Ryanair Holdings Q1 2027 Earnings Call | Passenger Traffic Gains Offset Soft Yield Pricing Pressures

Hello and welcome everyone to Ryan Holdings PLC Q1 FY27 earnings release. My name is Jordan. I'll be the coordinator for 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. Please limit yourself to two questions. I will now hand you over to Michael O'Leary, group CEO of Ryanair Holdings to begin. Michael, please go ahead when you are ready.

Okay, good morning everybody. Welcome to the Q1 results call. You'll have seen the results issued this morning. Q1 profit after tax of 538 million. That's a 34% decline on last year's Q1 of 820 million primarily due to the impact of the large spike on oil prices on our 20% unhedged and also the fact that the first half of the Easter moved in or Easter holiday fell into year Q4. Q1 highlights include traffic growth on track grew 6% to 61.3 million. Revenue per passenger fell 5%. Average fares were down 6%. Ancillary revenues were flat. Unit costs rose 5% which is an impressive number at the unhedged Q1 jet fuel prices doubled to $151 per barrel. FY27 jet fuel remains 80% hedge at $67 a barrel. A development in recent weeks as we took advantage of some price weakness on the forward rate and we're now 15% hedge for the entirety of FY28 at about $85 a barrel. The underlying growth into the summer continues. We are up operating three new bases this summer. Rabat in Morocco, Tirana in Albania, Trapani in Southern Italy and in total over 130 new routes. And we're pleased that the final 1.2 billion bond was repaid in full out of internally generated cash flow leaving the group essentially debt-free.

Touching briefly on a couple of points before I hand over to Neil. Scheduled revenue dipped 1% in Q1 to 2.91 billion as traffic grew 6% but at 6% lower fares. Q1 fares which benefited from a full Easter during April 2025 required stimulation as the Middle East conflict led to consumer hesitancy, concerns about EU jet fuel shortages, economic uncertainty, and later bookings. However, our conservative hedging policy means with 80% of our fuel hedged at $67 a barrel, the group's earnings are largely insulated from periods of extreme volatile oil prices as currently. And this will materially widen our cost advantage over all of our other EU competitors. As I said, we've recently extended those fuel hedges for the first time into FY28, now 15% hedged at $85 a barrel. Having repaid the 1.2 billion bond in May, at the quarter end, gross cash was just over 2.8 billion. Again, an impressive figure after 1.3 billion of debt repayments and half a billion in capex. Liquidity is further boosted by the group's 1.1 billion revolving credit facility which is mostly undrawn, a sensible strategy at this time of the year when cash flows are strong. We're now 90% through the 750 million share buyback program. The average price is 26.35 per share. However over the coming year, following the May repayment of our last bond, our funding priorities are: one, the max 10 aircraft capex and the first 15 of those aircraft are coming in the spring of 2027; shareholder dividends; the completion of the current buyback program which we think will run out until around the AGM in September; while rebuilding gross cash back to 4 billion which is where we were when we entered the Covid and that we believe that's a sensible number to help us cope with unforeseen eventualities such as Covid or the current war in the Middle East.

In terms of touching on fleet, Boeing continues to expect the Max 10 certification in late summer 2026. I spoke to them about two weeks ago and they expect the Max 7 to be certified in the coming weeks and they're reasonably confident that the Max 10 will be certified either in late September or mid-October. They have protected our first 15 delivery slots in the spring of 2027. So we are growing increasingly confident that we will have the first of those aircraft in advance of summer 27. And with 300 of these super fuel efficient aircraft, remember 20% less fuel but offering 20% more seats per flight, due to deliver by March 2034, it leaves us in very good shape long-term for cost efficient growth and we believe profitable growth. As I said, this summer we're growing, ahead topline growth is strong. Three new bases in Rabat, Tirana, and Trapani. But with only 4% of FY27 traffic growth, our scarce capacity is being switched away to those states, regions, and airports cutting aviation taxes, lowering fees to incentivize growth. The examples we've given are Albania, Morocco, regional Italy, Slovakia, and Sweden. And we are withdrawing material capacity, flights, and traffic away from high tax, high-cost markets like Vienna in Austria, Dublin here in Ireland where costs have gone up 10% this year, Germany, we're closing the Berlin base at the end of the summer, and regional Spain.

Over the medium-term, we expect European short haul capacity to remain constrained until at least 2030, principally as the two main manufacturers remain well behind on aircraft deliveries. Those industry capacity constraints combined with our very widening cost advantage, our strong balance sheet, low-cost fuel efficient aircraft order book, and industry-leading operational resilience will, we believe, facilitate Ryanair's sustainable profitable growth to over 300 million passengers by 2034. In terms of outlook, FY27 traffic remains on track to grow 4% to 216 million passengers. Much of that growth is front-ended, so in H1 we expect to grow by 6%. We will cut back our schedules into the winter and we expect to deliver only 2% traffic growth in the second half of the year. Our unit cost leadership continues to widen. We've seen the results reported by many competitors in recent weeks who have seen unit cost increases of high single digit, low double digit. We're this morning reporting low single digit cost inflation. Jet fuel remains 80% hedged for FY27 to $67 a barrel, and that helps us to offset a 300 million increase this year in EU and payroll taxes, significant crew pay increases under new multi-year CLA, and higher maintenance costs. While summer 26 volumes are strong, the booking window remains closer in than last year, which further reduces visibility. Despite a recent slight uptick in volumes and less price stimulation, Q2 pricing is trending modestly down year on year. That is a decline from where we were on the full year results. And we were hoping that Q2 pricing would be generally flattish year on year. They're now trending modestly down, low to mid single digits. And the final H1 fare outcome remains heavily dependent on the strength of close-in bookings in August and September, but they will not be sufficient to make up for what will now be a fare decline in the second quarter. As is normal this year with zero H2 visibility, and so there's no point in trying to provide any meaningful guidance for full year profit after tax guidance at this time. And with that, I'm going to hand over to Neil Sorahan, CFO. Neil, take us through the key points of the MD&A please.

Thanks Neil. Just before we open up the Q&A, I want to touch on a couple of more recent news events. The Tesla aircraft, where we had the fan blade issue, depressurization event last Friday, 10 days ago. We welcomed the NTSB is now in charge of the investigation. They have released the aircraft to us yesterday. So we're now engaged in repairing or replacing the engine and repairing the skin of the aircraft. That was a dramatic event, particularly for passengers on board. Depressurization is always a frightening event, particularly when all the masks come down. However, it took place in the climb of the aircraft. All passengers and cabin crew were belted in at the time. So some of the more salacious reports that one passenger was halfway out the window, head out the window. Nobody was out any window. They were all belted in. One passenger did suffer minor injuries. One pregnant lady was taken to hospital. They've both since been released. And we are actively supporting the NTSB investigation into what happened in that aircraft. Initial indication would suggest it looks like foreign object damage to the engine on takeoff out of, but we don't have that. I can't say that definitively. There will be a draft report issued in about 28 days and then a more detailed report. The US NTSB has done a couple of these before, two of them took place in Southwest. And we think they're the best people to investigate and report on the issue. The aircraft was 18 years old. It has nothing to do with aging aircraft. The engine had been fully serviced and overhauled I think within the last 2 years. So there's nothing to do with either age of aircraft or engines. We welcome in the last week the Irish government has finally, 18 months after the program for government, has passed the legislation enabling the minister for transport to lift the Dublin airport cap. We welcome that. It is badly needed given that the cap was 32 million and traffic at Dublin airport this year is heading for 37 million. We now call on the minister to actually lift the cap, abolish the cap. We do not want it raised to 40 million or 42 million and have to go back to all this nonsense again. Abolish the cap. There is a physical limit on traffic at Dublin airport. Two runways gives you capacity for about 60 million passengers. That should be what the cap is at 60 million passengers. And we should now get on with growing traffic at Dublin airport, growing tourism and economic activity on and off the island of Ireland using its main gateway. We also welcome the IAA's provisional recommendations last week. They recommended that Dublin airport fees be cut from summer 27 onwards on the basis that traffic is ahead of the DAA's projections. Surprise surprise, their capital expenditure is way behind what they had included in the previous projections, and we believe that all airlines will commit to growing at Dublin airport if the high fees at Dublin are reduced. We've already stepped forward with our commitment. We will add 2 million seats at Dublin next year. Some of those aircraft will be turned away from higher cost airports like Vienna, like Berlin. But there's no doubt in our mind that Dublin and Ireland is set for a period of rapid new route and traffic growth led by Ryanair if the IAA recommendations are implemented in their final report which we think is due in September, October.

