Ryanair Holdings plc (RYA) Earnings Call Transcript & Summary

Hello, and welcome, everyone, to the Ryanair Holdings plc FY '24 Earnings Release. My name is Maxine and I'll be coordinating 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, ladies and gentlemen. Welcome to the Ryanair Full Year Results Call. I'm joined by all the members of the team. I'm in New York, various services as the team are spread across Ireland, the U.K., the Europe. The only member who's in [indiscernible] our CFO. So she's in listen-only mode and won't be able to contribute to the call today. You have seen this morning, we reported full year profit of 34% to EUR 1.92 billion as traffic grew last year by 9% to EUR 184 million, despite Boeing delivery delays, which have hampered our traffic growth. And we've also announced a timely EUR 700 million share buyback. Over the full year, I said the highlights that the traffic grew 9% to 184 million passengers. Despite that, the fuel bill also jumped 32% to up EUR 1.25 billion to just over EUR 5 billion. We took delivery of -- well, we have 146x Gamechangers in the fleet at the end of March. This summer, we're still growing strongly. We're opening 5 new bases and over 200 new routes for summer '24. We've already hedged 70% of our FY '25 fuel at about $79 a barrel. So we've locked in fuel savings of about EUR 450 million for the next year. And in the 2024, we're paying our maiden interim dividend of EUR 400 million, EUR 200 million paid in February and EUR 200 million in September. And we continue to look forward to our Boeing MAX-10 order of 300 aircraft for deliveries of which starting early spring 2027. We continue to face delivery challenges with Boeing. As I said, we have 146 Gamechangers at the end of March. We hope to increase this to 158 by the end of July. That will be 23 aircraft short of our contracted Boeing deliveries for summer 2024. However, we'll continue to work closely with Boeing. Dave Calhoun, Brian West and Stephanie Pope in Seattle. We have seen recently an improvement in the quality of the fuselage is being delivered from Wichita to Seattle and also an improvement in the quality of the final -- out of final deliveries we're getting in Seattle. What we now need is a plan to accelerate our 737 deliveries. There remains a risk that Boeing deliveries could slip further, although we are becoming increasingly optimistic that the 9 extra aircraft we get through June and July will be delivered on time, at least we'll be able to use those through August and September. However, these delays mean that more traffic growth will occur the lower yield in H2 than we had originally planned. And as a result, we've cut back our full year traffic forecast this year from an original 205 million passengers to a range of between 198 million and 200 million. Now the demand in Europe remained strong for summer 2024, it's positive. And despite these Boeing delivery delays, we'll still operate our largest ever summer schedule with over 200 new routes and 5 new bases. We expect capacity in Europe to be constrained as consolidation process continues airlines, particularly in Europe ground, a significant number of A320 aircraft for P&W with the engine repairs and both OEMs struggle to recover their delivery backlogs. As a result, however, we're a little bit surprised that the pricing is soft. We had thought with these capacity constraints, right in this summer would ride between -- I mean, somewhere between 5% and 10%. However, we had an early Easter at the end of March into early April. Pricing through the back end of April, May and into June is a little bit weaker than we had expected. In fact, it will be slightly down on Q1 last year. We still see pricing being up in the peak summer months of July, August and September. But at this stage, we think that to be 0% to 5% and at this point in time, not 5% to 10%. Now we still have less than 50% of the bookings made for that July, August, September quarter. So it could go either way. Pricing could firm as we go into the summer peak or it might weaken further. And if it weakens further, it weakens, and we will continue to be load factor active, price passive. It just makes people and families traveling in Europe this year, we get better deals and better pricing on Ryanair. We expect European airline consolidation to continue. And we do in principle, support that consolidation process. We think Lufthansa should be allowed to acquire ITA. IAG should be allowed to acquire Air Europa, as long as there's appropriate competition remedies, i.e., stock handovers at congested airports like Milan Linate and Madrid. Looking forward over the last 12 months, as I said traffic grew 9% to EUR 184 million. Average fares rose 21%, but that was badly needed because our fuel bill rose by 35%. Overall, total revenues jumped 25% to EUR 13.5 billion. Operating costs were up 24% to EUR 12 billion, primarily due to a 32% increase in fuel cost. More importantly, however, the cost gap between Ryanair and all of our other EU competitors has widened significantly and we have seen that with much higher unit cost rises from competitors who announced results over the last 2 weeks. As I said, our FY '25 fuel requirements are over 70% hedge at just under $80 a barrel. And we've also locked with the first 10% around FY '26 fuel requirements at about $79 a barrel. End of year balance sheet was in good shape. Net cash was just over EUR 1.3 billion. That was somewhat boosted by Boeing delivery delays but that's given us the opportunity, as we've previously communicated to launch a share buyback scheme. The Board has approved a share buyback of EUR 700 million, which will take place over the next 6 months. Key to all of this is obviously in our outlook. Let's see what things we know. We expect our traffic to grow by about 8%. So somewhere between the finisher -- somewhere between 198 million and 200 million passengers. That is Boeing delivery delays, but there's less uncertainty now that we have only 9 more aircraft to take in June and July. Most advanced global competitors continues to widen. We do expect unit cost to rise modestly, as ex-fuel costs such as particularly pay and productivity allowances, higher handling and ATC fees and the impact of the Gamechanger delivery delays on crewing ratios and fixed cost is substantially offset by our fuel hedge savings and our rising interest income. While EU short-haul capacity is constrained, summer '24 demand is positive, with good trending slightly ahead of last year. Recent pricing is softer than we expected, can't really explain why other than there's a little consumer resistance out there and most airlines are engaged in price promotion through April, May and June. And if they are, then we will lead the market with price promotions. Q1 is requiring more price domination than last year. Fares and profits in Q1 will be behind where they were will be lower than they were in Q1 last year, particularly as half of Easter moved into March into Q4. And if you remember, we had a bumper Q4 results in today's annual results. Our visibility is limited, our outcome as all of this company will be heavily dependent on closing peak summer 2024 pricing, and we remain cautiously optimistic that peak summer '24 fares would be flat to modestly ahead of last summer. Q4 FY '25 will not benefit from an early Easter as the date in FY '24. However, it's too early to provide the sense of accurate full year guidance and the final outcome of FY '25 will be heavily dependent on avoiding adverse events during the year such as adverse developments in Ukraine, the Middle East, a repeat of last year's extensive ATC disruptions are further Boeing delivery delays. And with that, I'm going to hand over to our CFO, Neil Sorahan to take us through some points and teams on the MD&A, Neil?

Okay. Thank you, Michael. You covered a lot there, but I'll focus in a little bit more on the balance sheet, BBB+ rated balance sheet, exceptionally strong. And as Michael said, we finished with well over $4 billion in gross cash and just under $1.4 billion net cash at the end of the year. This has given the board the confidence having restored pay, having paid down significant debt over the past couple of years and funded large CapEx and now launched the buyback, the EUR 700 million buyback that will formally launch tomorrow morning and it will run for about a 6-month period broadly split between the non-EU and the EU shareholdings. And so delivering on the capital allocation policy on top of the dividend program that was rolled out last November. The cost base in good shape, we came in exactly where we said we were on a per passenger basis last year. That gap between ourselves and everybody else widening and very pleased that thanks to the hedging we have will more or less offset the nonfuel price inflation with the fuel savings over the course of the next year. And then, of course, happier with where we are with Boeing at the moment and looking forward to getting the balance of the Gamechangers, the first of the MAX-10s over the next couple of years.

And then Mike, [indiscernible] the deal deck, you might give us a flavor of what you're seeing in terms of new route growth in market share across some of the key markets in Europe this summer?

