Earnings Call: Q4 2019

May 20, 2019

Good morning, ladies and gentlemen, and welcome to the Ryanair Full Year Results Presentation. Mylan Mac O'Leary, Chief Executive Brian Aire. And with me is Neil Soren, our CFO. Good morning. This morning, we released full year results with profits down 29% to just over €1,000,000,000 on the back of lower fares. As previously guided, short haul capacity and the absence of Easter in Q4, led to a 6% decline in fares. But this, in turn, generated substantial traffic, stimulated traffic growth of 7% to over 139,000,000 passengers in Ryanair, 142,000,000 guests including Lauda. Ancillary sales performed strongly, jumping nineteen percent to €2,400,000 The highlights of the 12 months included average fares, traffic growth of 9% to 142,000,000 Ancillary revenues jumping 19 percent to $2,400,000 The year end fleet grew to 455 Boeing aircraft and 19 A320s. Ryan Arson, which we have renamed Buzz, has traded profitably in its 1st year. We bought or the purchase of Lauda was completed in January 2019. It has suffered an exceptional 1 year loss, a year one loss of €139,000,000 And over the year, we've concluded union agreements with Analyst and cabin crew in most of our major markets. Just to touch on a couple of brief themes in terms of revenues. Traffic growth is strong. Pricing underlying pricing is weak, but our ancillary division, powered by Ryanair Labs, continues to perform admirably and grow strongly. In terms of Costs. Ryanair remains the cost leader, particularly among the low fare EU airlines. Highlights of that would continue to be our Board, costs are significantly lower than competitors. Over the last year, fuel costs have jumped by €460,000,000 ex fuel costs rose by 5%, principally due to a €200,000,000 higher staff cost that included 20% pilot pay increases, which were pushed which were agreed with our pilots and cabin crew at the early part of 2018, a €50,000,000 jump in our EU261 cost, primarily because of repeated ATC staff shortages and strikes through the summer of 2018. In terms of the group airlines, Reinhard Son now rebranded Buzz, started last year with 5 aircraft in the Polish charter market. In its 2nd year of operation or in winter of 2018, rather, Buzz took over all of Ryanair's scheduled bases in Poland. And this summer, he's operating a fleet of 25 Aircraft, 7 of which will be in charters. The Buzz management team successfully delivered a small profit in its 1st year of operation. We expect that profitability to grow in year 2. In the case of Laudamotion, they have endured a very difficult first had to supplement their operations by leasing them 10 of our aircraft so that they can take up the slots that they had were entitled to in both Germany and Department of Mallorca. And now that enters its 2nd year, however, with a restructured operation, this summer it's operating 23 lower cost operating lease A320 aircraft, they returned the 9 very expensive lease aircraft to Lufthansa at the end of June. And we expect Lauda in its 2nd year will Group, carrying over 6,000,000 guests. And they have already signed agreements to increase the fleet to 34 aircraft for summer 2020, which will see them growing to carrying over 8,000,000 passengers at year end will be trading profitably. In the current year or year 2, we expect losses in Lauda to fall significantly, mainly driven by very low prices in the German market and particularly in the Germany to power the Bjorka market. Higher oil prices and lower fares have seen a wave of Airline Failures and Sales in the recent 6 months. And we expect that, that trend will continue and, in fact, will pick up in the winter of 2019, particularly among those airlines who are trading unprofitably and particularly those who are unhedged on fuel as spot oil prices rise back over dollars 70 a barrel. We have taken some pain in the last 12 months. We have closed unprofitable basis in Bremen and Eindhoven. We have reduced capacity at others, most notably in Neder mine, Frankfurt Ham and the Canary Islands. But all competitors from Norwegian to principally, who have announced the base, the closure of multiple bases, many of them where they compete directly with us. But competitors, Wizz, Lufthansa, Easyjet have all announced either base closures or base reductions. The Boeing 737 Max, we were due to take the first 5 aircraft in April, May June of this year. It's now clear that they won't be delivered. We've taken them off of Sales, for the remainder of our entire summer schedule out to the end of October. We are in continuing dialogue with both Boeing and the regulatory authority, NASA. We do expect the MAX aircraft to return to flying probably in July or August of this year. We won't take deliveries of the aircraft until, I think, October or November of this year, but we expect them to be operating successfully in the winter schedule. We continue to have the utmost confidence in these aircraft, which have 4% more seats and are 16% more fuel efficient North America, probably in July or August. It may be returned to flying in Europe in September or October. And we expect to be the aircraft in our winter schedule from November onwards. There will be some delays then to the original schedule of 43 deliveries this winter, but we'll be working our way through that in negotiations and discussions with Boeing over the coming months. In terms of our balance sheet, we remain very strongly financed with one of the best balance sheets in the industry. We own almost 95% of our 455 aircraft are owned and almost 65% of that fleet is entirely debt free. At year end, the group had over €3,000,000,000 in gross cash. We generated