Earnings Call: Q1 2021

Jul 27, 2020

Okay. Good morning, ladies and gentlemen. Welcome to the Ryanair Q1 Results Conference Call. I'm joined this morning by our C Group CFO, Neil Sarahan, and we'll move straight through. As you have seen this morning, we released our Q1 results for the quarter ended the 30th June. We reported a Q1 loss of SEK186 1,000,000 compared to a Q1 profit of SEK 243 1,000,000 in the prior year. Traffic in the quarter fell by 99% as all of our fleet was essentially grounded from the middle of March until the end of June. Our Q1 traffic fell from 42,000,000 passengers last year to just under 500,000 passengers this year. Cash preservation has been prioritized by the company in the last quarter, and I'm pleased to report that our closing cash balance is SEK 3,900,000,000. This will be important going forward. Cost reduction measures are being successfully implemented across not just Ryanair, but all of the group airlines. And we have initiated what we believe was a very successful return to flying at the end of July end of June. And we expect to accomplish about 40% of the normal July schedule during July. As I say, we planned to operate about 40% of the normal July schedule. We hope to grow that to about 60% of the schedule in August. And then hopefully, so there'll be no spikes in COVID-nineteen across Europe that we would get to 70% of the normal schedule in September. Of the biggest challenges posed to us by COVID-nineteen apart from the fleet grounding has been dealing with customer service a huge backlog of refunds caused by these government mandated groundings. I'm pleased to report that our customer service team were doing an extraordinary job, and we expect to have about 90% of all of the cash refund requests from customers processed by the end of July. At this time, we expect the full year traffic to fall by about 60%. We'll fall from 149,000,000 passengers last year to at best 60,000,000 passengers this year. That will be entirely contingent on there being no second wave of COVID-nineteen in the autumn or the winter. And obviously, We've seen some recent spikes in places like Barcelona, and that is impacting short term bookings. However, over the medium term, we have seen the closure of a significant number of airlines. We've seen Flybe disappear, Germanwings close, Level in Austria has filed for insolvency and SunExpress in Germany. However, going forward, the competition in Europe will be distorted by the wave of state aid subsidies or subsidies being poured by some EU governments into their inefficient flight carriers, most notably competing with these flag carrier subsidized airlines who will be engaged in below cost selling. However, this poses a significant opportunity for Ryanair, the Ryanair airlines and our airlines. We are lowering our costs. We will face lower fares and yields for the coming years, but we think we have the business model to sustain it. To touch briefly on the quarter, as I said, revenue fell by 95 percent from €2,200,000,000 last year to just €125,000,000 this year. We've managed an 85% reduction in costs during Q1, but that clearly wasn't sufficient to make up for all the revenue loss, which is why we're reporting a quarterly loss of SEK 185,000,000 Our cost leadership is where we've been focusing our energies over the last quarter, and that will be vital if our group airlines are to compete against these hugely subsidized flag carriers in Europe for the next number of years. And this is what underpins a lot of the cost reduction measures we've been negotiating, lower cost pay deals, modest pay deal pay cuts with our pilots and cabin crew as a better alternative to widespread job losses, and That process continues successfully, I might add. We're talking to our aircraft lessors and also Boeing about lowering the cost of the new aircraft orders we're purchasing. We're in active negotiations, but with Boeing on compensation for the delay in aircraft. And those the relationships we have with our aircraft lessors. We are renegotiating monthly aircraft lease rates to reflect the harsh environment and certainly the more competitive lease market environment caused by COVID-nineteen. We remain a a devoted or committed supporter of the Boeing MAX aircraft. We're pleased to see the recent progress that Boeing have made with the test flights of the MAX aircraft. And we are increasingly confident that Boeing will achieve their return to service delivery return to service date in North America sometime at the end of Q3. We hope that would be sufficient to allow us to take some deliveries of MAX aircraft before the end of calendar 2020. And if that's the case, then we would be hopeful of being able to take delivery of the first 40 of those aircraft in time for summer 2021. And that would be key because in summer 2021, we want to be able for our airport partners across Europe, growth potential, work with them to enable to work with them to reverse the significant and in some cases, catastrophic traffic losses that they've suffered as a result of COVID-nineteen, and we think there's opportunity to do so. The balance sheet in Ryanair remains strong. As I said, our year end our quarter end cash balance is SEK 3,900,000,000. So we remain in good shape. But clearly, we're facing into what would be a difficult winter. And