Hello, and welcome everyone to the Ryanair Holdings Plc Q3 FY24 Earnings Release. My name is Maxine, and I'll be coordinating the call today. If you would like to ask a question, you may do so by pressing the star followed by one on your telephone keypad. I will now hand you over to Michael O'Leary, Ryanair Group CEO to begin. Michael, please go ahead when you are ready.
Okay. Good morning, ladies and gentlemen. You're all very welcome to the Q3 Results Call. As you see, early this morning, on our ryanair.com website, we published our Q3 results together with a, an MD&A and a Q&A session with myself and CFO Neil Sorahan. Couple of quick themes: as you see, we reported a Q3 profit after tax of EUR 15 million. Traffic and fares were ahead of the prior year, but, close in Christmas and New Year loads and yields were softer than previously expected, as we had to lower prices somewhat in response to the very sudden, but, surprising but very welcome removal of flights from most of the major OTA pirate websites in early December. Profit after tax, however, for the nine months ended 31 December, was up 39% at EUR 2.19 billion.
Prior year, it was EUR 1.58 billion. Just to touch on some brief Q3 highlights, the traffic grew 7% to 41 million. Revenue per passenger was up 9%. Average fares were up 13%, mainly due to a very strong Christmas and the October bank holiday weekend, and ancillary revenues up 2%. MSCI raised their ESG rating on Ryanair from a triple B to an A in December. Our fuel bill rose EUR 320 million in the quarter, up 35% to EUR 1.2 billion. At the quarter end, we had 136 B737 Gamechangers in the total fleet. That was significantly behind the original deliveries due to Boeing delays. Much more importantly, looking forward, our fuel hedging. We've extended fuel hedging.
We have 65% of our FY '25 fuel now hedged at $67.9 per barrel. This year we're hedged at $89 per barrel. So we've already banked a saving of EUR 450 million into FY '25, and as you will all be aware, we have. The first interim dividend of EUR 0.175 per share is payable on the 28th of February. I think just to touch on growth and fleet. At the end of Q3, we'd taken delivery of 136 B737 Gamechangers. We now expect to have up to 174 of these aircraft in our fleet by the end of June, in time for peak summer 2024. That's up 50 aircraft from summer 2023.
That would still be seven aircraft short of our contracted deliveries due to Boeing delivery delays. However, those new aircraft means we have a bumper summer 2024 schedule now on sale. It includes 169 new routes, our first 11 domestic routes in Morocco, and our first summer with 23 routes in Albania, are in, to and from Tirana, the capital city of Albania. While travel demand remains high, we expect summer 2024 EU short-haul capacity to be behind where it was in summer 2023, as a considerable number of our competitors ground the A320 aircraft in Europe due to the Pratt & Whitney engine issues, and Boeing delivery delays constrain our growth from 57 - 50 aircraft.
We are continuing to work closely with Boeing to minimize delivery delays, and we're investing in additional Ryanair engineering oversight to improve the quality control in both Wichita and Seattle. The recent MAX 9 grounding was a disappointing setback, but we welcome the ungrounding of the MAX 9s last week. Ryanair do not operate any MAX 9 variant. There are no MAX 9 aircraft in Europe, and therefore it is largely a U.S. issue. However, Neil visited Seattle in January, met with Boeing senior management, and we urged them, and they have agreed to increase their quality assurance resources on the ground in Wichita and Seattle.
We are putting more engineers into Wichita and Seattle to run extra checks on our deliveries, but also on our recent 737 deliveries. We've noted improvements in the quality with fewer delivery defects on the 12 aircraft we got in the fourth quarter before Christmas. However, we do believe Boeing have more work to do to improve quality and reduce delivery delays. But, and I want to stress this, we are fully supportive of the initiatives that David Calhoun and Brian West are taking to improve Boeing's performance and production. It is critical, we believe, to Boeing's continued performance that we support Calhoun and West. I think they're a good team. I have concerns about the management in Seattle, but I have a lot of confidence in Calhoun and Brian West.
I think they're on the right track. The MAX 9 grounding was an unfortunate event, and it does indicate that quality does need to be improved in Boeing, but we are very supportive and a lot of confidence in what Calhoun is doing under his leadership. We welcome, on the OTAs, this was a significant event in December. The timing of the OTA taking us offstage was a bit unfortunate because it was the first week in December. With Christmas coming, you can't just go in and open up and dump seats to, counteract that. We think historically, these OTA pirates generally account for between 10% and 15% of our volumes. So a sudden removal of that meant we saw a sudden or a very short-term dip in our bookings.
We would normally respond to that by opening up price promotions, but we didn't want to do that in the run into Christmas. We therefore think it will take a hit of 1% or 2% on load factor in December and January. We will take a little hit on yield during December and January, but we think it'll be short-lived, and we are happy with forward bookings, particularly out into February and March, although March is slightly artificially enhanced by having the first half of Easter in that. Much more important for Ryanair and our passengers is to convert these OTA pirates into what we now would call kind of approved OTA partners.
The partnership agreement we signed last week with loveholidays , who are our fourth largest OTA, and Kiwi.com this morning, who were our largest OTA pirates, are critical, we think, to protecting customers from OTA overcharges and scams. As part of this agreement, we now give these two approved OTAs a direct feed of inventory from the Ryanair.com website, and they agree as part of the deal, no overcharging of passengers for either airfares or for any of our ancillaries. The bookings are made directly in the Ryanair.com website with the customer's actual and real email address and real payment details, so that if we need to send a customer an email or some flight information, it goes directly to the customer. It doesn't get lost in some OTA pirate's fake email address.
Whenever we have to refund the passengers, we can now make the booking directly to the passengers. We think this is the way forward, and we will continue to campaign to outlaw the illegal screen scraping and the customer overcharging and scamming being undertaken by so many others of these OTA pirates, and converting them to the same system or the same mechanism that we've now agreed with loveholidays and Kiwi. Looking forward to the summer 2024, we expect airlines will continue to consolidate. We expect capacity will be constrained by both the consolidation, by the lack of aircraft deliveries post-COVID across Europe, and I think the A320 fleet groundings this summer.
We expect about 10% of Europe's A320 fleet to be grounded for the while they address the Pratt & Whitney engine issues, and that this will mean tight supply for summer 2024. And while we still have 50 additional aircraft into that marketplace, we don't have the original 57 we hope, we had hoped for. So we think there's going to be reasonably strong summer pricing. Already today, our bookings are running about 5% ahead of where they were. Forward bookings into the summer about 5% ahead of where they were this time last year. Pricing is up by, by a low single-digit %.
Again, some of that, I think, is a factor of the fact that the first half of Easter has moved into March, so Q4 is strong, but therefore, there's less of an impact of Easter pricing in April. But much work remains to be done, but we're very pleased with where we are for summer 2024. In terms of outlook, we're targeting 183.5 million passengers in the current year. That will still be a monumental achievement. The original budget was 185 million, but if you take the ATC fifty, so it's been over 60 days of ATC strikes, that's cost us over 1 million seats.
The Tel Aviv cancellations, which have been running since the end of November, that's cost us about another 600,000 seats. And the Boeing delivery delays have meant we've had to truncate both the summer 2023 schedule and our winter 2024 schedule. So it would still be a very strong performance. However, as a result of these lower load factors, particularly in Q3, and the kicking in of some higher productivity pay agreements with pilot unions across Belgium, Italy, and in the U.K., these are in productivity enhances that we intend to roll out to most of the other by agreement with the other pilot unions and groups between now and summer 2024, which will significantly improve our operational resilience and reduce pilot attrition.
We now expect full year 2024 ex-fuel unit cost to rise by about EUR 2.50. That would still leave a dramatically wider cost gap between Ryanair and our main European competitor airlines, two of whom reported last week. Q4, which is traditionally the weakest quarter, will also be impacted by the partial unwind of free ETS carbon credits from the first of January, but we will benefit from a strong first half of Easter traffic falling into late March, although this is unlikely to offset the weaker-than-previously expected load factors and fares in late Q3 and early Q4. We're therefore this morning narrowing our full- year, FY 2024 profit after tax guidance to a range between EUR 1.85 billion to EUR 1.95 billion. It was previously EUR 1.85 billion to EUR 2.05 billion.