over almost €2,000,000,000 from operations. But in the we're now in the peak years of peak CapEx. So in the last year, we spent €1,500,000,000 on Vice, we've returned $560,000,000 to shareholders via buybacks, and we've repaid more than $400,000,000 in debt. Our year end net debt rose slightly to about €450,000,000 And we are pleased to announce that this morning, the Board of Ryanair, has approved a €700,000,000 share buyback, which will commence later this week, and we expect to run over the next 9 to 12 months. The Board has decided to allocate that buyback to about €500,000,000 into the ADR program and about €200,000,000 in ordinary Switch, will, in the run up to any Brexit situation later this year, again significantly reduce the quantum of our on EU Ownership. In terms of guidance for the next year, we are now we will be in tuning the Lauda results as part of a consolidated group results rather than separately. We expect broadly, we remain very cautious on pricing through the summer, where we have some visibility and into next winter, where we presently have none. We expect revenue per passenger to rise this year between a range of about 2% to 4%. That will put us in a profit range of between 7 €1,000,000 to €950,000,000 So broadly flat profits for the year on the assumption that average revenue capacity to rise by 3%. H1 bookings are slightly ahead of last year at this stage, but at weaker prices. As I said, we have 0 H2 visibility. Costs this year will suffer, particularly on the fuel side. Our fuel bill this year would jump by another €460,000,000 We are hedged, 90% hedged for the remainder of the fiscal year at about just under €71 per barrel. Spot Brent, is a little bit higher than that at the moment. Our ex fuel costs will rise by about 2%, principally due to stronger sterling. And the absence of Lauda costs for most of the H1 prior year comparable and the delayed delivery of the Boeing MAX craft, which we believe will deliver significant cost savings, but now only commencing in the year to March 2021. This guidance of flat profits for the next 12 months is heavily dependent on our closing peak summer airfares, prices for the second half of the year and the absence of any unforeseen security events and no negative Brexit outcomes during the remainder of the year. Neil, do you want to take us through the presentation? No. Okay. So briefly, Tobey, through the presentation, our competitive The position remains unchanged. We are the lowest fare, lowest cost carrier in Europe. We're number 1 for traffic. We expect to grow to 153,000,000 guests over the this year, up 8%. We are number 1 for coverage. We expect to continue to benefit, particularly this winter as there is further airline failures and airline sales accelerate. Average fares in the last year have fallen 6% to €37,000,000 which has driven that strong traffic growth. And we We have strong ancillaries performance last year, but this was offset by higher fuel. And the message as always is at lowest cost wins. In terms of airfares, nobody competes with Ryanair on price. The compelling message, however, is that nobody competes with us in Europe on costs either. There have been some significant concerns, I think, last year that unionization would lead to a loss of cost competitiveness. Nothing could be further from the truth. Yes, our staff costs have Risen, jumped materially in the year, but so have the staff cost of most of our all of our competitors across Europe. And we continue to being one of the most efficient, most productive teams of aviation professionals in Europe. On other cost lines, however, we beat everybody else hands down. Our airport and handling costs are lower. Our ownership and maintenance costs are lower than our competitors. In terms of coverage, we this summer will offer 87 basis, 2 in 34 airports, over 2,000 routes. Significant developments this summer are 3 new basins, This is our first three in France, in Marseille, Bordeaux and Toulouse. We've opened a base in South End in London, also in Berlin, at Tagel in Germany. And we are opening new country markets in Ukraine and Turkey. As I said earlier, we expect to grow to 153,000,000 passengers this year, and we're well on track to hit our target of 200,000,000 passengers annually over the next 5 years. Our market share in all markets are growing, and We are the number 1 or number 2 carrier in most of Europe's major markets. On results, which excludes Lauda, we saw our guests increase by 7% last year to €139,000,000 Average fare, however, was down 6% to just €37,000,000 which stimulated that strong growth in past new numbers. Ancillaries had a very strong performance driven by the likes of our priority boarding and reserve seating. And as a result, we're results were up 11% per guest to €17 Unit costs performed slightly better than the plus €6,000,000 that we guided, so 5% to €29,000,000 As a result, profit was in our guided range of €1,020,000,000 a drop of 29%. This excludes an exceptional €139,000,000 start up loss in now in the 1st year of operations. In terms of current developments, so we see lower fares and higher fuel driving away with airline failures in sales. Ryanair continues and Ryanair Labs, in particular, continues to deliver very good ancillary progress. And we have relaunched our customer Care Charter and a range of customer care improvements for the next 12 months. The group structure is developing. Fleet, both Lauda and Buzz and the management teams are growing strongly. The Boeing 737 MAX, the first deliveries will be delayed until winter 20 Dean, and there will be some backup in the winter deliveries, but we expect to be operating