Pricing this summer is softer than we had hoped for. We had hoped that the close-in bookings would dramatically recover. Close-in bookings remain strong, but they're not sufficient to make up for the amount of price discounting we've done, we've had to do in the first half of the year. So we think pricing will continue to be soft. If I were guiding you, I'd be moving to low to middle mid single digit decline certainly through in the second quarter. It is, we don't see any significant fall off, but the resumption of hostilities in the Middle East don't help the situation. Clearly oil prices have taken off again, but it also creates that consumer hesitancy, that nervousness about people traveling and booking. We think the rest of the future will be strong, but the second half of the year will need more discounting, although we expect a lot of capacity to be taken out of the system, the European system in the second half of this year, particularly by our competitors who are losing money hand over fist or copiously losing money and can't compete with us at these low prices. Nevertheless, it will be what it will be. The one little bit of upside I would give you on second half pricing is both halves of Easter will fall into March. Easter is very early next year, so we'll have almost all of Easter in March in. So Easter will come into this year's Q4, which should be positive for pricing in the second half of the year.

And lastly, it wouldn't be a quarterly set of results without some more utterly useless regulation out of the European Union. The European Parliament or the European Union last week are considering amendments to the ETS legislation which will bizarrely extend the damaging, harmful, and discriminatory ETS to places like Morocco, Turkey, and Albania, but not to the Middle East. Sorry, Morocco, Turkey, and Albania which currently are exempt. Of course they don't have the bottle to extend it out to American, Asian, and other carriers landing and taking off in Europe who still account for the majority of Europe's CO2 emissions. The one way to fix this utter discrimination of Europeans is to abolish ETS or at least move it into line with CORSIA. But no, that would improve the competitiveness of European aviation and the European economy, and useless von der Leyen couldn't come up with anything that would actually improve the competitiveness of the European economy other than giving speeches about it. And there's also a measure by the European Parliament. They are introducing new legislation again which makes European airlines less competitive in order to eliminate the family seating and family pricing, or they now want, sorry, not the family seating, the carry-on bags. So you've had the lunatics in the European Parliament running around trying to assert the right of passengers to carry on two carry-on bags despite the minor quibble that there isn't enough space on board the aircraft for them. The solution of these geniuses is that they will now change the advertising so that airlines in Europe in about the next 12 or 18 months will now have to advertise a price that includes the two free carry-on bags despite the fact that more than 50% of our passengers don't pay and don't want two free carry-on bags. But Europe's airlines will now have to advertise a higher fare than the lowest available airfares, and more than 50% of passengers we know will opt out of those higher airfares by opting out of the second free carry-on bag. So we have yet more useless regulation coming out of Europe. Instead of making Europe more competitive, they now have required the airlines to advertise fares that are higher than the lowest available fares in the system. And we will be extending ETS instead of abolishing it or bringing it into line with CORSIA. The parliament are overselling this as everybody will be entitled to bring two free carry-on bags on board. You won't. Airlines, if we're advertising fares, will have to advertise fares that include the second carry-on bag, but more than 50% of passengers will still opt out of the free second carry-on because they want the lowest airfares, which we will no longer be allowed to advertise because those geniuses in the European Parliament would prefer that we advertise higher fares than are available in the system. Welcome to Europe, where things never get more competitive, they just get further more regulated, and more regulation getting in the way of actually offering people the lowest available airfares. This is a solution to a problem that doesn't exist. More than 50% of 99% of passengers want the lowest airfare, and there's been no complaints from passengers who want to pay for a second carry-on bag, they're happy to pay for it. But that wouldn't stop the clowns in the European Parliament from inventing a regulation. Anyway, that's my quarterly rant over. We'll now move on to the Q&A session. And as everybody said, we have already said, limit yourself to two questions, and we'll get through this as quickly as possible. Back to the moderator, please, for the Q&A.

Thank you. 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 preparing to ask your question, please ensure your line is unmuted locally and please limit yourself to two questions. Our first question today comes from Jamie Robotham from Deutsche Bank. Your line's now open. Please go ahead.

Jamie, hi. Hi, Michael. Uh, two from me. So, just coming back on the unit revenues for the September quarter. When I read that you've seen an uptick in volumes and less price stimulation, I thought the guide for summer might be nudging up. You've seen the need to downgrade it from broadly flat to modestly down. Can you just explain the apparent disconnect there? What's changed exactly? It seems like better trends but inferior guidance. And then on the unit costs in the June quarter maybe for Neil, obviously fuel is what it is. Airport and handling and staff look very well controlled. Maintenance is up. That's partly the non-repeat of the supply compensation. But I wanted to ask about ownership. It's up about 15% on a per passenger basis. Are there any material one-offs in the DNA that you'd care to pull out? I saw there was a comment about increased NG maintenance and a provision for midlife leap engine shop visits. Thank you.

