are the only competitor in those marketplaces. We do not see much out of EasyJet. There has been a little bit, I think, some pressure on some of the tour operators, TUI and Jet2, seem to be kind of doing a bit more seat-only pricing. We think that is the trend last year where during the OTA boycott, some of our kind of holiday customers may have moved towards the tour operators. They have all come back to us this year.

No, I mean, everything we see across the marketplace, probably driven by us only growing at 3%, which for us would be a historically low rate of growth, is everybody is pricing up, and most of them pricing up more than us. Eddie, you want to add anything on that?

Eddie Wilson (CEO of Ryanair DAC)

Yeah. I mean, what you said there, EasyJet is not growing. They've closed a number of bases. You've got Wizz largely growing in places like Romania and further out to the sands and that. We do not really see them growing in our markets. We have seen some discounting from competitors, but not a rational discounting. As Michael said, that's manifested itself, particularly those that are selling package holidays where they have got the option of package holidays and seat-only. They seem to be discounting on the seat-only rather than on the package side.

Their discounted pricing is still materially higher than our kind of entry pricing. At the moment, everything we see into the summer season, Q1 and Q2, is strong forward bookings or stronger than we'd expected forward bookings, closing off some of the cheaper seats, and we're pricing up very strongly in Q1. It is a wait. I think the only issue for us at this point in time is this in the first half of the year. Do we get back all of last year's 7% decline or most of it? I'd be more concerned. I think we'll get back most of it, but not all of it. I could be pleasantly surprised on the upside, but it's too early to say.

Remember, when things are going well in this industry, that's always when some curveball comes out of left field, whether it's geopolitical issues, terrorism attacks somewhere, something. We're always cautious. When things are going this well, usually something else goes wrong in this business.

Neil Sorahan (CFO)

Just before we move off this question, I'd just like to add on the cost side, Michael, we did call out additional environmental costs in the release. This is the SAF mandates that have come in this year and the full unwind of ETS credits. If I was to point to one area where I feel a number of the analysts are maybe a little bit light, it's on that. We've guided that we're moving from EUR 850 million charge last year to over EUR 1 billion this year. I still feel that maybe that's, James, where some people are a little bit light in their numbers.

Michael O'Leary (CEO)

Okay. Thanks for that. Next question, please.

Operator (participant)

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

Harry Gowers (VP of Equity Research)

Good morning, Michael. Morning there. First question is just on, yeah, just on transatlantic leisure traffic. Are you seeing any evidence that that's redirecting to places within Europe on Ryanair instead this summer? Would you expect any material boost in demand or yields from that, or is it just too hard to tell at this stage? Then just on the share buyback running for 6-12 months, what's your thinking in terms of the timeline there? Will it be at the longer end of the timeframe given where the shares are trading? Yeah, just what your current thinking is on the pace of completing that. Thanks a lot.

Michael O'Leary (CEO)

Okay. As of the first half, look, I mean, it's too early to say yet, but anecdotally, there seems to be a kind of a weakness in EU-originating transatlantic travel, U.S.-originating as strong into Europe. We think that might be helping. I mean, I think there might be a trend. There's a perception, certainly in Europe, that the U.S. is an unwelcoming destination at the moment. That seems to be translating maybe to a bit more holidaying at home in Europe. We see no decline in the inbound transatlantic to Europe this year. All of the metrics we see, forward bookings into Spain, Italy, Greece, the holiday, the islands this summer has been reasonably strong. Buzz on the charter side, demand is strong, pricing is strong. We think there may be some element there, but I couldn't put a number on it.

It's more really anecdotal than anything else is that there's a little bit of a reluctance of people in Europe to travel transatlantic to the States, and they're staying at home in Europe. I wouldn't want to put too much more on that. I think the underlying trend on pricing here is not driven by transatlantic demand. It's driven by heavy capacity constraints in the European marketplace, which I think will roll out this year and probably next year again. On the buyback, Neil, before I give it to you, we're announcing 6-12 months. I think we've had a strong run in the share price. The buyback comes from the fact that we're surplus cash at the end of the year because of the Boeing delivery delays. I'm not that fussed whether we do it over 6 or 12 months.

I think Neil and the finance team will largely drive that. I would caution, I do not think we would be reluctant to promise any more share buybacks for the next year or two. We have EUR 2 billion of bonds that we have to repay in the next 12 months. That is a big slug of money. We do need to keep building a modest cash position thereafter. That will take us into the run into the MAX 10 deliveries running into the summer 2027 and summer 2028. We will spend a considerable amount of money on opening two engine shops in the next two to three years where a lot of the order for tooling and spares will be front-ended. We are looking again, particularly on the LEAP-1Bs, we may need to buy some more spare engines there.