So we think the number will come in just under EUR 2 billion for the full year. However, this guidance and the full-year results still remains heavily dependent upon avoiding unforeseen adverse events in Q4, such as the Ukraine war, the Israel-Hamas conflict, and any further Boeing delivery delays which might, damage us in the run into, Easter. We've also given you a full update, or we've attached to the release, a full update on the OTA pirate situation. I think this has been one of the most dramatic victories for Ryanair, in recent years, and I would always and be happy to take a short-term pain if it, getting rid of OTA pirates scamming and overcharging our customers and moving those, into a more cooperative, working with us.
It also, I think the new agreements this morning with loveholidays and with Kiwis exposes the falsehood of some of these OTA claims that Ryanair is just trying to eliminate OTAs. We're not. We have for many years worked with OTAs like Google Flights, who are an honest price transparency website, but who send passengers directly to Ryanair to make the booking. The reason we have a problem with the OTA pirates is the illegal screen scraping of our digital data, and then using that to scam customers for excessive airfares, inflated ancillary services, and in some cases, charging them for non-existent services such as refund insurance and/or change fees onto non-changeable tickets.
But I think it's been a very good month or two months' work, and is long-term, very much in Ryanair's interest and in the interest of our consumers, that they can get access to our low fares, our low-cost ancillary services, without being scammed by some intermediaries. Neil, I'm finished here. Do you wanna add anything you wanna highlight in terms of the finances, the balance sheet, and or the dividend?
Yeah, I suppose just on the balance sheet, ended the quarter very strongly with just over EUR 2.9 billion in gross cash, and importantly, net, net cash balance, EUR 150 million. We continue to be the most highly rated airline in the world with a BBB+ rating from Fitch and S&P. And a big advantage that we have in these markets is our unencumbered Boeing 737 fleet, 546 unencumbered aircraft. So we're, we're generating net interest income in the business at a time when our competitors are refinancing or taking on expensive leases. So that, that's a big competitive advantage that we have.
You touched on the hedging, but I think we shouldn't underestimate the benefit of the certainty that we have now in our hedging out to the end of March 2025. EUR 450 million worth of savings being locked in in what are very volatile markets at this point in time. And then, of course, we've got our first interim dividend at the end of next month, EUR 0.175 per share, and we'll have something similar again after AGM approval in September. And that's pretty much all I wanted to add, Michael.
Okay. All right, and gives us the speed, then we'll open it up to Q&A, please.
Thank you. If you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad now. If you do change your mind, please press star followed by two. When preparing to ask your question, please ensure that your line is unmuted locally. Our first question today comes from Harry Gowers from JP Morgan. Please go ahead, Harry, your line is now open.
Morning, gents. Hi. Yeah, two questions if I can.
First one's just on the ex-fuel unit costs. Maybe you could talk through the increase in the crew productivity part and what impact we might see into 2025, and so any latest forecast direction on your next fuel costs, perhaps, for March 2025? And then second one, we saw some comments from United, I think last week, saying they were making plans that doesn't include the MAX 10 going forwards, potentially. I guess if other airlines start to cancel or defer orders, would you happily take on some of those slots over the next few years, or are you quite content with your current plans? Thanks a lot.
Okay. Neil, I'll ask you to do the ex-unit unit costs. It's a bit early yet for FY 2025. We haven't yet finalized the budgets, but I'll ask Neil to give more detail. United, I thought the comments out of United last week were stupid. You know, if they want to hand over or they want to cancel some of their MAX 10 deliveries, frankly, Ryanair will take them. We'd be very happy to take aircraft early. The MAX 10 is a very good aircraft. We can't wait to get it. It offers us 20% more seats. It burns 20% less fuel. The MAX aircraft has now, in Ryanair alone, the MAX, we completed over 1 million flights last year. More than 20% of those on MAX aircraft. Great operation reliability.
This is a great aircraft. The MAX 9, the plug was an unfortunate incident. It does highlight the need for improved quality control in Boeing, but they're still making great aircraft. As by the way, are Airbus, who are making great aircraft, despite the fact that they have a the Pratt & Whitney engine is a major issue on, for Airbus air operators going forward. So but I think we have two large manufacturers. They're both making great aircraft. The stupidity of the United comments last week is that their order books are full out to 2030.
So if United isn't going to take the MAX aircraft, they're not, not only are they going to replace them or substitute them with Airbus aircraft, but if they want to delay or cancel any of those MAX 10 aircraft, Ryanair would be the first people into Seattle to talk to Boeing about taking those aircraft, although I suspect there'd be a queue of customers waiting to take those aircraft, given how tight the OEM supply is between now and 2030. So I thought the United comments were unhelpful, stupid, but if they want to do something stupid, like cancel some of the MAX 10 orders, Ryanair will be very happy to take them. Neil, unit cost?
Yeah, sure. Harry, thanks for the question. In the quarter itself and for this year, as you've seen from the commentary this morning, we're looking at about another EUR 0.50 on unit cost ex-fuel. So EUR 2.50 ahead of prior years. Some of that's down to the lower load factor in Q3 and early January. The balance is kind of down to the productivity pay improvements that we're putting through for our people. Those pay improvements will obviously have to then annualize into next year. So you'll see, we'll see a little bit of cost increase as a result of that next year.
But our fuel savings are going to more than offset any unit cost, ex-fuel increases that we have coming through on a year-on-year basis.
I think people were over-obsessed, too, on a quarterly basis, Harry, on unit cost. Actually, the key issue here is still slide 4 in the presentation. While we're not in any way kind of relaxed about unit cost or cost control, the gap between us and other competitors with EasyJet in Europe, and in particular, the other airlines in the U.S., is widening dramatically but we do have to keep our pay competitive. We have pay agreements in place that cover basic pay and productivity pay with pilots and cabin crew that run for the next 3-4 years.
But if our earnings are rising dramatically, and there is some pressure on competitive pay, particularly for pilots, it's up to us to work with our unions and our pilots and keep their pay competitive, which is what we will do.
Okay, thanks Michael.
Thanks, Harry. Next question, please.
Next question comes from Stephen Furlong from Davy. Please go ahead, your line is now open.
Stephen, hi.
Hi, Michael. Yeah, two questions. I noticed, maybe one for Neil, just maybe talk about the headwinds or tailwinds and costs into the next year or two. I saw there the EU were talking about ETS reform and the rebasing of current airline allowances, for example. Maybe that's a minor thing, but you might just talk about that and anything else on just big positives or headwinds for cost. And on pricing, Michael, I know on the pre-record you said pricing is strong, demand very, very strong. Anything in terms of markets where it's—I mean, I guess it's a function of capacity, where it's better than other places? That'd be great. Thank you.
Thanks, Stephen. Neil, you want to take the first one, cost?
Yeah, I will.
You will take it.
Yeah. Okay, Stephen, the rebasing of ETS against 2023, we're studying that at the moment, but we think it will be modestly positive for us. I haven't got the final numbers on it yet. As you know, we're very well hedged on carbon in any event. Like we, we've got all of our credits hedged next year at about EUR 76 in EUA, which is down from EUR 81 in EUA in the current financial year. But I do think that ETS reform will be modestly positive for Ryanair.
And I think the pricing situation as an opportunity, Eddie Wilson here, CEO of DAC. Eddie, what are you seeing generally by market or in general terms for summer 2024?
I think it's very early to say, but I mean, you look at our three largest markets Italy, Spain, and the U.K., where we have the largest proportion of our growth. So, nothing unusual there or anything different across those markets at all. And then we've got a lot of growth coming out of places like Albania, Morocco and Croatia. But like, you're still in very small numbers for the summer season. And so it's there are no- I mean, like the places where we put in a larger amount of growth in places like Albania obviously will, but it's only a small proportion of what we do, so.
