Ryanair Holdings Stock

Hello, and welcome, everyone, to Ryanair Holdings plc Q1 FY '27 Earnings Release. My name is Jen. I'll be the coordinator for the call today. [Operator Instructions]. 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 EUR 538 million. That's a 34% decline on last year's Q1 of EUR 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 Easter holiday fell into prior year Q4.

Q1 highlights include traffic growth on track, grew 6% to EUR 61.3 million. Revenue per passenger fell 5%. Average fares were down 6%. Ancillary revenues were flat. Unit cost rose 5%, which is an impressive number at the unhedged Q1 jet fuel prices doubled to $151 per barrel. FY '27 jet fuel remains 80% hedged at $67 a barrel. Development in recent weeks as we took advantage of some price weakness on the forward rates are now 15% hedged for the entirety of FY '28 at about $85 a barrel.

The underlying growth into the summer continues. We are operating 3 new bases this summer [indiscernible] in [ Morocco Tarana in Albania, Trapani ] and 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 and then 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 contract 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 hedge 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 FY '28, now 15% hedged at $85 a barrel.

Having repaid the EUR 1.2 billion bond in May, at the quarter end, gross cash was just over EUR 2.8 billion, again, an impressive figure after EUR 1.3 billion of debt repayments and EUR 0.5 billion in CapEx. Liquidity is further boosted by the group's EUR 1.1 billion revolving credit facility, which is mostly undrawn a sensible strategy at this time of the year when we're generally -- when cash flows are strong.

We're now 90% through the EUR 750 million share buyback program. The average price is EUR 26.35 per share. However, over the coming year, following the main repayment of our 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 EUR 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 [indiscernible] fleet, Boeing continues to expect the MAX 10 certification in late summer 2026. I spoke about 2 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 [ 415 ] 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 '30, '34, it leaves us in very good shape long term for cost efficiency or cost efficient growth and we believe profitable growth.

As I said, this summer, we're growing top line growth is strong, 3 new bases in [indiscernible], but with only 4% of FY '27 traffic growth, our scarce capacity is being switched away to those states, regions and airports, cutting aviation taxes, lowering fees to incentivize growth. The example 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 region of Spain.

Over the medium term, we expect European short-haul capacity to remain constrained until at least 2030, principally as the 2 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 of resilience will, we believe, facilitate Ryanair's sustainable, profitable growth to over 300 million passengers by 2034.

In terms of outlook, FY '27 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 to March '27 at $67 a barrel, and that helps us to offset a [ 300 million ] increase this year in EU and barrel taxes significant crew pay increases on new multiyear CLAs and higher maintenance costs. While summer '26 volumes are strong, the booking window remains closer in than last year, which further reduces visibility. Despite the recent slight uptick in volumes and less price simulation, Q2 pricing is trending modestly down year-on-year, that is a decline from where we were in the full year results, and we were hoping that Q2 pricing would be -- generally would be 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 fair decline in the second quarter. As is normal this year, with 0 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 Toran, CFO, Neil to take us through the key points of the MD&A, please.

Okay, Michael. Not a huge amount to add to what you've already said. They're other than to guide people back to the [ Fortis ] balance sheet that we have quite uniquely, 620 fully unencumbered Boeing 737 on the balance sheet, very pleased at going debt-free back in May. So a rock-solid balance sheet would put us in a very strong position over the next number of years to capitalize on every opportunity that comes to us. Hedging again, well insulated for the current financial year, 80% hedging at $67 a barrel. The key swing factor was a for the rest of the year is going to be where the 20% unhedged fuel goes.

Otherwise, unit cost strong, and I would guide people to Slide 4 in our presentation. You can see the gap between ourselves, with easyJet and everybody else is only getting wider. And I would expect that to continue to be the case, particularly as we start to take in the MAX 10 aircraft, 20% more seats, 20% more fuel efficient from next year. So good cost control in the business.

Some of that was down to having the extra aircraft. You recall, we were left short last summer, and so with better productivity as a result of having all those aircraft in there equally grew by 6%. So we were spreading the cost over more passengers. So it might tick up slightly into the second half, we're only growing by 2%, but expect very strong cost control on a full year basis. Ancillary solid grew pretty much in line with traffic. So EUR 24 per passenger delivered in the quarter, and the buyback, as Michael said, progressing very well. Thanks, Michael.

Thanks, Neil. Just before we open up to Q&A, I want to touch on a couple of sort of more recent news events, which I want to touch on.

The [ Tessalon ] aircraft, where we had the fan blade issue and depressurization event last -- or Friday, 2 days ago. we welcome the NTSB is now in charge of the investigation. They have released the aircraft to us yesterday. So we're now engaged in repairing the -- 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 [ maths ] 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 somebody -- one passenger was halfway out the window, out the window, head out the window, nobody without any window. They were all betted in. One passenger did suffer minor injuries. One pregnant lady was taken to a hospital. They both have been released. And we are actively supporting the NTSB investigation into what happened in that aircraft.

Initial indications suggest that may look foreign object damage to the engine on takeoff but we don't have that [indiscernible]. I can't say that definitively. There will be a draft report, it should be in about 28 days and then more detailed report. The U.S. NTSB has done a couple of these before the 2 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 overhaul, 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 of Transport to lift the Dublin Airport cap.

We're not -- we welcome that. It is badly needed, given that the capital is EUR 32 million in traffic at Dublin Airport this year is heading for EUR 37 million. We now call on the minister to actually lift the -- abolish the cap. We do not want to raise the EUR 40 million or EUR 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 [ IA ] provisional recommendations last week. They recommended that Dublin airport fees because from summer '27 onwards on the basis, the traffic is ahead of the DA's projections. Surprised to price their capital expenditure is way behind what we 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 churned 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 IEA recommendations are implemented in their final report, which we think is June, September, October.

Pricing this summer is softer than we had hoped for. We had hoped that the closed-in bookings would dramatically recover. Closing bookings remain strong, but they're not sufficient to make up for the amount of price discounting we've done through -- we've had to do in the first half of the year. So we think pricing will continue to be soft. If I will guide you, I'd be moving to low to mid-single-digit decline, certainly through in the second quarter. We don't see any significant falloff. 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 a consumer hesitancy, that nervousness about people traveling and booking. We think the rest of Q2 would be strong. But the second half of the year, we'll 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 faced are [ copiously ] losing money and can't compete with us at these low prices.

But nevertheless, it would be what it would 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. And so Easter will come into this year's 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 auto useless regulation out of the European Union, the European Parliament, the European Union last week are considering amendments to the ETS legislation, which will desire extend the damaging on discriminatory ETF to places like Morocco, Turkey and Greece, but not to the middle -- sorry, Morocco, Turkey and Albania which currently are exempt.

Of course, they don't have the [indiscernible] to -- it extended 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 win wage [indiscernible] auto discrimination of Europeans is to abolish ETS or at least move it into line with [ CORSIA], but no -- that would be -- that would improve the competitiveness of European aviation and the European economy and useless pondered in couldn't come up with anything that would actually improve the competitors of European -- the European economy other than giving speeches about it.

And there's also a mis-sell by the European Parliament. They are introducing new legislation, again, which makes European airlines less competitive. In order to eliminate the -- or to bring into -- they're family seating and family pricing. They now want -- or sorry, not family seating -- carry on [ bikes]. So you've had the [indiscernible] in the European apartment running around, trying to assert the right of fasteners to carry to pre carry on bikes despite that they don't buy the minor equivalent that they don't -- there isn't enough space to onboard the aircraft for them.

The solution of these geniuses is that we'll now change the advertising. So that airlines in Europe in about the next 12 to 18 months, will now have to advertise a price that includes the 2 free carry-on bags. Despite the fact that more than 50% of our passengers don't pay and don't want to bring 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 aircraft by opting out of the second or the free carry on bag.

So we have yet more [ bull sheet ] uses regulation coming out of Europe. Instead of making Europe more competitive. They now have required 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 the [indiscernible]. The parliament or over selling this as everybody would be entitled to bring 2 free carry-on bags on board, you won't. Airlines for advertising payers will have to advertise fares that include the second or the second carry-on bag.

But we believe continue to be that more than well still opt out of the pre-second carry on because they want the lowest airfares, which is we will no longer be allowed to advertise because those geniuses in the European parliament would prefer that we advertise higher fares than our availability in the system. Welcome to Europe, where things never get more competitive. They just get further more regulated and more bullish 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%. 99% of passengers wants the lowest airfare. And there's been no complaints for ambassadors who want to pay for -- if they wish to bring a second carry-on bag, they're happy to pay for it. But that wouldn't stop cloud 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 says, we have already said limited to 2 questions that we sit to this as quickly as possible. Back to the moderator, please for the Q&A.

[Operator Instructions]. Our first question today comes from Jaime Rowbotham from Deutsche Bank.

Michael, 2 for me. So just coming back on the unit revenues for the September quarter, when I read that you've seen an uptick involved and less price stimulation, I thought the guide that some affairs 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 nonrepeat 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 thought there was a comment about increased [ NG ] maintenance and a provision for midlife LEAP engine shop visits.

Okay. Thanks, Jamie. I think about the revenues at last, the Neil [indiscernible]. Couple of things on the revenue side. Yes, 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 of 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. The 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 at -- the discounting we do well than that.

We go into every month typically with about between 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 this the 60-day lease fire about a month ago, we did notice and out that part of that is also moving into the summer schedule. 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 -- or the 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 it closer to mid-single digits to low single digits. I would -- 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 U.S. has run, what say, 7 or 8 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 uptake now that it's over. People do tend to slightly postpone their [indiscernible] 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, then we just get [indiscernible]. I would not be optimistic for the second half of the year with the -- I think pricing is going to be weak. It will need more price simulation. The only 2 things that change that there are going to be meaningful capacity costs coming out of competitors. [indiscernible], for example, last week announced significant fleet reductions that they're going to take their capacity down by 6% from the winter.

You have the easyJet M&A situation going on, at the valuations that they're currently talking about there, there will have to be some meaningful I would say capacity cost in easyJet if whoever acquires those kind of valuations -- and then we are waiting to see what we'll do apart from losing money heroically. But given that neither easy yet nor ways have any are not particularly well hedged once you get into the third -- our third and fourth quarters of the year.

Again, we expect meaningful capacity cutbacks. And then you have all of Easter at the end of Q4, which will give Q4 at the back end of the year, a little bit of a lift. But I would be [indiscernible] 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% on the year.

And the pricing would be whatever the pricing will be. We are much more focused during these periods on taking out more cost the airport churn negotiations are going particularly well. We're looking forward to delivery of the MAX 10s, which now we are more optimistic about in the spring of next year, and those aircraft will give us some capacity additions in the summer '27, but on an aircraft at a 20% more season 20% less fuel. Neil, do you want to take the unit cost, please?

Jamie, I think you're happy enough with the staff and the airports and all of those costs, which performed particularly well over the first quarter, the unit cost ex fuel just up 2%. On the ownership, nothing that we didn't flag with the full year numbers. In May, we flagged at that stage that we're starting to accrue up to the utilization for the LEAP on the A200 mid-life hospital visits.

And so you're seeing the start of that coming through. Equally, just given that the NGs are a bit older, the duration between [ Jack ] is more frequent. So just reflective of that. And then, of course, we have 29 additional aircraft in the fleet this summer that we didn't have at the same time last year. Do I expect it to continue at this pace for the rest of the year? No, it will slow down a bit as we go out over the balance of the year.

Our next question comes from James Hollins from BNB Paribas.

Michael, just giving you an opportunity for another rant. Didn't have much comment on the airport cues. I think you've been quite widely published in media on that. Do think there's any sign that 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 surmise there's some weakness around that in terms of the bookings as well? And then on Neil, just to follow Jaime's question, do you -- I mean you did less than or around about 2% ex fuel cost per passenger in Q1. You say it's upticking a little bit in H2, is around 2% to 3% a sensible number for the full year?

Thanks, James. I don't think airport [ queues ] 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 controller understaffed and there are significant dues. All of the European countries have an out [indiscernible] to send the EES requirements until October, which is a more sensible time to implement them. The European mis-designed this system.

It should have been done online. When you're pricing all this online, only the Europeans would invent ship like this where you need border yards doing one thing or typing into systems and airports coming into the summer period. 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 [indiscernible] wants to get out into the third and fourth quarter? Yes, they will.

But the EES, if they really want to control this system should be moved online. The airlines have all the [ passport ] details. We have all that information. And it should be something that not beyond the wit of man or mankind. But again, it's just another example of where Europe under useless one lane can't organize a piece of in a brewery, are hopelessly inefficient. And we'll talk all day and all night about being competitive while really introducing more regulations make us less competitive. But no. So [ Air 4Q ] is our frustration. It's not something that is unheard of in Europe at this time of the year. And the alternatives meters are stuck in over for longer is going to make any difference either. Second half of the question, Neil.

Yes, James. Yes, it will tick up a bit in the second half of the year, particularly as we get towards the back end, and we're getting ready for the summer of 2028. We didn't give a guide and I said at the May numbers, it should be margin below mid-single digits. If you want to be prudent in your numbers, probably 3, 4 is a better guide than to trade. It won't be above mid-single digits.

Our next question comes from Alex Irving from Bernstein.

Two for me, please. First one is on winter capacity. How do you see that evolving for the sector and how do you see the probability that they 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 the easyJet that were to become available for sale? Would there be any elements, say, slots or an Airbus sub fleet that might be of interest to Ryanair?

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

Yes. I mean, you're looking at the moment there of -- if you look at the market that it will just be winter capacity would be about 5%. We don't think that's realistic. I think that's likely to be pared 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 -- we'll have 2 aircraft, just a few timing that will be will be in maintenance. We'll have 2 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 pared back capacity in the shoulders in November and in late January and then sort of micro manage the capacity growth in close to Christmas and the October bank holiday.

Yes. So I mean we are flexing our capacity expanded this winter. I mean, 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 is a fairly -- I think they -- the Board and management have done a good job with the valuations that they're currently on offer.

But if [indiscernible] money comes in and pay 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 certainly want to get, they'll have to be getting airfares up at their [ Fortress ] airports. If they're going to get any kind of [ BC ] or return on currently, the market cap is about EUR 5.5 billion. with will continue ways will just blow their brains out this winter.

They don't have any few 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 policy scheme of float is to keep taking aircraft and then doing sale and leasebacks and recognizing that through the P&L, the full year results, they reported a profit of EUR 1 million, but with EUR 630 million or EUR 640 million of sale leaseback profit, supplier compensation and ForEx gains.

And you can think of the underlying business, therefore, lost EUR 640 million, the full year when oil prices were $70 a barrel, got less than when oil is up at $130 or $140 a barrel. So we think it is inevitable. [ airBaltic ] are floundering around in Eastern Europe, may or may not survive. We think the government will keep the elections coming up in last year 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 [ Lufthansa ] that already own 10% of it. But 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 it would be [indiscernible] bits of easyJet came up for sale? No, it would be the simple answer. If you take the various bids easy to get aircraft orders, no, their Airbus they wouldn't be particularly cheap either, so it wouldn't be attractive to us. easyJet holidays came up for sale? No. We're not believers in that holiday model. But really, the holiday model is just stuck on to easiest fortress basis.

What else is there? I ultimately believe if easyJet is bought by -- kind of by [ VC ] entity, the only way they were financed over time will be to sell off the order books monetize the fleet, there'll be more sale on 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 based operations in Paris, [ Skip ] and Switzerland. And I think the [ Gatwick ] operation will be of great interest to the likes of [ IAG ] or [ Jet2 ] or somebody else.

I think if those get done, it will kick off another round of I think the M&A will bring people like Jet2 and with more clearly interview for the M&A businesses and ultimately, will speed up the inevitable consolidation of European airlines into to 4 large carriers, [ Los Hansa ] family, the [ BA family AirFrame ] family and Ryanair and we intend to grow organically, not by M&A.

Our next question comes from Savanthi Syth from Raymond James.

Two questions. Maybe on the EU passenger [indiscernible] rice update, you mentioned. Just curious if there are any technology changes that you kind of 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 higher fare. 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 300 million you were expecting?

Okay. On the passenger rights, I mean, like at the moment, the way the legislation is framed, there's nothing we could do about it. The airlines now have to advertise a fair that includes 2 carry-on bags. Even though that's a fare that will apply to less than 50% of passengers booking onboard 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 fair that has 2 free check-in bags. But click here and you can take EUR 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 advertising, not advertising or lowest ovarial airfares is just the kind of stupidity that you get in Europe. But that is what the regulation says. Of course, it's being missold by idiot parliamentarians are out there. You're all allowed to bring 2 [indiscernible] on board a plane now. Two free [indiscernible] do not fit on board the plane and certainly not a 737 or A320 and never mind the turbo [ props ] around Europe.

So it's just, again, more in regulation that makes Europe less competitive. And as an example of what makes European air travel less competitive. [indiscernible] 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 [indiscernible], don't do it. The Africans don't do it. Latin Americas don't do it, but the Europeans do. And while you see founders wandering around the world, giving speeches about making Europe more competitive by the drag report continues to gather just 2 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 be Turkey or Morocco and neighboring countries don't charge ETS. So they'll extend to Albania and Morocco. I suspect [ Eletrobras ] extended to Turkey, particularly with NATO. So even this mightn't get off the ground. Like the really way to fix both of this, the stupidity of only taxing the European. If you're not going to extend those taxes to the Americans and to build -- and by the way, I have no difficulty with -- we should extend it to them.

If you want to -- if you're really concerned about the climate change and flying, everybody who lands and takes off in Europe should pay their fair share. But of course, the European designer system that only the Europeans pay an unfair share and the Americans, the Gulf and the Asian pay noting at all, we exempt them. But if you're going to exempt them, then you should also extend the Europeans. We believe the better way is to move everybody onto [ CORSIA]. [indiscernible] is about 85% cheaper than and then at least you would be reducing the cost of air travel for Europe citizens, for families going on holidays in Europe, and you have a more level playing field in Europe. But that would confuse the European Commission who would be too busy given speeches about competitiveness while doing absolutely -- in fact, they go the opposite way and make Europe less competitive with these bulls*** changes on now what airlines can advertise at their lowest fares and the bulls*** extension of ETFs to neighboring countries as well.

They've drawn a line well in 5,000 square [indiscernible] -- 1,000 kilometers from Frankfurt which conveniently excludes Asia, America, everywhere [indiscernible], Turkey, Albania, Morocco and maybe Egypt as well. So congratulations. Another complete f*** up by the European Union when Mr. [indiscernible] is promising competitiveness, all we get is more idiot regulation.

Our next question comes from Harry Gowers from JPMorgan.

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?

And then second question, just coming back on those baggage rules coming into place from the EU and the carry on, which 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.

Okay. I'm going to ask Eddie maybe give you update on the CLA and then Tracey McCann will give the impact of the baggage rules.

Yes. Yes, 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 and subsequently, the other -- there's a number of other jurisdictions where their deals expired in April. So two of those were completed with -- in Romania and also in Denmark, and they extended both the pilots and cabin crew. And there are 2 then that are still in negotiations, but are reasonably well advanced, one on the pilot side and one on the unions are one on the cabin crew side, one of those currently under ballot at the moment.

So -- and there are other -- the vast majority of the CLAs will mature next April, April '27, but there's already a number of unions that are looking at filling out as to whether they could potentially go early, and we would be minded to engage in negotiations on that. So it's gone -- we -- you can never say never in terms of industrial action. But I mean, like we're almost into August and we're still in negotiations for the last 2. And as I said, the cabin crew one has got that one.

I don't want to comment on the individual when has gone to pallet and the other one is still on the pilot side is still involved in negotiations. And so we will -- so the cost of bills have actually come through. And earlier this year as well, we would have done the Spanish cabin crew as well, but that was from a previous round as well. So I think there's a lot of realism out there as well at the moment, like there are pretty much no opportunities in places like the Middle East.

Mind you, they are a small number in Riyadh where they don't actually have aircraft. So that's particularly attractive for us. Well, people who want to be paid and don't fly. And so -- but there is -- when you see the M&A activity that's going on in places like easyJet as well 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 -- sort of the security of employment on a well-capitalized airline and people know exactly what's happened in terms of deliveries that are coming over the next number of years.

Okay. Thanks, Eddie. Tracey, we think the new baggage rules, how will it impact revenues?

So we pretty much think it's going to be revenue news, what we've already seen in Italy and the [indiscernible], revenue neutral for us. And just to add, probably on Eddie, on the staff costs, as Neil said earlier, we will see some of the CLAs coming through 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, that we are -- some of the discussions, there has been some delays in some of those [indiscernible] with us looking for [indiscernible] the first of April, we will back take nothing. Our principle is always, you do the deal, whenever you do the deal, we'll implement it, but you're not getting backdating. We closed the accounts for the first quarter that date.

Just on the baggage rule, I think it will change probably the way we advertise. We probably won't do as much price advertising. There's not much point in having a -- what would now be our kind of EUR 29 seat sale if thanks to the idiots in the European parliament, we now have to include the second check-in bag. Our EUR 29 seat sale would now become an EUR 89 seat sale, which doesn't sound particularly cheap by in European terms.

So I think you'll see us doing much more advertising, not focusing on price, but ending 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 EUR 60 of this fare and you can say you -- feel free to opt out. Actually, we think more and more people opt out of it. But the same numbers are more will opt out where they think they can save EUR 60. And therefore, we think there are no impact whatsoever.

There will be some disappointment among consumers where, in some cases, they've been promised by parent areas are some of the more misguided consumer journalists that, oh, you're going to [indiscernible] and allow to bring 2 free bags on board, you're not because they won't fit. There is an interesting what happened actually when the plane is now more than half full. Do we still advertise price -- the answer is probably no because if the first 50% of people had booked the fare that has included the last 50% people couldn't get on that plan with the -- bringing a free second carry on that because there isn't room for them.

But detail or factual detail that has never bothered parliament when they're reviewing [ EU261 ]. It's always here just [indiscernible] of new bulls*** regulation that passengers don't need and not interested in, but we put up the advertising cost of airtime around Europe. Congratulations to the European parliament. Another f***** up regulation, making Europe less competitive instead of more. Juliusz, do you want to add to that, how many insightful [indiscernible] of our frames and the colleagues in Europe in the parliament commission?

It's hard to top this. But I think that advertising to prices is going to become the norm in the industry. So I think as we go through the booking process and you see your flight I think you'll be shown 2 prices: one with the bank, the other one without the bank and then when the airline sales of the space in the overhead lockers on a particular flight, it's going to have to be the lowest fare count to be advertised. So there will be no impact at [indiscernible].

Our next question comes from Stephen Furlong from Davy.

Michael, maybe it's [indiscernible] just the day that's in it, but just comments about Boeing and [ Airbus ] talking about looking by 2030 to fund the new Jet program. Just -- I know you talked about the MAX 10, just general comments about that? Or -- 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.

Okay. Touching renew jet program, look, it's all nonsense, but that's what they talk a lot of nonsense get talked as rubbish get to [indiscernible]. Boeing and Airbus have -- basically, they're in the forte of delivering the A3, the 2321neos, 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 than born 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 [indiscernible] 2050. 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 et cetera, et cetera. They need to rebuild their balance sheet, 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 engine, not the airframe.

So all these [indiscernible] about hydrogen aircraft and electric [ booking ] propulsion systems and all that. He's just airshow 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 -- the Airbus neo and the Boeing MAXs will, I think, make to surviving our consolidated airlines that are still standing in the early 2030, it's 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 sheet, improve the quality of production, certainly invested and improve the engine technology because as an industry, we do need to decarbonize. But we don't have any alternative to jet kerosene.

So -- but let's have more engines that carry more propulsion systems will enable us to carry more [indiscernible] while burning less carbon. Engines are going to be a real challenge or certain engine maintenance engine cost going to be a real challenge for the next 5 or 10 years. So GE producing bumper results again over the weekend, margins rising into the mid-20% in Q1, about 2.5 billion of net profit, net profit.

Engines are also going to be a real area of competitive advantage or disadvantage in the airline industry. Those airlines like Ryanair, who will in the next 2 years, have our own in-house MROs 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, our -- new jet programs.

Engine -- 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 [ Brand & Whitney ] repairs, but just because the -- both 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 with where we are. We are making significant progress on our 2 engine MRO shops. We've put in place a supply contract with [ CF ] who we are essentially partnering with on our 2 MROs, they want us to set up these 2 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 agent maintenance in-house in the same way that we've had a material constant advantage by doing all our airframes in-house for the last 10 or 15 years, and that will continue.

So I realize it is [ farmer ] this week. I realize everybody will be talking a lot s**** about new propulsion systems [indiscernible] until somebody gets a [indiscernible] travel and you start beaming people around the world beaming people instead of flying them. I think we're dealing with 737 MAX at A3 or Airbus neo for the next 10 to 15 years. And these are going to have -- be transformative certainly of Ryanair's P&L and our balance sheet. Next question, please.

Our next question comes from Jarrod Castle from UBS.

Michael, Neil, you've hedged 15% of full year '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 is 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 styling given another low-cost airline was -- has decided to put it on board and I guess, the way they've looked at things from an economic perspective.

Jarrod, we could be here for a very long time agreeing or discussing whether [indiscernible] a low-cost airline. There aren't new low-cost airlines in Europe, there's only Ryanair. Never that 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 risk got down to $85 a barrel. It's 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 forward rates into FY '28 this morning are above about $92 a barrel. So I think would expect us to be opportunistic, dip in and out. I don't expect in FY '28, we'll be able to get to $67 a barrel, which where we are this year, but we'll be opportunistic.

I'm going to ask Tom Fowler, just to give you a Director of fuel and sustainability, give you some his view on that. And then just WiFi on board, Jarrod, again, we believe WiFi on board will be a significant benefit for consumers, but only when it's free. And we are -- the current technology militates against it being free you have to get but there's a 1% or 2% fuel drag. It comes as no surprise to us that someone like [indiscernible] would be offering free Wi-Fi on board. It is just the loss making -- right way, and part of the deal is they've given away all the revenue to the supplier of the WiFi.

So it's just another stupid PR kind of stunt to them, but people in -- drowning people going down on the f****** Titanic were still playing violin as well. I wouldn't -- we would not be rushing to copy anything with [indiscernible]. In fact, we probably do exactly the opposite. We do think starting 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 they can fit the areas either in the nose cone, the baggage hold or the forward galley or the rear galley or something, where there is the dual penalty, then I think we will be honest -- and we will be keeping the revenue that will -- or the revenue opportunity will arise from WiFi. And there will be revenue opportunities even when it's free -- but would we be copying some of our competitors who can't shoot walks, trade and [indiscernible], no. Thomas, fuel gives a view on your general outlook and --

Yes. Look, [indiscernible] molecule like I think we'll be more opportunistic in the hedge and [indiscernible] will go in and we think the product made sense like when we see talk to ceasefire, I think it is going to be volatile over the next few months. They are going to be a dealer, they're not going to be a deal, and we just will be ready to go in and do the hedge as we see as we did in the last few weeks by doing 15% of each quarter for FY '28. So I think that's the way we're going to manage it for the next couple of months that we see some normality in the oil market. It's just a very volatile market at the moment.

Okay. [indiscernible], do you want to add anything on that?

No. Probably the only other thing is to say we have hedged some of the OpEx for it to cover ourselves as well. So we have about 18% of FY '28 OpEx hedged as well at [ 120 ].

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

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 reescalation in the conflict, how are 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 proportion of August and September is booked right now to understand the visibility on your guidance of this modest decline year-on-year on fairs 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?

Thanks, Muneeba. I'm going to hand over the first section to Tom Fowler and then I'll deal with the bookings. Tom, Jet fuel supply, do we think there's any issues?

No. Look, we haven't seen any issues today. I think as Neil what I said this morning, like we have good visibility now out into the end of August in most locations and in some of our countries out to the end of the year. And I think that [indiscernible] situation, okay, we escalated for supply starts to fall off towards the end of September.

Our demand that follow towards the end of September to the winter program. So would 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 maybe coming our way in most patients are usual pockets of stuff we see that has an impact anywhere.

And if you remember, I mean, in the previous conference call, remember, the vast majority of Europe's jet fuel doesn't come through the Gulf. That supplies Asian -- the Asian market, 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%. 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 give and Q4 prior year comps are weak. So that can 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 an [indiscernible] with their fail going into this winter, there would clearly be very significant alternative and we give you that [indiscernible], for example, are already talking now about a 6% capacity reduction. Some of that is long-haul, some of it is short-haul going into the winter.

So it's too early to give you any definitive outlook, [indiscernible] 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, certainly and get a boost from Easter in Q4. But there's too much uncertainty over capacity. Next question.

Our next question is from Conor Dwyer from Citi.

Michael, first question is just around a bit more medium term. Just thinking about growth this year is at 4%, and obviously fairs [indiscernible] soft so far in the year. And I guess the concern for investors stepping back and thinking about EUR 14 per passenger, net profit is that it needs pricing strength. But obviously, your growth going to hit about 6% to 7% for the end of the decade. I'm kind of thinking about like what gives you the confidence that there is going be strong into that while that growth is accelerating?

And then the second question is primarily for Neil, just around -- obviously, the staff unit costs were quite strong in the quarter just gone. And that was somewhat helped by potentially more claims in the fleet. But one of the features over the last few years has been elevated [indiscernible] ratios. 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 obviously doing quite well. It feels like the overall system is somewhat better set up for flying.

Thanks, Conor. 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 the ex fuel. They can't control their costs. Their costs are escalating wildly. And the GAAP cost gap between us or Slide 4 is getting wider and wider.

Now there's only one thing they can do in that is a, coat capacity to get airfares up to pay for the higher unit costs or b, materially take a lot of capacity out or go bust, which I think is inevitable in a case of a couple of our competitors. And then you have the consolidation plays itself out. If somebody comes over the hail and pay EUR 5.5 billion for easyJet they're going to want to return on that, and they're going to take, I think, much more sort of dramatic action or structural action on.

And what you can do with easyJet is move it out of [indiscernible] or move it out to charts the goal or move it out of skip to where, like [indiscernible] said full loot and full. So it is inevitable to my mind, you're going to see very significant capacity constraints imposed on the likes of an east jet going forward, I think they will -- if you look at the 2 candidates looking at , they're both experienced in the aircraft [indiscernible] market.

I think they will see -- and there's no doubt the easyJet order book and the 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 on our is not that consolidation will take place in Europe, in the next 4, 5 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 to pass it on the form of higher airfares. We are much better 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 as award, the Middle East, Trump in the White House, the spot oil prices are 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 -- we'll take another 5 or 10 points of market share of everybody else in the middle of all of that. And then add to that, there's something else to an [ Air Baltic], rose the people who can't shoot straight -- it will be nothing but upside in terms of capacity restriction and better pricing in Europe. Neil, do you want to take on the cost question or the staff cost question, Conor?