Yes. I think the -- I mean we're going to grow by about 9% this summer versus last summer. That's up almost 37% from summer '19, just slightly over [indiscernible] routes. But the big call-outs, I suppose, are like Spain, we have an extra 11 aircraft, and they're actually still growing strongly. 2 new bases there of the 5 new bases in Italy and Reggio Calabria and Trieste. Poland, Central Eastern Europe, including Albania, growing strongly and Morocco as well, growing strongly with new base there in Tangier and also, we are operating domestic there, albeit on a very small scale, but they're going -- they're going well at the moment. So capacity is growing where we can -- where we -- we are maintaining our pressure on costs there. And those airports have reward us with lower costs or get into capacity. If you look at that's recently in Bordeaux, where we had to -- we closed the base because the costs are going to rise. They're substantially over what we had contracted for. You can see in Venice, where the municipal tax has grown there. Same in Portugal and also here in Dublin, where we're going to have -- where we've got the double whammy of airport cost growing by up to 46% over the next 5 to 6 years. We've taken out all the Gamechangers out of there, and we've got the capacity cap in Dublin, which we'll probably see airfares spiral this winter because we'll be unable to put an extra capacity for key events such as Christmas, the new -- the school break and the extras generally. But overall, the message is those airports that reward growth with lower costs, get more Ryanair capacity and those that don't get it. Thanks.

Thanks Eddie. Just to make sure everyone where we announced the closure of the Bordeaux base from November. So we are still at the Bordeaux and will be key to summer, but it closes in November and already, we've had a number of other airports, including French airports onto the new team looking to secure those aircraft, but they've already been allocated by this winter. Okay. Maxine, with that, please, can you open up for Q&A?

[Operator Instructions] Our first question today comes from Harry Gowers from JPMorgan.

Two questions, if I can. First one, just on those peak summer fares. Maybe you could go through what you think has actually changed compared to before when the fares have been talked about 5% to 10% higher. Have you actually seen any large weakening in demand over the past month or maybe the original message was say a little bit too high. And then secondly, just on CapEx, probably one for Neil. Obviously, there's an impact on timing from the Boeing delivery delays and maybe EUR 400 million to EUR 500 million might have shifted into March 2025. I mean it appears like the CapEx guide is maybe EUR 500 million higher beyond just those delivery delays into March 2025. So maybe you could just detail out the new CapEx guidance. And has there been a noticeable increase in the nondelivery related CapEx spend?

Okay. I will take the fares and Neil, you do the CapEx. So let me give you what we think is happening on fares. A couple of issues. Firstly, when we come off 2 summers where we've had -- cumulatively 2 summers, both '22 and '23 of post-COVID recovery, fares were up plus 20% for the last 2 summers. We expected this summer would be marginally softer. Originally, we thought it could be up maybe 5%, 10%, it would be some single digit, but we wouldn't have a third year of 20% fare increases. I think we also expected that with the earlier Easter, the back end of April would be weaker and would weak with there's a kind of a longer run from the Easter through to the summer holidays. But I think it's fair to say we do think that fares would be stronger towards the summer, May, June, July, August, particularly with capacity constraints. And most notably, the A320 groundings, which really bite once the summer schedule take into place in April. One of our competitors, for example, they are a lot smaller wiz, announced a decline in traffic in April because of our -- in April because of these -- the A320 ground. So the capacity constraint is real. And I think when you look to analyze what's happening in the short truck, the honest answer is we're not sure. We think it's a combination of 2 things. One, the dispute with the OTAs, where a lot of the OTA prior took us off sale in December and January. We're gradually putting some of the OTAs doing approved OTA distribution deals -- but as a hit to that, we are seeing some hit to our kind of what we would say, the leisure routes, U.K., Spain, U.K., Germany, Spain, Scandinavia, Spain. A lot of those are coming back online using the benefit of our approved OTAs, which ensure that the consumers are not being overcharged. And we think that was an award that is worth fighting and it's clearly one that we're winning on behalf of the consumer at the moment. So that has probably had some small impact. We think overall, however, it's just a little bit softer out there than we expected. There's a degree that appears to be some degree of consumer resistance. There may be some kind of recessionary feel out there. There's not a lot of consumer spending our confidence across Europe and consumer spending, and maybe that's reflected in what we would call shoulder period bookings and shoulder period bookings and fares. Now when we engage in price stimulation as we have done over the last 4 or 5 weeks, we see strong volumes. So there's strong volumes out there. And to me, that the key theme, price is going to be softer this summer, it's going to be softer. But when we stimulate, we see very strong volume growth. And we've seen that across the piece. Almost all of the airlines in the short-haul space in Europe have been engaging in Seattle. Now maybe we're the authors of that, but we're going to be aggressive on pricing. And if consumers in their families got by slightly lower fares or less higher fares than we originally predicted this summer, then that's what it's going to be, and we will lead that trend. We could do so with a very strong base with unit cost largely nails down, unit costs rising at a far slower rate than it is among any of our competitors in Europe. And therefore, we do so from a very strong position as straight. So as always, there's a bit of price softness out there this summer. And I would describe it as no more the price softness. We will accept that as our fate and we will be strong on volumes and a little bit softer than we originally thought on pricing. I don't think that detracts from the medium-term outlook, which, to my mind, is still capacity constraints across Europe for the next 2, 3 summers and average airfares will rise over that period of time, that is no unforeseen events because I can see no outcome other than continuing manufacturing delivery delays continuing A320 groundings and hopefully, the pay out of the consolidation story in Europe. So short term, a little softer than we thought. It's that what it's going to be, then that's what it's going to be, and we will be aggressive and lead that process. Over the medium term, I think it's inevitably the next 2 or 3 summers in Europe, pricing with constrained capacity will be modestly upward. Neil, CapEx please?

Yes, EUR 2.3 billion CapEx for this year. A good chunk of that are predelivery payments and delivery payments that have moved forward into FY '25. On top of that, maintenance CapEx, but we've also got some additional spare engines, some hanger construction, SIM centers, construction underway. And then we start the first of the MAX-10 PDPs. Big step down next year, where we're primarily just looking at maintenance CapEx will dip down to just over a EUR 1 billion, maybe EUR 1.1 billion next year. And then we've kind of like CapEx for a year or so before it starts to tap up again with the predelivery payments on the MAX-10 and the delivery payments on the MAX-10 in 2026 into 2027.

The next question comes from Dudley Shanley from Goodbody.

Two questions for me. And Michael, you touched on both issues a minute ago. First of all, if you think of the airline consolidation in Europe, and I think before you've mentioned that ultimately it comes down to 4 players, which is the 3 flags and Ryanair. It seems as though the European Commission is getting a bit stricter in terms of getting these deals true. So do you still think that's the end game for consolidation? And then secondly, on capacity constraint, which has been an issue we've talked about a few times. Is it still the case? Do you think this goes on for a couple of years? I know as you mentioned that obviously the deliveries from Boeing. The quality is improving. The speed doesn't seem to be improving, and the GTF issue is still in the background. So will it still be there for 2 to 3 years?

