Good morning, ladies and gentlemen. Welcome to the Ryanair half-year results press conference. I'm joined, as always, this morning by Neil Sorahan, our Group CFO, and we're going to take you through the press release, the slide presentation, and a reasonably brief Q&A. As you have seen this morning, Ryanair reported H1 after-tax profits of EUR 1.8 billion, which is 18% lower than the EUR 2.2 billion recorded in the H1 prior year. The H1 highlights included traffic growth of 9% to a record of 115 million passengers. Average fares fell 10%. That was a 15% decline in Q1, slightly more measured 7% decline in Q2. We had 170 Gamechangers in the fleet at the end of September. We opened five new bases and over 200 new routes in Summer 2024.
We've signed up approved OTA deals with over 90% of the major OTAs, deals which protect consumers from overpricing and overcharging. Fuel hedges have been extended. We're now 85% covered for the second half of FY 2025 at about $79 a barrel, and we are 75% covered for FY 2026 at a slightly lower $77 a barrel. We completed the first EUR 700 million share buyback in August, and we're almost 30% of the follow-on EUR 800 million order now done, and the board has confirmed an interim dividend of EUR 0.223 per share will be payable in February 2025, so looking at some detail of these, total H1 revenues were rose by 1%. Scheduled revenues fell 2% to EUR 5.95 billion. Most of that was the move of the first half of Easter into prior year Q4.
Consumer spending being under pressure, we think, driven largely by higher for longer interest rates and in government inflation reduction measures, and a drop in the OTA bookings following the OTA boycott of December last year. Traffic, however, despite repeated Boeing delivery delays, grew 9% to EUR 115 million, while ancillary revenues were resilient, rising 10% to EUR 2.74 billion. Operating costs performed well, rising just 8%, lagging behind the 9% traffic growth to EUR 6.68 billion as fuel hedge savings offset higher staff and other costs due in part to the Boeing delivery delays. While modest compensation was received in H1 for Boeing, this won't come anywhere close to offsetting the substantial impact of a 5 million plus passenger shortfall, in FY25. In terms of fleet, we had 172 Gamechangers in our fleet at the end of October.
We now expect the remaining nine Q3 deliveries to step into Q4 as a result of the Boeing strikes. The risk of further delivery delays remains high, particularly for S25, and it's in that context we think it's sensible now to slow down our projected traffic growth next year from 215 million passengers to 210 million passengers, traffic growth of 5%. We hope that that slightly slower rate of traffic growth will assist or protect fares and yields. We expect European short-haul capacity to remain constrained for some years as many of Europe's Airbus operators work through their Pratt & Whitney engine repairs. Both of the major aircraft manufacturers, Airbus and Boeing, struggle with delivery backlogs and to increase production, and airline consolidation in Europe continues.
These capacity constraints, combined with our widening cost advantage, our strong balance sheet, our low-cost aircraft orders, and our industry-leading operational resilience, will we believe facilitate Ryanair's low-fare profitable growth to 300 million passengers over the next decade. In terms of outlook, we continue to target between 199, 198, and 200 million passengers for FY 2025. That will be traffic growth of 8%. That is subject to no adverse or worsening news from Boeing on delivery delays. We expect full-year unit cost to be broadly flat, as our fuel hedge savings, strong interest income, and modest aircraft delay compensation will largely offset ex-fuel unit cost inflation, particularly crew and productivity increases, higher handling and ATC fees, and the cost inefficiency of repeated Boeing 737 delivery delays. Forward bookings suggest that Q3 demand, however, is strong, and the decline in pricing curve appears to be moderating.
We do expect Q3 pricing to be slightly down, but not as much as Q2. We remain cautious on Q3's average fare outlook. As I said, expecting them to be modestly lower than the prior year Q3. However, at this time of the year, we have zero visibility into Q4, but I would highlight that Q4 this year won't benefit from having the first half of Easter in it, and therefore we'll have a pretty challenging Q4 prior year comp. Therefore, it remains too early to provide meaningful FY 2025 profit after-tax guidance. The final FY 2025 outcome will be subject to avoiding adverse developments during the remaining five months of the fiscal year, especially given the risk of conflicts, given the risks we're exposed to with conflicts in Ukraine and the Middle East, repeated ATC short-staffing and capacity restrictions, and our further Boeing delivery delays.