Yes. Sure, Conor. Firstly, as you rightly said, we were carrying too many staff last summer as a result of being left or 25 aircraft. So we're getting better productivity this year from those staff now that we've got the full complement of the MAX A 200 in the fleet. We have front-loaded some of the pay in the CLAs this year, so it will be slower into next year. Importantly, with the MAX 10 starting to come, that will obviously drive even more productivity with 20% more passengers on board.

But in the near term, as we flagged some time ago, we will continue to take in high levels of cadets and apprentice engineers so that we've spooled up when peak delivery start to come along, will be self-sufficient for first officers and captains. But I don't expect anything much beyond that. So we'll be slightly elevated on the crewing ratios. ATC continues to be a problem, so you wouldn't want to cut back too severely heading forward. But I think staff costs are relatively under control and the productivity from the MAX 10 is going to a big impact.

Next question comes from Dudley Shanley from Goodbody.

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 in case in the winter. 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 Conor's question. Are you still confident that you can reach the EUR 12 to EUR 14 net income per passenger range over the medium term?

Okay. Maybe I'll ask Eddie to -- the airport deals are getting better, but obviously, without naming names, but in general terms, what's happening?

Look Dudley, don't even have to wait until the winter time, I mean, because seen sort of a mark change over -- particularly over the last number of months where a lot airports are getting very nervous about some of their anchor tenants as to what's going to happen. They can see little prospects, they can see a little prospect for growth. And when things happen, like when we make an answer like the closure of Berlin or the 5 aircraft that are going to come out this winter out of Charlotte because taxes are going up.

You can see -- you can see airports that the Board lights up here for the commercial department with others saying, but 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 costs are actually going 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 -- are always back on to us about improving deals continuously, especially when they see those aircraft when they see aircraft coming up free from other basis. So it's a different place to be where airports are competing that aggressively. I haven't seen it in a number of years.

[indiscernible], just on the -- there's a number of the easyJet airports have been [indiscernible] recently?

Yes. I mean like you have places are overexposed there where you've got, say, [indiscernible], you've got airports, particularly if you -- if you look at this sort of in a macro level, like easyJet have been gradually retreating from so they're initially up into Northern Italy and understandably a lot of the airports there are wondering when they're 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 as well with [ Wiz ] 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'll give you one example. In the month of June, Vienna, where we reduced our capacity by some 10% in the last 2 years due to high cost and there's a mad EUR 12 aviation tax in Austria, that EUR 12 aviation tax rate is less than EUR 140 million for the Austrian government. Meanwhile, over the border in Slovakia, the government has eliminated the aviation tax [indiscernible] by 50% and [indiscernible], the [indiscernible] airport in Slovakia has introduced very main growth in center schemes.

In the month of June, Vienna's traffic fell by 6%. [indiscernible] 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%. And we abandoned that plan. We moved 3 aircraft out Dublin, our tacket this year is flattish, I think, in Dublin. But because [indiscernible] put fees up by 10% because they are regulated monopoly and good. If the IAAs proposed draft proposal, which is to cut an airport fees by 15% in December '27, we will charge in there with another 2 million seats.

That would be 10% growth delivered just by Ryanair. I mean 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 I don't underestimate the extent to which we can churn those aircraft where a number of our competitors are still at ports -- airports like [indiscernible] or shares to go, they can't -- because of they need, they lose the slot, they can't kind of move their [indiscernible] out of those.

Whereas most of our airports, we don't have slots -- are not too worried about them. We comp and churn all over the place. To encourage, and that's not to kind of penalize high-cost airports. But it's to encourage those other airports who want to grow aggressively, to be aggressive with growth incentives.

And turning to the second part, which is again 12 to 14. Look, I've given you my view in related to second half or answer's question. I'm going to ask Tracey maybe to give you a more independent or rational view of how we develop over the next 5 years. Tracey, using we'll get to EUR 12 or EUR 14 profit [indiscernible].

I think if you look at last year, as poster just under 11%. And a lot of this comes down to the deals we've secured on costs. Eddie 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 on [indiscernible] and come on to the MAX 10. So we'll have 20% more seats. So again, 20% upsell on ancillaries, revenue opportunities with 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 some aircraft, we'll probably finance them out of cash or take low cost opportunities to finance them if we get them. And CLA deals that are ongoing at the moment, improved 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.

And remember, we're competing across Europe mainly with legacy airlines whose unit costs are 4 and 5x higher than ours. You have the light of wins, for example, doing more sale and leaseback of their fleet, which is the only profit that they recognized in their P&L. But that means they have much more expensive aircraft and ownership cost going forward for the next number of years if they survive that long.

And then I think if the easyJet are the subject of M&A, there is 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 kind of contention in the last year of profit movement trial towards EUR 14 to EUR 15 a 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 Tracey identified, there's also significant and widening cost advances on the cost line as well.

Our next question comes from Ruairi Cullinane from RBC.

Your first question on ancillaries, has been quite flattish on a revenue per passenger basis for a few quarters. Now are you seeing less take up some of your ancillary products? And then secondly, on fair trends, has there been any sort of notable areas of weakness across markets in H1?

Maybe I'll do ancillaries, Tracey, do you want to take it out [ 80 ], maybe do the fair trend.

Yes. So until we pretty much Jim, as we said, or flat in this quarter, but some of that is the Easter impact. So we've seen significant growth in the same quarter last year, we were up 3% to 23 [indiscernible]. 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 bag seats and bags so it's optimizing the price and dynamically across all the products that we're in control of.

Thanks, Tracey. Eddie, fair trends, obviously, we're not any particular.

Yes. I mean, the only -- I mean, if you look at it, I mean, there is a general story of I suppose the -- and what's happening in the [ growth ] at the moment and consumer sort of sentiment and certain uncertainty, which we saw earlier in the sort of -- in the booking season, which was around fuel supply concerns and then we could see the whole uncertainty as the war going on and the World Cup in that. But there's no real call-out except like obviously, you'll have places that you've got a lot more capacity going into, which would be into Central and Eastern Europe and, to a lesser extent, into the U.K. where some of that may be driven by capacity. But there's a real callout on a geographic basis.

Our next question comes from Andrew Lobbenberg from Barclays.

Andrew, classical this one. Can you tell us what's going on with the EU ownership stake and I think the ADR premium 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 suggested it's a little bit undrawn, but given that you've got parts and parts of money, why do you need to draw it at all?

Okay. Thanks, Andrew. I got to Juliusz, maybe take the ADR question, EU ownership and Eddie will give you the update and then maybe, Neil, I'll go back to you, why is the RCF mostly undrawn in the middle of the summer.

Andrew. So our ownership last reported 30% next report will be as of -- 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. Anything else on ownership and control? No?

Not much. I mean there will be a revision of the law in Europe that deals with ownership and control rules that is due to start later this year and it will take about 2 years to go through the EU Parliament and the council. It is still expected that EU261 that ownership and control will be dealt with in that revision so that some changes will be proposed to modernize the rules to make 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 to the Parliament and Council as we've seen with EU261, anything might happen. So we just watch that closely keep pushing for more sensible set of rules that we have today.

Okay. Thanks, Juliusz. Neil, the RCF, why is it undrawn?

Andrew. Yes, we have about EUR 40 million undrawn under the -- or sorry, drawn under the RCF we have a big pool of banks, and we like to let them leave a little bit of money on the table just to feel involved. No other reason that we could have paid it off. We decided to leave that sliver there for the banks.

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. Now certainly, we won't need all of it. But bear in mind, we think the kind of contract base we should be in terms of cash on the balance sheet is around EUR 4 billion.

As of today, we have gross cash ourselves about EUR 2.7 billion, EUR 2.8 billion. The RCF would take us, if we were to draw it all then we take it up to 3.8%. But there's no -- we don't need the cash during the bumper summer period when cash flow is strong. But once you get towards September, and your -- the cash -- the [indiscernible] cash is the winter bookings, but you still have a ramp up the summer payments. We go cash negative in the September and December quarter.

We will draw down the RCF. I would not want us to go down to kind of 2 billion or below 2 billion gross cash and then have something on what happened. This is a capital-intensive cyclical business that is subject to extreme shocks such as war in the Middle East or oil prices go mad and bookings weakened, Putin in [indiscernible] Ukraine, COVID, yada, yada app. So it is a sensible strategy. I think to have a reasonably sizable RCF there in place.

As we've said in terms of our funding objectives for the next 12 months, it is to fund the MAX 10, the PDR CapEx out of internally generated cash flow, fund the engine shop, fund the balance of the share buyback fund. There's a dividend another share dividend coming in September and then rebuild gross cash back up towards about EUR 4 billion a year. That will take us at least another year. And so -- but our distant the RCF is draw it down during the winter period where you go cash negative, pay it back, I should get into the summer period when we're cash flow positive. Next question, please.

Our next question comes from Mark Zack from Kepler Cheuvreux.

Got 2, if I may, and just maybe just short one on the ETS. Do you mind sharing what percentage of kind of revenues, the passenger is now newly affected by the 5,000 kilometer radius from [indiscernible] wasn't before. The second question would be on the recent heat wave. [indiscernible], the quarter was unusual due to Iran. But do you feel the extended heat period has also weighed maybe somewhat on maybe yields, so you need to stimulate? And what do you expect your impact from, let's say, more of more liter heat waves in the future, say, U.K. becomes a beach destination. What's the impact on the operations?

I give the first one, invitation. I mean, look, the extension [indiscernible] I mean we'd be charging ETS on -- if implemented this way. We'll be charging ETFs on EU traffic Albania and Morocco. We have very little almost nothing going to Turkey apart where there's some charge charter stuff, but the tour operator will be paying that.

So it would have a minor impact 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 sheet out of European citizens starting within Europe and then exempting all the Americans Gulf Asians arriving in Europe, leaving Europe, despite that they generate more than 50% of European aviation CO2 emissions.

It is a mag discriminatory indefensible system. And the European should grow some vertebra and either fair system, the taxes everybody arriving in or leaving Europe or stop taxing the Europeans altogether. But expecting bonded to come up with anything that would improve the competitors of European aviation is -- we've been around for a long time. She's uses, and there will be no -- as the drag he report gathers even further dose in Europe, there's been no reform on ATC. There's been no reform on ETS and because Europe continues to be obviously on competitive market.

Despite about that air travel is one of the few areas where Europe wipes the flow of the Americans. They're ahead of us in AI. They're ahead of us in energy security area. 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 heatwave had any impact on us? Not really. As someone who put his wife and children on top sites to Portugal yesterday, despite a prolonged heat wave here in Ireland, there -- the Europeans are all still going to the beaches of Portugal, Spain, Italy, Greece, et cetera. I don't see that changing. Your occasional stuff that the French and all the others are going to keep coming to Ireland to get away, no sign of it.

I don't think -- look, one summer is not going to make any huge difference. I don't see that makes any significant impact at all. It allows newspapers to fill up rubbish during this kind of -- when the parliaments are all closed, they all are pricing s****. And I'm sure [ Sky ] in all those we'll be doing features, JV features now on global climate change and all the rest of it, most of which will be -- but no, we don't see any change in travel patterns. Eddie, any heatwave wave trouble patterns?

No, we haven't seen anything. I mean, like obviously, things like the World Cup and that I think you will see some see a bump bar right? We've seen that in previous tournaments as well. I don't think there's any systemic change in booking.

When Juliusz, the [indiscernible], we're going to stay at home during the summer or keep heading for the beach of Bulgaria, Greece and [indiscernible].

[indiscernible] go into Denmark.

Our final question comes from Axel Stasse from Morgan Stanley.

Two on my side, please. Could you maybe just iterate how much we should look at CapEx for '28 and '29, considering the maintenance stop and the delivery of the billings. And second question, on the buyback beyond the EUR 750 million, almost done. [indiscernible], you said you wanted to focus on aircraft CapEx, divis 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 open 5x, 1x, just to have an understanding.

Okay. Neil, do you want to take the CapEx and I'll do the buyback?

Yes, sure. No problem. A CapEx, current year FY '27, unchanged from what we previously guided of somewhere close to EUR 2 billion. If I look into the next year, we're probably somewhere in the range of EUR 2.7 billion to EUR 3 billion, and I wouldn't go beyond that in any kind of guidance at this stage.

Thanks, Neil. On buybacks, actually, look, we've been quite upfront. We said there will be another buyback this year. We'll finish the buyback probably around the time 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, December quarter this year. We've already paid back a bond of EUR 1.2 billion. We have funded dividends of EUR 400 million this year, and we will have completed the EUR 750 billion 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 would be -- I think we will continue to do buybacks. There just won't be another -- there won't be a follow-on -- there won't be a follow on one this 2026 when we complete the EUR 750 million. You'll have to wait, I think, until either March or the full year results next year in May, and then we'll have a more definitive position.

Can I just add to that, Michael, just on the specific gearing question, look, we keep it very simple. We're going to build the cash back up towards EUR 4 billion. Then to the extent the surplus cash, that will likely go back to the shareholders. Whether we take debt on or not will principally be driven by the cost of that debt. And we don't have any targets one way or another as to whether it's 2, 3, 4, 5 or 6x gearing on the balance sheet. We'll keep it very simple.

And opportunistic. Okay. Thanks, Axel. Ladies and gentlemen, thank you very much for participating in the conference call. Again, I think -- I wouldn't get too upset over the weaker -- the weak 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 airport -- 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 2, things like the Dublin Airport capping lifted, the IAA bringing in price reductions here at Dublin. Pricing will be a little bit weaker than we had originally hoped this year. Fine, if it is, it is, we think the prices will recover strongly in '27, '28 onwards, because the underlying [ fundamentals ] in our competitors' unit costs are rising rapidly, and they have no choice but to the 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, what we have to do then is manage and nonsensical idiotic EU regulation, where they'll continue to invent new regulations that make aircraft in Europe by the less competitive or make it look like it's best 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 in Q1, but 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 us and see us at any stage over the next couple of weeks, please feel free Jamie, who's Head of IR, be happy to set something up.

Thank you very much, everybody. We look forward to seeing you in now to the future. Have a good remaining summer. Enjoy yourselves. God bless. Bye-bye.

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

Hello, and welcome, everyone, to the Ryanair Holdings plc FY '26 Earnings Release. My name is Becky, and I will be coordinating your call today.

[Operator Instructions]

I will now hand you over to Michael O'Leary, Group CEO of Ryanair Holdings to begin. Michael, please go ahead when you're ready.

Okay. Good morning, ladies and gentlemen. Welcome to the full year results analyst conference and joined by all the team on -- I'm speaking to you from New York. I'm joined by all the team from London, Dublin and various other sites around Europe. As you've seen earlier this morning, we reported a record full year profit of EUR 2.26 billion, which is a rise of 40% over our prior year profit after tax of EUR 1.6 billion. The highlights for traffic growth of 4% to a new record figure of EUR 208.4 million. That was achieved despite delivery delays on in Boeing game changer aircraft during the year, incredible cost disciplined unit costs rose only 1% for the -- looking forward for the next 12 months, we've covered 80% of our jet fuel at about $67 per barrel, $668 per metric ton.

We took delivering at the last 29 of our 210 game changer order. So we have 647 aircraft in the fleet at the 31st of March, and we declared a final dividend of EUR 0.195 per share is payable in September, subject to AGM approval. Obviously, we've had a record year, and we're delighted with these results, but they've been overtaken obviously, by the conflict in the Middle East. Like everybody else, we don't know when the street of or moves will reopen. But Europe remains very well supplied by jet fuel and , almost all of Europe's jet fuel is now sourced from West Africa, the Americas and Norway. Our very conservative jet fuel hedging strategy, as I said, under which 80% for the next 12 months is hedged at $67 per barrel out to April 2027, will insulate the Ryanair Group earnings from the current very volatile oil market and will significantly widen the cost advanced we hold overall EU competitors for the remainder of FY 2027. As you will see, the balance sheet remains strong with a BBB+ credit rating, both Fitch and S&P, we have an unencumbered Boeing 737 fleet of 628 aircraft -- 20 aircraft.

At the 31st of March, gross cash was EUR 3.6 billion and this was after spending EUR 1.9 billion on CapEx, EUR 1.2 billion on debt repayments and over EUR 900 million in shareholder distributions over the last 12 months. Net cash was EUR 2.1 billion at year-end, which enables the group to repay our very last EUR 1.2 billion bond next week before the end of May, which leaves our group effectively debt-free, which is a stunning achievement by any nongovernment-owned airline. During FY '26, we purchased and canceled another 2% of our issued share capital. We've retired 38% of Ryanair's [indiscernible] share capital since 2008. The final dividend of $0.195 is payable in September subject to AGM approval. Our priorities with our cash over the next 12 months are obviously, firstly, to fund the final bond repayment in May then to fund our MAX 10 aircraft topics over the next 12 months, to pay down dividends and continue to fund the balance of our EUR 750 million buyback program has favorable lower prices recently while rebuilding internal cash flows are -- the group's cash back to EUR 4 billion.

I'm going to talk briefly on the fees growth. As we said at the year-end, we have 647 aircraft which includes 210 game changes, all of which are debt free and unencumbered. Boeing are making very positive noises about the MAX 10 certification, which they now expect to take place at the end of Q3, early Q4 2026. They've also confirmed in writing that they expect to deliver Ryanair's first 15 MAX 10 in the spring of 2027, in line with the original contract dates. Once we take 300 of these fuel-efficient aircraft, all of which are due to deliver by March 2034, they will transform the economics, the operating cost of Ryanair, let's say, enable us to offer 20% more seats to the market, but a burn 20% less sealift fuel per flight. At this summer, Ryanair is 130 new routes on sale. They include 3 new bases in Rabat, Morocco, Tarana in Albania, and [ Trapani ] and Southern Italy. Our scarce FY '27 capacity growth or summer [indiscernible] capacity growth is allocated to those regions and airports who are actively cutting aviation taxes like Sweden, Slovakia, Albania and regional Italy and are also where airports are incentivizing traffic growth. And we're switching our scarce capacity away from uncompetitive high-tax markets like Austria, Belgium, Germany and regional Spain. And the Board and myself commenced discussions on an extension of my employment contract, which currently runs to 2028 until April 2032. We've recently concluded an outlined agreement -- and the Board will commence engagement with our largest institutional shareholders in the coming days. The key feature of the contract extension is [indiscernible] will have purchase options over 10 million shares but these will only vest if we achieve a very ambitious profit after tax and share price growth targets over the next 6 years, i.e., before 2030. If we do, we will create very substantial -- a very substantial capital value for all shareholders.

I want to turn then briefly to the outlook. We expect full year FY '27 traffic to grow about 4% to 216 million passengers. The key feature of the next 12 months is that 80% of our trade jet fuel has been hedged at $67 per barrel which is lower than last year's $76 per barrel price. However, the price of our own hedged 20% has spiked due to the Middle East conflict. Our EU and viral taxes are also expected to rise by a further EUR 300 million this year to EUR 1.4 billion, which makes EU air travel even less competitive than it was before. Ryanair, like all of the European airlines are calling for either the abolition of ETS or bringing ETS taxes in line with [ CORSIA ] rates which is what the non-EU airlines pay. It makes no sense that we take ourselves that European airlines and passengers are taxed so in -- so discriminately, compared to our non-EU competitors. Our maintenance costs will rise modestly due to an aging NG fleet and mid-life hospital business on the LEAP engines, there would also be some significant crude pay increases agreed this year. We've recently completed 5-year pay deals with our Italian pilots and cabin crew and we're actually in active negotiations with a wide number of other national pilots and cabin crew unions, and we expect to agree follow-on deals with those over the coming weeks and months.

If the unhedged fuel prices remain at current elevated levels throughout the remainder of FY '27, then unit cost could rise in Ryanair by a mid-single-digit percentage. And that would still be -- demonstrate incredible unit cost discipline. To date, our summer 26 travel demand remains robust, although bookings since the war in the Middle East, have are closer in than they were last year, which reduced its visibility. Pricing in recent weeks has eased somewhat in response to economic uncertainty, caused by higher oil prices, far too much media attention about the fear of fuel shortage, which we believe does not exist and the risk of inflation adversely impacting consumer spending. In fact, the trend we've been seeing is that further out into June, July and August, we're having to marginally discount pricing maybe 1% or 2% to keep the forward curve rising, but the close-in bookings in early mid-May are strong and pricing is strong. With the first week of Easter falling into March, which benefited last year's Q4, we now expect Q1 fares to be behind Q1 FY '26 by a mid-digit percentage. With constrained EU capacity short-haul capacity due to OEM delivery delays and with the engine repairs, we'd originally expected S26 fares to rise modestly. We thought we'd be in the low -- plus low single digits after a 10% fare increase in the prior year.

However, Q2 pricing with limited visibility is now trending broadly flat. And the final outcome will be totally dependent on closing peak summer '26 bookings and fares with 0 H2 visibility and significant fuel price potential and significant fuel price potential supply volatility, it's far too early to provide any meaningful FY '27 profit guidance at this time. And with that, I'm going to ask Neil Sorahan, the Group CFO, to take us through the MD&A. Neil?

Thanks, Michael. I'm just going to maybe reiterate a couple of points that you already made. So first and foremost, looking at last year, very strong performance on unit costs up 1%. So in line with the modest unit cost inflation that we previously guided. Balance sheet, as Michael has already said, finished the year [indiscernible]rate is EUR 3.6 billion gross cash. And as a CFO, very excited that we'll be debt free. This day next week, having paid off our final EUR 1.2 billion bonds and a very strong unencumbered lease available to us. It was looking beyond down into next year again, very well hedged, as Michel has already said, $66 a metric ton. We hedge [ JetFuel. ] We don't hedge Brent or gas oil. We hedge exactly what goes into the tanks. That has always been the case. But equally, very well hedged on the euro dollar as well.

We don't generate any in the business. So we've hedged 80% of our dollar requirements on fuel this year at $115. And indeed, we've put down a floor into the first half of next year with nearly 30% euro-dollar at [ EUR 120. ] So locking in dollar savings, but haven't got -- haven't moved on our jet fuel yet just waiting to see where the market steadies in the next number of weeks. The next big mover on the cost base, as Michael alluded to, is going to be the MAX 10 aircraft coming in, in the spring of next year, 20% more fuel efficient, 20% more seats. So we'll be spreading the costs across 20% more traffic from then onwards. So business is in good shape. The balance sheet rock solid, and we're managing things that are within our control well. Michael, I'll hand back Michaelplease.

Okay. Thank you, Neil. And with that, we'll ask the moderator to open up for Q&A, please. And we're going to limit everybody obviously to 2 questions as normal. So we get through this in about an hour.

[Operator Instructions]

Our first question comes from Stephen Furlong from Davy.

Michael, I want to ask about aircraft actually and just generally capacity. So I saw in your presentation, you've kind of smoothed out the future growth plan, maybe it's just the timing of deliveries, it's 3% or so in the next 2 years. Do you think that as we go into the winter, it's likely that there will be changes in the market capacity presumably at these oil prices, a lot of competitors are stressed. And then even beyond that, obviously, you're working with Boeing to get the MAX 10s with the balance sheet you have, do you think there could be a situation that Boeing came back for MAX 10s or even 8s and you beat even more aircraft?

These 2 questions that look, -- the thing that overwrites these record results this morning, record profits, record growth is the war in the Middle East. And frankly, none of us know when that will finish or when not we'll wind up or when the Strait of Hormuz will reopen. It therefore tends for us to be very conservative. So we're saying this morning, if the war in the Middle East and the Strait of Hormuz remain closed until the end of March 2027, and let oil remains at $150 a barrel, then our unit cost might rise about 5%. I mean if that happens, there will be about 3 or 4 airlines left flying in Europe.

We are, by far and away, the best [indiscernible] airline in Europe. There's a lot of our competitors who are significantly poorly hedged. Most of them are hedged to the end of September, October with very little hedging in place through to the winter months. So -- but I do not expect the Strait of Hormuz to remain closed until March of next year. The U.S. has midterm elections in November. I have been reliably advised by a number of senior U.S. politicians that Memorial Day at the end of May is when those midterms kick off and that there will need to be a resolution of the situation by the end of May. However, if it does continue over those 12 months, there will be significant airline failures in Europe this winter, mainly from some competitor airlines who are offer low fares, but don't have low cost, very stressed gearing on their balance sheet and are not as well hedged as Ryanair. And you see already, many of those airlines are cutting capacity, they cut capacity up to 5%, 6% during April, May and into the June quarter.

We are not cutting capacity. We are continuing with our own 4% traffic growth, and we will expect to continue that through the summer, again, taking advantage of our -- a very strategically strong fuel hedging position. And I would expect us to grow strongly. If oil remains -- unhedged oil remains higher for longer, there might be a slight dip in profitability this year, but we're talking slight dips, not anything that reflects the recent 20%-25% decline in the share price. So we see this as an enormous buying opportunity. We continue day repossessed '25 aircraft [indiscernible] They've taken the 50 engines off to 25 aircraft and put them into the engine pool. They need to be able to make more spare more money out of spare engines than they are even re-leasing secondhand aircraft. We expect the current crisis to worsen the capacity situation in Europe. And the capacity situation in Europe was already significantly muted this year. We had originally thought that would lead to higher pricing. I still believe that will lead to higher pricing, but only when does the resolution of the Warner run and the Strait of Hormuz reopened. And then I think our pricing will rebound strongly and our unhedged fuel will fall significantly. But we're not there yet, and we don't know when that will happen.

Our Boeing likely turn around and offers more MAX 10s, sadly, no, because they can't make them fast enough at the moment. They did have to get it certified at the end of this year. Will there be more MAX 8s available? Highly unlikely. I mean there's a huge backlog of demand out there for the 2 OEMs, Airbus and Boeing. None of any spare aircraft availability this side of 2031, 2032. But as Neil has said, we will always in mind be opportunistic. If there was -- as somebody was distressed and came to us offering very low cost -- or sorry, [ 7378 ] or 10, we would certainly look at it, and that's why we continue to maintain a very strong balance sheet. I should say we have had -- since the word area, we've commenced negotiations on reasonably modest lease extensions of the Airbus, the 26 Airbus fleet in Lauda. Most of those aircraft leases at ending 28 '29. We're extending it at the moment out to 2030, 2031 just so that we can match their retirements into the deliveries of 40 when we get up to the 40 or 50 aircraft deliveries at Boeing. You'll have seen this morning, we pulled back the traffic growth through FY '28 and FY '29 and because Boeing can only delivers 15 aircraft each spring in those 2 years.

By the time I get to FY '30, they're delivering as 40, 50 aircraft, and then I can resume strong capacity growth in Europe and take out the Airbus aircraft. If we can source some new or newer younger aircraft leases here to replace the [indiscernible] fleet. So see lots of opportunity out there in the current climate. Our guidance, I think it is sensible to assume a worst case. The worst case is that the war will continue in the Strait of Hormuz will remain closed until March 2027. But frankly, none of us believe that will be the case. So I think there's nothing but upside at the moment in our trading outlook and there's nothing but upside in our share price currently. Thank you, Steve, next question.

Our next question comes from Jamie Rowbotham from Deutsche Bank.

Michael, first, in terms of that best guess on flat pricing for Q2, it was a similar outlook this time 2 years ago. And then in July, downgraded to fares now see materially lower that was largely the OTA headwinds, which you recovered very well from in 2025. But I just wanted to get a sense if there's little change in the next 2 months in terms of jet fuel prices, the Middle East conflict. How worried are you that you might have to deliver a similar message in 2 months' time given the far more turbulent backdrop now?

Then secondly, with the mid-single-digit guidance for increased full year unit costs, is it a similar increase to the fuel piece versus the nonfuel piece? And with regard to the latter, maybe some additional color on the magnitude of the crew pay increases in the new contract labor agreements?

Thanks, Jamie. I'll ask Neil to prepare to the second half of the question, which is the unit cost increase, which is almost largely the unhedged fuel, but nevertheless, let me talk about pricing in Q2. Like we're reflecting what is a trend we've seen develop over the last, I would say, next 8 weeks. Previously, we were reasonably -- the pricing into Q2, which is the July, August, September quarter, we were seeing modest, mid-single-digit increases. I think what has happened with the war in Iraq in the Middle East, there's been a degree of passenger hesitancy. You've launched Blue may already have made bookings to go long haul or across the Gulf carriers into the Middle East, and they're holding off? Will it clear, will it were what will happen?

We think that will break very much in favor of European air travel as we get to the school holidays now it's a break in favor of European air travel. We believe and we think we're mitigated with the strength of the close-in bookings, both volumes and pricing during May. We had another very strong week in the book as we get, we finished 50,000 bookings ahead of the target. Again, strong close-in pricing, strong closing volumes. But we were a little bit off. I mean, you're talking maybe 1% or 2% of the forward bookings out into June, July -- end of June, July, August compared to this time last year. And we think people -- I mean, anecdotally, [indiscernible] per just waiting to see what will happen? Will it be safe? Can I travel? Now I think 2 things come from that. One, people will travel. And they will -- families will go on holidays. The question is, will they go on holidays long haul or to the Middle East or will they stay at home and going holidays in Europe. And we think they will stay at home and go in holidays in Europe. So I am generally would have liked optimist. I think the war in the Middle East will get resolved in the next month or two.

And then I think you will see both a decline in spot oil prices and a reasonable surge in bookings through to the mid into Q2. But I'm guessing -- that's not at the moment, it makes sense for us to guide based on what we presently see which is flat pricing and unit cost if it continues like this for the full year. But I think that is likely to be a worst case scenario, and I think there's -- there will be a lot of upside in those numbers if the war -- if the Strait of Hormuz was reopened and oil prices settled back I mean, they won't go all the way down to $67 a barrel to BDD, but I do believe that we set it down well under $100 a barrel by the time we get to the back end of the summer. Neil, on the unit cost inflation.

Yes, Jamie. I suppose the 2 keywords in the outlook on the unit cost inflation are if and cut if fuel remains at a current level on the unhedged, then we could be looking at unit cost increase in the mid-single digits. To put it in context, when we were doing our budgets back in February, March, we were actually looking at unit costs if the curve would the remainder was then being down on fuel on a per passenger basis. It's now nudging above mid-single digits at this point in time based on where the forward fuel curve is.

So without giving away too many secrets, if fuel is ahead of mid-single digits, then obviously, ex fuel unit costs are marginally below. So we're doing -- we're continuing to perform very well on the ex-fuel unit cost, stocking in good airport deals, locking in good long-term opportunities. We've got 29 more game changers in the fleet this summer, 4% more passenger spreading the cost over those 20% more fuel efficient. So we've got a lot of issues in there. I don't plan to go into too much detail on the crew pay, but I might ask Eddie, if you want to add any color on that?