I think this year's share buyback will be the last one for a year or two unless we do better than we plan on profitability and cash. Neil, maybe you want to add anything to that on the buybacks?

Neil Sorahan (CFO)

Yeah. I would say, Harry, I would be expecting it to run slower rather than faster, so closer to 12 than 6. Last year's EUR 700 million buyback was accelerated because we saw a significant dip on the share price, and we leaned into it. If we're in more normalised markets with an EUR 850 million bond maturity in September and an EUR 1.2 billion bond maturity in May of next year, I think this will go a bit slower. I would be expecting closer to 12 than 6 months. Hopefully.

Harry Gowers (VP of Equity Research)

Thank you both.

Michael O'Leary (CEO)

Thanks, Harry. Next question, please.

Operator (participant)

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

Alex Irving (Head of European Transport Equity Research)

Hi. Good morning, gentlemen.

Michael O'Leary (CEO)

Good morning.

Alex Irving (Head of European Transport Equity Research)

Two from me, please. First one, just coming back on cost. You mentioned a moment ago around the pay increases in the 1st of April. Would you please quantify that? What you're thinking about in 2026 and then in any remaining years as a multi-year pay deal? Second question is on tariffs. Would it be right to assume you can just take delivery of planes into the U.K. AOC and avoid any tariffs on delivery itself? Also, to what extent would you expect tariff-driven increases on upstream components to be the upward pressure on future CapEx? Thank you.

Michael O'Leary (CEO)

Sorry, Alex, your line was breaking up. I missed the first half of that question. Pay increases in people. Yeah, but it was quite around pay increases. Could you just repeat the question?

Alex Irving (Head of European Transport Equity Research)

I'm asking about quantity pay increases on deals.

Michael O'Leary (CEO)

Correct. You just mentioned the pay increases from 1st of April. If you could please quantify them. No, we do not quantify pay increases. The pay increases of 1st of April this year are year three or four, three and four of what are four and five-year pay deals. We have another agreed pay increase in April of 2026. They are modest because we tend to front-end the pay deals where we do multi-year pay deals. No, we would not put a number. Darrell Hughes is here with me, who is our Director of People. I have asked him to give some outlook or give some color on the pay negotiations or where we are on pay deals. Darrell.

Darrell Hughes (Director of People)

Yeah. Thanks, Michael. I think you have covered most of it there. We've got a couple of cabin crew group deals expiring next March, a couple of pilot ones as well. The big chunk is in March 2027. That is really when the cycle comes up for the next round of deals. As you say, we've got modest increases in the tail end of the existing agreements running in April 2025 just gone and into April 2026 as well. We think the timing of those deals was driven, Alex, but as we get into April of 2027, we're starting to get into the MAX 10 deliveries where we would be getting a reasonable productivity benefit out of those aircraft. Now, we're getting a reasonable productivity benefit.

I think we can incorporate or afford a reasonably favorable or generous pay deal with our people without going mad over a three- or four-year period on the back of productivity gains that will be delivered by the MAX 10. The tariff question, again, I think if I understand, you broke up again, but is one of the solutions with tariffs is that we take aircraft into the U.K. Our view generally on tariffs is as follows. One, all of the evidence out of the Trump administration is that they announce tariffs and then, but they postpone them for 90 days. They do a kind of an outline trade deal with China, with the U.K., and there is another 90-day postponement. We do not foresee tariffs being a big issue.

We think trade deals will replace the risk of tariffs and that imposition of tariffs on commercial aircraft will be delayed until there is a trade deal. We would be very surprised if the Europeans impose tariffs on commercial aircraft, given that Airbus exports much more widebody long-haul aircraft to North American customers than Boeing does to Europe. It could not be ruled out. Ultimately, our deal with Boeing is a fixed price agreement, so the tariffs will be for Boeing's account, not ours. We would certainly work with Boeing to take deliveries into those economies or those countries where we would, by working together with Boeing, be able to take delivery of aircraft without any risk of tariffs. If that was the U.K. or somewhere else in Europe, we would certainly have a look, and we would work with Boeing on that.

Michael O'Leary (CEO)

All right. Thank you. Next question, please.

Operator (participant)

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

Michael O'Leary (CEO)

Dudley, hi.

Dudley Shanley (Head of Research and Head of Aviation and Travel Research)

Hi, Michael. Two questions. First of all, I think you said on the video today that there were no new bases, but there were 160 new routes. Are the levels of route churn picking up as capacity slows? Is that to manage costs, or are there just better opportunities on the newer routes? The second question is a longer-term one. In terms of, I guess, the capacity constraint in Europe and the consolidation of the industry, do you still think longer-term we move towards four big operators? Thank you.