With that, Neil, perhaps you'd take us through the slide presentation.
Thank you, Michael. I will. Ryanair has the lowest fares and the lowest costs of any EU airline. We're number one for traffic and hope to deliver somewhere close to 200 million passengers this year, which would be about an 8% increase year on year. Number one for on-time performance and reliability, and sustainability ranks Ryanair as the number one airline for ESG. We've a strong order book with 300 MAX 10s on order, which will deliver a decade of growth out to FY34, and this will be underpinned by our financial strength and our lowest costs, which makes Ryanair the long-term winner. As you can see, lots of coverage and choice for our customers, 95 bases over 230 airports, and we had 600 aircraft this summer. We hope to grow that to 800 aircraft by FY34 and 300 million passengers.
On our costs, the gap between ourselves and everyone else continues to widen. This is despite the fact that we've got phenomenal savings on fuel this year. We're also seeing the gap on non-fuel costs rising, and I think importantly, when Ryanair is financing itself out of its own cash resources, we're seeing our competitors taking on expensive long-term leases, expensive long-term debt, and that's ever-increasing the gap between ourselves and everybody else. We also have a cheap order book coming over the next coming years. On the first half of the year, we saw strong traffic growth of 9% to 115 million passengers at a 95% load factor. We did, however, have to do more fare stimulation than we would have anticipated, down 10%. Q1 impacted by Easter, we saw a 15% reduction, the reduction somewhat less in Q2 where fares were down 7%.
Ancillaries performed well, up 10%, and as a result, we saw a modest increase in total revenues to just under EUR 8.7 billion. Costs, total costs performed well, increasing 8%, which is slower than the 9% traffic growth. The outcome, however, for the first half of the year was an 18% reduction to just under EUR 1.8 billion profit after-tax. The balance sheet is rock solid, an industry-leading balance sheet with a BBB+ investment grade rating, one of the strongest ratings in the world for any airline. We have 580 unencumbered Boeing 737s on the balance sheet, and we finished with a very strong cash balance at the end of September over EUR 3.3 billion and net cash of EUR 600 million, despite the fact that we spent nearly EUR 1 billion on CapEx and EUR 900 million on shareholder distributions, primarily share buybacks, and then, of course, a EUR 200 million final dividend.
Michael, I might ask you to run us through current developments, please.
Okay, thanks, Neil. I've covered most of these in my opening remarks, but so Q3 bookings are strong. The fare decline is moderating, but we still think fares in Q3 will be marginally lower than the prior year Q3. As I said, the approved OTA deals now protect over 90% of OTA customers from overcharging and mis-selling. The risk of Boeing delays, however, pressures remain, and we're now, if you like, reducing our traffic growth expectation from 215 million to 210 million, still traffic growth of 5%, but modest, compared to our past rates of growth. As Neil has already said, the shareholder returns are accelerating, buybacks, and the interim dividend payable next September. The SBTi have validated our CO2 targets for 2031, and we're going to be fully paperless for summer 2025.
The review of our ownership and control restrictions, that shareholder engagement continues. Touch briefly on these points. We have 14 OTAs have signed up approved deals. These cover more than 90% of OTA customers. The critical thing about these approved deals is they get, they protect consumers from overcharging. The consumers get the Ryanair pricing both for the airfares and for the ancillary, and the underlying ancillaries. No markups on ancillary products, no digital piracy. The OTAs avoid the cost of scraping our website. We give them a direct feed and access to our very low fares, and we get, when the consumer is making a booking, the real consumer email and the payment details so we can communicate directly with the consumer, which is vital for safety information, whether disruptions or scheduled disruptions.
