Earnings Call: Q4 2018

May 21, 2018

Welcome to the Ryanair FY 'eighteen Results Call. For the first half of the conference, all participants are on listen only mode, so there's no need to be trained individual lines. And afterwards, there will be a question and answer session. Just to remind you, the call is being recorded. I'll now hand the floor to our host, Michael O'Leary, CEO. Please begin. Okay. Good morning, everyone. Welcome to the Ryanair full year results conference call. As you'll have seen earlier this morning, we released our full year results On the website, there's a detailed MD and A and a question and answer session, which was kindly hosted by Stephen Furlong of David with myself and Neil Which deals with most or all of the numbers and I think the key issues. I therefore going to run through this pretty Quickly and then we will open it up for Q and A. I'm joined this morning, we're a bit desperate. Neil Thorne is in New York David O'Brien, the Chief Commercial Officer in Denver Eddie Wilson, the Chief People Officer dialing in from Stockholm and Peter Beaulieu and Kenny Jacobs are in Dublin. So you see this morning, we are pleased to report a 10% Increase in profits last year at an unchanged net margin of 20% despite a 3% cost in our airfares. And that's the strength of the model. We continue to lower fare and lower costs in a market environment where our competitors are raising prices and raising costs. We expect, however, above average EU capacity growth will continue for the remainder of this year and that will continue to have a downward effect on fares. Unlike most of the competition who are predicting airfare increases this year, we believe the underlying yields will be flat. We're continuing to grow strongly. We're hoping with this summer, we've opened 200 new routes, including new country markets in Jordan, Turkey and Ukraine, Ryanair Sun, the new Polish charter airline commenced flying in April. And we have also invested They're taking a 25% stake in Laudamotion, which we believe, hopefully, with EU approval, we can grow to 75% before the end of at the half our half year in September. While airfares fell, ancillaries have performed well. Ancillary spend per passenger is up 4% with a 9% growth in traffic. Total ancillary revenues last year grew by 13% and we're now well on track to achieve our 5 year goal of getting to 30% of revenues coming from ancillaries. In the area of customer service, we lowered the checked bag Fees this year while increasing the bag allowances and by moving the 2 free carry on bags to our priority board customers, We have similar we have slimmed down or improved significantly the boarding experience of both customers and crews. One negative on the customer service side has been a Continuing decline in on time performance fell by 2% last year from 88% to 86%. All of this decline was due was created by additional ATC strikes our capacity staffing shortages in largely in German, French and UK ATC services, and this looks like continuing through most of December of 2018. ATC is going to be a real problem for us and most of the airlines across Europe. We're really giving them what we pay for Eurocontrol and ETC charges, the service we receive is lamentable. Unit cost last year It fell about 1%, largely due to our very good fuel hedging position. However, Ex fuel unit cost rose by 3%, mainly due to the one off EU261 costs and the pay increases negotiated with our pilots and cattle group following the September 2017 rostering failure. In FY 2019, we will invest substantially in the cost base as we gear up now to take delivery of 200, 210 Boeing game changers, the first of which will be delivered to us in April of 2019. This year, we'll see a modest increase in our ex fuel unit costs, up probably about 6%. Fuel this year, despite our very good hedging We have a 90% hedged out to March 2019 at about $59 a barrel compared to current spot for Brent is about $80 per barrel. But nevertheless, we have an unhedged 10% we'll be paying a higher rate for. Over the next 12 months, we expect our staff costs will rise by about CHF 200,000,000 Half of that will be the growth, our additional headcount pilot, cabin crew and a pretty extensive recruitment program in the operations area, in particular, where under Peter Beggi, we're putting in place a new team in engineering, in rostering and in operations, gearing up for the move to a fleet of 600 aircraft and 200,000,000 passengers per annum. Accordingly, we expect unit cost over the next year will rise by 9%, Ex fuel daily increased by 6%. However, we expect that to be a one off jump. Thereafter, we expect the impact of the lower cost Boeing 737 MAX Aircraft, a new 10 year lower cost engine maintenance agreement as well as continuing growth incentives at airports to result in flat or slightly declining union costs. On labor, we've made significant progress with our union recognition negotiations. We've already signed the first two recognition agreements with Bauta and Ampac. We expect that we're close to doing deals, I think, in Germany and Spain. The good news is that we have now negotiated 5 year pay deals with all of the pilots and the cabin crew. So we're not now it's not we're not in the Discussions with the unions, no, we're not focusing on pay issues. They all accept that our pay is very competitive and better than, in many cases, 737 competitors, There's Jet 2 and or Norwegian, but we are dealing in some cases with silly issues, union sort of inefficiencies. For example, the Spanish unions want the pilots committee to have an extra 36 days off a year to think and reflect about union issues. We've made the point those rules apply and explain for people working in canning factories doing Monday to Friday with 2 days off and weekends. Our guys get 5 days off, followed by 5 days on followed by 4 days off. And if they want 36 days off for the 6 committee members in Spain, Then those committee members can go to a 5:3 roster or they can think about union issues on their while they're on their 3 days off followed by one day a month or one day a week of union contemplation. So we're down to those kind of issues. I think we will continue to make progress both on the pilot and with the cabin crew unions, but we are not going to accept any ridiculous inefficiencies. And if that means we have occasional strikes such as the ones we had with the German pilots in December or with the Portuguese cabin crew in Easter, We think they will be reasonably small in number and will be on a country by country basis, but only where we're dealing with unreasonable demands or expectations. We have done an extensive survey of our pilots, more than 50% participation and have taken great comfort from the degree to which the pilots have perfected that they're Happy with the terms and conditions, the rostering and the pay at Ryanair. They want to see us make improvements on the way we allocate annual leave And base transfers that we have made under Peter and the new team and operators who've made significant progress in those areas. I think the key issue for us over the 12 months is we are more bearish on pricing than most of our competitors. We do not see airfares rising over the next 12 months. We think it's sensible at the moment to be cautious, we have reasonably cautious. We're guiding for flat Affairs for the next for the remainder of FY 2019, I think that's a sensible place to be. What could change that would be an upward tick or An increase or an acceleration in the rate and pace of European consolidation, which I think is likely this winter if oil remains at $80 a barrel. I I mean the challenge being faced by airlines like Alitalia, which last year lost money when oil was at $40 a barrel, Norwegian, which lost money when oil was at $40 a barrel. These airlines will face major challenges this year with they're largely unhedged and they're facing $80 a barrel for oil. So I think if there is some acceleration of consolidation, then the outturn that would slow down capacity growth in Europe, And that would clearly change our outlook on fares and capacity. But for the moment, we think we should be cautious and we remain that. We are doing our bid for European consolidation with the establishment of the Polish