Yes, I mean, if you look at what the CLAs, as they have ticked over from April for renewal the 5 years. And you have -- like I'm not going to go into percentages, but there's an element of front loading on those 5-year deals and then more modest increases thereafter. But I mean, when you look at what pilots and cabin crew on, I mean, they want to add longer-term certainty. They also want the favorable rosters back in the case of the pilots to keep continuing to roll the 54 rosters, which is an integral part of the whole scheduling process that everybody wins on. And then increasingly, things like job security are raising their heads out there. I mean, pilots and cabin crew know exactly what happens in situations like this. And even with the sort of recent closures that we've had in Berlin and Teslaniki, at least there are jobs with the growth elsewhere within the network, -- and so we're going to continue to talk to the other pilot groups and cabin crew groups that are maturing on their deals at the moment, and we're working our way through those.

Our next question is from James Hollins from BNP Paribas.

A couple for you, Michael. Just wondering -- so regionally, I was wondering if you'd flag any regions showing particular hesitancy on bookings relative to others. And also regionally, whether you're worried about jet fuel shortages anywhere you sound very confident on jet fuel. And then secondly, you're not a man to ever waste the crisis. I was wondering if you could just run us through your thoughts for the summer, clearly, lots of chat about pricing, but would you maybe use this summer to pressure some competitors or just let the demand cycle play out?

Thanks very much. Let me run through those briefly. There isn't much difference on the regional shape. I mean you take our size and scale, I think the real trend for us this summer is that we are switching capacity away from country. We're closing the base in Berlin in October. We're closing the pace of Tesla -- we're closing the taking aircraft away from regional Spain, France, Vienna, the beat is reducing. So any of those countries who still have kind of environmental tax on air travel or high airport fees, we're switching capacity away for those and their trapping is in decline. For example, Vienna last week reported April traffic down 8%. We're switching those are in pay product capacity in favor of those airports in places like Sweden, you remember the home of present Tuborg and fight shaming.

New transport manage has abolished aviation taxes up there. Orlando has introduced a very imagine growth intention scheme, and we're growing like gangbusters up there. Similar situation in Slovakia, regionally Italy where they're abolishing municipal tax. And Albania, where if not alone abolished aviation tax in code fees and the airport has introduced a growth incentive available to all airlines, which we are gobbling up very rapidly. So but that doesn't mean there isn't -- even in those new markets where we're growing strongly, there is a degree of presidency out into June, July, August. And I think it's not any major downturn, but this time of the year, we're happy to slightly open up a little bit on pricing just to keep that forward booking curve in line with our own internal targets. And we're running ahead of our targets for May and June, we're bang on that target for July, August and September.

So we're very comfortable where we are. But we're seeing this kind of trend for about the last 2 months further out, we're having to do a little bit of price discounting to keep the volumes going. And that's even while our competitors are taking out up to 4% or 5% of their own short-haul capacity. So there is a little bit of customer nurses out there. we think that would break in favor of stronger close-in bookings and pricing as we moved through June, July and August, but it very much depends on what and when the Strait of Hormuz and the conflict in Iran ends. Jet fuel shares, I think there was a real concern there about a month, 2 months ago in Europe. At this point in time, and we do regular weekly meetings with our fuel team were in Paris at the conference last week. We now have almost 0 concerns over fuel supplies across Europe only area with a slight reservation is QA, which is the oil subsidiary of the State of Kuwait has about 25% market share in the U.K. even they are now switching their supplies or their imports to the Americas away from the Middle East. And so Europe is now essentially fully supplied with an Jet A1 coming from West Africa and Norway, the Middle East and some of the Central Eastern European countries are taking Jet A1 from Russia. So we do not now see any real risk to supplies.

In the case of [indiscernible] in the U.K., our other large oil suppliers in the U.K. have said they will be able to supply us with fuel if there was any disruption with QAs but we don't rate the 80s are reasonably confident that they will be able to meet our supply in full through the summer season. So I think our concern over the risk of jet fuel shortage has now receded. The challenge remains price and price well is very volatile, as you all know what we think that will break meaningfully if there is some resolution of the contingent around the Strait of Hormuz. And if it doesn't, I think you will see meaningful competitor failures are very dramatic capacity cooked from competitors who will be running out of cash as we move to the end of the summer through August, September, October. And then there was -- talk with the last point on competition?

I mean I just called you and never to waste a crisis. Wondering if you were sort of thinking about stamping or beta [indiscernible]

We never ever, I would say, expand our -- take advantage of our competitors or do something or deploy capacity based on what competitors are doing. We couldn't care that -- we deploy capacity based on where the airport incentives are at their greatest. And we have been struck with the extent to which, for example, Albania, Tirana, which was -- it has a 12 aircraft with base are really very concerned. Like a lot of European airports about some of their incumbent carriers viability or survivability and they are getting very aggressive with the -- they're getting very aggressive with the incentives or the growth incentive schemes they're putting in place. We are seeing that play itself out across Europe. So we're also seeing it now very prominently in the Baltic states.

So there are a number of -- I would characterize our expansion this summer as not one of, can we put competitors put pressure on competitors. But rather taking advantage of unique growth opportunities that are now being made available to us because the number of our competitors -- our airport partners are becoming increasingly concerned that either a, their reliance on some of our flake competitors, b, and they said this to us themselves, are genuinely worried at some of our flaking competitors who might not survive this winter my view would they be right in that. So but we deploy capacity based on those markets where aviation taxes are being cast and airport incentive schemes are being improved.

Our next question is from Muneeba Kayani from BofA.

Two questions, please. So firstly, I just wanted to go back on share buybacks. Mike, you talked about the bond and the CapEx, clearly, but you've also talked about the share price being attractive. So are your thoughts right now on topping up the buyback? I know you have still a bit remaining in that. So that's the first question. And then secondly, just longer term, how are you thinking about that 12% to 14% profit per pax outlook if fuel prices remain elevated? Like could there be a scenario of this capacity cuts from other airlines, kind of supporting that outlook even in a high fuel environment? Or is that not possible?

Sorry, you broke up that you were saying the outlook on profit per pax, was there a period did you say years there? Or...

No. So if I correct me if I'm wrong, but I think previously, you said you'd expect that to get to the 12% to 14% range in [indiscernible] and so how are you thinking about that in this fuel environment, which could maybe take out capacity from others. So what are the moving parts in it given that it's a different fuel environment right now?

Yes, sure. Thanks, Muneeba. Okay, let me give you the 2. On the share buybacks, we're about $600 million through the existing -- or 80% of the way through the existing $750 million buyback. We expect to complete that buyback. We're pretty much -- we are very fettered in the way we can manage buybacks. So it all has to be Board approved announced to the market that we buy a certain percentage of the daily trades. And we continue to do that. Nevertheless, I think the war in the Middle East has been very helpful to us. It has brought the average cost of that buybacks in the earlier date from -- down from about $28, $28.50 a share. We're now down around $26.40 average price per share. would we step up and come up with a new buyback in the next 3 or a couple of quarters, I think it's highly unlikely.

Remember, our big kind of the big deployment of cash currently was the -- is to fund the repayment of the final bond debt. And to put that in some context, we're going to repay EUR 1.2 billion bond we drew down during covid. We pay only 0.85% on that. But if we were to try to refi that today, the cost would be about 4%. I think it is -- it demonstrates the strength of the Ryanair business model and our cash flows, we gave out a COVID with EUR 4 billion of gross cash. And in the last 5 years, we have now paid down that of EUR 4 billion of gross debt, sorry. We have our gross debt of EUR 4 billion at the end of COVID. We have now paid down that EUR 4 billion of gross debt over the last 5 years. while funding while funding buybacks while funding shareholder dividends and also funding gross CapEx on the remainder of the [indiscernible] . If I look forward over the next 4 years, so I don't think we'll do another share buyback in the next couple of quarters, certainly not before at the end of this calendar year. But we're then looking into a period of 3, 4, 5 years, where I think we'll continue to be very strongly cash generative, but we have no debt -- to do no bond debt to refinance a rebound. We'll also have a 2-year kind of CapEx holiday through FY '28 and FY '29 because we're only taking 15 MAX 10.

So you can take it that there will be a continuation of both dividends at very strong buybacks without spare cash through FY '28 and FY '29 but not this summer. This summer, we're using the buyback cash to pay down the last of our bond debt of EUR 1.2 billion, and that gets paid down next week. What do I think of the outlook of our EUR 12 to EUR 14 profit per pax? Frankly, I think it remains unchanged. This is a short-term shock to the system. The war and was somewhat unexpected by the market. Certainly, the closure of the Strait of Hormuz, this is no different to what we've seen before with 9/11, the Gulf or the second Gulf or the [indiscernible] basin Ukraine. There's been a long-term fuel spike what happens is a short-term view spike Ryanair's hedging comes to the fore, which protects a vast majority of our earnings during that period of volatility. And then the situation resolves itself oil prices refix and everybody goes back to normal again.

Will there be a disruption this year? Again, it's too early to say, Muneeba because we don't know how long the Strait of Hormuz will remain closed. IP, as I suspect, is likely to be the case at Trump, we'll find some resolution or declare a picture by the end of May when the midterm election hearing kicks off. Then I think we will -- I would be more optimistic than our current guidance of unit cost going up by mid-single mid-single digits this year. I think we'll do better than that. And I think you'll see more confidence return to passengers bookings and pricing during the summer. But much depends also what happens this winter with our -- the flake competitors around Europe the ones who are not particularly well hedged, the ones who are hugely have very large net debt positions. I mean 1 of our airline competitors recently borrowed $30 million from its local government just to get you through the summer trading period, that loan is used to be repaid in August. There is no possibility of that loan being repaid in August. So I would expect there will be competitive phases in Europe -- and then who knows, maybe the EUR 12 to EUR 14 profit per passenger will actually come forward because there would be even more constrained capacity in Europe and stronger pricing.

But like everybody else, we're in a period -- short-term period of uncertainty, we hunker down. We tend -- we trade on the strength of our balance sheet -- but I -- if you look at our record over the last 4 years or 5 years, Muneeba, when we have paid down EUR 4 billion of bond debt, as I look forward into the next 4 or 5 years, we have no bond debt to repay and that kind of cash generation will be available, and the Board has been consistent over the last 5 years in saying if there is surplus cash, it will be deployed to pay down debt. We now have no more debt to pay. And the balance will be returned to shareholders through dividends and share buybacks. But I would not expect another short-term buyback. We're very content to finish out the current program, which we expect will happen by sometime mid to end August before the AGM, and then pay down our bond debt. And then I would look forward into calendar 2027, calendar 2028, the resumption of reasonably strong buyback activity, if profitability and cash flow when profitability and cash flows returned to some pre Middle Eastern war norms.

Our next question is from Conor Dwyer from Citi.

First question is on that kind of CapEx point. So I think consensus is roughly around EUR 2 billion for the coming year. And you're talking a little bit around the CapEx holiday in the years following that, presumably on slower MAX10 deliveries. I was wondering if you could give any indication on where you expect CapEx to roughly end up at for that kind of level?

And then secondly, just around airport charges. So at the moment, the last quarter, tracks down low single digits, and you continue to kind of churn the network in that sense. I'm wondering how we should kind of expect airport charges to progress over the next kind of 2 to 3 years if indeed, you continue to grow as you're telling the airports, you will do so.

Okay. I think that's an opportunity. Neil take the next couple of years. And then I might ask Eddie Wilson, the [indiscernible] to comment on the airport charges. Maybe Eddie and Jason making its airport charges and our short disclosures for the next 2 or 3 years.

On CapEx, as you said, roughly about EUR 2 billion in FY '27, give or take, could be slightly lower or it could be slightly higher depending on the timing of CapEx on the engine shop, but be fairly modest CapEx in there the engine shops this year, the lion's share of the CapEx is maintenance with some deliveries in the spring of next year and some PDPs starting to build up. Similarly, the following year, haven't really gone into detail there. I think we've previously said somewhere between EUR 2.5 billion and then EUR 3 billion. I wouldn't be moving usually away from that. Again, it would be more skewed towards maintenance than aircraft deliveries. And then we kind of get into the peak of the order and the engine shop CapEx after that. But I'm not going to go into too much detail there at this point in time.

Just on the Yes, just on air costs, fairly aggressive targets with the new routes team on what we do in terms of airport costs because we just have this constant battle between regulated airports think they can do what the hell they like. And on the one side, you're doubling out there with a $5.6 billion CapEx out there with no extra capacity in it whatsoever. And then you've got the likes of [indiscernible] down there with like $11 billion plus heading into this difficult environment, whereby they think they can define the laws of gravity in terms of attracting traffic. The same thing plays out with the Fraport and [indiscernible] this world on that side of the house.

And then on the other side of the house, as Michael has talked about there, you've got municipal tax in [indiscernible] , you got the Swedish tourism tax, you've got all the deals whereby with the smaller airports that actually add up, you've got the long-term deal that we've completed with MAG in -- not just in London, where it's the only airport that can grow without any extra airport infrastructure or runway infrastructure in the next 10 years. And that's what [indiscernible] our competitors on a significantly higher cost base, and that's only -- that gap is only going to get wider in London. So we -- it's a constant battle there. Like I'd be to keep that flat and nudge it down if I can, over the next number of years, but it's a difficult job to do, but nobody is getting any capacity off Ryanair unless our average costs go down. And our average cost go down by lowering charges and airports have to work with us to extract more money from parking or duty-free or whatever it is, but we're going to have a sustainable commercial relationships with airports that have to work as hard as us in terms of investing on delivering more passengers and growth. Jason Z do you want to add on to that?

Yes. The other thing I would say, Eddie, is that increasingly, the conversations we're having with airports is they're increasingly worried about where the growth is going to come from. There's a huge amount of airport infrastructure coming into Europe over the next 5 to 10 years. And there's very few airlines are indeed only one airline, Ryanair that will deliver the growth into this new infrastructure. So increasingly, the conversation is they are worried about competitor capacity.

And I think that's where you're seeing us growing this year. We're growing Polish capacity by plus 22% this year. We're adding 8 aircraft into Poland, opened the base in Tirana 4 aircraft growing capacity by close to 60%. And we will take it out of [indiscernible] Germany and Austria where costs -- where they're not. They are not being sensible on cost. The Berlin 7 based aircraft closure being a prime example of somewhere where we reduced capacity by 50%. that capacity is migrating to Poland, Albania and Slovakia, and we're going to continue to do so. But I think there's going to be lots of opportunities across this winter in terms of capacity -- competitive capacity coming out of the market.

Can I just add to that to give you a flavor? You've an airport like Sweden, which 4 or 5 years ago was nobody wants to fly anymore -- is it creates onboard, flight shaming, et cetera, et cetera. You've had really good new transport minister of there going, this is stupid. We're losing business, you abolish the environmental tax and Arlanda is introduced very imaginative traffic growth schemes. Parana, for example, not only the abolished attacks called ATC fees and growth incentive schemes. And you contrast that with somewhere like Dublin, just a bunch of idiots. They have a traffic cap that they've been sitting on for the last 20 years.

Government had promised 18 months ago to remove it as soon as possible, 18 months later, nothing done. And then these jumbos in Dublin have come up with a CapEx program of EUR 5.6 billion for the next 5 years. 35% of that or about $1.5 billion is an allowance for inflation and contingencies over the next 5 years. Now there is a risk that inflation might tick up from 2% to 3%, but it's not put a cost of an extra EUR 1.5 billion. But that's the kind of missing that these regulated monopoly airports are still engaged with. And as we said last week, if that goes ahead, we simply will stop grow overnight, we will stop growing in Dublin. And if Ryanair Dublin, Dublin doesn't grow. We have lots of other airports in Sweden in Albania, Slovakia, for example, again, the new government abolished the environmental taxes. They cut ATC fees by nearly 50%. And the airport has significantly reduced its airport fees.

We, as a result, have switched to load of aircraft out of high-cost, high-tax Vienna up the road to Slovakia. And in April, Vienna's traffic went down by 8%. And Sovak, recorded a record 170% growth in traffic April over April. So I would expect those churn discussions to continue to play out over the next couple of years. while more on in Dublin and the likes of them come up with -- we gained the regulatory system by coming up with these absolutely stupid. For example, they want to spend nearly $1 billion in Dublin, putting air bridges on the Ryanair terminal, despite the fact that we don't use air bridges. And we deliver 80% of the traffic through that terminal, but they have come up with this one of you for the majority of airlines using Pier 1 want airbridges, with the -- while forgetting to mention at the airport that delivers at the air [indiscernible] delivers 18% of the traffic, won't use them and won't pay for them. But whatever those the great advantage we have is the strength of our churn negotiations. And as Eddie said, the strength of our pipeline of 300 aircraft deliveries. No airport in Europe if you want to grow, most have now recognize they need to encourage Ryanair to grow there because we're the world that won't to be deploying 40, 50 aircraft a year.

Some of those aircraft deployments will involve taking aircraft out of Doublet and deploying them somewhere else, unless somebody in the -- in our useless government eventually pass the legislation abolishing the tax and finally takes a stick to these more on the Dublin Airport who think they just keep passing away billions and the customer will pay. They won't.

Our next question is from Harry Gowers from JPMorgan.

First one, just for the Q1, I wanted to get a little bit more color on what you're seeing exactly in terms of the close-in bookings so far. I mean, clearly, there's some weakness or stimulation needed at some point in the curve, but have you seen more of a positive acceleration or sort of positive inflection in close-in pricing in recent weeks? Or has it been quite consistently strong since the start of the crisis.

And then the second one, probably for Neil, just on the ex-fuel unit cost inflation this year. If there was like some of it is maybe just timing related around staff and maintenance, maybe seeing a bigger impact this year than in the LT years? Is that kind of fair with the MAX 10s coming next year and that staff pay inflation being front-end loaded?

Thanks, Harry. I'm going to give you a flavor of what's going on. If you take, say, for example, the month of April, April was weak, it was artificially weak this year because the first weekend of the April school holidays fell into March. We entered April about 0.2% where we're ahead of target. But consist despite the fact that Easter was early in April. The closing bookings were stronger and stronger. We finished up the month about 0.5% ahead of target. Now 0.5% is sort of like 100,000 passengers. So we finished almost 100,000 basters ahead of our passenger target for the month of April, and that was all thanks to stronger -- very strong close in near-term bookings and stronger pricing.

However, if we are -- at the moment, if pricing remains weaker out through June, July, August that we're having to marginally, and I keep emphasizing is we're having to maybe take 1% or so off the pricing. You have to keep the further out bookings building and then the closing is strong and the pricing is strong. We still see that finishing up. If that continues through those 3 months of June, July and August. And I don't think it will because I don't need the Strait of Hormuz, the uncertainty in the Middle East can continue into June, July, August. Our clubs not just the house, but the Senate as well. But if it does continue, then we think pricing moves from being up mid-single digits in those peak summer months to being flattish in those peak summer months. We don't think it goes negative. But I can't rule it out either. If there was some on toward adverse development in the Middle East or the Strait of Hormuz, you never say never. But I would be much more optimistic that I think we are being conservative in the guidance today and that the outturn will continue to improve and be better partly because people will inevitably go on holidays one way or the other. I just think they are holiday in Europe and European resorts in Portuguese Isesaki this summer. Many more will fly with us to Turkey, Albania and Morocco because they can avoid Europe's [indiscernible] ETS taxation by simply flying to neighboring non-EU countries. And that will reflect itself by the time we get to the second -- first or second quarter numbers in slightly more optimistic toll on volume and pricing. Neil, on the [indiscernible]

Harry. Yes, you're bang on the money there. Some of it is timing. Absolutely. If I look at the maintenance side of things, we'll be taking the MAX 10s in which got full warranties which will help to offset some of the maintenance. Equally, the hospital visit that we refer to is purely a technical accounting thing where the component that has to be overhauled the 10,000 cycles, which accelerate a little bit of depreciation on that, but we get that back on the back end.

And then on the staffing side, as we said about 18 months ago, we're already recruiting for the MAX 10s coming in. So we're taking in more cadets at this point in time so that we're self-sufficient for first officers and indeed then command upgrades to captains when we get to the peak. And the deals that we're doing, as I said, on the prerecorded session on our website this morning, an element of front-loading on some of the pay increases. But on the back end, the productivity from the MAX 10 will help offset. So yes, there's a fair element of timing in there on the numbers.

Our next question is from Savanthi Syth from Raymond James.

For the first question, I was just kind of curious if for any of the 15 MAX 10 that you expect by next spring, if any of those have -- Boeing has started building them to kind of give you greater confidence of the delivery. And then just a second question, now that you've secured that multiyear engine materials agreement with CSM, curious if you have a better idea of how you expect maintenance cost to be stepping up versus your current contract? And just how much of a competitive advantage that might be versus kind of market rate?

Thanks, Savi. Again, Neil, I ask you to take the second half of that question, please. On Boeing, yes, they have started building the MAX 10. They expect by the end of this year, they'll have about 40 -- I think at 30 or 40 MAX 10s built. Some of which our first delivery is due in January of 2027. So some of ours will actually be built before the end of this year. But it's all down to certification. Now Boeing have been making very positive noise on certification. We separately have also been in dialogue with the asset, the European Safety Agency who have to certify the aircraft for Europe. They've been very complementary of the work that Boeing has done. They don't see that there will be any significant delays on the certification.

But obviously, that depends on Boeing and the FAA. And we get a set also for meeting with the FAA that there's a better relationship there under the current administration more supportive FAA. They want to see American manufacturing succeed and they certainly appear to be more supportive of Boeing and certification. But there's always a risk of slip-ups. But I think we take great heart from the turnaround that the new team in Boeing Kelly Ortberg, Stephany Pulp -- on our last 29 game changer deliveries, which were delivered to us almost a year late. Each one of those aircraft were defect-free and were delivered, on average, 1 or 2 months earlier than the original delayed delivery date. So Boeing are doing a really good job on the shop floor in Seattle, also at Wichita taking clean holes in which to Seattle, reducing clean aircraft, no defect we're actually pulling some of our engineers back out of Wichita and Seattle now because there's no reason for them.

So I would be reasonably optimistic that we're going to get those first 15 aircraft in the spring of 2027. That gives us capacity growth to get to about 223 million passengers by FY '28 and close to 230 million by FY '29. And then we start stepping it up growing at about 15 million passengers a year. through '31, '32, '33. The 300 million passenger target by 2034 is unchanged. And as I said to replies, I see no reason to change my somewhat optimistic outlook that profit per passenger will rise towards EUR 12, EUR 14, EUR 15 per passenger over the next 4 or 5 years. And I believe the current crisis in the Middle East and the straight will accelerate that profit growth, although it may take a hit this year, but it will be temporary and short-lived. Thanks, Savy. Neil, on the CFM engines and maintenance.

Yes. Savi, I think we've discussed this a few times before. I mean the key benefit of the engine shop is, first and foremost, we will be able to put the engines through faster to our own shops than anywhere else that obviously, significant efficiencies and reduces the number of spare engines that we need to hold in the inventory. The key benefit of the in-housing of the engine shop is compared to what we would pay if we replace what has been an outstanding power other deal for almost 25 years with CFM. If we were to try and renegotiate that deal as is today, you'd be locking in 4 to 5 the rates that we've been paying.

By doing it ourselves, and some of this will depend on the final granted and the labor support and everything else that we get, and we're not over the line on that yet. But you're probably looking at somewhere close to 2x by bringing in-house as opposed to paying 4x to 5x by leaving it out with third party. So I think that will massively increase the gap between ourselves and our competitors over the next number of years. It also means our competitors are going to be tied up in engine shops for significantly longer because they lease their fleet unlike Ryanair who don't and therefore, can get them through a lot quicker by just putting on new parts and moving an engine down the line. So it's the operational efficiency and the saving compared to going third party, which is the key benefits from this. And I think it's going to prove to be a very smart decision for Ryanair in years to come.

Yes. And Savi as you're aware, about 85% of the cost of engine maintenance is the spare part is not labor. You look at the 30 spare LEAP-1B deal we announced we did during the last 12 months, we bought those aircraft from our partners in CFM. And the deeply discounted price, they want -- and we think we'll be able to repeat that kind of success or by during periods of distress large quantities of spare parts at a very advantageous discount for our -- both our engine maintenance and for our shareholders.

Our next question is from Dudley Shanley from Goodbody.

Just one question for me. Just in the context of the route churn that you've had over the last few years and the capacity constraints that we've discussed a few times with the current short-term issues in fuel, do you think that slowing of growth in the European aviation space has any of the higher charging countries starting to think about reversing? And I guess, following that Swedish model that you mentioned earlier?

Thanks, Dudlely. Yes, the answer to the question is yes. I mean, for example, the Austrian government at the moment is considering a new budget cycle, they make a bunch of statement in June. We know already because I think they've admitted already they're looking at reducing the aviation tax, which is currently EUR 12 per passenger. Now we've been quite aggressive, forget reducing it, either abolished or gold waste your time. we will not be going back with any growth to Vienna. All of Vienna's growth is moving up the road to Slovakia where they are -- the new transform militaries deli with itself and the record traffic growth that [indiscernible] Airport is enjoying.

In fact, last week, you imagine a bus company has now started running 5 daily bus services from the center of Vienna direct to Bratislava Airport taking advantage of the enormous surge demand from D&E citizens and visitors who are now getting there via the much lower cost of Bratislava airport. And we think that will -- that trend will continue. We will continue to move aircraft out of countries and airports where taxes, our airport fees are high, are where, as I said in Dublin, you have the government old monopolies operates some 1,880 regulated [indiscernible] the some dumb regulator looking to double airport fees over the next 5 years. You would say the growth will come to shuttering all. But the problem is we have an incompetent government who can't even deliver on the 18 months later. I still have a delivery on their election promise to abolish the cap at Dublin Airport as soon as possible. Even for the snail pace growth in near place delivery of an Irish government, 18 months does not consist of as soon as possible particularly when you even [indiscernible] majority.

So we do expect there will be more regional regions in Italy will reduce taxes and the taxes now are coming down. The big issue here is whether we can persuade the European Commission led by that [indiscernible] Orsan dean who has spent the last 2 years talking about the competitiveness of European economy, but doing absolutely nothing about it. can we find persuade her at the other top European that it's time to abolish EGS taxes which are only applied on European citizens on intra-EU flights. But we exempt the Americans, the Gulf, the Asians and everybody else traveling to and from Europe. This makes no sense. This year alone, Ryanair passengers will pay EUR 1.4 billion in ETS taxes. It adds about EUR 7 to every ticket. Well, first of alternates serious about competitiveness, and we don't think she is because, frankly, she -- all she does is talk about it and do nothing and start by appolishing ETS, and make -- which would reduce airfares in Europe by between EUR 7 and EUR 10 for every single European visit. We'll keep pushing, but I wouldn't expect anything visionary coming out of useless [indiscernible]

Our next question is from Ruairi Cullinane from RBC.

Firstly, on hedging, if the war drags on, how long do you expect to hold out for hedging fuel requirements in full year '28? And then Secondly, just on the balance sheet, why is EUR 4 billion the right number for a targeted cash balance?

What we do is hedging at the moment, obviously, we haven't started. If you look forward or out into -- we're 80% hedged for FY '27, the current rate or the current fall rate over the fourth quarter FY '27, you could be hedging today at about $120 a barrel. Spot last Friday was about jet. It was about $136 a barrel out into FY '28 head, you can hedge today at about $90, $92 a barrel. So there's a very deep contango in the market where the further out to go the further prices fall away. I would be willing to -- certainly, we could remain unhedged into the summer of 2027. Up until about September, October of this year.

And I -- you speak to any expert, nobody really believes that the war in Iran or the Strait of Hormuz will remain closed out of September, October this year. But that doesn't rule out the possibility. There's mostly always some possibility. I think the key pressure point as we move through this number will be the U.S. midterm elections and whether Trump can keep the house and the Senate. And so I think there will be a change of tone and strategy when it comes to the Middle East and particular gas prices in North America. But I would not expect us to sell our hedging into summer '27 if prices remain elevated like this until about September, October. And then I think we would still be in a position to do it at you'd be looking at going up from $67 a barrel now to maybe a price at mid-90s. But if that happens, there will be a number of very large airline failures in Europe, this Autumn. So what we would lose on the fuel hedging going forward into Summer '27, we would more than gain on the likes of some of these airlines in Europe who are unprofitable and bad -- are poorly hedged. They will simply fail and you look, obviously, Spirit is the most clearing example of that here in North America in recent days.

Why is EUR 4 billion the right number? EUR 4 billion was the number we went into -- we went into COVID billion gross cash and EUR 4 billion of gross debt, a 0 net debt position. we do operate in a cyclical capital-intensive business. This is a really phenomenal business. It is very profitable. It turns out huge amounts of cash and we have used that cash to repay EUR 4 billion in bond debt over the last 5 years. But it's also an industry that's very susceptible to external economic shocks like the Gulf War, Russia's invasion of Ukraine and now you have the war in the Middle East and the close on the Strait of Hormuz. So I think we're a brilliant airline. We're clearly very profitable, very cash productive airline. But we're also an area that he is the subject of external shocks that we can do nothing about. And we believe that EUR 4 billion is the right kind of number that we should be aiming for. That doesn't mean and if an opportunity came along, we would let that cash dropped down to maybe EUR 2.5 billion, EUR 3 billion. We would if the right opportunity came along and also that we would let it rise from EUR 4 billion to EUR 4.5 billion or EUR 5 billion. Now EUR 5 billion, we don't need is too much. So everything over EUR 4 billion, and we will build ourselves back up to that in the next 12 months. Everything over and above that, we will be deploying in dividends and shareholder buybacks. Neil, I think you want to add that EUR 4 billion target?

No, I think as you said, COVID hopefully as bad as it ever gets in here and EUR 4 billion served us very well through that crisis. But equally across the turns of opportunities, and I'd hate we left scrambling and a price taker in the market or a bond or something. So it's a good level to be asked. And I would just add on the hedging side that we haven't added to digest. We have been jumping on dollar weakness which is the other side of the hedging coin, and we now have 30% of FY H1 hedged at $1.20 on the Eurodollar, which is better than the $15 that we have this year. So we'll continue to lock on lock in on dollar weakness. And as Michael said, we'll get back to the jet in due course.

And you should have a share where we are in the CapEx dollars, Neil, on that particular firm orders.

Again, jumping on days where the dollar weakens. We've now got 60% of the 150 firm orders hedged at just over EUR 120 trillion dollars. So we're locking in significant savings there. This is a keenly priced aircraft deal. And in euro terms, we're now locking in cheaper seats, which is good for the CapEx, but also cheaper seats, which is good over a longer period of time for the P&L. So pretty pleased at that. And the treasury team remain ready and able to jump on every week that we see in the dollar to expand that further.