The Boeing delivery delays continue, however, to be a, frankly, pain in the backside. As we've already said, we had 172 aircraft in at the end of October. We now believe the nine remaining Q3 deliveries will slip into Q4 as a result of the Boeing strikes. We're still working closely with Kelly Ortberg, Stephanie Pope, and her team, to accelerate as best we can deliveries pre-peak summer 2025. However, the risk of delays are rising, and I think we have to accept we're not going to get all of those 29 aircraft in advance of summer 2025, which is why we are slightly slowing down our rate of growth next year. After that, however, we've no deliveries post the Gamechanger order until the first half of 2027.
Boeing still expects the MAX 10 certification to take place in the second half of 2025, which would leave us on track to receive those first deliveries in 2027. I thought we'd set out here. This is an interesting slide. So if you like, the green highlighted deliveries were the remainder of our summer 2024 deliveries. They've slipped into the back end of 2024, and we now, we've taken five of those aircraft in September and October. We think nine will now slip, however, into January, February, and March, and then the critical issue for us is the 29 aircraft that we were due to get, originally at the end of 2024. They then moved into the first half of 2025, but at least pre-peak summer 2025. Again, working with Boeing, we now think it's unrealistic we get those 25 aircraft pre-summer peak.
We think it's a reasonable shot that we'll get about 15 of those aircraft probably delivered to us in April, May, and June. And then we think about 14 of those aircraft will slip into next autumn, next winter. It will give us some modest growth for summer 2026, but we won't have it in for peak summer 2025. And that's why we're stepping back our growth next year, to 210 from 215 million passengers. We think that's a reasonably deliverable schedule with Boeing, but as we've said, the risk of delays continue. We're launching a fully paperless boarding via the app for summer 2025. Already today, over 70% of our passengers are using our mobile app. They check in on the app. They board on the app. They can order services to their seat on board while on the app.
It's a significant environmental benefit. We think we'll eliminate about 300 tons of paper per annum, but huge customer benefits of using the app. It's the ideal travel companion. We give you live flight information and updates such as, you know, your plane has landed, its boarding gate at this, direct updates from Ryanair's OCC during disruptions, and we've just come through a weekend of storms, where this is critical. It also allows customers who are disrupted to self-service. They can change their flight. They can move their flight, and see what the alternatives are. We have the option to select seats, and we now have about 35% of our passengers ordering directly to the seat, prior to aircraft departure, and passengers will have all travel documents in one convenient place. Shareholder returns continue. Neil has covered this, I think, in some detail, so the EUR 700 million buyback is done.
We're just up, we're almost 30% of the follow-on done, and a dividend declared and payable, interim dividend declared and payable next February. We will continue where we generate surplus cash, return it to shareholders over the coming years. But remember, we have two large bond repayments due in September of 2025 and again in May 2026. So, it will be our priority to continue to pay down debt. The review of EU ownership and control restrictions is ongoing. We're consulting with all our major shareholders, and that process will continue, and we would hope the board would be in a position to make some amendment together with our regulators to be able to amend, certainly the ownership regulations, if not the control restrictions, going forward. As an EU airline, we must be currently EU majority owned and controlled, in order to protect our route licenses.
We're. I'm personally not sure that the ownership restrictions are all that important. The control restrictions clearly are. And maybe, Neil, I'll hand back to you for the outlook, as we look into the second half of the year.
Yeah, very good. On traffic, we're guiding traffic still in a range of 198-200 million, hopefully a bit close to that 200 million. This, of course, is very much predicated on Boeing not having any further delivery delays between now and the end of March. While Q3 bookings appear to be strong and average fares appear to be moderating, the declines in average fares moderating. We would still be somewhat cautious on Q3 fares, and we're guiding them modestly down year on year. This, of course, very much depends on close-in bookings for Christmas and the new year. As regards Q4, as is always the case this time of year, we've almost zero visibility. We also have a very difficult comp in that we've no Easter in Q4 this year.
I think it's just not practical to give any profit after-tax guidance at this point in time. It's too early, and we'll try to revisit this at a later stage. Boeing will continue to have an impact on our earnings, unfortunately, into next year with the delays continuing. But I think costs are in good shape. We're returning money to shareholders. We've got a MAX 10 order book, which is going to underpin a decade of growth in Ryanair.
