Hello and welcome everyone to the Ryanair Holdings PLC 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 star followed by one on your telephone keypad. 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 members of the team are spread across Ireland, the U.K., Europe. The only member who's in France at the moment is Tracey McCann, our CFO, so, she's in listen-only mode and won't be able to join and contribute to the call today. You'll have seen this morning we reported full year profit of 34% to EUR 1.92 billion, as traffic grew last year by 9% to 184 million, despite Boeing delivery delays which have hampered our traffic growth. We've also announced a timely EUR 700 million share buyback. Over the full year, as I said, the highlights are the traffic grew 9% to 184 million passengers.
Despite that, the fuel bill also rose jumped 32% to EUR 1.25 billion, well, up EUR 1.25 billion to just over EUR 5 billion euros. We took delivery of, well, we have 146 Gamechangers in the fleet at the end of March. This summer we're still growing strongly. We're opening five new bases and over 200 new routes for summer 2024. We've already hedged 70% of our FY25 fuel at about $79 a barrel, so we've locked in fuel savings of about EUR 450 million for the next year. In 2024 we're paying our maiden interim dividend of EUR 400 million, EUR 200 million paid in February, and EUR 200 million in September. We continue to look forward to our Boeing MAX 10 order of 300 aircraft, first 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 would 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 fuselages being delivered from Wichita to Seattle, and also an improvement in the quality of, the final out final delivery for 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're becoming increasingly optimistic that the, the nine extra aircraft we get through June and July will be delivered on time, and at least we'll be able to use those through August and September.
However, these delays mean that more traffic growth will occur in the lower yielding 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. Customer demand in Europe remains 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 five 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 Pratt & Whitney 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, pricing this summer would rise between, I mean, you know, 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'd expected. In fact, it'll 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'll be 0%-5%, and there at this point in time, not 5%-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.
If it weakens further, it weakens, we will continue to be load factor active, price passive. It just means people and families traveling in Europe this year will get better deals, and better pricing, on Ryanair. We expect European airline consolidation to continue. 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., slot handovers at congested airports like Milan, Linate and Madrid. Looking forward over the last 12 months, as I said, traffic grew 9% to 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 E.U. competitors has widened significantly, and we'll have seen that with much higher unit cost rises from competitors who announced results over the last two weeks. As I said, our FY25 fuel requirements are over 70% hedged, at just under $80 a barrel, and we've also locked away the first 10% of our FY26 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 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 six months. Key to all of this is obviously in our outlook.
Let's see what we know. We expect our traffic to grow by about 8%, so we'll finish somewhere between 198 and 200 million passengers. That is still subject to Boeing delivery delays, but there's less uncertainty now that we have only nine more aircraft to take in June and July. Cost advantage over competitors continues to widen. We do expect unit costs to rise modestly. 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 costs is substantially offset by our fuel hedge savings and our rising interest income. While E.U. short-haul capacity is constrained, summer 2024 demand is positive, with bookings 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 promotions through April, May, and June, and if they are, then we will lead the market with price promotions. Q1 is requiring more price stimulation than last year. Fares and profits in Q1 will be behind where they were, 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. While visibility is limited, our outcome as always this time of the year will be heavily dependent on closing peak summer 2024 pricing, and we remain cautiously optimistic that peak summer 2024 fares will be flat to modestly ahead of last summer. Q4 FY25 will not benefit from an early Easter as it did in FY24.
However, it's too early to provide any sensible or accurate full year guidance, and the final outcome for 2025 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, or further Boeing delivery delays. And with that, I'm going to hand over to our CFO, Neil Sorahan, take us through some points and themes 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 sheets. BBB+ rated balance sheet's exceptionally strong. And as Michael said, we finished well over EUR 4 billion in gross cash and just under EUR 1.4 billion net cash at the end of the year. This has given the boards the confidence, having restored pay, having paid down significant debt over the past couple of years, and funded large CapEx to now launch the buyback, the EUR 700 million buyback. That will formally launch tomorrow morning, and it'll run for about a six-month period, broadly split between the non-E.U. and the EU shareholdings. And so delivering on the capital allocation policy on top of the dividends program that was rolled out last November, the cost base in good shape.
We came in exactly where we said we would 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 non-fuel 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 and the first of the MAX 10s over the next couple of years. That's it.
Thanks, Neil. And then, Mike, I'm Eddie Wilson at Ryanair DAC. You might give us a flavor of what you're seeing in terms of new route growth and market share across some of the key markets in Europe this summer.
Yeah, I think the, I mean, we're going to grow by about 9%, this summer vs last summer. That's up almost 37% from summer 2019, just slightly over 2,500 routes. But the big callouts, I suppose, are like Spain. We have an extra 11 aircraft in there. Italy still growing strongly. Two new bases there of the five new bases in Italy in Reggio Calabria and Trieste. Poland, Central Eastern Europe, including Albania, growing strongly. And Morocco as well, growing strongly, with a new base there in Tangier. And also, we are operating domestics there, albeit on a very small scale, but they're going well at the moment. So capacity is going where we can, where we've got, we are maintaining our pressure on cost there, and those airports that reward us with lower costs are getting the capacity.
If you look at, you know, that's recently in Bordeaux where we had to close the base because the costs were going to rise there 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, well, we've got the double whammy of airport costs growing by up to 46% over the next five to six 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 if this winter because we'll be unable to put an extra capacity for key events such as Christmas, the new school break and extras generally.
But overall, the message is those airports that reward growth with lower costs get more Ryanair capacity, and those that don't don't get it.
Thanks, Eddie. Just make sure everyone's heard we announced the closure of the Bordeaux base from November, so we are still planning to Bordeaux, and we'll be through the summer, but it closes in November. And already we've had a number of other airports, including French airports, onto the new route scheme looking to secure those aircraft, but they've already been allocated by us this winter.
Yep.