But I think it's fair to say we've been very surprised at the strength of the, both the load factors and the fares in our new entry into Tirana, which is a market that was dominated by one of the other so-called low-fare airlines. We're running 90% load factors, having launched in November in the middle of the winter.
I mean, the only, from my point of view in terms of growth, is the disappointment that we're going to be somewhere 7 aircraft short, maybe 10 aircraft short for summer 2024. It really is constraining our growth. We have many more airports out there who were looking for these aircraft, and that doesn't even factor in things like returning to Ukraine, if or when they defeat the Russians. We see very strong growth across almost all our airport customers for additional Ryanair aircraft, particularly in markets where they're struggling to recover their pre-COVID volumes.
Next question, please. Thanks, Stephen.
The next question comes from Dudley Shanley from Goodbody. Please go ahead, Dudley.
Dudley, hi.
Morning, Michael. Morning, everyone. Two questions from me as well. First of all, on the higher productivity pay for pilots, and you mentioned in the statement that that brings increased operational resilience. Can you just talk us through what it actually brings for you? And then the second question is to do with the capacity dynamics in Europe at the moment. Obviously, the GTF engine is the kind of biggest new thing this year. How long do you see that market staying as tight as it is and below kind of pre-COVID levels? Thank you.
Sorry, just give me the second half of that again. The doing the GTF engines?
Just in terms of the capacity dynamics being tight in Europe, obviously it's going to be tight this summer, but d o you see that rolling into next year and beyond?
Yeah, I'll do the engine and maybe I'll give Eddie, you can talk about the productivity bit. Yes, like if you take capacity generally, like EUROCONTROL have confirmed last year, European short-haul was about 93% of pre-COVID. The question for summer 2024, is it going to grow or is it going to decline? We think it's not going to grow. We're not sure yet whether it declines. It depends on which markets, the A320 operators ground aircraft or don't grow. For example, if you take the likes of Wizz, are they going to kind of constrain their growth in the Middle East, or are they going to constrain their growth in Europe? I suspect we're going to see more constraints on growth in Europe, where they're struggling to compete with us.
and we're still waiting to see where those final kind of schedule decisions haven't yet been made or schedules haven't yet been altered. With the backlog of engine shops around the world, I mean, it seems clear to me that the Pratt & Whitney engine issue is going to run on through summer 2024 and again in summer 2025. May even stretch into summer 2026. The OEMs are not going to deliver meaningful aircraft numbers between now and then. Ryanair is very fortunate. Okay, we may get less short aircraft this with summer by Boeing. We'll pick them up for the summer of 2025. We're scheduled 30 aircraft in advance of summer 2025, plus whatever they leave us short this year. But really, other than that, there's very few new aircraft deliveries going into short-haul Europe.
We do expect the Asian market will recover more or reopen more for summer 2024, and that will enhance demand across short-haul Europe, particularly if it builds up transfer traffic on the legacy short- haul flight. So all the indications are, at this point in time, is that demand or capacity is going to be constrained in European short- haul for summer 2024. I see no reason why demand won't be strong. We're just not sure where that's going to fall in terms of pricing. I do believe pricing in summer 2024 will be ahead of summer 2023. It won't be up, though I think it won't be up the 15%-17% we saw last summer. I think kind of mid- to high-single digits, maybe low double digits, is a reasonable expectation at this point in time.
But it's that's capable of being derailed if there's geopolitical issues, or, you know, some adverse developments in Ukraine, et cetera, things like that. But certainly all the indications are at the moment is that, that summer 2024, particularly during the school holidays, Easter break, et cetera, is strong and pricing is, slightly upwards at this point in time. Eddie, will you just give a flavor around the productivity pay, why that feels resilient?
I f you go back to when we came out of COVID, like, Ryanair was the best prepared of all airlines, in Europe, if not in the world, for having, sufficient crews, more than sufficient crews to run the schedule when many of our competitors were floundering. And it's not a lesson that we have, forgotten. And as we continue to grow, we will lean into, having not just, the, sufficient, crews, but we should build in extra resilience. Because the reason we need extra resilience is primarily driven by, poor ATC, performance, and we don't want to be caught out by that. And that means that if we've got to, if we've got to.
We have to remain competitive with our crews to attract and retain people, and we'll continue to do that. If that means that we have to adjust pay like we have, then that's what we will do. And it gives us the comfort in the medium term is that when ATC, if it's ever ultimately resolved, to get back to the sort of operational efficiencies t hat means that we can pare back crews in time. But at the moment, we're not gonna take any risk on that whatsoever. So it's about having the right crewing ratios in place to run the schedule against the backdrop of a really shoddy ATC environment.
Yeah, and I should just say as well, just in terms of capacity, like the Boeing, we're being short of those aircraft from Boeing. We're finalizing our budget at the moment, but we're walking back our full year traffic figure for FY 25. It's gonna come back from 205 million. Probably, 200 million would be the working assumption. So, you know, we're gonna have 2.5% less capacity out there through certainly the summer 2024, than we would wish to have at this point in time. So as I said previously, if United Airlines want to walk away from any MAX 10 aircraft deliveries, we'd be very happy to step into the breach, in advance. Thanks for the question, Dudley. Next question, please.
Thank you. The next question comes from Jamie Rowbotham from Deutsche Bank. Please go ahead. Your line is now open.
Jamie, hi.
Morning. First one for Neil, maybe. Don't want to obsess too much on these ex fuel unit costs, but back in November, I asked whether there were any risks on the unit cost guide, and, Neil, you helpfully mentioned the route charges, which I thought looked a bit higher this morning. Presumably, you've now got visibility on the higher EUROCONTROL rates for the next twelve months. I just wondered whether these were also a little bit responsible for the extra EUR 0.50 on the cost per packs guide in 2024, and how much of a headwind there is on route charges into 2025. At least, I guess this will be the same for everyone. And secondly, Michael, given the focus on Boeing, you mentioned fewer delivery defects on receipt of recent MAXes. Could you expand a bit on that?
Describe the sorts of issues you were encountering before the recent improvement? Thanks.
Okay, thanks.
On route charges, Jamie, yeah, they are gonna track up a bit, year on year. We're just getting the final numbers in at this stage, running the budget. And I'll give you a bit more color when we come out in May. But yeah, the working assumption in the budget is that we're seeing route charges tracking up slightly year on year.
I wouldn't obsess with the your unit charges the third quarter. Like, the bigger driver of it on a quarterly basis was the slight slippage in load factor. W e would have expected originally to grow that load factor by maybe 1%. I t's down 1%. That will continue into January as well. So on a quarterly basis, it moves the dial a little bit more. On an annualized basis, it doesn't have that much effect. Boeing delivery defects, I mean, we've been jumping up and down with Boeing for about the last 18 months on the number, rate, and number of defects that we're picking up. We now do about a 48-hour inspection of each aircraft on delivery here in Dublin, which again, is kind of a sort of painful process.
We pick up lots of little things and I don't want to go into the detail, but like spanners under a floorboard, stuff in the cockpit that shouldn't be there. Those are the kind of small quality assurance things we pick up. The bigger issues were over the last 12 months of the known issues you've issues coming out of Wichita, where bolts into the tail fin were put in the wrong way, holes in the forward pressure, the seal or whatever the hell, I don't even know what it is, drilled the wrong way. S tuff that shouldn't be happening on a $100 million piece of kit.
Y ou wouldn't expect them if you were taking a car or buying cars from Mercedes or Audi, and we don't expect them when you're taking aircraft from Boeing or from Airbus. But ome people would say this was probably a consequence of the two-year grounding of production during COVID. I think there may be a little bit in that. But it means that Boeing and Airbus both need to significantly improve quality control, both the oversight on the engines and on the airframes during production. We are and Boeing are aware of this. I think they have significantly increased the numbers of engineers that are doing quality assurance on, as the aircraft go through the shop.