charter airline Ryanair Sun. That looks like it will trade profitably in its 1st 12 months of operation, but it's only a five aircraft operation. We've also acquired 25% stake of Laudamotion, which is an Austrian based AOC. It's an Airbus operator. We're working to increase that state to 75%, and we're working with Niki Lauda and his team To relaunch Laudamotion as Austria's number one low fares airline. We would see that growing to a fleet of 30 to 50 aircraft over the next 3 to 5 years. It has a very valuable portfolio of slots at many congested airports in Germany, Vienna and Palma de Mallorca And is an underlying is a reasonably profitable operation, but we expect that there will be startup and losses of about Cost and loss of about €100,000,000 over the 1st 12 months, mainly because we've had to pay all the pilots and the cabin crew for during the period from February through to June before the airline starts operating. And then because we've released it somewhere scheduled pretty late, it's gone into that German, Spanish marketplace with very low fares and we will offer very low fares through Laudamotion in order to fill those flights at whatever price it can get for the 1st 12 months. We touched briefly on Brexit. We hope there will be a transition agreement from at least April of 2019 through to December 2020. But we continue to plan that there will be a hard Brexit. We think there's a likelihood. Admittedly, it's a small likelihood, but nevertheless, a likelihood that the outcome of the discussion is that the European will be unsuccessful. And in those in that circumstance, there will be a disruption to flights as early as April 2019. We don't think that disruption will be long lasting because I think the consequences for UK flights and for the UK government of its structure, the flights will be severe. But we are putting in place preparations for a hard Brexit And we have had extensive discussions with the European Commission, and we'll ask Julius maybe to answer a question during the conference call. We have we believe that what we will secure our future as an EU airline, but that will may involve us invoking our existing rights Under our memo and article to disenfranchise all non EU shareholders. So they will we will remain a majority owned and controlled by EU shareholders by and not allowing non EU shareholders to vote on any shareholder resolutions in the event of a hard Brexit. So touching briefly on the Balance sheet, we continue to be very strongly cash generative, generating over SEK 2,000,000,000 a year. In the last year, despite CapEx of SEK 1,500,000,000 and a buyback Over €800,000,000 The net debt position closing year end net debt position was a fraction over €200,000,000 and pretty much unchanged over the previous year. And I think the success of our buyback program has been illustrated by the results this morning where in a year when net profit after tax grew by 10%, Earnings per share grew by 15%. I think the key issue for us in terms of outlook and guidance, we remain on the pessimistic side of cautious. We expect traffic to grow next year by 7% to about €139,000,000 Load factors will be flat at 95% because we don't think we can get them any higher than that. This year, we expect unusually unit cost will rise by 9% due to higher essentially higher staff and oil prices. The staffing cost step up will be 1 year. Oil prices could last for a year or 2, but then we expect that there will be Yields and fares will lag the oil price rise by about 12 months. So I think you'll see maybe a better fare environment into the FY 2020 numbers. We don't expect to see that in FY 2019. We'll add almost $400,000,000 to our fuel bill. So ex fuel unit cost issue will rise by about 6%, including fuel unit cost rise about 9%. We have reasonably we have limited H1 fare visibility. Obviously, quarter 1 is largely in the bag, But we have we're still waiting to see what fares look like in the Q2, which is the key quarter of the year, the July, September, July August and September pricing. At the moment in Q1, without Easter having moved into March, there was about a 5% fare decline in Q1. We expect to pick up most of that with about a 4% rise in Q2 fares, so essentially flat for the first half of the year. Thereafter, we think the Second half of the year, fares will be no worse than flat, but we're guiding flat for the year. Ancillary revenues will continue to outperform traffic growth, but not by efficient to make up a decline in our flat average fares or the rising costs. And therefore, we're guiding that full year profits for FY 2019 will fall by about 10% to a midpoint of about SEK 1,300,000,000 down from the SEK 1,450,000,000 this year. Excuse me, This guidance is heavily dependent on what H2 fares look like. So if there is some further consolidation in the second half of the year, That would be an up there will be upside in that guidance. If there isn't consolidation that continues to be above average capacity growth, then it could we think that's what the base to get the guidance is based on. None of that guidance have we included as the investment in Laudamotion. So if we are receiving EU approval to acquire 75 percent Laudamotion, we would expect to provide about €100,000,000 in exceptional Startup cost in next year's numbers, they're not baked into this year's guidance. With that, I'm going to hand over to Neil Somerhan. Neil, do you want to take give us some key themes On the MD and A and on cost. You might also touch on the hedging position as well. Fine. We'll do I suppose I'd just To everyone's attention, back to Michael's comments there on the balance sheet, very strong balance sheet. We've over 400 aircraft, with over half the debt on those unencumbered. So very strong balance with BBB plus raises. On hedging, we're well hedged into next Next year, we've 90 percent of our hedging in place now at $5.83 per metric ton. This compares to $4.93 last year, but it's well below the $800,000,000 that we're seeing at the moment. The MAX is also well hedged. Take the first MAX in April of next year, and we've got the euro dollar hedged on that at an average rate $124 against the dollar. Last year was a strong year, which saw unit cost down 1%. Guests were up 9% to $130,300,000 and revenue was up 8%, driven Primarily by a good performance in ancillaries. And so profit after tax ended up 10% and our EPS up 15% helped by the buyback. The latest buyback is now halfway through, dollars 380,000,000 spent on the current buyback, and we're well on track to finish the balance before the end of October. So with that, I'll pass back to yourself, Michael. Okay. Thanks, Steve. We're going to open it up for Q and A. Now what we've done in the interest of Speed here, we're not going to have multiple questions this morning. So one, analyst, if you could, don't ask kind of city questions that we've already covered in the detailed Q and A that's up on the website this morning, which I'm sure you're all seeing. And we're not going to allow multiple questions either. So if you have 1 or 2 parts to your question, that's fine. If there's 3 or 4 parts, We're stopping at 12. So we wanted to try and get as many questions as we can, but keep it to kind of either 1 or 2 questions and no follow-up, Steve. So So with that, let's open it up for the MD and A for the Q and A, sorry. Thank Our first question comes from Daniel Roskett, Bernstein, please go ahead. Your line is open. Good morning, gentlemen. Two questions, if I may. Number 1, in your outlook, you mentioned systems investment to facilitate the growth. Could you elaborate a bit on the changes you'll want to do, especially to your back office systems in, let's say, PSS, RES, RM, fleet planning, whatever it may be. And secondly, you touched on the opportunity of building a larger group of airlines under Ryanair Holdings banner in the 3 years. A little bit more on the strategic side, which key assets of Ryanair such as labs or the brand Do you see scaling across all those operators in the group? What's the opportunity here? And which elements would remain with the newly acquired airlines? Thanks. Thanks, Daniel. Okay, quickly on that. The systems, there's not so much computer systems. I think what we're talking about there in terms