Michael, Neil, good morning. Can we begin with your results? You reported a H1 PAT of EUR 1.8 billion. What were the key drivers?
Yeah, well, we had a very strong traffic growth. We saw a 9% increase in traffic to 115 million passengers, and this was despite the ongoing Boeing delivery delays. However, it came at a cost. Fares were down 10% in the first half. That was minus 15% in Q1, which was impacted by Easter, and then minus 7% in Q2. Ancillaries put in a resilient performance, rising 10% to EUR 2.7 billion, and we were pleased with costs, which just rose 8%, slower than a 9% increase in traffic, as our strong fuel hedging offset labor inflation and other costs, particularly Boeing delivery delay costs within the business.
On fares, why did they fall 10%?
It was made up of two quarters. Fares were down 15% in the first quarter. I think we had a kind of a, you know, the first half of Easter moved into the prior year Q4, which really damaged Q1. We also had the impact, I think, through the half year of, consumer spending under pressure, you know, that combination of higher for longer interest rates and government really, pushing pressure down on inflation. Then we had the impact on our, particularly, Q1 and into Q2, the impact of the OTA, a decline in OTA bookings because of the OTA boycott, from, the previous December. Q2, I think, though we saw a more measured performance. The decline in airfares was considerably less, down 7%. That was the peak, of the travel period. I think the good news, however, is that people were, traffic was up 9%.
More people were flying with us, albeit at lower fares. Consumers were getting a better deal, but we were taking enormous market share from competitors across most markets in Europe.
You mentioned OTAs. What impact did they have?
Yeah, well, as Michael said, they had an impact on the summer, probably more than we initially anticipated. I think they particularly hit the further out, the early summer 2024 bookings had an impact on load factors and yields. But I think if we look beyond that, we now have approved agreements in place with 14 OTAs, which is about 90% of OTAs out there. This delivers phenomenal benefits not only for our customers in that they're not going to be overcharged, they're going to have full visibility on what they're paying for ancillary products, but it also enables the OTAs now to get access to the Ryanair website, not having to pay for expensive scraping.
Importantly for us, particularly in a summer where ATC has been very poor, we've accessed the real contact details for our customers so that we can communicate with them for safety, for various other reasons. I think it's a win-win for everyone.
Michael, moving to your fuel hedging. What's the latest update here?
Yeah, as I said, we're 85% hedged for the second half of FY 2025 at $79 a barrel. We've taken advantage of the recent weakness in oil, though, to increase our FY 2026 hedging. We're now 75% hedged at $77 per barrel, locking in a modest year-on-year saving.
Onto your balance sheet, what are the key callouts?
Oh, it was an industry-leading balance sheet. We're the most highly rated airline in the world with a triple B plus investment grade rating from both Fitch and S&P. Importantly, 580 of our aircraft are unencumbered on the balance sheet, and we have very strong cash balances. We finished the first half of the year with over EUR 3.3 billion in cash and EUR 600 million of net cash. And that was despite the fact that we spent nearly EUR 1 billion on CapEx. We spent nearly EUR 900 million in share buybacks, and we did EUR 200 million final dividend in September. So I think the strength of our cash, the strength of our balance sheet is a huge competitive advantage over everybody else.
You know, our competitors are raising very expensive long-term leases, very expensive debt in the market, and we're funding ourselves out of cash, which is the cheapest form of finance at the moment.
What's your current FY 2025 CapEx guide?
We're still guiding at about EUR 2.3 billion, but that presumes that Boeing deliver all of the aircraft when expected, as we've said in the presentation. We expect some of those aircraft deliveries to be delayed into FY 2026, and that will obviously take down that EUR 2.3 billion figure.
And how do you fund both the Gamechanger and MAX 10 CapEx?