at least 50 of these aircraft for summer 2020. Ryanair is Europe's greenest, cleanest airline. Customers flying with us are have the smallest environmental impact of of any air passengers in Europe. We continue to see a weak summer fare outlook and we therefore that drives our cautious flat full year guidance. Within that, however, the Board has demonstrated its confidence by approving a 700,000,000 share buyback, which will take base over the next 6 to 9 months. And we believe that there is a short term price weakness driven around excess capacity in Europe, higher oil prices will see that along with that by the overcapacity shaking out this winter and Ryanair will continue to be the structural winner. You said a This there of the airline failures and sale and airlines that have failed and sold over the last 12 months, we believe that process and that trend will continue, particularly as we move out of summer of 2019 into winter 2019. In terms of ancillary, strong performance on priority boarding and assigned seats as our customers opt to or choose to purchase these attractive services. Our new baggage policy, which is essentially limiting to carry on bags to about 50% of the priority boarding customers, has significantly improved on time performance and has had a small impact in improving our baggage revenues by rolling out new 10 kilograms baggage product. We have replaced poor handling performers at Stansted in Spain and in Poland. And already in the 1st 4 months of this year, we've seen significantly improved better on time performance. We exceeded 90% in both March April and expect that to continue, although there is a spike in ATC disruptions, particularly strikes in France and Belgium during May. The new customer care charter was rolled out a by Kenny and the team in February. Key features of that include 20 fourseven support, faster responses to customers, Our digital platform continues to improve. The fare finder, the help center have all moved online and are and offering our guests faster and better services. And later this year, we'll roll out Ryanair Choice. We are developing into a strong airline group. This summer, Ryanair will operate a fleet of 430 Boeing 737s. Lauda or I should say, Boeing, rather, will operate 25 of our 7th this summer, but that will increase to 48 aircraft in summer 2020. Now this summer, we'll operate 23 low Low Cost Airbus Aircraft and already have signed heads of terms to take that fleet to 35 aircraft for summer 2020. The purpose of the group will be to develop each of these low cost brands in their separate markets, Lauda focusing on Vienna in particular, both Vienna and Palma in particular, Buzz focusing on Poland and Central Europe and Ryanair focusing on everywhere else in Europe. We will drive them forward with efficient capital Allocations and efficient aircraft purchases, timely and efficient aircraft purchases. We believe that by operating low cost Airbus and low cost Boeing of subsidiaries, that will facilitate competition divestments, which are inevitable over the coming years as Europe's consolidation and the process of European consolidation Continues. I signed up for as group CEO for the next 5 years. We expect to be appointing a replacement Chief Executive of Ryanair between now and the end of the year. And I'm pleased to say that Sam McCarthy has now accepted the position of Deputy Chairman and will replace David Bonderman as Non Executive Chairman by the time of the September 2020 AGM. In terms of the MAX, Clearly, it's been a very difficult period for Boeing. The MAX has been grounded. We reduced to take 5 aircraft for the summer of 2019. We have now taken removed them entirely from sale for the winter. That will cost us about 1,000,000 passengers this summer. But we do expect those aircraft to be back flying in North America and in Europe by July, August or September. We expect to be flying them from November onwards. We have 42 Aircraft, due for delivery over winter 'nineteen, and we expect to take all of those aircraft and to be operating them efficiently and effectively in the on our 2020 schedule. We are in continuing almost daily dialogue with Boeing and with the European regulators, EASA. We're reasonably confident that the aircraft will be approved to return to service sometime later in July or August of this year. We have frozen all pre delivery payments to Boeing since the aircraft grounding. We will resume the pre delivery payments once we have some certainty from Boeing on when these deliveries will take place. We do expect that Boeing will cover the lost profits from the 5 aircrafts that we haven't operated this summer, but it's not a material number and will formed part of our return to service dialogue with Boeing. It's important, though, to however, there are these aircraft are phenomenal airplanes. We have the utmost confidence in both the safety of the aircraft and in the Boeing technical expertise to get the return of these Aircraft, to fly. When they return to flying, we think our customers will love them. They have new interiors, more seats, more legroom and offer a better, quieter flying experience. And from a shareholder perspective, they offer us 4% more seats, but with 16% lower fuel assumption. These aircraft will drive the next generation of price reductions here in Europe and enable Ryanair to continue to grow by delivering unit cost reductions for the next number of years as we move to take 200 of the take delivery of 200 of these aircraft. They're also the aircraft will enable us to grow to 200,000,000 guests by 2024. Windstream to the environment is unparalleled and unmatched by any other airline in