Michael O'Leary (CEO)

Okay. Dudley, Eddie, do you want to take the first half of that since you're yourself engaged in the churn?

Eddie Wilson (CEO of Ryanair DAC)

Yeah I mean, there has been a bias towards increasing frequencies as opposed to launching new routes where you've got to do a lot of investment in lower fares. We've also picked up some extra efficiencies, particularly as we launched the winter schedule this year, where we're flying less on Tuesdays and Wednesdays and slightly more on Thursdays. We're probably at the limit of what we can do. We've been on a program of that for the last two to three years. Yeah, you're seeing less new routes, more frequency building, and a lot more analysis on how we allocate capacity as well, given that they are just smaller numbers. We have moved around capacity and closed some bases as well, particularly in places like Scandinavia, where you've seen Billund closed, and you've seen taxes rise there as well, tourist taxes.

You look across the water in Sweden where taxes are going the opposite way, and then they end up with essentially the bill on the aircraft in the same season. We will continue to do that churn, and we will be very judicious on opening new routes.

Michael O'Leary (CEO)

Okay. Thanks, Eddie. Capacity constraints, do I think the world moves in the trend of four big operators? Yes, absolutely. It is going to be we are heading for 200, heading for 206 over the next two years, 250 million passengers. The Lufthansa Group, the IAG Group, and Air France-KLM. We think there will be further consolidation. Obviously, TAP is next on the block. I think inevitably, Wizz will have to find a home somewhere with one of the bigger airlines because they clearly cannot make any money as an independent airline.

I think logically, that's what over the medium term will happen with EasyJet. The challenge for, I think, all of the other independent airlines is what do you do when Ryanair keeps expanding in on top of your geography or your marketplace? They don't seem to have a—they don't have a cost base that would enable—they generally, as a group of airlines, don't have a cost base that enables them to compete with Ryanair. Their unit costs are still rising, while ours are flat or marginally falling for the next couple of years. Thanks, Dudley. Next question, please.

Operator (participant)

The next question goes to Savanthi Syth of James. Sophanzi, please go ahead.

Michael O'Leary (CEO)

Savvy, hi.

Savanthi Syth (Managing Director and Senior Equity Analyst)

Hey. Good morning, everyone. Just a couple of aircraft-related questions. Just on the NG retirements, were those as expected? It looks like maybe five are retired? How are you thinking about disposals and kind of the fiscal year 2026? My second question, just on the MAX delivery, could you clarify that, Michael? Did you say you're not taking any more deliveries ahead of this summer and the rest are coming here in the winter? Is that the way we should think about the rest of the MAX deliveries?

Michael O'Leary (CEO)

Yeah. Yes. We had the last five of this year's deliveries. The deliveries for this summer, the last five were delivered in April. All of them came a couple of days early, which is positive. We had already agreed with Boeing that we'd delay the last 29 of those aircraft. We have 181 of the 210 Gamechanger orders now delivered. We had agreed with them that we would delay the last 29 to the spring of 2026.

They've asked us recently, would we take them in the autumn of 2025, which doesn't really suit us. We can't deploy them during the winter, but we're going to take them early so that at least we ensure and guarantee that we have those there for the summer of 2026. Obviously, that's also a consideration. If there were tariffs, we could delay those deliveries once the aircraft are manufactured. We could bring them forward or delay them. As long as we get those aircraft in advance of summer 2026, we'd be in very good shape. Coming back then a bit, and then obviously the next big issue is getting the MAX 10 certified and kind of guaranteeing or ensuring that Boeing delivers those first 15 of those aircraft for summer 2027 growth, which again is kind of critical to our continuing capacity growth here in Europe.

Like Boeing, I'm growing more confident that that will happen without disruption. On the NG retirements, again, we had planned to start maybe retiring the first of the NGs sometime around 2028, 2029-ish. Again, we could time that around the deliveries of the MAX 10s. Obviously, the first issue there is we still need to, we have the Lauda 27 Airbus aircraft. Those leases run out in 2028 and 2029. We would want to try to replace those with some other Airbus aircraft, but at the moment, we're still looking at those opportunities. The market is not in our favor in the short term. I mean, current market lease rates are more than double what we pay per month on those 27 aircraft. The first issue would be how do we kind of replace those, preferably with Airbus.

If not, we'd replace them with maybe some of our older NGs. By the time we get into 2029, 2030, and we're taking 50 MAX 10s a year, we would then begin to start to retire some of the older NG aircraft. We have no plans at the moment to dispose of them. It's a bit too far away yet. Clearly, in the current marketplace, you could dispose of them because the leasing companies are short aircraft and are pricing up. We are making so much money out of those aircraft, we would want to continue to maintain our own capacity growth in a market where we're challenged. It's more profitable for us to run the aircraft and operate them, as you're seeing this morning's numbers and hopefully next year's numbers, than it would be to sell the aircraft.