Two good points, Dudley. Firstly, on consolidation and then I'll ask Eddie, Juliusz also to comment on that. I mean I think the EU commission is, as usual, getting it wrong. Consolidation does need to take place. What happens is it looks that was not allowed to buy Alitalia, what happens to Alitalia. Now the goes bust, which is politically on attractive in Italy. The Italian taxpayer keeps massively funding on Alitalia, keep it like with the legal state aid. Europe does need to accept that there has to be consolidation. What happens to Air Europa, if IAG are not allowed to buy them. And I think, again, it goes both. We've seen that in the state where JetBlue was not allowed to buy Spirit and Spirit is teetering on the edge of bankruptcy. So Europe needs to have a better kind of strategic focus on what it wants for their airline. We need low-fare air travel across Europe. If you're going to have integration, you're going to have freedom of movement, particularly from the peripheral states to the center. But the center also needs to be -- not some kind of rational strategy here. We think they should be encouraging that consolidation, but then it should be encouraged with appropriate soft remedies. The way to fix this, if you're concerned about consolidation to monopoly in place like Malpensa or in Madrid, [indiscernible] diverse lot to competitors who can maintain and sustain those operations, don't do it, they did in Lisbon, which was to give slots from TAP to easyJet, and easyJet has barely used half of those slots during the winter period, which is where Ryanair would have used up all of those slots during the winter period. So I think the EU Commission needs to have a longer-term vision for air travel in Europe, the European -- the single market widely depends on low-cost air travel. And the only way that's going to be sustained is with, I think, some -- a smaller number of larger, more sustainable carriers. In my personal view, it's going to be 4 large airline groups. I don't see any of the others surviving as a large independent carriers either because they can't compete with the legacies or with the hubs and with the connecting traffic or they can't compete with Ryanair on the low-cost point-to-point pricing side. Capacity constraint, I can't see any way it doesn't continue for the next couple of years. There are 3 key elements here: One, there's been a huge shakeout of capacity during COVID, that capacity is not coming back; two, the manufacturers are hugely challenged for the next 5 years from 2024 out to 2030, just delivering on their existing commitment. And there's a huge number of unfulfilled orders still out there from Turkish, Middle Eastern carriers, Asian and Chinese carriers. And with the constraints in the supply chain, there's no way that those -- I think that they will be able to meet their own step-up in monthly in manufacturing. There are going to be challenged for the next 3, 4, 5 years. And then you add to that, the GTF issues on the Pratt & Whitney engines. We've seen optimistic stuff. I mean 20% of the fleet is going to be grounded. So I think it's going to be for the next 2, 3 summers which is not going to be a quick fix. The original forecast of 300, 350 days for the engine repairs have already moved out towards 450, 500 days. There's huge challenges on the engine maintenance side, supply chains and on engine shop, and there's no way that, that being accelerated. So I think it is inevitable that for the next 3 or -- 2 or 3 summers at least '25 -- '24, '25, '26, the passenger cost Europe is going to be meaningfully constrained. Also remember, in Ryanair's case, this year, we're only going to have 30 of our 59 -- 40 of our -- sorry, 40 of our 59 aircraft deliveries. We hope to pick that up next year when we will add. We take another 29 aircraft, we hope, and the backlog of the 20 were short issue we might have 59 aircraft for summer 2025. Then we have essentially no growth for summer '26 and no growth for summer '27. So we will be a key player in that capacity constraint for the next 2 or 3 summers as well. I think there'll be disappointment at the moment with the investors who always want to see upside, oh the pricing is a little bit softer, what's going wrong, the margin broken, why are not prices rising. We've had 2 years of very strong pricing growth. We're seeing much more modest pricing growth into this summer. And if that some degree of consumer resistance or we need to incentivize consumers travel, so be it. But for the next 2 or 3 summers, capacity is going to remain constrained, nobody can add that meaningful capacity in Europe other than the Ryanair deliveries. And I think pricing is going to be flat -- slightly up for the next 2 or 3 summers, which should feed well into the Ryanair model, where our unit costs are rising at a much lower rate than competitors and prices will rise. Next question Maxine?

The next question comes from Jarrod Castle from UBS.

Jarrod, go ahead.

Unfortunately, we're not getting audio from Jarrod's line. We'll move over to the next question. The next question comes from Stephen Furlong from Davy.

Michael, can you talk a bit about the OTA deals? I'm thinking that as we look beyond the summer into the first portion of winter, the Christmas period, it was hit last year. So maybe it's something that will help you as they -- all those deals are bed down, might talk about that. And then the second thing, just on Boeing, I may know some things aren't in their console, but are you happy to see them acquire their Spirit error systems? And do you see any sign that there will be any issues or delays with the MAX-10 certification? Or is it still all up in the air?

Thanks, Stephen. Look, I mean, I think the OTA -- we bought the OTA pirates for 10 years now. We still find it astonishing that the consumer agencies, the European Commission allow these guys to legally engage in digital piracy by a legally screen scraping Ryanair's inventory and then turn around and inflate those airfares and ancillary services and due consumers. If we or any other airline did this, they'd be down the second tonne of bricks. And yes, they think turn to blind out to these guys. They seem to me to accept the value are duped into believing because that there's some kind of honest price comparison websites when they're not. They have been scanning and overcharging consumers for years now. It seems though we brought [indiscernible] in December. I think gradually, as we have moved to more sophisticated payments and payment protection for consumers, it's harder for these guys to pass the results off the Ryanair. The good news now is we have signed up, I would say, 10 of our 11 largest OTAs and that have either signed up to our approved OTA distribution deals, are already in the process of agreeing those deals. The only one who stands out there is still eDreams, which is a total scam, still taking out, passing themselves off, passing off Ryanair airfares that massively inflated overcharges, both on the underlying airfares and on the ancillary fees. They've also started this eDreams Prime scam where they guarantee discounts on 100% of flight, but what they do is they take Ryanair EUR 50, they pass it off to their eDream Prime members as an EUR 80 airfare, is the discount back to EUR 54, EUR 55. It is a complete scam, eDreams Prime member shouldn't pay the EUR 65. And by the way, what eDreams then do, if they don't even allow the consumer when they roll it over into year 2 or year 3, they increase the cost. You're getting no value whatsoever, no discounts when you're booking Ryanair flights with the eDreams and they are also being scammed for inflated ancillary services such as priority boarding and, but all of the others, Kiwi, loveholidays, some of the bigger [indiscernible] have all signed approval. And the good thing about the approved OTA deals is one, it guarantees the consumer price transparency. You're only paying the published Ryanair fares; two, you're only paying the -- the published Ryanair ancillary prices. The OTA may charge you a small or modest separate fee, but at least you know what you're paying the OTA and what you're paying to Ryanair. And reading that transparency is vital for protecting consumers. The good news from Ryanair's point of view is we also get the -- they agree that we get the payment details and the passenger contact details as well. So if we have to send you pre-flight information or disruption information or procedural change intervention, it goes straight to your e-mail, not in the case of eDreams where we still get a fake e-mail addresses or fake payment details and that communication with the passengers get lost. There was no doubt that the OTA has taken us off late in December did hit close-in bookings in Q3 and certainly into Q4, and there's a view among the commercial team, although I don't subscribe to it that some of that OTA dispute is impacting our Q1 bookings that we would have had more family or leisure holiday bookings. I'm not sure that the OTAs have that much volumes. But that's their view, that's their view. I think the underlying softness in pricing at the moment is just there's a bit of consumer resistance out there and consumer spending is generally challenged across most sectors in Europe at the moment in safer needs stimulation, it needs stimulation. But I think we would probably be helped in Q3 and Q4 next year. But we will need that help because we won't have the first half of Easter in Q4 of FY '25. In terms of Boeing, I don't think the Spirit acquisition makes much difference one way or the other. Boeing has whether Spirit was an approved supplier or a subsidiary of Boeing. What's critically Boeing is we need hard-to-job management in Seattle and in Wichita. We have certainly seen an improvement in the quality of the fuselage is being moved from Spirit to Wichita after about a 2-month gap. So what's been moved to Seattle at the moment is undoubtedly they're not carrying forward defects on fuselage, which have to be repaired at Seattle. However, that hasn't just speeded up the turnaround of the planes in Seattle, they should be turning around those fuselages in about 8 or 9 weeks. We're seeing turnaround in 12, 14 weeks. Greeting Stephanie Pope and the team in Seattle are doing a much better job. The good thing is Stephanie, she is there. She's on the ground. There's a daily, weekly briefings. I think they're getting it. We have seen recently, for the first time, a little bit of a pull forward of aircraft deliveries. We originally thought we were only getting 3 aircraft in July. It now looks like we'll get 7. We get 10 aircraft deliveries in August, but that's too late. It deliveries in August and no use to us. We've missed the summer peak. But we keep taking those deliveries through July, August, September, October, November, so that I'm now reasonably confident we'll get all of those 59 aircraft before the end of calendar 2024. That then we move on immediately to well. Now our 29 aircraft, we're going to get from January to April of '25. I think there's a risk of some slippage there. We will be insisting or hoping to get aircraft. If we can get all the 29 aircraft between January and June of 2025, we'll be in reasonably good shape for summer 2025. And then just to touch briefly, there has been some slippage on the MAX-7 certification. I think it's now moved from the back end of '24 into the -- I would hope the first half of FY '25 that normally means that MAX-10 has slipped a little bit to the middle end of 2025. They will miss, in my view, some of their -- the lead -- the first deliveries of the MAX-10 in summer 2025 to the American carriers. But we don't think, at this stage, it will delay our deliveries in our first 17 deliveries that are in the spring of 2027. But there's a risk that some of those might get it. It won't fundamentally alter our growth prospects for summer 2027, but we would like to see definitely both by the team in Seattle, continue the good work they've done recently on improving quality. Now let's improve and accelerate deliveries. Now let's catch up the backlog and make sure that the MAX-7 certification happens in the first half of '25. MAX-10 in the second half of '25. And if they can get there and there's no other unforeseen events, then I think we would be reasonably confident that we'll get the MAX-10 in time for summer '27. Stepping back on from that, and I think just as important here, Boeing are still making great aircraft, like they have shipped an unbelievable amount of unfair publicity recently. Every time there's a maintenance defect and nose wheel falls up in Air Canada aircraft and engine cowl comes off Southwest aircraft, those are not, it's all reports have Boeing aircraft. Those are maintenance issues with Air Canada and Southwest. They're not Boeing issues. The Gamechangers that we now have about 160 that in the fleet this summer are flying really well for us, huge customer approval, very quiet experience in flight, huge fuel savings. I mean they are delivering 16% less fuel and carrying 4% more passengers. These aircraft are transformational for Ryanair's cost base for the next decade. And I think they will enable us to carry more and more passengers, but at a significantly lower fuel cost per passenger and also significantly less emission -- CO2 emission as well. So at much lower cost, much more fuel efficient, and [indiscernible] environment as well. So we take to go and keep up the good work. We will be asked who we think should take over in Boeing, we don't care as long as it doesn't affect the good work that Stephanie Pope and the team are doing in Seattle. We do not want any disruptions in Seattle. We want all of Boeing. And I think Dave Calhoun gets it. I'm sorry to see him go at the end of the year because I think somebody does need to run Boeing to allow the people to get to focus on the deliveries and the quality of those deliveries. But we are very supportive of the good work that Stephanie Pope and the Seattle team we're doing at the moment.

