Good morning, ladies and gentlemen. You're very welcome to the Ryanair half year results podcast. We've had an interesting six months, in which we've reported half year profits have fallen by 7% to EUR 1.2 billion. Highlights of the half year include traffic growth of 6% to 77 million passengers, a load factor of 96%. Average fares have fallen 3% to just under EUR 46. Ancillary revenue, though, has grown strongly to 27% up to EUR 1.3 billion. That strong growth in ancillary revenues has not been enough to offset higher costs in labor, fuel, and EU 261 payment. We've signed agreements with unions in Ireland, the U.K., Italy, Germany and as recently as last week, Portugal, and shortly Spain, and we continue to make progress on that front.
We've increased our Laudamotion holding to 75%, and there's an agreement to take that to 100% at some stage over the next two and a half years. In terms of growth, we've taken delivery of 23 new Boeing 737s in the half year. We've opened more than 100 new routes and just as important, we've returned EUR 540 million to our shareholders via buybacks. Well, all of this is on our website. You can get the detail of our quarterly press release and the MD&A, and we'll take you now through the share of the presentation. Ryanair continues to be Europe's favorite airline. We are the lowest fare, lowest cost carrier. Through all the noise of the last six months, that is the message that we want to communicate. We remain and have a large price and a very large cost advantage over all of the European airlines.
With that model, we continue to grow strongly. This year we're now forecasting 141 million guests. That includes about 3 million Laudamotion passengers, which is growth of 8%. We are number 1 for coverage, 37 countries, 92 bases. Yes, unionization and that process has added to costs and will add complexity. It doesn't alter the fundamental model, which is that Ryanair is by some considerable distance, the lowest cost airline in Europe and will continue to roll out sustained and profitable growth. Oil prices have added to costs. Airfares are falling this winter, but we believe that will speed up the consolidation process and we've seen a number of failures in recent weeks already. Added to that over the medium term is we are by next spring taking the first five of our Boeing MAX aircraft deliveries.
These aircraft will arrive with 4% more seats, 16% lower fuel costs per seat and will drive unit cost efficiencies over the next five or six years. In terms of fares, we continue to reduce airfares in the half year and our fares are significantly lower than every other airline. In terms of cost, and I think it's important because some of this has been lost in the noise of the last six months. We continue to have by far and away the lowest unit cost of any airline in Europe. It's not just related to labor. In fact, with the 20% pay increase for pilots and pay increases for cabin this year, our unit cost of labor is now higher than it is for Wizz. Still significantly lower than EasyJet, mainly because we're operating a larger aircraft.
In other areas, airport and handling costs, we are one third what on a per passenger basis what EasyJet are paying. When it comes to aircraft ownership and maintenance costs, we are less than half of what Wizz and other airlines are paying. We continue to have an enormous cost advantage over every other airline, and that will sustain not just traffic growth, but profitable traffic growth over the next five years. We continue to spread the model all over Europe. For summer 2019, we recently announced our first two bases in France, in Marseille and in Bordeaux.
We'll open a new base in London, at London Southend next summer with a very low cost deal there that runs over a number of years, and we will take over the four aircraft base in Tegel, Berlin Tegel in Germany from Laudamotion this winter and will continue to grow that. That will give us two Berlin airports, Tegel and Schönefeld, and help us to continue to sustain our number 2 position in the German market. As I said, we'll grow this year to 141 million guests, with a fleet of 455 aircraft. Our market share is number 1 or number 2 in most of the major EU markets and in almost all cases it's growing strongly. Neil, do you want to take the half results?
Well, Michael, thank you. In the first half of the year, we saw our guests or traffic increase by 6% to just under 76 million customers. Load factors were very strong at 96% year-on-year. Fare, however, as Michael has already said, was down in the first half of the year. We saw a 3% reduction. Ancillaries, however, performed very well. We saw an 8% increase in total revenue to EUR 4.8 billion. Our profit after tax, however, due to higher costs, higher fuel particularly kicking in, we're down 7% to EUR 1.2 billion. This excludes an exceptional one-off loss in Laudamotion in the first half of the year. Michael.