Nothing in the near term on NG requirements, and we're very happy where we are on the max deliveries. Next question. Thanks, Savvy.

Jarrod Castle (Managing Director and Senior Equity Research Analyst)

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

Michael O'Leary (CEO)

Jarrod, hi.

Jarrod Castle (Managing Director and Senior Equity Research Analyst)

Hi. Thank you, everyone. Good morning. Michael and team, I mean, assuming your shares remain above the 2021 level, it looks like you should be able to get your options vesting in about 16-17 days. I wanted to get your thoughts, A, in terms of is there potential for a follow-on scheme? I don't know if it's 2026, 2027. I know the current scheme runs till March 2028. Also, how you see that as an incentive program in general for Ryanair management going forward. The second question, it seems like there's more confidence around Boeing and the max 10 getting signed off.

Just wanted to get your thoughts on if it does not get signed off on potentially doing more leases or indeed maybe there is an external factor where you want to accelerate capacity such as peace in Ukraine. Just any thoughts on that optionality either way. Thanks.

Michael O'Leary (CEO)

Okay. Thanks, Jarrod. I am glad somebody raised the options questions since I am sure some morons in the Daily Mail will be raking it up in about 16. The options do not vest until 2028. We may achieve the targets either later on this month or later on this year, but none of those options, and it is not a bonus, it is share options, do not vest until 2028. I and the rest of the management team have to stay here until 2028 and continue to deliver before we can actually get hold of those share options.

They do not come around for another, what is that, three years, and a lot can happen between now and then. I accept there is a possibility that we might at least hit the performance targets either later this month or hopefully later this year. Remember, there are two targets: share price at EUR 21 or an annual profit of EUR 2.2 billion. Chance of follow-on scheme, I think, pretty limited. The board about three or four years ago moved away from share options. We originally had share options here for many years that were driven by profit targets. The problem is that creates a sort of a regulatory concern that we cannot share forward-looking profit targets. We have moved away from those. For the last, I think, three years, certainly the senior management team have been getting LTIPs, which are awarded every two years.

That seems to be a kind of quieter, more reasonable way of rewarding superior management performance. I think that may be what will continue going forward. Obviously, my contract runs out in 2028, and there'll have to be some discussion, I presume, with the board and the Remco as to how my remuneration will be fixed from 2028 onwards if they want me to stay on after 2028. I will have all the usual bullshit out of the newspapers. All I would draw the point that we are, I think we're delivering exceptional value for Ryanair shareholders in an era when premiership footballers and managers are getting paid $20 million and $25 million a year. I think Ryanair shareholders are getting a particular value out of our share options, both mine and the rest of the management team. Moving on to some more sensible topics.

If the Boeing MAX 10 doesn't certify, we've already had that discussion with Boeing. Boeing have to make something. What is likely to happen, although I think it's increasingly unlikely, is that they will make more MAX 8200s. Boeing have kind of confirmed with us that if for some reason they don't think the MAX will get certified later this year, they will start to rip up or make more MAX 8200s and deliver those to us maybe for summer 2027 or summer 2028. Boeing do have to make something. I'm reasonably confident at this stage that they'll be making certified MAX 7s and MAX 10s. The fallback position is they'll make more MAX 8200s. They can do that with about 18 months notice. It's only a difference in the fuselage. One way or another.

Obviously, I would prefer the MAX 10s because they have 20% more seats and 20% less fuel, whereas the 8200s have only got 4% more seats and 16% less fuel. Operationally, and Boeing clearly wants to sell more MAX 7s and MAX 10s than 8200s. I think that is the fallback position, which both Boeing and we would be reasonably comfortable with. I think the likelihood of that fallback are receding as confidence grows that they will get the 7 and the 10 certified later this year. Thanks, Jarrod. Next question, please.

Operator (participant)

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

Rory Cullinan (Non-core Executive Director)

Rory, hi. Yes. Good morning. First question on slide nine, where you are expecting 7% passenger growth in full year 2028. It looks like that is on just over 2% fleet growth. Is there something else other than fleet growth going on there? Secondly, just on cash tax going forward, the cash tax charge was just under half the tax expense on the income statement. What are your expectations in future? Thank you.

Michael O'Leary (CEO)

Neil or Tracy Malloy might deal with the cash tax question. Let me just touch on if you go to slide nine, we set out there what we expect from the kind of the fleet on the fleet growth. We expect FY 2027, that is summer of 2026, we pick up the last 29 of the MAX aircraft or the Gamechanger aircraft, takes the fleet up to close to 650 or 650-655 aircraft. The following year, which is summer 2027, we go up by 15, which is the first 10, first 10 of the MAX 10s, the first 15 of the MAX 10s, sorry, which have 20% more seats.