cash preservation and paying down debt both to the U. K. Government and the first bond as it falls due in mid-twenty 21 will remain key priorities. The challenge of Brexit hasn't gone away. The U. K. Will leave the European Union in December of 2020. We continue to hope that this will be done in a managed or by agreement, certainly where air travel is concerned. I think the experience of the U. K. During the COVID-nineteen outbreak the priority with which they gave the return of air bridges will hopefully serve as a lesson, are reminded that the U. K. Needs to have open air access with the rest of the European Union and will spur at least a trade deal at least that will cover the air travel segment. However, if there is a hard Brexit, we have a series of airlines, most of which have European AOCs, and therefore, we think we'll be far less impacted than U. K. AOC holders will be. In terms of outlook, I'm afraid it's too early to say. We really can't give any guidance on for the full year. We think 60,000,000 passengers for the full year at this point in time is an ambitious target. The risk to that is on the downside. If there spikes in COVID-nineteen, particularly towards the end of the autumn or early winter as flu season spreads across Europe, we may suffer some cutbacks on that. That traffic will only be delivered on the back of lower airfares. And I'm convinced that in actual fact, the way to get Europe air travel moving again is with lower fares and price stimulation. And that's why it's utterly key we negotiate lower costs across every cost line with our people, with our asset buyers, with our maintenance providers, and that process is underway. Those are the opening remarks. And I'm now going to take you through myself and Nee will take you through the quarterly side presentation. So unchanged in many respects. We are the lowest fare, lowest cost airline group in Europe. We're number 1 for traffic. While that meant 149,000,000 passengers last year, think we'll do well to carry 60,000,000 passengers in the current year. We remain the number one airline for coverage across Europe, 240 airports over 2,000 routes. We have, I think, delivered a very successful return to serve flight services from the 1st July, but that return and that recovery of our flight schedules that remains dependent upon the European governments continue to successfully combat the spread of COVID-nineteen. We have a very strong BBB rated balance sheet, And we believe our combination of financial strength and lowest cost will make Ryanair the long term winner. As you're well aware, Ryanair offers the lowest fares. Our fares are lower than any other European airline, and that's why we believe we will recover strongly coming out of the COVID-nineteen pandemic. Allied to those low fares, we have by far and away the lowest unit costs. Our unit costs per passenger, excluding fuel, is at least 26% below our nearest challenger in Europe and materially up to 71% or 100% lower than most of the other so called low cost airlines in Europe. Neil, do you want to take the I will. It was a very challenging quarter for the Ryanair Group. We saw our fleet grounded for almost 4 months within the March until the back end of June and that meant the traffic dropped by 99 percent to just 500,000 customers within the quarter. Load factors were over 60% compared to a 96% load factor last year. And revenue was very heavily hit. We saw a $2,200,000,000 reduction in revenue to just $125,000,000 We did a lot of work on our costs, which led to an 85% reduction in costs over the quarter. Unfortunately, that didn't offset the reduction in revenues and we recorded a net loss of $185,000,000 in the quarter. As I look over to the balance sheet, we've got a very, very strong balance sheet BBB plus raised by Fitch and S and P. Our cash was up in the quarter compared to year end. We had a cash balance which was over $3,900,000,000 compared to $3,800,000,000 at the end of the last financial year. We also have a very high number of unencumbered debt free aircraft on the balance sheet, 333 Boeing 37s with a conservative book value of about $7,000,000,000 So market value somewhat higher than that. So of the strongest balance sheets in the sector. So in terms of current developments, as you know, I said, we returned to service in the 1st July, 40% of our July capacity, covering about 90% of the network, but obviously with reduced frequencies. In August, we expect that to grow to about 60%. And in September, we're hopeful, particularly if there's a successful return of the schools across Europe that we'll see about 70% of our normal September capacity. The big challenge facing us going forward is going to be the illegal state aid. This has exploded all over Europe. And those airlines engaged in below cost selling to the damage of the level playing field in European Aviation. We and Ryanair remains Europe's low cost leader, but even we are rightsizing our business now to rightsizing the cost base to reflect the lower fare environment we expect for the next couple of years. We are hopeful that the first MAX deliveries will take place in the winter of 2020. That is subject to the aircraft, the Boeing MAX aircraft successfully returning into service in North America at the end of Q3. I couldn't be more excited about the post