Okay, thanks Jamie. I'll deal with the revenues of the last year. Couple things on the revenue side. Yeah, look, we have been saying all from the start of the year. We started before the war kicked off in Iran at the end of February. Pricing into the summer looked like it was going to be up mid single digits. Pricing in Q1 was always going to be slightly down partly because the first half of Easter moving out, but prices weakened once the war in Iran started in February, March. Nothing significant, but we've had to open up or keep stimulating forward bookings. Close-in bookings and the booking pattern is moving later. People are making up their mind to travel slightly later and then pay slightly higher fares. But it's not sufficient to make up the discounting we've had to do or the discounting we do well in advance. We go into every month typically with about 75 or 80% of the seats sold on the first day of the month. Therefore, we have only 20% of the seats left to sell during the month. When we came out, when we had the 60-day ceasefire about a month ago, we did notice a little bit stronger on the close-in bookings. The pricing is a little bit better on the close-in bookings, but it's not sufficient to make up for the high volume of discounting we've done well in advance. We did say at the end of the full year results in May we were hopeful that Q2 would be flattish. It's now moving down low to mid single digits. I would personally think it's moving closer to mid single digits than low single digits. If it's going to be weak, it's going to be weak. We're now well into the peak period of July and August. And I think it is trending weaker rather than stronger. The ceasefire has broken down. The US has run what, seven or eight nights of bombing in Iran. We are where we are. I think the people, largely the decisions on summer holidays have been made. The one other one that runs across that is the World Cup does have an influence on things as it has had before. And I think there will probably be an uptick now that it's over. People do tend to slightly postpone their travel arrangements until those competitions are done and out of the way, but again, I don't see any recovery in Q2 pricing now. I think it is heading for down mid single digits on last year, and if it is, it is, and we just get on with it. I would not be optimistic for the second half of the year. I think pricing is going to be weak. It will need more price stimulation. The only two things that change that are there are going to be meaningful capacity cuts coming out of competitors here. England, for example, last week announced significant sleep reductions that they're going to take their capacity down by 6% from the winter. You have the easyJet M&A situation going on, and at the valuations that they're currently discussing, there will have to be some meaningful capacity cuts at easyJet if whoever acquires those kind of valuations. And then we are waiting to see what Wizz does apart from losing money heroically. But given that neither easyJet nor Wizz have any, are not particularly well hedged, once you get into the third and fourth quarters of the year, again, we expect meaningful capacity cutbacks. And then you have all of the Easter at the end of Q4, which will give Q4 the back end of the year a little bit of a lift. But I would be bearish now on pricing. And we will simply revert back. There's a war going on in the world. There's a lot of uncertainty, and therefore it's going to be price passive, load factor active. We will hit the traffic target of 4% for the year, and the pricing will be whatever the pricing will be. We are much more focused during these periods on taking out more costs. The airport turn negotiations are going particularly well. We're looking forward to the delivery of the Max 10s which now we're more optimistic about in spring of next year, and those aircraft will give us some capacity additions in the summer of 27 but on aircraft that are 20% more seats and burn 20% less fuel. Neil, you want to take the unit cost, please?

Okay. Thanks. Thanks Jamie. Next question please.

Our next question comes from James Holland from BNP Paribas. Your line's now open. Please go ahead.

James Addie, hi. Thanks very much. Michael, just giving you an opportunity for another rant. We didn't have much comment on the airport queues. I think it's been quite widely published in the media on that. Do you think there's any sign that we might be okay for the rest of the summer? Is there are there any countries lifting or pausing the EES regulations which might help? And I guess I'm asking, do you see there's some weakness around that in terms of the bookings as well? And then on Neil, just to follow Hein's question, do I mean you did less than around about 2% ex fuel cost per passenger in Q1. You say it's up ticking a little bit in H2. Is around 2 to 3% a sensible number for the full year? Thank you.

Thanks James. I don't think your airport cues are really that significant, certainly in the second quarter. We have identified about 15 airports mainly in Portugal, Spain, and some Italy where the border control is understaffed and there are significant queues. All of the European countries have the power to derig or to suspend these EES requirements until October, which is a more sensible time to implement them. The Europeans misdesigned this system. It should have been done online. You know, we've got when you're processing all this online, only the Europeans would invent something like this where you need border guards doing one finger typing into systems at airports coming into the summer period. So it's another European screw up. But is it going to stop people traveling through the peak summer? No, it isn't. And then will the queues ease off once you get out into the third and fourth quarter? Yes, they will. But this EES, if they really want to control this, this system should be moved online. The airlines have all the passport details. We have all that information, you know, and it should be something that is not beyond the wit of man or mankind. But again, it's just another example of where Europe under useless von der Leyen can't organize a piss-up in a brewery, are hopelessly inefficient. And we'll talk all day and all night about being competitive while really introducing more regulation to make us less competitive. But no, so airports are frustration, it is not something that is unheard of in Europe at this time of the year, and the alternative means you're just stuck in the queue for longer, isn't going to make any difference either. Second half of the question, Neil.

Thanks. Thanks, James. Next question, please.

Our next question comes from Alex Irving from Bernstein. Your line's now open. Please proceed.

Alex, hi, good morning. Two for me, please. First is on winter capacity. How do you see that evolving for the sector and how do you see the probability that we get a meaningful capacity reduction at competitors? Second one, I want to come back on EasyJet where you talked about the likelihood of capacity cuts. If there were any parts of EasyJet that were to become available for sale, would there be any elements, say slots or an air or subfleet, that might be of interest to Ryanair? Thank you.

Okay. I think it's opportunity to ask Eddie Wilson, Ryanair DAC CEO. Eddie, do you want to give us an overview on winter capacity and likely competitor cuts?

Yeah, I mean, you're looking at the moment at the market that it must be winter capacity would be up at about 5%. We don't think that's realistic. That's likely to be paired back significantly. Ryanair, we will be growing by around 2% this winter. And some of that has been driven by the fact we'll have two aircraft just due timing that will still be in maintenance. We'll have two less aircraft actually this winter. So it's but we do expect to see our competitors pull back that we can't see any way that the market is going to grow by 5%. We will continue how we allocate capacity during the winter as we've had in previous years as we have paired back capacity in the shoulders in November and in late January and then sort of micromanaged the capacity growth in close to Christmas and the October bank holiday.

Yeah. So I mean we are flexing our capacity expanded this winter. I mean and some of that is because 20% of our fuel is unhedged anyway but we are still going to deliver 4% traffic growth for the full year. Just to touch on the easyJet valuation, it's fairly, you know, I think the board and management of easyJet have done a good job with the valuations that are currently on offer, but if BC money comes in and pays that kind of money for easyJet, I think it's inevitable that they will want to do something to monetize some of the fleet or the order book or they'll certainly want to get, they'll have to be getting airfares up at their fortress airports. They're going to get any kind of VC or return on currently the market cap is about 5.5 billion sterling. Wizz will continue, Wizz will just blow their brains out this winter. They don't have any significant fuel hedging in place, they have expanded capacity far too much this summer. Some of that is driven by the only way you can keep the Ponzi scheme afloat is to keep taking aircraft and then doing sale and leaseback and recognizing that through the P&L. In the full year results, they reported a profit of a million, but with 630 or 640 million of sale and leaseback profit, supplier compensation, and forex gains, anything else you could think of. The underlying business therefore lost 640 million the full year when oil prices were $70 a barrel. God bless them when oil is up at $130 or $140 a barrel. We think it is inevitable. Air Baltic are floundering around in Eastern Europe may or may not survive. We think the government will keep them alive. There's elections coming up in Latvia in October, November. I think they were out this morning saying that they're talking to a number of investors. We do think Air Baltic will probably be acquired by Air France who already own 10% of it. But you know the consolidation process will play itself out and I think we have to look today on the quarter numbers. The immediate short-term outlook is weak. Pricing is weak. We see that as an opportunity to take out unit costs and to materially widen the unit gap between us and competitors on unit costs. But over the medium term, our growth and our market share gains are accelerating and that growth will take place on aircraft that will be materially more profitable for us. What bits would be if any of the bits of easyJet came up for sale? No, it would be the simple answer. If you take the various bits for easyJet, aircraft orders, no, their Airbuses wouldn't be particularly cheap either. So it wouldn't be obnoxious to us. EasyJet holidays came up for sale. No. We're not believers in the holiday model, but really the holiday model is just stuck on to easyJet fortress bases. What else is there? I ultimately believe if easyJet is bought by a BC entity, the only way they will finance over time will be to sell off the order books, monetize the fleet, there'll be more sale and leasebacks, and then in time I believe the easyJet business will be sold off to legacy carriers in Europe. Certainly Air France-KLM would be very interested in the easyJet base operations in Paris and Switzerland. And I think the gaffing operation will be of great interest to the likes of IAG or Jet2 or somebody else. I think if easyJet does get done, it will kick off another round of M&A that will bring people like Jet2 and Wizz more clearly into view for the M&A businesses and ultimately will speed up the inevitable consolidation of European airlines into four large carriers. Lufthansa family, the BA family, Air France family, and Ryanair. And we intend to grow organically not by M&A. Thanks Alex. Next question please.