The 12 aircraft we got in the fourth quarter, or in the December quarter, we found less sort of little silly things on those aircraft on delivery than we had on any of the previous game changers over the previous 2 years. So we think quality is going the right way. It is very unfortunate, but you know, that they had the MAX 9 door panel stuff. Boeing are getting an awful lot of unfair kind of coverage as a result. I mean, there was an Air Canada aircraft took off last week, and one of the nose wheels fell off. Like, that's nothing to do with Boeing. I mean, that's a maintenance issue within Air Canada. But it's, "Oh, there's a pilot on 737." T here are two large volume aircraft, the A320 family and the 737 family.
They carry 90% of the world's passengers on a daily basis. They are terrific, aircraft. They are very safe. We are big supporters of the 737, and particularly the new variants. The game changer, which is carrying 4% more passengers and burning 16% less fuel, and especially the MAX 10, which will carry twenty percent more passengers, burn 20% less fuel. As Neil said, we expect the game ch- the MAX 10s to be certified. Boeing believe in the Q4 of 2024, first delivery to the American Airlines in early 2025. We're not pleased to get the first MAX 10 until 2027. You know, so we are well down the list of, deliveries, but we can't wait to take them and pass on the value, the incredible value that those are.
The cost reductions, those air cost efficiencies, those aircraft will deliver for us, we'll then pass it on in the form of lower fares to customers. Thanks, Jamie. Next question, please.
The next question comes from Satish Sivak umar from Citi. Please go ahead, your line is now open.
Satish, hi.
Hi, Michael. Yeah, thank you. I've got two questions here. So firstly, on the capital allocation, obviously, you have started the interim dividend today, and what does it mean in terms of share buyback and balance, given the balance sheet strength as we go into full year results or into 2025? So that's my first one. And then the second one, obviously, you flagged about the pilots being, in terms of labor as such, as being under pressure in the U.K., but are you seeing anywhere else out in continental Europe, where the pilots are actually under pressure, like in terms of availability is being under pressure? Yeah. Thank you.
Thanks, Satish. So quick ones on that. Capital allocation we will continue to pay down debt, and we'll continue to fund all of our CapEx from internally generating cash flow. However, CapEx falls steeply in the next two years from almost EUR 3 billion down to just under EUR 1 billion a year. That should, if profitability maintains where it is, spring out, throw off about EUR 2 billion a year in free cash for the next two years. A quarter of that will be allocated to dividend payments. And then I think the board, subject to all being well with the balance sheet and the rest of the world, will be looking to return the, the additional, any spare cash to shareholders. A nd it'll be a case-by-case basis. There'll be special dividends or buybacks.
And I think that the driver of that will be generally P/E multiples, whenever we come to do it. But we won't promise we're not gonna borrow to do it. Once we generate the cash if we have more than EUR 3 billion to EUR 4 billion in cash on the balance sheet, then anything surplus to that will be returned. We have two more big debt payments, but one is in 2025, one is in FY26 and the other is in FY27. So I think shareholders should expect more returns, but what format they will be, we don't know yet. That'll be a matter of the board. Pilots, we're not seeing huge pressure on pilots across Europe. There is some pressure in the U.K..
There was, you know, some of the other U.K. airlines were kind of paying out panicked pay increases last year because they came out of COVID short of pilots. That does seem to have settled down. We are not seeing significant pilot attrition, but I think we did have a gap between our pilot pay and that of competitors for the last year. Again, as a result of these kind of panicked pay increases that some other, particularly 737 airlines in Europe and in, the U.K. were paying. We intend and plan to keep our pilot pay competitive. We will never be the best payer, but we certainly will keep it competitive.
The rapidity of Ryanair's growth and the rate of promotion, like, you'll go from being a cadet here to a captain on the 737, typically within a period of four or five years, if you're up to the job, and that is what drives very rapid increases in pilot pay. U.K., we think we're okay at this point in time. It is the market is tight because of the inflexibility of U.K. labor post-Brexit. And we don't have. We have some growth in the U.K., but not a lot. But we believe that the pay deals we've now agreed with the unions, pilot unions, and we're extending out to cabin crew unions as well, leaves us well-positioned with ample pilot and cabin crew resources for summer 2024.
But that's heavily dependent upon there not being another meltdown in European ATC. And the things like a repeat of the 60 days of ATC strikes, which we suffered in summer 2023, they really do eat up an awful lot of crew hours at peak periods. And it's something that we're building in slightly higher crewing ratios to improve our resilience, and that in turn reduces some of the productivity elements of pilot pay. Eddie wants to come in on that point?
If you look at the U.K., it's primarily really a licensing issue and the ability, as Michael says, a particular tightness in that market that you don't have the fluidity of moving pilots around from different parts of Europe that you had pre-Brexit. But what we've done over the last number of years, because we don't take people from other airlines, we've been growing our sort of our input of cadets into the U.K. system. So, that coupled with the pay issues that we have dealt with there, that should sort that out. This isn't just in. It's the same for engineers as well, because it is primarily driven by Brexit until the supply issues are sorted.
Thanks, Eddie. Next question, please.
The next question comes from Alex Irving from Bernstein. Please go ahead, Alex, your line is open.
Alex, hi. Hi, good morning, gentlemen. Two from me, please. First, on the OTAs, could you please tell me what your typical level of ancillary spend per passenger is on an OTA booking versus direct booking? Is there a revenue opportunity here from the new deals or a greater share of direct bookings? Also, is there any cost-saving opportunity from the OTA change with a reduction in the level of manual post-sale servicing? Second question is on unit costs, it'll be maintenance. We saw maintenance costs up 40%, so as capacity up 8%-9% year-on-year. What's driving that please? And are there any one-offs we should be aware of? Thanks.
Okay, I'm going to have Tracey McCann here. We're going to get her to you the that maintenance cost question, Neil. And then, just so on the OTAs, look, I don't think there's any particular upside on ancillaries. There's a lot of kind of misguided coverage here. We want to take these bookings direct so we can maximize our ancillaries. The big issue with the OTAs is, one, we don't want anybody illegally scraping our website. That is digital piracy. It's our data, and, we are a bit like music piracy or film piracy should be outlawed. We wouldn't have such a big issue with it if they weren't scamming co-customers. And so we have, for a number of years, been chasing down some of these pirates, to stop them overcharging. And what they don't .
W e would have less of an issue with them if they suddenly said to each customer, "We are the OTA, and here's an OTA fee of EUR 5 per the OTA." At least then the customer could decide whether they want to make the booking through that OTA and pay the fiver or come directly to Ryanair instead. They've been scamming and inflating our airfares. They're scamming and inflating the ancillaries. I think there might be a slightly bigger, better conversion of ancillaries if we're able to communicate directly with a passenger, or the booking is made directly in the website. In some cases, that we release this on a monthly basis, our OTA pirate surveys. You know, some of these OTAs are inflating our ancillaries, the bag charges, the seat charges by 300% and 400%.
I think there might be a slightly better conversion of ancillaries if every customer has access to our ancillaries at the published prices on our website. But there's no big jump in ancillaries as a result of getting rid of the OTAs. I think there may be. What we're trying to do is to protect consumers from being overcharged by these intermediaries. Over the longer term, we don't want a Booking.com or some other third party to be able to insert themselves between us and our customer, capture a huge amount of customers, as they have done, for example, in hotel distribution, and then turn around to us and reimpose on us what we had 30 years ago, when we had to pay 20% for distribution through travel agents and global GDSs.
We do not want, we cannot afford, to pay kind of extravagant commissions for distribution, particularly when there's no cost of distribution through the internet, because that would simply inflate the airfares, which would be not in the consumer interest. So we will continue to battle intermediaries, particularly those who are engaged in digital piracy, who want to insert themselves between us and our consumer, overcharge the consumer, or at some point in time in the future, turn around and try and overcharge us in a manner that would inflate the cost of air travel for consumers. But I don't foresee, Alex, that there's any immediate upside in ancillaries, although probably a little bit of a jump in conversion, by not overcharging consumers for ancillaries. Tracey, maintenance costs?
For maintenance costs, it's really the timing of the checks, so we've brought forward more checks from Q4 into Q3, so we won't see that. We'll see a drop down in Q4. We also have labor increases in our third-party maintenance facilities, driving that as well. And we had some A320 handbacks. And again, we brought forward some of the maintenance of the A320 just in anticipation that the MRO shops may get full with the GTF issues that there will be at the end, based within the next few months.