COVID-nineteen growth opportunities that will emerge all across Europe. We are in the initial discussions with airports, but some airports are losing enormous amounts of their existing traffic and we'll have to respond competitively to that loss. The Brexit has intensified, but everybody's aware of that. And therefore, we think our outlook, Really, we can't give you guidance on the full year in terms of profitability, but we think SEK 60,000,000 on traffic is a reasonable stab, but that could be impacted if there's any significant second wave of COVID-nineteen either across the continent of Europe this winter or spikes in different European countries. Just to briefly touch on the successful return to service on the 1st July, we're running about 40% of normal July schedule covering 90% of the routes, but with much lower frequencies on those routes. And we're hopeful we're on track, I think, to exceed the 70% load factor, whereas the initial guesstimate was that we do a 60% load factor. Some of that success has been with the comprehensive health measures that we've rolled out for both our crews and our passengers on board. Many EU governments are easing the lockdown restrictions. In fact, there's largely free travel between most of the EU 27 members. The only exception that has been Ireland, which has been slow and is not managing the reopening of its economy particularly well. They produced a green list in recent weeks, which is very restrictive and we think not sensibly based. And we will continue to call on the Irish government to open up short haul travel between Ireland and the other EU 27 member states. On time performance has been excellent during July. We're running on time performance of over 95%, combination of very good fleet reliability and also very good European ATC performance, given the lower volumes across flights across Europe. We would expect those to continue to control have a controlled return, controlling that capacity growth and where we see outbreaks of COVID-nineteen, our dip in passenger bookings, we have the flexibility to sit those aircraft on the ground. So our capacity and our load factor will be controlled into H2, but maybe kind of low or bumpy. Traffic is very heavily dependent on there being no material second wave COVID-nineteen across Europe in the second half of the year. And that's why our figure of passenger traffic figure of €60,000,000 is very tentative. We will look where we see opportunities, use seat sales to stimulate demand, to recover traffic, to try to build load factors and restore ancillary sales because we think a good strong winter will actually gear the way or pave the way for hopefully a strong return to normality in the summer of 2021. But obviously much of that will depend on there being a successful vaccine emerging for COVID-nineteen. Just a quick summary of where we are the illegal state aid to the legacy carriers. Lufthansa has received combined almost €11,000,000,000 Even Carsten Spohr has admitted that this is more money than they needed or but he's happy to take as much as he can get. Air France, ALM, Alitalia, an airline that has been bankrupted and should have been bankrupted, has now received 3,500,000,000 euros of the Italian government. Ryanair remains the used cost leader and but we're not we're taking advantage the crisis to try to reduce costs wherever we can. We have rolled out significant pay deals with most of our pilots and cabin crews across Europe. We think working with our people to lower pay, we're looking at pay cuts of up to 20% for the best paid pilots down to as little as 5% for the lower paid cabin crew. That's a much better solution than just job losses or thousands of job losses. And our people, I think, are working with us on that. There will be headcount reductions, however, such as in Germany, where the pilots union remarkably voted against this deal, we've now announced the closure of 3 German bases in Tegel, Miederhein, Wietze and in Frankfurt Hall. We are in the early stage of discussions with airports around growth deals. We haven't made as much progress as I would like to have made at this stage, but I'm only because the airports themselves aren't really sure of where they're going to suffer the biggest capacity cuts because the legacy carriers haven't laid them out yet. We're also working with our suppliers to improve terms of maintenance, marketing and almost every other cost line. Lauda and the management team in Lauda have done terrific work over the last 2 months. They faced it down the time when they were about to doubt they had actually announced the closure of the Vienna base because the local Austrian unions wouldn't agree to the new CA. Thanks to the heroic efforts of the pilots and the cabin crew in Lauda. That decision was reversed and the union was embarrassed, I think, into supporting the agreement that had already been supported by over 92% of Lauda's pilots and more than 67% of Lauda's cabin crew. However, the Stuttgart Lauda Stuttgart pilots voted against the deal in Stuttgart and as a result, that base will close at the end of October. Lauda has also negotiated new lower aircraft lease rates. And with the new pay deal and lower costs, we think Lauda in the next 12 we hope will breakeven or will go very close to breakeven. The big driver for us in terms of costs