Yes. And you see that also reflected in the lease extensions we're doing on the A320 fleet and the current difficult environment, particularly post the spirit failure in the U.S.

Our next question is from Andre Marder from Bernstein.

[indiscernible] as was along with the higher fuel price, it's still profitable to flat 320 sales? Or do you need to think about retiring earlier there and take...

Sorry, and Antoine, sorry, can you just speak into the speaker, it's very hard to hear you there. I didn't hear any of that for the first half of that question, please. Can you repeat?

Sorry, can you hear me well now?

Yes. Yes, just about.

Okay. So no, I was wondering with higher fuel prices, it is still profitable to flag the A320s or do you need to think about retiring or low that plate? And second, what is your ancillary revenue per [indiscernible] fall in Q4? And what can we expect for full year '27 in ancillaries?

I'll ask you Neil, just to comment or maybe trade to the ancillary question. Can I just -- if I've understood the question and one, it is would the higher oil price affect whether we would take the A320 CO or look for Neos. Is that the question?

No. Just it's still profitable currently to flag the A320s. Yes.

So asking should we keep flying the loud is in the current high fuel environment, the A320s that we have answer the...

I mean, the answer that question -- the question is, yes, if the lease rates are falling. And the great joy of the middle of the strike in the Middle East is this again an opportunity we're extending these leases, which are coming to end of life. -- but has materially reduced monthly leak rates and the multi-lease rents were already significantly below market. A lot of the lessors of these aircraft, they're coming to the end of life they have Ryanair on their kind of -- as a customer and the risk of taking back these aircraft that are getting to end of life and trying to market them somewhere else in the world, are just take a modest hit on the lease rentals and on the redelivery conditions and extend the deal with the Ryanair Group for another year or 2 seems to be attractive.

So the answer to the question is, no, they're not the most fuel-efficient aircraft, but if the lease rates are falling, we would always be happy to take advantage of those kind of opportunities. And remember, Andre, they really only account for '26 aircraft out of the 675-odd aircraft, 650-odd aircraft fleet where most of that significant force our fleet now is the game changers, which are offering us 4% more seats and burning 16% less fuel. So in actual fact, our fuel consumption on a per faster basis will continue to modestly decline with the benefit of the game changers will begin to significantly decline as we move into the MAX 10 in '27, '28, '29 and will you take the Tracy, maybe take the ancillary question, please.

Yes, we just seen a small slight dip of about 1% in Q4, but I think we have to look at the overall. So the year, we were up 2%, and we would hope to see that continue into next year, kind of 1% to 2% range.

Yes. I mean It's not on a profit growth?

Yes. It's not unusual to see a dip in Q4 given that we had one week of Easter in there, which are pushing people in the dog days of January and the weeks outside the midterms in February. So I wouldn't read anything into that. We guided 2% passenger growth last year. We came in exactly bang on. And FY '27 will be somewhere between 1% and 2% per passenger, again, above traffic?

Next question comes from Axel Stasse from Morgan Stanley.

Two questions on my side, please. One a bit more medium term and 1 a bit more short term on the medium-term one. It's coming back on the commentary on hedging in fiscal year -- so if I understood correctly, you don't want to hedge any time soon for fiscal year '28, but how do you plan to offset that pick up in fuel? And is it just with first go into next year? How should we look at this?

And then short-term on the salary negotiations. Sorry to come back on this. But can you just confirm what percentage of the staff cost base is being renegotiated? And is it fair to assume mid-single-digit increase in year 1 and then low single digit as from year 2 onwards.

Sorry, the first half, I mean I need to give again more color on maybe [indiscernible] on the foundry negotiation. Can you just explain the first part of the hedging. So if we you're talking about it, if we hedged into FY '28 at higher prices, how do we think we would pay for that? Is that the question?

Yes, can you hear me?

Yes.

My question was more Go ahead. Yes, sorry. If you all start to hedge in the coming months for fiscal year even using the forward curve, for example, how do you plan to pass on the fuel cost inflation? Is it through pricing? Is it something else that we should be aware of?

Yes. Again, I come back to if the oil prices remain higher for longer through into, for example, say, the third -- our fiscal third calendar, the December quarter or the December quarter, if oil prices remain higher into that quarter, then I think you would see us start to put down some hedging into the summer of 2027. So FY '28 that maybe take a number, $90, $95, $85 per barrel, materially higher than this year's oil price but they were at that point in time, be casualties here in Europe among the European airlines. There are people who are less -- I mean we're 80% hedged out to March 2027.

Most of Europe's second-tier airlines are hedged kind of generally out about October. And some of them, while they came to be hedged aren't hedged at all, they have caps and collars. So -- but what would happen, I think if there were higher oil prices out into [indiscernible] into summer of 2028, it is inevitable that the legacy airlines will be bringing in fuel surcharges. I think if it ever that there will be far less capacity available in the system next summer, partly because of failures and partly because capacity simply will be grounded. And I would think there'd be a significant upward pressure on pricing. But I don't expect that to be the outcome. I expect by the time we get to the end of May or June, there would be Trump will be declaring victory in the Middle East, a straight to or most will be reopened.

The focus will be over here on the midterm elections in November and that there will be a much more optimistic environment, political environment here and economic environment in relation to oil prices. maybe Darryl or Eddie, do you want to take the salary negotiation question?

Yes. Gerald -- yes, go ahead, Jari. You go first. he dropped off. Okay, sorry. No, what you have -- don't forget, in the existing deals that we have, there are already pay increases built in for April in any event. So you have the -- like I mean like that's -- I mean, they'll go on for the next year. What we did see is that there is some appetite among some of the groups to go earlier. And we've facilitated that like anything that brings having long-term stability out there. The Italian pilots were one of those groups and we're in active negotiations. So the simple answer is 100% of the pie are covered by pay increases because they either have new deals coming, which will be higher because there'll be an element of front-loading or the existing ones which run out next April still have had their pay increase in April. And that pertains for the cabin crew as well. So would that answers your question.

I remember actually, what we're doing here we're putting in place new 5-year pay yields, which will run across a dramatic uptick in productivity, staff productivity coming from the delivery of MAX 10 aircraft, which start in the spring runs out over the next 5 years out to 20, 30, 2031 of the 5 years of these paid deals. When our -- basically [indiscernible] and [indiscernible] will be flying 20% more passengers on a per flight basis and burning 20% less oil. So it does make sense from an operating and from an efficiency point of view to share the upside of that with our people by putting in place new 5-year pay deals.

Now where there's an element of front end in the incentive for the staff is you get the pay increase front-ended. But we'll get the productivity gain over the lifetime of that 5-year deal.

Next question is from Gerald Khoo from Panu Liberum.

Two for me, if I can. I talked a bit about airport charges earlier in the call. I was just wondering whether you could give an indication of the average duration of your airport charges deals? How long are you looking to be favorable terms any for? And finally, Michael, in terms of your parable pub contract extension, is there a particular reason why you've landed on 4 years? And should we expect this to be the final extension.

I mean it's very difficult to -- it's really the duration of the airport -- the airport deals, it very much depends on an airport-by-airport basis. So that now run out into 2035, 2036 particularly, for example, I use high an example like London [indiscernible] where they're investing EUR 1 billion extending the terminal facility and growing the capacity from 3 million to about 45 million passengers per annum. And I would highlight that as -- and they want the security with growth commitments that Ryanair will fill those facilities if they put in those extensions. Stanson are going to grow capacity from 30 million to 45 million patches, about 50% growth in capacity for a cost of $1 billion.

Meanwhile, Dublin proposed 5.6 billion with no increase in capacity. I mean, $1.5 billion of inflation, $600 million on vanity sustainability projects, including 7 million planting bloody wildflowers, which could only come about with a kind of government old monopoly passing away money. So the Lenten deal, typically, when we're doing extensions are somebody wants growth Typically, it's 4 to 5 years. But in some cases, where they're committing extensive CapEx on facility enhancement like instant like in Bergamo, for example, they run out longer, typically out to 2035 -- 2034, 2035, 2036. So it parses for courses. What I would say though, almost every airport in which we operate, where we have a or a 5-year deal, they're back to us within 2 years going. Can we have another more growth? Can you extend again. And we are -- I mean, there's no exaggeration Jason McGinnis and achieve the new route you can barely get in the office doors at the moment with the numbers of airports that are sleeping in our reception area looking for meetings, looking for growth partly because they are very worried that some of their existing incumbent carriers who are heavily invested or less well hedged or don't have fuel hedging in place will not survive or will dramatically cut back on their capacity growth.

For example, Padala had given where we're growing very rapidly now. One of our competitors airlines promise to grow their base from 2 to 5 aircraft. Apparently, then a week later, they changed their minds the tollbooth the fifth aircraft isn't coming a called us to say morning you said there's another fair stand here. Do you want to put another aircraft in here, and we'll give you favorable terms. So I don't tend anybody, but I'm coming down to Bratislava next week to announce another aircraft that are paid will go by one more aircraft this way they hear solely because one of our less competent competitors and did honor their kind of 5 aircraft based deal. And on my contract -- sorry, 2032, Jason, this is 2026, 232 looks like a reasonable extension I was offering 2030, the Board want to 2033, we set on 2032. They put in -- and I don't want to -- we're not going to breach the confidentiality that the Board wants to discuss that with some of the larger consumption individual shareholders, but there are very aggressive, and I mean very aggressive. -- profit and share price target on the purchase on the share option purchase agreement other than that, I get paid a very modest basic salary and bonus, no pension and no anything else. But it has always been my philosophy. I want my remuneration and rewards tied to very ambitious profit and share price kind of target. The last time around in 2019, I had to almost double the profit, they're almost total to share price. And I think shareholders would reasonably assume that the next set of targets are not dissimilar to that. But again, the Board wants a brief major -- the main shareholders on that first.

We currently have no further questions. So I'll hand back over to Michael Leary for closing remarks.

Okay. Folks, thank you very much. Again, may I conclude by just to remind you, everybody, we've had a record year, record traffic, record profit we have been overtaken by events in the Middle East in the last 2 months, but I do not expect that, that will last very long, maybe another month or two and then I believe the Strait of Hormuz will reopen, oil prices were settled down. People will go back to booking with confidence during the peak summer months. And Ryanair is incredibly well positioned with 4% more seats this summer well controlling remarkable unit cost discipline in a marketplace where none of our competitors, the COG cap between and our competitors is widening.

We are really well hedged out on March 2027. That gives us incredible financial strength. We will pay down the last of our bond debt next week, and we will be essentially debt-free. And that puts us with an enormously strong position to continue then to grow capacity in the next couple of years, take delivery of MAX 10 aircraft that will transform our operating economics because they are 20% more seats at 20% less fuel and you guys today can buy all this incredible advantage as, I don't know, EUR 22, EUR 23 a share. So I don't want to hear anybody telling you for the next 2 or 3 years. Oh, I wish we bought it the last time there was a dip. Here's the we're very happy with our share buyback program. The average cost has dramatically come down over the last 2 or 3 months. And for that, we are extremely grateful. And we look forward, we have an extensive road show with all of the senior managers on the road across art in the U.K., Europe, East Coast and West Coast America. I said I'm in New York for the next 2 days. Chicago and when they posted on Thursday, if anybody wants the meeting, if anybody wants to be reminded of how strong Ryanair's fundamentals are and how profitable and cash generative we are please ask us a [indiscernible] for a meeting, and we look forward to meeting you. And other than that, if anybody wants to come to Dublin, it's on the page over the summer, and visitors or see the operation. You're very more than welcome.

I believe we're setting off on another 5-year period of very strong traffic growth on aircraft that have more seats that burn less fuel, and they will, in turn, deliver very strong profit and very strong share price appreciation. So with that, thank you very much for joining the call. Good morning. Look forward to seeing you all the next couple of days. And if not, [indiscernible] to Dublin during the summer. Thanks, everybody. Bye-bye.

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

Hello, and welcome, everyone, to the Ryanair Holdings plc Q3 FY '26 Earnings Release. My name is Elliot, and I'll be coordinating the call today. [Operator Instructions]

I would now like to hand over to Michael O'Leary, Group CEO of Ryanair Holdings, to begin. Michael, please go ahead when you're ready.

Okay. Thank you. Good morning, ladies and gentlemen. You're all welcome to the Ryanair Q3 results call. I'm joined by all the members of the senior management team here in Dublin. Eddie Wilson and Jason are in Brussels today. So they're caring from Brussels, and Neil Sorahan is in London but they're all on the call.

You'll have seen earlier this morning, so we released our Q3 results. Q3 profit after tax of EUR 115 million pre-exceptional compared to a strong prior year Q3 -- prior year Q3 of EUR 149 million. The main difference is the absence of any supplier compensation in the current third quarter. We got some compensation from Boeing on the aircraft delivery delays last year. The underlying business, however, is performing strongly. Traffic is up 6% to 47.5 million passengers.

Average fares were up EUR 1 from EUR 43 to EUR 44 over the quarter. Strong cost control continues with unit costs flat prior, obviously, the exceptional charge. 206 Gamechangers were in the fleet at the end of December. We take the last 4 Gamechanger deliveries will take place in February. All 4 aircraft have exited the shop in Seattle and are -- we're just doing the last of the fit-out. So Boeing doing are terrific job in catching up on deliveries, which puts us in very good shape this year of -- we have the full fleet additions for the full summer schedule. That will incorporate 3 new bases, 106 new routes. They're all on sale for summer '26. And I think the big news is we've now hedged 80% of fuel for next year, FY 2027 at just $67 a barrel. This year, we're hedged at $76 a barrel, and that should deliver us savings about $500 million on our oil bill in the next 12 months.

Turning to the quarter. Q3 revenue rose 9% to EUR 3.21 billion. As I said, the scheduled revenue increased as traffic grew 6% and 4% higher fares. We had a particularly strong October school midterm and then strong close-in Christmas and New Year bookings. Operating costs pre the exceptional charge rose 6% to $3.11 billion. That was flat on a per passenger basis and another impressive performance. We've noted most of our competitors reporting numbers where they are unable to control their unit cost per passenger.

With almost all the 8200 Gamechangers now delivered, other income dipped in Q3 due to the absence of delivery delay compensation in the quarter. And for Q4 FY '26, fuel is hedged 84% hedged at $77 a barrel. but we've locked in hedges for jet fuel for FY '27. We're now 80% covered at $67 a barrel. I don't propose to go through most of the rest of the detail on the press release. We'll take it as read. I want to touch briefly on the baseless AGCM fine.

In late December, the Italian Competition Authority levered an utterly baseless fine of EUR 256 million against Ryanair, alleging that our direct distribution to consumers in Italy was somehow anticompetitive or contrary to competition law. This ruling is -- flies in the face of the precedent Milan Court of Appeal ruling in January 2024, which found in our view correctly that Ryanair's direct distribution model and "undoubtedly benefits consumers by leading to lower fares that it's economically justified in terms of containing operating costs and eliminating the costs associated with intermediation ticket sales. And it contributes to a direct channel of communication for any possible need for information updates on flight."

Both we and our Italian lawyers are to quote them highly confident that this baseless ruling will be overturned on appeal. We expect the appeal will take 1 to 2 years. And it's for that reason, normally, we provide 50% for these legal cases in our quarterly numbers. In these circumstances, we will be, given the strength of the legal advice within our rights to not provide at all, but we think that's too optimistic whereas in this case, we think providing 33% is a sensible and conservative approach. But we are very confident that, that baseless fine will be overturned.

The definition, the market definitions there untenable attempts or to claim that we are dominant in the Italian market with a 30% market share is utterly absurd and we believe will be overturned on appeal.

Turning to the outlook. I think the good news this morning is we've raised the full year traffic guidance from 207 million to 208 million. that is due to strong demand over the Christmas period, and we were able to add some extra flights over Christmas, new year on the earlier-than-expected Boeing delivery. Unit costs have performed well, and we continue to expect only very modest FY '26 unit cost inflation as our Gamechanger deliveries, fuel hedging and effective cost control helps to offset unjustified increased ATC charges, higher enviro costs and the roll-off of last year's delivery delay compensation.

While Q4 won't benefit from Easter, fares are trending ahead of the prior year, and we now believe that our full year fares will exceed the previous plus 7% growth by maybe 1% or 2%. We think we can get to plus 8% or plus 9% for the full year. And therefore, at this stage, we're cautiously guiding full year profit after tax pre-exceptional in a range of EUR 2.13 billion to EUR 2.23 billion for the full year, up from the EUR 1.6 billion we recorded last year. Obviously, the final FY '26 outcome will remain exposed to adverse external developments in Q4, including any escalations of conflicts in the Ukraine, the Middle East, macroeconomic shocks such as that visited at Davos last week, and any further impact from repeated European ATC strikes and mismanagement.

I would want to touch briefly, I thought there were a number of positive developments coming out of Davos last week, not least a renewed focus on the need for Europe in general and Ireland in particular, to focus on competitiveness. I thought there was a very good presentation last week on the BBC where one of the correspondent said that the agenda for Europe for the next 4 or 5 years is going to be Draghi and drones. They need to begin to focus on European competitiveness if we're to finance defense spending, and they clearly need to increase defense spending.

There are a couple of things. Obviously, we would call for the early implementation of the Draghi report. Ursula von der Leyen has done absolutely nothing on that issue for the last 18 months, except talk about it. And it is time now for urgent reform of Europe's failing air traffic control service and the immediate rollback of enviro taxes on short-haul air travel in Europe. It is indefensible that we tax European short-haul air travel while we exempt all the non-Europeans traveling to and from Europe.

And if Europe is serious about competitiveness, we should be abolishing those enviro taxes on air travel ASAP, and Von der Leyen should start focusing our commission, not on more regulation of U.S. multinationals, not on b***s*** regulation of EU261, listening to idiots in the European parliament, but do something really important, and that is fixed Euro's broken ATC services. That can be done with 2 AM simple measures. One, required that the ANSPs are fully staffed for the first wave of morning flights; and two, protect all the flights during national strikes.

And with that, I call for competitiveness, both in Ireland and over in Ireland, where our government could actually get on with lifting -- scrapping the Dublin Airport cap. They promised to do so last January as soon as possible. 13 months later, absolutely nothing done. The good news is that Airlines for America have now filed a complaint with the American authorities, which we believe is likely to lead to some Aer Lingus flights being denied access to New York or Micheal Martin being denied access to the White House on Paddy's Day in 6 weeks' time. And it is a sad indictment of our incompetent government that it's going to take the American administration to embarrass them before they start passing legislation with their 20-seat majority.

With that, Neil, I'm going to hand you over and take us quickly through the MD&A, and then we'll open up for Q&A, please.

Okay. Going back to slightly more mundane things again. Unit costs, as Michael said, performed very well. And we're now very comfortable with our modest unit cost inflation for the full year. We'll also have the benefit of those fuel hedges into next year, which delivers significant jet savings, albeit some of that will be offset by the rising environmental costs, which will go from about EUR 1.1 billion this year to somewhere over EUR 1.5 billion next year.

Balance sheet, rock solid, and we're now in a very strong position to pay down the EUR 1.2 billion bond, which matures in May out of our own cash resources. That will further differentiate ourselves from everyone else out there. We've also been jumping on recent weakness in the dollar to increase our hedging on the MAX 10, which is now up at 40% at 1.24.

And then I would highlight our total shareholder return over the past 3 years, which is coming in at just over 150%, putting us firmly in the upper quartile of the EuroSTOXX 600 Index. We're in a small club of 3 who actually have a PAT in excess of 15%, investment-grade ratings, net cash and TSR over 150%.

With that, Michael, I'll hand back to you, please.

Okay. Thanks, Neil. And Eddie, is there anything you want to highlight in terms of current trading as we look into the summer of '26?

No. Just to say that we continue the churn and we reward those countries, regions and airports that are lowering access costs, and we continue to migrate the growth in capacity from those that continue to put taxes up. So that's generally the story in terms of where we're allocating capacity, yes.

We see a growing trend, by the way, of national governments abolishing environmental taxes. I mean, Sweden, for example, the home of Greta Thunberg, and flight shaming is abolished there. Aviation tax. Hungary abolished aviation tax. Slovakia has abolished theirs. Albania has abolished theirs. A number of the bigger regions in Italy are also pushing back and abolishing the municipal tax. So this trend is continuing while Europe sits there doing nothing about the egregious ETS taxes, and it is time for Europe to act on that. And we also call on the Irish government to abolish the stupid and illegal Dublin Airport cap before the end of February, certainly before our Prime Minister gets to the White House.

And secondly, it's time to abolish ETS. It is egregious that citizens flying to and from peripheral islands like Ireland, Cyprus, Malta are being hit for these taxes when people flying long-haul flights, transatlantic flights to and from Ireland are completely exempt. The way forward, as called for by A4E is actually to bring ETS into line with CORSIA, which would dramatically reduce environmental taxation and dramatically increase the competitiveness of European air travel.

And with that, moderator, we'll open up to Q&A. [Operator Instructions]. And if you could start straightaway, please.

[Operator Instructions] First question comes from Jamie Rowbotham with Deutsche Bank.

One for Michael, one for Neil. In the prerecorded Q&A, you were asked about short-haul industry capacity. You said very heavily constrained. As you look to summer '26, is that a fair description of all markets, Michael? Or does it vary quite a bit? Because from the U.K. to short and mid-haul beach destinations, it looks to us as though there could be well over 5% seat growth again, which doesn't really feel like a shortage. So any thoughts on that, please?

Second one for Neil. Consensus has you on track to have about EUR 3.5 billion of net and gross cash by March '27 because you'll be debt-free by then. Scope for strong cash generation again in the year to March '28, even with a step-up in CapEx for the MAX 10. So this being the case, how should we think about the potential for further returns to shareholders beyond the current EUR 750 million buyback, please?

Okay, Jamie, thanks. I'll take the first one, Neil, and you do the second one. I'm always wary about these short-haul capacities. What happens this time of the year when analysts are looking at tracking capacity, you have airlines over declaring capacity for the summer trying to secure slots. But the capacity doesn't emerge. If we look at aircraft additions, we've taken 29 aircraft for this summer. So our capacity will grow 4%. Our traffic will grow from 208 million to 216 million passengers next year. We think Wizz have taken a few additional aircraft, but we're struggling to find out where they put them.

But there is a degree of churn going on. So I mean, I would certainly look at markets like Albania, where we're opening up a 4-aircraft base in Tirane this summer, Wizz have about 12 aircraft in Albania, but they seem to be moving those aircraft out of Italy. So there is a high degree of churn. I would say we expect there to be some increase in seat capacity out of the U.K. into the leisure destinations.

We're not sure how well the U.K. economy will perform this summer. But if you take it across the piece, where we're growing from 208 million to 216 million passage, Jamie, there will be some markets, and I think certainly, there will be a fare war with Wizz in Tirane. But we would expect to see strong fare growth in places like regional Spain, Vienna, Germany, where we've churned capacity out of there, and we are underweight capacity there. We're still seeing strong growth in Poland. We're seeing strong growth in regional Italy is going to grow very strongly this year because they're abolishing the municipal tax. But that municipal tax will give us a fair boost in yields as well.

So overall, across the piece, if you take the European short haul, it's somewhere around 800 million seats, we're going to add about 10 million seats this year. We think Wizz might add 3 million or 4 million; easyJet, 1 million or 2 million on aircraft upgauging. Really, there's not that much capacity across the marketplace. There is no doubt that the capacity is still heavily constrained. And we think that will lead towards higher pricing, particularly from our competitor airlines who can't manage costs. Against that, we think there will be some downward pressure on pricing because there's so much fuel savings coming through the system this year.

But overall, I would expect and certainly we are finalizing our budgets at the moment, modest fare increases in low single digits this year, but meaningful cost savings, particularly coming from fuel. And I wouldn't get too worried about individual markets because, yes, there will be some markets will have above GDP capacity growth, but that's more because we've churned. There will be other markets that will have considerably -- that are in decline, Germany, Austria. I mean Vienna Airport last week themselves predict this year, their traffic will grow from 33 million to under 30 million. There's no doubt that passengers driving to and from Vienna this year will be paying meaningfully higher airfares because of the failure of the Austrian government to abolish the tax. Neil, cash flows?

Yes. Jamie, you're right that, that EUR 750 million buyback will probably run out to the back end of the current calendar year. As of this morning, we're just under halfway through it. So fairly pleased with how the brokers are managing the pace of that, about right if we're going to run this out to the end of the year. So absent the dip in the share and things been accelerated, no changes there. Beyond that, we've been fairly clear our capital allocation policy is to retain a strong balance sheet. I'd like to see the cash trending up somewhere EUR 3.5 billion to EUR 4 billion, a big strong war chest there, which enables us to jump on any opportunities that arise.

We'll be investing in the 300 MAX 10s. We'll continue to invest in opportunities where they come along like the 30 spare engines that we saw from CFM last June, and we hope to get the last of those engines in before the end of this month. We have engine shops coming out afoot. But taking all of that into account and the strong free cash flow that we expect to have in the business, there'll still be opportunities to return more cash to shareholders. We have a 25% dividend payout. That will see the dividend increase next year, thanks to the higher profitability in the current year. And it's reasonable to assume that once we've done all of the other things I talked about and we've got EUR 3.5 billion to EUR 4 billion in cash, that there will be more buybacks or special dividends coming to shareholders' way.

We now turn to Harry Gowers with JPMorgan.

First question, probably just for Neil. Anything you can say directionally on ex-fuel or total unit costs for March 2027 financial year yet? And then second question, I think fares at plus 4% in Q3 is a strong result, especially you're still growing capacity a decent amount in the quarter year-over-year. That compares to maybe some softness seen at some of your competitors on short haul over the last 6 to 9 months.

So I mean, maybe one for Michael. What do you put that pricing outperformance down to versus the rest of the market? And are you surprised at all with how strong fares have actually been as the OTA tailwind has normalized?

Neil, do you want to take the ex-fuel unit cost and then I'll do the fares?

Yes. Look, Harry, I'm not going to give you a huge guide on that because we are doing the budgets at the moment. We've highlighted the savings coming through on the fuel line. I would expect that the cost advantage that we have over everyone else is going to widen, particularly as we pay down our final bond and we become effectively debt-free at a time when everyone else is taking on expensive leases and expensive financing in the business.

We'll continue to have significant cost discipline over the course of next year. We've been locking in some very good airport deals, and they'll see us in good stead for the next few years. We have all of the 210 Gamechangers. So that's good for the efficiency in the business. But I'm not going to get into detail on exactly where the ex-fuel costs or indeed the total costs will go next year because the budget is still underway.

Thanks, Neil. And Harry, on the fares, again, if you remember, let's go back a year, we had the kind of the OTA boycott in FY 2025. Fares fell 7%, traffic was up 4%. And in that year, we saw a lot of our kind of competitors benefiting as the OTAs at short notice switched a lot of our kind of holiday traffic to our competitor airlines, particularly in the U.K., and they were reporting kind of strong growth and yields up. This year, we've seen that the reverse of that kind of restore itself. We've signed up OTA with almost all the OTA agreements with the exception of eDreams. We've seen very strong resurgence of those bookings coming back to us. So we have stronger bookings at better yields. I think our competitors have been the opposite at the end of that trade, losing some of that traffic back to us as we had fixed the OTA distribution agreement.

So what do I put the 4% in the third quarter down to? We definitely had a strong October schools midterm break, and we had a very strong Christmas. Also, we've taken delivery of 25 extra aircraft -- the 25 new aircraft, we were able to extra -- Christmas extras that were timely and paid well. But really, this is the continuation of the reverse of the trade of the previous year. So the previous year fares were down 7%. We had thought earlier on this year, we wouldn't get back all that 7%. Then we thought we'd get back all the 7%. Now we're saying today, actually, it's going to be a little bit better. It could be 8% or 9%, 1% or 2% ahead.

But I think an awful lot of that was the reverse of that OTA trade from the previous year, which also calls into question the Italian competition ruling, like we now have direct access to all OTAs and most of the mom-and-pop travel agents directly into the Ryanair inventory. All we ask them is that you don't inflate and they're not allowed to inflate Ryanair's prices for fares or for ancillaries. And the one OTA, which is eDreams in Spain, who refused to sign up to that because they continue to try to overcharge consumers either for fares or for ancillary services were the one making the complaint to the Italian AGCM.

So it appears despite the Milan court ruling in February, January, the Italian competition authorities would like us to facilitate the one unlicensed OTA that wants to continue to overcharge consumers. So apparently, the Italian competition thinks we should facilitate that kind of anti-consumer behavior, which again is one of the reasons why we're so strong on why we think that would be overturned on appeal. But I think the strength of that is really -- we're still benefiting and will through the entire of this year, the reverse of that OTA boycott in the prior year when fares went down 7%. It looks like we're recovering 8% or 9% of that. So over the 2-year period, average fares are up 1 or 2 percentage points. Next question, please.

We now turn to Savanthi Syth with Raymond James.

Just regarding the CapEx plan for fiscal year '27, the $2 billion you mentioned in the video calls, how much of that is related to the engine shops? I'm just wondering if kind of beyond the step-up related to PDPs, if we see a bigger step-up as you go into kind of fiscal year '28 on the CapEx front. I know that's a little bit far out, but just kind of curious how that -- what's baked in and what might still be yet to come.

And then for my second question, I was just kind of wondering in terms of distribution now that you've kind of gotten everything, are you able to share like how much of your bookings come through OTAs versus kind of corporate platforms such as GDSs versus direct on the website?

Okay. Savi, I'm going to ask Tracey McCann, our CFO, to deal with the engine shop. Let me deal with the OTA third-party bookings. Generally speaking, and it's hard for us to track it all down because some third-party bookings still come through the website. We are hovering somewhere between 10% and 15% of our bookings are coming through these approved OTA distribution agreements and third parties. Very little comes through GDSs, although we do have GDS distribution agreements.

Overall, I would think the number hovers at the moment between kind of 10% and 15%. 85% to 90% are people booking directly on the website. Some of those direct bookings are being made by travel agents, and we have no issue with that. As long as the customer is getting the actual Ryanair fare. So it's not an accurate number, but certainly, the volume of third-party bookings that we are coming through OTAs and approved distribution agreements with mom-and-pop travel agents and OTAs is somewhere between 10% and 15%.

Tracey, do you want to take on the engine shop CapEx?

Yes. So for the CapEx figure for next year, there's very little of that is actually related to the engine shop. There may be some deposits on things like tooling, test cells, but the big spend in that actual CapEx for the engine shop will likely fall into '28, '29 when that shop becomes operational.