Okay, Maxine, with that, please can you let me look it up for Q&A.
Thank you. If you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad. 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.
Hey, morning, Michael. Morning, Neil. 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 were being talked about 5%-10% higher. You know, have you actually seen any large weakening in demand over the past month, or maybe the original message was set 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-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 non-delivery related CapEx spend? Thanks a lot.
Okay, I'll take the fares, J and Neil, you do the CapEx. So let me give you what we think is happening on fares. A couple of issues. Firstly, one, we've come off two summers where we've had, you know, cumulatively two summers, both 2022 and 2023 of post-COVID recovery. Fares were up +20% for the last two summers. We expected that this summer would be marginally softer. Originally, you know, we thought it could be up maybe 5%-10%. It'd 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 weaken. There's a kind of a longer run, from Easter, through to the summer holidays.
But I think it's fair to say we did think that fares would be stronger towards the summer, May, June, July, August, particularly with capacity constraints. Most notably, the Airbus A320 groundings, which really bite once the summer schedule kicked into place in April. One of our competitors, for example, they're a lot smaller. Wizz announced a decline in traffic in April because of these A320 groundings. So, the capacity constraint is real. I think, you know, when you look to analyze what's happening in the short term, the honest answer is we're not sure. We think it's a combination of two things. One, the disputes with the OTAs, where a lot of the OTA pirates took us off sail in December and January.
We're gradually putting some of the OTAs, doing approved OTA distribution deals, but there's a hit to that. We are seeing some hit to our kind of what we would say the leisure route: U.K., Spain, U.K., Canaries, Germany, Spain, Scandinavia, Spain. A lot of those are coming back online with using the benefit of our approved OTAs, which ensure that the consumers are not being overcharged. And we think that was a war that's worth fighting, and it's clearly one that we're winning on behalf of the consumer at the moment. But 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 or 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 or confidence across Europe in consumer spending, and maybe that's reflected in what we would call shoulder period bookings and, and shoulder period bookings and fares. Now, when we engage in price stimulation, as we have done over the last four or five weeks, we see strong volumes. So there's strong volumes out there. Now, to me, that's the key theme. Pricing's 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 seat sales.
Now, maybe we're the authors of, of that, but we're going to be aggressive on pricing, and if consumers in their families across Europe fly at 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 costs largely nailed 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 of strength. So as always, if there's a bit of price softness out there this summer and I would describe it as no more than 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 two to three summers. Average airfares will rise over that period of time as long as there's no unforeseen events because I can see no outcome other than continuing manufacturing delivery delays, continuing A320 groundings, and, hopefully, the payout of the consolidation story in Europe. So short term, a little softer than we thought. If that's 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 inevitable the next two to three summers in Europe, pricing with constrained capacity will be modestly upward. Neil, CapEx, please.
Yeah, hi, Harry. How are you doing? Yeah, EUR 2.3 billion CapEx for this year. A good chunk of that are pre-delivery payments and delivery payments that have moved forward into FY25. On top of that, maintenance CapEx, but we've also got some additional spare engines, some hangar 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, so it'll dip down to just over a billion, maybe 1.1 billion next year, and then we've kind of light CapEx for a year or so before it starts to ramp up again with the pre-delivery payments on the MAX 10, and the delivery payments on the MAX 10 in 2026 and into 2027.
Thanks, Neil.
Next question, Maxine.
Thank you. The next question comes from Dudley Shanley from Goodbody. Please go ahead, Dudley. Your line is now open.
Dudley.
Good morning, everyone. Two questions from me, and Michael, you touched on both issues a minute ago. First of all, if we think of the airline consolidation in Europe, and I think before you've mentioned that ultimately it comes down to four players, which is the three flags and Ryanair, it seems as though the European Commission is getting a bit stricter in terms of getting these deals through. So do you still think that's the endgame 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 that 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.
Will it still be there for two to three years?
Yeah, two good points, Dudley. Firstly, on consolidation, and then I'll ask Eddie or Juliusz also to come in on this. Look, I mean, I think the E.U. Commission is, you know, as usual, getting it wrong. You know, consolidation does need to take place. You know, what happens if Lufthansa is not allowed to buy Alitalia? What happens to Alitalia? If either goes bust, which is politically, you know, unattractive in Italy, or the Italian taxpayer keeps massively funding on Alitalia, keeping it alive with illegal 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 it? I mean, I think again, it goes bust.
We've seen that in the States 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 this 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 have a, you know, some kind of rational strategy here. We think they should be encouraging that consolidation, but then it should be encouraged with appropriate slot remedies. The way to fix this, if you're concerned about consolidation to monopoly in places like Malpensa or in Madrid, divest slots and divest slots to competitors who can maintain and sustain those operations.
Don't do as 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 E.U. Commission needs to have a longer-term vision for air travel in Europe. The single market vitally depends on low-cost air travel, and the only way that's going to be sustained is with, I think, a smaller number of larger, more sustainable carriers. In my personal view, it's going to be four large airline groups. I don't see any of the others surviving as large independent carriers either because they can't compete with the legacies or with the hubs and 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's 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 five years from 2024 out to 2030 just delivering on their existing commitments. 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 that I think they will be able to meet their own massive step up in monthly manufacturing. They're going to be challenged for the next three, four, five years. And then you add to that the GTF issues on the Pratt & Whitney engines.
You know, we've seen optimistic stuff that 20% of the fleet is going to be grounded for I think it's going to be for the next two, three summers. This is not going to be a quick fix. You know, the original forecast of 300-350 days for the engine repairs have already moved out towards 450-500 days. You know, there, there's huge challenges on the engine maintenance side, supply chains, and on engine shop. And there's no way that that's being accelerated. So I think it is inevitable that for the next three or two or three summers, at least 2025, 2024, 2025, 2026, capacity across Europe is going to be meaningfully constrained. Also, remember, in Ryanair's case, this year, we're only going to have 30 of our 40 of our 59 aircraft deliveries.