of investment for to spool up to 600 aircraft, It's largely in the operations and engineering side. We have invested heavily in the last 6 months. There's a new management team within operations, new head of engineering. We have significantly beefed up the rostering side of the house where we had that failure last September. I mean rostering team has doubled in size with Significant kind of management there. We're also investing heavily in simulators. We did we signed a deal to take the Three more simulators coming at the end of this year, which will increase our pilot training capacity by some 40%. And we are also investing heavily in we have new Coming in place in Seville, there's another one in Stansted, another one the third one, somewhere I can't remember, I'll stop my head where it is. So but And investment in engineering, tooling. And then within the Laudamotion operation, it has a 2 bay hangar in Vienna. So there's a lot of physical infrastructure going in place in the operations, rostering, pilot training And as we've done the new 10 year engine maintenance deal. So we are it's not so much, I mean, I think John Hurley would be here in London. I mean, we think that the systems we currently have, we are working on an operations system to replace this line, That won't come in place for about another 12, 18 months. That's one that we're building internally within Ryanair Labs. But so it's much more Okay. There's much more management, physical infrastructure in operations and engineering to cope with the 200 aircraft. On the group structure, And I think we will evolve, I mean, maybe over the next, the thinking is Ryanair Holdings will evolve probably into a holding company not similar to IAG over the next 2 to 3 years, where Ryanair DAC will become a it's already I mean, at the moment, it's a subsidiary of Ryanair Holdings, But we would see a rapidly growing Ryanair Sun and hopefully subject to registry approval, Laudamotion And become much more significant airlines in their own right and begin to report through to holdings as a kind of a proper holding company, Determining capital allocations to the subsidiary companies. Within that, a lot of the Ryanair skills, Certainly, the website and the mobile app are scalable. I mean, we've gotten Laudamotion has we're helping Laudamotion With the sales, with their website development, straightaway, much of that work has been done by Ryanair Labs simply because Laudamotion didn't have those resources to do it on their own. And I think a lot of the kind of the lab technology and the customer service technology that We have evolved over recent years at very low pricing and then encouraging passengers to take up optional service such as reserved seating, a priority boarding and check-in baggage if they so wish to. We think we can roll that out across those other subsidiary companies. I also think there will be other opportunities within the M and A space. Not that we will lead in that space, but for example, if I mean, if an IAG or Lufthansa were to acquire Norwegian, for example, I think it's inevitable that there would be significant competition divestments coming out of that. And we would certainly want to play a role in any kind of competition divestment that would arise out of A restructuring or a takeover of either an Anitalia or a Norwegian or any SAS, any other loss making airlines at the moment. And a group structure, again, modeled on the IAG structure would enable us to build some skills to participate in those kind of processes. Great. Thanks for that, Mark. Thanks, Daniel. Next question, please. Thank you. The next question is from Savi Syth of Raymond James. Please go ahead. Your line is open. Hey, good morning. Hi, Navi. Just a couple of questions for me just on the cost side. First, But the labor, the cost increase, I appreciate the color on that. Is that a little bit higher than you were expecting? And is that due to tightness or maybe because some of the costs didn't come through in fiscal year And then second one is, I know you mentioned maintenance and EU261 as kind of driving the year over year even though your comps are a bit easier because of the Construction last year. Just wondering if you could talk a bit more about that and if the inspections related to the Southwest Accident is having an impact there? Thanks. Well, I might have Peter just touch on the South Pacific. Let me deal with the part. No, actually, the labor is not much sorry, to us, I don't think labor is surprised. We have well telegraphed with what we have done in the last 6 months, I think a significant achievement by Eddie Wilson and the team was to put in place 5 year pay deals With our pilots and our cabin crew, in some cases, despite the opposition of local unions in certain countries, Our pilots voted directly or in some many cases over the heads of the units on these pay deals, which have now gone into place. That has been reflected, what those pay deals, a lot of the pay was front ended into the 5 year. So it's a year 1 of the 5 year pay deals. So You see an impact on it on the last 5 months of last year's numbers, but then we and the full 12 months for the next for the 1st 7 months of the next 12 month period. I mean, there's a lot of kind of analysis, I think speculation at the time that the unionization could cost us anything up to 140,000,000. I think Between €140,000,000 of pay increases, we're not there. The number is €100,000,000 We thought we indicated we said it would be €100,000,000 And I think we cap it out at that. There is still continuing growth here. And I think both on the management side, management and sec, if you like, Structural side, which I've dealt with in operations, engineering, rostering on those kind of areas, so that we avoid a repeat of the September 2017 In rostering, and we are very confident that won't be repeated. And we are putting it so I think that investment is necessary. A lot of that you'll see in the engineering and the operations side. I mean, there is a pinch point in engineering and maintenance around the industry at the moment as well. And we have to kind of factor that in. I think in many cases, we do much of our own maintenance in house. We need to invest in those both facilities and in the people. On the maintenance of the EU261, I mean, EU261 is just an ever expanding claims Fest for customers. It is going to become a greater challenge for airlines. And particularly, It is the point at issue where we have a problem with European Union, the U261, is where we are completely not responsible for these cancellations and delays such as ATC Fee strikes. The legislation says that you're entitled to recover your EU261 cost, but the ATC providers around Europe have kind of leaked Protection from claims. And so we can't recover those costs. And as more and more people have become aware of their entitlement to claims, I mean, there's a rising Percentage of customers who are making those claims. Now we have successfully fended off. I mean, we've had a number of very notable victories, Court victories getting rid of the claims, ambulance chasers who are in the middle, charging customers 40% for their claims. But frankly, Customers are now becoming more and more aware of their entitlement compensation when all their right to care, either where there's more than a 3 hour delay or where there's a strike. And in the case of strikes that we're not responsible for, we still have the right to care obligations. So people have to spend more time in hotels or meals. The airline is being airlines are being expected to pick that up despite the fact that competing transport doesn't have to do that here in Europe. So we think that will be a Growing area of cost for not just for us, but for all airlines. And Peter, do you want to touch briefly on the south and post south Wales inspection? Sure. On the fan blades, we're fortunate that we have almost 40 spare engines across the company. So that's enabled us to kind of mitigate problem around this. We're doing 5 inspections a night on the fan blades across the engines. We're doing them in Stanstedt, Dublin and our recently opened hangar in Madrid. We have support with logistics on that from CFM. We've a very, very robust plan in place that we will get all the