Well done. Current developments. The key trend in our sector at the moment is all airlines across Europe are reporting much lower fares into the winter. There seems to be excess capacity growth, something about 8% this winter in European short-haul. That's unsustainable and will lead to further casualties this winter. That process will be speeded up by significantly higher oil prices, up to $85 per barrel, steeply rising EU 261 costs, mainly as a result of a litany of air traffic control strikes and staff shortages that all airlines have suffered from in Europe this year. The stronger dollar and higher oil is accelerating airline failures in Europe. We're making very good progress on the union agreements. We have more to do, but we have made very significant progress over the last six months, in particular in recent weeks.
Laudamotion will now lose an exceptional EUR 150 million this year, but it will move very close to breakeven, maybe it's very small loss in year two. I think the theme of our roadshow this year will be, yes, we're suffering some short-term pain. The industry is going to suffer short-term pain this winter, Ryanair is and will emerge the long-term sector winner because of our low cost base. Just to put the oil position in some context We are 90% hedged out to September 2019, so 12-month hedge is in place at about USD 68 per barrel. We have only 10% exposure to the spot market where oil is currently hovering somewhere close to USD 85 per barrel. If we should look at some other competitors, Wizz, for example, has 60% exposure to the spot market over that 12-month period.
Norwegian, if they survive that long, will have 85% exposure to the oil spot market over that 12-month period. This is going to put enormous pressure on the cost base of those airlines. It will limit their ability to compete with Ryanair, where we're already strongly hedged, taking advantage of our strong balance sheet. We are already seeing that process of consolidation accelerating. We're facing into a very difficult winter. There is very strong capacity growth, as I said, up 8% in EU short-haul with a stronger U.S. dollar and high oil. In recent weeks, we've seen the failure of Primera, a 20-aircraft operator based around Stansted in Scandinavia. Small Planet in Germany and Azur Air have also failed. SkyWork Airlines in Switzerland, VLM Airlines in Belgium has gone bust. Cello Aviation, a small U.K. charter airline, and last week, Cobalt Air, a six-aircraft Airbus operator in Cyprus filed for bankruptcy.
Underneath that, you're also seeing a lot of consolidation among the larger airlines. Norwegian has closed bases in Edinburgh and Belfast. Wizz has closed a base in Poznan where they've been unable to compete with Ryanair. Lufthansa is closing its Dusseldorf base. EasyJet has cut two aircraft from its Oporto base in Portugal, Ryanair has announced two base closures. Bremen, a two-aircraft base in Germany, Eindhoven, a four-aircraft base in Holland, and we are reducing our Niederrhein base in Germany from five to two aircraft this winter, mainly because we're now expanding at Dusseldorf, which is quite close to Niederrhein, so we have too much exposure in that market. Can we rule out further cuts or closures this winter? No, we can't.
If oil prices rise above USD 85 per barrel, or if airfares fall more steeply than the -2% we are forecasting this year, we would not rule out further base closures or further capacity trimming this winter, I think that's a sensible position for us to adopt. We've made very significant progress with the union front. We now have pilot agreements in the U.K., in Italy, in Ireland, with both pilots and cabin crew. Last week, we signed our first agreement with the Portuguese pilot union, SPAC. In Spain, we reached agreement with SEPLA in Spain last week, and we expect that agreement to be signed sometime over the next week or two, which will mean we have almost all of the major pilot unions signed up to agreements, with the exception now only of Germany.
We are in active dialogue with the German pilot union, VC, and German cabin crew union, ver.di. We would hope to make progress with them over the coming weeks. As you can see, there's more to be done. 90% of our pilots have already agreed to 20% pay increases this year in 2018. Money is not at the heart of these agreements. It is generally local law, local terms and conditions, and other issues, seniority-based transfers. We have agreed in almost all countries to those terms and conditions. We continue to actively meet with the other unions. We are moving to local contracts. We're moving to local taxation in other EU countries with the benefit of our 5-4 pilot rosters, local seniority lists.