We hope to pick that up next year when we will take another 29 aircraft, we hope, and the backlog of the 20 we were short this year. We might have 59 aircraft for summer 2025. Then we have essentially no growth for summer 2026 and no growth for summer 2027. So we will be a, you know, a key player in that kind of capacity constraint for the next two or three summers as well. And I think, you know, there'd be disappointment at the moment with the, you know, investors who always want to see upside. "Oh, the pricing is a little bit softer. What's going wrong? The model's broken. Why aren't prices rising?" We've had two years of very strong pricing growth.
We're seeing much more modest pricing growth here this summer, and if that's some degree of consumer resistance or we need to incentivize consumers' travel, so be it. But for the next two or three summers, capacity is going to remain constrained. Nobody can add meaningful capacity in Europe other than the Ryanair deliveries. And I think pricing is going to be, you know, flat to slightly up for the next two or three 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. Please go ahead, Jarrod. Your line is now open.
Jarrod, hi. Jarrod, go ahead.
Unfortunately, we're not getting any audio from Jarrod's line, so we'll move over to the next question. The next question comes from Stephen Furlong from Davy. Please go ahead, Stephen. Your line is now open.
Stephen, hi. Yeah, hi, Michael. Can you talk a bit about the OTA deals? I'm thinking that, you know, as we look beyond the summer into the first portion of winter, the kind of Christmas period that was hit last year, so maybe it's something that will help you as all those deals are bedded down? Might talk about that. And then the second thing, just on Boeing, I mean, I know some things aren't in their control, but are you happy to see them acquire Spirit AeroSystems and to see any sign that there would be any issues or delays with the MAX 10 certification, or is it still all up in the air? Thank you.
Thanks, Stephen. Look, I mean, I think the OTA, you know, we fought the OTA pirates for 10 years now. You know, we have and we still find it astonishing that the consumer agencies and the European Commission allow these guys to illegally engage in digital piracy by illegally screenscraping Ryanair's inventory and then turn around and inflate those airfares and ancillary services and dupe consumers. If we or any other airline did this, they'd be down as like a ton of bricks. And yet, they seem to turn a blind eye to these guys. They seem to misaccept the fact, you know, are duped into believing that there's some kind of honest price comparison websites when they're not. They have been scamming and overcharging consumers for years now. It seems though that came to a head 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 themselves off as Ryanair. The good news now is we have signed up, I would say, 10 of our 11 largest OTAs, and that's, you know, have either signed up to our approved OTA travel distribution deals or are in the process of agreeing those deals. The only one who stands out there is still eDreams, which is a total scam, still taking, passing themselves off as Ryanair, passing off Ryanair airfares at 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 flights on 100% of flights.
But what they do is they take a Ryanair EUR 50, they pass it off to their eDreams Prime members as an EUR 80 airfare, which they then discount back to EUR 54, EUR 55. It is a complete and utter scam. eDreams Prime members shouldn't pay the, the EUR 65. And by the way, what eDreams then do is they don't even allow the consumer to, to roll when they roll it over into year two or year three, they increase the cost. You're getting no value whatsoever, no discounts, when you're booking Ryanair flights with eDreams. And they are also being scammed for inflated ancillary services such as priority boarding, but all of the others, Kiwi, Loveholidays, some of the bigger intermediate Travelfusion, Etraveli, are all, have all signed approved. And the good thing about the approved OTA deals is, one, it guarantees the consumer price transparency.
You're only paying to publish Ryanair fares. Two, you're only paying 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, you know, 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 schedule change information, it goes straight to your email, not in the case of eDreams where we still get fake email addresses or fake payment details, and that communication with the passengers gets lost.
There was no doubt that the OTAs taking us off sale in December did hit close-in bookings at Q3 and certainly into Q4. 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 had that much volume, but you know, if 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.
To say, "For if it needs stimulation, it needs stimulation." But I think we will 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 FY25. In terms of Boeing, I don't think the Spirit acquisition makes much difference one way or the other. Like, Boeing has, you know, whether Spirit was a kind of an approved supplier or a subsidiary of Boeing, what's critical in Boeing is we need the, you know, on-the-job management in Seattle and in Wichita. We have certainly seen an improvement in the quality of the fuselages being moved from Spirit to Wichita after about a two-month gap. So what's been moved from Spirit to Seattle at the moment is undoubtedly they're not carrying forward defects on fuselages which have to be repaired in Seattle.
However, that hasn't yet speeded up the turnaround of the planes in Seattle. You know, they should be turning around those fuselages in about eight or nine weeks. We're still seeing turnarounds in 12-14 weeks. But we think Stephanie Pope and the team in Seattle are doing a much better job. The good thing with Stephanie is she's there. She's on the ground. There's the 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're only getting three aircraft in July. It now looks like we'll get seven. We'll get 10 aircraft deliveries in August, but that's too late. Deliveries in August are no use to us. We've missed the summer peak.
But we'll 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 were due to get from January to April of 2025. I think there's a risk of some slippage there. We will be insisting or hoping to get aircraft. If we can get all 29 aircraft between January and June of 2025, we'll be in reasonably good shape for summer 2025. 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 2024 into the, I would hope, the first half of FY25. That probably means that MAX 10 has slipped a little bit to the middle end of 2025.
They will miss, in my view, some of their leading first deliveries of the MAX 10 in summer of 2025 to the American carriers. But we don't think at this stage it will delay our deliveries. In our first 17 deliveries are in the spring of 2027. But, you know, there's a risk that some of those might get hit. It won't fundamentally alter our, you know, growth prospects for summer 2027, but we would like to see Stephanie Pope and 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 backlogs and make sure that the MAX 7 certification happens in the first half of 2025, MAX 10 in the second half of 2025.