Thanks, Tracy. Well done. Next question, please.
The next question comes from James Hollins from BNP Paribas. Please go ahead, James.
James, hi.
Yeah, James, thanks. Two for me on the OTAs. The first one is, would you expect to do deals with all the OTAs or be some off limits like Booking.com, given your history of trying to sue them? And are they coming to you for deals? And secondly, you, thank you for quantifying 10%-15% of tickets historically sold through OTA pirates, your words, not mine. I was wondering how that normalizes so quickly, and that's higher than I thought it'd be. And you seem to be implying that this is kind of a December-January issue, rather than anything longer than that. Can you enlighten me as to why that would be? Thanks.
Okay, I'm not sure. I f you take there's about 7 or 8 OTAs account for, we think more than 50% of OTA pirate bookings. We're never quite sure what the number is. I give you 10%-15%. b ecause the only way we can track these is where we think there's a fake credit card or there's a fake email address, that's how we chase them down. So we're not entirely sure ourselves. A number of them have come to us since December. In fact, well, loveholidays were the first ones to come to us and we have offered them, in essence, and the same offers on the table. We've given them the same terms that were on offer to, through the GDSs.
You know, where we'd signed up deals with the GDSs last year, so the travel agents had visibility on our fares. And the critical thing again was that we would have the booking made directly in Ryanair.com, and no overcharging, no scamming of consumers, either for airfares or ancillary. I think that gives these business OTA business models a lot of flexibility. But what we're not willing to countenance is that people taking our digitally. Sorry, they also agree not to screen scrape our website, because we give them a direct feed. There's no need to screen scrape our website. Do I think all of them will come on board? Frankly, I don't know, and I don't particularly care. I do think the majority will.
We have a number of others who are in active discussions with, almost all, I would say, of the top eight, top ten. Booking.com are not in our top eight or top ten. They're reasonably small, but I do expect. I don't know whether Julius or anyone asked if he wants a. We do expect the case with Booking.com to roll on. We're not particularly minded to settle with them. And I think, but we have so many examples of egregious overcharges by Booking.com on airfares and on ancillaries. We believe it would be very difficult for Booking.com to go into court in the States eventually. We're going to drive it that way.
We thought it was remarkable that they wanted all of the Ryanair management deposed, and we've all been deposed, and yet none of the Booking management want to be deposed. Or they're kind of contorting and wriggling every which way they can to avoid being deposed. 'Cause the first question you're gonna ask them, of course, is: Why are you overcharging? Why are you, illegally screen scraping and overcharging customers? But they're reasonably small in terms of volumes, but we're not about to, allow any of these people to try and, engage in digital piracy or to overcharge consumers. If they all want to have approved partnership deals where we give them direct access to our inventory, and they agree not to screen scrape, not to overcharge, then we'd be very happy to work with them.
Why do we think it's a December, January issue? Well, one, because once they come off sale there is an immediate drop-off in our bookings, and it took us a week or two in December to spot this. But passengers suddenly find a way, they find other ways on the internet back to the Ryanair low fares. You know, and a lot of passengers still mistakenly believe that they're booking in Ryanair when they're actually booking through eDreams or eDreams or Booking or Opodo or Kiwi or these people. They don't really realize that they're not making a booking in the Ryanair website. They don't really realize they're getting scammed and overcharged.
If Ryanair comes off sale on some of these OTA pirate websites, people simply find a way around, or go back to Google Flights or somebody else, or some of the other price comparison websites to find the Ryanair prices. It does look. And then, of course, we always have the ability to open up a bit more cheap seats or a bit more price stimulus, which we're happy to do during January and February. We weren't happy to do it in December because we thought we would trash the close-in bookings over the Christmas New Year period.
And I have always been of the view that, you know, if we can eliminate these guys or at least remove the overcharging and the scamming, and at least protect ourselves from the long-term risk that these guys would try to become or would have so much of our volume that they try to become a new GDS or a new intermediary, charging either us or customers a percentage of revenues, then that's a fight that's well worth taking on. We're much more vocal about this because we have the cheapest airfares in every market. Therefore, we're much more of a target for these guys than the other higher-fare airlines. I think the other higher-fare airlines are grateful for whatever bookings they get from these OTAs.
Whereas in our case, because we have such a price advantage, it gives them more latitude for scamming our overcharging passengers. Julius, anything you want to add on the Booking.com side or the OTA side?
On Booking.com, maybe only that, Booking themselves are in trouble with competition authorities throughout the world. They're likely to be added as a gatekeeper under the EU Digital Markets Act this year, and I think they should consider seriously where they stand in respect to consumers on transparency and the extent of charges that they impose. I think ultimately they will have to come to terms with the fact that the age of overcharging consumers with hidden fees is over, and they'll have to work with us.
Okay, thanks for that. Next question. Thanks, James. Next question, please.
The next question comes from Savanthi Syth from Raymond James. Please go ahead, your line is open.
Savanthi, hi.
Hey, good morning. Just first question from me, on the GDS side of things, you've been adding, you know, more kind of corporate relationships there. I was wondering if you can, kind of, give an update on, on where there's a lot more opportunity there, and if you're seeing any kind of improvement in either the mix of business, travel or just any color on how business is recovering. And just, secondly, just with the aircraft delivery delays, is there, are you needing to change and, just given how, constrained the environment is, are you changing anything in the way you kind of load schedules, in the way you book out schedules, given kind of your historical k ind of yield passive load factor active strategy?
Okay, Eddie, maybe you take the GDS point, and then I'll do the aircraft deliveries and loading schedules.
I think the GDS is came back, but primarily driven by business travelers. L ike, as we've grown our base network in particular, we, you know, and particularly post-COVID, where corporates became much more price sensitive, that we weren't available on a lot of the platforms. But we've done a recent deal with Concur, which was, you know, a staff-based product for people to manage or for corporates to manage their expense management. And, you know, we fit naturally into that too. And that will go live, I think probably from, well, we've signed the deal, it'll go live and the APIs and all will be working from early April. So it's just another channel. GDS is growing, not spectacularly.
People still go from the, you know, the or naturally gravitate towards our lowest fares. You look at the recent OTAs that have come through, you know, you can argue they're a channel. O ne of them is a channel for those who want to have a package holiday, not material in what we do, but we will continue to develop those channels. It's not necessarily going to move the dial. But the one that I really, I suppose I'm excited about is, is Concur, because that will get those small and medium-sized businesses, and Ryanair will be presented and obviously will have the lowest fares.
I think it's fair to say we're also I wouldn't underplay, n ever would I underplay the significance of the OTA deals last week with loveholidays and with Kiwi this morning. T hese deals now give them direct access into Ryanair's inventory. They are capable of moving a significant volume of seats. And the fact that they're now doing that without screen scraping, but giving their customers the Ryanair airfares and the Ryanair, the real Ryanair ancillary prices, I think could result in a significant boost in their volumes or the, that volume of bookings. Turning to aircraft delivery delays, it's very frustrating. We have been very slow to launch the summer 2024 schedule.
I think it's fair to say, typically at Christmas, we would have about 85% of the summer schedule launched. This Christmas, we've only about 75% of it launched. We have some of that and most of that is uncertainty over aircraft. We're still negotiating with some airports as well. Eddie, Jason, and the team made a major breakthrough last weekend with a new base in northern Italy, where they, the Treviso region or the Trieste region, scrapped the municipal tax, which is the first time one of the big Italian regions has scrapped the municipal tax, EUR 6.50 per departing passenger. These are major advances on behalf of consumers and in terms of our cost. So it's fair to say that summer 2024, our schedule, our summer schedule, launch has been delayed.