Our next question comes from Zavant Biff from Raymond James. Your line's now open. Please go ahead.

Hey. Good morning. Um, two questions. Um, maybe on the EU passenger rights update you mentioned. Just curious if there are any technology changes that you need to make to be able to show maybe both fares on your web page and just if you expect any kind of demand impact from having to show the highest fare. Um and then on the EU ETS changes, just curious if it was to be in place this year how much more of a step up would you see versus the 200 million you were expecting? Thanks.

Okay. On the passenger rights, I mean, at the moment, the way the legislation is framed, there's nothing we could do about it. The airlines now have to advertise a fare that includes two carry-on bags even though that's a fare that will apply to less than 50% of passengers booking on board our flights. Passengers 99.9% will still get on, go on our website, what's the cheapest airfare. They'll see, we will put lots of banners up on those airfares. So we'll advertise a fare that has two free check-in bags, but click here and you can take €60 off your fare by opting out of the checked-in bag. The idea that those morons in the EU Parliament would have Europe's airlines not advertising our lowest available airfares is just the kind of stupidity that you get in Europe. But that is what the regulation says. Of course it's being mis-sold by idiot parliamentarians out there. 'Oh, you're all allowed to bring two free carry-on bags on board a plane.' Now, two free carry-on bags do not fit on board a plane, and certainly not a 737 or an A320 and never mind the turbo props around Europe. So it's just again more idiot regulation that makes Europe less competitive. And you want an example what makes European air travel less competitive? ETS is right up there. We are the only economic block in the world where we are penalizing our own citizens with these ridiculous environmental taxes. The Americans don't do it, the Asians don't do it, the Gulf carriers don't do it, the Africans don't do it, Latin Americans don't do it, but the Europeans do. And while useless von der Leyen is wandering around the world giving speeches about making Europe more competitive, while the report continues to gather dust two years after its publication with not one recommendation implemented, the only thing they managed to do now is to consider they don't like the idea that Albania, Turkey, or Morocco and neighboring countries don't charge ETS. So they'll extend ETS to Albania, Morocco. I suspect they'll have trouble extending to Turkey, particularly with NATO. So even this mightn't get off the ground. The really way to fix both of this, the stupidity of only taxing the Europeans, if you're not going to extend those taxes to the Americans and by the way I have no difficulty with that, we should extend it to them. If you're really concerned about climate change and flying, everybody who lands and takes off in Europe should pay their fair share. But of course, the Europeans design a system that only the Europeans pay an unfair share, and the Americans, the Gulfs, and the Asians pay nothing at all. We exempt them. But if you're going to exempt them, then you should also exempt the Europeans. We believe the better way is to move everybody on to CORSIA. CORSIA is about 85% cheaper than ETS, and then at least you would be reducing the cost of air travel for European citizens, for families going on holidays in Europe, and you'd have a more level playing field in Europe. But that would confuse the European Commission who'd be too busy giving speeches about competitiveness while doing absolutely nothing, in fact they go the opposite way and make Europe less competitive with these changes. Now on what airlines can advertise at their lowest fares and the extension of ETS to neighboring countries as well, they've drawn a line within 5,000 square kilometers from Frankfurt which conveniently excludes Asia, America, everywhere else but catches poor Turkey, Albania, Morocco, and maybe Egypt as well. So congratulations, another complete cock-up by the European Union. When Mrs. von der Leyen is promising competitiveness, all we get is more idiotic regulation. Next question, please.

Thank you. Our next question comes from Harry Gow from JP Morgan. Your line's now. Please go ahead.

Yeah, morning Michael. Morning everyone. Um, first question, maybe you could just give us a little bit of an update on the CLAs with the unions, how to think about modeling that on the staff cost line and was there already some impact from that in the Q1 or it doesn't really hit the P&L staff costs yet? Um and then second question just coming back on those baggage rules coming into place from the EU on the carry-ons which you know Michael you covered quite eloquently already but just from your perspective do you expect actually any financial impact on Ryanair from that whether it's on the revenue line or more kind of operational drag from trying to sort the bags out. Thanks a lot.

Okay, I'm going to ask Eddie maybe give the update on the CLA and then Tracy, if you can, the impact of the baggage rules.

Yeah, good morning. On the CLA negotiations, we're almost through the summer now and the largest markets like Italy for example was completed earlier this year both for pilots and cabin crew. Subsequently, there are a number of other jurisdictions where their deals expired in April. So two of those were completed in Romania and also in Denmark and they extended both the pilot and cabin crew. And there are two then that are still in negotiations but are reasonably well advanced, one on the pilot side and one on the cabin crew side. One of those currently under ballot at the moment. So the vast majority of the CLAs will mature next April 2027, but there's already a number of unions that are looking at feeling out as to whether they could potentially go early and we would be minded to engage in negotiations on that. We can never say never in terms of industrial action, but we're almost into August now and we're still in negotiations for the last two. As I said, the cabin crew one has gone to ballot and the other one on the pilot side is still involved in negotiations. So the cost of those have actually come through earlier this year as well. We would have done the Spanish cabin crew as well but that was from a previous round. So I think there's a lot of realism out there at the moment. There are pretty much no opportunities in places like the Middle East. Mind you, there are a small number in Riyadh where they don't actually have aircraft. So that's particularly attractive for a small group of people who want to be paid and don't fly. But when you see the M&A activity that's going on in places like easyJet and what's likely to emerge this winter, there's probably more of a focus on people really valuing what they have here in terms of promotional opportunities and also the security of employment on a well-capitalized airline, and people know exactly what's happening in terms of deliveries that are coming over the next number of years.

Okay, thanks Eddie. Tracy, we think the new bag rules, how will it impact revenues?

So we pretty much think it's going to be revenue neutral. We've already seen it in Italy and it's had no impact. So revenue neutral.

Later in the year, what's already been done is in the costs and furthermore as we do the CLA for the remainder of the year, we will see some staff cost increase. I should say on that, there has been some delays in some of those CLAs with unions looking for backdating to the 1st of April. We will backdate nothing. Our principle is always you do the deal whenever you do the deal, we implement it, but you're not getting backdating. We closed the accounts for the first quarter, that's it. Just on the baggage rules, I think it will change probably the way we advertise. We probably won't do as much price advertising because not much point in having a now 3-hour kind of 29 seat sale. If thanks to the idiots in the European Parliament we now have to include the second checked-in bag, our 29 seat sale would now become an 89 seat sale, which doesn't sound particularly cheap by European terms. So I think you'll see us doing much more advertising not focusing on price, but finding other ways to deliver value. And the website will, all the website displays will show this mad pricing with the second carry-on bag, but with big banners you can opt out of €60 of this fare. You can feel free to opt out and actually we think more and more people will opt out of it.