Europe. We continue to cut our fuel consumption and noise emissions. We have in almost every independent third party survey, we are the cleanest Europe ranked as Europe's greenest, cleanest airline, principally because we operate 1 of the youngest fleets with the highest load factors. After which will have 4% more seats, but 6 will burn 16% less fuel and will deliver 40% less noise emissions. We successfully run Europe's 1st voluntary carbon offset program as part of the fair booking. And in the last 12 months, that has generated more than €1,000,000 in Carbon Offsets from our customers. And we are distributing those funds to environmental partners in In Portugal, where there are reforestation programs in Portugal, the Irish Whale and Dolphin Group, 1st Climate, who are investing in wood burning stoves in Africa and the Native Woodland Trust here in Ireland. We expect that those that campaign or our support for these climate partners will continue and step up over the coming here. In addition to this, however, Ryder has also committed itself to be plastic free within 5 years, and we're well on I believe in fact we think we will beat that 5 year target. Okay. Just looking into the guidance for next year, we're cautious, very little visibility and Mike will only reach you at this time of year as is always the case. However, the guidance, which is for the entire Ryanair group, including all of our airline subsidiaries, you'll see our guests increased by 8% to $153,000,000 Revenue per passenger will be up, we believe, in a range of about 2% to 4%. Furs remain soft, particularly into the summer, and therefore, we're guiding for us in a range of minus 2% to plus 1%. Costs will increase next year. Our fuel bill will be up 4 £60,000,000 were 90% hedged, and this assumes that spot prices remain where they are for the remaining 10%. Ex fuel costs will be up in a range of about 2% for next year. As a result, we think that profits will be broadly flat on a Full year basis in a range of €750,000,000 to €950,000,000 This, of course, carries the usual health warning in Okay. We're now going to do our question and answer session. I'm pleased to say we're joined this morning by Stephen Furlong of our Chris Davey, who's going to grill us on the numbers and presentation for the full year. Steve? Thanks, Michael. Thanks, Neil. Okay. Can we just talk about the revenue environment? First, why did the revenue per Pax fall by 1% in the last fiscal year. There's a number of moving parts, Stephen, in there. Firstly, we saw average fares down 6% to just €37 per customer, Primarily, it's due to the overcapacity that we're seeing in Europe at the moment and of course, the absence of Easter in Q4. This, however, drove a strong passenger growth of 7% to 139,000,000 guests or indeed we add Lauda 142,000,000. Again, so we had a very strong performance. We saw an 11% increase in spend to €17 per guest, which was driven by the likes Our priority boarding and reserved seating had a strong performance last year. What is your outlook for fares for this year? I think our outlook is cautious. I mean, we expect fares that are a fair environment. We've been consistent in this throughout the year that the fair environment will be weak. It's driven principally by 2 of our major markets, which is the U. K, where there's consumer nervousness about uncertainty over Brexit. There's a later booking pattern, and we're having to stimulate bookings with lower airfares. Add to that, there appears to be significant overcapacity in the German market in particular. Just Panza is engaged in below cost selling with its Germanwings subsidiary. And Laudamotion is in that marketplace, as is Ryan here. So we expect weaker prices in the UK and weaker prices out of Germany, and that will continue for the remainder of the year. So we're guiding, as Neil said, prices this year flattish to slightly down the range, we believe, of average fares for the year will be from minus 2 fall of 2% to possibly 1% up 1%. And much of that will be driven by closely in summer bookings, where we would hope to see some strength coming out of the U. K. As people finally make decisions on holiday bookings and the second half of the fairs and second half of the year. Well, the strong performance in ancillary revenues continue. Yes, I think ancillaries will continue to be a strong performer, They're probably not growing at the same pace as it is in the year. You'll stand as priority boarding will continue to perform strong, particularly for the next 6 months, the comps are going to be a bit more difficult as we get into the winter where it starts to overlap, the introduction of the new bag policy in November. Lauda are now starting to roll out ancillaries across their business as well. Last year, for example, they weren't generating any revenue from their onboard sales. They share they've taken that in house and it's performing very well. And so we expect to see some benefits coming through there on the ancillary side as well. What about can you just give us an update on Car hire? Yes, Car hire. I mean, the Car hire market is difficult. The Car hire companies are being challenged by the Ubers and some of these other models. We are currently in the process of retendering our car hire contract over the next 5 years. We expect to select or choose our Carhartt partner sometime over the next month or 2. It may well be the existing provider of Carharttroller. It could be some new provider. But we would expect to have or announce be rolling out that new partner or that new contract from October this year. Let's just talk about costs maybe. I see costs were a little bit better than