We are still at this point in time, we have only launched it with the core summer schedule. We're also late with the, some of the summer, schedules that we would have ideally have launched in April and May, don't get launched until June and July because of the Boeing delivery delays. We were supposed to have 57 aircraft from Boeing at the end of April. We will be lucky to get 50 aircraft by the end of June. And that in itself means, a lot of the summer business that we would want to do in May and June has been delayed. And even today, we are still holding back about 15 aircraft. We have only, what's on sale at the moment is about 35 of the 50 aircraft that we have from Boeing.
We need more certainty and more confidence that Boeing will deliver those aircraft to us. And, you know, there are still a number of announcements to be made on some new routes, on some new aircraft, on some new routes and maybe one or two bases. We're in the final part of the negotiation. And overall, Savi, to answer your question, the aircraft delivery delays is delaying the summer schedule. It is constraining our growth. I mean, it would add another million or two million passengers if we were able to launch these summer routes in May and June, as opposed to launching them only in at the end of June or in July.
That's still enough to hit the summer peak, but it is very frustrating, which is why I think the next year, instead of 205 million passengers, we'll probably be running around 200 million, will be the number for the full year. Next question, please.
Thank you.
Thanks, Savi.
Thank you. The next question comes from Duane Pfennigwerth from Evercore ISI.
Duane, hi.
Please go ahead. Your line is now open.
Good morning. Just, just a couple quick ones. On the ETS credits that are expiring, can you just help us think about the magnitude of that relative to the EUR 450 million in, in fuel savings, FY 2025 over FY 2024? In other words, that 450. W hat should we subtract from that for the sort of change in the ETS credit recognition?
Yes Duane, it's Thomas here. So we'll lose about 20% of the free allowances during next year. So like, you know, we had about just under 4 million free allowances, so about 20% will unwind in FY 2025.
What's that in financial terms?
Well, if it's about 65 EUR a ton today, so it's probably about EUR 50 million to EUR 60 million.
So the fuel hedging savings are about EUR 450 million, and the ETS penalty unwind just costs about EUR 60 million to 70 million, is it?
That's great.
The second question, Duane?
Yeah, just, just with respect to a tighter OEM market, and these lingering constraints, where would you estimate the value of your unencumbered fleet today? Thanks for taking the questions.
That's a big question above my pay grade. I mean, the value of our existing unencumbered fleet is dramatically higher than well, anything back. I think it's the big difference between us and some of our competitors in Europe. Remember, we add all of our aircraft at the net purchase price to the balance sheet, and so you get the benefit in lower depreciation, significantly lower depreciation charges over the next 20 years. I heard one of our competitors last week contorting themselves, trying to explain how they're doing sale and lease backs, recognizing a profit up front, but it doesn't make a lot of difference over time between us and Ryanair. When in actual fact, the aircraft ownership costs for that airline are more than double that of Ryanair on a per passenger basis, like, just complete and utter horseshit.
And I would say also, by the way, you know, our delivery book of aircraft, which we priced them in the last of the, we still have more than 60 or just over 60 Gamechangers to take delivery of over the next two years. We could, they are worth, I would say, probably not far off double what we'll be paying for them over the next two years. And even the MAX 10 Gamechangers, I would say, you know, the market is so constrained. I read a story this morning that Airbus are out trying to buy back some of the pre-delivery slots from some of their A320s, from lessors and some of their customers, ostensibly to provide aircraft to United in the States.
So I hope they're very successful, and I hope therefore, as a result, United walk away from a load of MAX 10s, because we'll be the first ones out there looking for additional MAX 10s for delivery in 2026 or 2027, if we could get them. But I think it's the reality for all airlines is that, you know, we're all short of aircraft. The OEMs cannot, I mean, the more significant thing, while we welcome the MAX 9s going back into the air last week, just so that you just take that as an issue out there. I thought that the most significant intervention by the FAA was that it ordered Boeing not to increase monthly production. They, that does represent a challenge for Boeing.
It will leave some dissatisfied customers going forward for deliveries in 2024, 2025 and 2026. We will still get our 30 aircraft next winter. But I think it is inevitable, given the quality challenges facing both Boeing and Airbus, that, you know, some of this capacity ramp up needs to be slowed down. And we still haven't even taken account of some of the orders that are still out there from the Chinese airlines, the Middle Eastern airlines, some Indian airlines, for additional aircraft. Therefore, you know, I think the world is going to be challenged for certainly short-haul aircraft for the next 5, 7 years out to 2030. Ryanair is one of the few airlines that has secured a pipeline of reasonably low cost new aircraft deliveries over that period of time.
These are new aircraft deliveries that will transform our operating, our operating costs because they offer significantly more seats, but at a significantly reduced fuel consumption. So I don't think I've ever been more excited about our growth and the possible profitability of our growth, in Europe in the next three to five years, where capacity is going to be meaningfully constrained. I think if you look at the pricing of air travel across North America, compared to where it is in Europe at the moment, it's clear that pricing in Europe has some considerable way to go to catch up with North America. Will it get all the way to North America? I don't know. Nobody really knows.
But certainly, if you are at the lower end of the pricing model, as Ryanair is, I think we have more headroom for price increases over the coming years to cover higher costs, although we'll be using our low-cost aircraft and improved fuel consumption to keep airfares down. And I think, you know, one of the big differences between us and some of our competitors who reported last week is we saw average airfares rise double digits in our Q3, whereas their average fare performance was significantly behind that of ours. And that's, I think, in large measure, because we're expanding into a lot of their markets and we're expanding profitably, whereas they're unable to compete with us and reporting losses.
Thanks, Michael.
Thanks, Marie. Next question, please.
Thank you. The next question comes from Ruairi Cullinane from RBC. Please go ahead. Your line is now open.
Ruairi, hi.
Good morning. Yes, the first question on Boeing delivery delays. I thought the previous expectation would be that you'd be down around 10 aircraft this summer, and it now sounds more likely to be down 7. So I was wondering what potentially drove this slight improvement? And then secondly, on the modest growth in ancillary revenues per passenger, you previously explained that ancillary revenues should be more stable than fares. But is this driven by you sort of holding back on pricing, or are you seeing some take-up of ancillary products declining in the current environment? Thank you.
Okay, Neil, I'll ask you to do the ancillaries. You are basically cam here. Just in relation to Boeing it's a movable feast here. Originally, we thought we'd be down five. Then it looked like we were going to be down 10. Now, we think our best guess is that by the end of June, we'll be down for about seven aircraft. Now, that could be nine, it could be five. We are working. We have eight aircraft deliveries due in May, there's seven due in June, and then there's about nine in July, and we're hoping that we will get some of those Julys into June.
I think it's fair to say, we will also take some deliveries in the first seven or 10 days of July, but we have said to Boeing that under no circumstance are we taking aircraft after there's a weekend. There's the 13th, 14th of July. We're not taking aircraft after that, because frankly, if we're not certain to get them before that, we can't put them on sale. So I think we are working well with the team in Seattle. There's a big focus on those aircraft deliveries in June and or in May, June, and the first couple of weeks of July. And we think there's a reasonable prospect that, you know, we will get 50 aircraft. Might be 52, it could be 48. The big driver, though, is it's certainly not going to be 57, and we accept that.
But we have said to Boeing, if we don't get them by that second weekend in July, we're not taking them until October. Which is why, again, our number for next year has moved back from kind of originally 205 million towards 200 million. But it's movable. You know, we would be hopeful that Boeing will do slightly better, but if they have other unforeseen events like the MAX 9 issue, it might move slightly back the other way. Ancillaries and modest growth, and Neil?
Ruairi, we're very much on track to what we said we would do this year. We said we'd be up EUR 0.50-EUR 0.60 on a per passenger basis. That's exactly where we're going, with EUR 23 per passenger in the quarter just ended. And you remember, there was a big step up on ancillaries after COVID, where we've jumped from about EUR 18 a passenger to EUR 23 a passenger today. Longer term, we think we'll track ahead of the growth in passenger numbers, so a couple of percent, 2%-3%, per passenger increase in spend for the next 2 or 3 years. So we're bang on where we thought we would be.