More will opt out when they can save €60 and therefore we think no impact whatsoever. There will be some disappointment among consumers where in some cases they've been promised by parliamentarians or some of the more misguided consumer journalists that oh you got every allowed to bring two free bags on board. You're not, because they won't fit. There is an interesting what happens actually when you know the plane is now more than half full. Do we still advertise price? Probably the answer is probably no, because you know if in theory that the first 50% of people had booked the fare that has included the last 50% of people couldn't get on that plane with the bringing a free second carry-on bag because there isn't room for them. But detail or factual detail that has never bothered parliamentarians when they're reviewing EU261. It's always here. Just invent some new regulation that passengers don't need and not interested in, but which put up the advertised cost of air travel around Europe. Congratulations to the European Parliament. Another regulation making Europe less competitive instead of more. Julius, is there anything you want to add to that insightful?

Okay. Thanks. Thanks Julius. Next question please.

Our next question comes from Steven Furlong from Davy. Your line proceed.

Hi Michael. Maybe it's farmer just the day that's in it, but this just comments about Boeing and Airbus talking about looking by 2030 to fund a new jet program. Just I know you talked about the Max 10. Just general comment about that, and second thing then, just while I'm talking about the supply chain, maybe just talk about the engine shops and where we're at on that. Thank you.

Okay. Um touching briefly new jet programs. Look it it's all nonsense you know but that's what they talk a lot of nonsense gets talked at rubbish gets talked at air shows. Boeing and Airbus have basically they're at the foot in the foothills of delivering the A320, the A321 Neos. Boeing haven't even certified the Max 7 and the Max 10. These are dramatic technological revolutions in air travel. I mean, these are aircraft that carry 20% more seats and burn 20% less fuel. So, from a climate, environmental, operating efficiency, everything there, these are brilliant aircraft. These are the aircraft that are going to fund the next 20 years of air travel. There will not be a need for new jet program for probably another I think probably the end of the 2040s. You might be heading for 2050. And Boeing and Airbus need to actually monetize these. They put a huge amount of R&D into these. Boeing's balance sheet has suffered from the years of the Max grounding etc. They need to rebuild their balance sheets both Boeing and Airbus. The technology now I think is what we will have for the next 15 or 20 years. And the challenge is going to be the engines not the airframe. You know all this nonsense about hydrogen aircraft and electric propulsion systems and all that it is just air show rubbish. It will not be there in my lifetime and I expect to live well beyond 2050. But I think what we should be very happy with is that the next generation of aircraft the Airbus A320, the Airbus Neos and the Boeing Maxes will I think make those surviving or consolidated airlines that are still standing in the early 2030s very profitable for the next 15 or 20 years. And the last thing we need is Boeing and Airbus blowing their brains out, developing new engine, new aircraft, new jet programs. Make money for the next 15 to 20 years. Repair your balance sheets, improve the quality of production, certainly invest in improve the engine technology because as an industry, we do need to decarbonize, but we don't have any alternative to jet kerosene. So let's have more engines that carry more propulsion systems that will enable us to carry more passengers while burning less carbon. Engines are going to be a real challenge or certainly engine maintenance, engine costs are going to be a real challenge for the next five or 10 years. So, GE producing bumper results again over the weekend. Margins rising into the mid 20% in Q1 and got 2.5 billion of net profit. Engines are also going to be a real area of competitive advantage or disadvantage within the airline industry. Those airlines like Ryanair who will in the next 2 years have our own in-house MRO will have a significant advantage over the rapidly escalating cost of third party engine maintenance and third party engine spares and parts. And again it's one of the reasons why we don't need a new engine, new aircraft or new jet programs. Cost of engine maintenance and engine overall is escalating rapidly. There is a worldwide shortage of capacity in that sector partly to do with the blade repairs but just because the manufacturers are not willing to spool up MRO capacity to meet demand. They want to increase prices of that MRO capacity. We're very happy where we are. We are making significant progress on our two engine MRO shops. We've put in place supply contracts with CFM who we are essentially partnering with on our two MROs. They want us to set up these two MROs. They know we won't compete with them. We're not going to do third party engine maintenance for anybody else. But we will have a material cost advantage by doing our engine maintenance in-house in the same way that we've had a material cost advantage by doing all our airframes in-house the last 10 or 15 years. And that will continue. So I realized it is farmer this week. I realize everybody would be talking a lot of shite about new propulsion systems da yada yada. Until somebody gets the Star Trek travel and you start beaming people around the world, beaming people instead of flying them, I think we're dealing with 737 Maxes and A320 Airbus Neos for the next 10-15 years. And these are going to be transformative certainly of Ryanair's P&L in our balance sheet. Next question, please.

Our next question comes from Jared Castle from UBS. Your line's now open. Please proceed.

Morning everyone. Michael, Neil, you've hedged 15% of for your 28 now. So I gather it's not a stop process anymore for 28, or is it still a little bit of a start stop depending what fuel's doing? If you could give any color in terms of maybe the 28 view on hedging. And then another potentially contentious topic, but Michael, have you changed your views on Wi-Fi on board and Starlink given another low-cost airline, Wizz, has decided to put it on board and I guess the way they've looked at things from an economic perspective. Thanks.

Jared. We could be here for a very long time agreeing or discussing whether Wizz is a low-cost airline. You know there aren't any of the low-cost airlines in Europe. There's only Ryanair. Nevertheless, I'll come on to that. Fuel, look, fuel prices are going to be very volatile for the next I think right up to the November midterms. We are going to, my view is, we'll dip in and out. We thought when it got down, oil prices got down to $85 a barrel, it was a sensible place to start. We hoped we would see it drift further down below $80 a barrel. But obviously to no great surprise, the ceasefire broke down and fall rate into FY28 this morning or about $91, $92 a barrel. So I think we'd expect us to be opportunistic, dip in and out. I don't expect that by 28 we'll be able to get down to $67 an hour which is where we are this year. But we'll be opportunistic. I'm going to ask Tom Fowler, director of fuel and sustainability, to give you his view on that. And then just Wi-Fi on board, Jared, again, we believe Wi-Fi on board will be a significant benefit for consumers but only when it's free. And the current technology militates against it being free. You have to get it but there's a one or two percent fuel drag. It comes as no surprise to us that someone like Wizz would be offering free Wi-Fi on board. It would just be another loss-making way and part of the deal is they've given away all the revenue to the supplier of the Wi-Fi. So it's just another stupid PR kind of stunt by them. You know, but you people in drowning, people going down on the Titanic were still playing violin as well. I wouldn't, we would not be rushing to copy anything Wizz do, in fact we probably do exactly the opposite. We do think a Starlink system is very good, I also think the Vodafone system, there are a number of very good systems out there, but I would wait until the technology can fit the areas either in the nose cone, the baggage hold, or the forward galley, or the rear galley or something when there is the fuel penalty. Then I think we will be on it and we will be keeping the revenue that will arise from Wi-Fi and there will be revenue opportunity even when it's free. But you know, will we be copying some of our competitors who can't shoot or walk straight and shoot gun? No. Tom Fowler gives a view on your general outlook and um.

Yeah, look, I tend to agree with Michael. I think we'll be more opportunistic in the hedge and Jared, like, will go in and we think the price makes sense. Like when we see talks of ceasefire, I think it is going to be volatile over the next few months, either going to be a deal or it's not going to be a deal, and we just will be ready to go in and do the hedge as we see fit, as we did in the last few weeks by doing 15% of each quarter for FY28. So I think that's the way we're going to manage it for the next couple of months until we see some normality in the oil market. It's just a very volatile market at the moment.