going forward, though, is going to be the new lower cost MAX aircraft, which we hope to take deliver out this winter. This aircraft will deliver us 40% sorry, will deliver us 4% more seats per flight, deliver a 16% lower fuel burn and also 40% reduction in emissions. This aircraft is the key to a really seismic reduction in Ryanair's unit operating costs for the next 3 or 4 years. And we couldn't be more excited about the game changer aircraft or its deliveries, which hopefully will happen before the end of this year. In terms of the growth opportunities, as I said, there are huge gaps emerging across European Aviation as a result of the failure of certain airlines, Flybe, Germanwings, levels, SunExpress and others. Competitors will retrench in some cases in return for the state aid. Air France, for announced its capacity will be cut by 20% in 2021, and similar capacity cuts have been announced by a number of the EU flight carriers. We would hope to exploit those cuts, particularly where we were able to show our airport partners that we have up to 40 new aircraft coming for the summer of 2021, and that we can reverse or deliver them traffic growth in circumstances where some of their incumbent carriers are withdrawing from the marketplace. Touch briefly on Brexit. As I said already, we expect the U. K. Is leaving European Union at the end of December. We hope that some common sense will prevail and that they will see the benefit of Europe and the U. K. Negotiating a trade deal that covers air travel. I think the impact on on the U. K. Economy of the grounding of the air flights for the 3 months during the COVID period has been I think has would have helped, I think to firm up the political view that air travel is a necessity and they won't want to repeat the shock of that or have any interruption to flight. So we're hopeful that there will be a trade deal that will cover air travel. And therefore, there will be no impact on air travel at least of a no deal Brexit. Neil? Could I just on the outlook, as Michael said, it's way too soon to put any kind of P and L guidance into the market. There's a huge amount of uncertainty around what may happen with COVID towards the auction period. And equally, Brexit brings its own risks. At this stage, our best guess is we will have 60,000,000 customers in the current year, which is a 60% reduction on $149,000,000 that we carried last year. Significant work has been done within the airlines to get the cost base down further so we right the business for the challenges that are going to lie ahead, particularly from state aiders, carriers, when I would be able to sell below cost. Our focus will be to keep the balance sheet strong, preserve cash, get the costs down. But we'll hopefully be in a better position you an update on the P and L portfolio when we hit again at the AGM September or in the year H1 or H2 results in November. Reported a loss of $185,000,000 Why? It was a very challenging quarter. We saw our fleet ground for almost 4 months the end of March on to the back end of June, which meant that our traffic was down 99% to just 500,000 customers compared to converts $42,000,000 last year. Revenues more or less dried up completely in the early weeks of COVID with no bookings coming in the door. And we saw a 2 $200,000,000 reduction in revenue to just $125,000,000 While we did great work on costs throughout the quarter, we had an 80 5% reduction, but that unfortunately wasn't enough to offset the reduction in revenues, so we recorded the loss. Was there a fuel ineffectiveness charge in Q1? There was we had a small adverse mark to market on ineffective hedges, but it was approximately €10,000,000 in the Q1. As the market is aware, most of the fuel in this was front loaded into the FY 2020 full year results. Could there be another exceptional charge in FY 2021? Yes. It can't be rolled out if we were to see more groundings of fleets across Europe. If there was a second wave of COVID-nineteen, then more fuel that could go in effect of equally if the Boeing MAX was to be delayed well into next year, then we could see some effectiveness on the cash flow hedges there. How are ancillary products performing? Well, she will do a ban be affected by the groundings in Q1. As passengers return in July, still seeing strong uptake on products like reserve seating priority boarding. Clearly, with the health measures where not setting teams and companies at the moment. Onboard sales will be impacted. And therefore, it's too early at this point in time to be able to give any guidance on ancillary revenues for year. How is your cash position on balance sheet? It's strong. We saw our cash increase to $3,900,000,000 at the end of the quarter, up $3,800,000,000 at year end. We've got a strong investment grade balance sheet BBB for both Fitch and S and P, and that's by a very strong aircraft on the balance sheet, 333,000,000 unencumbered Boeing 737 with a conservative market book value of just over $7,000,000,000 significantly higher market viper. So very strong balance sheet. What is the group cash burn running out since return service? I mean, it's reasonably breakeven. We expect to run with a load factor of about 70% or just over 70% in July and it looks something similar again in August. And on that basis, we think we're running on a properly