we thought for the full year. You might just talk They were, Stephen, they were up 5% on the full year basis, which as you said, was better than the 6% previously guided. Like everybody else, we saw our staff costs increase over the course of last year, staff up about 28% in total as we rolled out By the pay increases increased our crewing ratios and took on the pilots for the growth in the airline over the next few years. New 261 jumped by about €50,000,000 on the back of all the ATC disruptions that we saw last winter. And then of course, our maintenance was up as well by about 19 15% driven by the timing of lease handbacks, but also higher maintenance on some of the older aircraft in the fleet. And ex fuel costs are going to increase again in FY 'twenty. Michael, I'm sure you could add Michael. Yes. Bear in mind, it's a much smaller jump in FY It was up 5% this year. Excluding it's up 5%. Next year, it will be up 2%. Most of that is stronger sterling, not having the load of costs in the compared year comp for most of the first half of the year and cost savings that We would have generated by taking delivery of the MAX Boeing MAX aircraft to be delivered on time. But I would point to the fact that we're returning now to reasonable cost discipline in Ryanair, particularly at a time when most of our competitors are seeing their unit cost wise by significantly more than the 2% we're predicting. Could you talk about where Ryanair I mean, there's been some cost in place in the last 2 years, but I think the answer of Ryanair is the lowest cost airline in Europe and where the cost savings could come going forward? Well, the €29 per passenger last year, we're streets ahead of everybody else when it comes to unit cost, Stephen. That's going to remain the case with all the consolidations and failures that we're seeing in Europe. Airports are clamoring to get Ryanair capacity And that's one of the reasons why we have advantage on our unit cost for important handling over our next nearest competitor and multiples of that When you look beyond that competitor handling, we believe we will start to drop over the next year or 2 and help drive Our EU261 compensation claims as we've invested very heavily in new handling facilities in the likes of Stansted, Spain and into Poland. We're already seeing benefits on on time performance as a result of that, which will have a positive impact. And then of course, the big saving coming down the tracks in the next year or 2 will be the delivery of the MAX aircraft, phenomenal aircraft with 4% extra seats, 16% fuel burn efficiency Over what we're seeing at the moment and 40% less noise emissions, we're also continuing to work with Lauda and the team to reduce their costs within the business. So we've got a lot going on, which we'll see that leadership on costs remain for the foreseeable future and beyond. And Just talk about fuel hedging, maybe that's We're 90% hedged for the remainder for the this fiscal year I just under $71 a barrel, but that still means a jump in the fuel bill this year of about $460,000,000 Some of that is ETS. Some of that is volume increase as well. We have begun hedging into the following year, which is FY March 'twenty one. We're 35% hedged this morning for the Q1 of that year as about $66 per barrel. So About a 5% cost saving into Q1 the following year. That also factors in carbon credit increases. It does say, absolutely. And EPS payments, Yes. And in terms of EU261 costs, I mean, they were up obviously a lot last year. Do you see this further rising in FY 'twenty? This is a factor of the level of disruptions that we see in ATC over the course of the summer. Hopefully, it won't be worse than last year, but we've put a lot of Time and effort into improving our handling arrangements. We put a lot of extra spare parts around the network and our on time performance has improved as a result of that. So hopefully, We'll actually see some reductions in the right to care costs, but we can't rule out disruptions at an ATC level. I mean, do you see airlines doing something about it or in terms of trying to improve the ATC disruptions? I think all the European airlines, particularly our partners in airlines Europe are campaigning hard. I think the rate and scale disruptions means that the European Commission and European politicians are beginning to listen. We welcome the recent publication of the wise men's report on ATC reform that was published, which would give Eurocontrol more control over The flow management and would also put further pressure on the ATC providers, particularly in France, in Germany and in the U. K. To staff up. I mean, they are understaffed to where they should be for the traffic growth that we that they have been understaffing relative to the traffic growth and that has to stop. Let's just talk about the group structure. Michael, can you just give an update on Yes, I think we've made very good progress in the last 12 months. You can see now both Buzz and Laudamotion on a tier growth trajectory. Buzz was profitable in year 1, will be profitable again in year 2 as it takes over most of Ryanair's scheduled flying in Poland and in Central Europe. Laudamotion had a very difficult 1st year, a chaotic kind of start through summer 2018. So they have suffered exceptional year 1 start up losses of year 1 start up losses of £140,000,000 Already, we see our way through in year 2 in what is a very weak environment in Germany and the German Spanish market in particular where Lauda was one of the main players. And yet the losses will be significantly and substantially reduced. We don't think it will to breakeven in year 2. But they