I think our pilots and our cabin crew and their unions are beginning to appreciate the job security that Ryanair offers at a time when many other airlines are failing. Can we rule out further strikes this winter? No. We're not expecting them, but we certainly can't rule them out. We hope to avoid them in the interest of our customers. If other people want to go on strike this winter, as we've demonstrated during eight days so far this year, we can manage our way around strikes with very little disruption to our business. Laudamotion, our shareholding increased to 75% in August. Niki Lauda and his family continue to be a significant minority shareholder of 25%. It's had a very difficult first year for reasons that have been well-cataloged. Late arrival of aircraft from Lufthansa, late release of seats into the market this summer.
It will make an exceptional loss of EUR 150 million in the first year. It has already announced its summer 2019 winter schedule, which will focus around three large bases, Vienna, Düsseldorf, and Stuttgart. The fleet has been restructured. We are returning by agreement with Lufthansa the nine expensive aircraft that Laudamotion had this year, and we will replace those with currently 19 long-term operating leased A320s in summer 2019, and we will supplement that with four of our own aircraft, which will see the Laudamotion fleet grow from 18 aircraft this year to 23 aircraft next year. That will be sufficient to see the airline grow from three to five million passengers, and reduce losses from EUR 150 million in year one to somewhere between breakeven and a EUR 30 million loss in year two.
The reason we're not so sure is just because we don't know what the outcome on fares will be, but we will have released the summer schedules for many of these big German cities to Palma de Mallorca 10 months before we get to summer 2019, and we expect that the advance bookings will be strong and at materially higher yields than Lauda had this year. We're very happy with the management team in Lauda. They're doing a lot of the sensible things that we would like to see done. They've redone deliveries, new interiors. They're improving the pilots and cabin crew pay deals. We have the benefit in Laudamotion of an Austrian AOC, a very significant Vienna base, and a huge assembly of very valuable slots at German airports and at Palma de Mallorca. Ryanair is and will continue to be the medium-term, long-term winner.
The cost leadership in Ryanair, the gap between us and the others has widened. Yes, we've had higher labor costs this year, but so have all of our competitors. In many cases, they've conceded to pay increases significantly higher than Ryanair without getting our productivity. We're about to start into a five, six-year period of Boeing 737 MAX 200 deliveries, 4% more seats, 16% lower fuel cost. The key thing here is we bought these aircraft at very low prices. We've hedged the dollar-
At about 124, yeah.
At about 124 to the EUR for the entire six years of the delivery period. We've locked away these low costs, and we'll see those unveil over the coming years. Airport incentives continue to improve as competitors fail. We would point to the deals we've done in Bordeaux, particularly London Southend, which has been very advantageous. We're using the very strong Ryanair balance sheet to exploit low-cost financing for our aircraft, very strong hedge lines on fuel and on U.S. dollars, that helps us to continue to deliver strong profits, strong cash flows, and shareholder returns. The pilot and cabin crew supply has also improved as competitors have failed. Primera, for example, released 400 crew, Cobalt last week released about 150 pilots and cabin crew to the market.
At the back of all of that, ancillary revenues, thanks to the large efforts of labs and our digital teams, are rising strongly. Stephen, do you want to take guidance?
I will, Michael, please. Traffic this year will increase by 8% to 141 million, which includes 3 million customers in Laudamotion this year. We expect fares, as Michael has already said in the presentation, to remain under pressure. There's a lot of capacity in Europe this winter, up about 8%, so we think our fares will drop by approximately 2%. Very limited visibility into Q4. There's no Easter, and we've seen some weaker pricing around the school midterms in October and Christmas. Ancillary we believe will continue to perform strongly. We had a very good performance in the first half of the year. Penetration of priority boarding will continue to improve over the back end of the year.
There will be a bit of an offset for IFRS 15, the new revenue accounting standard, which we'll be unwinding in the second half of the year, having had a positive benefit in the first half. Our fuel bill will be up about 460 million EUR this year, and our unit cost ex-fuel, we believe, will be up about 6%, maybe a little bit higher, depending on the final outcome of EU 261. As a result, our profit after tax guidance is unchanged from that issued to the market back on the 1st of October, in a range of 1.1 billion EUR to 1.2 billion EUR profit after tax. That, of course, excludes exceptional first-year losses in Laudamotion of about 150 million EUR.