breakeven cash basis through So there's been no diminution in cash balances through and we don't expect any through June, July and August. What is the latest on refunds. We're getting through and we've had an unprecedented number of claims in 4 months of ground lease. Customer service team with the help of labs will ensure that we will have about 90% of our cash refund us tiered by the end of this month. We're seeing a number of customers opting for free flight changes and accepting vouchers as well for How are screen scrapers frustrating the refund process? Yes. I mean, the refund issue has really exposed the kind of anti consumer behavior of these unlicensed screen scrapers. The big challenge we face is that the screen scrapers make bookings for 3rd party passengers, but they put in fictitious email addresses and falsify credit card or the payment details. So we can't automate refunds to those people. And we run the legal risk that if we issue a refund, to those people. And we run the legal risk that if we issue a refund to an unlicensed screenscraper and they don't pay the consumer that the consumer ultimately will sue us. So What we're trying to do is to open up a new mechanism whereby the end of the line consumers can apply directly to us for their refunds. Although clearly some of them are quite shocked when they find out that how much they've been overcharged by the screenscraper when they receive our refunds, but it is a problem. We are continuing to call for policing and reform of these unlicensed intermediaries with the regulatory agencies, particularly the CAA the U. K. And the their equivalent offset number here in Ireland. How is the operational performance on return service? It's been very good. Now we put a lot of work in during the groundings to ensure we kept our people and our aircraft current. We were worried that there might be spike in tech issues when we returned to service in May, June, early July, but thankfully we haven't seen that. Air traffic control due to reduced volumes in the sky has also performing very well. So we're seeing on time performance in the mid-ninety percent at the moment, which is excellent. What are your capacity plans for the It's hard to say yet. I mean, as I said, we're looking to grow about 60% of the normal August schedule, about 70% of the normal September schedule. We really need a better sense of where bookings would be though into September, October before we make a final decision on the winter schedule. And that's why our full year guidance of 60,000,000 passengers is tentative at this point in time and it could go lower. In the last week, for example, as there has been a spike in coronavirus cases around Barcelona, we've seen bookings to and from and within Spain being hit. And I think we'll see more of those kind of developments. How are fares performing in Q2? As Michael said, we are seeing fluctuations in bookings as a result in COVID in various different markets. There was a lot of pent up demand coming into Q2. Lockdowns were relaxed. A number of people wanted to get out, get some sun over the summer period. Visiting friends and relations also has performed well. Businesses is a lot slower. I think we have to wait people get back to our offices in the autumn before we see an uptick in that. And it's inevitable that we're going to have to stimulate demand over the winter with lower fares, particularly as we try to take on the flag carrier, which we now have about €30,000,000,000 on the legal stage 8, which will enable on sale below What health measures did you apply when flights resumed? Yes. We rolled out extensive health measures with extensive videos up on the website both for our crews and for our passengers and they consist of mandatory face masks and hand sanitization, and kind of hygiene. We've limited the in flight service, removed teas and coffees during the month of July and really trying to do everything or follow most of the sensible guidelines that were published by both the European Centre For Disease Control and the ASSA the 20th May last. In many respects, the airlines have gone ahead of most national governments in making face masks mandatory. In fact, Ireland, for example, we made the face mask mandatory in shops in the middle of July. We were many months ahead of them. But and I think we've been encouraged. I mean, I thought we might have some customer resistance on face mask. But to date, during July, they our customer's resistance on face masks. But to date, during July day, our customers have been terrific. Our crews have been terrific and everybody has adjusted remarkably well to the new face mask experience on board. What cash preservation and cost cutting did you implement in Q1? It was hugely important that we move quickly when the groundings came in. We had 99% of the feet grounded, which we took a lot of costs out of the business. But we very quickly to preserve cash, canceled our share buyback program, canceled all non essential CapEx within business. We introduced recruitment freezes, 50% pay cuts for our people into April and and indeed we're continuing to negotiate pay cuts across the board at the moment. And we were lucky enough and able to participate in a lot of government payroll sports games across Europe, which we're very grateful that we've been given the opportunity