have signed up for to increase the fleet to 34 aircraft for summer of 2020. At that point in time, they will be operating carrying over 8,000,000 passengers. They will be one of the very substantial the 2nd largest airline at Vienna Airport, a very big presence in Palma and probably one other new base somewhere in Central Europe. They have good management teams. We are rolling forward, I think, the group structure. I signed up to be the group CEO for the next 5 years. And I think once we have the results out of the way, we'll begin the process of recruiting and appointing a replacement CEO for me within Ryanair. And then we will have the 3 airlines reporting into me as the group CEO on a weekly basis. And I believe that will give us we'll be able to leverage the strengths of Ryanair's model, but also the advantages of different brands in both Laudamotion and also within our motion being an Airbus operator. We see ourselves now being well positioned, particularly if there is There are competition divestments, which I think is inevitable as IAG, Lufthansa and possibly Air France KLM look to participate in more consolidation. You look at the Lufthansa, for example, at the moment, we're interested in the Condor Thomas Cook. It's inevitable that there will have to be significant competition consolidations coming out of that kind of a merger if it were to take place. And we now can do and participate in those mergers, A, because we're unionized, which I think would previously, have been a blockage and B, because we are both an Airbus operator and a Boeing operator. You talked about that a lot. In terms of buzz, that's expected to ramp up quite a lot in terms of to ramp up quite a lot in terms of growth over the next couple of years. Yes. Those started off last year with 5 aircraft in the fleet, Primarily charters, that's now increased to 7 charters this summer. But last winter, they took on schedule flying for the Ryanair Group of 25 Aircraft in the fleet that will easily double over the next few years. As Michael said, modestly profitable in the 1st year and will continue to be profitable for a foreseeable future. So the management team are doing a good job there, keeping the cost down and performing well. And just in terms of the group structure, did you talk about the Board changes. Yes. I mean, they've now been rolled out. We have announced the Board succession plan to shareholders. Stan McCarthy has become Deputy Chairman of the Board from April of this year. He will take over as Chairman in the summer of 2020. And This September 2019 AGM will be David Bondman's last as Non Executive Chairman and Kieran McDonald's last as Senior Independent Director. And I hope At the AGM, shareholders will recognize the enormous contribution David and Kieran have made to the successful growth and development of Ryanair over the last 20 years. We've been very fortunate to have both of them, and we will miss them when they're gone. And in terms of you talked about consolidation, but in terms of growth for for 2020. Where is the plan for growth, Mark? There's lots of opportunities, Steve, about over 40% of our growth this year is going to come in the big markets, The likes of the U. S. And Spain into the U. K. We're adding new markets in France where we've got 3 new base in Marseille, Bordeaux And Toulouse, we've opened up a new base in South End in the UK and we're already flying to exit as well. And then of course, there's new markets Being at it all the time, the likes of the Ukraine, Turkey, Bosnia, Herzegovina and now we're doing a lot down in Jordan and Israel as well. So, you know, continues to be lots opportunities for Ryanair's growth over the next few years. What about Skaldiv? Skaldiv is a very difficult market, more particularly with The Swedish and Norwegian governments, in particular, hiking unjustified aviation taxes. Both of the main airlines up there, Norwegian and SAS are loss making. We think it's inevitable that Norwegian will either fail or be sold this winter, And that may lead to some opportunities up there. But I would be a reluctant entrant into the Scandinavian market at the moment where costs, Airport costs are high and governments are kind of vindictively taxing air travel, which is rich for particularly from a country like Norwegian, whose Principal export is oil, but nevertheless, it is what it is. We have much more attractive, as Neil said, growth opportunities, I think, in France, in particular, Now that we're unionized and we're dealing with the French unions and those new countries, Jordan, Israel and Ukraine, which I think we're particularly excited about. Neil, can you just talk about the balance sheet, Anna? Talk about the new IFRS 16 as we have discussed. The leasing standard which is coming in. Yeah, Yes, it's going to have a fairly modest impact on us, Stephen. Only 6% of our fleet is leased at this point in time. So the impact will be as we take the future lease rent is onto the balance sheet as debt. We will have an adjustment in Q1 of about 140,000,000 to debt, however, as we add more Lauda leases within advance of summer 2020, that figure will increase about €330,000,000 impact on gross debt. For the P and L, rentals won't really be the kind of figure that you've seen in the past. It's now a bit split up between depreciation and interest, Broadly similar figure when you look at the 2 of them, maybe modestly positive to the P and L, but nothing significant. Relationship banks. We just raised €750,000,000 It's a club deal with our Core relationship banks, we just raised €750,000,000 It's a 5 year unsecured facility, which we'll use for general corporate purposes, including