If they can get there and there's no other unforeseen event, then I think we would be reasonably confident that we'll get the MAX 10s in time for summer 2027. Stepping back one 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 in a nose wheel falls off an Air Canada aircraft, an engine cowl comes off a Southwest aircraft. Those are not. It's all reporters, "Oh, seven Boeing aircraft." Those are maintenance issues with Air Canada and Southwest. They're not Boeing aircraft issues. The Gamechangers that we now have about 160 of them 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 we will enable us to carry far more passengers but at a significantly lower fuel cost per passenger and also significantly less emissions, CO2 emissions as well. So much lower cost, much more fuel efficient, and better for the environment as well. So we take the Boeing 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, you know, 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 this.
I'm sorry to see him go at the end of the year, because I think, you know, somebody does need to run Boeing to allow the people in Seattle 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 are doing at the moment.
Next question, please.
Thank you. The next question comes from Jaime Rowbotham from Deutsche Bank. Please go ahead. Your line is now open.
Jamie, hi. Hi, Michael. 2 questions from 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 2025 mean that's a lot less likely now? Second one, on costs, you've put the non-fuel 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 non-fuel bit, I feel like you're pushing us towards, you know, maybe a couple of euros again on Neil's metric of non-fuel cost per pax, which would be, you know, mid- to high single-digit inflation.
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 non-fuel unit costs this summer. So perhaps you could just address that, in terms of the gap, widening. Thanks.
Thanks, Jamie. Couple of words. Look, all I can say on buybacks is, you know, we have, unlike most of our competitors, we are cash-generative. We have zero, you know, we're paying down debt aggressively. In two years' time, we'll be zero debt. All we have said is that as the board has a policy if we generate surplus cash, firstly, it'll be used to restore, pay, and put multi-year pay agreements in place for our people. Secondly, we'll pay down debt aggressively as debt costs are rising in the current market, in the current marketplace. And thirdly, it'll be CapEx, but we know we're coming up to a kind of a two-year CapEx holiday. And if there's any spare cash or surplus cash, we are committed to continuing 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'll do after that will depend on what the cash position is after that. I don't wanna prejudge what the board will do. I mean, all I would remind you is there's a dividend payment coming in November. We will have a share buyback this year. I would, you know, point to remember the board's commitment that, you know, 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 supported us during COVID.
And, Neil, I'm looking at more color on the cost, but give me a couple of those. Just the one issue I would point to here is where yes, our unit costs are rising slightly. Lauda is a driver of that. But our unit costs grow off of a much lower base than many of our competitors. It is going to be less than some of our competitors. We've seen, for example, you mentioned easyJet. I mean, you know, their pilots have recently rejected a 20% pay increase and are threatening strikes through this summer. And easyJet do not have a great record of standing up to the unions when they're threatened 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 pilots or cabin crew attrition at the moment. In fact, if anything, we're slightly overcrewed this summer because we crewed up for all of the Boeing deliveries, and they're going to leave us about 20 aircraft short. But you look across North America, what some of the deals that have been done with the pilots and crews across the North American airlines, you know, it's off the charts. In Europe, there is no doubt that our people and, you know, we continue to ask our pilots, our cabin crew, and our engineers, to perform efficiently. They deliver the best service planning airline in Europe. They're also delivering the most efficient turnarounds. And, you know, it is only fair, I think, that we share some of the upside with our crews in the form of multi-year pay agreements.
and if we have to respond in that marketplace to be competitive on pay, and then we will continue to do so. And, you know, but it will be our increase in costs, our cost inflation this year, will be significantly lower than any other airline in Europe, including some of the ones you've mentioned, Jamie. Neil, do you want to add anything on the unit cost outlook?
No, I will. I mean, I think that the key here is that we're, you know, 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 packs will ultimately depend on whether we come in with 198 million passengers or 200 million passengers. But net on a total cost basis, we're broadly flat to Marjor. Important to factor in the fuel savings that we're getting on the Gamechangers. It's important to factor in the hedging impact that we have. And the non-fuel 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, you know, our fuel hedging position, yeah, is, you know, is a benefit. But you know, again, if you look at the numbers that were produced recently 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're now 10% hedged for FY26 at $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, but that will be more, I think, than get picked up over the next year or two on if capacity is constrained, modest fare increases over the next couple of summers in Europe. Thanks, Jamie. Next question, please.
Thank you. The next question comes from Alex Irving from Bernstein. Please go ahead, Alex, Irving.
Alex, hi.
Hi, morning, guys. So two from 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 your competition is more GDS-heavy, or is it more of a widespread phenomenon? Second question is on load factors. Before the pandemic, you speak of 96% every single quarter, summer, winter, didn't matter. Has it been back there since? Is that a conscious decision as you're trying to maximize the total revenue of passenger rather than just load factor optimize, or is something else behind that, please?
Okay. You broke up saying June 1st, but I mean, correct me if I'm wrong. I think the question is, is the fare weakness kind of across the board, or is there particular geographies where there's fare weakness? Is that the question?
Yeah, that's right. Specifically, is it more weakness in the GDS-heavy markets staying Central Eastern Europe?
What's the GDS-heavy markets?
Then in the markets where you have competitors with GTF engines that can't use their planes. So I think there's that.
Oh, sorry. Oh, okay.
More widespread in those markets.
No, I mean, well, what we think and I'll ask maybe Eddie and Jason McGuinness to give some flavor on this. I mean, it's generally across the piece. You know, April has been weak, May, June has been weak. And more of the weakness is on the leisure routes, which is why, you know, honestly, we're not quite sure why there's 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.