inspections done by the end of June, which is required. CFM support on the spare blades has been quite poor, But because we have the spare engines and we have other spares in stock, we will be able to manage that. And it is creating additional demands on our engineering gearing to park it And it creates some additional manpower and resources that we need to put in place. But we have a robust plan in place, and we would have it done in time for the end of the period. Thanks, Peter. Okay. Thanks, Savi. Next question, please. Thank you. The next question is from Milgram of Credit Suisse. Please go ahead. Your line is open. Good morning, everybody. If I could ask one short term question and one medium term, please. The first one, just based on the staff cost guidance, Certainly, I calculate you need the rest of ex fuel unit costs up about 4% this year to make 6%. I'm just interested what the biggest drivers are there. I know the Q and A had You mentioned maintenance. How significant is EU261 and your thinking there? Then the second question, one thing I think is probably Easily missed this morning. I mean, your return on assets actually were the highest this century at 12%, the highest since 1999. Just interested, once you get through the 2 year fuel headwind, given your top line story should become less asset intensive with ancillary growth, is it fair to think you expect structurally higher returns from the business as we go forward through the medium term? Okay. Let me just touch on that. So I mean, I think if you're looking through to next year, we expect kind of obviously, we've already baked in quite a significant jump in staff costs and a significant jump In fuel and oil, even with our hedging position at $59 a barrel, which looks very attractive compared to $80 a spot, It's still a significant jump on last year's hedge position where the average cost of fuel was in the low 50s. We will expect airport and handling charges to rise pretty much in line with traffic growth. And I think that there will be a significant increase next year in the maintenance materials and repairs, which this year only grew by 5%. And on the marketing distribution costs, they will continue to heading to be an exceptional growth in EU261 costs and claims. And that was an area where we and all other airlines are very concerned about the continuing kind of claims culture Among passengers, it's not so bad where we're responsible for the delay of cancellation, which is very rarely. But where we are now responsible for right to care on the huge volumes of Cancellations that we're not responsible for. I mean, if you take the month of May alone, we've already canceled over 300 flights in the month of May. Last May we cancel less than 100 flights this year, we've already canceled 300 flights because of 3 weekends of French ATC strikes And tomorrow there's a national strike in France, but we may we face another probably 300 flight cancellations. That's 600 flight Cancellations in the 1st 3 weeks of May alone, all of which are outside of our control and due to strikes. But we have the right to and the difficulty for us To reaccommodate passengers when our load factors are running at 95%. So it is very difficult to reaccommodate passengers. And Despite the fact we're not responsible, we don't have to pay EU261 compensation, we are responsible for their rights to care. I would so Going forward, the next year, the big areas apart from staffing and fuel will be maintenance in EU261. I would just calm down on the return on I think we are facing this year a certainly a structural step up in unit costs. We will still be significant as you have a very large and widening unit cost advantage over all of our other EU competitors, most of whom are facing much of the same cost themselves. We will continue though to be very cash generative this year. We will, this winter, take less aircraft because of there's we're in the gap this winter between the end of the In GE order and the start of the game changer order. But no, I don't think I think over after once we get through this year, I would expect a reasonably return to a reasonably flat slightly declining unit cost outturn, particularly as more and more game changers come through the system with 4% more seats and 16% lower fuel consumption. I I think ancillaries will continue to perform well, but I don't think it's realistic to expect a continuing improvement in our returns. This year, we've managed a 20% net margin. That net margin may be under threat. I think there would be a downward trend there depending on the outcome of years next year. But thereafter, I would expect us to return to a 20% net margin, which is where our long term kind of profitability should be. And the driver of that in the next number of years will be the out Turn on pricing and that would be driven by consolidation. There is no doubt that Europe is moving towards a similar Turner's North America with consolidation will take us towards 4 or 5 very large major airlines in Europe. Most of those major airlines are reasonably well run. Air France clearly has issues with unions, which is a separate issue, but they're clearly well run. There will be less and less, I think, capacity growth in Europe in the next number of years and more and more focus on Pricing, particularly in markets like Germany, where Lufthansa now controls the entirety of the German domestic market and much of the short haul market. And I think they we will see a return to fuel surcharges in the summer of 2019, but that won't feed into our numbers until FY 'twenty. But so I would expect us to maintain current profitability. We don't really run the business for return on assets. We run the business for For profitability and cash flow, and we would expect to maintain the recent performance on both of those fronts with a likelihood of a dip this year in terms of The profit overturned. Great. Thanks, Michael. Thanks, Ian. Next question, please. Thank you. The next question comes from the line of Jarrod Castle of UBS. Please go ahead. Your line is open. Hi, good morning. 2, please. 1, just looking at the holding company structure that you're Potentially talking about, be interested to get your views on kind of long haul, low cost and whether or not that Potentially is back on the table. And then secondly, just looking at Ryanair Labs, 600 individuals now, that sounds Like a lot of the skill base. But just trying to get the profile in terms of what is the same that's going into Ryanair? And how should we be thinking about that Sorry, your line was particularly faint at the end there, Gerard. But my favorite, What's the is the outlook on long haul low cost? I have no aim. Frankly, we have no interest in long haul low cost. I'm not sure and as the Norwegian experience would Yes, I don't think long haul low cost is a profitable area. It is too much of the long haul market is controlled by the legacy airlines who Are continuing to exercise very significant pricing power at the premium end of the cabin and can afford to dump the economy end of the cabin almost down at any price. And I think the struggles that Norwegian are experiencing are suffering and their entry into long haul, which has proven to be the more they grow, the more money they lose. I think ultimately that long haul piece will be long haul low cost will be loss making. I would continue though to see a I think we're excited by the Utilities available to feed into long haul. I think that will we've reached agreement now with Aer Lingus. We would hope to have the system issues dealt with before the end of the year and to be launching a serious business or a serious business feeding into Aer Lingus Through Dublin, where we have 85 short haul routes on to their long haul operations. I think that's likely to be a reasonably small but growing business opportunity for us in the next number of years. Ryanair Labs, we continue to invest very heavily in Ryanair Labs. We now have 3 development centers in Dublin, in Broth Slove, in Poland and in Madrid. The costs are not significant relative to the income that Ryanair Labs is generating through ancillaries or the speed at which Ryanair Labs is developing operating kind of systems for us. But I've John Hurley here in London. I might