the likes of Our peak CapEx of €2,000,000,000 this year and the repayments of more expensive maturing secured debt within the airline. There's been a lot of talk, Michael, daily basically on the Boeing MAX or the Ryanair CV. Well, firstly, we have the utmost confidence in the aircraft. It's Great aircraft, 4% more seats, 16% lower fuel consumption. It has been flying already in North America for over 12 months without any incident. We believe the aircraft will be certified to return to flying in North America probably in July or August in Europe, maybe a month or 2 later than that. We've taken the first five aircraft, which we were supposed to take for summer 2019. We've removed them from sale for the full year, for the full summer. It cost us about 1,000,000 passengers this year. We've frozen all the PDP payments to Boeing, but we are working on a daily and weekly basis with Boeing and with EASA, the European Safety Agency, on a return to service. When it returns to service, we would expect to delay our delivery of the first five aircraft probably to October so that we will be operating in the winter schedule. We We then have 42 aircraft to take over the winter. We think they would be slightly backed up, but we would expect to have all 48 or 50 aircraft in service for summer 2020, delivering a better customer experience, lower costs and enabling us to pass on lower airfares. What's the situation in terms of the simulators for MAX in Europe? Very, very eminent number of simulators in Europe at the moment, about 20 in the world In total, we took our first MAX simulator a couple of months ago, and we've another 2 simulator students deliver between now and the end of this year, so the end of December 2019, which puts us in a very strong position. As is always the case, we tend to have more spare parts and more simulators than anyone else. In terms of aircrafts, there's a plan to sell older 77, 800s? Yes. We're moving forward in that. We're very close to an agreement to sell the first 10 or 10 of our oldest aircraft. Price would be something just over $170,000,000 for the first 10 aircraft. We believe, subject to the MAX deliveries, that they will be delivered to the purchasers both at the end of March 2020. And then we'll move on to packages of further packages of aircraft of such younger aircraft over the coming years. I mean just a follow-up there. I mean the market for secondhand aircraft, do you think it's And also maybe just talk about the lease market because you're obviously leasing Airbus aircraft. Yes, the market is strong, particularly for Yes, the 800 NGs, most of the strongest bids came from air from purchasers who want to convert the aircraft for the cargo market in China. They want between 15 18 year old aircraft, and they're paying us what we think is attractive prices. The lease market at the moment is slightly strange, particularly in the case of Lauda, for example. You have very high prices for new Airbus, new aircraft prices have rocketed, particularly with on the back of the Boeing MAX difficulties. And yet, we have seen Extraordinary value out there in the second hand lease market for Lauda. So Lauda has, for this summer, signed up 23 aircraft on 5 year operating leases. Average lease rental is well below $200,000 a month. And they've added to that another they're going to take the fleet of the 34 aircraft for the summer of 2020. Those heads and terms have already done it again. Young 7, 9 year old aircraft at lease rentals of $200,000 a month. So we'd be very keen to continue to grow Lauda if we can find that kind of value in the operating lease market. If we don't, we are in dialogue with Airbus for new aircraft. But frankly, at the moment, with both Boeing and Airbus, the order books are full out to 2021, 2022 and pricing is high. We'd rather wait until that pricing The pricing cycle kind of weakens. What about buybacks? Yes. Well, our Board just signed off on a 700,000,000 Our buyback, which will start in the next couple of days, we get into the open period. This will run for probably 9 to 12 months and will be in favor of the ADRs where we'll allocate about €500,000,000 towards ADR buybacks and €200,000,000 towards ordinaries, although the Board have certain flexibility in relation to that. So we indicated that we would come back. This will help our ownership position in a hard Brexit scenario as well. So when this is complete, Stephen, that brings up to almost €7,000,000,000 the amounts that we've returned since our first distribution back in 2,008. I think the share buyback time at this time is a sign of the Board's confidence in both the business model. Yes, the short term pricing this week. But our cost leadership continues, and we are very happy to use our balance sheet to purchase And can I just ask about just on the labor front in terms of union progress? Where do you see that? So do you see any disruptions? And maybe also just talk about do you see the supply demand scenario in terms of pilot shock I think the team, led by Eddie Wilson, the head of personnel, have made market progress in the last 12 months. People wondered whether we would be able to deal with unions, whether the kind of cost would explode. And what we've demonstrated in the last 12 months, we've signed agreements with most of the pilots and cabin crew units across most of the major markets. We're moving from recognition agreements now into CLAs that have been voted, many of which have been voted on and approved by our people. And it has led to a significant cost inflation last year, but we think that was a one off step up. The backdrop, I think it's more favorable this year. We've