To celebrate these exceptional results and the lower fare environment this winter, we're launching today a large seat sale. 1 million seats are on offer across all markets, starting from EUR 9.99 for travel in November, December, January and February. We are going to lead fares down across Europe this winter. We're going to drive the fares down for our customers and also going to drive fares down for our competitors as well. It's never going to be a cheaper time to fly, either with Ryanair or across Europe this winter. Despite the fact that oil prices are rising, Ryanair's fares are still falling, and we're growing strongly and profitably because we will be the medium-term winner in all this. Thank you.
Thank you.
H1 fares fell 2%. Will this trend continue?
Yeah, I think it will. We've seen a lot of capacity coming into the market this winter of about 8%. We're guiding fares down at least 2% this winter. We've seen weaker bookings around the school midterms in October, early November, and around Christmas. We would anticipate that we're going to see more fare reductions over the course of the year. Do you expect more consolidation this winter?
Yeah, we think it's certain, particularly as Neil said, short-haul capacity in Europe is up 8%. Fares are falling. Oil prices are rising steeply to $85 per barrel. In recent weeks, we've seen the bankruptcy of Primera, SkyWork, Small Planet, Cobalt in Cyprus last week. I think there will be more and larger failures this winter. Our focus would be on one of the two major Scandinavian airlines, both of whom are losing money and have a very weak oil hedge position. We think one or other of those is probably the most likely candidate to fail this winter.
Will you reduce capacity further this winter?
It can't be ruled out. If oil remains at or above $85 a barrel and fares are under pressure, it'd probably be the sensible thing to do to take a look at capacity again. How are the airports reacting to this environment?
We're seeing longer, deeper, better incentives over a longer-term period. I think you'll see that with the new bases that we've announced for summer 2019 also some of the incremental growth that we're delivering in markets like Spain, Italy, Greece, Central Europe in particular, also airports in Ireland and the U.K. who are very nervous about some of their incumbent carriers and are working hard with our new routes team to incentivize Ryanair to allocate more aircraft to their markets in 2019.
Where are the growth opportunities for FY 2020?
There's always lots of growth opportunities for Ryanair, some of the good examples into next summer would be our two new bases in France. We're opening bases in Marseille and Bordeaux. We're getting into Southend in London, one of the few London airports we don't currently fly to. We're increasing capacity in Luton. Dublin will see more aircraft capacity, of course, Italy and Spain will continue to grow strongly for us. How is Ryanair Sun developing?
It's growing very well and very profitably. It'll be profitable in its first year of operation where we allocated five aircraft to the Polish charter market. In year two, we've already increased that by almost 50% to seven or eight aircraft for the charter market. The failure of, or the cutbacks by Small Planet Airlines in Poland has meant there's been a reduction in charter capacity in the Polish market, we're also using Ryanair Sun now. We're transferring some of our scheduled aircraft into Ryanair Sun this year. By putting those on the Polish AOC, we can offer more advantageous terms to our pilots and cabin crew in Poland by taking advantage of some of the deals that are in place for LOT Polish Airlines with its pilots and cabin crew in the Polish marketplace.
Is there any update on the group structure and [audio distortion] full year results in May?
It's bearing down very well. We have Ryanair, which we all know and love very well. Ryanair Sun, as Michael has said, has bedded down really well in its first year of operations and will expand into next year. Laudamotion is now a fully owned subsidiary of the group, 75% shareholding in there. Of course, we'll have our fourth airline, Ryanair UK, with a U.K. AOC before Christmas. All of these airlines will help us manage our growth over the next few years and also enable us to engage in any consolidation opportunities that fall our way. What is the latest on Laudamotion?