We've seen that, in recent weeks as we engage in reasonably modest price stimulation. Like, we've done some EUR 14.99 and EUR 12.99 seat sales, 20% off. That has boosted capacity significantly. The market is responding strongly whenever there's any little bit of price stimulation. I would describe it as widespread rather than particular geographies. Where we're strong, if there was one area where I think we are a little bit stronger, it is probably in those Central Eastern European markets where Wizz are grounding a significant number of aircraft. We're growing strongly into what were previously Wizz markets in Albania have been very strong, Romania, Bulgaria, Czech Republic, Slovakia. In Poland, they tend to be small and reasonably weak, but we're growing strongly in Poland as well.
We generally tend not to notice Wizz much in most markets because they're generally priced significantly higher than us. But it does seem to us that Wizz have taken a conscious decision where they're grounding aircraft, they're grounding aircraft across Europe rather than in their Middle East markets. They do seem to be trying to protect or maintain whatever capacity or growth they have in those Middle Eastern markets. And we've seen them continue to retreat from markets in Italy and Albania, Central Eastern Europe where they're unable to compete with us on costs. 96% load factor before the pandemic? Yeah. I mean, I think we haven't consciously set ourselves a load factor. We're not consciously stepping down the load factor, but we are undoubtedly in a marketplace post-pandemic where pricing is materially stronger.
Therefore, we are not in that kind of capacity growth phase, huge capacity growth phase across the market where we're having to fight for every % of market share gains. We're taking huge market share gains and also seeing modest fare increases. It does feel to us that, you know I mean, we've set the budget load factor for this year is the same as last year at about 94%. If that's a % to a point or two below the 96 pre-pandemic 96%, I think that's because pre-pandemic, their underlying airfares 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 were operating twice the fleets they are today and losing money hand over fist.
There hasn't been any great conscious decision. I think it's just there are 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, and but we're not trying to thrash our own yields to win market share. We're winning huge amounts of market share with, at modestly higher, airfares, that of modestly higher fares than last year and significantly higher airfares than pre-COVID. Eddie and Jason, it 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 they'd be?
Yeah. Sorry, Michael. I might just let Jason in a second. Yeah, I mean, I'd agree with what you say there. I mean, like, in terms of, like, where Wizz has pulled back in places like in Eastern Europe where we wouldn't have a strong presence like, Budapest and Sofia and places like that. But just so that, you know, the audience here understand about when we're talking about OTAs as well, it's not like what has happened is that when OTAs, prior to this, when we're scraping, could actually make up the 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 end to get the pipes fully, sort of humming.
So it's that has happened as we've signed up each of those OTAs. And, you know, 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?
Yeah. The only thing I'd add is, covered already a little bit. Central Eastern Europe is very strong. Like, we consciously increased capacity on the labor piece out of Central Eastern Europe by 20%-25% this summer, and it's absorbing very, very well. The five new bases are booking very well. We consciously grew the Balkans, new base and Dubrovnik, new routes in Sarajevo, and those are booking very, very well as well. Italy, very strong this summer. Domestic, and particularly where Wizz has now almost completely pulled off, are very strong. So that part of the market's very strong. The leisure piece in Western, yeah, a little bit softer. Fare's 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 midweek leisure.
Okay. Thanks, Jason.
Thank you, Michael.
Thanks, Alex. Next question, please.
The next question comes from Duane Pfennigwerth from Evercore ISI. Please go ahead. Your line is now open.
Duane, hi.
Hey, hey, good morning, Michael and team. 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. Thanks, Duane. Both of those are above my pay grade, I'm afraid. I don't know whether Eddie or Jason, if you've any idea how much U.S. consumers make up of our traffic in Europe. And maybe, Neil, I might ask you, just to comment then on the how much of the EUR 450 million saving, are well, none of it is made up of, but what is it net of, the ETS? Eddie and Jason, anything on U.S. consumers?
Jason, you go ahead. Beyond my pay grade.
Thank you.
Alex, the answer is we don't know.
I don't know.
It's a relatively small number.
Okay. All right. The answer is we don't know. But the great luxury we have is we don't tend not to have to worry about the nationalities of 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. Neil.
Very, very, very fair.
but you and ETS?
Yeah, Duane. ETS is obviously becoming a bigger portion of our fuel bill as the free allowance is unwinding. So we will go from just under EUR 700 million in the year just gone to 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 450 is based on our jet hedging and our dollar hedging, at this point in time.
Got it. Well, sorry, sorry for the U.S., curveball there, but appreciate the thoughts. Thank you.
Nope. We welcome all U.S. passengers on board our aircraft, Duane, apart from those guys with the big heavy golf clubs. But nevertheless, we're not too worried about nationality as long as we get paid. Next question, please, Maxine.
The next question comes from Sathish Sivakumar from Citi. Please go ahead. Your line is now open.
Sathish, hi.
Hi, Michael. Yeah, I got two questions here. First is on the ancillaries. If you could just, like, give some color within the FY24, where which part of the, like, ancillaries perform well and where do you see that trend into FY25? And the second one maybe just for Jason, actually. If I look at the demand-wise, how does the beach vs city, midweek vs weekend, like, trending? And where are, like, in terms of pricing, delta and such? So, like, is it material between, say, midweek and weekend and beach and city, or is it, like, just directionally same across the board? Yeah, thank you.
Thanks, Sathish. We've not been remarkable on ancillaries. You know, as we've said in the last year and I think for next year, ancillaries will continue to form a little bit ahead of scheduled traffic growth. Scheduled traffic growth last year was 8%. Ancillaries were up a couple of % points above that. We continue to work on penetration, conversion. The big ones are still the big ones, which is priority boarding, reserved seating, baggage fees. And we expect they'll 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. We would expect that to recur again next year. Ancillary revenues will be a couple of % points ahead of scheduled traffic growth. Jason, color on for yields, fares, midweeks?
Yeah. Like, we're not gonna go into the difference in on leisure and city. Like, city is booking 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 that little bit softer than we were expecting. However, I have to reiterate, like, volumes are strong. And as you said earlier, Michael, it's responding where we need to stimulate. So, volumes strong is the overall theme.