We do believe we would actually pick up. The reason that there's a little bit more passenger growth there is that we think we would be able to deploy some more of those aircraft in the autumn of 2027 or into the spring of 2028. We'd have a bit more growth in the winter half of the year in addition to the summer growth. We wouldn't have any issues over Boeing deliveries during the winter period, and we could deploy more of that capacity during the winter period, which is why the passenger growth slightly steps up a bit from 4% in FY 2027 to 7% in FY 2028, and then levels out at 4% in 2029, 4% in 2030. Neil, do you want to Neil or Tracy, do you want to take the cash tax question?

Neil Sorahan (CFO)

The cash tax. Tracy's on a flight to Canada at the moment to go over and meet our shareholders there. We expect cash tax to remain relatively light for the next number of years. We have significant capital allowances due to the volume of aircraft that we're taking delivery of. The effective tax rate this year and last was 10%. That will gradually creep up over the next two or three years as the OECD rules get adopted by more and more countries across Europe. Unless, of course, there's a rollback given what's happening in the United States where they've now moved away from OECD. On cash tax, it'll be relatively modest in the overall scale given the capital allowances.

Rory Cullinan (Non-core Executive Director)

Great. Thank you.

Michael O'Leary (CEO)

Thanks, Neil. Thanks, Rory. Next question, please.

Operator (participant)

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

Michael O'Leary (CEO)

Muneeba, hi.

Muneeba Kayani (Managing Director and Head of Europe Transport in Global Research)

Yes. Good morning. I wanted to ask firstly around ancillaries. There was around just 1% growth per pax last year. How are you thinking about it this year? Is that kind of a similar flat 1% increase that we should be expecting? Secondly, if I could just go back to unit costs. Through the quarters, is there any cadence? Is 1.5 a bigger increase than second half or anything like that that we should be looking out for? Just secondly, a quick clarification. The guide, is that based on the current jet fuel price or not? Thank you.

Michael O'Leary (CEO)

Okay. Neil, both of those. Sorry. What's the guide you're talking about there? I did not give any guide.

Muneeba Kayani (Managing Director and Head of Europe Transport in Global Research)

When you say, no, unit cost, when you say the modest increase, is it what fuel and gas for the 15%?

Neil Sorahan (CFO)

Yeah. That would be current jet prices when even. Because the current jet price when even, as we see it today, it was taken at a moment in time, so. That's based on what? Jet closing last Friday at about $67 a barrel for fuel.

Michael O'Leary (CEO)

15%.

Neil Sorahan (CFO)

Exactly.

Michael O'Leary (CEO)

Okay. Neil, it sounds like both of those, you want to take ancillaries and perhaps that. I'm not well on. Just over on cost, I'm not going to break out the quarters. We've given a full year number today. We're not going to go into the micro of quarter by quarter, but I think there's enough there, Muneeba, for you to build from. On the ancillaries of 1% last year, we'd anticipate something similar, maybe slightly better into FY 2026. I think, again, if you model +1%, you probably won't be a million miles away on a per passenger basis.

Muneeba Kayani (Managing Director and Head of Europe Transport in Global Research)

Thank you. Okay.

Michael O'Leary (CEO)

Thanks, Muneeba. Next question, please.

Operator (participant)

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

Michael O'Leary (CEO)

Gerald, hi.

Gerald Khoo (Senior Equity Analyst)

Morning, everyone. Two if I can. Firstly, on financing come, which did seem to be very high in the second half and the fourth quarter, I think it implies an interest rate of about 10% or 11%. I think that line includes some compensation from Boeing. Firstly, is that right? If so, how long is that likely to continue for? Secondly, you talked about the Spanish rules on cabin bag charges. Can you just clarify what you're actually doing? Are you still able to charge passengers for cabin bags coming out of Spain, or are you actually prohibited from doing that at the moment? Thanks.

Michael O'Leary (CEO)

Yeah. No, the Spanish bag ruling, Gerald, is under appeal to a regional Spanish court.The appeal is suspensory, so we continue with our policy, which is we have one large free carry-on bag for non-priority passengers. Priority passengers get to bring two carry-on bags, and there will be no change in those rules. We think ultimately, unless the commission forces the Spanish to stop interfering in pricing or in breach of EU regs, it will go to the ECJ, which could take about two years, and it will, in our view, undoubtedly be overturned by the ECJ. It is only a question of time, but at the moment, there is no change. There is a bit of jumping up and down, various consumer organizations, "Oh, glorious victory for fucking passengers. You can now bring as many bags as you want." Nobody in the industry wants to go back to that kind of free-for-all. It will result in much bigger airport security queues.