ask John just to give a comment on Rynor Labs and I'll ask Kenny Jacobs in Dublin Just to give us a color for what Ryanair Labs doing in the ancillary side. So John? Hello, everybody. Ryanair Labs, like I said, has 3 data centers in Dublin, Poland and Spain, it's all in house, no contracting, low cost. And we're using the data of 1,000,000,000 visits per year to Utilize and build the best possible solution going forward. Going forward, it's a big focus on ancillaries, improving The revenue you saw results this year were quite promising. Next year, we'll be continuing to grow in that space. I guess firstly, when you look at the cost of Ryanair Labs, like these are generally expensive individuals, But the cost of Ryanair Labs on an annualized basis is a fraction of what we would be paying to consultants and to third party providers, the data This world, who have any profit margins about 30%. We will be paying these guys a fortune. And the delivery will be an awful lot Lower than it is through Ryanair Labs, where actually we pick up the labor costs of our own in house developers. And we are able to develop much more quickly and deliver products and services and change much more quickly. And Kenny, maybe you want to give a touch on the digital plan going forward in ancillary? Yes, you can hear me there. Can you? Just checking. Yes. Yes, okay. Yes, to take up from there, I mean, I think you can the bigger numbers that I would call out just Obviously, they're in the deck. But in addition to the 43,000,000 people we now have with My Ryanair accounts, we've got 33,000,000 people Our active users of the app. So the app continues to be the number one most used travel app across Europe. A lot of the focus And a lot of the uptick in penetration we've had in the past 12 months has been on the, what I would call, the day of travel products. So this is Priority boarding is an example that was building nicely on penetration when we changed the policy on January 15. That gave us then an extra kicker in penetration of priority boarding. And because we've got 33,000,000 people with the mobile app and we've got data on 43,000,000 people, We do see a good number of customers take priority boarding on the day that they're actually traveling. On the other big product seats, It's you can see it's a very high number at 50%. It's closer to saturation, but there's still some to go for on seats and Plus products at 10% ahead of when we thought we would get to 10%. It's quite interesting that it's hard work on all of these products, and it's hard work on driving penetration of Plus. It's interesting when you start to look at this by different types of customer segments in different markets. So you would have the cheapskates across Europe, but we'd also have some countries and some bases where over 15% of the sectors we now sell are a plus sector. So I think plenty to go for still on plus. On Ryanair Rooms, conversion is on plan and visits are strong. We will have a busy summer improving the website and improving the app. And it's more like you're managing an OTA site than managing a low cost Airline website when it comes to Ryanair Rooms because it's different type of competition. And as we said previously, about half of the bookings on Ryanair Rooms are people who do not Have an upcoming Ryanair flight attached. So it's a different type of animal to manage. I think going forward, it's really interesting to see how the The behavior of the consumer is also changing. We see a lot of customers and you might take the same individual who will book late in, pay high fare, Add in fast track, add in high priority to their booking when they're going on business travel, and they might be Europe's biggest cheapskate when they're buying their own travel. So I think the trip, as we call it, is becoming unbundled, and that plays into our strategy of being able to really just target the right product to the right customer at the right time. And the more you want one, Louis, as in the same individual might want everything and pick the Flexi plus fare, they might also say, no, I don't want a bag, I don't want to Forward early on certain flights, and we would say, look, it's customer choice. One other thing I would say is we're also using the power of Ryanair Labs to improve Customer service, we've learned through the past 6 months, if you take the strikes in France tomorrow, all customers will have received an e mail already with the option of A refund or a move, and we're saving money because they're not calling the call center. There's simply it's one click on the app to make that move. So we're using digital to improve customer service there already. Okay. Thanks, Kenny. I should also say there's a big misunderstanding that we've I tracked some negative publicity in the last week for the move of non reserve passengers could check-in for 4 days before travel. We've reduced that 2 days before travel, mainly so that we can create more space for people who want to pick up or take reserve seats. Well, it's not a measure that's designed to force people to pay airport check-in fees of £50. In actual fact, The vast majority of our customers are now checking in on a mobile app. So whether they're away for the weekend up in the Spanish Hills or there, They have no difficulty checking in online on the mobile app within the 48 hours, which is still double. Typically, pretty share with Aer Lingus and others for their economy passes only allow them to check-in 24 hours before departure. So it's not a money making move. It's simply a reflection of the fact that actually Online check-in has moved to the mobile app, and we would have no difficulty to reduce that to 48 hours or even 24 hours without it causing any passage or any inconvenience whatsoever. Thanks, Jarrod. Next question please. Thanks. Thank you. Our next question comes from Alan Dace of Deutsche Bank. Please go ahead. Your line is open. Yes. Hi, good morning everyone. I was just wondering, there's 2 things please. So you talked about engineering, we know about rostering, It's also about maintenance. Are there any other areas you just think you need to be you need to bulk out Just to make sure that 2024, the infrastructure is all in place to get there. And then secondly, Particularly with Auto Motion now as well and the things you said in the past, do you have any updated thoughts on A321neos because obviously you've got, yes, EGM with saying the unit cost is just spectacular. Thank you. Yes. No, I mean, I think we have the 3 areas of bulk out have been in operations, engineering and lab. That's very well flagged. Finance, there's been some new management added to the senior team in finance that's all there now embedded down. Sales and marketing, I think, anyway, there is reasonably Stable. No. So I think we're reasonably happy now, but we have front loaded a lot of that investment, both in staffing and in management with a view towards how Have we got the right resources in place for 600 aircraft and how do we avoid having a kind of rostering management failure or a kind A bunker mentality within any one area of the business that could fall over going forward. So we don't expect there to be any other areas of significant investment on the labor side. Now the Motion, again, the attraction of Laudamotion is, one, it's an Austrian EOC with a big presence in Vienna. It's also an Airbus Operator, and that has been it was one of the reasons we originally made a bid for Aer Lingus in back as far as 2,006. We want to have some an airline relationship with Airbus. I think we need to have to establish credibility with Airbus. We need to have an Airbus operation within the fleet. I am less motivated by aircraft. I've always been kind of pretty much I know what the word is, but I never really care which aircraft it is or what It's always about the cost of the aircraft. I think when you look at the A321neos, the Boeing MAX 10s, which Jacob, which are the Boeing equivalent about 240 seats, they're both very good aircraft. The question is what cost you buy them at? And the market has been overheated, I think, for the last 2 years on both 73s and on airbuses on the neo front. And the lease rates And the cost for those aircraft, I think, are too high. We have I mean Boeing has