As I covered in the presentation, Laudamotion has traded well this year, but because of the later release of the aircraft and the inventory to the marketplace, it'll lose about EUR 150 million in year one. We'll double the size of the Airbus fleet at much lower cost into year two. We're hiring a lot of Airbus pilots and cabin crew who are coming to us from airline failures like Primera Air and Cobalt Air. We expect substitute fares, peak period fares in summer 2019, largely between Germany and Palma, that we will trade somewhere between excuse me, a loss of EUR 30 million or break even in year two.
Why did you do the Laudamotion deal?
Well Laudamotion was one of those things that came our way earlier on this year. It has a lot of very positives in it, including a very valuable slot portfolio in Palma de Mallorca, in a number of German airports. Of course, it gets us into Austria, particularly Vienna, where we hadn't operated before. It's got strong brand recognition, and it's got the ability to grow strongly from next year and beyond. What happened with the Lufthansa lease?
Laudamotion has reached agreement with Lufthansa to return the nine aircraft to Lufthansa this winter, and it has already reached agreement with a number of aircraft lessors to replace those aircraft and in fact expand the Airbus fleet to 18 aircraft for summer 2019.
Ancillary is up 27% to €1.3 billion in H1. Will the strong performance continue?
We had a strong performance in the first half. We expect to see an increase in penetration in the likes of our priority boarding and reserved seating in the second half of the year. Ancillaries will have a good full-year outcome. We're very pleased with the way it's going. We're also continuing to invest heavily in our website. We've a major upgrade on the way at the moment, which will help enhance our personalization for products to our guests and enable us to grow out to 200 million customers by March 2024.
Ex-fuel unit costs rose 7.5%. What are the drivers of this?
It was a year of investment in Ryanair. We're starting to see the pilot pay increases, 20% pay increases coming through. 90% of the pilots have already accepted that. That's in the first half numbers. We're investing heavily in training costs for our pilots and cabin crew. We're ramping up our engineering headcount in advance of the MAX coming in next year. Unfortunately, we've seen an increase in EU261 compensation costs due to the high level of ATC disruptions in the summer just ended.
Will these increased costs continue? I don't think so. There'll continue to be some cost pressure on the labor line next year. Airports and handling costs now will be flat to slightly down. Certainly, aircraft ownership costs over the next number of years as we take delivery of the MAX 200s will be at the unit level, will improve. We can't gauge where EU261 costs will go because much of that will be driven by ATC strikes and disruptions. Sadly, at this point in time, there's no indication that French or German ATC services will be any better in summer 2019 than the lamentable performance that we have received in summer 2018.
Have you increased your fuel hedging?
We're well hedged. We're 90% hedged now for the next 12 months at about $68 a barrel, which is significantly lower than the high spot prices up towards $85 a barrel that we've seen recently. We've got limited exposure now to spot prices for the rest of the year and a good position relative to competition. When I look at our euro/dollar FX hedging for the next year, FY 2020, we're hedged about 123, which compares favorably to 115 that we hedged in the current year.
Could the EU261 cost increase further in FY 2020? It's possible. It's all driven by the lamentable performance of ATC providers, particularly Germany, Britain, and France. Germany and Britain, where they tend to be short-staffed, badly managed, particularly at weekends, and in France, where we had 11 weekends of strikes and disruptions at the Marseille ATC center. That might be improved slightly if there are more airline failures this winter, and therefore there's a reduction in capacity in Europe next summer. It's a fluid situation, but at the moment, I would be generally pessimistic both on ATC services and therefore on our EU261 cost into next year.
When does the MAX delivery start?
Of course, we're in the spring of next year, we're due to take 5 in. We've nicknamed this aircraft the Gamechanger because it's the next step change in cost reductions for Ryanair. It's 16% more fuel efficient. It's got 4% extra seats, so we can spread our costs over 4% more customers while also driving our ancillary revenues over that higher number of passengers. It's an aircraft that we're looking forward to. It's going to drive and widen our cost leadership over the next few years.
Given the difficult trading environment, would you consider deferring some deliveries? No. These aircraft will lower our costs. If it was a very difficult trading environment, I think what we would do is take the deliveries of the new MAX aircraft and return or ground some of our older 737NGs or return them off lease. We could trim the fleet that way, no. Given that we have exceptional costs on these aircraft, we've hedged the dollar, they have 4% more seats and 16% lower fuel, we'll take as many and as much of them as we can.