Okay. Yeah. Thank you.
Thanks, Sathish. Next question, Maxine.
The next question comes from Jarrod Castle from UBS. Please go ahead, Jarrod. Your line is now open.
Jarrod, right. Good morning. Take two. Michael, you obviously become quite a decent-sized facilitator to the package holiday providers, On the Beach and TUI and, and the rest. I mean, looking back, did you think it was a mistake not to undertake your own package holidays? You know, I know you did try, and then you moved away from it. And, and, and any, any thoughts going forward? Is, is, is this a, a future opportunity, let's say, for you? And then just, just looking in, maybe a bit more at the fuel hedging. I mean, there's, there's been, you know, a number of years where you materially ahead of, you know, current levels of hedging, you know, 80%, even as high as 90%, I think, for, you know, where you were in 2019.
is this just more an opportunistic approach in terms of, you know, taking advantage of the movements in the fuel price, or is this still very much a systematic approach? Thanks.
Thanks, Jared. I really had two things on that. Like, you know, I'm not a believer in the package holiday business. I know easyJet, you know, are making some money in that business. But, I mean, to my way of thinking, they're just moving the yield from the underlying airline into a package holiday business and dressing and distracting everybody with the package holiday business. I think it's a distraction. You know, if the package holiday business was where the money, the future lay, you know, the bankrupt Thomas Cook, TUI, and those would still be 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 have disintermediated the accommodation, the air travel, the flights, and the transfers. Now, are we leaving some money on the table for the OTAs and the packagers? I think we probably are, but and we're very happy to do so. But, you know, if we can work with the OTAs and, as I said, we've now signed up, or are about to sign up 10 of our biggest 11, there's additional money for them to be made in getting direct access to Ryanair's low airfares without having to pay some intermediate screen scraper a fee. And we're undoubtedly either A, going to get higher airfares, or we're going to ensure that the consumers get access to Ryanair's, you know, real airfares.
There's upside for both of us in that. I would still be of the view that we still want to be Europe's largest scheduled airline. I don't really want to have the distraction of dealing with a holidays product. We did try to do it before, dress it up as Ryanair holidays, but really, all we were trying to do was to be an OTA, connect the OTAs to our flight system. They want to overcharge everybody, so, you know, it's taken us about 10 years to convert them to our way of thinking. But lo 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 haven't got the pipe fully open yet.
But the first ones in, which was Travelfusion, Kiwi, we're seeing very strong growth in those, 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 package than you will 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 would be very happy at any stage over the next 5 or 10 years to put Ryanair's underlying profitability up against that of, say, easyJet, as airline and their holiday product. Where do we think we're going on fuel hedging? I mean, I think, you know, we've said this recently. In the old days, we used to be just blindly let's be 90% based on a rolling basis.
I think we have to be a little bit more careful going forward. There is more volatility in oil at the moment. We're a bit nervous to be any more than kind of 70%-75% hedged, and I think we're also being a little bit tougher in terms of our hedging. You know, we could hedge the balance of this year, FY25, at 85, 84, 85, $90 per barrel this morning. But at the moment, we have a hedge price of $79 per barrel, where we see opportunities to add to that. And we saw a couple of those in recent weeks. I think we added another 2%-3%, to the 70%, but, you know, keeping the average hedge price below $80.
I think it does make sense how we're nervous that if there's, you know, fundamental underlying trend in oil still appears to be, you know, strong volume, strong growth in production, OPEC+ countries trying to restrain production by cutting their production, weak demand out of China and the U.S. And therefore, the underlying, the kind of stripped underlying function would still be that oil price is trending downwards and yet 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, you know, we're certainly far better hedged than any of our competitors in Europe over the next 12 months.
Some of our competitors don't have a balance sheet to be able to hedge. Some of them talk about price caps, but in reality, the price cap is almost an imagine the price cap at current fuel prices. So I think we are. I don't think at the moment, or certainly for the next year or two, 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 nick a bit of value on closer in hedges, I think that's where we should be. And Neil, I don't know if you want to add or maybe Thomas Fowler might want to add something else.
Yeah, 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. Jet is 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 nuanced in how we do it. And equally, we don't want to be, you know, have too much hedging in place from the time when our competitors are lightly hedged for all the reasons Michael just called out there.
Great.
Thanks. Well, thanks, Sathish.
Tom Fowler?
Oh, I've not done that, Michael. I think it is just down to volatility with the underlying oil price at the moment and just being sensible about not overhedging while there's so much volatility.
Okay. I might ask Eddie and Jason any kind of views on the OTA holidays, generally, holiday product? Feel free to disagree with me, but nevertheless.
Well, sorry, Michael, Eddie here. Yeah, just on the holiday product, like, I don't disagree with you on that, Eddie. 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 costs in Europe. And they can take you know, they can direct that to the markets that are, you know, that are responding best to consumer demand. And that fits in perfectly where you've got the largest airline in Europe with the lowest seat costs with the widest, widest range of destinations. And, you know, they don't have to whereas the who they're competing with are locking in on hotel costs much further out.
It's not a business that, you know, we'd 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 at it and plug into our seat inventory.
Okay. Thanks very much. Next question, please, Maxine.
Thank you. The next question comes from Ruairi Cullinane from RBC. Please go ahead. Your line is now open.
Ruairi, hi.
Good morning. The first question's 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 courier ratios beyond summer 2024. And then secondly, I understand 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? Thank you.
Okay. Thanks, Ruairi. Two on 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 50-54 days of strikes through the first six months of last year over the pension Macron's pension reforms. Thus far, we've had one big day of French 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 disruptions as there wasn't during the World Cup in Paris last year. We think the unions 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 crew ratios.
Our crew 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. You know, we crewed up for the full deliveries, and boy, you're going to leave us 20 aircraft short. So, you know, that's not an item where you could just flex and 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 will mean a slight step up in labor costs 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, the 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?