made us an offer in the MAX 10, which would have been Significantly ahead of where we've ever bought an aircraft before. So we politely said thank you, but no thank you. But so whether it is we can grow, I mean, the Attraction of having Laudamotion there is if the right opportunity comes along. And remember, we have a very low cost order for Mac For 197 seat, 730seven-two 100 game changers that are going to come through over the next 6, 7 years out of 2024. So we're securing our aircraft fleet program and we already have a huge Aircraft maintenance cost leadership over Easyjet, I mean, you look at, for example, Wizz is a Norwegian's aircraft ownership cost. They are Ridiculously expensive because they're doing these sales and leasebacks and putting them on the balance sheet at an inflated price. We add all our aircraft to the balance sheet at a net purchase price. We don't play games on we're not trying to take out or take profit off the table on the aircraft. So you're getting carriers, getting the benefit of our Significant buying power and our we have the fact that we opportunistically put those deals in place in 2013 2014 when Boeing needed somebody to buy the remaining NG production and a lead customer for the 8 100 for the 2 of the game changers. I would be very happy to take either an A321neo Or a MAX 10, 737, but only when we get to the next downturn in the industry. And I Expect the next downturn in the industry is coming at a sooner rather than later as oil prices rise towards $80 a barrel. And who knows, maybe they're heading for $100 a barrel. Frankly, in the more short to medium term, I hope to hit $100 a barrel because that will speed up consolidation and will take us in The next round of opportunistic aircraft orders. Okay. Very clear. Thank you. Thanks, Alan. Next question please. Thank you. The next question comes from Monique Dodd of Citi. Please go ahead. Your line is open. Monique. Good morning, everyone. Just a couple of questions from me. The first one on fares. Obviously, 4Q fare is really strong, up 6%. And even if you strip out Underlying impact from Easter, maybe 2 percentage points, it still looks like a big move in the underlying fair outlook 4Q versus 1Q this year. Could you comment on that? Is that partly a result of some of the short term capacity exits you saw from in Germany, for instance, from the likes of Everlyn coming back online? And then secondly, ancillary revenue growth also really Strong in the year and Q4 in particular. And that I suppose is despite some headwind you would have seen from your new baggage policies and lower baggage fares. Could you just Give us some indication of what kind of headwind that caused to your ancillary revenues and say what the kind of underlying ancillary revenue growth was? The Q4 fairs are somewhat distorted. Obviously, you've identified that the first half of Easter was in Q4 and not in the prior year comparable. It's also the quarter whether we had grounded 25 of the winter aircraft so that we can accomplish all the pilot leave over the winter period. So in many respects, We grounded 25 aircraft. We were operating less capacity than we thought we originally would. And you've seen that reflected in others like Easyjet reported very Strong underlying yield performance in Q in that quarter, mainly because we had taken out a lot of our UK domestic flights where we could be head to head with them. So I think some of the Q4 was a is based on Easter and us grounding more aircraft. They're all back flying again once we got To April. And so we're into a more normal steady state going forward. Q1, the fares are down 5%. We should always be cautious on airfare This industry, Q2 looks like fares up about 4%. A lot of that is depends on the what the close in bookings will be. And also how many more cancellations of high yielding weekend flights we have to suffer through May and into June if the French Continue to have these weekend strikes of air traffic control. And we are those it's not so much of the cancellations and clearly the cancellations are painful, but Canceling what our high yielding very profitable flights that weekend, but so is everybody else. Ancillary revenues, again, be cautious. We have performed very well in the last 12 months, traffic growth of 9%, ancillary revenue growth of 13%, up another 4%. Most of that has come from what is really cost free services such as the continuing I think continuing, I think, trend of customers to take up those kind of reasonably cheap services like the reserve seating, the Regarding boarding. Baggage, remember baggage goes into the underlying we put our baggage fees in the underlying airfare, so it's not in ancillary. And as the take up of baggage has continued to decline, we're down to low teens now of customers who are checking in bags. There is an operational challenge for us in that we have at least eliminated the baggage issue at the boarding gate. But certainly, during the summer here, we're seeing flights where we're taking anything between 100 and 150 second gate bags, second bags go you the whole free of charge. We need to be able to manage that and we'll have to be able to regulate that at some point in time The future, we may have to do something more on the numbers of passengers who can bring a second bag free of charge to the gate. We're not quite sure what, but It's got to be operationally efficient. Understood. Thank you. Dijs, do you want anything else on the ancillary revenues there? No, I think it's fine. Manik, just you'd referred to the Plus products. The Plus products do get caught in the scheduled revenue as opposed to ancillaries. You would have seen there were up to 10% penetration now on the plus. That includes the bag, which would normally be scheduled, but it has some other bits and pieces like for Astrak, etcetera, that will be down in the ancillaries. But I wouldn't get caught up, Monique, trying to figure out what's the cannibalization between Flos and the ancillaries. We will split them out or as we've done today, and it's relatively straightforward. Thank you. Next question please. Thank you. The next question comes from the line of James Hollins with Exane. Please go ahead. Your line is open. Hi, there. 2, please, for me. Firstly, one for John on the move to Amazon Web Services. I was wondering if that would, over the next few years, both improve your cost base and more specifically improve your yield management. Certainly, the press release from Amazon would suggest as much as I think much to be guff from their behalf. And secondly, you're talking about capacity above average. I'm just wondering if you could quantify Either what you're seeing is industry growth over the next couple of quarters or better still on competing routes with you, what you're seeing in terms of the data point on competing capacity? Thanks. Okay. Maybe I'll take the second one first. We were surprised that Lufthansa were allowed to buy up Air Berlin with no kind of competition divestments at all. I mean, they went to 97% shares of German domestic market. That does mean that a lot more Air Berlin capacity has remained flying in Germany. Asia came in and took up Berlin operations and we through loud emotion have come in and taken up a lot of the flights from A valuable software, Berlin, Stuttgart, Dusseldorf that we otherwise couldn't get access to. So there has been I mean, Germany, I think, is going to be a very underperforming market This year, particularly because we're the Laudamotion is sending a lot of its capacity at very short notice into the peak summer period. But that's ultimately good for Laudamotion. Customers are enjoying incredibly low prices on their destination of Palmetto, New York during the peak period. But you take that kind of That capacity not being taken out of the system. You still have Norwegian adding kind of scattergun capacity in Spain, in Italy, Not until we very well thought out or planned. They seem to be just taking our short haul aircraft and dumping them into markets where they just lose more money. We're adding capacity. I would say our capacity additions are rational, but across the system are doing well now in Spain and Portugal, in Central Europe. Italy is Forming well, Germany is weak. The UK has certainly