We now turn to Alex Irving with Bernstein.

Two for me, please. First of all, on the Lauda fleet, Lauda A320s are getting quite old, seems to be about 18 or older, except for 5. How do you see that fleet evolving over the medium term? Do you want to keep that all A320 and create some competitive tension between the 2 OEMs or to have the scale economies of an all 737 group? And if you do go a mixed fleet, how many A320s would you need for that to be efficient?

Second question, since it's topical, you absolutely concluded that the marginal cost of Starlink would be more than the marginal ancillary revenue. Is that because your flights are too short to drive willingness to pay? And how do you think about the ancillary revenue pool you could expect if you were to offer in-flight WiFi?

Okay. Thanks, Alex. I'll take those. I might have Eddie to comment on the Starlink thing. But if you take the Lauda fleet, the leases that we have 26 or the 27 A320 or 26, the leases run out to '28, '29. In an ideal world, I would like to replace those with new Airbus aircraft, but we're not in that ideal world at the moment. But there could be a turn in the cycle or some unforeseen event between now and 2028, '29. So we have another 2.5 years to go. We could opt to extend those aircraft by another year or 2, but they are getting close to end of life and the maintenance is getting expensive on them.

So in an ideal world, I would love to replace them with, say, I'd love to get an order done with Airbus for 50 Airbus aircraft, but they have no availability decided -- for deliveries decided 2031, 2032 and the pricing at the moment is off the charts. Therefore, our fallback position will be, at the moment, maybe extend the -- Airbus leases by a year or 2 bits cheap to do so or replace them with -- at that stage, we're into getting 50 MAX 10 deliveries from Boeing. We would replace the MAX 10 deliveries. But I would prefer to keep Lauda as an Airbus operator. I think it's useful to have some Airbus operation in the overall fleet generally.

But that's the kind of -- the fallback position is swap them out for MAX 10s or put some of our older NGs in there and take out the older A320s.

The marginal cost on the Starlink thing, and I want to -- again, we had a bumper week of free PR last week. I dispute, by the way, an awful lot of articles written over the weekend that Ryanair won hands down. I think we both got a significant win out of it. Musk and X got lots of free cheap publicity by calling me, I think it was a deranged -- I don't know, a retarded t***.We certainly got a lots of free publicity and a seat sale and a big bump in website visits. The press conference last week was covered. There was 1,500 news articles covered across, I think, 59 different nations, many of whom had never heard of Ryanair before, but certainly have now, even if it's only Ryanair, the airline run by a retarded t***. It was good for PR.

The fundamental issue with -- look, I think if you take my view, I think in 5 years' time, as the technology continuously improves, I think most airlines will be fitting a WiFi access on board short-haul aircraft. We will certainly do so in a heartbeat when we don't have to put an aerial outside the fuselage of the aircraft that has a fuel penalty or a fuel drag. I think the technology will improve in the next number of years that you'll be able to put the aerial or the antenna, I don't know, in the front or the back hole or in the baggage hold or something. Anything that doesn't involve you drilling holes in an aircraft fuselage and putting 1 or 2 aerials on it that has a fuel drag penalty.

We can argue over what the fuel drag penalty, although interestingly, Mr. Musk's Grok AI facility says that we're right and he's wrong. And therefore, while you shouldn't always believe what AI tell you. I think it's coming, but would we pay EUR 200 million a year at the moment, which is the rough cost of the installation and the fuel drag? The answer is no. I was asked, would I be worried if he gave the Starlink system free to some of our competitors, easyJet, Wizz Air and others? And the answer would be absolutely not. I have nothing but confidence that 99.999% recurring of passengers when they're making a booking will focus on what's the cheapest fare to XYZ. No very few will focus on -- I wonder if they have free WiFi on board and that will determine, I'll pay a higher airfare for the free WiFi. They won't.

We would happily put it on board our aircraft now if I thought there was some way of monetizing it, and that is getting passengers to pay EUR 1, EUR 2, EUR 3 or EUR 5 access to free WiFi. To be fair, and we're talking to Starlink, Amazon and also to Vodafone, they all believe that passengers will happily -- 50% or 60% of passengers will pay for it. We think the number is closer to between 5% and 10% of passengers. And therefore, it will simply add to costs without adding to revenues. But I have no doubt in my mind that a low fare will beat a free WiFi on board every single time. But I think as the WiFi technology improves over the next 4 or 5 years, we'll all be offering free WiFi access. Customers will use it if it's free, but if they have to pay for it, they won't use it.

Eddie, anything you want to add to that, the Starlink or the -- since you're leading the discussion with Amazon and Vodafone as well?

Yes. I mean, just to back up what you've said there, I think the technology will improve. I mean, like when we were talking to some of the other providers, there was talk of trying to put it into one of the aircraft have the fuel drag. Vodafone haven't got their satellite system in place yet. Kuiper or Amazon were later to the game providers, you've got the airline and you've got the customers. We're not going to increase -- customers are going to pay for it. So we're going to have to come up with -- if there is going to be some sort of drag on it, there's going to have to be a model that comes out that is risk-free for Ryanair.

Eddie, your link is breaking up there. I think we've got the message. Yes, no, for some reason, you're breaking up. It's not coming through well. Okay. Anyway, thanks. We've got the message, right? Next question, please.

We now turn to Stephen Furlong with Davy.

So 2 things, one for Neil maybe. But the new Eurocontrol rates from 2026, maybe you could just talk about that and what effect that would have for Ryanair. And the second thing is just the whole area of engines and engine cost inflation. I mean it just seems to be almost out of control. And how do you think, Michael, that's going to play out in the industry going in the next couple of years or out to the end of the decade?

Okay. Neil, do you want to take Eurocontrol rates or you want Tracey to...

Stephen, they're starting to come through, and they won't be double digit this year. It looks more like kind of high single digit at this point in time is where they'll end up.

And some are reducing. I mean the Slovakians have reduced ATC fees. The Polish PANSA have come out, I think, with about a 7% or 8% -- a 12% reduction in their rates. So yes, there is finally a bit. But the big guys, the French, the Germans, the U.K. still -- who provide the worst service are still talking pricing up. And if there was ever a demonstration or if Europe wanted to demonstrate it was serious about competitiveness, they should start by fixing air traffic control, both the s***** service and the out-of-control fees. But I wouldn't hold my breath on Ursula von der Leyen doing anything on competitiveness except talking about it, chatting about it. But I would expect -- and I think the guys are right, it's mid- to high single digits this year.

On engine costs, they are simply getting completely -- I mean, they are completely out of control. But it is a massively constrained market. To be fair, the engine manufacturer has been losing money for 20 or 30 years. it almost bankrupted GE over the last 20 years. But post-COVID, you have enormous supply chain constraints. You have a huge surge in demand or supply for aircraft. Boeing and Airbus deliveries are backed out to early 2030s. COMACs are not yet at the races in terms of serious volumes. But to the extent they tool up volumes, that will put another drag on certainly the supply of Airbus engines and Airbus avionics. So it is a very constrained marketplace. And we are seeing dramatic increases.

Now we're luckily, in Ryanair, we're insulated. We have a Power By The Hour contract that runs out to 2028, 2029. We believe setting up our own workshops, our own in-house engine shops over that period of time is the way forward. But we are facing -- even we're talking to GE and Safran at the moment about spare parts, the contract, they are getting really, really difficult to deal with even when you're as large as we are.

And we believe the best way forward is to take that labor in-house. If you're getting third-party engine maintenance in the next 5 to 10 years, you are going to be absolutely screwed. You saw GE results last week, bumper margins, bumper profitability. There's only 2 suppliers in the world on short-haul engines at the moment. That is GE, Safran and Pratt & Whitney, and Pratt & Whitney are struggling to repair the engines that they've already made. We badly need someone like Rolls-Royce to come back into that marketplace, but there's no sign of it yet. But I think that will be an area.

By us, one of the reasons why we went out last year, for example, and bought 30 spare engines where we got -- they needed cash for some quarter end or something, we got a terrific deal on that. So I think where we will -- by setting up our own 2 in-house engine shops and by being able to buy aggressively spare engines and spare parts at a time of distress for the manufacturing distress, we will be able to have a very significant engine maintenance cost, advantage over all of our competitors who are third-party takers of third-party contract rates. And it will be another point of widening gap.

But I think one of the things that is going to drive -- I mean, I come back to the fundamentals. I look at the North American market last year, Southwest, which is the lowest fare airline in the U.S., its average fare was $115 last year. We, in Europe, my average fare last year was EUR 45. There is going to be upward pressure on cost for all airlines in Europe in the next 4 or 5 years, airports, airport handling, certainly engines and certainly aircraft costs, like new Airbus, new Boeings are pricing up way over where we priced our MAX 10 order. But I think there is a -- given the capacity constraints across the marketplace in Europe, particularly as consolidation continues to roll out with Lufthansa buying Alitalia, Air France-KLM stepping up their ownership of SAS, TAP will be mopped up by somebody. There is going to be less and less short-haul capacity and that short-haul capacity will price upwards.

So I think plus or minus unexpected geopolitical events, we're entering into a 4- or 5-year period this side of 2030, where constrained seat capacity will enable airlines to price upwards, but they will need to price upwards because of ATC inflation, airport and handling and certainly hub airport and handling cost inflation and engine cost inflation going forward. But thankfully, in Ryanair, we will be much better insulated against that kind of inflation because we're taking it in-house ourselves as we have done with our airframe maintenance over the last 20 years. Neil, anything else you want to add on that?

No, I think that covers it well.

I'll now turn to Muneeba Kayani with Bank of America.

So firstly, Michael, just wanted to go back on your comments on the fares. So your guidance for fiscal '26, I think if I've done my math right, implies something like a 2% to 3% fare increase in the fourth quarter. If you could talk about like is that what you're seeing in your current bookings for the fourth quarter as well as kind of any signs on Easter, I know early days in terms of bookings, is the first question.

And then secondly, on the MAX 10 certification, I see your positive comments on Boeing. How confident are you on the summer? And if there's slippage, like how do we think about the timing in terms of your deliveries for next year? Like when is the latest that you need to have clarity on this?

Okay. Thanks, Muneeba. Fares for the Q, again, don't get too hung up on fares in the fourth quarter. I think the strongest signal we can send today is we raised the full year fare guidance from plus 7% to plus 8% or 9%. Bookings at the moment in the fourth quarter are strong. We're slightly ahead of where we were prior year. Average fares at the moment are modestly up. And what does modestly mean? Look, they're modestly up. But a lot depends, Trump caused chaos at Davos last week, if there's peace in Ukraine next week, -- there's too much geopolitical uncertainty out there at the moment to be.

I think people should take reasonable confidence from our full year fare guidance up 8% to 9%. The one thing we're not sure of is the first weekend of Easter is going to fall into -- the week before Easter, of course, the first weekend falls into the 28th, 29th and 30th of March. So you get a lot of school holiday traffic. So we might get a little bit of an Easter bump at the back end of March. But if we do, it will come out of April. So again, don't worry about it. I think take comfort from the fact that gradually over this year, we started off thinking we wouldn't get to recover last year's 7% decline. Now we're finishing up 1% or 2% ahead of last year's 7% decline. I think that's the better thing to focus on rather than worrying about the detail in Q4.

MAX 10s, again, I want to pay tribute here to Kelly Ortberg and Stephanie Pope. They are doing a terrific job in Boeing at the moment. They really are getting that thing turned around. Stephanie Pope sits on top of the workshop. She worries about it. You can call her. She's there, she'll answer your questions. And I can think they came to us last year and said, look, they were originally supposed to deliver us the 29 delayed aircraft in the spring of '26. And said could you -- if we deliver them over, could you take them over?

We didn't want it. We said we'd take them just so we didn't run into any problems in the spring of '26. And to be fair, they've delivered 25 aircraft before the end of December. The last 4 aircraft, which were due in February have all exited the shop in Seattle. We're just fitting out the interiors now. And they all look like they're going to come about a week or 10 days earlier than their revised original delivery date. So they really are getting on top of this thing. We get a lot of very positive feedback. They now expect the MAX 7 certification to take place in probably Q2 of this year, MAX 10 in Q3.

We've heard back and again, kind of secondhand both from EASA and from the FAA, they're really impressed with Boeing. They don't get b***s****** by Kelly or Stephanie. They have questions they get answered. There's a much more transparent relationship with the FAA. ENAC, or sorry, not ENAC, the European EASA have been equally complementary. They're impressed with the MAX 10 and the certification work to date. EASA certainly tell us they don't see any reason why it won't be certified. Everything is going -- and that doesn't mean there won't be a slip between cup and lip. But certainly, everything at the moment suggests that they're going to deliver the first MAX 10s.

I think the first delivery is due to WestJet in September of this year. I think the second customer is United before the end of the year, before December. And then I think we're about the third customer. Our first delivery is due in early February of '27. They're already -- and I think the most important signal that came out of Boeing is they started making the MAX 10s now before they're certified. So there's a reasonably high degree of confidence that it's going to get certified. And they really are -- there's talk last week that Boeing are going to now get the -- begin production up in Everett, which would be the first time they've made a 737 outside of Brenton. That takes monthly capacity up from 47 to 63. Everything is going in the right direction, and there's a really good management team sitting at top of Boeing who are just getting on with the f****** job and delivering.

And I would be very optimistic now. To answer your question, as long as certification doesn't slip into early 2027, if they get certification and deliveries start at the back end of '26, I think we're in reasonably good shape for our deliveries in -- and our first 15 deliveries are due in February, March, April and May of 2027. At the moment, I would think the better risk is actually they might come a couple of weeks earlier than get delayed. But something else could go wrong. But I think there's a lot of confidence out there, certainly among the regulatory community that the management team in Boeing have their act together, that there's no -- they're not covering up. They're not hiding.

And certainly, of the deliveries we've got this year, no defects, nothing carried forward. No fuselages are going out of Wichita up to Seattle. Really, I think you have to be very impressed by the job that the management team in Boeing are doing, and we're very supportive of the work they're doing, which is why we're taking these deliveries early. So the risk to us, Muneeba, is that certification doesn't happen in Q2 or Q3. The certification slips into maybe Q1 of 2027. And at that stage, we might be running a bit late on our 15 deliveries. But we could take those deliveries up until April, May or even June of 2027 and still have them in for the peak period, July, August, September.

We now turn to Conor Dwyer with Citi.

First question is for you, Michael. You're talking about it getting more difficult to deal with the engine manufacturers. Do you think it makes it more difficult as a result of that to do a deal on spare parts for your own maintenance houses? And does that kind of reduce some of the value in them?

And then secondly, you yourself pointed out some churn in certain markets, certainly looking at some of the data that competitive overlaps are kind of rising with you and some of the other low-cost guys. And while there might be some fare wars locally, do you think there's much of a risk that, that spills over into the rest of the market at all into the summer?

Okay. Eddie, I might get you to give an update on churn and the risk of crossover with competitors. Look, no, I mean, at the moment, I think the engine manufacturers are becoming incredibly difficult to deal with. But thankfully, we have most of our deals already done. I mean the critical difference at the moment is when we ordered the MAX 10s back in at the end of COVID, the deal was done with Boeing, and we priced it. Boeing did most of the negotiation with the engine manufacturers. So we've priced all those engines. We get a certain number of spare engines for every number of aircraft deliveries we take.

We have found it a little bit more difficult than normal dealing with CFM and GE on the engine shops, but we're very close, I think, to signing up a multiyear spare parts agreement with CFM. I would expect to be in a position to announce something sizable there, and it's a multibillion order by the end of our fiscal year. But we are the biggest airline in the world. These are very sizable multibillion. If you're not, you're trying to buy much smaller spares or you're trying to negotiate third party -- already, for example, when we started the discussions around setting our own engine shops, 2 or 3 years ago, when we were talking to them about extending our existing Power By The Hour agreements in 2028 and '29. I mean the first quote came back was 3x our existing rate. And on the LEAPs on the MAX aircraft, it was 5x -- just picking a number, it was 5x our existing rate.

And I don't think those numbers have softened any. Now I think by setting up our own shops and being able to -- we have a huge spare parts inventory already, but buying more judiciously and buying spare engines, we will be able to meaningfully beat those -- that kind of cost inflation going forward. But at the engine manufacturer, I've lost money for 30 years, and now it's their turn to make money. And it's just another one of the challenges. The advantage is we have is huge scale. We can -- the ability to invest in engine shops. And the labor is not expensive. I mean spare parts -- spares is about 85% of the cost of repairing engines. Labor is reasonably cheap. But access to third-party engine shops is incredibly tight at the moment and therefore, incredibly expensive.

So we have a very good relationship with GE, with Safran. In fact, I was speaking with Olivier Andries this morning in Safran. We have good relationships with them, and we are one of their largest customers. So I think we are okay. But if you're smaller, you're a leasing company or you're something else, you are going to get fried alive by these guys. I was intrigued at GE's numbers last year. I thought the number that jumped out at me was that GE share price has risen by 500% from, I think it was January '23 or January '24 to January to date. And I think Ryanair is performing well, but sadly, we can't deliver that kind of share price appreciation. But these are cycles and the best thing to do is to manage your way through the cycles.

Eddie, subject to your line being okay, can you give us your view on churn? And is it increasing the crossover with competitors this summer?

Yes. Hopefully, the competitiveness of Belgium and their phone line, can you hear me there?

Yes, perfect.

Can you hear me?

Yes, loud and clear.

If you look at what like this summer, we're going to grow by capacity, if you look in the context of about 5%, it's very pointed. I mean, Italy continues to absorb capacity. You can see easy air retreating on domestic connections, particularly into Rome as they migrate traffic into Germany and that connections. Like the U.K. is a very competitive market. But we, again, will be up at 9%, 10% growth there because of our ability to negotiate deals at airports. We have -- we've just recently concluded a deal with MAG at Stansted, Manchester and East Mids, and that gives us cost certainty out to 2035, something that our competitors don't have.

So like the U.K. will be a competitive market, but we'll be off significantly and more established lower cost base. Poland is going to grow by just over 20%. Albania, where you were last week, Michael, seems to be able to absorb that capacity right up against the competition down there. And you look on the other side of it then in Spain, again, we continue to lock out places like Malaga and Alicante. Like most Spanish airports like Madrid and Barcelona are close to being full now, including Palma, Malaga and Alicante. And we've taken out close to 3 million seats out of regional Spain over the last 2.5 years because we're not getting a break on cost there. The same happening in Dublin, Austria, which you touched on earlier and then regional France and to a lesser extent, in Germany, we put an extra 300,000 seats in last week, but we're not back to anywhere near pre-COVID level because they decided to not increase the tax there and they've got on the additional EUR 3.

So the message is getting through. And you have that pointed increase in capacity where we're getting lower access costs. In Italy, for example, the latest region to deliver on the municipal taxes is Emilia-Romagna in 3 of the smaller airports there. And the message has finally got through. Look, if you want traffic, if you want to have access to, in particular, what Ryanair gives is that connectivity to 31 other markets. And that's what those airports want. And they know that we're going to be there for the long term, and we won't be flip-flopping on capacity as some of our competitors have. So we're going to continue with that. And we've already started the churn for winter '26. And we'll continue on that, and we'll see. But I think it's really important, I mean, what's happened in one of our most competitive markets in the U.K. that we've got that long-term deal now secured in London that gives us that cost certainty out to 2035.

And I know you've Jason McGuinness is there, our Commercial Director there with you. Jason, anything you want to add is anywhere -- I mean, I don't -- haven't noticed any particular increase in crossover. Are you seeing anything there? I mean, I know we're turning -- we have a big base, but they're competing with us on very few routes. I mean, they seem to be serving Moldova and Afghanistan and they seem to be desperately -- wherever we meet with these days, they seem to be trying to find routes that we don't serve, and they're welcome to those. But the routes we serve, they're not able to compete with us.

Yes, I'd agree. I haven't seen -- we haven't seen any increase in that kind of crossover. Like we are growing, as we said we would, Central and Eastern Europe capacity very, very quickly. Like it's grown to grow by 15% this summer, not to repeat, but Poland, Albania and Slovakia are all growing by double digits. We're putting 8 additional aircraft into Poland. Why? The airports there are negotiating lower costs and the market is absorbing capacity in Central and Eastern Europe incredibly well. And we are taking capacity away from some of our Western Europe markets, the likes of Dublin, which is flat this year because they're putting up charges plus 10%. So overall, see no real increase in crossover and Central and Eastern Europe is growing very, very well and absorbing the capacity very, very well.

We now turn to Dudley Shanley with Goodbody.

Just one question left. I was just wondering if you could talk to us about labor. I think you're starting to come towards the end of the labor agreements in the next few years. Just how...

[Technical Difficulty]

Dudley, sorry, you got cut off there. We've lost you. Okay. Sorry, you got cut off, so we didn't hear most of the questions. But I have Darrell Hughes here, our Chief People Officer. So I'm just going to hand it. Darrell, give us your current view of the world in terms of labor agreements there.

Yes. Thanks, Michael. So look, we're right in the thick of negotiations with the deals that are expiring this year. We've got a couple of pilot deals expiring and a few more on the cabin crew side that are up in March of 2026. Really, the bulk are up the following year in March 2027. We're in a fairly intensive period of negotiations. They're progressing reasonably well. I mean they are obviously tough negotiations, but we are hopeful that we'll conclude those before the end of March.

But we'll conclude what before the end of March. Some we don't think we will conclude it.

Yes. Some we may not. And we may see some localized industrial action through the summer as a result. We've had a fairly benign period of those relations over the last couple of years driven by the fact that we've had those long-term agreements in place. So we may end up doing a deal somewhere and having to deal with that through the course of the summer. But operationally, it will be manageable. And so we just have to see what we can progress between now and the end of March.

Yes. I mean I should say, one, that the German pilots have come up with some mad kind of demand. So we said, look, off you go. It wouldn't surprise me if we don't do a deal with the German pilots, but we're getting so small in Germany, frankly, if they want to go on strike, they'd be doing us a favor. Belgium, I see no reason to be doing labor deals in Belgium because the Belgian government just pay for inflation twice a year, frankly. So we will continue to do where there's -- where people are rational and we can do sensible deals, we do sensible deals. And where we can't, we will simply reduce capacity, We'll take strikes and off you go. We're not going to lose too much sleep over it.

But mostly at the moment, the focus is on most of our bigger deals could only come up for renewal in April of 2027. And we are talking to some of those groups about doing deals earlier. Obviously, it would be in their interest to do deals earlier. But we're not under any great pressure to do deals. And I would certainly expect some strikes in Belgium or in Germany later this year. But like frankly, we are reducing our capacity in Belgium. Belgium, by the way, where we have 12 aircraft in Charleroi, the Belgians as only they can have decided that the way forward is to levy a EUR 10 travel tax on traffic in Belgium at a time when almost every other country in Europe is abolishing travel taxes.

And then the local Charleroi City Council have come up with a wheeze that they might add EUR 3 travel tax, but it's okay, it will be paid by the airport, not by the airline or passenger. So with that kind of mentality, I suspect we will be cutting aircraft out of Charleroi later on this year, unless those tax increases are reversed. And again, there'll be even less pressure on us to do a deal with Belgian labor. Now I suspect they'll ultimately reneg on these kind of mad taxes. But you never stop some stupid politician thinking you can just tax air travel and the traffic and the capacity won't disappear somewhere else, even despite they raised such little tax.

We now turn to Jarrod Castle with UBS.

Michael, Neil, Eddie, maybe just 2 topics to get your thoughts, one on kind of technology/changes and the other one on geopolitics, if I may. Just on technology, I mean, AI agentics, I mean, you spoke about OTAs being 10% to 15% of your bookings. I mean, Michael, do you see this as a positive for Ryanair in terms of more traffic coming directly to you?

And then kind of related, I guess, just in changes in the industry, we're seeing more kind of premium seating from some low-cost airlines like Southwest. Is this something you'd ever consider doing a bit further out? You can decide if that's 1 or 2.

But the other one I just wanted to ask you about, you don't have to answer it if you think I've already asked, but just Ukraine, I mean, do you think you've got enough capacity to add your 5 million seats within 12 months, just given how tight things are if we saw peace at the moment?

Okay. I'll give you my view, and then I might have Eddie, who's kind of closer on the technology side. Look, I mean, I think the OTA like certainly the approved OTA deals has been terrific for us in the last 12 months. But it doesn't take us away. We've been fighting for 20, 30 years to eliminate distribution costs. We started off in this industry 30 years ago when you paid travel agents 10% despite the fact that they were trying to upsell to our more expensive competitors. And then the GDS scammers has got another 10%. So you're paying 20% for distribution in an industry that had a less than 1% net margin, like it was mad. The Internet came along and all of a sudden, we can distribute directly. And that has been undoubtedly hugely beneficial for consumers.

The development -- I mean, I think one of the reasons when we had the OTA boycott in November of 2024, the OTAs pretty quickly realized actually that they have no business unless they have access to Ryanair's low fares because we have the lowest fares in every market in Europe. But I think what has driven the OTA distribution agreements is the OTAs are terrified of AI. Historically, for the last 20 years, you have price comparison websites, which is they start off being honest Joel price comparison websites, but then the technology, they do people into coming on them and then they flip them into higher airfares. Now we've gotten away from most of that, but only by fighting with them for the last 10 years. And again, it shows why the Italian competition ruling is so mad.

But the OTAs and ourselves remain terrified. And I always said, I am worried at the moment that sometime in the next 5 or 10, the technology, ChatGPT or some AI may dominate the marketplace and we'll suddenly turn around and say, well, we're referring -- lots of people now will not go to certainly under 20 -- under 30 year olds won't bother their a*** to do the work going to a price comparison website. They'll just go, Alexa or whatever it is, what's the cheaper fare to? Now I think that's very good for Ryanair's business because we undoubtedly do have the cheapest fare. But if they suddenly start getting control of 40%, 50%, 60% of Ryanair's distribution, they'll turnarounds and start trying to charge us for it.

Now my bet is that we will tell them to f*** off and that they'll need us more than we'll need them because we have such price leadership in Europe. But we remain very wary all the time of people trying to insert themselves between us and our customer and then trying to charge us or the customer for the service. And that's why we are so obsessed with investing in the app, the Ryanair app, the website, moving people on to the mobile boarding passes, et cetera. And it is to make sure -- and it is really for protection of consumers that nobody can insert themselves between us and the consumer and start charging us or the consumer.

You look at the way Booking.com has transformed hotel distribution. They don't own a stick of any hotel anywhere. And yet they're able to charge hotels 20% for distribution, and they have a market cap of $150 billion. So we need to make sure we avoid that in terms of the technology going forward. And so I think our direct distribution agreements with the OTAs and with the travel agents have been very, very beneficial for our consumers. All we require from them is that they agree they won't overcharge or inflate our airfares or our ancillaries to consumers, and so consumers get a better deal. They are free if they want to charge a fee for that service, and that's up to the consumer where they pay that fee or not. And so that has undoubtedly been very beneficial.

But we, the OTAs, everybody needs to continue to be very vigilant that the next layer of technology, the AI, Alexa isn't able to control huge volumes of distribution and then turn around start charging you for distribution. That's where I would fear. And I'll come back to Eddie on that.

Just on the geopolitics, look, if Ukraine opens up, and I would be remain pretty skeptical. I don't see any pressure on Putin to do a deal here. But if Ukraine opens up, Ryanair is the only airline that has aircraft based at 93 airports around Europe. And we can today -- I'm doing, say, 3 flights a day from Dublin to Barcelona. We're doing 3 flights a day from Brussels to Charleroi to Rome. We can take one of those flights at 4 weeks' notice and instead of going to Barcelona, we'll pivot it to go to Kyiv and Lviv. So we have put a proposal with the Ukrainians is that we can reopen 30 or 40 routes from cities all over Europe back into Ukraine because we're the only airline that has aircraft based all over Europe, and we can do that within 4 to 6 weeks.

Now we still have a problem with the useless Ukrainian airports who despite the fact they've been sitting on their a**** doing nothing for the last 4 years. We said we will put 5 million seats in there in year 1 straight out of the blocks at fares that will be EUR 19.99, EUR 24.99. And then they come back at something dumb like, well, you have to pay full published charges. Listen, lads, forget full published charges. Those days are over. If you want this rapid growth and rapid reconstruction, we want big discounts off those b***s*** published charges. And we're still waiting for a response out of the useless Ukrainian airports.

So our response would be if it's published charges, we'll put 1 million seats back in, in day 1. Nobody else can put in those connections. Wizz are talking about putting in 5 million seats, but they don't have 5 million seats to put in there. And they certainly don't have 5 million seats anywhere else in Europe. They probably would agree to pay published charges because that's what Wizz agreed to do everywhere. It's why they can't make any money. And that situation will evolve. So we can be very flexible very quickly in Ukraine, but I wouldn't hold my breath that there's going to be open skies, that the skies in Ukraine are going to reopen in 2026 or maybe even in 2027.

And much as we hope that the current talks result in a peace, I think Putin is on the front foot. And Trump has handled the entire -- in my personal opinion, I think Trump has been historically wrong on Ukraine and on Russia, but we will wait to see what happens. Eddie, do you want to come back to -- since you're much more closer to the technology than me and you're the point man with the Amazon and OpenAI.

I hope you can hear me on this line.

Yes, keep going.

Yes. I mean, just to build on what you say there, I mean, you've covered it off well in terms of what the aggregators are trying to give themselves, how they're going to differentiate themselves. I think they've got a lot of fear from that. And you're quite right in talking about our inventory that if you want to have -- if you've got the percentage of the market that we have in Europe, well, then we've got to be on those platforms. But I think what I would say is that we've been disappointed as I think a lot of other -- taken soundings from other people in the industry as to the applications that -- there's a lot of hype out there about what it can actually do at the moment.

Okay, we can see some upside in terms of customer service and dealing with customer queries. But you read about what's happening with Uber and that where you try to do it through ChatGPT and it's actually slower than being on the app. So that sort of leaves you with the sort of twin-track approach of making yourself distinct with your own ecosystem, the digital boarding pass, making the app, I suppose, flow in the way that, that younger generation want to ask questions on flights or it won't be as sequential as you have through a traditional website. So sort of approach of developing your own ecosystem, making it easier, keeping one eye to what's happening in the market with ChatGPT and others. And quite frankly, we wouldn't pay on distribution.

But we are disappointed by what we see. I mean the focus on Labs really at the moment is optimization where we're getting real sort of cost savings. And on the revenue side, where we're looking at -- where we've been doing machine learning for many, many years of building on that. So we are looking on the distribution side, but nothing is sort of shaking the foundations just there at the moment, and we'll continue with that sort of twin track approach of making ourselves much more distinct in our own ecosystem and also developing the plumbing, so you can actually plug into any of those agents if they become the go-to place for people to make bookings into the future.