According to the media, Ryanair is rife with strikes. What has the impact been on customers?
Well, you can't believe everything you read in the papers. We've had a limited number of strike days over the summer period, and we've handled the operation phenomenally well on the days of strikes with limited disruptions to our customers. We've operated over 90% of the schedule in the impacted markets and re-accommodated the other 10% of passengers on alternative flights. Minimal disruption to the operation.
It's important to put that in some context. We've had eight days over this year, which is less strike days than Lufthansa have had in the last two years or that Air France have had in the current year. As Neil said, in any of those days, we continued to operate actually more than 95% of the total schedule across Europe.
How bad were the ATC disruptions in H1?
Terrible. This has been the worst year on record for ATC services. Our H1 performance, on-time performance dropped from 86% to 75%, and of that 11 percentage point decline, 13 percentage points was accounted for by ATC strikes, delays, and slot restrictions.
Do you expect ATC disruptions into next summer?
Yeah, I think it can't be ruled out. We've lobbied hard through Airlines for Europe to try and get the staff shortages addressed in the ATC providers across Europe. I think we're going to have issues into next year. Now we've seen some capacity come out of the market. Some larger airlines might fall over this winter. That could help. As things stand, it looks like it'll roll into the next summer.
How is union recognition progressing? I think we've made very significant progress in a short nine-month period. We've now reached agreements with pilots and cabin crew in Ireland, pilots and cabin crew in the U.K., pilots and cabin crew in Italy, last week we announced our first signed agreement with pilots in Portugal. We've reached agreement with SEPLA, the Spanish airline pilots' union. We expect that agreement to be signed sometime in the next week or two, which leaves us really only Germany and to a lesser extent, Belgium, as the only two larger markets where we haven't now concluded agreements. We're in active dialogue with both the Belgian and the German unions, we would be hopeful of concluding agreements with them this side of Christmas. If it's not done this side of Christmas, sometime after Christmas.
I think, given the adverse environment that's out there, particularly for airlines and the number of job losses being reported in recent weeks by both pilots and cabin crew, there is a much more, I think, sensible, common-sense approach being taken by the unions also by us. We need to get these agreements done so we can focus on protecting the jobs of our pilots or our cabin crew, hopefully avoiding any more base closures or base cuts, although they can't be ruled out if oil prices continue to rise or fares continue to fall.
When do you expect to conclude the negotiations?
As Michael just said, we're making good progress at the moment. I think it would be wrong to put an actual date on it. We will continue to work through the issues with the unions and hopefully get there as soon as we can. Is there a risk of more strikes?
There's a risk. We don't expect more strikes over the coming weeks, but they can't be ruled out. It's not within our control. We're in the winter. I think everybody realizes the airlines are facing very difficult trading environment. Many of the major airlines have announced cuts or base closures this winter. I would like to hope that common sense will prevail. We're working positively with the unions. We get a sense that the unions are now working positively with us. I hope we'll see us conclude agreements over the coming months.
Is there any change to the EUR 200 million staff cost increase due to the CLA?
No, that guidance is holding. 90% of our pilots have already taken the pay increases. We're the best low-cost payer in our bases across Europe. We offer very good rosters, five on, four off for the pilots, five three for the cabin crew. We've got great job security. The negotiations are pretty much around local terms and conditions like local contracts of employment, local seniority lists, more transparency on holiday leave. As Michael said, we've been happy and we've been able to negotiate CLAs on the base of those Ts and Cs. Will you lose productivity with the local employment contracts?
No. We know ultimately there's no productivity at all. In actual fact, it's more of a myth. Largely, Irish labor legislation complies fully with EU regulations and standards, which are the same regulations and standards that apply across almost all other EU countries. There may be some small elements. In fact, in some cases, we've now had feedback both from the Italian cabin crew and from the Portuguese cabin crew that actually they'd prefer to stay on Irish social legislation because maternity leave in Ireland is longer and child benefits are higher in Ireland. Nevertheless, we've committed ourselves to moving to local contracts, local agreements, local taxation as quickly as we can in early 2019, subject only to reaching agreement with the unions.