It will result in much higher costs for airlines and higher fares. It is the kind of dumb regulation that Draghi has been pointing out in Europe. The airlines should be allowed to get on with what we do. We had 200 million passengers last year who demonstrate that they're very happy with our baggage policies. All we want to do is to comply with the prices so that we really do not want anybody's baggage fees. We just want to comply with the bag rules, which makes airport security and boarding aircraft much more quicker. Finance income, there is a tiny bit of Boeing compensation in the finance income line. It is not material. It will not continue. Boeing have caught up on those deliveries.

Sorry, the 29 deliveries delays next year, there'll be a little bit of compensation, but it's very modest, and the numbers are small in the context of a EUR 1.6 billion full year profit.

Neil Sorahan (CFO)

I'd also add to that. Yeah. I just add, in the MD&A, we do break out that we've got strong cash, we've got low financing costs in the business, and then, as Michael said, the modest Boeing compensation, which we received a bit in Q3 and Q4. It is a confidential agreement. We can't and we won't break out the exact numbers, but it's coming to an end at this stage with just the 29 delays to be caught up and hopefully no more thereafter.

Michael O'Leary (CEO)

Not alone is it very modest, it doesn't go anywhere close to make up for the shortfall we have of the delayed growth in this marketplace.

Thanks, Gerald. Next question, please.

Operator (participant)

The next question goes to Andrew Lubenberg of Barclays. Andrew, please go ahead.

Andrew Lobbenberg (European Equity Research Sector Head Transport)

Oh, hi there. Can I just check? You spoke about the expenditure on the engine MRO shops. Is that all included in the rough CapEx guidance you were given earlier? The second question would come around. It's not included.

Michael O'Leary (CEO)

No.

Andrew Lobbenberg (European Equity Research Sector Head Transport)

No. Are you able to quantify how big it might be?

Michael O'Leary (CEO)

Too soon and too fast.

Andrew Lobbenberg (European Equity Research Sector Head Transport)

No. Okay. Ukraine and Israel, there's been lots of excitement about the potential of the peace in these markets, yet we still don't have peace. How are you thinking about it? Were there to be the opportunity, how would you execute it? Yeah, how are you thinking about those two potential opportunities?

Michael O'Leary (CEO)

First of all, the engine CapEx number is not all of it.Clearly, we're negotiating this, and it's also subject to finalizing location of both shops, and there's obviously some kind of government assistance and some of that. The reason I want to draw your attention to the engine is that it is a big CapEx number, and it will be a big CapEx number, but it'll be spread over a three- or four-year period. It's a big number, but it's something I think that will secure significant cost advantage for Ryanair going forward. Touching on the Ukraine and Israel situations, I mean, clearly, we want to see peace in both. Our Israel-Tel Aviv schedules, and to a lesser extent, the Jordan schedules are repeatedly being disrupted by that conflict. At the moment, we've canceled all the flights to Tel Aviv until early June.

I think we're running out of patience too with Israel and the Tel Aviv flights to and from Tel Aviv. If they're going to keep being disrupted by these security disruptions, frankly, we'd be better off sending those aircraft somewhere else in Europe where at least we can sell the seats without these kind of repeated disruptions. Ukraine is clearly a big market for us. We were the second largest airline in Ukraine before Putin's illegal invasion. We would wish to go back into Ukraine. We have been disappointed, however, at the response of the Ukraine airports who have basically refused to engage with us in a post-market, in a kind of a post-war marketplace.

We have an extensive plan to go back into Kiev, Lviv, and Odessa, but we're not sure about the integrity of the runway of the airport in Odessa, but certainly Kiev and Lviv. At this point in time, I would have said we'd charge back in there with 5 million passengers in the first year, growing to 10 million passengers within three or four years. Unless the airports come up, and at the moment, all we're getting out of the airports here is just pay the public charges. If that's their response, I think we would certainly charge back in there with a more extensive network, but a more narrower. I think we'd be looking at going back in with maybe 1 million passengers in year one, rising to maybe 2 million or 3 million.

We simply wait for the Ukrainians to realize that nobody else has the seat capacity. If you want to recover and rebuild that economy very rapidly, the egregious profit-making by empty airports is not the way forward. If you're going to rebuild the Ukrainian economy quickly, those airports need to get real, follow the example of many other European airports, and aggressively discount what is an empty airport. Not just to Ryanair, they should be aggressively discounting to all airlines. It's just that Ryanair is the only airline that will go in there on day one from about 26 or 30 European cities because we're the only one that has bases spread across those 26 or 30 cities.

There are a couple of very lazy airport directors out in Ukraine who need to get up off their fat arses and do a deal with us quickly if they want real radical growth and real radical economic rebuilding and development in Ukraine. Thanks, Andrew. Next question, please.