had you've seen huge numbers of airline failures, a large supply of trained pilots and cabin crews, many of whom are coming to Ryanair From the Germanias, primaries in those major markets, looking for jobs either on the 737 with Ryanair or on the A320s with Lauda. We have not only filled our recruitment process for summer 2019, but we've also filled our entire recruitment needs for pilots and cabin crew for summer 2020 as well. And I think that environment will or the environment for pilots will certainly get worse this winter because I think there will be more airline failures and consolidations. We're very happy where we are with our people. And they are well paid. They have the best rosters in the industry. And in fact, we take some comfort from Some of the commentary from pilot unions, in particular, in the U. K. In recent months where they were looking for or recommending their members take 1 year unpaid leave from Norwegian and Gatwick are suggesting pay freezes within Jet 2 for pilots who are already less well paid than they are in Ryanair. And then also in terms of disruptions you see here, not really, I guess. I mean, look, we don't expect disruptions through the summer of 2019. We have agreements in place with most of our pilots and cabin crew in most major markets. But We're now a unionized company. And when you're unionized, you can never rule out disruptions. But we think they will be the exception rather than The kind of the aid we suffered in 2019, we don't expect that to be repeated this year. Neil, can you talk about the guidance? Sure, Stephen. The guidance this year is on a full year sorry, on a full group basis as opposed to splitting out the subsidiaries. We think their profits will be broadly flat, clearly depending on where fares end up. We will be in a range of about 750 €1,000,000 to €950,000,000 guests will increase by about 8% to 153,000,000 customers. Fares, we think, will be somewhere between minus 2% and plus 1%. And then some of these will continue to perform strongly and drive total revenue per passenger, which we think will be up about 2% to 4%. Costs, however, we will suffer from a higher Fuel bill, fuel, we have about €460,000,000 in the financial year and unit costs ex fuel, we believe will rise by about 2%. This of course is based on very limited visibility on close in some of our bookings, zero visibility on H2 fairs and hopefully we won't see any on Brexit or elsewhere. Okay. And finally, Michael, maybe you can just talk, do you think the European market is going to play A bit like the U. S. In terms of consolidation. We've seen in the last couple of years, maybe as oil prices risen, there's been a lot of pain out there. Some of the capacity and some of the failures have been backfilled? Or do you think I mean, it's just getting I mean, the market is clearly tough in terms of oil price rising We demand in certain markets to expect more failures and consolidation as we go forward. I do. I think we're in that process. I mean, what's been slightly there, consolidation will continue. In fact, I think it will accelerate in the winter of 2019, particularly if Oil prices remain above $70 a barrel. Remember, some airlines survived last winter only because spot prices fell from $80 down to $50 between November March. So hopefully, oil prices will remain up above $70 per particularly where we're hedged at $70 a barrel. I think that will lead to more consolidation. You're right, the consolidation plays out slightly differently here in Europe. I mean, it's Marco that Dufanze is allowed to buy everything, in many cases, almost without any kind of competition or application of competition rules. They bought Eurowings, and they are plainly below cost selling within Eurowings. But if that's the market we're in, that's the market we're in. Frankly, if we're in a period where there's going to be attritional awards for a year or 2. That's good for Ryanair's business because ultimately we have the lowest cost base and we have the lowest prices. We will fill our planes as we're doing now, but profits will suffer for a year or 2, and I think that's what our shareholders should expect. However, it is clear in in my mind that within the next 4 to 5 years, you are seeing the emergence of 4 or 5 large European airline groups led by Ryanair, is the biggest. Lufthansa, BAIAG, Air France KLM and then question mark over whether Easyjet will survive as and independents, carried or not, I think on balance, they probably will. But most of the others from Wizz, Norwegian, Anatolia, of TAP in Portugal, will, I think, over the next number of years either merge with or be acquired by 1 or other of those groups. And I think at that point in time, you'll see Europe emerge in much the same way North America has in recent years. 4 or 5 strong airline groups, Much more capacity discipline, although there will be capacity growth, but at a slower rate than heretofore and some upward pricing upward pressure on pricing because frankly, the level of airfares in Europe are typically about 25% of the level of airfares being charged in North America at the moment. Now I don't think Affairs in Europe, will get to the North American levels. But it will certainly begin to rise again because they are artificially low at the moment. The level of airfares in Europe are typically about 25% of the level of airfares being charged in North America at the moment. Now I don't think the airfares in Europe will get to the North American levels, but they will certainly begin to rise again because they are artificially low at the moment. Thanks, Michael. Thanks, team. Thanks, Stephen. Thanks, Stephen. Thank you.