Okay, thanks Jared. Thanks. Next question please.

Our next question comes from Manila Kayani from Bank of America. Your lines now.

Yes, I wanted to ask firstly around jet fuel supply. I think Neil was on TV saying that there's no shortage but given the de-escalation in the conflict, how were you thinking around jet fuel supply and any learnings from the last couple of months here on that? And then just wanted to go back on your comments earlier Michael around bookings. Could you give us a sense of what portion of August and September is booked right now to understand the visibility on your guidance of this modest decline year on year on fares for the second quarter and into the second half? Why are you expecting pricing to decline and price stimulation if airlines start cutting capacity? Wouldn't that be good from a pricing perspective? Thank you.

Thanks, Manila. I'm going to hand over the first section to Tom Fowler and then I'll deal with the bookies. Tom, jet fuel supplies. Do we think there's any issues?

No, look, we haven't seen any issues today. I think as Neil would have said this morning, we have good visibility now out into the end of August in most locations and in some other countries out to the end of the year. And I think that supply situation, okay, what's escalated, but supply starts to fall off towards the end of September or demand falls off towards the end of September into the winter program. So we'd be hopeful to see reserves fill back up providing it doesn't escalate any further in the Middle East, but at the moment we don't see any issues in NEA coming our way in most locations. Our usual pockets of stuff we see that hasn't impacted anywhere. And if you remember many the previous conference call, remember the vast majority of Europe's jet fuel doesn't come through the Gulf, you know that supplies to Asian, it supplies the Asian markets. All of Europe's jet fuel is coming from the Americas, West Africa, Norway, and even Russian imports as well, so see no disruption on supplies. Bookings look, August today we're at about 75% already, or 75% of our final number is already in the system. September we're running about 40%, and I expect fares will continue to decline but there will be upside. That's because we haven't yet seen what competitors are going to take out of the system in the second half of the year. If spot oil remains up at around $130 a barrel, they're going to be taking out significantly more. So I think it is unrealistic not to expect at this point in time if everybody maintains the capacity they're maintaining and we will be growing our capacity by 2% in the second half of the year, I think pricing will fall. With the one caveat that we have Easter comes into Q4 which we did, and the Q4 prior year comps are weak, so that'll give the kicker there anyway. But I think there could well be meaningful upgrades on that kind of pricing outlook depending on how much capacity is taken out of the system, depending on if an Air Baltic or a Wizz Air fail going into this winter. There would clearly be very significant alterations, and we've given you examples here, for example already talking now about a 6% capacity reduction. Some of that is long haul, some are short haul going into the winter. So it's too early to give you any definitive outlook for winter pricing except I think we should expect it to be down low to mid single digits, with the prospect as capacity comes out if oil prices remain higher for longer that pricing will move back towards flat or maybe even up a little bit to get a boost from Easter in Q4. But there's so much uncertainty over capacity. Next question, please.

Our next question from Connor Dwire from City. Your line's now open. Please go ahead.

Hey, Michael. First question is just around a bit more medium-term. Just thinking about, you know, growth this year is at 4% and obviously fares are twisted soft so far in the year and I guess the concern for investors stepping back, I think about 14 per passenger profit is that it needs pricing strength but obviously your growth going to hit about 6 to 7% by the end of the decade. Kind of thinking about like what gives you the confidence that fare is going to be strong into that while that growth is accelerating? And then the second question is primarily for Neil, just around obviously the staff costs were quite strong in the quarter just gone and you know that was somewhat helped by potentially more planes in the fleet but one of the features over the last few years has been elevated crewing ratios and I'm just wondering how much more is there to go on that over the next few years in terms of that coming down given obviously disruption costs are doing quite well. It feels that the overall system is somewhat better set up for flying. So thank you very much.

Thanks Connor. Okay, I'll take the first half. Look, medium-term, I don't see any change in our outlook, and in fact what drives that medium-term outlook is every time our competitors produce a set of half-year or quarterly numbers and their unit costs are up 8%, 10%, 12%. And this is ex-fuel, they can't control their cost. Their costs are escalating wildly and the cost gap between us, our slide four, is getting wider and wider. Now there's only one thing they can do in that: either cut capacity to get airfares up to pay for their higher unit cost, or materially take a lot of capacity out, or go bust, which I think is inevitable in the case of a couple of our competitors. And then you have the consolidation play itself out. If somebody comes over the hill and pays 5.5 billion sterling for easyJet, they're going to want a return on that and they're going to take, I think, much more sort of dramatic action or structural action. And like what you can't do with easyJet is move it out of Gatwick or move it out of Charles de Gaulle or move it out of Schiphol too, where like Stansted is full, Luton is full. So it is inevitable to my mind you're going to see very significant capacity constraint imposed on the likes of an easyJet going forward. I think they will, if you look at the two candidates looking at easyJet, they're both experienced in the aircraft leasing market. I think they would see, and there's no doubt the easyJet order book, an easyJet fleet is an attractive asset, but that asset will get monetized. And so I think what's going to happen is the biggest upside for us is not that consolidation will take place in Europe in the next four or five years, which it will, it is that our competitors are struggling with unit costs and the only way therefore they can manage those unit costs is to pass it on in the form of higher airfares. We are much better at managing unit costs, but our fares will trend upwards behind price increases by our competitors. And therefore I think that gets us over the medium term. Take this year as one of those aberrations. There's a war in the Middle East. Trump in the White House, oil, spot oil prices are all over the place, and there's a bit of consumer hesitancy that will dissipate. The Middle East will get resolved, people will go back to some degree of normality, and we will accept and we'll have taken another five or ten points of market share off everybody else in the middle of all that. And then add to that if something happens to an Air Baltic or a Wizz or the people who can't shoot straight, it'll be nothing but upside in terms of capacity restriction and better pricing in Europe. You want to take on the cost question and staff cost question?

Okay. Thanks. Yeah. Thanks Connor. Next question please.

Our next question comes from Dudley Shanley from Goodbody. Your line's now open. Please proceed.

Good morning, Michael. Just a couple of questions. First of all, on airport deals, I'm just wondering in the current environment where you're talking about capacity being cut in the winter, whether you're starting to see any airports come to you with better deals or is it just too early for that? And then the second question, just to follow up on Connor's question, are you still as confident that you can reach the 12 to 14 net income per passenger range over the medium term? Thanks.

Okay, I got maybe I'll ask Eddie to deal with the airport deals. Are they getting better? But obviously without naming names, but in general terms, what's happening.

Yeah, like I don't think you even have to wait until the winter time. I mean because we've seen a sort of a marked change over particularly over the last number of months where a lot of airports are getting very nervous about some of their anchor tenants as to what's going to happen. They can see little prospect for growth. And when things happen like when we make announcements like the closure of Berlin or the five aircraft that are going to come out this winter out of Charleroi because taxes are going up, you can see airports that the board lights up here for the commercial department with others saying well we can take those, we can do an improvement on the deal that we have, all volume related. And you can see things happening that we haven't seen for a long time where Dublin airport calls are actually coming back this year. You can see in Spain where there's growing momentum particularly at regional airports where there's nobody coming to save those airports. And those airports that are nimble and know that they have to attract traffic don't just do these, they are always back onto us about improving deals continuously, especially when they see those aircraft coming up free from other bases. So it's a different place to be where airports are competing that aggressively. I haven't seen this in a number of years.