The next question comes from Jaime Rowbotham from Deutsche Bank.

Michael, 2 questions for me, please. Firstly, the buyback running between now and November. Would it be sensible for us to think of this as maybe a first tranche with the potential for you to maybe go again depending on how summer pans out? Or does the EUR 1 billion higher CapEx in fiscal '25 mean that's a lot less likely now. Second one, on costs, you've put the nonfuel cost commentary in with fuel to stay modestly up overall on a per unit basis. But if we unpick the moving parts a bit focusing on the nonfuel bit, I feel like you are pushing us towards maybe a couple of euros again on Neil's metric of nonfuel cost per tax, which would be mid- to high single-digit inflation. And to be fair, that is a bit higher than what we hear some of your peers guiding, easyJet guiding, I think, low single-digit increase in nonfuel unit costs this summer. So perhaps you could just address that in terms of the gap widening.

Jaime, all I can say on buybacks is we have -- unlike most of our competitors, we are cash generative. We have -- we're paying down debt aggressively. In 2 years' time, we'll be zero debt. All we have said is that as the Board had the policy, if we generate surplus cash, first, it will be used to restore pay and put multiyear pay agreements in place for our people. Secondly, we'll pay down debt aggressively as debt costs are rising in the current marketplace. And thirdly, it will be CapEx, but we know we're coming up to a kind of a 2-year CapEx holiday. And if there's any spare cash or surplus cash, we are committed to continue to return that to shareholders. We think EUR 700 million now is appropriate. The Board thinks that's appropriate between now and November. What they do after that will depend on what the cash position is after that. And I don't want to pre-judge what the Board will do. I mean all I would remind you is there's a dividend payment coming in November. We have a share buyback this year. And I would point to -- remember the Board's commitment that we have a dividend policy that will return 25% of after-tax profits, currently EUR 1.93 billion. That's about EUR 480 million in calendar year 2025. So I think the Board is more than living up to its commitment that once we've addressed our people, our debt and our CapEx, we're clearly returning surplus cash to the shareholders who support us during COVID. Neil will give you more color on the comp, but give me a couple -- there just -- what issue I would point to here is, yes, our unit costs are rising slightly. Labor is a driver of that but our unit cost growth at a much lower base than many of our competitors is going to be less than some of our competitors. We see for example, you mentioned easyJet. I mean their clients have recently rejected a 20% pay increase and are tracking strikes through this summer. An easyJet do not have a great record of standing up to the unions when they're certain with strikes. But there is undoubtedly pay inflation running through the system. I think the fact that there's capacity stability in Europe is helpful from that point of view. We have very little pie at our cabin crew attrition at the moment. In fact, if anything, we're frankly over crewed this summer because we crewed up for all of the Boeing deliveries and we're not going to -- they're going to leave us about 20 aircraft short. If you look across North America, while some of the deals that have been done with the pilots and crews across the North American airlines, it's off the chart. In Europe, there is no doubt that our -- and we continue to ask our pilots, our cabin crew, our engineers to perform efficiently. They deliver a best service plan airline in Europe. They're also delivering the most efficient turnarounds. And it is only fare, I think that we share some of the upside with our crews in the form of multiyear pay agreement. And if we have to respond in that marketplace to be competitive on pay, and then we will continue to do so. But it will -- we -- our increase in costs, our cost inflation this year will be significantly lower than any other airline in Europe, including some of the words you mentioned, Jaime. Neil, do you want add anything on the unit cost outlook?

I will. I mean, I think the key here is that we're well hedged into next year. As you indicated, Michael, however, we are carrying extra crew this summer due to the Boeing delivery delays. The final outcome on cost per pax will ultimately depend on whether we commit with 198 million passengers or 200 million passengers. But net-net, on a total cost basis, we're broadly flat to margin or to factor in the fuel savings that we're getting on the Gamechanger's important factor in the hedging impact that we have. And the nonfuel stuff is annualization of pay increases that we gave last year, extra crew that we're carrying and some additional engineering and handling costs. So nothing significant coming through here. And as I said, broadly flat on a total cost basis on the year.

And I would just point out, our fuel hedging position here is the benefit but again, you look at the numbers that were produced recently by way -- by easyJet. I think they were about 42%, 43% hedged out to March 2025 at about $83 a barrel, we're at 71%, 72% hedged at $79 a barrel. And in fact, we are now 10% hedged for FY '26 $79 a barrel. So don't just dismiss the fuel savings. It's all part of the same envelope. And while, yes, I think there will be modest unit cost inflation, excluding fuel, that will be more, I think, than a pickup over the next year or 2 on if capacity is constrained, modest fare increases over the next couple of summers in Europe.

The next question comes from Alex Irving from Bernstein.