to do that. But we're looking at every cost line have looked at every cost on it. How will you improve your cost base for the future? I think Mario, as I said, by rightsizing our cost base, we're looking at every line. We produce some of our aircraft lease commitments. We're renegotiating the price of the aircraft with Boeing. We're talking about compensation for late deliveries. None of can be finalized until we actually know when the aircraft will be delivered. We've engaged in extensive negotiation over the past number of months to reduce pay modestly. And in I think a very fair way with pilots, cabin crew, they take the reductions upfront and then those pain cuts are restored to them over the next 3 or 4 years. The office team here has suffered significant pain cuts during July, during April May. We're also looking at lowering our basements costs. Financing costs are going to be lower. Fuel will be significantly lower going forward and I think for the next 2 or 3 years. But those are all vital because we're going to have to continue to pass on those savings in the form of lower fares to stimulate a return to travel across Europe and also to be able to compete against these state aided carrier airlines who will be below comp selling for a number of years into the future. How are the union negotiations progressing? As Mike said, we've various pay and productivity negotiations ongoing. A lot of them have actually been put fed at this point in time. Various other discussions ongoing or we would hope to get modest pay cuts in place so that we can minimize the job losses and base closures. But I don't want to really get into specific deals as the number of somewhere are still ongoing at the moment. Are group airlines closing bases? They are in mine air. We have been unsuccessful in pursuing German pilots to agree to pay costs. So we've announced closure of Stuttgart of Bernand Tegel, Dusseldorf Wiese and Frankfurt Hand at the end of the summer schedule. Now that it's closing its Stuttgart base. We're also looking, I think, at some base soldiers in Spain, where at the moment the unions have not yet agreed to the pay cuts we need. And there's a real risk to some of the regional bases in Italy where you have a combination of slow pace on negotiations with the unions, but also the Italian government trying to impose our Italia's pay rates and abysmal productivity on other airlines and other airports in the sector. If that leads to significant increases in cost, then I think it's inevitable that there will be closures on a Italian regional basis as well. Welcome, are you feeling in legal standing? We are. Thus far, we've launched a European Court appeal European core challenges to the state aid so far received by SAS, by Finnair, by Air France, by TAP in Portugal. The germ of Lufthansa 1 yet been published but will in due course. And I think we've been heartened by the success of Apple and the Irish government in front of the European Court of Justice in weeks overturning the challenge that was made to the Apple tax base here in Ireland. And I think it demonstrates the European Court of Justice is willing to stand up for the European law, where I think the performance of the European Commission in over on some of these egregious illegal state aid has been abysmal. I mean, the idea that Lufthansa has run around hoovering up state aid, not just in Germany, but in Austria, in Belgium and in Switzerland. And in fact, I mean, Carter Schbour was correct. He didn't expect to get that much he's receiving more than he actually needed, which in itself is a breach of the stated rules. So I'd be reasonably confident that we will be successful in these opposing these state aid state these state aid grants. The challenge and difficulty would be it will take us 2 or 3 years for these court hearings and the appeals, the inevitable appeals to be pursue to be kind of run their course, in which case we would have suffered a number of years of below cost selling by Italia, by Lufthansa and others as to the damage of Ryanair and our shareholders' interest. So yes, we pursue the stated claims and we think they'll be successful, but it'll take us some time. There was a recent restructuring in Lauda. What did that involve? It was quite a significant and painful restructuring for the Lauda Group. But they have to, in light of COVID-nineteen, totally look at every cost item within the business, look at their growth plans for the future. They had hoped to grow to 38 320s in their fleet this summer. That's now being capped at 30. They've also renegotiated a new CLA with their staff, in cabin crew in Vienna, which is leading to pay reductions, enhanced productivity in the rosters. Unfortunately, their base in to Ryanair Group as a wet lessor and have a good future, we believe, within Ryanair. How are Unit Group airlines developing? They're coming along well. Well, I mean, VICARE had a difficult first quarter on the back of the groundings. Buzz at the moment have just 50 aircraft in their fleet and continue to take over operations for the Ryanair Group in Central and Eastern Europe. And we hope take on a couple more basis. This winter, the charter market has been impacted over the summer. A number of kind of markets like Turkey are still not open and that will have an impact on them. Malta Air