And might just for you, Eddie, how are relations with the approved OTAs? I mean, I know with the exception of eDreams, we have about 95% of the OTAs getting direct access to our inventory and the mom-and-pop travel agents as well. How are relations there? How is that kind of relationship building or developing?

Look, it's very, very good. I mean, there's always tweaking to be done with the Labs teams in terms of the APIs that we have there. And you're always going to be ironing out sort of customer issues, but that's not a big part of it. And like it runs extremely fluidly, like the technology sort of links there are robust and they get on with it. And so we don't have a sort of a relationship with them or we don't have to have a relationship with them on a day-to-day basis. We install the plumbing, and we don't want to hear from you again, just send the bookings. And it's working very well for -- and customers can be happy enough that they're brought into our website.

And certainly, you see a lot there when the OTAs themselves are disclosing results, all talking up the relation of the direct to access to the Ryanair distribution, good for their business, developing business. And it gives them access without the cost of screen scraping to Europe's lowest airfares.

We now turn to Gerald Khoo with Liberum.

Two, if I can. Firstly, on CapEx. Could you give an indication as to when CapEx on the MAX 10 peaks and at roughly what level? And secondly, on the Italian fine, can you confirm whether you have to pay that now or whether it only gets paid if all appeals are exhausted.

Okay. I think -- thanks, Gerald. I'm going to invite Tracey to address the CapEx, MAX 10. And I have Juliusz Komorek here, our CLO, maybe give you a briefing on the Italian AGCM appeal, fine payment, et cetera. Tracey.

Yes. So I suppose the CapEx, we've only given guidance for this year and next year. Beyond that we will see a big step-up in FY '28, but we haven't given anything beyond that because, again, it will be subject to deliveries, and it will be subject to when and the timing of the engine shop.

And I think one point I'd like to draw your attention to this morning, we've done really good work on the dollar hedging on that CapEx. We've jumped on kind of dollar weakness in recent months. We've now hedged 40% of the total MAX 10 CapEx program at $1.24, which is remarkable given that at the start of the year, we were looking at about $1.08 or $1.10 to the euro. So well done to the treasury team. Juliusz, do you want to comment on the AGCM fine timing of the payment and the appeal?

Thanks, Michael. Gerald, so we expect the appeals to last between 1 and 3 years, depending on whether we go through only 1 instance or 2. And the payment most likely will take place in September of this year. If we win the appeal, the fine gets refunded to us with statutory interest.

Okay. And do you want to get -- any kind of thing you want to add there in terms of the discussion with the Italian lawyers on their -- the likelihood of successful appeal or.

Yes. I mean you've covered it quite well before. But I think 2 key points to take away from this is that we won the same case in the Court of Appeal of Milan in January of '24. The competition investigation started in September of '23. So just a few months after the AGCM started their investigation, a reputable specialized competition court delivered a ruling in the same case. And everyone expected at the time for the investigation to be dropped. It didn't get dropped for, I don't know, political reasons, perhaps, and it continued and the authority was really desperate to try and invent a theory to justify the continued investigation and then ultimately to justify their fine.

And that's what makes the decision ultimately so weak. I mean we have seen some bad decisions in our time, but this one is out there competing for pole position. So on that basis, we are confident that we are going to do well on appeal. And then the other point I would just draw your attention to is that the authority concluded that we are dominant in Italy. But in order to do so, they really had to twist the market definition. So the case is ostensibly about travel agents selling Ryanair tickets. But for some reason, the authority excluded long-haul flights from the market definition as if no one ever bought a long-haul ticket from a travel agent. Well, obviously, that doesn't make sense. But then even within the short-haul flights, they looked at flights shorter than 6 hours, but for some reason, excluded certain countries, which are within the 6 hours of flying from Italy. So on that very first hurdle, we think the decision will ultimately fail on appeal.

And I would add to that. I think the one message that came out of the geopolitical events at Davos last week is Europe needs to get its act together in terms of competitiveness. Now you have useless Von der Leyen who's done nothing on the Draghi report for 18 months. It is time for Europe to stop all this regulatory b***s***. Like it is a mystery to me that you can have the Italian Competition Authority ruling against the lowest fare airline in Europe. A year after the Milan Court said, Ryanair's direct distribution model results in lower fares and undoubtedly benefits consumers. Europe needs to stop this b***s***. The European parliament out there, a bunch of crazies trying to reinvent the wheel on EU261 at a time when Europe needs to be competitive.

So it is time to fix ATC. It is time to roll back enviro taxes on short-haul air travel. It is indefensible that we exempt the Americans and the Gulf state airlines and the Asian airlines from paying their fair share of enviro taxes. And the only people that we tax are the short-haul flights in Europe by European citizens. But trying to reform Brussels. And I think that maybe one of the big upsides of Trump and the mess in Davos last week is you might finally change the whole dynamic in Brussels away from regulation and b***s*** in favor of a bit more competition and a bit more deregulation and doing successfully what Europe does well.

I mean one of the great big -- Europe leads the way in terms of low-cost air travel anywhere in the world. We wipe the floor with the Americans. We have much lower airfares here in Europe despite the fact that we pay ridiculous fees for ATC compared to America where ATC is free. So we should be building on those kind of successes, roll back the b***s*** environmental tax nonsense and get on with making Europe a really competitive single market again because if we're going to rapidly invest or spend money on defense, that's where it's going to come from. We need growth, and we need competition. And everything in Europe is about killing growth and regulating f****** competition. So I remain ever hopeful that there'll be a sea change in Europe in the next 12 or 18 months, and we put an end to all this regulatory b***s*** coming out of the Italian Competition Authority.

Our final question comes from Andrew Lobbenberg with Barclays.

Just one quick question really. You said you wanted some Airbuses for Lauda. Do you see any opportunities out of the shenanigans at Spirit? Or would you run away from any GTF-powered Airbuses anyway?

No. Andrew, again, we would be opportunistic on Lauda. The problem with the aircraft though that would come out of Spirit is they'd be coming from leasing companies. And the last thing I would ever want to do is to take an aircraft from a leasing company, the most overpaid underworked useless industry in the world. They are competing with each other to waste money this week and having the aircraft leasing, the Robert Barnes ball in Dublin all week. But we would -- again, like I would take cheap aircraft wherever I could get them.

We thankfully renegotiated the leases on the Lauda fleet before -- as we came out of COVID. So we have very low-cost leases there. And again, I think we just paid it by year. We could extend those leases by a year or 2, but only if there's a kind of -- if the lease rates fall to compensate for what would be more expensive maintenance. But over the medium term, I would like to replace those aircraft with an order for 50 or 100 Airbus aircraft. But I don't see there being a good deal on Airbus aircraft this side of the year at the mid-2030s unless there's some significant unforeseen event. And so it's much more likely that we will take some of our older NGs and replace out the Airbuses with NGs. But for the moment, if we could find an Airbus alternative in 2028, '29 that takes us through to the mid-2030s, that would be my kind of favored course of action. But if not, at least we know what our fallback position, that is cheap MAX 10s coming out of Boeing. And we could spring out some Gamechangers or NGs into Lauda.

Thanks, Andrew. Any other questions?

We have no further questions. So I'll hand back to you, Michael, for any final remarks.

Okay. Folks, thank you very much. I would take that results today steady as she goes. We're clearly having a reasonable year. The full year results again look okay as long as there's nothing untoward happens between now and the end of March, although with Putin in Ukraine and Trump in the White House, that is a long period of time. And as we've demonstrated this morning, we'll continue to move on opportunities to hedge fuel, to hedge the CapEx dollars and to use the balance sheet sensibly. And then in the meantime, we will use opportunities such as Mr. Musk generating huge amounts of free PR to drive bookings and seat sales, help us pay down the bond in May and then we'll be debt-free after that.

And then I would hope that by the time we get to the full year results, we'll be able to brief you on some successes on pay negotiations, and then we'll have better or more clarity on the Boeing MAX 10 certification and deliveries for the spring of '27.

Thank you very much for your support. We are not doing the usual roadshow on the third -- 3 results. Anybody wants to come talk to us. Jamie Donovan here is Head of IR. Neil is doing a few investor meetings in London today, and we'll do these in France and in Frankfurt and Madrid in the next day or 2. But if anybody wants to have a meeting, please call Jamie, you're more than welcome to come visit us here in Dublin. And in the meantime, we'll keep trying to execute sensibly on your behalf. Thanks very much, everybody. I hope to see you on the full year results roadshow in May. Cheerio, thank you. Bye-bye.

Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the Ryanair Q3 Results Conference Call. I'm Michael O'Leary, Group CEO. And as always, I'm joined by Neil Sorahan, the Group CFO.

This morning, as you'll see, Ryanair reported a Q3 profit after tax of EUR 115 million, pre-exceptional. [indiscernible] As traffic rose 6% and fares in Q3 rose 4%, and an EUR 85 million exceptional charge has been made in the accounts. It's a provision of approximately 33% for the utterly baseless Italian AGCM fine, which was announced on Christmas Eve, which both we and our Italian lawyers are confident will be overturned on appeal.

The highlights of the third quarter include traffic growth of 4% -- of 6% to $47.5 million. Revenue per passenger up 3%, very strong cost control as a result of which unit costs are flat in the quarter. We have 206 million -- 206 Gamechangers in our 643 aircraft fleet on the 31st of December. The last 4 aircraft will be delivered in February. We have announced 3 new bases and 106 new routes for summer '26, and these are already on sale. Fuel is 80% hedged for FY '27 at $67 a barrel, resulting in a very significant 10% saving in our fuel costs next year. And we'll touch briefly on the Italian AGCM baseless fine, which was levied and which we're confident will be overturned on appeal.

Touching briefly on a couple of highlights. With almost all of our Gamechangers now delivered, other income in Q3 dipped due to the absence of delivery delay compensation in the prior year Q3. For Q4 of FY '26, our fuel is 84% hedged at about $77 a barrel, but we've now locked in hedging for FY '27 with 80% of our jet fuel requirements hedged at $67 a barrel. This will deliver significant cost savings next year.

Over the last 3 years, Ryanair has generated a total shareholder return in excess of 150%, which puts Ryanair comfortably in the top quartile of the Stoxx Europe 600 Index TSR performers. I believe the group will continue to deliver disciplined and consistent capital allocation, and this is underpinned by our strong balance sheet as traffic grows to 300 million passengers by FY '34 with the benefit of our 300 MAX 10 order.

Touching briefly on fleet. We have said we expect to receive the final 4 Gamechangers, bringing the total number of game changers to 210 in the fleet before the end of February. Because we're getting these aircraft deliveries early, this facility is facilitating slightly higher traffic growth this year, and we're now raising this year's traffic to 208 million what was previously 207 million. But it also means that we have all of the fleet in place in time for the Summer schedule, and that will allow us, we think, to deliver 4% traffic growth to 216 million passengers next year, FY '27.

Boeing expect that the MAX 10 certification will take place this Summer, and they're increasingly confident. In fact, I was very confident they will meet their contract delivery dates to Ryanair for the first 15 MAXs in the Spring of 2027. And we -- that will be the first 15 of 300 of these very fuel-efficient aircraft, which have 20% more seats, but burn 20% less fuel and will enable us to grow profitably out to March 2034.

This winter, we've allocated Ryanair's scarce capacity to those regions, countries and airports who are cutting aviation taxes and incentivizing traffic growth, such as Albania, regional Italy, Morocco, Slovakia and Sweden. And we're switching flights and routes away from high-cost uncompetitive markets where they have unjustified aviation taxes like Austria, Belgium, Germany and in regional Spain. This trend of this churn will continue into Summer 2026 as we operate over 160 new routes on sale, and -- we're opening 3 new bases in Rabat in Morocco, Tirana in Albania and Trapani in Italy.

Touching briefly on Italy. In late December, the Italian AGCM Competition Authority levied a baseless EUR 256 million fine against Ryanair for our direct distribution to consumers policy in Italy, a policy that we've adopted all over Europe. This fine, we believe, will be overturned it in appeal as it ignores and indeed contradicts the Milan -- the precedent Milan Court of Appeal ruling in January 2024, which ruled that Ryanair's direct distribution model in Italy, one, undoubtedly benefits consumers by leading to lower fares; two, is economically justified in terms of containing operating costs and eliminating costs associated with distribution and ticket sales and the court ruled it contributes to a direct channel of communication for any possible need for information and updates on flights to consumers.

And yet the AGCM 18 months later, comes up with this mythical fine alleging that Ryanair is abusing a dominant position when we're not dominant in Italy. Both we and our Italian lawyers are very confident that the Italian courts will overturn this manifestly wrong and baseless AGCM ruling on appeal. And that's why unusually, we normally provide 50% provision in our accounts for legal appeals. In this case, we have lowered that to 33%, which we think is reasonable. In fact, we could just as easily provide nothing for this given the -- our confidence that this ruling will be overturned.

In terms of outlook, we now expect FY '26 traffic to grow 4% to almost 208 million passengers due to strong demand and these earlier-than-expected Boeing deliveries. We continue to expect only modest full year unit cost inflation as our Boeing Gamechanger deliveries, fuel hedging and effective cost control helps to offset the increases in ATC charges, higher enviro costs in Europe and the roll-off of last year's modest delivery delay compensation. While Q4 won't benefit from Easter, fares are trending modestly ahead of prior year, and we now believe that the full year fares will exceed our previous plus 7% growth guidance by maybe another 1% or 2%, 8% or 9%.

At this stage, we're cautiously guiding full year profit after tax pre-exceptionals in a range of EUR 2.13 billion to EUR 2.23 billion. However, the final FY '26 outcome will remain exposed to adverse external developments in Q4, including conflict escalation in Ukraine or the Middle East, macroeconomic shocks and any further impact of repeated European ATC strikes and mismanagement.

And with that, I'm going to ask Neil to take us through the slide presentation. Neil, over to you.

Thank you, Michael, and good morning, everybody. Ryanair has the lowest fares and the lowest cost of any airline in Europe, and our cost gap advantage continues to widen. We're #1 for traffic and are now increasing traffic targets to 208 million passengers this year, which is a 4% increase on last year. Thanks to our strong on-time performance and reliability, we've seen our customer satisfaction scores rise to 89% in the year-to-date, and we continue to be highly rated by all of the ESG rating agencies. With our 300 MAX 10 order book starting to come in from next year, this will underpin a decade of growth to 300 million passengers by FY '34. And that, of course, as always, is underpinned by our financial strength, our lowest costs, and this makes us the long-term winner in our sector.

This is a snapshot of where we stand at the moment, including 3 new bases for Summer of 2026. So 208 million passengers in the current year, 300 million passengers by FY '34. Our costs, as I already said, continue to improve, continue to get better with a strong performance in Q3. And over the next number of years, with 300 MAX 10s coming in with 20% more seats, 20% more fuel efficiency, this advantage is only going to get better.

On the quarter itself, we saw traffic increase by 6% to 47.5 million passengers at flat 92% load factors. Average fare rose 4%, thanks to a strong midterm break in October, but more importantly, close-in bookings for Christmas and the New Year also were strong. Revenue as a result, up 9% to EUR 3.21 billion in the quarter to the end of December. On costs, excluding the AGCM provision, which Michael has gone into in some detail, we saw unit costs remain flat or total costs increased by 6% to EUR 3.11 billion. And profit after tax, pre-exceptional, down 22%, primarily due to the absence of Boeing delivery compensation tanks and catching up on their order book. So coming in at EUR 115 million profit in the quarter and EUR 30 million after that AGCM fine provision for the 33% that Michael referred to earlier on.

Balance sheet remains rock solid, a fortress balance sheet, BBB+ a strong investment-grade rating from Fitch and S&P, uniquely, almost 620 Boeing 737s fully unencumbered on the balance sheet. Liquidity remains very strong with EUR 2.4 billion gross cash and EUR 1 billion net cash at the end of the quarter. And that puts in a very, very strong position now as we move into the next financial year in April to pay down our final bond, the EUR 1.2 billion maturing bond in May 2026 from our own cash resources, effectively making the Ryanair Group debt-free.

I'd just like to briefly focus on our total shareholder return. Over the past 3 years, we've delivered a TSR up 153%, which puts us firmly in the upper quartile of the Euro Stoxx 600. In fact, we're in a small club of 3 companies in Europe, which can boast a net profit in excess of 15%, investment-grade ratings, net cash and TSR over 150%, while at the same time, investing in growth, delivering consistent and disciplined returns to our shareholders. And we expect this model to continue for the years to come.

With that, maybe, Michael, you will take us through current developments, please.

Okay. Thanks. So as we've set out, we expect FY -- we're raising slightly FY '26 traffic, up 4% to 208 million, thanks to the earlier Boeing deliveries and strong demand. We are using our constrained capacity to engage in more churn. So we're switching scarce capacity to those airports and regions who cut taxes and fees to grow. Our full FY '26 schedule is on sale from the end of March with 3 new bases and 106 new routes.

Most exciting is the fact that we're -- we've hedged 80% of our fuel for FY '27 at just $67 per barrel, a 10% saving. There's an interim dividend of just over $0.19 per share payable in late February. And as Neil has said, we've completed 46% of the EUR 750 million buyback by the end of the third quarter. We are ready and have the resources to repay the final EUR 1.2 billion bond in May. Thereafter, we're essentially debt-free. And we are actively planning for the MAX 10 entry into service in the spring of 2027, and we now believe that Boeing will hit those delivery dates.

And the critical thing about those aircraft is that they allow us to engage in a decade of low fare profitable growth of over 50% to 300 million passengers by FY '34. In terms of the Boeing numbers, as I said, we've already covered this off, with 206 Gamechangers in the fleet, 4 more coming in February, Boeing expect the MAX 10 certification to take place in late summer of 2026. We expect now to get the first 15 MAX 10s in the spring of '27. And that, as I said, gives us a decade of growth out to 2034.

In terms of outlook, Neil, do you want to finish on that?

Yes. Thank you, Michael. So as Michael said, traffic marginally ahead of where we previously guided. So 208 million passengers, 4% increase on last year, primarily due to the earlier delivery of those MAX 8-200 aircraft and strong demand in the business. Fares now look like we'll be ahead of the 7% fare growth that we previously guided, possibly 1% or 2%, which is well ahead of the minus 7% fare decline that we suffered last year. So fully recovered and then some growth on top of that. Unit costs have performed well year-to-date. So we're sticking with our modest unit cost inflation for the current financial year.

We'll continue to see the benefits of our fuel hedging offset rising ATC environmental and indeed, the unwind of the Boeing compensation with no Boeing compensation in the second half of this year. So putting that all together, we're now cautiously guiding profit after tax pre-exceptionals for the full year in a range of EUR 2.13 billion to EUR 2.23 billion.

Beyond that, we're now in a very strong position to deliver 216 million passengers next year. That's a 4% increase. We'll see the benefit of our fuel hedges, 10% savings coming through on the jet price help offset some of the rising environmental costs. And importantly, with the MAX 10 now due to join the fleet in the spring of 2027, we're ramping up for a decade of growth to 300 million passengers over the next number of years. Thank you very much.

Michael, Neil, starting with your results. Ryanair reported Q3 PAT of EUR 115 million, pre-exceptional, down 22%. What were the key drivers?

With a strong operating performance in the business, we did, however, not have any Boeing delayed compensation in this quarter, having had it in the prior year comp. That's down to Boeing catching up on the deliveries and effectively no need for compensation. But if we look at the operating performance, very strong traffic up 6% to 47.5 million passengers at 4% higher fares, driven by strong midterms in October and strong close-in bookings for Christmas and the New Year. Ancillaries, as has been the trend all year, put in another solid performance, rising 7% or up 1% on a per passenger basis. And I'm particularly happy with the cost performance where we delivered flat unit costs pre-exceptional charges in the quarter.

You provided for 33% or EUR 85 million of the Italian AGCM fine. Will you provide for the balance of this fine in Q4?

No. In this case, normally, our policy is to provide about 50% for these kind of legal fines when they're under appeal. However, in this case, with the benefit of the Milan Court of Appeal precedent ruling, which was just less than 18 months ago, our lawyers and ourselves in Italy are highly confident that this AG -- manifestly wrong AGCM ruling will be overturned on appeal.

In fact, we could, given the strength of the advice we have not made any provision at all, but I think that would have been a bit too ambitious. It seems to both me and the Board that it's sensible to provide about 33%, and we don't expect to be making any other provisions. In fact, we expect to be writing back that provision to the P&L sometime in the next year or 2, which is how long we expect the appeal will take.

Can you update on your hedging position?

Yes, we continue to be very well hedged. In the current quarter to the end of March, we're about 84% hedged at $76 a barrel. But more importantly, when we look into next year, we're 80% hedged on our jet fuel at $67 a barrel. So that's about a 10% saving. On operating expenditure, the euro-dollar exposure, we're locked in now for next year at about EUR 1.15, which compares favorably to EUR 1.11 in the current year. And we recently jumped on dips -- weakness in the dollar to extend our MAX 10 hedging from up to 40% on a euro-dollar rate of EUR 1.24.

How is Q4 trading?

Demand is good. As I said with the earlier Boeing deliveries, we're seeing -- we expect traffic to be modestly -- rise slightly faster than we had originally expected. So we expect to do 208 million passengers for the full year as opposed to previously 207 million. Pricing in Q4 is modestly ahead of the prior year despite the absence of any impact of Easter on Q4. But nevertheless, as we've always said, the final outturn is heavily reliant on there being no disruptions as we move through February and March.

Can you give any color on Summer trading and FY '27 costs?

It's a bit too early for that. We're still working through our budget. So it will be another month or 2 before the Board sign off. What I can say at this stage, however, is with all of the Gamechangers expected to be in the fleet by the end of February, we're now targeting traffic next year of 216 million. So that's marginally up on the 215 million that we had previously guided, 4% increase. And of course, we'll see the benefit of our fuel hedges coming through next year as well.

Moving to the balance sheet. What are the main callouts of your strong balance sheet?

I pretty much the same as it has always been. So we have a BBB+ credit rating. We have an unencumbered fleet of almost 620 737 aircraft. Strong liquidity, EUR 2.4 billion gross cash at the end of December, almost EUR 1 billion of net cash, which leaves us very well positioned to repay the remaining bond debt in May this year from internal resources. And it's that financial flexibility that widens our cost gap with most of our competitors in Europe who are heavily exposed either to the aircraft leasing costs or financing expenses.

What's FY '26 and FY '27 CapEx guidance?

At this stage, I think we'll finish FY '26 with CapEx somewhere close to EUR 2 billion. So that's marginally down on the EUR 2.2 billion that we had previously guided where we're seeing some timing issues with a couple of projects moving out 1 or 2 years. And then next year, not much hugely different to what we had previously said, now it depends on the final budget. I think it will come in close to EUR 2 billion, possibly just below EUR 2 billion.

How will you finance the MAX 10s?

As we've always done, we'll use a strong balance sheet and be opportunistic. I would expect mostly it will be from internally generated cash, but we'll also use bond or bank markets when it's opportunistic or low cost to do so.

Shifting to shareholder returns, how is the EUR 750 million buyback progressing?

Yes, it's going well. I mean this buyback is scheduled to run out to the end of the current year. So we're about 46% of the way through it at the end of December. Put that in context, that's about 13.1 million shares bought back at an average price of EUR 26 per share. All of those shares canceled. So about EUR 340 million spend up to the end of December.

When is the next dividend payable?

There's an interim dividend of just over EUR 0.19 per share. That's payable by the end of February.

Ryanair's TSR performance is market-leading. Has focus shifted from investing in growth to shareholder returns?

Well, you're right. It is. It's a phenomenal return of 150% over the past 3 years and putting us firmly in the upper echelons of the Euro Stoxx 600 TSR index. But no, our focus hasn't shifted, and we have no plans to shift our focus. We'll continue to invest in growth. The plans are to have 300 MAX 10s in the fleet and 300 million passengers by FY '34. We've got a very simple capital allocation policy in here. We will retain a strong investment-grade balance sheet.

We'll continue to invest in growth. As I said, the MAX 10s, jumping in opportunities like we did last June where we were able to buy 30 spare LEAP engines at the right price, good use of capital for our shareholders. And indeed, we'll invest in engine shops over the next number of years to help widen Ryanair's cost base. But at the same time, as we've done in the past, if there's surplus cash, we'll return that. We already have a 25% payout of prior year PAT regular dividend program. And the Board have and will continue likely to deliver buybacks and ad hoc dividends from time to time over the next number of years.

On fleet in growth, when will you receive your final Gamechangers?

The final 4 Gamechangers will deliver in February, well ahead of the end March launch of the Summer '26 schedule. Kelly Ortenberg, Stephanie Pope and the team at Boeing are doing a great job at catching up those delivery delays, which is why we've seen a significant drop in supplier compensation in the Q3 numbers. But those earlier deliveries mean we can now facilitate 4% growth to 216 million passengers in the year to March 2027.

What's the latest update on MAX 10 certification?

Yes. Boeing are still talking about certification in the Summer of 2026, possibly in Q3 calendar. So that's the July, August, September time frame. And they're increasingly confident, as Michael already said, that we will be taking our first 15 MAX 10s in the spring of next year.

What's your views on European short-haul capacity?

It will continue to be very heavily constrained right out to at least 2030. The drivers are the huge backlog and delivery delays being faced by -- challenges being faced by Boeing and Airbus. The Pratt & Whitney engine repairs continue to be devil the Airbus short-haul fleet here in Europe, that will run on through our competitors, say that will run on into '26 and '27 as well.

And industry consolidation, most recently, Lufthansa's acquisition of it, and it looks like TAP will be next, which is causing capacity withdrawal certainly in short-haul and domestic markets in Europe, as Lufthansa pivots the likes of Alitalia to feeding people into Munich and Frankfurt, but away from keep competing with Ryanair in the short-haul domestic and Italian domestic market.

Where is Ryanair most focused on growing?

Yes. We've been very clear. We've got limited growth. We're only growing by 4% this year, and we only plan to grow by another 4% next year. And so we're very focused on rewarding and giving growth to regions that are reducing aviation taxes, airports that are stimulating growth. And if you look at our summer 2026, the new bases are in places like Tirana in Albania, Trapani in Sicily as well and Rabat in Morocco. At the same time, we're pulling capacity out of markets where they're actually increasing taxes or at least not bringing them down the likes of Austria, Belgium, Germany, regional Spain. And we'll continue to do so while capacity remains constrained.

What's the latest update on your engine shop project?

Going well. We expect to announce the first of 2 sites pretty soon. I'd say we'll make an announcement before the end of March or April. Negotiations for spare parts and tooling to fit out those engine shops are at advanced stages. In fact, again, we expect to be signing contracts on those before the end of, I would say, the first quarter or the end of April. And we hope and expect to have the first shop operational overhauling or repairing Ryanair engines by late 2028, early 2029.

The second shop will be opened probably in the early 2030s. And this will give us another point of cost differentiation between us and our competitors. While our competitors will be having their engines maintained in very scarce supply third-party engine maintenance facilities. We will have surplus capacity and I think a significant advantage in -- cost advantage in maintaining our engines over those of our competitors.

Lastly, on outlook, what's the group's FY '26 outlook?

Yes, we expect traffic now to finish at about 208 million passengers, 4% growth on last year, thanks to the earlier delivery of the Boeing aircraft and strong demand. On fares, we think we're in a position where we'll recover not only all of the 7% that we saw decline last year, but another 1% or 2% on top of that. So ahead of our previous guidance. On costs, performance has been good year-to-date. So we're sticking with our modest unit cost inflation for the full year, where we'll see the benefit of our fuel hedges continuing to offset air traffic control charges, increasing environmental costs and indeed, the roll-off of Boeing compensation with no delayed compensation in the second half of this year.

So putting all of that together, profit after tax, pre-exceptional, the AGCM fine provision, profit after tax should be somewhere in the range of about EUR 2.13 billion to EUR 2.23 billion. And then beyond that, 4% traffic growth again next year to 216 million passengers. You see the benefits of our lower fuel hedging coming through. And then, of course, with the MAX 10 aircraft starting to deliver from the start of 2027, we'll have another decade of growth to 300 million passengers by FY '34.

Thanks, Neil. As you know, it's the Q3 results, so we're not having a formal roadshow, but there is an analyst call at 10:00 -- later this morning at 10:00 a.m. Dublin time. Everybody is welcome to dial in. And if you have any further follow-up questions, please put them to us during that call or feed them into the IR team here led by Jamie Donovan or through Neil and the finance team.

Thank you very much. We look forward to seeing you all again.

Hello, everyone, and welcome to the Ryanair Holdings plc H1 FY '26 Earnings Release. My name is Nadia, and I'll be coordinating the call today. [Operator Instructions]

I will now hand over to your host, Michael O'Leary, Group CEO of Ryanair Holdings plc to begin. Please go ahead.

Thank you, Nadia. Good morning, ladies and gentlemen. Welcome to the H1 results conference call. I'm joined by the entire team here in London and on other phone lines. We published the results this morning, Neil and myself have done a 30-minute Q&A on the website. So I would direct you to the ryanair.com website for that while you're there, book a low-fare flight.

Quick couple of comments. One, as you see, I'd prefer to deal with Q2 because the H1 was distorted by the very ridiculously strong Q1 and the weak prior year comp. But if you look at Q2, so traffic is up 2% because of the Boeing delivery delays. They have improved in the last couple of months. We've now taken 23 of the 29 aircraft that they should have delivered to us at the start of the summer. That gives a little bit of headroom to increase traffic growth this year from 206 million to 207 million. So we should get growth of about 3.5% this year. Fares in Q2 were up 7%, very strong recovery. That is the recovery of last year's 7% fare decline, and we think we will continue that through the remainder of the year.

I caution, we do have slightly stronger prior year or tougher prior year comps in the second half when we began to repair the OTA boycott or the impact of the OTA boycott was less significant. So the fare growth in the second half won't be as strong as it is in the first half. But overall, on the year, we're pretty confident now we get back all of last year's 7% fare decline, maybe a little bit above that, but it won't be much. Much more important, as always, unit costs well under control, only up 1% in the second quarter despite significant cost inflation on air traffic control and a little bit on the engineering side. Clearly, the lower hedge cost this year playing a significant role in that. And as a result, Q2 profits are up 20% to EUR 1.72 billion.