Do you want to touch on this? There's a number of the easyJet airports have been on this recently.

Yeah. I mean like you have places that are overexposed there where you've got say Luton, you've got airports particularly if you look at this sort of in a macro level, like easyJet have been gradually retreating from southern Italy up into northern Italy and understandably a lot of the airports there are wondering when are they going to go back over the Alps or not, or are they going to stay there in some of those key airports. But also you see it as well with Wizz as well where a number of airports are where they see themselves being overexposed and that there's uncertainty, and you have Ryanair that's got the 300 aircraft delivery coming, they just have to do it on our terms.

I give you one example. In the month of June, Vienna, where we reduced our capacity by some 10% in the last two years due to high costs, and it's a mad €14 or €12 aviation tax in Austria. That €12 aviation tax raises less than €140 million for the Austrian government. Meanwhile, over the border in Slovakia, the government has eliminated the aviation tax, cuts by 50%, and Bratislava, the airport in Slovakia, has introduced very imaginative growth incentive schemes. In the month of June, Vienna's traffic fell by 6%. Bratislava traffic was up over 120% year-on-year, huge growth at low cost. And we are moving, switching aircraft around, taken away from Berlin this year. For example, we had originally planned to grow traffic in Dublin by 10%. We abandoned that plan. We moved three airports out of Dublin. Our profit this year is flattish, I think it is in Dublin, but because DAA put fees up by 10% because they're a regulated monopoly, and good if the IAA's proposal, draft proposal, which is to cut Dublin airport fees by 15% in the summer of 2027, we will charge in there with another 2 million seats. That would be 10% growth delivered just by Ryanair. This is in an airport that has a capacity cap. But while Aer Lingus are talking about reducing capacity by 6%, we'd be charging in there next year with 2 million more seats, so delivering very dramatic growth. So don't underestimate the extent to which we can churn those aircraft, where a number of our competitors are stuck at fortress airports like Gatwick or Schiphol, and all they can't because of the need, they lose the slots, they can't move aircraft out of those. Whereas most of our airports we don't have slots, we're not too worried about them, we chop and change all over the place to encourage, and that's not to penalize high cost airports but to encourage those other airports who want to grow aggressively to be aggressive with growth incentives. And turn the second part, which is again 12 to 14. Look, I've given you my view in relation to second half or answering question. I'm going to ask Tracy maybe to give you a more independent or rational view of how that will develop over the next 5 years. Tracy, do you think we'll get to 12 or 14 profit per passenger?

I think if you look at last year, I thought we were just under. And a lot of this has come down to the deals we've secured on cost. Eddie's just spoke about the airport deals that are available out there. We're ready to open our engine shops in 2029, which again will give us cost advantage, and we've dealt with CFM and cost advantage of the Max 10. So we'll have 20% more seats. So again, 20% upsell on ancillaries, revenue opportunities, but no real incremental cost. We'll have the fuel benefit of the Max 10 order, 20% more fuel efficient, and it's how we finance those aircraft. So probably finance them out of cash or say low cost opportunities to finance them if we get them, and CLA deals that are ongoing at the moment improve productivity on crewing. And I think that's all the steps are in place to actually get us there. So I think it's a cost story, cost advantage story, as well as the opportunities we'll get with capacity coming out of the market.

Yeah. And remember, we're competing across Europe mainly with legacy airlines whose unit costs are four and five times higher than ours. You have the likes of Wizz, for example, doing more sale and leaseback of their fleet, which is the only profit that they recognize in their P&L. But that means they have much more expensive aircraft and ownership costs going forward for the next number of years if they survive that long. And then I think if easyJet are the subject of M&A, there's no doubt in my mind that the financing cost of that M&A will be passed on to easyJet. They will have to get airfares up. And our strategy or our contention the last year of profit movement 12 towards 14 to 15 per passenger is that most of it will take place on the yield pricing line, and I would still be confident that would be the case, but as Tracy identified, there's also significant and widening cost advantage or advances on the cost line as well. Next question please. Thanks.

Our next question comes from Reri Telenain from LBC. Your line's now open. Please proceed.

Rory, how are you?

Yeah, good morning. Um, yeah, first question on ancillaries. Um, it's been quite flattish on a revenue capacity basis for a few quarters now. Are you seeing less take up some of your ancillary products? And then secondly, on fare trends, has there been any sort of noticeable areas of weakness across markets in H1? Thank you.

Take me on to ancillaries. Tracy, you want to take it? And Eddie maybe do the fair trends.

Yeah, so ancillary pretty much as you said flat in this quarter, but some of that is the Easter impact. So we seen significant growth in the same quarter last year we were up 3% to 2308. We're still on track to see ancillaries grow about 1 to 2% for the remainder of the year and continue to do what we said. It's about growing the total revenue now at the moment and starting to price between bags, seats, and bags. So it's optimizing the pricing dynamically across all them products that we're in control of.

Thanks, Tracy. Any fare trends? Obviously, we're not particular.

Yeah, I know. I mean, if you look at it, it is a general story of what's happening in the Gulf at the moment and consumer sentiment, you know, wrapped up in uncertainty, which we saw earlier in the booking season which was around fuel supply concerns, and then we could see the whole uncertainty as the war going on and then World Cup. But there's no real call out, except obviously you'll have places that you got a lot more capacity going into which would be into central and eastern Europe and to a lesser extent into the UK, where some of that may be driven by capacity, but there's no real call outs on a geographic basis.

Okay, thanks Eddie. Next question, please.

Our next question comes from Andrew Loenberg from Bartfield. Your line's now open. Please proceed.

Andrew, hi. My contacts classic this one. Can you tell us what's going on with the EU ownership stake and I think the ADR premium's been rising of late. So is there anything to say on the ownership and control situation? And then just another short simple question. You mentioned that the RCF is mostly undrawn which suggested it is a little bit undrawn but given that you've got pots and pots of money, why have you needed to draw it at all? Thanks.

Okay, thanks Andrew. I got Julius maybe take the ADR question. EU ownership and ADR gives you the update and maybe Neil, I go back to you. Why is the RCF mostly undrawn in the middle of the summer?

Hi Andrew. So our ownership last reported is 30%. Next report will be as at the end of September, we'll give that in November with the H1 results. We have seen Europeans buying ADRs over the last few months and this is a new development, quite welcome, and that could be behind the rising premium.

Okay, any ownership and control? No,

Not much. I mean, there will be a revision of a law in Europe that deals with ownership and control rules that is due to start later this year and it will take about two years to go to the EU parliament and the council. It is still expected that EU261, that ownership control will be dealt with in that revision. So some changes will be proposed to modernize the rules to make them more suitable to the capital markets as we know them today where European money may well be managed by someone in the United States or the United Kingdom and the other way around. But we just have to wait and see what comes out of the European Commission and then when it goes through the parliament and the council, as we've seen with EU261, anything might happen. So we just watch that closely and keep pushing for a more sensible set of rules than we have today.

Okay thanks Julius. Neil, the RCF, why is it undrawn?