now have 120 Boeing 737s in their fleet and they're actively involved in cost negotiations with their people across the various markets that they operate in. And we would and hopes that Malta will take on more of our operations over the coming years months. Is the latest update on the MAX? Well, the Boeing successfully completed the return to flight tests with the FAA in early July. They expect to make significant progress with both the FAA, with the asset, with the Canadian regulators before the end of the month. There's reasonable prospect, I think, at this point in time that the aircraft will be certified for return to commercial service by the end of of Q3, we hope by the end of September. The Boeing MAX 200s, which we've ordered, are running probably about it should take about a 2 month certification period. So we would be hopeful at this stage that we'll see the first of our MAX deliveries by maybe the end of this calendar year. And if that's the case, then I think there's a reasonable prospect that we will be able to take up to 40 new aircraft deliveries between now and the summer 2021. And that will put us in a very strong position to go around to Europe's airports offer them growth or to offer them traffic recovery where they've lost traffic from other providers. And I think that will, I think, kickoff or enable us to kick off a range and a round of significant growth incentives and they would be much needed in this industry for the next number of years. How are bone compensation talks progressing? Yes. They're still ongoing. We're making some progress, but it won't be possible to conclude the discussion on first times as we do see a return to service of the max and we get a firm schedule of deliveries for ourselves. And in that space, then What are the group fleet plans? Well, as I said, we were hopefully getting 40 MAX aircraft for summer twenty 1. We're already committed to selling 7 sales of the 730seven-800s. Those will be delivered this winter. That's the balance of the 10 aircraft deal we announced we'd sold in FY 2020. We've got a whole lot many further sea sales because frankly we need the aircraft we have to the kind of growth opportunities we see across Europe. There are 14 737 lease returns by May 2021. We are in discussions with the lessors on those aircraft. And we'd certainly be willing to extend those leases as long as we can do so on competitive terms. And the Lauda fleet, However, though, it has been frozen at the moment. It was originally supposed to go 38 aircraft for summer of 2020. Because of the impact of COVID-nineteen, we have stopped its growth, at least it's limited to 30 aircraft. And we won't be adding any further aircraft in the fleet, I think, for the foreseeable future unless there's some significant pricing opportunities on the Airbus side. Michael, what is the latest update on I mean, the as I said, the U. K. Leaves the European Union at the end of December. There is a significant risk of a no deal Brexit. As everybody can see, the And I think the experience of the U. K. With the COVID-nineteen groundings should help that process. I think the U. K. Was very keen in recent weeks to reopen air bridges and restore air travel between the U. K. And Continental Europe. And we hope that, that will give a significant impetus to or at least to encourage that the concluding of a trade deal between the U. K. And Europe that will cover air travel. If it's not, there is a hard deal Brexit. Our group consists of 4 European airlines with European AOCs in Malta, Austria, Poland and in Ireland. We expect there will be no interruption on their flights to and from the U. K. There may be some disruption. We operate 3 U. K. Domestic routes and some U. K. Routes to places like Morocco, our country are out there. That might be affected if there was a no deal Brexit, but it's a tiny proportion of overall business. And it I think would be more than made up by opportunities that will emerge where U. K. Registered airlines and AOCs would be grounded in terms of flying intra European. But we would like to see a trade deal done and there be the smooth as possible between the from the U. K. From the European Union. What's the group's traffic and profit outlook for FY 'twenty one? It's way too early to have any kind of P and L outlook at this point in time. There's too many unknowns in relation to what may or may not happen with COVID over the next number of months. Our best estimate at this stage is that we'll see traffic at about $60,000,000 for the current financial year, which is a 60% reduction on $149,000,000 that we carried last year where we're actively working to right size the cost base for post COVID environment where we'll have to compete against stage aided carriers. We've just been gifted over €30,000,000,000 in illegal stage So we think as we look into the winter, we'll have to significantly stimulate demand with lower fares. Indeed, we'll need these lower fares to compete with the flag carriers. Further out beyond that, there are opportunities. We're continuing to preserve cash in the business and to improve the balance sheet. Michael, Neil, thank you. And improve the balance sheet. Michael, thank you. Thank you very much. And we look forward to talking to speaking with you all in the conference call later on this morning. Thank you.