Ladies and gentlemen, good morning and welcome to the Ryanair Q1 results presentation. I'm Michael O'Leary, the Group CEO, and I'm joined as always by our Group CFO, Neil Sorahan. This morning we reported a Q1 profit after tax of EUR 538 million. That was a 34% fall on the prior year Q1 profit after tax of EUR 820 million. Principal cause of this was the price of our 20% unhedged fuel doubled in the quarter and fares fell 6%, primarily, we think, due to the impact of the Middle East conflict and the first part of Easter falling into our prior year Q4. The highlights of the quarter include traffic grew 6% to 61.3 million passengers. Revenue per passenger fell 5%, mainly due to average fares falling 6%. Unit cost rose 5%, again, primarily because of the unhedged 20% of our jet fuel price doubled to over $150/ bbl .
The good news, however, is that our FY 2027 jet fuel is 80% hedged at $67/ bbl , and this morning we're able to announce that we've hedged the first 15% of our FY 2028 fuel at $85 /bbl , taking advantage of some recent price weakness. This summer we've opened three new bases, Rabat in Morocco, Tirana in Albania and Trapani in southern Italy, and we have 130 summer 2026 routes on sale, so growth continues. I'm pleased to report that we repaid the final EUR 1.2 billion bond in May, leaving the group essentially debt-free. Scheduled revenue in quarter one dipped 1% to EUR 2.91 billion as traffic grew 6%, but at 6% lower fares.
Q1 fares, as I've already said, required stimulation as the Middle East conflict led, we think, to consumer hesitancy, concerns about E.U. jet fuel shortages also impacted on bookings in Q1, economic uncertainty and later bookings. However, our conservative hedging policy, again under which 80% of this year's fuel is hedged at $67 /bbl, has insulated our earnings during this period of very volatile oil prices. This widens our cost advantage over all of our E.U. competitors. We recently, as I said, extended those fuel hedges. We're now 15% hedged for FY 2028 at $85 /bbl . The balance sheet remains strong. At the quarter end at the 30th of June, gross cash was just over EUR 2.8 billion, and this is after repaying EUR 1.3 billion in debt repayments and EUR 500 million in CapEx.
Liquidity is further boosted by our EUR 1.1 billion revolving credit facility, which is mostly undrawn as we speak. We're now 90% through our EUR 750 million buyback program. We would expect to complete that sometime around the AGM in September. Over the coming year, following the May repayment of the EUR 1.2 billion bond, our funding priorities will be to fund our MAX-10 CapEx with the first 15 of those aircraft coming in the spring of 2027, funding shareholder dividends and the completion of the current buyback program from internal cash flows while still rebuilding gross cash back to EUR 4 billion. To touch briefly on fleet, Boeing continue to expect the MAX-10 certification will take place in late summer 2026. In fact, I spoke with Boeing last week and they expect to announce the certification of the MAX- 7 aircraft shortly.
They've also confirmed that they expect to deliver our first 15 MAX-10s on time in the spring of 2027. With 300 of these super fuel-efficient aircraft, they burn 20% less fuel but carry 20% more seats due to deliver by March 2034. We're on track to grow traffic to 300 million passengers by 2034. We expect over that period European short-haul capacity to remain constrained certainly until 2030 as the two main aircraft manufacturers remain well behind on aircraft deliveries. Industry capacity constraints combined with our widening cost advantage, strong balance sheet, low-cost fuel-efficient aircraft order book, and industry-leading ops resilience will, we believe, facilitate Ryanair's sustainable profitable growth to over 300 million passengers by FY 2034. Outlook at this point in time of the year, you know we have very little visibility, thus far, FY 2027 traffic remains on track to grow 4% to 216 million passengers.
Monthly growth is about 6% in H1. It will fall to about 2% in H2 as we reduce our exposure to unhedged oil in the second half of the year. Our unit cost leadership continues to widen. Jet fuel is 80% hedged to March 2027 at $67 /bbl, which helps us to offset a EUR 300 million increase this year in E.U. enviro taxes, significant crew pay increases under new multi-year CLAs and higher maintenance. While 2026 traffic volumes remain strong, the booking window remains closer in than last year, which further reduces visibility. Despite a recent uptick in volumes and less price stimulation necessary into Q2, Q2 pricing is trending modestly down year-on-year. The final H1 fare outcome is heavily dependent on the strength of close-in bookings for the remainder of August and September.
As is normal at this time of the year, we have zero H2 visibility, it remains far too early to provide any meaningful FY 2027 profit after tax guidance. With that, I'm going to ask Neil to take us through the slide presentation.