And I would add to that, like, we do expect we will as we move into the September, December quarter we will draw down on the RCF. Certainly we won't need all of it, but bear in mind we think the kind of comfortable base we should be in terms of cash on the balance sheet is around 4 billion. As of today we have gross cash ourselves about 2.7, 2.8. The RCF would take us if we were to draw it all, take us up to 3.8, but there's no point. We don't need the cash during the bumper summer period when cash flow is strong. But once you get towards September, and the cash in the bank cash is the winter bookings, but you still have a run of the summer payments, we go cash negative in the September and December quarter, we will draw down the RCF. I would not want to go down to kind of 2 billion or below 2 billion gross cash, and then have something unforeseen happen. This is a capital intensive cyclical business that is subject to extreme shock such as war in the Middle East, oil prices go mad, and bookings weaken, Putin invades Ukraine, etc. So it is a sensible strategy to have a reasonably sizable RCF in place. As we've said in terms of our funding objectives for the next 12 months, it is to fund the Max 10 pre-delivery capex out of internally generated cash flow, fund the engine shops, fund the balance of the share buyback, fund there's a dividend another share in dividend coming in September, and then rebuild gross cash back up towards about 4 billion a year. That would take us at least another year. And so with our discipline with the RCF, we draw it down during the winter period when you go cash negative, pay it back as you get into the summer period when we're cash flow positive. Next question please.

Our next question comes from Mark Ze from Kepler Chevro. Your line's now open. Please go ahead.

Good morning. Thank you for taking my questions. A bit too if I may, and just maybe just drop one on the ETSs. Do you mind sharing what percentage of kind of revenues the passenger is now newly affected by the 5,000 km radius from from Pton wasn't before. The second question would be on the recent heat waves and I recognize the quarter was unusual due to Iran but do you feel the extended heat period has also weighed maybe somewhat on yields, so you needed to stimulate? What do you expect your impact from let's say more frequent heat waves and in the future say UK becomes a beach destination, what's the impact on question. Thank you.

You the first one and I invite Neil or Tracy to come in. I mean, look, the extension of the ETS would now mean we'd be charging ETS on if it didn't implemented this way. We'd be charging ETS on EU traffic to Albania, Morocco. We have very little or almost nothing going to Turkey apart from some charter stuff, but tour operator will be paying that. So it will have minor impacts on us. The fundamental impact on us and all the rest of European aviation is Europe has this mad system where we're taxing the out of European citizens traveling within Europe and then exempting all the Americans, Gulf, Asians arriving in Europe, leaving Europe, despite the fact they generate more than 50% of European aviation CO2 emissions. It is a mad, discriminatory, indefensible system and the Europeans should grow some vertebrae and either have a fair system that taxes everybody arriving in or leaving Europe or stop taxing the Europeans altogether. But expecting von der Leyen to come up with anything that would improve the competitiveness of European aviation is, you know, we'd be around for a long time. It is useless and there will be nothing as the Draghi report gathers even further dust in Europe. There's been no reform on ATC. There's been no reform on ETS. And Europe continues to be a hopelessly uncompetitive market despite the fact that air travel is one of the few areas where Europe wipes the floor with the Americans. They're ahead of us in AI. They're ahead of us in energy security areas. We wipe the floor with America when it comes to air travel. And yet Europe keeps inventing new regulations to make us either less competitive with ETS or make us look less competitive with the new mad advertising regulations. Has the heat wave had any impact on us? Not really. As someone who put his wife and children onto flights to Portugal yesterday despite a prolonged heat wave here in Ireland, the Europeans are all still going to the beaches of Portugal, Spain, Italy, Greece, etc. I don't see that changing. You hear occasional stuff that the French and all the others are going to come keep coming to Ireland to get away. No sign of it. I don't think one summer is going to make any huge difference. I don't see that it makes any significant impact at all. It allows newspapers to fill up rubbish during the quiet when the parliaments are all closed. They'll all start talking rubbish and I'm sure Sky and all the others will be doing daily features now on global climate change and all the rest of it, most of which will be nonsense. But no, we don't see any change in travel patterns. Any heat wave travel patterns? No, no, I haven't. We haven't seen anything. I mean obviously things like the World Cup and that, I think you will see a bump, we've seen that in previous tournaments as well, but I don't think there's any systemic change in booking patterns. And Julius, we're going to stay at home during the summer or keep heading to the beaches of Bulgaria, Greece, and God where else?

Keep going to Denmark.

Okay, thanks Mark. Next question, please.

Our final question comes from Axel Stafy from Morgan Stanley. Your line's now open. Please proceed.

Hi. Hey, thanks for bringing my question to your side, please. Could you maybe just reiterate how much we should look at capex for 28 and 29 considering the maintenance swap and the delivery of the Boeings. And second question on the buyback beyond the 750 million, almost done, conscious you said you wanted to focus on aircraft, buybacks, dividends, and the 4 billion gross cash level, but what kind of gearing should we look at to understand the leeway here on the potential buyback? Is it 0.5 times, one times, just to have an understanding. Thank you.

Okay, thanks. Neil, you want to take the capex and I'll do the buyback.

Thanks. On buybacks, actually look, we've been quite upfront. We said there won't be another buyback this year. We'll finish the buyback probably around the end of the AGM in September. The AGM will get approval to continue buybacks, but we will not look at another buyback, I'd say, until the spring of 2027. We do go cash negative in the September and December quarter this year. We've already paid back a bond of 1.2 billion. We'll have funded dividends of 400 million this year and we'll have completed the 750 million buyback. So shareholders have done well this year. They'll just have to wait. I think we will look at it again once we get a better handle on what the capex looks like through the middle of 2027 and that is when we'll be into the heavy engine shop capex. Then I think we will reassess. I think we will continue to do buybacks. There just won't be another. There won't be a follow-on one in 2026 when we complete the 750. You'll have to wait until either March or the full year results next year in May and then we'll have a more definitive position.

And opportunistic. Okay. Thanks, Axel. Ladies and gentlemen, thank you very much for participating in the conference call. Again, I wouldn't get too upset over the weaker near-term outlook. It is what it is. There's a war in the Middle East. We see this as a period of opportunity. We are aggressively churning airports. There are a number of airports who are very concerned out there by the financial challenges faced by some of their incumbent carriers and are doing more aggressive deals with us. There is a lot of upside in the system over the next year or two. Things like the Dublin airport cap being lifted, the IAA bringing in price reductions here at Dublin. Our pricing will be a little bit weaker than we had originally hoped this year. Fine. If it is, it is. We think the pricing will recover strongly in 2027, 2028 onwards because the underlying fundamentals is our competitors' unit costs are rising rapidly and they have no choice but to either constrain capacity or leave certain markets where they're unable to compete with us if they're going to get their airfares up. And in the meantime, all we have to do is manage nonsensical or idiotic EU regulation where they'll continue to invent new regulations that make air travel in Europe either less competitive or make it look like it's less competitive. But Ryanair will continue to find its way around those regulations and continue to take significant market share from our competitors as we move into a winter period where we expect a number of failures among those competitors. Okay. We're not obviously Q1 results. We don't do a road show. Neil is meeting some investors in London. I think he's going to Switzerland tomorrow to try and drum up some more European interest. And if anybody wants to do a follow-up meeting or come to Dublin and see us at any stage over the next couple of weeks, please feel free. Jamie, who's head of IR, would be happy to set something up. Thank you very much everybody. Look forward to seeing you in the afternoon in the future. Have a good remainder of the summer. Enjoy yourselves. God bless. Bye-bye.

Thank you for joining. That concludes today's call. You may now disconnect your line.