improved given the Monarch bankruptcy last year. But again, some of that capacity has been backfilled by EasyJet ourselves or adding more aircraft to base in Birmingham, East Midlands and Manchester and Jet 2 have taken up some of that capacity as well. So I think some of the capacity we thought would have come out last year through bankruptcies hasn't necessarily come out, and that's likely to continue. I think the big issue for us is will be Timing and nature of the inevitable, in my opinion, demise of Norwegian at $80 a barrel. Yes, I would have said it will go bust. Clearly now it looks like it may be rescued by a BA, an IAG or a Lufthansa or something like that. But I think even within that, that would take an illogical competitor. I think one of the upsides of Norwegian to these guys is their order book. I think instead of those short haul aircraft being deployed on as exact new capacity growth elsewhere, I think they'd take some of those orders to re please within their existing operations. Now I'm not sure about the timing or of the strategy of the IAG announcement. It seems to us that they have given the bond holders in Norwegian hope. But one way or another, it would be helpful to the industry generally The illogical loss making competitors like SAS, Norwegian, Alitalia, which continues to lose money and is in administration, Either rationalized or join in the consolidation process because I think ultimately then the capacity growth in Europe will settle down to more being reflective of GDP growth rather than at the moment, it's running at 2 or 3 times ahead of EU wide GDP growth. John, do you want to touch briefly on the Amazon based web service and their page? Yes, certainly. Claims are probably a bit overexcited. Basically, Ryanair has got 3 data centers across Europe post in the website. That gets refreshed every 5 years. 18 months from now, we're up, we'll do a refresh. So a bit of refreshing that kid will move into the cloud basically. It will primarily doing it to get to scale, to get to protection as you grow the website to 200,000,000 passengers over the next 6 years. It's already busy at 1,000,000,000 passenger unique business per year, and it's protect that all to scale, etcetera. It will reduce costs slightly, but nothing material to call out a note on. Yes, Amazon has a lot of interesting products. We are looking at them, particularly around live streaming of data using Kinesis that will give us a benefit going forward. Would it benefit our yield in the future? Who knows? We're definitely looking for that space. It will certainly will help us having better products offered to customers at the right time. Great. Thanks, Don. Next question, please. Thank you. The next question comes from the line of Mark Simpson of Sidoti. Please go ahead. Your line is Okay. Yes, morning. Just wanted to touch first off on the ancillary side. If you plug in your kind of headline guidance FY 2019, The residual line is ancillary per packs. And essentially, it kind of implies 13% growth in ancillary revenue per packs for FY 2019. I'm sure you're not saying that. Can you give us a firmer sort of guide on that? And given the fact that you were woefully off in the Q3 full year 2018 guidance that you gave at plus 2% and it came in at plus 4.3%. As I say, some guidance on ancillary forecast for this year will be good. 2nd question, Last year, you gave us 5 quarters of hedge positions, which included the Q1 of the second year. Can you give us a Q1 2020 some commentary on your hedge position. Okay. I'll just first touch on that. Neil, that's just coming on the hedge In the Q1 of FY 2020. Look, we've given you what we've given you on ancillaries. I wouldn't I think we your implication is a bit Overly optimistic. We think in the next year, traffic growth is about 7%. And I think the most likely outturn on ancillaries would be a Similar performance this year. We'd be hopeful that Asterias will continue to build revenue per passenger up, I think, around 4% as a result that could be 3%, it could Remember, some of our as Kenny points out, some of the service products we're doing at the moment will top out. I'm not sure that there's much more room in They're speaking above kind of 50%, 55%. Priority boarding will continue to grow. But again, I mean, it's at 20% at the moment. It may get to 30 Over the year, but I'm not sure it's going much higher than that. So be cautious. I mean, I think 7% traffic, maybe around 4% is a reasonable outturn. So we'd be more at 10%, 11% rather than 13%. And Neil, on fuel on the Q1 of the following year? Yes. Mark, this time last year, we had about 10% of the FY 2019 hedged. We don't have any commodity hedging in place since the Q1 of FY 2020 at this stage, but we do have a fair bit of our OpEx or euro dollar Cover in place out there. We're about 50% hedged for the full year. That's kind of skewed towards the first Half of the year where we're hedged at about 125 for just over 80% of our OpEx in the first half of the year on the fuel side, but no commodities, yes. Just going back to your ancillary guidance as well, Mark, I think your numbers are very much Based on the upper end of the guidance, clearly, the ancillaries will be a determinant on whether it's the upper or lower end of the guidance. Thanks, Neil. Next question, please. We've got about 5 more minutes for questions. So if we can speed it up, that would be helpful. Thank you. The next question comes from Johannes Brann of MainFirst. Please go ahead. Your line is open. Yes. Hi, good morning. Just 2 for me also. Firstly, Obviously, you are increasing large client to Fraport, not only in Frankfurt, but also in Greece. Just interested how do you think about the targeted Significant fee hike that Fraport has depreciated with the Greek authorities and which will kick in, in 2020, 2021. Is there any way you can challenge the sea hike? And then secondly, can I just ask about Ryanair Sun and Loda Moton? And at which unit cost and profitability level do you expect these airlines to operate after the start up phase? And also, will these 2 subunits Be unionized as well or will you try to keep them union free? Okay. Yes. David, if I come back to you for some color on the Fraspor fee hike in 2020. Just briefly on Ryanair Stone, we Expect it to operate at similar margins to Ryanair. It will be profitable in year 1. A lot depends on the speed at which it builds Over the next year or 2, and that's we need to see how the charter market in Poland performs this year and what the demand will be for A flight in Ryanair is done into the September 'twenty program. Laudamotion will be loss making in year 1. Probably, we would hope to be close to breakeven in year 2. I mean, the challenge for Laudamotion is that while it's been split out by Lufthansa, Yes. Lufthansa has been forced by the competition, sorry, to lease it originally 14 aircraft. Now Lufthansa haven't provided all the aircraft. It's now down to 9 aircraft. But the leases are very expensive and they run over a 2, 2.5 year period. So until we can replace those expensive Lufthansa aircraft, I think Laudamotion will be loss making, but not significantly loss making year 2, Hopefully close to breakeven or small profit in year 3. Thereafter, once we can restructure the fleet in Laudamotion And I think get it to a reasonable scale of 30 to 50 aircraft. I think no reason why Laudamotion won't run at the same kind of Cost base and margins that Ryanair operates, that's given the benefit of the Ryanair kind of the website, our sales, The ability to deliver sales and our presence in the 2 big markets of Germany and Spain, obviously, we will lean heavily on Niki Lauda and the Lauda brand in Where there is a much higher greater presence than Ryanair has in Austria. And Austria, I think, is a market that is certainly attractive to us. For many years, it's been dominated by Austrian Airlines, the Lufthansa subsidiary with very high fares. So it needs choice and competition. David, Fraport. Yes. Well, the Fraport increases are entirely predictable. If they're going to sell a monopoly to the highest bidder, that's what's going to happen. And it has already happened. They've had some increases in the 1st year. And our response has been to concentrate our activity in