Michael, thank you very much and good morning, everybody. Ryanair has the lowest fares and the lowest costs of any airline in Europe. T hat cost advantage, the gap continues to widen. We're number one for traffic, as Michael already said, growing by 4% to 216 million passengers this year. Number one for on-time performance and recorded record customer satisfaction CSAT scores of 91% in the first quarter, up 2 points on where we were last year. We continue to enjoy very strong ESG ratings, our 300 MAX-10s, which start delivering from 2027, will deliver a decade of growth for Ryanair. This is underpinned by our financial strength and our low cost, which makes Ryanair the long-term winner. Just looking at the route, number one for cover and choice. This summer, we're operating almost 650 aircraft from 95 bases across Europe. This will deliver 216 million passengers.
With our MAX-10 order book, 300 aircraft will grow to 300 million passengers per annum by March 2034. Importantly, the cost gap between Ryanair and our competitor airlines continues to widen quarter-on-quarter, year-on-year. If we look at our two nearest competitors, before COVID, Wizz were at 26% behind Ryanair. Now, that's over 81%, and we would expect that to continue to grow over the next number of quarters and years. easyJet have gone from a 70% gap to 150% gap. Again, I don't see that narrowing anywhere in the near term. I think with the MAX-10s coming in, we're going to see further improvements on our unit costs as we push out over the next few years, and that gap will only get wider between ourselves and all competitors in Europe.
On the quarter itself, we saw traffic grow 6% to just over 61 million passengers. This was helped by the 29 additional game changers in the fleet. All 210 game changers were operating in the first quarter of this year, with flat load factors 94%. Fares, however, were down 6%. Some of this was due to the timing of Easter. We saw only half of Easter in this quarter compared to a full Easter last year. Importantly, we saw a consumer hesitancy related to the Middle East war, which drove some of those fares down with more price stimulation. Ancillary revenue did, however, put in a solid performance, up 5% to EUR 1.47 billion. As a result, total revenue grew modestly 1% to EUR 4.38 billion in the quarter.
Fuel, however, as Michael already said, while we're very well hedged on 80% of our fuel book, our 20% unhedged saw the price double to over $150 /bbl. As a result, total costs up 11% to EUR 3.81 billion, and profitability of EUR 538 million in the quarter, which is just over 30% down on the prior year quarter at EUR 820 million. Balance sheet is rock solid, a fortress balance sheet. We're very unique, 620 Boeing 737s fully unencumbered on the balance sheet. Now, of course, having paid off our EUR 1.2 billion euro bond in May, the group is debt-free. We're BBB+ rated by both Fitch and S&P. L ots of liquidity at EUR 2.8 billion gross cash at the end of the quarter after EUR 1.3 billion debt repayments, EUR 500 million CapEx, supplemented by a revolving credit facility. An unrivaled fortress balance sheet within the Ryanair Group.
With that, Michael, I'll ask you to run us through current developments, please.
Thanks, Neil. As we've said this morning, traffic is up. We expect full- year traffic up 4% to 216 million passengers. That is strong growth in H1, up 6%, less capacity deployed in H2, up only 2%. With that strong volume growth, however, Q2 fares we expect will be modestly down year-on-year, something low to mid- single- digits. That scarce capacity we have is being switched to those states, those airports who are cutting taxes, lowering ATC fees, introducing growth incentive schemes to grow. For FY 2027, jet fuel is 80% hedged at $67 /bbl, but we are exposed on the other 20% unhedged to very volatile fuel situation, but less exposed to any of our competitors. FY 2028 is now 15% hedged at $85 /bbl. We repaid the final EUR 1.2 billion bond in May. The group is now essentially debt-free.
We are actively planning and funding the delivery of the first 15 MAX aircraft, MAX-10 aircraft, in the spring of 2027. We believe those new aircraft will kick off a decade of low-fare profitable growth to 300 million passengers by FY 2034. Briefly on the Boeing update, spoke to Boeing last week. They expect to have the MAX- 7 certified by the end of July, mid-August. They now expect that the MAX-10s will be certified by the end of September, maybe October. They believe they're well on track to deliver us our first 15 MAX-10s in spring of 2027. These aircraft will transform Ryanair's economics. They have 20% more seats. They burn 20% less fuel. They're significantly quieter than some of our existing fleet. With 300 of these super fuel-efficient aircraft, we believe we will grow very profitably to 300 million passengers per annum by 2034.
We set out a slideshow there showing you the allocation of aircraft and how that translates into traffic development for the next decade. In terms of outlook, again, to repeat myself, full- year traffic up 4% to 216 million passengers. Fuel, very well hedged. Final unit to total unit cost hinge on the price of our 20% unhedged jet fuel. It was falling until last week when the ceasefire came to an end. Nevertheless, our summer 2026 volumes are strong. The window is closer in, and it is pricing at lower fares. Q2 is pricing trending modestly down. H1 fares clearly the final outcome is entirely dependent on close- in bookings in August and September. We have zero H2 visibility and therefore no full- year guidance. Again, we go back to the kind of key trend of the next decade.