Taking forward, in kind of themes I would give you that we want to cover in the call, Boeing are doing a much better job. I think they asked us to take those -- could we take the aircraft through August, September, October. We said didn't -- there were no use to us at that stage, but we would work with them. We would take those aircraft if they could deliver them. They've delivered 23 of the 29 aircraft in the last 3 months. We get 2 more in November and then the final 4 will be delivered in January, February of next year. So we will have all 210 Gamechangers in the fleet by the end of March next year or in advance of summer '26, which puts us well on track, I think, for traffic growth to 215 million, 216 million passengers in FY '27. And that will be the first year since the MAX groundings that we're not dealing with Boeing delivery delays in the spring or disruptions to our summer schedule. So we think that will lead to strong traffic growth and hopefully maintaining pricing and profit recovery into summer '26.

The good news this morning is we've taken advantage of our recent fuel weakness. As you know, we were 85% hedged out to March 2026 or for this year at $76 a barrel, down from $84 a barrel last year. Today, we're able to announce that we're 80% hedged for FY '27 at just under $67 a barrel. That will be a very significant 10% saving on our fuel bill, will save us about EUR 600 million next year, which I think will enable us to incentivize and stimulate growth, but also fund what will be another painful increase in emissions ETS taxes and viral taxes in Europe, where Europe continues to damage its own competitiveness by taxing only intra-EU travel, whereas all the extra or the non-EU travel or people arriving to and from Europe are exempt from these egregious environmental taxes.

Balance sheet continues to strengthen. We paid back the EUR 850 million bond in September. We have the final EUR 1.2 billion bond we will pay in May, and then we will be entirely debt-free with a fleet of 640 aircraft. We have hedged, and I think the treasury team has done a wonderful job start this year, the dollar was about 1.08 to the euro. It weakened in recent months with some of the Trump spectaculars to 1.24. And we've now hedged the first 50 of our 150 firm MAX 10 aircraft orders at 1.24, which is about a 15% euro cost saving -- euro saving on CapEx on those first 50 aircraft, and we're looking for opportunities to extend those CapEx hedges. And you can only do that with the kind of strong balance sheet Ryanair have.

The real underlying, I think, story, though, is here that Europe capacity continues to be constrained and will remain constrained out to 2030 because of manufacturer delivery delays, Airbus fleet still largely grounded repairing engines, a program that won't be completed until 2028 or 2029. And therefore, I think as we add capacity next year, there's a reasonable prospect that we would grow traffic, but we'll see modest fare increases coming through the system. The one negative in Europe is Europe is continuing to fail on competitiveness. We've had the Draghi report, now it's 14 months old. He pointed to a whole series of areas where Europe can and must be more competitive. von der Leyen has committed herself to delivering on that competitiveness agenda and then done absolutely nothing for the last 14 months.

All of Europe's airlines are calling for 2 competitive initiatives. One moved the ETS environmental tax emissions trading system tax rates in line with CORSIA, which is what the non-European airlines are paying. It is indefensible that Europe is harming itself by having these excessive environmental taxes, move ETS in line with CORSIA, and it would result in dramatic improvements in competitiveness and also lower fares for consumers traveling on intra-EU air services. And then second, reform Europe's broken ATC services. We need the protection of overflights during national ATC strikes. We cannot have a single market if it can be shut down every time some air traffic control union wants to go on strike.

It isn't much of an ask. The legal mechanism already exists because in Spain, Italy and Greece, they already protect overflights during ATC strikes and they ground the domestic flights. But as we all know, in France, they protect a disproportionate amount of the domestic flights and cancel all the overflights. This is unsustainable and von der Leyen should take action. I think with what is a very impressive new Transport Commissioner, Tzitzikostas. He wants to reform, but everything ties in the dead hand of von der Leyen's office. So she should stop talking about reform and competitors and start delivering it, protect over flights and then fix staffing on the first wave of ATC staffing on the first wave of flights, which, again, Germany, France and NATS in the U.K. are inexplicably short staffed. It's inexcusable.

The airlines we roster standby pilots and standby cabin crew. ATC, they just allowed the system to fall over and they cut capacity. It's not acceptable. Air traffic control fees have gone up 14% this year, and we're still getting a s***** third rate, third world service. And if von der Leyen can't deliver competitiveness, frankly, she should leave and be replaced by somebody competent who can deliver competitiveness in Europe.

Other than that, I think the good news is we're seeing a sea change in environmental taxation at national level. Governments in Sweden, Hungary, Italy, Slovakia and regional Italy are all abolishing their environmental taxes. And we are switching an enormous amount of capacity away from high-tax economies like Germany, France and the U.K., where Rachel Reeves is increasing APD by another GBP 2 in April. And moving that capacity to Sweden, Hungary, Italy, et cetera, where governments are get it, they're abolishing the environmental taxes and they're also incentivizing traffic growth. So we want to reward those countries that are incentivizing growth and penalize those countries like Germany, France and the U.K. who are incentivizing tax increases and damaging growth. And that will continue.

But I think the fact that countries like Sweden, the home of Greta Thunberg and flight shaming 5 years ago are now have worked out. They're abolishing the environmental taxes, gives us hope and I think some degree of optimism that the way forward is not penalizing Europeans. It is abolishing those taxes and allow airlines like Ryanair to invest heavily in new engine technology. Our new MAX 10s will carry 20% more passengers, but burn 20% less fuel per flight. So a 40% reduction in fuel and emissions on a per seat basis.

Other than that, there's also some other government and competencies, the Irish government, which was elected last year on a program to abolish the Dublin Airport cap 12 months later, nothing done. We have a do-nothing Prime Minister and a do-nothing Deputy Prime Minister, both of whom have been sitting on their arses for the last 12 months, talking about passing legislation despite the fact they have a 20-seat majority. They're now talking about legislation might be moved by the end of 2026.

Ireland and growth cannot wait for these do-nothing politicians. They have a 20-seat majority, they should pass the legislation scrapping the cap at Dublin Airport before the end of 2025 and allow the airlines, Ryanair and the other airlines to get on with growing traffic at Dublin Airport, the way we're growing, and we're adding aircraft in Shannon and Cork. So there's always some stupid government and some incompetent politician holding back the growth.

But thankfully, there's better politicians in Sweden, Italy, Hungary, Slovakia, all of whom are working closely with Ryanair to abolish taxes and allow us to grow strongly. I think we're looking forward particularly with the improvements Boeing have made in the deliveries, the quality of the deliveries. Kelly Ortberg and Stephanie Pope are doing a terrific job. They have got -- they've gone up from rate 38 to rate 42 in October. We think the FAA will increase that to rate 46 in March, April next year. They are gradually catching up on the delivery delays. They are pretty confident that they'll certify the MAX 7 even with the current government shutdown in Q2 next year, the MAX 10 in Q3, which will be about 6 months in advance of our first 15 MAX 10 deliveries in the spring of 2027.

So we have the 29 aircraft delivered this winter that enables us to grow to 215 million passengers in FY '27. The first 15 MAX 10s coming in the spring of '27 will enable us to grow to about 225 million passengers by FY '28. And then we are off and running on what I believe will be an 8- to 10-year program to grow from 207 million passengers this year to over 30 million -- 300 million passengers by 2034. Currently, we're making a profit of approximately EUR 10 per passenger. I think it's reasonable to suppose that, that profit will rise from EUR 10 towards EUR 12 or EUR 14 profit per passenger over the next 10 years. There will be 1 or 2 curveballs in the middle of that. We are a cyclical industry.

We have a strong balance sheet. We will have 0 debt in May of next year. And I think we are poised for very strong growth, particularly if the European economies continue to lag in growth, people will get more and more price sensitive and will switch to Ryanair from high fare competitors elsewhere. So I have never been more excited about, I think, the growth outlook for the next 4 or 5 years. I think we have a number of challenges in moving politicians to a competitiveness agenda. But within that, Ryanair is going to grow strongly and profitably, I think, for the next 4 years up to 2030.

And with that, Neil, I want to hand over to you, anything you want to highlight in the P&L or on the balance sheet?

Yes. I'll maybe just focus again on a couple of things in the quarter and in the half. Firstly, as you already pointed out, costs put in an excellent performance, up just 1% on a per passenger basis. That was down to our strong fuel hedging, which very much helped offset double-digit increases in ATC and environmental costs.

We're still guiding modest unit cost inflation for the full year. What's modest, it remains somewhere between 1% and 3% on a full year basis, probably a little bit higher than the 1% that we had in the first half in the second half of the year. We have extended our hedges into FY '27, as Michael said. We've also extended our OpEx hedging into next year at 1.15 compared to 1.11 on the euro-dollar. So we're locking in significant price savings next year, and that will go a long way to help offset a jump up in our environmental ETS next year somewhere from about EUR 1.1 billion this year to somewhere between EUR 1.4 billion and EUR 1.5 billion next year.

Balance sheet, rock solid, BBB+ rated, 610 unencumbered aircraft and in a very strong position now to be debt-free by May of next year, which I think is a great place to be. Also, we're locking in euro savings on our MAX 10 CapEx moving forward with a 35% hedge in place where we've hedged 35% at a firm order, that's 150 aircraft at 1.24. Buyback moving along at a nice pace. We're pleased with the pace that the brokers are moving at. They managed it well through indexation. So we're just over 35% of the way through that, and that will run out to the back end of 2026.

And then finally, the last thing I'll point to business as usual, but we've announced an interim dividend this morning of EUR 0.193, which similar to last year, will be paid at the end of February. And that's all I wanted to touch on, Michael.

Okay. Thanks, Neil. With that, Nadia, we'll open up to Q&A, please.

[Operator Instructions] The first question goes to Harry Gowers of JPMorgan.

First question just on the Q3 fares, maybe you could provide us with what you're currently tracking for the quarter? And if you've seen any changes strengthening or weakening around that number in the last few months?

And then second question on the online travel agents, that clearly, the fare comparatives are normalizing into the Q3 versus last year. I was wondering if you think you're still getting like any actual realizable uplift or specific tailwind from those official partnerships? Or is this just like fully past us now and we're back to a more regular kind of pricing cycle, just fully dependent on supply/demand in any quarter?

Yes. Thanks, Harry. I mean I wouldn't want to split out where we think we are on Q3 fares because so much of it is dependent on the close-in bookings at Christmas, over the Christmas and New Year period. But October is strong, up on last year. November is a little bit weaker, slightly down on last year's fares and Christmas at the moment is booking strong ahead of last year on fares. I think all I want to -- I wouldn't want to go any further than give you the kind of -- we have moved from being hopeful to being now confident that average fares will recover the full 7-year fare decline from last year in this year's numbers. We're up 13% average fares in the first half of the year. We have tougher prior year comps in the second half of the year. So you won't see, I think, 7% fare increases in Q3 or in Q4.

But I think rounded out for the full year, we're pretty confident now we will be up -- average shares will be up 7%. Maybe we might get to 8% if we have a strong Christmas. But again, we need to see how those close-in figures book. And I think that is what leads us with a reasonable degree of confidence to see a strong profit recovery this year, but we can't put a number on it yet because it's so heavily driven by Christmas and the New Year holiday bookings.

The new aircraft from Boeing will gives us the capacity to add a few extras there over that Christmas-New Year period. That's why we've been able to bring the traffic up from 206 million to 207 million this morning. On the OTAs, the big impact on us on the OTA boycott last year was through the first half of the year when you lost the people who I kind of complacently thought would be price sensitive. Therefore, they'll book the holidays directly with us. They didn't. A lot of them moved to the tour operators last year to the Jet 2s and the easyJet holidays. They've come back to us in the first half of this year.

You see that reflected. We have weak prior year comps and a strong H1. We see some of those kind of tour operators, easyJet, Holidays Jet 2 (sic) [ Jet2 Holidays ] talking about a bit more price sensitivity in their bookings through the first half of the year. And it's because that traffic -- the OTAs have moved that traffic back to us. They need our low fare access.

And so -- but that's not a key feature into the second half of the year. The OTAs are a lot less impactful in Q3 and 4. And therefore, we didn't have the same decline in airfares in Q3 and 4 last year. We've got much -- we have a tougher prior year comp, which is why we think, again, the second half of the year, you won't see 7% fare increases. It will be a little bit less than that. But overall, in the round, we'll come out at fares up about 7% on the full year.

Eddie, do you want to add anything to that on Q1, Q2 or OTAs?

No, I mean like what we've said, there sort of covers it off about what has happened, like slightly less in terms of fares in November, but Christmas, we're happy with how it's booking. So nothing really to add there at all. And I think we are through that sort of tail end of the OTAs, and I don't think there's going to be any further uplift. I just think it's, as you say, much tougher for our competitors out there on the prior year comparable.

The next question goes to James Hollins of Exane BNP Paribas.

I'll start one for Neil, actually. Just on the ex-fuel unit cost performance was only up 2%. I think noticeable was the EUR 30 million Q2 decline year-on-year in marketing, distribution and other. I'm assuming that's all lower distribution costs -- sorry, lower disruption costs. Or am I missing something else within that particular line?

And secondly, Michael, clearly, using this platform as ever to get your point across on EU, progress on overflights, et cetera. Maybe just give us an update on what this new transport minister might be able to achieve? And secondly, whether there's any update on the sort of comedy baggage regulation they're looking at?

Okay, Neil. You okay if we have -- Tracey come in after?

Yes, sure. On the marketing line, I think you're particularly referring to some of that's down to lower EU261, lots of disruptions, but keeping them below the 3 hours. Equally, we've got up to 60 million people a week coming through on social, which is keeping our marketing costs way down. A little -- some of it's a bit of timing. We will do a bit more marketing over the Christmas period. And then offsetting that somewhat would be higher input costs for the onboard spend, which is going particularly well from an ancillary perspective.

Okay. Thanks, Neil. And on its commissioner Tzitzikostas, who's the Transport Commissioner, has had a really impressive start. One of the most notable things is they finally moved on the infringement proceedings against Spain over the crazy Spanish bag fines that were levied only on the low-fares airlines in Spain, but not on the high-fare airlines. It's clearly illegal. It's in breach of EU Regulation 1008/2008, which guarantees the airlines' freedom to set prices free from government interference or regulation.

He does want to reform ATC. But like I think a lot of commissioners, he's frustrated. They're all expressed frustration at how little comes back out of von der Leyen's office. There is a real dead hand of Germany incompetence at the top of the European Commission and either she should deliver reform and deliver reform and competitiveness or go, preferably be replaced with someone who can actually do something. I would like to say we should get an Irish politician there given it was Peter Sunderland, who originally deregulated air travel. But given the lack of action from the Irish politicians on the Dublin Airport [ mad ], Dublin Airport cap, I wouldn't be recommending any of our Irish politicians either.

At the EU Parliament, as is it won't is -- we elect a bunch of clowns, and we should be not surprised in a circus that they come out with crazy ideas. One of which is now that everybody should have the right to bring 2 free bags onboard an aircraft. We have politely pointed out that there isn't room on board the aircraft for 2 free bags for 189 passengers. That does seem to be a detail that they've missed.

We've also pointed out that actual bag, one of the greatest things here that limiting people to bringing one free bag on board, and that was the wheeling judgment, the ECJ judgment in 2014, we do allow half the passengers who are priority boarding to bring a second carry -- free carry-on bag. That's about as much capacity as the aircraft has.

But what the European parliament now part of this is that the commission under Tzitzikostas is looking for a reform of EU261. There talk about bringing compensation up from 3-hour delays to 4-hour delays, which does make sense. The parliament then pushes back with some ridiculous suggestion like 2, 3 bags on board. What that would do is they create huge queues at Europe's airports as everybody starts struggling with 2 bags through airport security. A bit like you have in American airports where you take forever to get through security because they're all bringing 5 and 6 bags attached to their persons through the airport.

It would also mean inevitable flight delays because bags that don't fit in the aircraft would have to be taken away at the gate and put in the hold of the aircraft. You have more aircraft missing their slots and you would just gum up the whole system. But of course, a bunch of lunatics elected to the European parliament wouldn't worry about the day-to-day details of how people move. They only work about 3 days a week anyway and wouldn't be all that sensitive at the best of times to efficiency.

This is why in America innovates, China replicates and Europe f****** regulates. And why Draghi has pointed 14 months ago, we need to get more efficient in Europe. And the best starting point would be stop issuing new bulls*** regulations invented by idiots in the European Parliament and start making Europe more efficient. If you really want to deliver efficiency for consumers of air travel in Europe and competitiveness, abolish environmental taxes or at least bring them into line with CORSIA and fix air traffic control.

The European part will be much better off waste spending its time reforming air traffic control or protecting overflights in a single market than they would designing new and hopelessly impractical and unimplementable regulations, allowing passengers to bring 2 free bags on board an aircraft where there isn't room for the bags and they don't fit.

The next question goes to Jaime Rowbotham of Deutsche Bank.

Two from me, both on growth. The first one on fares. Obviously, great to see you're making back what you lost from the OTA issues. But on an underlying basis, the pricing is broadly flat. And that's, I think, the scenario you're implicitly guiding to for this winter when the comps normalize. So as we look ahead to next summer, you're growing in Poland, Italy, Ireland, you'll shrink in Spain, Germany, France. But overall, you'll grow seats at about 4%. It looks like the industry will do 3% to 4% again as well.

That being the case, I was a bit surprised to hear you talking about modest fare increases coming through the system, especially as you hinted that Ryanair will likely be passing some of its fuel cost decline on to stimulate growth. So would it not pay for us to tread quite carefully when thinking about the direction of your pricing next summer?

Second one, you've announced EUR 25 million of annual investment today to accelerate cadet and first officer recruitment for the next 3 years. You've also talked previously about setting up 1 or 2 in-house engine maintenance shops. Is there any update on that project? Have you chosen the sites? And are there any other non-aircraft investments for growth that we should have on our radar?

Thanks, Jaime. I'm going to ask Eddie to deal with the growth question. I might ask Tracey McCann to come in on -- Tracey will come in on the EUR 25 million, on the first officer and on the engine shops update. Eddie, growth in 2026.

Yes. I mean if you look out into the summer of next year, I think, just close to 75% of our growth will be in Italy, Poland, Albania and U.K. I mean like we've -- if you look what's happened in Italy, we've opened 2 new -- we've got bases in Trapani. Tirana base will open. We've got additional aircraft, 3 additional aircraft going into Modlin, 3 additional aircraft going into Krakow.

And then you see as we begin to -- like it's not good to say that we're not growing in Spain. We're not growing in regional Spain. I mean regional airports in Spain are underutilized by about 70%, but we continue to grow in Malaga and Alicante where we will have -- probably we'll have 20 aircraft in both of those bases next year, and that'll be pretty much maxed out on early morning slots. We continue to grow places like Madrid, so it is getting more patchy and Barcelona is full.

But yes, the way this is playing out in terms of you look at our competitors and their sort of cost inflation, and that's going to drive fares up while the gap between us and our competitors widens on a unit cost basis, and that gives us the opportunity to take advantage of what we believe will be like fares at least rising to some extent, the bias is going to be towards that. And we continue to grow, as I say, 75% of it across Italy, U.K., Poland and Albania and then a smattering of one aircraft increases across a wide range of bases where we're continuing to get low-cost deals. But like I could have allocated those 29 aircraft 3x over based on the appetite that's out there for particularly the stability that Ryanair brings and the longevity into those markets.

And I would just add to that point. I mean if you look at the non ex-fuel unit cost inflation in our competitors, whether it's easyJet, Wizz, Lufthansa, Air France-KLM, they are really struggling to contain unit costs. And that, I think, puts pressure on the next year to get fares up to cover these unit costs. The legacy carriers are also facing a much bigger penalty in terms of the withdrawal of the free ETS allowances. It has a much bigger impact on Lufthansa, Air France and IAG. And I think the pressure on fares is going to be upwards for the next year or 2. We have a much better unit cost discipline, and I think our fares will trend up behind them despite the fact that we've already banked up to EUR 650 million in fuel cost savings next year.

Tracey, do you want to touch on the first officer recruitment issue and the progress on engine shops?

Yes. So attrition rates are probably at the lowest we've ever seen. So we probably slowed down our recruitment this year of cadets probably to about 500. We should be up at about 1,000. So given the long lead time for promotions to captain been about 4 to 5 years, we're commencing recruitment now for then peak years for the MAX 10 deliveries. So there'll be a carry cost of about EUR 25 million per annum up to 2030.

And shop progress?

So just on the engine shops, we're close to selecting our first MRO shop. We will open 2. So that will allow us to do 200 engines in each shop. The selection period is ongoing. There's nothing in our CapEx for this year, but we will probably start paying something next year, but we're close to announcing something on that very shortly.

We're in advanced discussions with GE and CFM on spares packages, and we would hope to have announcements of those, if not, before Christmas, maybe early in the new year.

The next question goes to Jarrod Castle of UBS.

I was quite interested to hear you say that you think the profit per pax could go as high as EUR 14 at least over the next few years. And you've given some commentary on pricing and costs. But just some color on what gives you that confidence, assuming we've got like a stable GDP environment. There's no downturn, I guess.

And then you've obviously spoken about a number of countries, Germany, France and I saw some comments on the U.K. But it does look like you're still continuing to grow in the U.K., which I think is about 1/5 of your capacity. And if I'm not mistaken, you're going to grow in summer by the sounds of things. So why is it still attractive to you? And what are your thoughts on the upcoming budget on the '26?

Okay. I'll maybe ask Eddie do the second half of the question on U.K. growth this year. Remember, the APD increase, that doesn't come in until April of '26. So -- but it's coming. Just on profit per passenger. If you go back to the kind of the broad brushes or my favorite back of the envelope, the real driver, I think, of our industry in Europe for the next 4 or 5 years is capacity constraint. We've gone through 25, 30 years where there was new airlines being set up, low fares airlines, the legacies were setting up low fare subsidiaries, everybody had new aircraft deliveries. There is very little capacity growth across Europe this year, next year or for the next 3 or 4 years. Nobody has any significant aircraft orders with the possible exception of Ryanair. Wizz had some orders and they've -- they're desperately trying to defer those orders now, which means their profits implode because all their profits come from [ Mizigel ] or Ponzi like sale and leaseback profits being recognized in the P&L, but that's an aside.

So I think the demand for air travel remains strong. Yes, there are economic challenges in countries like Germany, France and the U.K. where the economies are not doing well, particularly in the U.K. post-Brexit. But people are not willing to forgo the travel. The kids, midterm -- we've just come through the midterm school break last week, very strong traffic flows, very strong bookings at high yields. Easter, summer holidays, Christmas, we're seeing strong demand for travel. I think, if anything, strong demand for travel with -- in Ryanair because we have such a pricing advantage over every other airline in Europe. Wherever we allocate the capacity, we are filling strongly. And I think that was reflected in this morning's bookings even into the remainder of October, November, December or November, December, where forward bookings are about almost 1% ahead of where they were this time last year. And we see that continuing.

So I was asked earlier this morning, one of the interviews, if we saved EUR 650 million on fuel next year, will we pass that on in the form of lower fares? I think -- and my answer was, I think we can, but I don't expect to have to because I don't see -- if you look at the kind of cost inflation or ex fuel unit cost inflation in Wizz, easyJet, Lufthansa, Air France-KLM, it's high single digit, low and mid-double digits in the case of Wizz. Those guys have no future unless they constrain capacity and get airfares up for the next year or 2. And I think we will be the beneficiaries of that with a much more disciplined unit cost control.

And I keep go back to Slide 4 in our presentation. If you look at the comparable unit cost advantage we have over every other airline in Europe, I think there's a reasonable prospect that we will see modest fare increases over the next 2 or 3 years plus or minus any unforeseen events, but modest fare increases, mid-single digits. And in Ryanair's case, most of that flowing through to the bottom line. Now we will have labor cost inflation in the next couple of years. I think ATC will continue to be out badly controlled by government. But overall, we will be -- we're moving into a decade where we're going to start taking aircraft at 20% more seats that burn 20% less fuel per flight. We're looking at a much more operating efficiencies coming through.

And I think that justifies a reasonably modest growth in profit per passenger from EUR 10 to EUR 12 to EUR 14, I think, over the next 5 years to 2030. But then I'm one of like hopeless optimist, which is why I'm employed in the airline industry.

Eddie, U.K. growth impact of APD.

Yes. I mean, notwithstanding the sort of background of continuous APD growth in the U.K. The way we look at in terms of route development is not just season by season, but there's a continuous carousel of airports that we do deals with. And like if that -- if you've got airports even in a tough market like that, that are willing to share the investment with you in terms of lower cost, well, then we're going to reward that with extra capacity. And we've got extra aircraft going into places like Newcastle, which has gone from 0 to 2 aircraft based and 3 aircraft based now. Birmingham has got an extra aircraft. Liverpool has got an extra aircraft, Birmingham, Manchester, Stanford. All these places have extra aircraft going in because they're willing.

We're in there for the long term. We're lowering costs there and incentivized for additional traffic. So it doesn't always go coterminous with the market as you make those investments, and it's going to put even more pressure on [indiscernible].

Neil, anything you want to add there on U.K. growth or impact of APD?

Not particularly. I think we're -- Eddie and yourself have covered that off fairly well. On the profit per pax, I suppose just to reiterate, it won't go in straight line. There will be years where we'll be up and years where we'll be slightly down.

Okay. Michal Kaczmarzyk here as well, who's the CEO of Buzz. I might just add, I guess, help us to just to give you maybe his insight into growth in Central Europe, Poland, in particular, the charter market in Buzz.

Michal, anything you want to add on growth in those non-tax economies like Poland and Central Europe?

There are good taxes. True. I mean Poland and CEE are performing very well. Demand is strong. We have now 80 aircraft allocated in the region. The Poland is the biggest part of the market with 44, offering more or less 40 million seats with the most attractive destinations in CEE. We have very strong brand recognition there at Ryanair, but also supported by our local structure bus generating over [ 3,500 ] direct jobs in Central Eastern Europe, supporting another 20,000 airport handling and so on. We make a lot of significant investment in the region through our hangars facility, but also crew training centers.

We completed recently the biggest crew training center in Central Eastern Europe with 3 -- sorry, 4 full motion simulators. It's located in Krakow. We'll be able to train over 300 crew per day. We developed also our Warsaw ops center, focusing now on covering Central Eastern Europe, but also serves as a backup for Dublin ops center. So there is a lot of capacity still we can allocate in Central and Eastern Europe. The only -- the constraint is the number of aircraft we can allocate there. And we are in the good shape to take a lot of market share in the next 2, 3 years.

And there was talk last year of with moving aircraft back from the desert and basing aircraft in Central and Eastern Europe. Are you seeing much of Wizz in those markets? And how is the -- what's the -- Albania, where we're opening a base in Tirana, which is currently a Wizz base. How is the Tirana expansion base going head-to-head with Wizz?

So aircraft allocation -- I mean the Wizz aircraft allocation from the desert to Central Eastern Europe, I would say it's too late. I mean after pre-COVID, we increased in Central Eastern like 40%. We took their capacity or even pass capacity from the region to the region. So now we are the biggest in Poland, the Baltics, Croatia, Slovakia. We have the local structure there where we are able to compete in terms of cost level.

There is no cheaper airline than past now in the region. Also with the highest fleet utilization ratio in the industry, over 6 hectares per aircraft per day. So the new base launch next summer will be Tirana for us, with quite significant capacity of Wizz. But what I mentioned, we are absolutely not afraid of that because our local structure there guarantee us the lowest cost. Once we deliver the lowest cost, we are able to deliver the lowest fares there as well.

Thanks, Michal. Eddie, anything you want to add on growth there before we...

I mean just touch on the point there, you talk about Wizz and what's happening out there, where their policy or their growth strategy is to go back to Central and Eastern Europe. And certainly, what we pick up from the airports is that those that are incentivizing us to grow is that we're there for the long term. And you can see even cancellations in [indiscernible] from Wizz before they've even started back there.

So some of that has been replicated. And you hear a lot of noise, but not a lot of lot of action that even extends to places like Italy, where we're doing almost 1,200 frequencies a week and you've got less than 100 frequencies a week from Wizz. So -- but I think airports recognize Ryanair is in for the long term, do a deal with Ryanair, get the cost down and you have the traffic for the long term rather than looking at these other short-term deals that are available [indiscernible].

The next question goes to Stephen Furlong of Davy.

Just on Boeing, last week, they had the results, and I thought they were pretty vague on the certification. They just said 2026, maybe the deliberately were for the MAX 10. I mean a little bit more work on the 10 and the 7 and hardware and software modifications, although they did say it was pretty straightforward. So just might talk about that, what exactly they're telling you.

And then you mentioned labor. Could you just remind us what's the timetable for CLAs? I think most of them are in 2027 and stuff that would be great, the contract labor agreements.

Yes. I mean I think it's one of this -- I give Boeing more credit. The new management team is doing much more credit. The old management team would give us all sorts of pie in the sky, to be here tomorrow, next week and then miss targets all over the place. The new guys are much more cautious. They don't want to make promises they can't deliver. And I think that's the sensible place for them to be in. But you look at what they have delivered, they've got FAA approval to go from rate 38 to rate 42 in October. They're now talking about going to rate 46 in March, April next year. That doesn't really affect us. I mean we'll have finished our -- the Gamechanger deliveries at the end of February. But at least we have all 29 aircraft in for summer 2026.

There is a risk at the moment with the government shutdown that certification, they're pretty confident talking to us. And actually, we get this on the other side from talking to EASA, who are involved in. EASA are very impressed with the work that the Boeing of the management team and the work that they're doing. And we get a lot of very positive feedback from EASA. So I think they're right to be somewhat cautious to underpromise and overdeliver. But we have a reasonable headroom there. At the moment, they're talking about MAX 7 being certified by -- in Q2 next year, MAX 10 in Q3. That could slip to Q4 or to Q1 of 2027, and we would still get our 15 deliveries in the spring of 2027.

Now clearly, we'd be one of the lead operators of the MAX 10. I wouldn't have any issue with that. The sooner we can get them, the better. So -- but they're telling us and have gone in writing that they will meet our delivery date, the first 15 delivery dates, the first contracted 15 delivery dates in the spring of '27, they will meet. That's what gave us the confidence in the treasury function to go out and start hedging the U.S. dollar on those firm deliveries. And we're looking for more opportunities to extend those hedging.

So I think Boeing were right to be a little bit cautious in their public commentary, but all of the delivery on the ground in terms of quality of what they're delivering to us and the timeliness of what they're delivering to us now has been nothing but impressive for the last 3 or 4 months. Now they clearly don't need any screw up along the way. But in Stephanie Pope who, is sitting on top of the production line in Seattle, there's somebody who's there every day. You can pick up the phone and call her. She gets back to you. She's really is well on top of it, and I would be very supportive of the work she's been doing.

Maybe I'll add over -- so timetable on CLA, Eddie, while most of our labor contracts run out to -- our rates -- come up for renewal in April '27.

And there's a couple of labor contracts that will be up 2 or 3 on the pilot side and again, a similar number on the cabin crew side. But like a lot of what we're -- it's not always just about pay. I mean, if you look at the disruption that's happened against the background of ATC and Ryanair's ability allow its people to actually deliver sort of a stable working environment underpinned by the continuation of the plan for roster, which will be a key part of any discussions on the CLA.