So two for me, please. First of all, back on the fare expectation and the change there. My question is more geographic, has it been specifically worse than expected in the markets where our competition is more GTF heavy? Or is it more of a widest phenomenon? Second question is on the load factors. Before the pandemic, GTF 9%, 6% every single quarter, summer, winter didn't matter. Having been back there since is that a conscious decision as you're trying to maximize in total revenue passenger rather than just load factor optimized? Or is there something else behind that, please?

Okay. You broke up slight during the first one, but I mean, if -- correct me if I'm wrong, I think the question is that the fare weakness kind of across the board? Or is there particular geographies where the fare weakens? Is that the question?

Yes, that's right. Specifically, is it more weakness in the GTF heavy markets? Spain, Central and Eastern Europe.

And what's the GTF-heavy market?

In the markets where you have competitors with GTF engines that can't use their planes. So I think more widespread in those markets.

No. I mean what we think -- and I'll ask maybe Eddie and Jason begin us to give some flavor of it. I mean, it's generally across the piece. April has been weak; May, June has been weak. And more of the weaknesses is on the delay, it is on the leisure routes, which is why honestly, we're not quite sure why that weakness, but we think it's a combination of some underlying impact of the OTA kind of lockout, where people would have been booking some kind of leisure packages in those markets maybe during April, May and June. But more generally speaking, broadly a bit of consumer resistance. There's a bit of lack of consumer spending, and you see that across most markets. I think that does benefit the Ryanair model where we have lower fares than anybody else. And we've seen that in recent weeks as we engage in reasonably modest price stimulation. Like we've done some 1499 and 1299 seed sales, 20% off, that has boosted capacity significantly. People -- the market is responding strongly whenever there's any little bit of price stimulation. But I would describe it as widespread rather than particular geographies. We're very strong. If there was one area where I think we are a little bit stronger, it is probably in that Central Eastern European markets where with our grounding a significant number of aircraft, and we're growing strongly into what were previously is Wizz market in Albania have been very strong. Romania, Bulgaria, Czech Republic, Slovakia, Poland, they tend to be small and reasonably weak, but we're growing strongly in Poland as well. We generally tend not to notice with much in most markets because they generally significant -- price significantly higher than us. But it does seem to us that wins have taken a conscious decision where they're grounding aircraft or grounding aircraft across. Europe rather than their Middle East market, they do seem to be trying to protect or maintain whatever capacity or growth you have in those Middle Eastern markets. And we've seen them continue to retreat from markets in Italy, Albania, Central and Eastern Europe, where they're not able to compete with us on cost. 96% load at the time before the pandemic, yes, I mean I think we haven't consciously set ourselves a load factor, we're not constantly stepping down the load factor but we are undeniably in a marketplace post-pandemic where pricing is materially stronger. And therefore, we are not in that kind of capacity growth fare, huge capacity growth rates across the market we're in to fight for every percentage of market share gains. We're taking huge market share gains and also seeing modest fare increases. We first used, I mean, as we said the budget load factor for this year is the same as last year at about 94%. As a percentage to a point to below pre-pandemic 96%. I think that's because pre-pandemic, underlying airports were 50%, 60% lower than they are today. And we were still fighting with lots of other airlines that were adding capacity or airlines like ITA and TAP in Portugal who are operating twice the fleet they are today and losing money hand over fist. So there hasn't been any great conscious decision. I think it's just -- a 94% load factor is a reflection of the fact that we're operating in a market where post COVID, fares are higher, demand is stronger but we're not trying to trash our own yields to win market share, where we need huge amounts of market share with at modestly higher airfares -- modestly higher airfares than last year and significantly higher airfares than pre-COVID. Eddie and Jason might be helpful. Is there anything you want to add by way of color on fares by market or generally, what's your analysis of why the fares are a little bit weaker than we thought would be?

Yes. And [ Terry, ] Michael, I might just let Jason in a second. Yes. I mean I'd agree with you say that, I mean, in terms of like where we are pulled back in places like in Eastern Europe where we wouldn't have a strong presence like [indiscernible] places like that. But just so that the audience here understand about when we're talking about OTAs as well. So like what has happened is that when OTAs prior to this when we're scraping could actually make up to fares or make up the ancillaries. But when you go from screen scraping to an API, there's a lot of technical work or whatever that goes on, on the OTA and to get the pipes fully sort of homing. So it's -- so that has happened as we've signed up each of those OTAs and more of that should -- I know you disagree with that, but more of that should come through the pipes as those APIs become more fluid. Jason, do you have anything there?

Yes. The only thing I'd add is covered already a little bit. Central and Eastern Europe is very strong. Like we consciously increased capacity on the [ laser ] piece out of Central and Eastern Europe by 20%, 25% this summer, and it's absorbing very, very well. The 5 new bases are working very well. We actually grew the Balkans, new brace in Dubrovnik, new routes in Sarajevo, and those are working very, very well as well, actually very strong domestic and particularly where Wizz of now almost completely pulled off is very strong. So that part of the market is very strong. The leisure piece in Western, yes, a little bit softer, fares not increasing as quickly as I'd expected, but volumes are still strong on us, but a little bit of price stimulation needed, particularly on some of the mid-week leisure.

The next question comes from Duane Pfennigwerth from Evercore ISI.

Can you comment on how much of your passenger volume came from U.S. consumers running around Europe last summer? And if you have a view on how that plays out this year? And then my follow-up would be on the EUR 450 million of savings you've called out year-to-year on fuel. What is that net of ETS? Does ETS offset some of that fuel savings?

Okay. Both of those are above my pay grade, I'm afraid. I don't know Eddie or Jason, if you have any idea how much U.S. consumers make up of our traffic in Europe? And maybe, Neil, I might ask you just to comment on the -- how much of the EUR 450 million saving where none of it is made up of the positive net of an ETS. Eddie and Jason, anything on U.S. consumers?

Jason, you go ahead.

I don't know, it's a relatively a smaller number.

All right. The answer is we don't know [indiscernible] we have is we don't tend not to have to worry about the nationalities consumers, all we really worry about is that we're getting a 94% load factor and that they paid us well in advance of their departure.

Yes. Duane, ETS is obviously becoming a bigger portion of our fuel bill as the free allowances unwind. So we will go from just under EUR 700 million in the year just gone, just over EUR 800 million, probably about EUR 850 million in the next financial year. So that's all part of our overall fuel guides, but the EUR 450 million is based on our jet hedging and our dollar hedging at this point in time.

Got it. Well, sorry for the U.S. curve ball there, but I appreciate the thoughts.

And we welcome all U.S. passengers on board our aircraft doing, apart from those guys were the big heavy gold clubs. But nevertheless, we're not too worried about nationality as long as we get paid.

Next question comes from Sathish Sivakumar from Citi.

I got 2 questions here. First is on the ancillaries. If you could just give some color in FY '24, that which part of the like ancillaries performed well? And where do you see that trend into FY '25? And the second one, maybe just for Jason, actually. If we look at the demand-wise, how does the beach versus city, mid-week versus weekend like trending? And where are like in terms of pricing delta set? So like is it material between, say, midweek and weekend and beach and city? Or is it like just directionally the same across the board?

We are looking remarks on our ancillaries, as we've said in the last year and I think for next year, ancillaries will continue to follow a little bit ahead of scheduled traffic growth. Scheduled traffic growth last year was 8%, ancillaries were up by a couple of percentage points above that. We continue to work on penetration conversion. The big ones are still the big ones, which is a priority boarding, reserve seating, baggage fees and we expect that will continue to be. There's nothing new or radical that we see in ancillaries at the moment, but ancillaries to perform -- continue to perform very strongly and we would expect that to recur again next year. Ancillary revenues will be a couple of percentage points ahead of scheduled traffic growth. Jason, color on the yield fares midweeks?