And certainly, I mean, I, again, and I come back to the OTA point, if we, can, you know, convert a number of the OTAs into partners who are no longer charging for ancillaries, you might see actually an increase in ancillary conversion and some pricing improvements because the people who were originally paying, 20 or 30 euros for a 10-euro bag, they may well—we may convert more and with, with a bit of yield management, we might get 11 or 12 euros on average for those bags. Thanks, Ruairi. Next question, please.
Thank you. The next question comes from Gerald Khoo, from Liberum. Please go ahead. Your line is now open.
Morning. Two, if I can. Firstly, on the balance sheet, looking at current assets and the other assets line, which sits just below EUR 1.2 billion, at EUR 1,153 million. I was just wondering what that line relates to and how and when that might convert into cash? And secondly, on the MAX 10, I know your first deliveries are sort of two years after the first ones. At what point do you get concerned about certification delays impacting that sort of early 2027 delivery date for yourselves?
We've got to take the MAX 10. I'm going to ask, maybe Tracey McCann here, will do , that current assets, other assets issues. The MAX 10 deliveries, the first delivery to the North American airlines are scheduled to take place at the end of calendar 2024, early calendar 2025. I don't think we would be concerned about o ur first delivery, that we only take 17 aircraft in the first half of 2027. So I think we would begin to get concerned if the, if they missed the summer of 2025, if the first deliveries of the MAX 10 run into the winter of 2025, spring of 2026, I think at that stage we'd start to get a little bit concerned. We don't honestly foresee there being that kind of a significant delay.
These aircraft are, you know, there are kind of production slots there in Seattle, in Wichita and in Seattle for them. I think the issue is more certification. They're still hopeful that the MAX 7 will be certified in this, the current quarter, and delivered, the first one delivered. They're already built, and the first delivered to Southwest for summer of 2024. So I wouldn't want to be complacent, but I mean, I am reasonably happy that we're not the lead customer for the MAX 10. But given that we're taking our first aircraft two years after the first scheduled deliveries to American Airlines, I'd be reasonably relaxed. And Tracy, you want to take that point on the other assets?
So the prepayment, okay, most of the other assets is prepayment, so typically prepayment from airport charges, fuel charges, and then the carbon credits is the biggest mover in that.
And I just add to that, Gerald, over many years, we've got significant discounts from large suppliers by giving them prepayments, and some of that will be reflected in the non-current asset line as well, which I think you might have been referring to.
Okay, thanks.
Thanks, guys. Thanks, Gerald. Next question, please.
The next question comes from Conor Dwyer, from Morgan Stanley. Please go ahead, Conor. Your line is now open.
Hi, guys. Thanks very much. First question is on pricing commentary. So if you're currently running low single digits ahead, initially for the summer, and you think you can get to mid to high, is that just as the impact from a late Easter hurting April and May dissipating, or you think you can get more in the late yields? And then secondly, assuming certification does happen on the MAX 10 later this year, and United doesn't actually take them, how confident are you that you would be able to actually take them and run that capacity? What kind of lead-in time would you need for that? Thanks.
Okay. On pricing, I think the biggest driver at this point in time on pricing is that the first half of Easter is in March and not in April. Easter is still a big driver of forward bookings this time of the year. Q4 is materially stronger than Q4 was this time last year. We are still expecting a loss in Q4. But bookings through the summer are running ahead of where they were this time last year, both in terms of volumes and pricing. But I would believe, t his time last year, we were in a very, very strange. We had a very, very strong January, but then a lot of that was still post-COVID recovery, people getting out there and booking early.
So we had a very, very strong first quarter, and then pricing softened into the second and third quarter of last year. I'm not sure this year we won't see. Pricing at the moment is, you know, sort of modestly up, but I would expect it to strengthen further as we go through into calendar Q2 and calendar Q3. It might be wrong, it might be, I might be calling that wrong, but that's the way it feels to me. And I think what we, we need to see, like, we, we monitor closely some of our A320 competitors, and they haven't yet, in the case of Wizz, taken out, as far as we can tell, the 40 or grounded 40, 45 aircraft. Same with the Volaris, Volotea. I don't think they've finalized spot where, where the capacity is coming out yet.
So there may be more to go with that. We don't know. But I think pricing will continue to drift upwards into the summer of 2024. And, well, but we haven't there's more to run on that, and I think we won't have a better feel for that until we get to May and we're on the full year results roadshow. Second point, MAX 10s. I f we were to, I would be very happy to start looking at if Boeing and if there were clearly we'd want to negotiate the price of them. I would be very happy to take MAX 10 deliveries in, for summer in advance of summer 2026.
I'm not sure we'd be in a position to take them in advance of summer 2025, but I'm not sure they, they can manufacture or deliver many in advance of summer 2025. But if someone like United want to walk away from those deliveries over the winter of 2025 into 2026, or we could take more aircraft in for summer 2026 and certainly increase. We have 17 aircraft, MAX 10 deliveries in the spring of 2027. I'd be very happy to take that up from 7 to 30, 40 aircraft over the winter of 2026, spring of 2027. We have more than sufficient demand across Europe for these aircraft, and the operating performance of these aircraft is dramatic.
But I don't foresee, despite all of that, what I thought was kind of nonsense commentary out of United last week. I don't see any chances of not taking the MAX 10s, and I'm sure there would be a queue, not least of rapacious aviation lessors out there and others looking to get those aircraft if United or somebody else walks away from them. I mean, we're still expecting a number of very large orders coming out of the Middle East, and China might also step up to the plate as well. So if somebody wants to walk away from MAX 10s, I think there'll be a queue of people who take them. But to answer your question, we'll be very keen on taking MAX 10s for summer 2026, not summer 2025. That would be too early for us.
Great, thanks.
Thanks very much, Connor. Next question, please.
The next question comes from Muneeba Kayani from Bank of America. Please go ahead.
Muneeba, hi.
Good morning. I just wanted to clarify on pricing for Q4. So fares were up 13% year-over-year in Q3, and kind of what's in your guidance for Q4? And then secondly, just on capital return and the share buyback. Given the share ownership issues, post-Brexit, like, how does that impact your ability to do a share buyback this year? Thank you.
Sorry, give me that. Say the second piece of that again, Muneeba. I listened to share buybacks.
Just in terms of your EU ownership, post-Brexit, and how do we factor that into a potential share buyback?
Okay. I wouldn't get into pricing on Q4. We would never break it down on a quarterly basis, but I hear you. You can work it back from our full year guidance. Yes, we've narrowed the range slightly, but more to reflect the hit in Q3. We're still somewhere between EUR 1.85 billion and EUR 1.95 billion. But detail on Q4 pricing and our costs, we wouldn't get into at this point in time, Muniba. On EU share ownership, we continue. We're the only airline that is very close to 50/50 EU ownership. Other competitors, like EasyJet and Wizz, are way below 50%, but that's a matter for the EU Commission, not for us.
I do believe, though, that if we did a share buyback, I think we would probably be looking at trying to buy ADRs and ordinaries. I think it would be in our interest to do both. Although it is we have i n the past, we have found it easier to buy ordinaries in Europe. It has been very difficult for us to buy ADRs.
One of the challenges we face with the ADRs is they tend to be quite tightly held by a number of very large institutions in the U.S., and when we come looking to do share buybacks, they all go: "Here, buy somebody else's ADRs." But if we are unsuccessful in executing share buybacks of ADRs, we would simply buy more ordinaries and then over a period of time, as we've done in the last two years since Brexit, continue to use the fairly draconian powers we have to disapply our non-EU and non-EU buyers of the ordinary shares.
But I would think the working theory, my working assumption would be, if we are returning cash to shareholders by way of further share buybacks, we would probably split that 50/50 between the ADRs and the ordinary, so that we balance the E.U. ownership rules. Thanks, Muneeba. Next question, please.
The next question comes from Alex Paterson from Peel Hunt. Please go ahead. Your line is now open.
Alex, hi.
Morning, everyone. I just wondered if you could give any more color on the commercial agreements you've got with the GDSs and now with two OTAs. Are they paying exactly what a customer would pay if they book directly on your website, or are there any fees in between, like an API fee or anything else?
I s there a second one?