What are your plans, Michael, if the MAX 10 slips?
Yeah. Sorry. MAX 10, contingency plans.
Yeah. There won't be that much of a contingency, I mean, it obviously depends. Like, at this point in time, we're expecting 17 aircraft in the first half of. We have no aircraft deliveries in calendar 2025 or in calendar 2026. So we will get the first. We still have the 29 deliveries to take from Boeing in the first half of 2025, but they were originally scheduled for delivery in late 2024. But then we have no deliveries in 2026. The 17 in summer 2027 is not really growth. That was really to take out some of the Lauda aircraft leases that are being returned and some of the older aircraft.
We would simply extend some of our older aircraft for a year or two, but there still won't be any meaningful growth in summer 2026 or summer 2027. We get the first 50 aircraft for summer 2028, and that's when we will restart growth after a two or a three-year period or a two-year, two-year period through summer 2026 and summer 2027 where we essentially have no growth. And that, to my mind, also plays to the overall capacity constraint story across Europe for the next two, three, four summers. You have aircraft manufacturer delivery delays, the Airbus groundings for the apparently with the engine repairs, and the fact that Ryanair, after we get hopefully 50 aircraft for the summer 2025, then we have no net aircraft for summer 2026 or summer 2027.
Our contingency, if there's some slippage on the MAX 10s, would be we've already extended some of the Lauda leases from 2024 to 2028, and we would simply fly a couple of our older NGs for another year or two. 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 benefits for, maybe, summer 2027 of these new aircraft which have carried 20% more passengers but burned 20% less fuel. Next question, please, Maxine.
The next question comes from Savanthi Syth from Raymond James. Please go ahead. Your line is now open.
Savanthi, hi.
Hey. Hey. Good morning. Just a couple of quick follow-up tech questions. I know Eddie mentioned seat growth of 9% over the summer. I was curious, you know, if your fleet delivery is consistent with expectations, what you expected in kind of the winter quarters. And then just on the Lauda fleet, I was curious with the extension, what is that fleet expectation for the out years, and are you still kind of expecting to get out of that in the next five years?
Okay. I mean, to Eddie, you took the first half of that question. I'll do the Lauda one first. So, the Lauda fleet, generally, we've extended our... the Lauda team, they've done a terrific job. So we've extended three of those aircraft leases that were due to terminate in 2025 or 2024. We've extended those out for four years but without any increase in the lease costs, 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 is a customer, and therefore, we're willing to extend out those leases for four years at, without any increase in what were, what are below-market, monthly lease rentals. We're happy to extend those aircraft.
We would like to replace the Lauda A320 fleet with more A320 more Airbus aircraft. But at the moment, in the current marketplace, that looks unlikely. Now, it would be unusual if there isn't some downturn or some event between now and 2028. But for the moment, we've extended those aircraft beyond where we originally thought. We originally thought we'd return those aircraft in 2025 and 2026. They're out to 2028. That takes us beyond well beyond the first of the MAX 10 deliveries. But we would still look for opportunities to see if we can't grow the Lauda A320 the Lauda Airbus fleet or replace the Lauda Airbus fleet with other Airbus aircraft. Fleet growth for summer 2024, Eddie, what would it have been if we had taken all of the 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, you know, it would have been marginally up on, on, you know, another 0.5%, I suppose, if we'd if we'd if we'd got the full deliveries. But, it's so.
Yeah. I mean, if you take it over the full year, Savanthi, we would have grown. We would have delivered 205 million passengers, at slightly lower labor costs because, you know, we'd have had the full fleet in, which we're crewing this summer. Instead, we're looking at a full year of somewhere between 198-200 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, please, Maxine.
The next question comes from Conor Dwyer from Morgan Stanley. Please go ahead, Conor. Your line is now open.
Conor, hi.
Hi guys. Good morning. First question is for Neil back on the CapEx question, about it being pulled forward to FY25. I think the indication for FY26 is unchanged at EUR 1 billion, maybe EUR 1.1 billion. I'm just wondering, is there any indication you can give us for the FY27 year of what that might roughly look like ahead of it then ramping up again into FY28? The second question is on the buyback. Obviously, too early to say if another one will be announced in November. I'm just wondering, is there maybe an indication that we could use, in kind of the next two to three years of, like, a target net cash, net debt level that you think is right for the business? Thanks.
Neil, do you want to take the question?
Okay. CapEx FY 2027?
Yeah. I mean, we're going to see it increase a bit, Connor, 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'll really be a year or two before that number starts to go up. I wouldn't want to put a number into the market yet 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 know, you're talking EUR 300 million or EUR 400 million, give or take, from the following year.
Thanks. And on the buyback, look, again, you know, we continue to be strongly cash-generative. But I, you know, I don't think we would want to commit to anything other than 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 two years as we move out of the delivery so move out of the Boeing delivery. But we have two big bond repayments in the next two 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, you know, these are big debts, but we are committed to repaying those because of the rising cost of interest costs. It makes sense to repay those.
Once we're down to that, I think we would, as a company, be concerned to, you know, maintain a kind of a reasonable cash fund of, you know, somewhere between EUR 3 billion and EUR 4 billion. We have got to be cognizant, you know, that there will be another downturn, whether it 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 war, wars, terrorism, in a strong cash position so that we can, you know, renegotiate airport deals, aircraft contracts, etc., etc., from position of strength during a downturn. The world is full of airlines, you know, who are 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 us organic growth out to the mid-2030s. But I think we will want to, when we pay down that debt, you will see us engage consistently, I think, in consistent shareholder returns, whether that's ordinary dividends or share buybacks for the foreseeable future until there's another downturn. And, you know, and when there is another downturn, you know, we will; it will make sense for us not to do share buybacks. I would hope the our 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.
I think we would want to go into the next downturn with somewhere between EUR 3 billion and EUR 4 billion in gross and net cash.