Yes. Look, I'm not going to go into the difference on leisure and cities. Like cities working very, very well. Strong volumes are strong. There's nothing really to call out in terms of the variations there between weekend and midweek. As I say, it is the leisure piece that is a little bit softer than we were expecting. However, I have to reiterate, like volumes are strong. And as you said earlier, Mike, it's responding where we need to stimulate. So volume is strong as the overall aim.

Next question comes from Jarrod Castle from UBS.

Michael, you obviously become quite a decent size facilitated to the package holiday providers on the beach and [indiscernible] and the rest. I mean looking back, do you think it was a mistake not to undertake your own package holidays? I know you did try and then you moved away from it and any thoughts going forward? Is this a future opportunity, let's say, for you? And then just looking maybe a bit more at the fuel hedging. I mean there's been a number of years where you materially ahead of current levels of hedging, 80%, even as high as 90%, I think, for where you were in 2019. Is this just more an opportunistic approach in terms of taking advantage of the movements in the fuel price or is this still very much a systematic approach?

Right, 2 things on that. I'm not a believer in the package holiday business. I know easyJet are making some money in that business. But you mean to mine way of thinking, they're just moving the yield from the underlying airline into a package holiday business, investing a distracted every with the package holiday business. I think it's a distraction. If the package holiday businesses was where the money the future lay, Thomas Cook who -- those that would still be the -- by far and away, the biggest travel companies and they're not. I struggle -- I mean, there's no doubt that if you can secure a lot of accommodation, there's money to be made on the accommodation side. But I think increasingly, with the internet in this year, the consumers did intermediate, the accommodation, the flight and the transfers. Now we leaving some money on the table for those -- the OTAs and the -- I think we probably are, and we're very happy to do so. But if we can work with the OTAs, and as I said, we've now signed up or are about to sign up 10 of the -- of our biggest 11. There's additional money for them to be made in getting direct access to Ryanair airfare without having to pay some intermediate screen scraper a fee and we are undoubtedly either a, going to get higher airfares or we going to ensure that the consumers get access to Ryanair's real airfares. There's upside for both of us in that. I will still be of the view that we are -- want to be Europe's largest scheduled airline and I don't really want to have the distraction of dealing with a holidays product. We did try to do it before it dresses up as Ryanair holidays, but really all we were trying to do is to be an OTA -- connect the OTAs to our flight system. They want to overcharge everybody. So it's taken about 10 years to convert them to our way of thinking but the low and behold, I think we're now converting them. And we are seeing strong booking flows coming from the ones who are, as Eddie said, a lot of them I haven't got the pipe fully opened yet, but the first one in, which is Travelfusion, Kiwi, we're seeing very strong growth in those markets. And I think there's a very good business for both Ryanair and for those approved OTAs, particularly because access to Ryanair's lower airfares means you have a much lower price to come a package than you have trying to combine it with the airfares of our much higher fare competitors. But I'm still not a believer in holidays, and I will be very happy at any stage over the next 5 or 10 years to put Ryanair's underlying profitability up against that, I'll say, easyJet is airline and their holiday product. Where do we think we're going on fuel hedging? I mean, I think -- we said this recently in the old days, we used to be just flying these, 80%, 90% hedge on a rolling basis. I think we have to be a little bit more clear for going forward. There is more volatility in oil at the moment. We're a bit nervous to be any more than 70%, 75% hedged and I think we're also being a little bit tougher in terms of our hedging. We could hedge the balance of this year in FY '25, but $84, $85, $90 per barrel this morning. But at the moment, we have a hedge price of $79 per barrel, when we see opportunities to add to that and we saw a couple of those in recent weeks. I think we added another 2% or 3% to the 70%, but keeping the average hedge price below 80%. I think it does make how we're nervous that if there's fundamental underlying trend in oil still appears to be strong volume, strong growth in production, OPEC plus countries trying to restrain production by cutting their production, weak demand out of China and the U.S. And therefore, the underlying functions will still be that oil price is trending downwards and you have a lot of geopolitical uncertainty keeping it up in the mid-80s. So we're a little bit nervous at the moment of hedging much more -- hedging above $80 a barrel. In case peace breaks out in the Middle East and Ukraine and all the rest of it but we believe that we're certainly far better hedged than any of our competitors in Europe over the next 12 months. Some of our competitors aren't able to hedge. They don't have balance sheet to be able to hedge. Some of them talk about price caps. But in reality, the price cap is almost the price cap at current fuel prices. I think we are -- I don't think at the moment or certainly for the next year or 2, while we continue to see volatility and a possibility that oil prices might trend downwards. I think we'd be nervous to be hedged up at around 90%, where we think 70% and if we can make a bit of value on closure in hedges, I think that's what we should be. And Neil, I don't know if you want to add or maybe Thomas Fowler might want to add something.

Yes. I would just add that, I mean, you hit the nail on the head when you said a lot of our competitors are not hedging. Just as an over-the-counter product, we're one of the more active players in that market. So to many extents, we can be bidding up the market against ourselves. So we just have to be a little bit more new option how we do it. And equally, we don't want to be -- have too much hedging in place from the time when our competitors are lightly hedged for all the reasons Michael just called out there.

Tom Fowler?

I think it's just on that, Michael. I think it is just down to volatility with the underlying oil price at the moment and just insensible about not over-hedging where there's so much volatility.

Okay. And Eddie and Jason, any kind of views on the OTA holidays, generally holiday product? Do you please disagree with me, but never that?

Mike, Eddie here. Yes, just on the holiday product, like I don't disagree with you on that. But what you can see when you actually get to meet with the OTAs, particularly those that package holidays rather than doing transfer products or selling flights only, is that they have much more agility now and are completely buoyed up by the fact that they've got access to the lowest seat cost in Europe, and they can direct that to the markets that are responding best consumer demand, and that fits in perfectly where you've got the largest airline in Europe with the low seat cost with the widest range of destinations. And they don't have to -- where -- who they're competing with are locking in on hotel costs, much further out. It's not a business that we have to have a huge amount of expertise to do that in-house. I think this model for the limited market that it is, and if they're good at it, let them matter and plug into our seat inventory.

The next question comes from Ruairi Cullinane from RBC.

The first question is on disruption and how that is tracking. I was wondering if there was anything you'd like to see this summer to perhaps take some slack out of your crewing ratios beyond summer '24? And then secondly, I understand that it's not your base case expectation, but if MAX-10 deliveries were to slip, are there any contingency plans that you're thinking about?

Okay. Two of those, I mean, look, we, at this point in time, we're expecting less disruption than we had this time last year. French ATC had 54 days of strikes through the first 6 months of last year over the pension reforms. Thus far, we've had 1 big day of ATC strikes on the 24th and 25th of April. We do expect some more French disruptions in the run-up to the Olympics. We think once the Olympics get started, though, there won't be any ATC disruption as there wasn't during the World Cup in Paris last year. We have been told no disruptions during the Olympics. So we would be reasonably hopeful that there will be less disruptions this summer with ATC. Unfortunately, there's nothing we can do though to reduce our crewing ratios. Our crewing ratios and labor issue would be a bit higher in the first half of the year than we had originally planned because we're 20 aircraft short. We crewed up for the full deliveries and Boeing, you're going to leave 20 aircraft short. So that's not unlike where you could just flex, get rid of pilots or cabin crew. We will take that cost hit this summer. We will keep those extra pilots and cabin crew, which should give us a little bit better recovery capacity, but it would mean a slight step-up in labor cost this summer. We are negotiating some modest compensation from Boeing, but it won't make up for the revenue and the profit -- the revenue and the cost shortfall, revenue shortfalls and the cost increases that arise as a result of being 20 aircraft short of the 59 aircraft deliveries this summer. And I forget what was the second part of the question?