No, that was it. I'd already been asked by everybody else.
W hat we're trying to do, we don't charge them anything. We are very willing to give people direct access into the GDSs and the OTAs. T he critical thing for us is to eliminate the kind of illegal screen scraping. And if we can kind of eliminate the illegal screen scraping, that makes it much more difficult for these kind of OTA pirates to exist. They get direct access to our fares and ancillary prices in our website.
W hat we do, I think what we do is we free them from the cost of the, the digital piracy by giving them a direct feed, and they, in return, agree that the booking will be made and the payment in our website, directly in our website. So we have the contact with the customer, both the email contact and the payment details, and they agree that they will not levy any fees or charges on our underlying airfares or ancillary. That does not necessarily preclude them from charging some kind of fee for their services, as many travel agents now do, but it has to be an identifiable fee for, say, if the or , for example, they may, they generally do package holidays.
They may take something, or they may make their money out of what the other elements of the package they sell. But the customer booking with them on Ryanair is paying the underlying Ryanair airfare and the underlying Ryanair ancillary prices without any inflation, price inflation, or price distortion. And, you know, we don't, at the end of the day, have a difficulty if, as with the GDS distribution, if travel agencies want to levy a fee for what they serve, as long as the customer knows that that's a travel agent fee, we don't have a problem with it. We think ultimately, over time, it will be difficult. Consumers will certainly move away from travel agency fees if the fees are unreasonable and will just increasingly book directly in the Ryanair.com website.
But critical to all this is protecting the consumer from overcharges and then not having some OTA in a position like Booking.com is with the hotels, where they control hotel distribution, and they charge them 15%-20% of revenues for that distribution. It may work for the hotels, but that certainly wouldn't work in a low-margin industry like airline industry for us. Eddie, you want to add anything to that?
I t's just like when the APIs are fully functioning out there, you'll see that people will, It'll be absolutely clear in the case of somebody buying a package of the elements that they're buying, and they'll see that they're getting the Ryanair price, the Ryanair ancillaries, and there's no ability within that flow to add on extra charges. So in that sense, it'll be very transparent for consumers because some of the most egregious complaints we get here are from consumers who buy through pirate screen scrapers and don't get any of the, what you call, don't get any of the emails.
The service emails, and they're the ones that turn up at the desk and didn't realize they didn't get any of the three or four emails to tell them how to check in online beforehand. So when, when these things are up and fully functioning, you know, we've signed, we've done the deals, and while we're working on them in the, in the background, when the APIs are up there, you'll see how transparent it is.
Okay. Thanks, Eddie.
Great. Thank you.
Thanks, guys. Next question, please.
Our final question we have time for today is from Neil Glynn, from Air Control Tower. Please go ahead, Neil. Your line is now open.
Good morning, and thank you for giving me time.
Neil, hi.
Just two quick ones then. The first one, crew rostering has been mentioned a number of times, and I just wanted to check. I think you're running at 5.8 at the moment versus 5.4 historically. Should that 5.8 continue into this summer, or is it likely to be higher? And then the second question, more big picture. Pre-COVID, the fourth quarter was generally profitable, and I appreciate there's clearly a range of factors driving a heavy loss this year. But to what extent do you think the seasonality of your earnings have structurally changed? And if that's the case, might this have any ramifications for how you deal with unregulated airport contracts, for example?
Okay, Eddie, maybe you want to take on the crew rostering and deal with the COVID.
I mean, the crew rostering isn't the crews per aircraft. It's just one of the inputs there. I mean where we've made very large inroads is on the support systems that we have here in terms of computerized systems that we have in the operations control center, that helps us particularly on meltdown days, which manages errors properly and then spreads them more evenly. So the crewing ratio, like, I mean, is. There's no significant increase. We're keeping it at the same levels that we have, which would be it would be in the range of 5.4-5.8, but it's. I wouldn't see it going beyond that. There's no need to hit anywhere near 6 or anything like that. But some of this is a function of the number of smaller bases that you have.
We're getting much better at managing errors, particularly in the peak, so don't see any sort of more upside data on crewing. t hat will be traditionally higher than where we would have been. And if we didn't have this ATC environment, French ATC strikes, and that, w e should be able to pull that back, but that's, that's some distance away.
Yeah, I think it's something we are working towards, though we are pushing hard with the European Commission. Like, if the European Commission made one simple initiative, which was to protect overflights, particularly overflights over France it would dramatically transform both on-time performance and ATC disruptions across Europe. And with European elections coming up this year it's very depressing and that Europe hasn't moved on this. T hey're great for talking about the single market, and Ursula von der Leyen tell you what you're doing to protect the single market, and yet the French shut down the single market for air travel 57 days last year, complaining about Macron's pension reforms that didn't even apply to them. So we'll continue to campaign for that. Seasonality.
Look, it's a seasonal business, and I don't think you're gonna ever get away from that. We make the vast majority of our profits in the first two quarters, the first half of our year, which is the June and September quarter. I don't see any reason why the third or fourth quarter shouldn't be kind of breakeven, or why they should be loss-making. But there are a number of issues there at the moment, and one of the challenges is that we gear up for a lot of summer growth, and with most of that gear up takes place at the end of Q3 and Q4. We have to start the recruitment of pilots and cabin crew, training of pilots and cabin crew.
We tend to take a lot of the aircraft deliveries from Boeing in the first three or four months of the year without having been able to deploy those aircraft or use those aircraft in service. So there is a disproportionate weighting of costs into that fourth quarter without, if you like, the commensurate revenues. And that's why b ut Q1 and Q2 then tend to be very significantly profitable. I mean, again, I try not to get lost in the short term or in the quarterly stuff. I think the key message here is even with the, on this morning's new numbers, and we are back at, where are we at? At the end of January.
You know, we're on track to make over EUR 10 net per profit per passenger for the first time since a number of years. I think that EUR 10 net profit per passenger will be the kind of baseline going forward. I think there's a reasonable prospect, plus or minus uncertainty in geopolitical events, that that number might move upwards from 10 towards 11, 12 or 13 over the next couple of years. Particularly, as we get more and more game changer and MAX 10 aircraft into the system, where we are carrying materially more passengers per flight, but burning significantly less oil. And I think what's really that my key takeaway from this year's numbers is we're about to make EUR 10 profit, net, net profit per passenger in a year when our oil bill went up 30%-40%.
We went from being hedged at $65 a barrel in FY 2023 to $89 a barrel in FY 2024. And yet our customers were willing to pay us modestly higher airfares, better performance than ancillaries, at a time when most of our competitors are either still losing money or reporting reasonably modest profitability for the full year. So this is a very impressive model. The costs are heavily controlled. We are widening, hugely widening the gap between us and our principal competitors in Europe on airport and handling costs, aircraft and ownership costs. And I think that will continue for the next couple of years.
I think we have a reasonable expectation that, you know, despite the surprise or the sudden impact of the OTAs on the Q3 numbers, we'll have a strong year of profitability. And I think a realistic prospect of strong pricing through summer 2024, which will deliver another year of strong profitability in the year ending March 2025. Neil, I think that's as much as I can add on the seasonality. Any other questions?
We have no further questions.
Any other questions?
That does conclude our Q&A session for today.
Great. Okay. Thanks very much, everybody, for participating in the call. Neil, Neil is going to do what? He's doing a kind of a roadshow day through, London today, France and, Paris and Frankfurt trying to persuade more and more, p ardon me?
Try to encourage more European share ownership here. It's not that we don't love the Americans, we do, but we're gonna need more Europeans on the share register. In the meantime, we'll continue to try to execute and deliver. Thank you. We are not doing a roadshow on the Q3s. If you are happening to be in Paris or Frankfurt and want to meet with Neil, by all means, ask for him. Other than that, if anybody wants to come see us here in Dublin over the next coming months, please feel free to do so. If not , we'll see you at the full- year results roadshow in May. Thanks very much, everybody. Good to talk to you. Bye-bye.
Thank you, ladies and gentlemen. This concludes today's call. Thank you for joining. You may now disconnect your lines.