As I indicated, on the balance sheet question, we continue to fund ourselves out of cash, which is the cheapest form of finance, and the working assumption is that we'll continue doing that. That said, Ryanair is very opportunistic in our financing. We have the benefit of the unencumbered aircraft. We have the benefit of the triple B plus rating. So if there are cheaper forms of financing out there, whether it's the bond market, whether it's JOLCO sale-and-leaseback, and the latter is very little exposure to Ryanair or bank debt, we'll look at that. Ultimately, the lowest cost will decide what way we finance ourselves over the coming years.
You restarted share buybacks in May. How's that gone?
Very well. You know, I think when we benefited from the decline in Ryanair's share price over the summer, we completed the EUR 700 million share buyback in August. We've now done almost 30% of the follow-on EUR 800 million buyback. We expect to finish that buyback program sometime in summer 2025. When that's finished, we will. Ryanair will have returned over EUR 9 billion to shareholders through a combination of dividends and buybacks. I think an interesting statistic will be. We'll have purchased back 36% of the total issued share capital of the company since 2008.
When that's finished, can we expect more buybacks?
I think let's finish the first EUR 800 million, as Michael said. That'll run out to probably the middle of next year, but I think we've been, as you've seen from the statistic of EUR 9 billion returns, since 2008, the board won't be found wanting it. There's surplus cash in the business after we've paid our CapEx, after we've paid off our debt, and don't forget, we've got two very big bond maturities over the next two years. We've got an EUR 850 million bond in September of next year. We've got a EUR 1.2 billion bond in May of 2026, but if we're covering all of that and our other expenses, then there will be further distributions to shareholders.
When's the next ordinary dividend?
The board has approved an interim ordinary dividend of just over EUR 0.22 per share that will be paid in late February 2025. You know, and if there's no disruptions or no unforeseen circumstances, I think it's likely then that the board, there'll be a dividend of a similar final or a final dividend of a similar amount, probably paid again in September after the AGM, subject to board and AGM approval.
Neil, moving to your fleet. What's the latest update in Boeing deliveries?
Well, at the back end of last week, the end of October, we had 172 Gamechangers in the fleet. We were due to get 11 Gamechangers in, in Q3. It looks like we'll only get those, effectively two. So nine of those are likely now to slip into Q4 as a result of the Boeing machinist strike. That leaves us with about 29 deliveries. Again, I think some of those are going to slip. We're not going to get them all ahead of summer 2025. Might get 15 of them. So at this stage, it's sensible to plan our business on the basis of slower growth next year. We're now planning to grow to 210 million passengers, which is about a 5% increase in traffic, but lower than the 215 million passengers that we had previously targeted.
You've been compensated for these delays?
We are receiving modest compensation. Boeing want to restructure the compensation, so it's coming in the form of maintenance credits, so it will come through the P&L. It's not significant, and it certainly doesn't offset the impact of the loss of the 5 million passengers this year or a 5 million passenger loss in FY 2026 as well. There'll probably be some more modest compensation in the second half of the year, but it depends on where we finish up with Boeing deliveries and what the delays are, pre-summer 2025.
Staying on Boeing, when do you expect the MAX 10 to be certified?
The 10 won't be certified until the MAX 7 is certified. As things are going at the moment, we understand that the 7 is on track to be certified in the first half of 2025. If that happens, then I think there's a very good chance that the 10 will be certified in H2 2025. That will put us on, you know, still on the road to receive our first MAX 10 in the first half of 2027.
Looking ahead, what's your view on inter-European capacity over the next few years?
We think it's going to be heavily constrained. Not alone are we. Next summer, we're going to be running with fewer aircraft deliveries from Boeing. And as you see, we've taken down our traffic, kind of, guidance from 215 to 210 million passengers. But you have most of Europe's Airbus operators. They're still struggling with the Pratt & Whitney engine repairs. You have the two major manufacturers, Boeing and Airbus, struggling to increase their production or to hit their monthly production increases. M&A will also remove some capacity. So we've seen that airline consolidation trend continue. Lufthansa's agreement to purchase a significant stake in ITA, and TAP, the Portuguese flag carrier, currently up for sale.