When is the next buyback?
We just finished a EUR 750 million buyback. There's a lot of uncertainty in the market at the moment around Brexit and what's going to happen. I think it's wise to keep our powder dry for the moment. This is something that the board keep under review on an ongoing basis, in any event. We've returned over EUR 6 billion for our shareholders since 2008 under our various distributions. I've no doubt we'll have more in the future, the timing is just something that we need to see what happens with Brexit. Why has your net debt increased at period end?
We've gone through a six-month period now where we've had enormous amounts of CapEx. We spent over EUR 800 million in the half year, largely on aircraft CapEx. We spent almost over EUR 500 million on share buybacks during the half year. Profits are down 7% in the half year as well.
Would you consider another aircraft order?
We're always interested in cheap aircraft if we can get the right price. That said, we've got very good orders at the moment, 210 MAX on order. We've lined up 19 aircraft on lease for Laudamotion. We understand that Boeing and Airbus' order books are full at the moment. That could change very quickly if we see a number of airlines fall over in the next number of months. If the price is right, we'll look at it, but we're very happy with what we have at the moment. What is the latest update on Brexit?
Nobody knows. Clearly the risk of a hard no-deal Brexit in March 2019 have risen appreciably in recent weeks and months. In those circumstances, there is a threat some flights could be grounded. Certainly, flights operating from the U.K. to Europe could be grounded for a period of time in April 2019. We think on balance, that's unlikely. It can't be ruled out. In those circumstances, if there is a hard no-deal Brexit, the two key issues for us will be flight routes. We expect that the British will welcome flights from Europe. That won't be interrupted. We are not sure that the Europeans will reciprocate. The other element is that we will move immediately, in those circumstances, to limit the ownership and control of non-European shareholders.
We will immediately remove voting rights from all non-EU shareholders. We will restrict the sale of shares by non-EU shareholders. They can only sell them to European nationals for a period of time until we ensure that we are 50.1% EU-owned. We would expect that would take place in a short period of months after April 2019 with those restrictions in place. Once we've restored 50.1% EU ownership, we will then release or remove or ease those restrictions on shareholder sales and on voting rights.
Do you have contingency plans if flights are grounded after March 29th?
We have a number of plans. Much would depend on the amount of time that aircraft would be grounded for. If you're talking a short number of days or weeks, we'd probably leave the aircraft on the ground in the U.K. However, we have talked to airports across Europe. They're very hungry for Ryanair's growth, they would love to see that accelerated in the event of a hard Brexit. We've got lots of options out there. We also have our U.K. AOC, which will come online towards the back end of this year, which will secure the flying rights of the domestic U.K. operation. What's your full-year guidance for FY 2019?
Full-year guidance, profit after tax at Ryanair will be in a range between EUR 1.1 billion-EUR 1.2 billion. That excludes Laudamotion. As we said, Laudamotion is on track to make an exceptional EUR 150 million loss in the current year. We think that's driven by excess European capacity growth this winter, a weak pricing environment. We have no element of Easter in this year's Q4, whereas the first half of Easter was in last year's Q4. Therefore, we're guiding second half of the year average fares will fall by about 2%. Fuel bill will rise by over EUR 460 million. Ex-fuel unit cost for the full year will rise about 6%. That could be slightly higher depending on the EU 261 payments over the winter period if there's excess weather disruptions. Ancillaries are performing strongly.
Although H2 will be, as Neil has already alluded to, adversely impacted by the timing differences in IFRS 15, the revenue recognition, which slightly inflated or had a positive effect on ancillary revenues we had H1 and negative effect in H2.
Is Laudamotion in the FY19 guidance?
No, it's not included in the guidance there that Michael just gave. We're expecting an exceptional first-year start of loss of about EUR 150 million due to unhedged fuel and low fares. Michael, Neil, thank you very much.
Thank you very much.