the summer peak when you can make money at higher prices in Greece at the summer peak. The issue is what they do for the rest of the year. And We are in discussions with Fraport about a growth plan that would incorporate shoulder periods and the winter because that's what they need to do. Otherwise, it will be summer peaks and we'll live with that. Thanks, David. Thanks, Jan. Next question, please. Thank you. And the final question in queue comes from Catherine Leonard, Numis. Please go ahead. Your line is open. Good morning, everyone. Just in the interest of time, I'll try and be quick. But in terms of the credit that you currently have operational for the Rhino RIM, do you have a Penetration level that you're aiming at until the point where you remove that credit. How should we think about the time until that becomes profitable or margin accretive And just secondly, just on the cost increases to staff costs that you've alluded to. I know that we talked a little bit about this already, but When we met in February, you talked about staff cost per pack not exceeding sort of the €6 per pack or €6.1 level, And that was sort of in line with the guidance you've given on the €100,000,000 of annualization of costs. The current guidance implies sort of a €6,800,000 Euro to PAX, if my calculations aren't incorrect. Just wondering if what has changed so rapidly in the last few months? I know you talked about investment, etcetera, but Can you just give any more color on that? Okay. We haven't got a threshold of which penetration of brand new rooms. Brand new rooms is growing Significantly at the moment, but I mean it's a non profit earner. We're giving back effectively 10% commission we make on the hotel rooms to customers in the form of travel credits On Ryanair services, we would expect that to continue and we would expect to be delivering that kind of a kickback of commissions, I think, certainly for the foreseeable future, Certainly over the next couple of years, while we build up the penetration of Ryanair Rooms. And then the test of this is to see how Quickly and how much we can say build, not just the convince Ryanair customers to book hotel rooms using Ryanair rooms, But to persuade non Ryanair customers to book hotels using Ryanair rooms because we're giving back we're offering a combination of the lowest hotel prices, But we kick you back the commission. And we think that's ultimately how we can attack the business models of the Booking.coms and the Expeditors who are very successful at what they do, but have a very high margin built into their system. And we need to be able to persuade the hotel providers that we can do it, Ryanair Rooms will do it at a much cheaper commission price than you will have to pay to the hotel.com, the booking.com. In the short term or in the more medium term, it's not about making money out of that, it's about building scale. Our cost increases, I'm not Quite sure what the point is, but maybe Neil, do you want to answer that question? And I thought you were trying to explain it as well where the labor cost increase was going to be. Yes. I mean, Catherine, we weighed €6 per passenger, just under €6 per passenger, rounds up to €6 in the year just to end. We're going to be under €7,000,000 So just Approximately a euro for PAX going up there. I thought we'd made that point quite clear actually at the Analyst Day back in February, But it's pretty much in line with what we did indicated, where we would see the staff go up by effectively a euro. That's what's happening, and that's coming through in the numbers. So no real surprises. Thanks, Catherine. Any other questions? We do have one further question that's come through. That's from Alex Patterson, Investec. Please go ahead. Your line is open. Last question, Alex. It's just one question for you. Just on Laudamotion, has your guidance changed slightly? You previously said €50,000,000 of start up and operating losses In year 1, you're now saying €100,000,000 until breakeven. Is that now greater than €50,000,000 in year 1? It's greater than 50 in year 1, but year 1 will kind of be spread across the will run across our fiscal year. What we didn't factor into was the delay, I mean, well, 2 things. 1 was the delay in getting the aircraft out of Lufthansa and 2 was the delay in being able to put the aircraft on sale. We really only released the Laudamotion summer schedule from Germany to Spain in April. It's a very short window for selling the peanut. We Clearly, we'll fill those sites, but we will fill those sites at low fares and a lot of the Germans had already pre booked their trips to Malaga, Spain and to Greece at that point in time. So there have been significant start up costs, mainly paying the pilots, the cabin crew during the month of February, March, April May, and then allowing for much lower yields through the summer peak because of the late release of the soft or legally to the flight program. We're looking then we will have a major drive that will be announced in the next week or 2. There will be a very large Laudamotion Schedule focused around Vienna this winter. We're also you have others like Wizz, Wailing also Talking about expanding in Vienna this winter, and it's likely to be a very low year's environment in Vienna this winter. In almost all cases, wherever we've come up against Whaling and or whiz on a point to point basis, they tend to retreat. And we see no reason why that won't be the outcome of the expansion in Vienna this winter. So I think the difference Where we had fair foresee was a fair year 1 start up cost of $50,000,000 that's risen to $100,000,000 which is largely going to be lower than our aggressive yield and pricing in the Laudamotion environment for the first up until March of 2018 2019. Thereafter, though, we would expect next year, the summer 'nineteen schedule for Lauda Air, Particularly, we can add more aircraft from Germany, the main cities in Germany and Austria to Spain to be very strong. We'll have been in the market early. We'll have released Summer 2019 schedule much earlier many months earlier than this year. And David, maybe you want to add some color to that on It's allowed to motion prospects for summer 2019? Yes. I mean, we really can't read too much into summer 2018. As you say, We put seats on sale 5 months ahead of flight date, which had already been on sale for 5 months with competitors. But it's interesting. If you take Dusseldorf, where Laudamotion itself had no presence and Ryanair has no presence this year. Between us, we'll represent about 30% of the capacity between Dusseldorf and Palma. But pretty much all of that went on sale with 5 weeks to go. But it's clearly a very lucrative market, but not this summer. And I have a feeling the late entry of our own capacity and allowed emotions capacity Generally, across the piece, it's going to dampen close in booking for competitors as well. I mean, Nicky and Air Berlin have been well replaced in Germany. Lufthansa and Eurowings have put in about 4,500,000 seats. Easyjet, 2,500,000 seats ourselves. And loud emotion between us, about 2,000,000 seats, which is pretty much all of Berlin. So there's a lot going on there, and it won't be pretty this summer. Thank you. Michael, if I could just add there, the one other thing, James, that has changed or sorry, Alex, that has changed since we announced this back in February is that fuel has gone up Between $10 $15 a barrel. Yes. And Laudamotion is eventually on Hague this year. Okay. Thank you. Ladies and gentlemen, thank you very much for participating on the call. We have extensive roadshows. I guess, 14 teams on the road across U. K, Europe And U. S. And we look forward to meeting you all at some stage during the week. If you haven't got a meeting, please contact either Citi or Davies, and we'll be happy to I'll schedule a meeting, an investor meeting for you during the week. Other than that, we'll share it back to you in the office next Monday. And if you have any individual questions, Please route them through Shane O'Toole, the Head of Investor Relations, and we'll deal with them on a one to one basis. Thank you very much, everybody. God bless. Bye bye. This concludes the conference. Thank you all very much for attending. You may now disconnect.