We believe, however, that once we get into, we're one of the few airlines that is taking deliveries of Gamechangers, albeit at a slower rate through Summer 2024, Summer 2025, Summer 2026. We will continue to take market share in a market where capacity is heavily constrained, and then the MAX 10 order will underpin a decade of very profitable growth for Ryanair to 300 million passengers by the mid-2030s.
Shifting to ESG, what are Ryanair's H1 highlights?
Yeah, we continue to perform very well on that. We're very strong ESG ratings from the likes of Sustainalytics, where we're the number one airline for ESG in Europe. We've an A rating from MSCI and an A-rating from CDP, and importantly, SBTi, the Science Based Targets initiative, recently validated Ryanair's 2031 targets of achieving 50 grams of CO2 per passenger kilometer by 2031, which is a 27% reduction on where we are today. This is helped by the 24 new Game changers that we got in the first half of the year, the ongoing retrofit of our 737s with Scimitar winglets, which will reduce fuel burn, and of course, our SAF mandates within the organization, and we're not stopping there. We're looking at all areas of the business.
As Michael said earlier, we hope to become the first major airline to have 100% paperless check-in. That will remove about 300 tons of paper annually from the system as well.
How is EU ATC performing?
Air traffic control across Europe this summer was a shambles. We had record air traffic control delays, particularly on the first wave of departures. This is due to ATC short-staffing and the staff they have not turning up to work. It's completely unacceptable. There's no reason why the first wave of flights should be delayed because there's nothing up in the sky on the first wave of departures. We're continuing to call on the new EU Commission under Ursula von der Leyen. They put competitiveness and productivity at the heart of their strategy for the next five years. Start with effective reform of EU air traffic control. We've no interest in your Single Sky. It's been a 30-year failure. What we do want is two effective measures. One, require that European air traffic control services are fully staffed on the first wave of departures.
If you get the first wave of flights out, the flights will stay on time through the day. Secondly, protect overflights during national ATC strikes. If they implemented those two simple measures, both of which are within their legal power, you would eliminate about 90% of air traffic control delays and a huge environmental gain for the industry because you'd eliminate 90% of the delays, the flying around, the overhead restrictions, and the arrival delays. So we're calling on the EU Commission, deliver us proper ATC staffing and protect overflights during national strikes. That would have a major impact for all airlines and, more importantly, it would eliminate 90% of passenger flight delays.
You recently announced a review of your ownership and control restrictions. How's it going and how long will it take?
Yeah, as we said, with the announcement at the AGM in September, we would commence an engagement process. We're now engaged with major shareholders and regulators. That's ongoing. The process will last as long as the process lasts. There's no set timeline on it, and I suppose there's no guarantees that there'd be any variations at the end of the process, but we are actively engaged.
Michael, lastly, what's the group's FY 2025 outlook?
Well, as we said, we're going to continue to target just under 200 million passengers. That will be 8% traffic growth, subject to no further Boeing delivery delays. I think the key message, however, is full year unit costs will be broadly flat, including fuel. That will see a significant widening of the gap between Ryanair and all of our other EU competitors. And I think, you know, while our pricing was down this year, the fact that we are continuing to maintain broadly flat unit costs considerably widens the gap between us and our competition. Looking into Q3, as Neil has already said, forward bookings are strong, demand is strong, and the price declines appear to be continuing to moderate. We still remain cautious on Q3 average fare outlook.
We think they'll be modestly down than the prior year Q3, although not by as much as in Q2, where fares fell 7%. We have zero visibility into Q4, and the challenge and the prior year comps in Q4 will be challenging because you had the first half of Easter in last year's Q4. We don't have any impact of Easter this year's Q4, although you'll have all of Easter in next year's Q1. And therefore, it's too early to provide meaningful full year guidance, and we're not giving full year guidance this morning. And with that, thank you very much. Neil, thank you. We have an extensive roadshow. We have about eight teams on the road for the next week. If anybody would like a one-on-one meeting, please contact us through our investor relations team, Peter Larkin here, or through any of our brokers. Thank you.
Thank you very much.