Yeah. I'd have a slightly wider range. EUR 3.5 billion-EUR 5 billion would be where I feel comfortable. So we're in that range at the moment.
Great. Thank you. But okay. Thanks, Conor. Next question, please.
The next question comes from Neil Glynn from AIR Control Tower. Please go ahead, Neil. Your line is now open.
Good morning, everybody. Just one quick one from 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 ensue as a result of this?
I don't think, you know, we don't see any you know, at the moment, if you stand back and look at it from a structural point of view, you know, I think there's a lot of inflation built into the industry across Europe at the moment. There's a lot of inflation on the pilot side, less so on the cabin crew. But nevertheless, you know, we're seeing above-inflation pay settlements 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 at our competitors' airports. We went through COVID. We negotiated long-term extensions of most of our major airport cost deals. We self-handled at a number of the other bigger airports, the Dublin, Stansted. So we're insulated from a lot of that cost inflation.
But there's no doubt 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. I, I think 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. 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, 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 and burning 16% less fuel. That it 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, market at market rates. And that is resulting in significant widening in the aircraft ownership costs. You'll see it on our investor slide four. And I would go back to slide four here, in 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 two, I think that's fair. Our people work hard, and they are entitled to see some rewards, the reward from their, their work. We will continue to be disciplined, though, on costs. We will face down some strikes in the next couple of years, although we have reasonably good relations at the moment with our union partners and our labor teams across Europe. But everybody will be looking at the cost settlements in the States, you know, what easyJet do with their pilot pay pact where the pilots have rejected a 20% pay increase. And, you know, 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 three-aircraft Bordeaux base in November. In the interim, probably we're fending off calls from 15 or 20 airports, all of whom were looking for those aircraft this winter. Please base them here. The deals are getting better, as Eddie has also pointed to.
In a lot of markets in Italy now, the regions are scrapping the municipal tax, which is, you know, a significant structural change in the Italian marketplace. And we are still seeing significant growth opportunities in Central and Eastern Europe. We welcome the new management changes, for example, at a lot of the Polish airports with the new government in place. We think that new government is much more European or looks towards Brussels and Europe. And I think we'll want to significantly increase traffic growth that we may have at the Polish airports. But other than that, I don't see anything structural, Neil. 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.
Great. Thanks. Thanks, Neil. Next question back to you.
Thank you. Our final question today comes from Andrew Lobbenberg from Barclays. Please go ahead, Andrew. Your line is now open.
Oh, hi, you guys. You've won several legal cases on state aid against your rivals. 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 them over, but eDreams is, is a standout. Do you think they will, in time, roll over and join the others and play with you nicely?
I think, Andrew, I think that's the question. We'll give the state aid cases to Juliusz. Will you take that? And then, again, so I don't dominate it, I might ask Eddie Wilson, who's closer to t he discussion of the OTAs, what do you think eDreams are likely to do? So, Juliusz, state aid cases.
Thanks, Michael. Hi, Andrew. So far, the E.U. courts have overturned over half of all of the state aid 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 the 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 retrospectives, not surrenders, where those were not imposed initially. So, you know, this is not over. It will probably take another few years. So please have some patience and keep tuning into those calls, and we'll keep giving you updates.
Thanks, Juliusz. And Eddie, OTAs, eDreams?
Yeah. I mean, you know, 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, you know, eDreams don't have any, you know, any USP, really, because if they're going to cut themselves out of the largest airline in Europe and, you know, the only model that they have is these sort of loyalty-type programs that you've talked about earlier, which are not loyalty programs. They're just another way of price gouging. Like, it is now a more transparent market. It has become more regularized, and I think that they'll eventually have to either come on board or get smaller if they want to access the seat inventory from Ryanair. I just one further point there. Just Duane, it's the American market this year, I'm reliably informed, coming in is, it's just close to 1.5% of our passengers.
And we're making it increasingly easy for them to get their boarding cards beforehand so they don't have to queue at the visa desk. So it's all good news. Yeah. And I'm outstanding. I don't believe the eDreams model is sustainable. You know, we are being much more aggressive with our videos communicating videos, explaining the eDreams pricing scams, and particularly eDreams Prime pricing scams. We think some consumer agency, whether it's going to be in Italy or in Spain or in Brussels, is going to move on the eDreams. And I think that 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 scrape our fares, and then you're scamming consumers by inflating those fares and those ancillary services. The eDreams model is going to dwindle pretty dramatically and pretty quickly because it won't be price competitive 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. 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, the overcharging scam. They're the only ones who are not engaged. We've had a meeting with them back in, I think, March. Sarah, correct me if I'm wrong.
And we haven't heard back from them since. So they, to my mind, have taken a conscious decision. 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, you know, highlight the profitability of eDreams Prime and how eDreams Prime was producing most of their profits, no great surprise, given that it's a complete scam. And, you know, we have exposed it. It's a very interesting, you know, on their videos, we put up the prices of 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 think the consumer authorities are going to move on eDreams, sooner rather than later.
It's something that they should be moving on. It's a complete anti-consumer scam. Okay, Maxine. I think that's all the questions we have. As said, we thank you, everybody, for participating in the call. We have a full roadshow underway across North America, Europe, Ireland, and the U.S. and the U.K.. If anybody wants a meeting, we'd be happy to facilitate it. You can make contact with the brokers, our 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 on Thursday during this week's extensive roadshow. Other than that, I would say, look, we are continuing to grow organically.
Pricing may be a little bit softer this summer than we had originally expected, but, you know, it's not, not disappointing, given that we've come off two summers where pricing was up 20%. But I don't believe the medium-term story has changed one whit. There will still be significant capacity constraints across Europe. We will have some modest growth through the summer 2024 and summer 2025, and then we have no growth in 2026 or 2027. We believe, 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. We look forward to seeing you 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.