The MAX-10 order will facilitate growth to 300 million passengers by 2034. With that, Neil and I are going to take a Q&A.
Michael , Neil, good morning. Starting with your results, Ryanair's Q1 PAT fell 34% to EUR 538 million. What were the key drivers?
As always, a number of moving parts in there. Firstly, traffic performed well, rising 6% thanks to the extra game changers in the fleet. Fares, however, were down 6%. Some of that we would accredit to the timing of Easter. We had a full Easter in the first quarter last year. Half of Easter fell into the fourth quarter of the year just gone, so we didn't have the full benefit there. Importantly, we saw some consumer hesitancy in relations to Middle East war. That led to more price stimulation and closer in booking. Fares down 6% as a result of that. Similarly, the Middle East had an impact on the price of our unhedged fuel. We saw the cost of our 20% unhedged fuel spike.
It doubled to $150 /bbl. Ancillaries, however, put in another solid performance, rising 5% to EUR 1.47 billion, or broadly flat on a per passenger basis at EUR 24 per passenger.
What's your current hedging position?
As we've said, FY 2027 jet fuel is 80% hedged at $67 /bbl. We've now hedged 15% of FY 2028 at $85 /bbl. FY 2027 OpEx is 90% hedged at $1.15 to EUR 1 , and H1 of FY 2028 is 30% hedged at $1.20 to EUR 1.
Moving to the balance sheet. Ryanair's balance sheet continues to be industry leading. What would he call it?
It's a fortress balance sheet. We've 620 fully- unencumbered Boeing 737s on the balance sheet, which is quite unique for an airline. We're debt-free, having paid off our EUR 1.2 billion remaining bond in May just gone, and we've got very strong investment-grade ratings, BBB+ from both Fitch and S&P. Liquidity is strong. We finished the quarter at the end of June with over EUR 2.8 billion in cash, and to put that in context, that was after paying down EUR 1.3 billion in debt, EUR 500 million in CapEx. That liquidity is further supplemented by our revolving credit facility. We've a EUR 1.1 billion RCF, which is substantially undrawn. This is a huge competitive advantage for Ryanair. Our competitors are taking on expensive long-term debt. They're taking on expensive leases, and importantly, they don't have the hedge lines to hedge out their fuel and their dollars.
That's adding to their burdens over the next number of years.
What are your funding priorities over the coming year?
Firstly is to fund the MAX-10 introduction and the pre-delivery payments on that order book. We're beginning to fund the two MRO engine shop CapEx. We also need to fund the balance of our dividends as another final dividend payable in September and complete the EUR 750 million share buyback. Thereafter, we want to rebuild group's gross cash to EUR 4 billion, and anything surplus to that will be returned to shareholders via dividends and buybacks.
Looking out longer term, how will you finance the MAX-10s and engine shops?
Thanks to the strength of the balance sheet and our strong investment grades, we can and will continue to be opportunistic in what we do. It'll ultimately boil down to what's the lowest cost of finance for Ryanair. At the moment it's cash, but I would expect over the next number of years, we'll probably go back to the debt markets, whether it's the banks or the bonds. Likely a combination of cash and debt.
What's FY 2027 CapEx guidance?
We're guiding approximately EUR 2 billion, that's subject, however, to the timing of the engine shop CapEx.
Is the MAX-10 order book hedged?
Yeah, it's fairly well hedged. If you look at the 150 firm orders that we have, we now have 60% euro-dollar hedging in place at just over 123 on the euro-dollar. We're locking in very good levels on what was already a keenly priced order book from Boeing.
Shifting to shareholder returns, when's the next dividend payable?
We expect the final dividend of EUR 0.195 per share will be payable in September, subject to AGM approval.
How's the EUR 750 million buyback going?
It's progressing very well. We're now over 90% of the way through that buyback, I would expect that it'll probably run out somewhere towards the back end of September. As of today, we've bought back and canceled well over 25 million shares at an average price of EUR 26.35. When we're finished the buyback in September, we'll have returned and canceled nearly 40% of our issued share capital since 2008.
Switching on fleet and growth, is the MAX-10 certification still on track?
We believe so. As I spoke to Boeing last week, they're pretty confident that the MAX-10 will be certified sometime in September or October of this year, well in advance of our first 15 deliveries in the spring of 2027. Boeing have confirmed that they've protected those 15 deliveries, our first 15 deliveries in the spring of 2027. We're growing increasingly confident that we'll have those aircraft in time for summer 2027. Come back to the fundamental point, 300 of these aircraft with 20% more seats burning 20% less fuel will facilitate profitable growth to 300 million passengers annually by 2034.
What's your views on European short-haul capacity?
I think it remains constrained for some time to come, at least out to 2030, if not beyond. If you look at the two big OEMs, Boeing and Airbus, while they're starting to improve on their production, they're still way behind on their deliveries and very much dependent on the engine manufacturers for growth over coming years. