Earnings Call: Q3 2019

Feb 4, 2019

Hello, and welcome to the Ryanair Third Quarter FY 'nineteen Results Call. Throughout this, all participants will be in listen only mode. And after there will be a question and answer session. Just to remind you, this is being recorded. So today, I am pleased to present Michael O'Leary, Chief Executive and Neil Sorahan, CFO. Please begin. Okay. Good morning, ladies and gentlemen. Welcome to the Ryanair Q3 results conference call. I'm I'm here with the management team in Dublin, and Neil is joining us from London where he was doing the PR this morning. As you'll see, All of the results were released this morning on the website at 7 o'clock. We have an MD and A a video MD and A on that, We should address much of the questions that might arise. Couple of quick themes, while the $20,000,000 loss in Q3 was disappointing, We take considerable comfort that all of it was due to weaker than expected airfares. There isn't a cost issue here, but lower prices is good for our current and for our future Traffic growth bad for our competition. Ancillary revenues have performed strongly in the quarter of 26%, although and this helped us to offset Higher fuel, higher staff costs and higher EU261 costs. Ryanair has the lowest unit cost of any EU airline and this gap is widening. We take delivery of the first 5730 7 MAX game changer aircraft from April. These aircraft have 4% more seats, are 16% more fuel And they will drive unit cost efficiencies over the next 5 years. Unlike other airlines, we won't be talking about adding lower Aircraft and then seeing our aircraft and ownership costs rise faster than our traffic. With these aircraft, you'll see our aircraft and ownership costs rise at a slower rate than our traffic growth over the coming years. The industry, however, continues to be bedeviled by overcapacity, particularly in short haul Europe, As consolidation continues and weaker European airlines fail, some of them are currently up for sale at the moment. The airports around Europe are increasingly keen to attract Ryanair's dependable, high load factor traffic growth, and David and the team are going through an extensive series of negotiations with airports and potential new bases, both as we conclude the winter 2019 schedule and we're also beginning to focused on the summer 2020. Balance sheet remains strong with $2,200,000,000 of gross cash. And we emphasize again, we own 93% of our fleet of more than 4 50 aircraft, 60% of that fleet is unencumbered. In December, Lauda acquired the remaining 25% of Laudamotion we didn't already own from Niki Lauda and his family. Lauda has had an exceptional is heading for an exceptional year 1 start up loss. That loss has been reduced from an estimated $150,000,000 to approximately $140,000,000 Most of this loss accounted for by the very late release of Lauda's summer 'eighteen schedules due to the takeover of the airline from Lufthansa. Lufthansa showed up late with some fewer aircraft than expected at very expensive lease rates. Ryanair was able to supplement that by giving loud at 10 of our 737 aircraft last summer, but it meant that the schedules were very late on release, and therefore, we priced most of that schedule through last summer at very low prices just to fill. And we are in a much better situation now with Lauda going into the second or summer of 2019. The airline will operate 24 aircraft, up from 19 last year, but of that 24 aircraft, only 5 will be 737s. Now we'll operate 19 airbuses. We expect the losses will narrow very substantially in the year 2 of operation, down from $140,000,000 to a figure of anywhere between $50,000,000 to breakeven, which is a wide range, but we really don't know what the out final outturn on yields, particularly the peak summer yields would be in that German to Palma market, but we are reasonably optimistic. Underneath that, Lauda is growing its presence in the Vienna market very strongly. And I think one of the noticeable developments in the last 6 months has been Level has scaled back its growth And for Vienna almost entirely and Wizz seem to have slowed down their pre or their announced growth plans quite significantly. By year 3, which is summer 2020, Lauda will be operating a summer fleet of 30 aircraft. We have letters of intent already signed, and will grow to be carrying 7,500,000 customers and will be trading profitably. And the big trend at the moment remains Higher oil prices and lower fares due to overcapacity in market. The past 4 months, we've seen a wave of EU airline failures. Primera in the UK, For example, Germania are currently seeking a buyer in Germany. That's about a 30 aircraft charter airline. We understand that rumors they weren't able to meet their January payrolls last week. Wow! Flybe in the U. K. Are also for sale. The big one obviously is Norwegian, who has announced a significant multiple base closures through the summer and into the winter. And I think Key development of those base closures is they're all bases where they're competing with Ryanair. That's Palmas, Palma, Tenerife, Edinburgh, Belfast. They're going to cut the Dublin base from 6 to 1 aircraft. They are trying to refinance themselves, But we can we'll expect to continue to see not just in Norwegian, but among other loss making at low fares airlines, further contraction further consolidation in the winter of 2019. Brexit remains a major concern on our horizon. The risk of a no deal remains worryingly high. We have obtained the U. K. AOC to protect our 3 U. K. Domestic routes, That's a tiny part of our overall operation. We will and have plans in place to proceed to place restrictions on the voting rights and the Share sales of non EU shareholders, which for a period of time after a hard Brexit will also include U. K. Nationals and U. K. Citizens. We do that to ensure that Ryanair will remain at all times and EU owned and EU controlled airline. In terms of forward guidance, we're on track. Our profit guidance for the remainder of FY 2019 is to be in a range of between 1,000,000,000 to 1,100,000,000 That is excluding the Laudamotion losses of about $140,000,000 in the 1st year. We have a reasonable visibility on Q4 bookings now, but we can't rule out further cost to airfares and or cycling to lower full year guidance if there are some unexpected Brexit and or security developments over the next 8 weeks. I've been a bit taken aback by some of the commentary that come from competitor airlines in recent weeks on their announcement of their December quarter results. It seemed to us they were all covering over the fact that their airfares were had been disappointing. None of them seem to have met their Ambitions for stronger airfares during the winter. They were all pretty poor in terms of cost containment as well. And it seemed to us they were trying to from those pool results by hoping and praying that the summer 2019 yield outturn our fares will be stronger. We see no evidence of that at the moment. As of this morning, we have now 18% of our seats sold for the period from April through September. The average fare is 1% down on last summer, which is nothing catastrophic. It is a stronger performance than the pricing this winter or indeed last summer. But I think it is I would urge everyone to be cautious on pricing this summer. If Norwegian gets refinanced, there will still be Idiotic loss making capacity out there in the marketplace. Germania may not survive, but there are other airlines out there losing money. There is excess capacity there this summer and unless there is a more meaningful takeout of short haul capacity, We expect that airfare the traffic growth into summer 2019 will be strong, but we expect it will be at the cost of airfares, which I think we'll be flat to slightly down in summer 2019, and we see no evidence of the kind of Promised or mythical fare increases that were being promised on the Wizz and Easyjet conference calls in recent weeks. We've set out this morning as well some guidance for our shareholders. We're moving towards a group structure, which It is planned along similar lines to that IAG, a very small senior management team will oversee the development of 4 separate airline subsidiaries: Ryanair DAC, the Irish based airline Laudamotion, Ryanair Sun in Poland and Ryanair UK, each will have their own CEOs and management teams, but reporting to me as The group's CEO, we think this group structure will enable us to deliver cost and operating efficiencies. Each of these airlines will compete with each other for both capital allocations, aircraft deliveries and will also compete with each other to lower our costs. We, the group structure, will also give us the opportunity to look at other small scale M and A opportunities, and I emphasize small scale, something like the successful development of Lauda over the last 6 months. In terms of Board succession, there was some Uncertainty on that, I think, Ralph, some concern from some shareholders. We have announced this morning I've agreed to enter a new 5 year contract as the group's CEO. I will replace myself as the CEO of Ryanair DAC, the Irish airline between now and the end of the year. The Board has also set out its Session plans this morning. Thankfully, David Bonderman and Kieran McLaughlin have agreed to lead the Board for at least 1 more year until the summer of 2020. In the meantime, Stan McCartney has agreed, the former Kari Group CEO, who joined our Board in 2017, Stan has Kindly agree to take on the position of Deputy Chairman from April 2019, and he will transition to Chairman of the Board of Ryanair Holdings in the summer of 2020 to succeed David Bondeman and Kieran McLaughlin, whom have indicated they don't wish There are names to go forward for reconsideration at the September 2020 AGM. So David and Kieran will serve At least that is something between another 12 to 14 months, but then will not go forward to the September 20 AGM. With that, Neil, I'm going to hand you over to you. He gives a quick I'll run through the M and A and some key themes on the cost side. Okay. Thanks, Michael. Well, just to echo Michael's comments earlier this morning. Guests grew strongly in the quarter to 33,000,000 customers. That was driven by a 6% reduction in average fare. However, ancillaries Very strongly, which meant that total revenue per guest was up 1% in the quarter. Fuel, as expected, increased by 32% to just over $570,000,000 However, other unit costs Ex fuel, we're up 6%, in line with expectations and actually below the growth in passenger numbers. As a result, profit after tax Came in at $20,000,000 of a loss in the quarter. Balance sheet, very strong. BBB plus raised balance sheet, $2,200,000,000 gross cash. And as Michael said, 93% of the fleet owns only 7% of the fleet leased and the vast majority unencumbered. So very strong balance sheet costs, as I said, very much under control. Okay. Thanks, Neil. Okay. We'll open up for questions and answers. And as before, we're going to limit Harry to just 2 questions, Please, so we get through this with some reasonable speed. Thank you. And as told, please restrict yourself to just two questions. And the first is over the line of Daniel Roksa at BONE Research. Please go ahead. Your line is now open. And two questions, if I may. 1 on the group structure. Could you elaborate a little bit more on the elements of the IG model you'd be planning to So what are the individual airline CEOs going to be able to decide or be responsible for? Is that more kind of a labor arbitrage game? Is it a cost plus? Is it a full P and L? Kind of where do the commercial functions and Ryanair Labs fit in that environment? And secondly, on the topic of M and A, every other airline's unit cost in Europe is more And until now, it seems organic growth has always been a little bit better than inorganic growth. So what factors have changed in your assessment of the strategic growth opportunities for Ryanair to make M and A more compelling at this point in time? Thanks. Thanks, Daniel. Okay, I won't I'm not going to get into details of the group structure on this call. I think we'll be able to feed that out more appropriately to shareholders when we do the full year results roadshow in July. Suffice to say that there will be a small group Staff headed by myself, Chief Executive, will be a group finance and a group legal. But underneath that, the individual airline CEOs will have Possibility for running each of the individual airlines. They will be responsible for their own cost management and out of that cost management will come Aircraft allocations and capital allocations. And to answer, there will be some central functions, but they will largely for the moment be handled Ryanair, most notably Ryanair Labs, that we will run the sales function as we do currently of Laudamotion, Ryanair Sonae and others through at the ryanair.com website, which is now the world's most visited airline website. In terms of the M and A and the organic growth, The focus will continue to be on where we can replicate effectively our kind of unit cost efficiency. And for that, I will give you the example of what we're doing in Laudamotion. It was an airline that was being bought out of the 4th divestment out of the Lufthansa purchase for Air Berlin. We've had a reasonably high cost base having come out of Air Berlin. But having said that, we have in the space of less than 12 months now A very low cost operating aircraft fleet, 30 A320s with an average monthly lease rate of under $200,000 per month. It is using Ryanair's kind of low cost technology. The sales done across the Ryanair website. The efficiencies, they're moving towards 25, 30 minute turnarounds. And you will see Laudamotion, certainly by next year, Begin to mirror Ryanair type margin. That's why I think we would look at small scale M and A where there's an opportunity to take over what are Not necessarily shell companies, but very small AOCs, 1 or 2 small AOCs where we can reverse Some of our organic growth into those AOCs, and that would make sense from our point of view in places like Ryanair in Poland. May I put that in some perspective? In Poland, for example, it is Ryanair had a very successful 1st year in the Polish charter market, But it is now taking over Ryanair's scheduled flying in the Polish market, and it's doing that because there are tax advantages for our pilots, Polish pilots and Polish cabin crew moving to the same type of contract employment that LOT, The national airline in Poland has promoted. And therefore, we're able to replicate. We can get a lower operating cost In the Polish market by replicating that type of structure that LOT and Enter Air have benefited from. So we will see opportunities across the group opportunistically to lower costs in certain markets where there are local considerations that make it sensible for us to do so. We'll give you more details on that group structure and how we see it working on the July full year results roadshow. Next question? Our next question is over to the line of Jarrod Castle at UBS. Please go ahead. Your line is On the fuel hedging, you had hedged kind of 52% at 7.18 at the half year results. So now we're at 90% at 7.09%. So just I'm trying to understand why some of The fuel benefit doesn't seem to be coming through in the hedge ratio, kind of where you were hedging. And then secondly, just looking at the balance sheet, You should continue to drive some cash. Should we be expecting some further capital returns in the next 12 months? Thanks. Okay. Thank you. Yes, we took on the fuel on the half year, which were in September. We oil spot oil at the time With $84 a barrel, the forward rates were we were trying to get forward rates under $70 a barrel. We saw at the time, We tried to close it out and we finished by the time we finished closing out the hedge, but it'll be 90% of FY 20 hedged at $71 a barrel, very delighted with that success as oil with spot oil was $84 And then in the space of about 4 weeks, it went from $84 a barrel down to under $60 a barrel. So what looks like a very clever hedging strategy quickly became a not so clever hedging strategy. I think our general view is that fuel is likely to trend slightly back upwards. We're a bit out of the market at the moment compared to spot. We are looking now at hedging out into FY 2021. But again, based on current spot rates, we're trying to get forward rates out at around or under $600 per ton. Again, we don't use fuel hedging here to try to beat the market. We try to use fuel hedging to give us cost certainty for the next 12 months. On the balance sheet, balance sheet remains strong. I think our position has been consistently that, yes, we would like to do another Capital return to shareholders, but I think it will be done in the context of once we have some certainty on the outcome of Brexit, We very much hope we will have certainty of the outcome of Brexit. In the event of a hard Brexit, obviously, we would have A slight we would have for a period of time, depending on how many of the U. K. Shareholders don't re flag into Europe, We may have a small surplus or a majority of non EU shareholders. I think we'll be timing another share buyback At the same time, as we've been imposing restrictions on all non EU shareholders, voting and share sale restrictions for the timing of a share buyback would facilitate Some of those shareholders being able to dispose of their non EU held shares to it, they could participate in the buyback. So I think the timing of the further share buyback would be very much driven by some developments on Brexit over the next couple of months. Thank you. Thanks, Jarrod. Next question? Our next question is over the line of Savi Syth at Raymond Please go ahead. Your line is now open. Debbie, hi. Just two questions. Michael, you indicated the opportunity if the opportunity presented itself, you would consider accelerating the MAX growth. Would that be incremental growth? Or would that be kind of accelerating retirements in return? And then Neil, you can take that back on that. I didn't get that question. We consider opportunities To what? To accelerate the MAX growth. Accelerate the MAX growth. Yes. If the opportunity arose, I know you mentioned you would consider Getting more MAX aircraft. I was just wondering if that would be accelerating the retirements or if it would be kind of incremental growth? And then the second question just on the costs. It's helpful to kind of indicate kind of flat to down costs looking forward. Just wondering if you could kind of talk about, Neil, kind of the trends of some of the bigger cost items as you kind of exit this year and head into next I mean, we're always willing to accelerate growth if there's a cost opportunity to You do so, I mean, but that would require some collapse in aircraft values or some crisis in the aircraft. Now I suspect the both Airbus and Boeing are presently facing a of canceled orders or aircraft redeliveries. But I would imagine at the moment in the next 12 or 24 months, our fleet growth, So any unplanned free growth is likely to take place on the Airbus side through Laudamotion. We have been struck by the ready availability of reasonably low cost A320s, good 8, 10 year old secondhand A320s. Coming back on the market, it seems to me where leasing companies are stuffing these airlines with new neos and taking back delivery of very clean, These are the young CEOs. We have seen when we first started trying to procure a fleet for Laudamotion 12 months ago, I think we've seen the lease rates on those secondhand A320s go from over $200,000 a month back down Up to 10% below, we're looking at lease rentals now between $170,000 $190,000 per month. And I certainly that would encourage us to accelerate Laudamotion, the fleet growth in Laudamotion from 19 aircraft last year, 24 aircraft in summer of 2019 and up to 30 aircraft in summer of 2020. If we see some further opportunities on the 2nd, on Airbus side, I think we would jump on those. I don't foresee much of the MAX side at the moment. I mean, it is Will be new aircraft to us. We are taking 5 this year. Next winter, we take 50 of those aircraft. I think half of that fifty will be reallocated to Ryanair Sun and go on the Polish register, probably half will be on the Irish register. I wouldn't see us accelerating that growth much beyond that at the moment. I think it will be a big jump for us to take 50 MAX next winter and pulling those aircraft into a lot of basis where they will not be yet be familiar with dealing with the MAX aircraft. So if there's any Accelerated growth, I think, in the next 12 or 18 months, it would be through Laudamotion or through some small scale M and A. Got And Neve, do you want to address the cost point? Or that you can Yes. I suppose, Savi, just to be clear, we're doing our budgets at this time of year, so we haven't got the full year numbers Yes. And I'll give more color on that in May. But as we move into next year, we start to see the costs, for example, on the staff line Stabilize with the 20% pay increases factored in, we start to see the EBITDA benefits coming through on the MAX, although we only really have 5 MAXs operating this summer, while 10% of the fleet will be maxed by the end of this financial 'twenty. It's really summer 2020 where we see the huge benefits. Airport and handling continue to see good opportunities there. And we've nearly 20 leases going back next year as well, which will drop down the aircraft rentals line. So we'll see it stabilize and then beyond that start to drop on overpassenger I think we're reasonably confident now that unit cost next year will be flattish flat, slightly down. The only one that I think will still be out of Control will be the EU261 compensation claims. We're expecting another torrid second calendar quarter. We think The under staffing in U. K, German, repeated strikes in French ATC will reappear in April, May June again of this year because none of those problems have been addressed. But so with the exception of BU261 costs, We are reasonably optimistic that unit cost will be flat to slightly down in the next 12 months. Helpful. Thank you. Next question, please. Next question, please. Now go to the line of Duane Pfennigwerth at Evercore. Please go ahead. Your line is now open. Duane, hi. Most of my questions have been asked. Michael, how do you see your job changing in the new structure? What are the things you'll be excited to do that you could not do previously. I don't think there'll be that much change in the new structure. I mean, for the next 12 months, I'll Philby, Chief Executive of the airline. I'm spending a reasonable portion of my time at the moment working with Andreas, who is the Chief Executive of Laudamotion with Mikael, Chief Executive of Ryanair Sun, overseeing the development of those airlines and allocating aircraft and capital to those companies. So I think it will be an evolution over the next year or 2. The key challenge is to get the right Chief Executive for Ryanair, the airline, in place by the end of this year and then hold his or her hand over the next 12 months so that we don't lose the focus on costs and we continue to run. But then I would see and continue to encourage each of the airlines to compete actively for capital and aircraft. I mean, the big opportunity for us in the next Year R2, certainly as a group of airlines, is to encourage much more competition between Ryanair, Laudamotion, Ryanair Sun, to compete for aircraft because they can use those aircraft more profitably are at lower cost than other airlines within the group. Thanks for the thoughts. Thanks, Dwayne. Next question, Steve. We now go to Stephen Furloughed with Davy. Please go ahead. Your line is now open. Stephen, hi. Hello. Yes. Hi, Mike. Hi, Neil. Just two quick ones. Can we just go back to The leases on the Lauda aircraft, and I'm just interested in the what's the tenure or the time of those leases? And is the ultimate Intention to refinance those leases with owned aircraft down the road From either Boeing or Airbus. And then just a second quick one. I was just wondering, usually it's around this time, last couple of years, there's been Some kind of branding, marketing push like always getting better, is that planned for this year? Thanks. Yes. Leases at the moment, the tenure of those leases are 5 years. So we did And we're redelivering at the moment the 9 Lufthansa, very expensive Lufthansa aircraft. It will be delivered back to Lufthansa starting in January and the last will be gone in June. So we have the first at the moment Laudamotion will have this summer or for summer in summer, I'm going to say, summer 2019. They will have a fleet of 19 Airbus aircraft on 5 year leases. We've already signed a LOI for another 11 aircraft, Airbus aircraft for next year for summer 2020 with 5 year leases. So they will run through until 2023, 2024. We are having we are accelerating our what we call dialogue with Airbus. I mean the initial the kind of initial Discussion with Airbus last year, we said we're about to buy Laudamotion. We need aircraft for delivery in 2019, 2020 so we can grow. And listen, look, we don't have aircraft in that period. Now that these lease I mean, I think the there are significant opportunities for us in the lease market. I would have no difficulty at the moment at these kind of prices continuing to use operating leases into 'twenty one, 'twenty or 'twenty two. We certainly see the Laudamotion fleet growing from 30 aircraft in summer 2020 to 40 in 2021 to 50 in 2022. We will be talking I think at the end of those leases though, which is starting around 2023, we would like to see new aircraft either from preferably from Airbus Or for Boeing coming through and replacing those operating leases. But if there is real value, I mean, typically, historically, anytime you get operating leases at under 200,000 a month, that's a pretty good deal. And with the help of Ryanair backing, the airline is not paying, Laudamotion Not be paying maintenance reserves or security deposits, although it is providing for maintenance on an hourly basis. So I think we'd be reasonably Non doctrinaire about it. If operating leases are cheaper, we do operating leases. But if we can secure a fleet of New aircraft directly from Airbus, then we'd be happy to do so. And I think a lot will depend, I'd say Airbus and Boeing, I think, are beginning to feel the pressure with the likes of Norwegian canceling orders and deferring deliveries, even Easyjet and Wizz deferring some deliveries recently. So hopefully there'll be some opportunities there. Branding and marketing opportunities, Kenny is straining at the leash almost on a monthly basis, wanting to announce new brand Marketing strategies, I think what we wanted to do though was not focus on those yet. Yes, we wanted it. We had obviously a second profit warning in January. Pricing is weak. We wanted to get the kind of board succession, management plan, group structure out The way now, I think you will see a rebranding, but you will see some branding and marketing initiatives that we're concluding at the moment announced probably sometime in late February, early March for both Ryanair and for Ryanair Sun and also in Laudamotion. So sometime pre the kickoff of the summer schedule. That's great, Michael. Thank you. Thanks, Steven. Next question, please. Come on, next question. We now go to James Holland of Cowen. Please go ahead. Your line is open. James, Can you hear me? Yes, we can. Yes, sorry. So first on summer capacity, obviously, you're dismissing out of hand what Easyjet and Wizz is saying. I mean just putting some numbers on Easyjet talked about their competitor route capacity being up about 2% in the summer. I mean you obviously done that work yourselves on how you initially see your competitive capacity, I was wondering if you could put a number on it. Secondly, just on the German market, I think it's obviously been a very tough period with you, Easyjet, Lufthansa themselves sort of growing into where Air Berlin works. Maybe just give us an update on how you see the German market on capacity trading, etcetera, into the next few months. I think you specifically said Lauda was looking quite good on that market, maybe just the wider market in general. Thank you. I mean, without wishing to speak ill with my competitors, we thought most of Commentary that surrounded their summer 2019 stuff is just blind optimism coming from airlines who in recent months have promised us don't worry about higher oil price Because higher airfares will cover higher oil prices. We didn't see there was any basis for that. It's all right for somebody to go out there and say, well, there's only 2 The reality is none of the airlines have sufficient visibility on the 2 summer quarters this year. We generally have stronger advanced bookings than anybody else. And as of today, we've only 18% of those seats sold. It is far Too early to be guiding optimistically for this summer, particularly if Norwegian doesn't go bust between now and as I survive into the summer, And there will still be capacity out there. I mean, we could take you through this summer Norwegian closing base as well as it could be with us and it's all nobody do. But Fundamentally, I think there's still overcapacity out there in the marketplace. There are market segments. I mean, we see Spain and Portugal is a bit weaker this year because a lot of that traffic is going back to Turkey and Egypt. Germany is a Torrid market at the moment and will continue to be a Torrid market. I think even Easyjet, we're also confirming that the Berlin base will lose money for The 2nd year in operation, no sign of stronger yields out of that marketplace. So at this time of the year, I think it's wrong to be Promising good news or optimism, particularly when it comes from airlines who've been making up repeatedly making optimistic noises on fares only to subsequently disappoint. I think the best guidance I can give you at the moment is that we have sold 18% of our summer seats and the average fare is 1% below where it was Now it's not 7% below, it's not 5% below. It is marginal at best, but I think everybody should be much more cautious This summer, and then either EasyJet or Wizz were on their calls, but it seemed to me they were I mean, most of them were trying to duck and dive on cost. They didn't want to talk about cost. It was all, don't worry about the cost, the fares will rise this summer. It was more of the manana, manana you get out of them at this time of the year. In our case, we're generally much more cautious because we're good on costs and we're much more cautious on forward booking. And David, do you want to give us just a taste of what you see in the German market? Well, you've pretty much covered it there, Michael. Now The difference this year is that I do think that by the end of the year, there could be something of a shakeout. If Germania goes, that could change things Somewhat in the market. But I think when you're talking about a 2% change to competing route capacity, You're really looking at the wrong thing and struggling in the wrong area because it's choice in Germany that's happening now. People have choices all over the place, not on specific routes, but to many different destinations. And as Michael said, Turkey and Greece has opened up along with elements of North Africa. So We still have more than 17,000,000 seats to sell for this summer. We're in no position to give any sort of particular guidance there. I can say the Canaries, in particular, Germany would be a weakish market, competing as it does with some of the other longer or medium haul routes into Turkey and the like. On a slightly positive side, but not in any rate volumes, we're very content with the bookings on our New capacity into Jordan, into Israel, but these are very and Ukraine, but very peripheral, I have to say. Okay. Thanks, David. Thanks, James. Next question, please. It's over to Damian at RBC. Please go ahead. Your line is now open. Hello, Vincent. I hope you can hear me. Yes. Great. Two questions, please. First of all, coming back and following up on one of the things you mentioned about capital allocation. Could you talk a little bit more about the profit decline for Q3 and whether that was across the piece or whether there are certain locations or bases that drag that down. I'm guessing given the base cuts, that's already been the case and given you talked about MAX allocation of half of that to the Polis register. But can you elaborate a little bit more on what that does mean for the MAXs that get allocated on the Irish registration on the assumption that I assume the capital follows the highest returns? And then secondly, you talked about ticket fares. Can you also elaborate a bit more on ancillaries? Was it just the priority boarding and bag policy change in Q3 that improved? And how much of that rolls forward into this summer? Thank you. Thanks. I mean, if I characterize again the profit decline in Q3, it was spread. I mean, there weren't significant geographic segments. It was spread across the piece. As you know, we were predicting a 2% decline in average fares this winter, and that was against the prior year comp that we thought was reasonably benign. If you remember, the prior year, we The rostering screw ups, where we are and flight cancellations. So if anything, we thought we'd reasonably benign prior year comparator. And we were Genuinely surprised by the fact that airfares across the beach, particularly into the Christmas, close bookings in on Christmas were weaker than we had expected in the past. There's been some sort of miss, I think, analysis that somehow this is something to do with the unions or lack of passenger confidence in flights. We had no evidence of that at all. There's no disruptions over Christmas. And even when we did have I mean, there's a very small number of disruptions last summer. We didn't think it had any impact All the fares because we managed our way through it very well. There is too much capacity out there this winter and there that has been reflected in significant Pricing downwards and that was reflected in both the pricing commentary on the calls by Norwegian, Wizz, Easyjet, everybody else without seeing the same story on short haul Europe. The only difference for them is they're all promising treats tomorrow or And I don't see really any fundamental basis for that unless there was a big shakeout of a Norwegian or a Germania or something else. Next winter, there's certainly going to be a big shakeout of Norwegian bases closing capacity being taken out of the place. They'll lose another couple of 100,000,000 this summer. So I think they'll have to come back to more doing more refinancing. I've long held the view that Norwegian is a Turkey that isn't going to survive. And you may see that impact next winter and into the summer of 2020. On ancillary, generally speaking, the ancillary performance across most Segment has been the increased penetration. The large movers of the dial in Q3 was the Increasing propensity of customers choosing to take up the priority boarding, the reserve seat service and but there was also Improved performances of the others, mainly across Ryanair Labs and Ryanair Rooms did well. Car hire is performing reasonably well. Fast Track as a product through airports is also performing well. So the continuing ability of Ryanair Labs and the commercial team to monetize those additional services continues to drive that ancillary performance. And that goes through to next summer. Yes, should do. Next question please. It's over to Roxanne Dosa, Chevre, please go ahead. Your line is now open. Yes. Hello. Good morning. Just one question. You mentioned 18% of Capacity between April September being sold at this stage at fair is down 1%. I suppose the current bookings refer particularly to the So if you adjust for the positive effect from Easter, what is the underlying fare decline on bookings that you see in April at this stage? Thanks. I think it's the continuing trend. I mean, you're right to highlight the fact that Easter is in April. Now we don't have that many bookings in the system yet for through the 3rd Q2, which is essentially June, July or July, August September, which would be where a lot of the higher yielding traffic will come through. But and again, so which is why I think that we should be cautious And I would be reasonably I mean, I'm not pessimistic for pricing this summer, but I am much more conservative than Competitors who were out there last week, frankly, with very little visibility on the summer bookings talking of pricing. Okay. Thank you. Thank you very much, Arthur. Next question? Okay. We are now to the line of Catherine Leonard at Barclays. Please go ahead. Catherine, your line is now open. Hello. Good morning, everyone. Yes, Cam. Go ahead. Hi. Just to follow-up further on the ancillaries point made by Damien. Just I think when we last spoke, you guys spoke about priority boarding and the allocation meeting peak penetration around about the time of November 50%. I think since then, the group has increased the availability of priority boarding. You previously, Michael, I spoke about that peaking at 50% because it wasn't priority if more than 50% of the plane could be a priority border. As I understand it, that is now 100%. And The plane ride I took recently, all 100 of the priority boarders were picking up that privilege. So firstly, the question is how sustainable is that? I thought the idea going forward was once we reach Penetration that the yield management of those products have then given additional growth into FY 2020, but that doesn't seem to be happening. You seem to just be increasing the number that is available to you. So how do we think about the ancillary growth FY 2020 if you are at penetration already? Okay, fine, you've raised the bar a little bit. But Then you've mentioned about Ryanair Rooms, obviously, being a small contributor, but the amount of the credit that you're giving is reducing the contribution Avril, the bottom line, how should we think about 2020? I think we should continue to see increased penetration on a per passenger basis through 2020, Roktan. We have capped the priority boarding is capped at 100. I mean, it's a We're on 189, that's a fractional 50%, but that was always the cap. We haven't raised the cap on that. The priority boarding is now the only way that you can have Passengers can bring 2 carry on bags on board. So in many ways, description of it as priority boarding is slightly historical. It's really the way that those customers who want to bring both carry on bags on board can bring both carry on bags on board. They still enjoy priority boarding. We have changed some of the pricing algorithms on the seat allocation. There has been some yield management there, And we are beginning to ban the pricing of priority boarding. So if you take that 50%, it's a fractional 50%, but there's one price The first 20 to book it, there's a second price band for the second 20 percent to book it and then the third price for the last 10% to book it. So we are beginning to ban, I mean, it's not really yield management, but there is clearly capable of being monetized in favor of encouraging people to take it, preferably at the time of booking. But the point I make is correct. We are still building Meaningful penetration growth per passenger on those other products. Yes, we're not making huge return from rooms because of the We're giving away most of the commissions, but it is still building, CarHyre is still building, our fast track to airport, airport car park is still building, Labs is doing a stunning job at very low cost of increasing customer uptake on these optional services, and we see continuing into the following year. You won't see a big jump upwards. There's no kind of killer conversion like we had with priority boarding this year, but you will have a full year's penetration of priority boarding and the reserve seating into next year. Okay. And then just definitely on the net debt. Neil, are you able to give any guidance on what you expect the net debt to be for the full year? And just in the context of the earlier question on the share buyback, You said that I think previously you said you're comfortable with a net debt position of sort of €200,000,000 to €300,000,000 So based on whatever guidance you're about to say, I mean, how does that I know that Michael's comments are on Brexit, but taking aside any hard Brexit and any incentivization So facilitation you use share buybacks just to go on an underlying basis? Based on where the numbers are at the moment, Catherine, we would expect to be somewhere around 500 ish on the net debt at year end. Balance sheet is in very strong position. Thanks, Catherine. Next question, please. It's over to the line of Mark Simpson, Goodbody. Please go ahead. Mark, hi. Mark, your line may be muted. Can you unmute your line, please? Yes. Can you hear me? Yes. Go ahead, Mark. Yes. Okay. Thanks. Look, 2, one positive transformational improvement is what term and expect it to happen on digital platform by the year end. Can you give us a bit more sort of specifics behind that phrase? And then the other part, which is probably sort of take a level of disagreement to your comments in terms of December yields from the competition. I mean, you could point to Wizz sort of ticket RASK being up 5% in that quarter. I mean, there is this perception and it's perception reality that there are people concerned about booking with Ryanair in the peak holiday season and that this is the reason why there's this large spread between The performance of yields from your competition and what you really revealed for this quarter, I think there is a spread there, but I'm not quite sure other than this idea that there is a slight bias hesitation why that spreads there. Okay. Thanks, Mark. No, we won't give you any support details on digital platform because I think Kenny will be doing his big reveal on that. And at some It would be part of the customer experience, customer service improvements that we'll be rolling out sometime at the end of every middle of March. I mean, on the December yields, the kind of guidance you were getting for Wizz and Easyjet, if you go back 6 months earlier, they were talking up fares much more aggressively. Now to be fair, Wizz has caught a lot of winter capacity. They grounded it to considerable part of their winter capacity to try to manage their yields. That's why their cost performance was particularly poor. I mean, neither of these 2 were able to manage their unit costs. They're always dreadful. The conference calls are always distracted by lots of positive and optimistic future sounds on fares and yields, but none of it ever covers their cost management. I disagree, but we reserve the right to disagree with your call on customer confidence. And I point to the fact that if you take our numbers Morning. We have 9% 8% traffic growth in the 3rd quarter and load factor is unchanged at 96 Yes, it is at lower than previous airfares, but I get no sense of the in the marketplace, if there's any concern about past Making bookings with Ryanair. There was no threat of strikes over Christmas. I suspect there we have no threat of strikes through January, February. That covers a period when we did close bases. Somebody asked, I forgot it, when Damien asked the question, what was the impact of the base cost? Actually, our base costs were tiny. We closed Bremen, which was a 2 aircraft base. We closed Eindhoven, that was a 4 aircraft base. In the Eindhoven case, we flipped the aircraft out of Holland. The same 4 aircraft are still flying to and from Eindhoven. In the case of Bremen, the aircraft We're flipped out of Germany. But we allocated the capacity elsewhere. So when we cut those bases, it's not like we sit that capacity on the ground and And manage the business for higher fares, which is what we'll seem to have done this winter. And yet their cost performance was, atrocious. This is the airline that for 3 or 4 years has been promising that they'll overtake, they'll beat Ryanair on unit cost because they've got some super dewberry, Biggery, shiny new A321neos and yet their aircraft ownership and maintenance cost keeps rising faster than their traffic growth. These guys are adding more expensive aircraft, not less expensive aircraft. And the cost gap between us and them continues to widen as it does with Easyjet. Despite the fact that this is a year where we have had a step up change in labor costs, not through unionization. We had a step up in labor costs to head or to get ahead of the unionization issue, which is why Eddy and the team have made such great progress over the last 6 months, Putting in place agreements in most countries across Europe on recognition, and we're now working actively on CLA. We see nothing. I mean, at the moment, if you take our advanced bookings into this summer, they're in line with where they were this time last Here for the summer of 2018, but we did have lots more threats and strikes and that it is. And Frankly, I don't agree with the perception and we our numbers this morning, I would say, undermine those perceptions. Fair point. Okay. Thanks. Thanks, Mark. Next question, please. We're now over to the line of Gerald Khoo at Please go ahead. Your line is now open. A couple of questions. Firstly, you talked about anticipating more aircraft control problems this summer, but you said that you think it's going to be at its worst in the shoulder peak periods of April, May, June. I was just wondering why you think it's going to be worse than in the peak Of Sabah. And secondly, I was just wondering whether you could give an indication on where Nautamotion's average fares and And so the revenue passenger sits versus the group average and whether you think that's And when are they sick, do you think that they could converge on the average or exceed it? Okay. Thanks. On the ATC problems, I mean, I think the historically, the worst of the ATC problems tend to take place in that quarter, April, May, June and will roll on to 1st half of July, that's usually because the French starts striking around April, May June. We have still Short staffing in the U. K, in Germany, in the cars Ruhr ATC that flows over into Maastricht, but the French tend not to strike in January, February March. We also then able to coincide with the switch over to the summer schedule. So it's always the month where ATC falls over because you get all the charter Capacity coming into the marketplace, they're still understaffed. You get all these euphemisms about ATC capacity and all the rest, which is just a euphemism for being short staffed. In our view, the air traffic controllers in France will then resume striking again through April, May June, and that's why typically It tends to be at its worst through those 3 months. It tends to improve into July August, 1, because the capacity gets you out They get a bit more used to the summer capacity and 2, because the French air traffic controllers and their families tend to be going on holidays in July August, so they tend to stop striking in July August. And that's just the way it is. It has been historically that way for the last number of years. The French are at their most remoting in April, May June, but it is exacerbated by the staffing shortages, particularly in what is a very mismanaged service in NAT in the U. K. And in Germany. I don't want to break out this day the Laudamotion pricing and ancillaries. Laudamotion, I would say in janitor. The Laudamotion pricing is ahead of the Ryanair pricing, but we would expect it to be materially better than Ryanair pricing with a during the peak summer months at those high yielding German airports down to Palma. I would expect out of Vienna, which is where there is a big push on. I mean Laudamotion has grown from 4 aircraft in Vienna last summer to 8 aircraft this winter to 11 aircraft in the summer of 2019, and it will grow again to probably 14 or 15 aircraft in the winter of 2019. The Vienna yields at the moment are similar to Ryanair's yields. But on balance, going forward, we would expect the Laudamotion yields once the German market sets us down And we build a large presence. I mean Laudamotion will be the number 2 airline in out of Vienna this summer. I think we will see their level appears to have given up on Vienna as a project. And we will start to withdraw capacity We're going to be in a market where they are, as is always the case, unable to compete with Ryanair or Laudamotion on cost or on price. Ancillaries in Laudamotion is still slightly behind Ryanair, but catching up rapidly. Some of that is historical. They still We factored out the in flight sales activity for the 1st year of operation. Ryanair has taken that over or it becomes more Ryanairized from the 1st April or 1st March this year. So I think you will see ancillaries in the next 12 months in Laudamotion begin to mirror Ryanair ancillaries, but the underlying airfares in automotive should be slightly higher, certainly through the summer period. Some of the costs are slightly higher as well because they have kind of At the German airports and at Vienna, they're pretty close to public rates. Okay. Thanks very much. Next question, please. It's over to the line of Neil Glynn at Credit Suisse. Please go ahead. Your line is open. Good morning, everybody. The first one, just on the Airbus engagement mentioned earlier, Michael. Just interested, do you need to agree a plan with Airbus to fleet the U. K. ALC with Airbus planes perhaps at some point over the next 5 years or so to drive proper engagement at scale? And then the second question just on culture in the context of the group reorganization. Obviously, the culture has evolved through this decade, through all this getting better in Ryanair Labs, etcetera. But just interested in terms of how you think about a more, I guess clunky organization relative to the lean Ryanair in the past, do you need to focus on managing those businesses, The UK and the DAC business in particular, the internal appointments? Or how do you think about maintaining the culture in a bigger organization? Yes, the U. K. AOC, I mean, a lot depends on Brexit. There is a hard Brexit. I think the U. K. AOC will generally be a reasonably small operation. It's designed to be able to operate the 3 U. K. Domestic routes and some U. K. Non EU route, the U. K. To say Morocco or some of those markets. I wouldn't convince that ever being an Airbus fleet vehicle. I mean, it will never be a large vehicle. Hopefully, we won't need it at all because there will either be there will be some agreement on a deal in Brexit that would be I would For a 21 month transition and then more orderly or at least have a trade agreement in place, so there's little as possible disruption. So no, I don't see the U. K. AOC being an Airbus fleet. Laudamotion clearly will be an Airbus fleet. And if there's some other small Scale M and A in the next 2 or 3 years, maybe that I think the advantage going forward with Laudamotion and with Ryanair is we now have a credible of an Airbus operation and we have a credible Boeing operation. And therefore, if an opportunity came up, but I mean, I sense most of these opportunities will come out of competition divestments. Like if IAG had bought Norwegian, for example, Norwegian has a large presence in the Spanish market, where up beside you have IAG with Iberia Whaling and Iberia Express. And I think that would have been there would have had to been some Competition divestments coming out of that. So I see the small when I say small scale M and A, I think it's much more of facilitating competition divestments for other large scale M and A, A bit like, which is how the Laudamotion opportunity cropped up. We're not running around the place trying to buy things that lose money or lose money that we can't turn around. And the second part, I forgot the same part of the question, Neil. What was it? Culture. Oh, yes, culture. I mean, look, I think we would take the view Laudamotion has a distinct somewhat Austrian culture, they don't get our jokes. They don't like the swearing and Much the same in, I think, in Ryanair Sun in Poland. I would encourage each of the airlines that we want to encourage each of these airlines to have their own culture. We want to I mean, I see the strength of this not unlike IAG being you have individuals or line airlines that compete with each other for capacity, for capital allocation, and where an airline develops a cheaper way or a lower cost way of Organizing itself, the rest of the other airlines in the group can decide whether they want to take advantage of that or not. And so no, I don't I'm not a great fan of these unitary kind of cultures or one culture fits all. We are Irish. We take our beatings, such as the rugby on Saturday well, and we learn to get on with it. But again, Laudamotion will, I think, have a it's an Austrian AOC. It will have an Austrian culture. And I think certainly, Ryanair Sun It's Polish AOC and 11 in Crete certainly has a Polish austere culture, and we should encourage that. We should encourage those differences because out of those differences, I think will come opportunity. I think the critical thing that each of the airline CEOs We'll need to understand though that if you want to grow, you're going to compete with the other airlines for the next aircraft or the next 10 aircraft, next 20 aircraft. So go ahead and demonstrate you can get better growth incentives from airports or better handling deals. You can do a better job and then we'd reward that with More aircraft. No, and again, I'm not unlike the way IAG, I mean, I've always been impressed with the way Willie has managed IAG, the turnaround, for example, of Iberia using different brands such as Whaling. He has driven a lot of cost efficiency in Iberia and in BA. Looking at kind of management succession, again, I think the way that Willie has taken sort of Alex Cruz out of Whaling and put him into BA, And there's much more mobility between the management teams, I think also gives us an opportunity. I think it's a big opportunity also for the management, the middle management team in Ryanair, where we have a reasonably stable senior management team, there was always a view here or kind of a bit of a pushback that My way forward is blocked. I can't get further. How do I rise through the organization? And we would be encouraging more people. Now you rise Engineering Director in Ryanair Sun could become the Ryanair Engineering Director. So I think we it gives us more opportunity to cross Holliday, the middle management are promoted with the senior management positions, again, the way IAG have managed to develop these to their airlines. That's great. Thanks, Michael. Thanks, Dean. Next question please. We go to the line of Johannes Brown at MainFirst. Please go ahead. Your line is open. Johannes, thank you. Yes. Hi. 2 for me as well. So firstly, On that framework agreement that you had with the German pilot unit recently, just wondering how comfortable are you to reach a full CLA based on that framework agreement? I think you have a deadline for the end of this month. And then secondly, on the new company structure, just curious, what will be the headcount of the new management team Within the new structure compared to the old structure, it should include the operating units In that? Okay. At the union agreements, we're making good progress. I think most notably, we have announced most recently that the Spanish cabin We have signed up a recognition agreement. We're moving to a CLA with those. We are in active negotiations with the German unions on CLAs, there is a commitment there on their side that the agreement would be finalized by the end of February. I'm not wouldn't die in a ditch over a deadline at the end of February, but we'd like We have made some other agreements that we can't yet announce because but they are significant Because they are being balloted at the moment and the unions have asked us not to comment on the publicly until they're over the line. So we've made very good progress. I think I have been struck by the amount of sort of negative foreboding coming out of analysts and both media. We'll never manage this and never get done. And really, I think we've made extraordinary progress this winter with no disruptions. Does that mean we will rule out disruptions this summer? No. I think there once we have unions, there will always be threat of disruptions, but I think there will be far more threats than there will be active disruptions. But I would suspect occasional disruptions around Easter or into this summer are likely. And if they happen, we will manage our way around them very That's as we've done in recent years, R. A, in over the last 12 months. The new management team, it will start very I mean, I think generally speaking, that would be me, a group legal function and a group finance function that is probably about 3 people and a dog. And it will evolve, I think, over the next 12 months. We're not going to have a big group office. There isn't going to be a lot of infrastructure. A lot of the group service that will be, as I said, kind of labs, some of the marketing will come out or will be driven hear from Ryanair and will be then adapted or adopted by the other companies. And then where the other companies can operate offer services at Cheaper rates, we are moving some of the procurement out of Ryanair, for example, into Ryanair Sun. And we're certainly looking at opportunities to do more of the pilot Training in Poland at the moment, where again, I think one of the challenges for us in recent years has been we have lots of Western pilot, many of whom don't like foresee themselves wanting to go and base themselves in Eastern Europe. I think we want to be encouraging much more Eastern and Central European pilot recruitment and training in the next number of years because they're equally at home, whether they're working in Eastern and Central Europe or crewing in Western Europe as well. Next question, please. Thank you. We now go to Adam Anderson at Investec. Please go ahead. Your line is open. Morning, everyone. Can you just remind me why the ratio of staff to aircraft at Laudamotion is much higher And for the rest of the group, is that simply a function of using a different aircraft, I. E. Airbus not Boeing? Or is it just not integrated in the same way and therefore the scope to improve on that, please? Yes. I mean, we inherited a group of staff Mainly on the management side, we inherited that out of the divestment that came out of Air Berlin. And it started off last year with a tiny fleet of just 9 leased Lufthansa aircraft. In order to grab those slots, Valuable slots in Berlin and Dusseldorf and Fieldcraft in Palma. We wet leased 10 of our aircraft. The management there has done quite a degree of pruning this winter. Some of the middle management people have been taken out. And I would be very confident that as Laudamotion moves to 30 aircraft fleet by the summer of 2020, none of which will be aircraft leased in from Ryanair. It will be operating at Similar staffing ratios, in fact, maybe staffing ratios to Ryanair. The other issue that also with Laudamotion came. It has a maintenance facility there. So Laudamotion has the ex Niki Lauda hangar And about 100 engineering staff there. So it was Kind of because it came out of the divestment, we took everything that was there. We didn't have a choice but to take the maintenance base. So it's a bit just distorted. It will, by the summer of 2020, be operating at the same staff to aircraft ratio as Ryanair? I mean, between 2020 2019, you actually have an increase in staff per aircraft. So you go from about 47 to 52. I mean, even if you take the 100 off maintenance, it still leaves you 48, rest Yes. But I mean, I'm not sure those numbers are correct. I mean, we haven't released that for aircraft ratios Maybe I'm misinterpreting where you say jobs on the Laudamotion slide, Slide 11. Yes. Look, I mean, that's more PR than anything else. I mean, that's a fucking flight for the press down in Austria. Do you mind then? Do you mind our PR slides? They're always good news. So there may be a few disappointed applicants? I'm sure we'll have lots of very excited applicants. But the actual getting down to the detail of How many jobs will need to how many jobs will be employed to deliver a fleet of 40 or 50 aircraft? Don't do too much sleep over that at the moment. It went down very well with the Austrian press, suffice to say. Next question. Thanks, Alex. You get the price for the price for the observant boy in the class this morning. We now go to Malte Schulz at Commerzbank. Please go ahead, Marty. Your line is open. Hi, good morning. Thank you for taking my questions. Hi, Michel. Michel, First of all, on your negotiations with airports, you mentioned that they were quite keen on getting more Ryanair flights to the airport. Is there any concessions we can expect from it? Or do you expect a significant progress on your airport fees? And the second one is on your new structure a bit. I mean, if you compare it with the IG, on the individuality of each airline, should we expect that there is And in the end, also in terms of product, the difference between Lada Motion and Ryanair, Rhine Europe, for example, or even Rhine UK? Or will it be mostly on a cost competition only, but the product itself will be always the same. Okay. Yes, I mean, There is a lot of airports out there at the moment who are very nervous about the future of their Norwegian capacity, Germania capacity The and some others there as well, particularly airports who have FlyBE as a large base. And by the way, the and what we are seeing is that we are seeing very interesting growth opportunities there, airports Pitching not just at Ryanair, but also at Lauda, interestingly enough as well, seeing some very enlightened, I would have said, forward looking Growth incentive schemes, which are now becoming, I think, more and more prevalent, not just at secondary airports, but also at primary airports. And Obviously, I can't give you any detail on that, but we are continuing to encourage that process. Laudamotion, for example, has written out 250 new airports In the last week, talking about their growth plans for the winter of 'nineteen and the summer of 2020, And it is meeting more than 20 of those airports in London next week. So within the space of 7 days, more than 20 of the 50 airports have taken up the opportunity to meet in London. They want to do it in London so they can get everybody through the place in 2 days. And I think that is a reasonable indication of the appetite that's held there for growth. In terms of new structure, I mean, yes, there will be some obvious product differentiation. I mean, the most obvious product differentiation is that Laudamotion will have Airbus aircraft and Ryanair, Ryanair Trond will have Boeing aircraft. That I think will be the most significant product innovation. I would expect on short haul though that most of the service elements will converge because where it works in one airline, it should work in others. Laudamotion will, in the next number of months, I think, be moving towards the Ryanair model of priority boarding And bringing the priority boarding, using priority boarding to restrict the number of people who can bring 2 bags on board the aircraft. It is facing challenges with the volume of free gate bags they are taking at the airport gates at the moment. But that's not to say that there won't be different. I mean, there's a different, for example, in flight product or some difference in the in flight product in the Laudamotion between Ryanair. I know they eat more bratwurst or sausages or some stuff like that than what we do the alkaninis. So around the age, there'll be some differences. They speak German, we speak Manganese English. But other than that, I think the aircraft will be the big area of differentiation and the product will largely not exclusively, but will largely merge towards whatever is the most profitable, lowest cost provision. Next question, please. There are currently no questions in the queue. So can you please pass it back to you for any closing comments at this stage. Okay. Neil, any closing comments you'd like to make? No, Michael, I think we covered it off there. So we will have the full year numbers out in May, and we will update everybody again at that stage. Okay. And we do a full roadshow in May, where I think we'll put more meat on the bones of both customer service enhancements this year, the group structure and everything else. Other than that, I would just conclude by saying, I think we're facing a year of strong traffic growth. I would be cautious on the summer pricing. Our unit cost performance in the next 12 months will be good. Unlike most of our competitors, we can manage our unit cost. And therefore, and I think we're excited about the growth potential in Lava Motion, particularly as we're now signing up aircraft Leases, reasonably opportunistic aircraft leases, and Ryanair Labs is continuing to monetize what is a very successful Platform increasingly improving both the customer communications and the ability to convert customers into taking optional services. We are we'll have a continue to have a we have a weekly, monthly focus on punctuality. Our punctuality numbers have Significantly improved in recent months, but we would be again very worried about that period through May, June, when I think all airlines are going to be in Europe as we launch our summer schedules are heading for a torrid time with air traffic control service that are not fit for purpose. And we're still not making much progress with the European Commission of the European Union in tackling The French striking French air traffic controllers is one of those another example of where Europe likes to put the vested interest of tiny numbers of producers ahead of the interest of the millions of consumers whose flights will be delayed and canceled as a result of a few French air traffic controllers. Other than that, we're reasonably happy. I think we have set out this morning management succession has been addressed, Board development has been addressed, and therefore, I think most of the kind of ancillary concerns of shareholders over the last 12 months have now been addressed. The big issue for the next 12 months will be the rate and speed of airline failures and consolidation. Clearly, if oil prices rise back Toward the $80 a barrel that rate and speed will accelerate. But nevertheless, nobody can compete with Ryanair's unit cost across Europe. Nobody could beat with our pricing. And we would expect to keep pushing competitors out of the way or seeing them withdraw capacity from those markets where they compete with us both through summer of 2019 and into the winter 2019. Okay. I think that's all I want to continue with. If anybody has any further follow-up questions, please direct them here to Shane O'Toole, our Head of Investor Relations to Neil, who will be back Here later on this afternoon. And with that, if anybody wants to come and see the operation or visit the operation, please feel free to do so, Shaid. We'll be happy to facility to visit. Thanks very much everybody. Bye bye. This now concludes today's call. So thank you all very much for attending and you can now disconnect your lines.