Operator (participant)

The next question goes to Alex Paterson of Peel Hunt. Alex, please go ahead.

Michael O'Leary (CEO)

Alex, hi.

Alex Paterson (Analyst)

Hi, morning, everybody. Two questions, please. Firstly, would you mind just repeating what you said about FY CapEx guidance, please? I just missed that. I also wonder, you've been very clear on holidays that you would not be interested in offering them until your aircraft deliveries in the 2030s. Your relationships with OTAs that have signed agreements with you seem to be working well. That seems to be helping you. I just wonder if you might be interested in helping them growing in regions where perhaps their brands aren't so strong, perhaps with people starting a booking by booking flights on your website and then being directed through to theirs in order to book a holiday.

Michael O'Leary (CEO)

Yeah. Okay, Alex. Neil, you might take the CapEx guidance. I'll deal with the holidays question. Be careful here. I didn't say we're not interested in holidays, but I think the development of a Ryanair holidays brand can only come when we, like EasyJet or others, have significantly slowed our growth or are not eventually growing headline traffic at all. We're too busy getting on with growing headline traffic by 4% or 5% a year, which in our case is now 10 million-15 million passenger growth. We're using Ryanair Labs to transform the way we deliver that service, dramatically transforming our cost base.

We've gone in-house with all our ops systems. The kiosks are transforming our airport and handling costs, all that kind of stuff. We have too much going on. We're very pleased with the approved OTA deals, as are the OTAs themselves. I think they've been very complimentary. On the Beach, Love Holidays, and those about the growth they're enjoying are stimulating with the Ryanair approved OTA deals. We're very content, while we're busy growing headline traffic for the next five years or 10 years, to let them monetize the holidays or let them work the holidays. If there's particular markets they want to work with us, we'd be very happy to kind of take that on board, but we want them to do the heavy lifting.

I really don't want to waste our time and resources running around places like the Canaries or Greece trying to buy fucking hotel rooms or mom-and-pop fucking holidays or organizing bus transfers. We have more to be getting on with. If you look at our profitability, even this morning in the year, where fares declined, we're reporting about EUR 1.6 billion in profits. We carry about twice EasyJet's traffic, and we're about three times, but about three times their profitability. I'm not dissing the EasyJet holidays product. Our Jet2, the holidays have a valuable, it's a bit of a niche, but it's a niche I think we'd only be interested in looking at when our growth materially slows down. If there's something that they want to work jointly or there's new markets they want our help to break into, we'd be happy to work with them on that.

Eddie, do you want to add anything to that? Maybe Jason might ask you something there as well.

Eddie Wilson (CEO of Ryanair DAC)

The OTAs are agile enough. They do not need our help on that. There is already evidence that they are moving into winter weekend breaks, which was less of a volume prior to the agreement, and they never really invested in that because of the potential sort of disruption. They are now morphing into that, and they actually have more of a legitimacy to put things together. You could argue against those that go out to buy bed banks and that. There is probably further disruption to come with AI and how all these things are going to be presented in the years ahead. There is probably going to be another wave of that. The OTAs are able to take our inventory, and they're the experts in putting that together at the moment, and they're probably much more agile than the more traditional model, even though they haven't been successful.

Michael O'Leary (CEO)

Okay. Thanks, Eddie. You probably opened it up for next week. That's a useful segue. I have John Hurley here, who, as you know, is the Head of Ryanair Labs. And John, be just useful on the conference call. Give us a couple of pointers on what Labs is working on, where we think the next development in terms of kind of improved customer experience and lowering costs are coming from.

Eddie Wilson (CEO of Ryanair DAC)

Thank you, Michael. As you touched on, the biggest piece of news from Labs this summer has been the roll of our new system for ops, crewing, and scheduling. We call that ROCS. It's giving us efficiencies right across the board from tail allocation to main trouble engineering to crawing to annual leave planning. It's all Ryanair code, Ryanair rules, and our efficiency is baked in, so we're in a very good place there. On the website front, the big news is we've launched Prime.

It's opened in two months, going well for us. We're focusing heavily on customer service and customer service improvements, helping customers self-serve to reduce our costs, which is important and a better price across the board. The big improvement going forward is going to go fully 100% mobile boarding and mobile app, and that'll happen next November. They're the key main highlights. We're working very hard on machine learning. We're looking at GenAI and machine learning. The biggest wins for so far have been the dynamic pricing around Silvery Pucks and some of our fares.