The plan if the MAX-10 slips.

Yes. There won't be that much of -- I mean, obviously, it depends -- at this point in time, we're expecting 17 aircraft in the first half of -- we have no aircraft deliveries in calendar '25 or in calendar '26. So we will get the -- we still have the 29 deliveries to take from Boeing in the first half of 2025, but they were originally scheduled delivery in late 2024. But then we have no deliveries in 2026. That 17 in summer '27 is not really growth, but that was really to take out some of the Lauda aircraft leases that are being returned on some of the older aircraft. We would simply extend some of our older aircraft for a year or 2, but there still won't be any meaningful growth in summer '26 or summer '27. We get the first aircraft for summer '28, and that's when we will restart growth after a 2- or a 3-year period or 2-year, 2-year period through summer '26, summer '27 where we essentially have no growth. And that, to my mind, also plays to the overall capacity constraint story across Europe for the next 2, 3, 4 summers. You have aircraft manufacturer delivery delays, the Airbus groundings with the engine repairs and the fact that Ryanair after we get hopefully, 50 aircraft in summer 2025, then we have no net aircraft for summer '26 or summer '27. But -- so our contingency, if there's some slippage on that MAX-10s would be, we've already extended some of the Lauda leases from 2024 to 2028 and we would simply buy a couple of our older NGs for another year or 2, there would be a bit of a spike up in maintenance costs as a result of flying older aircraft, and we won't have the benefit for maybe summer 2027 of these new aircraft that carry 20% more profit with 20% SCO.

Next question comes from Savanthi Syth from Raymond James.

Just a couple of quick follow-up questions. I know Eddie mentioned seat growth of 9% over the summer. I was curious if your fleet delivery is consistent with expectations what you expected in the winter quarters. And then just on the Lauda fleet, I was curious with the extension, what is that fleet expectations for the out years? And are you still expecting to get out of that in the next 5 years?

Okay, Eddie will take the first half of that credit. I'll do the Lauda one first. So Lauda plead generally, we've extended our -- we've done, the Lauda team that does terrific job, so we've extended 3 of those aircraft leases that were due to terminate in 2025 or 2024. We've extended those out for 4 years, but without any increase in the lease cost, which I think is key. Those are very favorable leases in the current marketplace. I think some of the lessors want to keep Ryanair on their books as a customer -- the Ryanair Group as a customer, and therefore, we're willing to extend out those leases for 4 years at -- without any increase in what our below-market monthly lease rentals. We are happy to extend those aircraft. We would like to replace the Lauda A320 fleet with more Airbus Aircraft but at the moment in the current marketplace that looks unlikely. Now it would be unusual if there is some downturn or some event between now and 2028, for the moment, we have extended those aircraft beyond what we originally thought, we original thought we've returned those aircraft in '25 and '26. That was 2028. That takes us beyond -- well beyond the first of the MAX-10 deliveries. And -- but we will still look for opportunities to see if we can grow Lauda -- the Lauda Airbus fleet, all replaced the Lauda airbus fleet with the Airbus aircraft. And fleet growth for summer '24 what orders have been if we had taken all of the Boeing -- 59 Boeing aircraft deliveries this summer.

Well, we're just going to do just short of 140 million seats just approximately 9%. So it would have been -- it has been marginally up on another 0.5%, I suppose, if we've got the full deliveries. But it's -- so...

If you take it over the full year, Savi, we would have grown, we would have delivered 205 million passengers at slightly lower labor cost because we have had the full fleet in which we're proving this summer. Instead, we're looking at a full year of somewhere between 190 million to 200 million passengers. Some of that growth will take place in Q3 and in Q4, which is not the most profitable time of the year to be delivering growth, but we have the aircraft and we have the crews, it will make sense for us to continue to expand. I think you'll see a little bit more growth from us in the second half of the year, which would be good for volumes, but not necessarily good for profitability.

Next question comes from Conor Dwyer from Morgan Stanley.

First question is for Neil, back on the CapEx question about it being pulled forward to FY '25. And I think the indication for FY '26 is unchanged at EUR 1 billion, maybe EUR 1.1 billion. And I was just wondering, is there any indication you can give us for the FY '27 year of what that might roughly look like ahead of -- is that ramping up getting into FY '28? And the second question is on the buyback. Is it too early to say if another one will be announced in November? I was just wondering, is there maybe an indication that we could use in the next 2 to 3 years of like a target net cash, net debt level that you think is right for the business.

Neil, do you want to take first about the CapEx for FY '27?

Yes. I mean we're going to see it increase a bit, Conor, as we start to take the first of the deliveries, hopefully, off the MAX-10s into the spring of 2027, and we start to ramp up on the PDPs. But it won't increase meaningfully. It really a year or 2 before that number starts to go up. I wouldn't want to put a number into the market, yes, at this stage. I mean you have next year and you have this year, which is probably sufficient. But it will start to ramp up. You're talking EUR 300 or EUR 400 million give or take from the following year.

So on the buyback, look, again, we continue to be strongly cash generative. But I don't think we would want to commit to anything or the Board wouldn't want to commit to anything other than, look, when we have surplus cash, it will be returned to shareholders. There will be a CapEx holiday for the next 2 years as we move out of the Boeing delivery. But we have 2 big bond repayments in the next 2 years. We have to repay EUR 850 million in September 2025. And then we have a EUR 1.2 billion bond in May 2026. So these are big debts, but we are committed to repay those because of the rising cost of interest cost, it makes sense to repay those. Once we're down to that, I think you we would, as a company be concerned to maintain a reasonable cash fund of somewhere between EUR 3 billion and EUR 4 billion. We have got to be cognizant that there will be another downturn, whether we don't know when it will come or what will cause it, but there will be another downturn. It is a capital-intensive cyclical business and most of our money is made by going into these things like COVID, like wars, terrorism, in a strong cash position so that we can renegotiate airport deals, aircraft, contracts, et cetera, et cetera, from a position of strength during a downturn. The world is full of airlines, were out there ordering aircraft at the peak, paying peak pricing for aircraft. Thankfully, we don't do that. We already have more than 360 aircraft deliveries well priced at the moment to take us, will deliver organic growth out to the mid-2030s. But I think we will want to -- when we pay down that debt, we will see engaged, I think, in consistent shareholder returns whether that ordinary dividends or share buybacks for the foreseeable future until there's another downturn. And when there is another downturn, we will -- it will make sense for us not to do share buybacks. I would hope that underlying profitability won't be affected, but it probably will be in which case the dividend will be affected as well. But I would think we will continue to operate a conservative balance sheet, pay down debt. And then -- and again, Neil, you feel free to come. And I think we want to go into the next downturn with somewhere between EUR 3 billion and EUR 4 billion in gross and net cash.

Yes. I'd have a slightly wider range. EUR 3.5 billion to EUR 5 billion would be where I feel comfortable, we're in that range at the moment.

The next question comes from Neil Glynn from AIR Control Tower.

Just one quick one for me left. Just following your fourth quarter, it seems like a very prevalent theme across the sector that the seasonality of earnings has changed for everybody with a higher cost base in the low season. I'm just interested, is this a potential opportunity for you to reflect that in airport third-party handler deals? Or are there any other structural changes to the cost picture that might include as a result of this?