And we've seen also over the last number of years, one of the dividends of doing local labor contracts is that people now not only are in the right -- most people are in the right place where they want to be, and it's relatively easy in terms of how they're paid, the local bureaucracy administration and labs have made a huge investment with that in terms of -- it's so much easier now. It's easier than it's ever been in Ryanair's history for people in far-flown basis to get the smart things done, how do I get my time off, how do I get my payroll queries, and that's all done through sort of a platform called Ryanair Connect.

So there's lots of things like pilots and cabin crew more than ever value given the disruption that are there -- the disruption that is driven by ATC to have a stable working environment. I mean like this August, for example, we had our lowest cancellation level ever, completely different from the previous season. A lot of that, again, is about recovering on the day. So we'll be talking with our union partners in terms of the renewal of agreements. We will try to do long-term stable agreement, but underpinned by superior working conditions that I think are increasingly becoming more valuable. So it's not all just about one.

Touch on the Spanish CLA?

We just concluded the Spanish CLA for the cabin crew, which was one of the last ones post sort of unionization. There were some bumps in the road, but actually was signed there last week, now we ratified by the local labor authority, and that's for cabin crew. That's very welcome. That goes out to 2030 into that deal. And that sort of sets somewhat of a benchmark for where we're going to go with the new deals that are going to come up, particularly on the cabin crew side.

And Darrell, you want to add anything to that on the CLA side and Chief People Officer? Darrell? Okay. Maybe Darrell's not on the line.

Look, as you rightly say, Stephen, the labor contracts run out to April '27. That will [indiscernible] kind of is timed to meet the deliveries of the MAX 10s. And there's no doubt we're going to get a productivity gain out of those MAX 10 aircraft, not so much from the extra seats, but from the fuel consumption on the engines, which is dramatic. We are willing, I think, to share some of that productivity upside with our people. I think they -- but Darrell and his team have started those kind of discussions around 2026 and 2027.

We have, as Tracey has already said, record low attrition. I mean we have almost no pilots and no cabin crew attrition at the moment. People are happy where they are. They're being well paid. They're in the basis they want to be in. Clearly, the Gulf carriers, which would historically have been a kind of the valve that would have recruited a lot of our pilots they don't have any capacity growth either at the moment. So things have never been more stable. But I think we will be seeing productivity gains coming over the next couple of years, and we are certainly minded to do deals with -- as long as we can do sensible deals.

Will we do unsensible deals? No, we won't. I mean we've taken strikes in Belgium in the last 12 months. We've taken an occasional strike in Spain. We're happy to take strikes where people don't want to be stupid. We'll take strikes and we will face them down. But I think there is some upside coming in the next couple of years. And certainly, we will want our people to be at the front end of that. And if we can conclude new pay deals in the next -- either from April '26 or for April '27. And if that results in a step-up in labor cost, it's something I think we'd be willing to fund and finance. So watch this space, and we would hope to make progress on that over the next 6, 9, 12 months.

The next question goes to Alex Irving of Bernstein.

Two from me, please. First on ancillaries. Really good to see that robust growth continuing on from Q1. What's driving that? Is it product innovation? Is it pricing decompressing 2 years into 1 as you reinstate the OTAs and flat unit ancillaries at this time of last year? And then related to that, what do you expect for unit ancillary sales over the coming years?

Second question is on CapEx. You've previously spoken about peak CapEx of around EUR 3 billion in FY '30, '31. You talked about locking in some of the dollar weakness and some of those gains into your future CapEx budget. What are your latest expectations for peak CapEx? When and how much, please?

Thanks, Alex. So maybe I'll ask Tracey McCann to take the ancillaries question. And Neil, you might come in and do CapEx, our peak CapEx.

Tracey, ancillary?

Okay. The ancillary growth, 3%. A lot of that is driven what we said from dynamic pricing. So we're starting to get better pricing on seats, better pricing on bags. We also have our order to seat service, which is increasing our onboard spend. And so probably fall back a little bit, you're going to be faced with the same thing on the comparables in the second half of the year. So maybe not as strong as the first half and probably about 2% per annum, I would say, beyond this year. But again, a lot of it is driven by what the labs team are doing in-house in driving them increments we can get on pricing.

Okay. Neil, do you want to touch on CapEx?

Yes, Alex, there's not a lot to add at this stage. We're only 35% hedged on the firm, the 150 aircraft. We haven't done anything on the options yet. The CapEx that we've guided in the past doesn't include engine shops. So it's a little bit premature to start changing numbers at this point in time. I prefer to wait until the engine shops agreed and then come out and refresh the numbers at that point in time.

John Norton here, Head of Trading. John, do you want to add on -- sorry, go ahead, Neil.

No, that's pretty much it.

John, do you want to add anything on CapEx on the treasury or currencies?

Yes. Thanks, Michael. Yes, look, we've got a nice layer in place there on the CapEx [indiscernible] for the MAX. I mean when you look at it at the start of the year, where euro dollar levels were down at 1.02, 1.03 in January. And then when you also factor in when the contract was signed and it was at 1.08. We have that nice space in place now to take us forward. Now we'll just look for opportunities when we see them just where markets going forward to build on that.

The next question goes to Dudley Shanley of Goodbody.

Two questions. The first one, Michael, you were on CNBC this morning. And I think if I'm listening to you correctly, you said the consumers seem to be a little bit more price sensitive at the moment. How are you seeing that coming through your business? Is that just a temporary thing?

And then the second question was to do with capacity constraints. Just what are you watching on that kind of 3- to 5-year view that it will remain as constrained? I know some people have been talking about the likes of aircraft from people like Spirit and think that's been shifted over to Europe. What do you watch?

Thanks. I mean where do we see consumer price sensitivity at the moment, I think, is the fact that forward bookings without any price promotion at the moment are running close to 1% ahead of where they were this time last year. And this time last year, we were actually coming off the kind of OTA pricing down 7%, lower fares. At the moment, fares are up in the first half of the year, 13%. We think that will be a little less in the second half of the year. And yet we're -- pricing is coming -- running against us or forward bookings are running against us. If anything, we're kind of slightly closing off cheaper seats to try to restrain forward bookings because clearly, we want to keep as much capacity we can for the closer-in bookings, particularly as you run up against Christmas and the New Year.

In markets where we are expanding capacity, regional Italy, very strong. A new thing we've identified recently in Italy is Alitalia -- seem to have a number of their aircraft fleet grounded, particularly in the domestic market as the shortest spares. And we are expanding -- seeing very strong loads. Okay, the prices are lower in domestic, Italy, domestic Spain, that kind of stuff, but strong growth. And I note there is clearly a bit of consumer price sensitivity there.

I'm campaigning aggressively against Rachel Reeves putting up APD or doing any more damage to the U.K. economic growth. But in a kind of slightly bizarre screwed up way, the more she damages economic growth and confidence in the U.K., the more people will switch away from paying higher fares to BA and others on to Ryanair. So I think that all augurs well for our growth over the next couple of years.

Capacity constraints, what do we look for? I mean the only thing you can really look for is Boeing and Airbus orders. And they are -- the most recent one was Turkish, which I think was kind of preannounced by Trump when he was sitting with Erdogan at some meeting in Ankara. And even Turkish, which has announced an order for, I think, 200 or 250 narrow-body 737s, but they have no engines. They're now complaining that they can't get a deal out of the engine manufacturers. I mean in our day, when we order aircraft, you're Boeing, you go sort out the engines. But we wouldn't buy, order an aircraft unless it has engines attached. The market has moved so aggressively in favor of the engine manufacturers. People are now kind of ordering aircraft but with no engines and then kind of being price takers when they go to do deals on aircraft.

Really, I don't see anything -- I mean if some of those aircraft appear out of Spirit, I think the chance of those appearing in Europe are 0. Airlines in Asia or in the Middle East and would be much more aggressive and willing to pay much higher lease rates than airlines in Europe. I see no demand among Lufthansa, Air France-KLM, IAG for capacity growth. They're all playing the same game. They've consolidated. They want to control capacity. If any, they'll keep shaving capacity so they can get air fares up. Wizz has canceled or desperately trying to -- well, IndiGo, not Wizz are definitely trying to postpone those Airbus orders into the mid-2030s, which by the time you've added 5 or 6 or 10 years of escalation, those already expensive aircraft will be even more expensive. And all easyJet is doing is upgauging from an A319 to 321s at their fortress airports, Gatwick, Paris, Switzerland. That makes sense. It's a sensible thing to do.

But as we track across Europe, as Michal has said in Central Europe, we don't see Wizz anywhere. In fact, as Eddie has mentioned, most of the big incentives we'll get -- growth incentives we're getting from airports are from Wizz customer airports who are shooting themselves that Wizz is going to go bust in the not-too-distant future. I think there's a reasonable prospect and are getting Ryanair to come in there and kind of, if you like, almost as the insurance policy against a Wizz collapse. Now I don't think Wizz will collapse. But I mean, as a competitor, we wouldn't pay any attention to them at all. I mean the idea that they're going to close one of their desert bases in Abu Dhabi, noteworthy that they haven't closed the one in Riyadh, and they're going to move that capacity back to Central and Eastern Europe, well, [ whoopty doo ]. We haven't seen them yet.

I think they've expanded their definition of Central and Eastern Europe to the stands. Apparently, most of the stands are now in Central and Eastern Europe, if you go by the Wizz definition. Meanwhile, we're charging in on top of them in Albania. They were competing with us in Italy and in Austria where 2 or 3 years ago, they disappeared.

So we have a reasonably benign kind of map across Europe where most airports want us to grow there. And increasingly, countries want us to or incentivizing us to grow by abolishing environmental taxes. And that is Sweden, Albania. I don't go through the list again. One of the areas where airports were growing fastest in next year would be in Bratislava, where we had a 3 aircraft base. An hour up the road, the Austrians have failed to abolish their stupid environmental tax, which was less than EUR 160 million a year. Vienna has put up its fees by 30% since COVID. And all of the airlines, including now Ryanair are taking aircraft out of Vienna and putting in Bratislava.

We had already announced an increase in our Bratislava base in 3 to 5 aircraft next year. And then about 3 weeks later, Wizz announced they're going to open 2 or 3 aircraft based in Bratislava, which is wonderful. Because in order to be able -- the only thing we could do to respond to Wiz arrival in Bratislava is put up our airfares there. So they'd be somewhat competitive with Wizz who come in there with fares that are about 40%, 50% more expensive than Ryanair. And the outcome will be exactly the same as it was previously in Vienna or in Italy. Wizz will lose, we'll win and the people of Bratislava will be left with the lowest fare airline, Ryanair, delivering all of that growth.

But in Slovakia, there's a new transport minister, a new government, they've abolished environmental taxes. They've cut ATC fees by 50%, and the airport is incentivizing growth. Meanwhile, Rachel Reeves is over here in the U.K., considering whether she further increases APD, taxes the rich and follows the Marxist-Leninis North Korean growth model, which consists of taxing the s*** out of everything that moves with the result that nothing [ broken ] moves in the end. But to the extent that the U.K. economy suffers, I think more and more English people we can take will start fleeing to Ryanair and away from high-fare airlines like easyJet and BA.

The next question goes to Conor Dwyer of Citi.

First question is for you, Michael. You were talking about how ETS credit prices should come in line with CORSIA, which would obviously be quite material if that did happen. But how much of this is hope and how much you think this might actually change? Is there a political will for this?

And then the second question for Neil, on the cost per pax. It was obviously up 1% in the first half of the year, and you're talking about a bit of acceleration to the back half of the year, I think. You've got quite a strong fuel hedge position for that. So I'm just wondering where are you expecting some nonfuel cost pressure in the back half of the year?

Thanks, Conor. I mean talking about moving ETS to CORSIA, somebody has to leave the campaign. We've been calling for this for about 2 years. We didn't have the support of the flag carriers in A4E, Lufthansa, IAG or Air France-KLM. But they're now much more badly impacted by the withdrawal of free ETSs because they haven't grown for the last 10 years, most of their traffic was covered by free allowed ETS allowances. As Europe unwinds those free ETS allowances, they're getting much more hit or the cost impact on them is much more severe.

And lo and behold, they're all now campaigning for moving -- well, if we're not going to abolish ETSs altogether, at least move in line with CORSIA, it is utterly indefensible that Europe taxes the s*** out of Europeans traveling within Europe. And yet the Americans, the Gulf carriers, the Asian carriers, all land and take off in Europe. They account for 53% of European aviation CO2 emissions and yet pay nothing. So I think the fact that A4E is now unanimous on this, I mean, how much of it is -- I'm much more optimistic that we will see some movement on that.

Now we still have the dead hand of Ursula von der Leyen to deal with. But ultimately, I think you can even embarrass an incompetent German into -- I can actually do something on competitiveness. The Draghi report is 14 months old. She's done absolutely nothing. And I think if we build ahead of steam there, there's a reasonable prospect that Europe through the fog of failure will ultimately want to do something other than spend hundreds of billions on defense, but to make its economy more efficient. And air travel is clearly one of the ways of doing that.

It would be material. It would be result in a dramatic or a significant reduction in airfares. Remember, passengers are paying these ETSs. It would result in a significant reduction in airfares. But at least it would mean that everybody in Europe is paying the same fair share as the non-Europeans. -- whereas at the moment, the Europeans paying all of the taxes, the non-Europeans getting completely free ride and useless Europe in the middle of it or useless von der Leyen sitting in the middle of it, terrified of Trump or taxing the non-Europeans. And so I think it's a call whose time has come.

I also believe, and again, I'm one of life's great optimist, that actually, we will embarrass her into doing something about air traffic control or at least defending and protecting the single market. She was the one who was singing most vociferously during the Brexit negotiations that the single market is sacrosanct. We will do everything to defend the single market unless, of course, a couple of French air traffic controllers want to go on strike. So I think ultimately -- and I am much more motivated. Commissioner Tzitzikostas is really a guy who wants to get things done. He wants to deliver change. I think he really does want to transform air travel in Europe. He's from Greece. Therefore, they're very sensitive to making air travel more efficient. And I am very hopeful that him, together with the unanimity out of the A4E airlines, we will see some movement in Europe on ETS in the next year or 2.

Neil, unit cost per passenger?

Yes, sure. Conor, a couple of bits and pieces. Firstly, I would expect that air traffic control charges will go up again in January this year. The service is just so abysmal that they have to put it up again. I think you'll see some of that marketing spend. I talked about some timing in there. Some of that will catch up into Christmas and into the stimulation for the advertising ahead of the summer. We're starting to see the Boeing compensation unwind. So that will have an impact on the maintenance line where some of those maintenance credits went.

And then with the heavy maintenance at the back end of the year. Tracey also talked about we're going to start recruiting up on the cadets. That will kick off probably in the January time frame. So we'll be ramping up on the cadet side, but we'll also be ramping up as we always do ahead of the summer of 2026. So that tends to be back-ended costs in there, which is why I'm kind of been keeping the 1% to 3% unit cost inflation.

The next question goes to Savanthi Syth of Raymond James.

Just on the first one, another question on the unit cost. But given you have hedging in place for next year and clarity around the Boeing deliveries, I was wondering if you could provide any kind of early thoughts on how we should think about fiscal year '27 unit costs?

And then maybe a second question, just on the debt side. Usually, airlines that even have kind of good balance sheets find some value in having debt and being involved in that side of the financial market. So kind of was curious is the 0 debt view just ahead of kind of -- you do have the MAX CapEx -- MAX 10 CapEx, engine shop, other opportunities. So is that kind of a temporary 0 debt view? Or do you have a different kind of philosophy on the debt side?

Yes. Thanks, Savi. I mean I think on the hedging, I mean, I'll ask Neil to come back in and correct me if I get something wrong here. It's too early yet. We haven't done the budgets for FY '27. So I wouldn't get into unit costs at this stage other than we banked EUR 650 million in fuel cost savings with the fuel hedging. So that's a good strong start. I think the 2 critical elements on the hedging is we've hedged 80% of FY '27 fuel at just under $67 a barrel. We've made good progress on the currency hedging on OpEx.

I'll ask John to come in -- John Norton to come in on where are we on the OpEx hedging for FY '27?

Yes. So we reached 80% of FY '27 at a level of [ 150 ]. So...

Where were we in the prior year?

So [ 1.11 ] [indiscernible]

Okay. So we've hedged away OpEx and a little bit of saving as well. And then clearly, it's not material in FY '27, but we've started to hedge the fixed orders on the MAX 10. So the hedging is locked down. We have the 29 aircraft will be delivered by Boeing. And I think that's much more critical here into FY '27. We have certainty now that we'll be able to deliver the headline traffic growth. And that's what drives ultimately the airfares and what drives the ancillary revenues.

On the debt side, we're in this kind of artificial period. We have this kind of 2-year interregnum from '25 to '27, where in reality, we don't have a lot of CapEx. We could -- and we have -- we're coming up to -- in May next year, we have the 1.2 million bond. I mean we raised that coming out of COVID at less than 1%. So the cost of refining that bond that currently would be somewhere close to or close to about 3%, which isn't -- it's not a lot of money, but we don't need it at the moment.

And therefore, collectively as a Board, our view is we should demonstrate to the market that we can pay down these bonds. When we start getting into '26 or '27, I think we would reserve the right to start. We would probably go back to the bond market as we get into the heavy CapEx again on the MAX 10. But we do so coming off with a strong balance sheet, BBB+ rated and say, look, we paid out back $4 billion worth of bonds post-COVID. And so I like -- we like the sense of we're not trying to be 0 debt for some kind of bulls*** philosophical reasons. We would expect to be -- to raise debt as long as we can raise debt cheaply, but only when we move into a period of heavy CapEx, which is where we'll be in '28, '29, we only take 15 aircraft in '27, we get another 15 aircraft in '28, but then we move up towards closer to 50 aircraft in '29 and '30.

And so I would be of the view, you will see us pay down the last bond in May. We will try to build up gross cash of somewhere between EUR 3 billion and EUR 4 billion out of that. Other than that, we'll return the surplus cash to shareholders in dividends and buybacks. But then as we get into the heavier CapEx in '27, '28, '29, I think you'll see us go back to the bond market. Like there's nothing here. We have no principles here in terms of being -- having debt or being debt-free. It's just because of this kind of slightly strange -- it's the first time in 30 years, we go through a kind of a 2-year period with very little aircraft CapEx, pay down the debt, and then we can always refi again in '28, '29 from our position of strength. I don't know if you want to add anything on that on the debt.

Yes, I'd agree with that, Michael. I mean it's very much down to a cost decision at the moment. The cheapest way to fund ourselves is out of our own cash resources. And that's why we've decided to repay that bond out of our own cash. We've got nearly EUR 1 billion in dry powder in the form of our undrawn revolving credit facility. And as we've done in the past, we'll be opportunistic when we go back to the bond market. We'll go back at the time of our choosing and not just because there's a bond maturing and we have to roll it over.

And I think that's how we will lock in the lowest cost ultimately long term for the group. So as Michael said, it's not just we have to be debt free. It's just it's going to fall that way for a period of time, and then we'll be back in the markets again.

And again, I would draw the point, as you look forward in terms of unit cost going forward FY '27. You look at our competitor airlines across Europe, the so-called low-cost airlines, they have huge net debt on their balance sheet, aircraft leasing costs, financing costs. And those costs are rising into the -- for the next year or 2. We will have 0 financing costs. We own 650 aircraft completely unencumbered. And it is another point of difference between us and the competition.

It's also one of the reasons why they need to get airfares up in the next year or 2 to as their financing costs are rising and they have a huge leasing obligations. And why I think our underlying airfares may well rise into '27 and '28, whereas our unit costs will be well under control.

The next question goes to James Goodall of Redburn.

I just got a couple of follow-ups. So firstly, just on the MAX 10 deliveries. Do you know how many deliveries to other airlines are in front of you in the queue? I mean it looks like various airlines like United, Alaska, they've been pushing back some MAX 10 deliveries from '26 to '27. So I'm just trying to gauge the risk profile to you if the program gets pushed back any further, which I guess seems lower now given the deferrals from those airlines, but I would love your thoughts there.

And then secondly, just following up from your comments around forward bookings being up 1 point in Q3. Does that forward book load factor level differ between the peak and the shoulder periods in Q3? And I guess, what does the higher book load factor level mean for you in terms of pricing strategy in the late market?

Okay. Thanks, James. Eddie will do the forward bookings. Let me touch on the MAX 10s. I mean, yes, one of the reasons why we're growing increasingly confident we'll get our first 15 deliveries in '27 is we are not delaying our MAX 10 orders. United who were the lead customer, I think, has delayed them. One stage they were talking about canceling the MAX 10s. We offered to step in and we take any MAX 10s they wanted to cancel. But it has helped, I think, Boeing to catch up with their production.

I understand there's about 2 airlines in front of us. I think WestJet is one, Alaska might be another who are still ahead of us in the queue. Their due deliveries in middle to late 2026. Not sure whether they'll get them or not around. I think there's a reasonable prospect that the lead customer is likely to get the first MAX 10 deliveries in probably Q3 or Q4 of '26. We have about 6 months of headroom there before we get our first aircraft. And I would be reasonably confident we will take them. I don't think we'll be the lead operator. I don't think we'll get the first MAX 10 aircraft, but we might be second or third in the queue.

And to those -- to my mind, it made no sense for United or some of those others to postpone the MAX 10s because you postpone them into the late 20s or early 30s, you're just paying a couple of more years of escalation. I would rather take the aircraft as quickly as I can get them. We don't have escalate -- well, we have -- we built in our price -- the price is averaged over the lifetime of the deliveries between 2027 and 2034. I want those aircraft as soon as I can possibly get them. I would happily take an aircraft -- any aircraft that has 20% more seats and burns 20% less fuel, will be an economically much more efficient and an environmentally much more efficient aircraft to operate here in Europe.

And I would take as many as I can get as soon as I can get them, which is why we stepped in when United stupidly announced that they wouldn't maybe take theirs. I said, well, we'll take anything that United wants to cancel. They finished up not canceling and just postponing. I think we're about third or fourth in the queue, but it will be a reasonably short queue. I think the first deliveries will take place in Q3 or Q4 of '26 and our first 15 are in the spring of '27.

Eddie, do you want to talk about forward bookings through November, December, maybe into Q4?

Yes. I mean in Q4, we're only about 10% booked, so very little for Q4, so very little visibility there. If you look forward to, say, November has required some price stimulation, but we're happy with load factors. If you look in December and January, I mean, we've learned as well from previous years in terms of trimming our schedules as well there, particularly as we get into the -- beyond the first 10 days of January and also doing some trimming around the early December as well.

So look, we're about 76%, 77% booked for November. Like our bookings are ahead of where they're marginally ahead of where they've been for each of those months, both November -- like November, December and January, comfortable with what we're seeing, but November is the one that needed a little bit of needed price stimulation to get there. But looking, we don't have to dig too deep, but we're ahead. And so we're happy, but you do have limited visibility. And like really like with 10% of bookings for Q4, you have no real visibility whatsoever.

The next question goes to Muneeba Kayani of Bank of America.

I just wanted to follow up on your outlook for the fourth quarter. Why are you saying there's no Easter benefit because there is the earlier Easter and a couple of days will fall into the end of that. So just wanted to understand your thinking around kind of the base effects into the fourth quarter.

And then just on EU ETS, what sort of increase should we be expecting in fiscal '27? Because it looks like hedging levels on that are just 11% right now and the prices have gone up. So how much of those fuel savings could be offset by the ETS costs going up?

Okay. I'll ask Thomas Fowler, who's the Director of Sustainability, maybe take the ETS question for you, Muneeba.

Let me deal with the outlook. I mean, yes, Easter Sunday next year is on the 5th of April. So the first weekend of the school holidays will fall into the last weekend in March. But it's not significant. We will get a little bit of a bump. But I think at this point, we're better off just to say, look, there will be no Easter benefit in Q4. If we get a little bit in the last 2 days of March, great. But really, most of it will flow into April.

It's really only when you get an Easter on the end of the 31st of March or 1st of April, you see the first -- as we did 2 years ago, the first half of Easter was in the prior year Q4. Almost all of the impact of Easter next year will be in Q1. There will be a couple of days in March. And if we get a little bit of a benefit out of that well and good, but there's certainly no point in going out now, we have 2 days of Easter in March next year, what can you do? We bug all visibility in Q4, and we won't have any until we get out to the Q3 numbers in February. And we -- that's all we're trying to communicate now, Muneeba.

And now I'll turn to optimistic Tom for the ETS outlook for FY '27, and you won't touch on '28 yet, unless we [ hear ] from Ursula von der Leyen in between now and then.

I think Neil alluded at the call [indiscernible] outlook. We think the ETS and SAF costs go from EUR 1.1 billion this year to somewhere between EUR 1.4 billion and EUR 1.5 billion next year, depending on the outturn of where the pricing is. Obviously, it is higher. Prices are higher going into next year, and we have to unwind the final loss of the free allowances. So somewhere between EUR 1.4 billion, EUR 1.5 billion for FY '27.

Thomas, is it worth pointing out that's the last big step-up as well that we're going to have?

Well, the last step of velocity allowance is, obviously, fair pricing changes, Neil, yes, like we hopefully won't see step up at that level the following year until mandates increase on staff in 2030. We do see the mandates grow a bit in the U.K. literally to 2030. But obviously, given it's only -- it's a portion of our business, we don't get the full impact of that through the line.

And again, sorry, and it calls into question. If Europe is serious about being competitive, this bulls*** tax needs to be rolled back. We need to bring it in line with CORSIA. And it's one of the reasons this unwinding of the free ETSs while Lufthansa, Air France, IAG are now much more vocal about the need to have a fair and level playing field on environmental taxes in Europe. We can't just be taxing ourselves to debt in Europe and exempting the Americans, the Gulf, the Asians and everybody else. It's simply insane only the Europeans would sign something that stupid and self-defeating. And therefore, I think the more we can -- the more and louder we campaign, the more likely we are to see some progressive reforms and pushing back on this bulls***.

The last question goes to Ruairi Cullinane of Research RBC Capital Markets.

Yes, first question, a follow-up on the previous one. So it sounds like you're not focusing lobbying efforts on sustainable aviation fuel mandates. Would you like to see any changes there to rules in the U.K. or EU? And then I wondered if you'd be willing to comment on whether the U.K. has diverged at all from the Q2 fare trends you've reported or 3Q booking trends?

Sorry, Ruairi. Just speak up, you're very faint there on the -- I got the first half with the SAF. What's the second question?

Yes, the second question on the U.K. Has the U.K. diverged at all from the Q2 fare trends you've reported or Q3 booking trends that you've seen across the group?

Okay. Look, SAF, I'm not a believer -- sorry, I'm a believer in SAF, but I mean, there is simply -- the volumes will not be there to meet the EU 6% mandate by 2030 or the U.K.'s insane 10% mandate. You have the oil majors at the moment going back from the production of SAFs under pressure in the White House. I think the -- I think I join and I support the call of all the A4E airlines in Europe. We need to move these mandates to the right -- we may get to 6% or 10% by 2035, but I think there's no prospect of getting there in 2030. And I would be surprised even if the oil majors don't produce the SAF, there's nothing we can do to supply it.

These are just another example of European -- British and European lack of competitiveness. The environmental agenda, there's a war in Ukraine, Trump in the White House. There is no, I think -- what is the word, there is no significant where -- if anything, the whole environmental agenda is moving backwards. We need competitiveness in Europe. And if the Swedes who were the home of the original environmental tax and flight shaming and all, if they worked out that Greta was wrong and they're abolishing their environmental tax, then surely the rest of the dodos in Europe will do likewise.

So I think there is, I think, very little prospect of those SAF mandates being met in 2030. I don't think as an industry, we should abandon SAF, but we do need a much more either Europe and European governments should use some of the environmental taxation, this astonishing the SAF or the ETS taxation to incentivize the production of SAF or move the SAF mandates to the right or further out into 2030. There's nothing we see divergent in the U.K. Sorry, I'll let that to Eddie. Eddie wants to answer that question. U.K., Q3, fares and...

I mean, as I said, like in November, required price stimulation. And even though -- if you look at U.K. leisure, U.K. leisure for us is about 1/3 of all of our seats out of the U.K., like where we've got -- you do see some price pressure there. But just in November, a lot of capacity has gone in there in the market. I think it's causing a lot more pressure for our competitors. It's a very small part of it.

If you look at the rest of the U.K., our city to city, our ethnic traffic to the U.K. and Ireland and all that, that's in line with the rest of the network. That's only a slight call out there in terms of U.K. leisure, I would say. And a lot of it would be focused in the region, a lot of capacity within post-COVID. Some of that went to our competitors' way in terms of holidays last year. I think they're feeling more of the pain, but we're getting to those factors.

But are you seeing any divergence in U.K. traffic in [ U3 ] compared to non-U.K. or EU traffic in...

I mean the only call that I would have is some of the U.K. leisure in November. And it's a very small part of our business, and the rest of the U.K. is as robust as the rest of the network Europe.

Okay. Ruairi, does that answer the question?

Yes.

Good. Okay. Any other questions, Nadia?

We currently have no questions.

Okay. Listen, folks, thank you very much. I think we've done, what, 1 hour and 25 minutes. We appreciate your time on the call. We have extensive roadshows on the road, Ireland, U.K., Europe, North America for the remainder of this week. If you'd like a meeting on a one-on-one, please contact us either through Jamie here, our Head of IR or through the Citi, Davy, Goodbody. Thanks to Citi, Davy and Goodbody for arranging and facilitating the roadshow, and we look forward to meeting you all at some stage over the remainder of this week.

If anybody wants to come visit us in Dublin after that, please feel free. As long as you fly Ryanair, we'll be happy to meet you. And otherwise, I think we are reasonably cautiously optimistic on the outlook, if not for the next 12 months, but I think for the next 4 or 5 years, keep focusing on the fundamentals. Capacity is going to remain constrained in Europe. We are doing much better deals with airports across Europe. Governments select -- are increasingly reversing these environmental taxes.

And therefore, I think there's a reasonable -- I'd be reasonably cautious that we're going to see controlled growth certainly to 250 million passengers by 2030, 300 million passengers by 2034. And there's a prospect plus or minus the occasional unforeseen event that profit -- net profit per passenger will over that period of time, although lumpily move from EUR 10 towards EUR 12 towards EUR 14 per passenger. And we hope you'll all join us for the ride and see where it goes over the next 4 or 5 years. Thank you for your time. Look forward to being here this week, and thank you very much. We'll wrap it up there, Nadia, please. Thank you.

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