Yeah. You said just along the ROCS system, we explain to people what happens now, for example, there's a disruption and we now allocate with 600 aircraft. How do we identify standby pi lot or there's a disruption? The machines are now determining which pilot or which cabin crew, standby crew gets called. Yes, that is correct. Historically, when we had a disruption, we had to crew people who was next available on the list. Sometimes that was alphabetical, not an ideal way to do it. Now with computer, we can actually look at who is the best hours to cover standby. Will not impact our schedules in the following weeks and following months.

All the cabin crew and pilots are limited to FTLs, so you can't just let you go by next person on the name. That's now been fully automated. We're now recovering from major disruptions in hours as opposed to in days. It is going very well and very positive.

Michael O'Leary (CEO)

Good. Okay. Thanks. I should say too on Ryanair Prime, I have been one of the great skeptics of this thing. I thought it was a complete load of bullshit, but I have been persuaded, as usual, that I am wrong and the IT and labs team are right. What is different about this is it is a member subscription service for EUR 79. We promise that you have benefits, multi-year or year-long benefits of travel insurance, seat selection, etc. What was different in Ryanair, we said we would give you one major seat sale each month. For a cost of EUR 79 in the first three months, we have delivered seat sales worth over EUR 140. That is just the first three months. We have nine more of them to go.

We will deliver something of the order of over EUR 300-EUR 400 in seat sales exclusively for Ryanair Prime members over the next 12 months. I think actually the seat sales will get better as obviously we move out of peak period into the winter period. There will be more availability and deeper discounts, and those are absolutely secure and only offered to. We are not including them in other seat sales. Particularly as prices rise, this ability to kind of pair or design a seat sale specifically for members has been something that certainly I have been surprised at. I mean, I thought we would be lucky if we sold 100 Ryanair Prime memberships. We are now up to 30,000 at EUR 79. I think the only mistake we made is we underpriced the Prime membership.

We should probably have charged about EUR 99 for it, but if we got the pricing wrong for the first 12 months and for EUR 79, Ryanair Prime members get about 300 million or 400 million in or 300 or 400 years in seat sales. So be it, and the numbers continue to increase margin. Look, it's never going to be huge. We're probably at this point in time going to generate about EUR 2.5 million in membership fees in a company where we're looking at making EUR 1.6 billion. It's not huge, but I think it is very critical to our ability to target seat sales, to help with selective seat sales where we don't want to do a big broad brush, dump the shit out of pricing across all the geographies. I think Ryanair Prime would be something that we will continue to work on. It's a demonstration of what Labs can do internally and will continue to do. Next question, please.

Operator (participant)

We have no further questions, so hand back to you, Michael, for closing comments.

Michael O'Leary (CEO)

Fantastic. Okay. That's great timing. Neil and the team need.

Neil Sorahan (CFO)

I didn't cover Alex's CapEx for him, so we will just cover that.

Michael O'Leary (CEO)

Oh, sorry. Apologies. Yeah. Sorry, Neil.

Neil Sorahan (CFO)

No worries. Alex, I'm assuming you missed the question at the start of the call from Jaime in relation to phasing of MAX PDPs over the next three years. As I said to Jaime, PDPs and delivery payments are going to be relatively light over the next couple of years and then start to phase up into FY 2028. In the current year, we're looking at a CapEx figure around EUR 2 billion, maybe a bit more into next year. That's maintenance CapEx, aircraft, and various other odds and sods. It'll dip below EUR 2 billion next year. I said to Jaime, these are all very broad brush, somewhere between EUR 2.5 billion-EUR 3 billion in FY 2028. Of course, when we have more ideas around engine shops, we'll bring those numbers forward.

Michael O'Leary (CEO)

Okay. Thanks, Neil. Okay, ladies and gentlemen, thank you very much for your time this morning. We have extensive road shows. We have something like 12 teams on the road around Ireland, the U.K., Europe, East and West Coast, U.S. We are also going to do some online or Teams meetings with Asian investors as well. If you'd like a meeting with us, please come to us through Citi, our broker Citi. Davies are a good buddy, and we'd be happy to include you either in a lunch or breakfast or set up a one-on-one meeting.

If anybody'd like to come to Dublin over the summer before we get to the AGM in September, see the operation. You're more than welcome. Thank you for your support over the last, what has been a difficult and challenging 12 months, but I think as you can see in this morning's numbers, we're coming out of it strengthened, very cash positive, and we will be paying down debt aggressively over the next 12 months so that we'll be hopefully debt-free in the next 12 months, still growing strongly in what I hope would be a more benign pricing and certainly more benign fuel environment as well. I think hopefully we're set for a reasonably strong summer trading as long as there's no unforeseen adverse developments in the next couple of months.

Look forward to meeting you all at the road show this week, and if not, that we'll see you in Dublin sometime in the next couple of months. Thank you very much, everybody, and thank you to the moderator for your time and assistance. Bye.

Operator (participant)

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