I don't think -- we don't see -- at the moment, if you stand back and look at it from a structural point of view, I think there's a lot of inflation built into the industry across Europe at the moment. There's a lot of this inflation on the pilot side, less so on the cabin crew, but nevertheless, we're seeing above inflation pay settlement among a number of our competitors. Airports, particularly those airports where they have pricing power, you are seeing handling costs and airport fees rising significantly, mainly in our competitors' airports. We went through COVID, we negotiated long-term extensions of most of our major airports, cost feels we have -- we self-handled at a number of the other bigger airports to double stand it. So we're insulated from a lot of that cost inflation. But there's still that there is going to be -- there is some cost inflation on the labor side coming through the model in the next couple of years. I would be reasonably sanguine about that in the Ryanair model. The critical thing for us is that the cost gap between us and our competitors is widening significantly. And that is labor inflation among our competitors is materially higher than it is in Ryanair. The cost of financing is materially higher among our competitors than it is in Ryanair. And aircraft and fleet costs are materially higher among our competitors than they are in Ryanair. And so I think we will see a widening cost gap between us and our competitors across Europe in the next couple of years. Particularly, if we take more delivery of Boeing MAX aircraft, where we're carrying at the moment, 4% more passengers, burning 16% less fuel. That will be another further material cost advantage for us. We see some of our competitors taking new aircraft, but those aircraft are coming in at very high prices at market rates, and that is resulting in significant widening in the aircraft ownership costs. You'll see it in our investor slide, Slide 4. I would go back to Slide 4 here, a lot of our presentations over the roadshow the next week, the gap between us and the competition is widening materially. And if there's a little bit of labor cost inflation in our model for the next year or 2, I think that's fair. Our people work hard and they are entitled to see some rewards, the reward from their work. We will continue to be disciplined though on cost. We will face down some strikes in the next couple of years, although we have reasonably good relations at the moment, our union partners and our labor teams across Europe. But everybody will be looking at the comp settlement in the states. What easyJet do with their pilot pay where pilot have rejected a 20% pay increase. And I think we will continue to be cognizant of that. But I don't see any structural gains at the moment in the current marketplace. The next round of structural gains will take place when there's another downturn, and we will go into that downturn hopefully, with zero debt, strong balance sheet and the ability to do better deals. I think if there's one structural area, again, it is still the fact that we are one of the few airlines across Europe that's able to deliver airport growth. And we saw that as recently as last week when we announced the closure of the 3 aircraft Bordeaux base in November. The new routing probably were fending off calls of 15 or 20 airports, all of whom were looking for those aircraft this winter [indiscernible]. The deals are getting better ready is also points to in a lot of markets initially, now the regions are scrapping the municipal tanks, which is a significant structural change in the Italian marketplace. And we are still seeing significant growth opportunities in Central and Eastern Europe. We are welcomed, there's numerous management changes, for example, a lot of the Polish airports with the new government in place, within that new government is much more European looks towards process in Europe. And I think we'll want to significantly increase traffic growth that we had at the Polish airports. But other than that, I don't see anything structural. Neil, is there anything you want to point to?

No, not particularly, Michael. I think we've locked down most of the key costs and just jump on the opportunities as we see them.

Our final question today comes from Andrew Lobbenberg from Barclays.

You've won several legal cases on state 8 against derival yet not a lot seem to have happened. Do you expect to get anything constructive out of those victories? And then on the OTAs, you've won a lot of the move, but eDreams is a standout. Do you think they will, in time, roll over enjoying the others and play with you nicely?

I think that the question we will give [indiscernible] to Juliusz, will you take that? And against, I don't dominate, I might ask Eddie Wilson who's closer to the discussion of the OTAs, what do you think the eDreams are likely to do? So 2 year state 8 cases.

Thanks, Michael. So far, the EU courts have overturned over half of all the state 8 that was granted to airlines in Europe during COVID, so over EUR 20 billion, which is quite remarkable. Many of those decisions are under appeal, though, either by the commission or by the airline that was involved. So while appeals are pending, there will be no recovery. At the same time, we are in regular contact with European Commission, telling them how they should go about recovery and giving them some ideas as to how to calculate the damage that was done to competition and what should be recovered. In some cases, that may also mean retrospective, not surrenders, where those were not imposed initiatives. So this is not over. It will probably take another few years. So please have some patience and keep tuning into those calls, and we're giving you -- we'll keep giving you updates.

Thanks, Juliusz. And Eddie OTAs eDreams?

Yes. I mean this market is consolidating. And as I said earlier, there's almost some relief from the OTAs that we've dealt with in terms of having a stable sort of business model to grow on. And I think eDreams don't have any USP really because if they're going to put themselves out of the largest airline in Europe. And the only model that they have is the sort of loyalty-type programs that you've talked about area, which are not loyalty programs, circa way of price gouging, like it is now more transparent markets becoming more regularized and I think that they'll eventually the leader have to get -- the leader have to come on board or get smaller if they want to access to see the inventory from Ryanair. Just one further point there. Just [indiscernible] it's the American market this year, I'm reliably informed coming in is just close to 1.5% of our passengers and we're making it increasingly easy for them to get their boarding cards before so they all have to queue at the Visa desk. So it's all good news.

Yes. And I would just add that I don't believe the eDreams model is sustainable. I can -- we are being much more aggressive with our communicating videos explaining the eDreams pricing scams and particularly eDreams Prime pricing scams. We think some consumer agency, whether it's got be in Italy or in Spain or in Brussels is going to move on the eDreams. And I think the eDreams model is fundamentally broken. All of your competitors, whether that's loveholidays or Kiwi or the other OTAs have direct access to Ryanair's lowest fares. And all you're doing is paying some intermediate screen scraper to scrap our fares and then you're scamming consumers by [indiscernible] those fares and those ancillary services. The eDreams model is going to dwindle pretty dramatically and pretty quickly because they won't be price competitor with the other approved OTAs in the marketplace. If I had my way, I would certainly not want to do a deal with eDreams. I think they should be roasted by the consumer agencies. But because we're a big airline, we would have to treat everybody equally. But there's no way we're going to do any deal with eDreams. It doesn't involve them ending this prime scam and the overcharging that's going on that the overcharging and they're the only ones who are not engaged. We've had a meeting with them back in, I think, March, Darek, correct me if I'm wrong, and we haven't heard back to them say. So to my mind, we have taken a conscious of statement, they're going to keep scamming people, they're going to keep overcharging them, and we were mystified on their call that they were able to highlight the profitability of eDreams Prime and how eDreams Prime was producing most of their profit, no grade to price, given that it's a complete scam. And we have exposed it, it's very interesting on their videos. We put up the prices at the Ryanair airfares and these kind of mythical discounts that eDreams is offering under the Prime thing. So we think it's not a question whether eDreams will sign up for the approved OTAs. We need the consumer authorities are going to move on eDreams sooner rather than later, and it's something that they should be moving on. It's a complete anti-consumer scam. Okay. Maxine, I think that is all the questions we have. As I said, we thank you, everybody, for participating in the call. We have a full roadshow underway across the North America, Europe, Ireland and the U.K. If anybody wants a meeting, we'll be happy to facilitate it. You can make contact with the brokers Citi, Goodbody, Davy, or through our IR function, as you know, Peter Larkin, who heads up the IR team. We'd be happy to organize a meeting at substate during this week to extend the roadshow. And other than that, I would say, look, we are continuing to grow organically, pricing may be a little bit softer than something that we had originally expected. But that's not disappointing even though we come off 2 summers where pricing was up 20%. And -- but I don't believe the medium-term story has changed one way. There will still be significant capacity constraints across Europe. We will have some modest growth through the summer '24 and summer '25, and then we have no growth in '26 or '27. We believe we -- as long as there's nothing untoward or unforeseen, we will generate very strong cash flows over the next couple of years. And we will, I hope, be able to continue to look after our people, pay down our debt, fund all of our CapEx from our internally generated cash flow and still leave some funds there for ordinary dividends and for the occasional share buyback. So thank you very much, everybody. Thank you for your support, and we look forward to seeing or speaking to you later on this week. Okay. Thanks, Maxine. We can end it there.

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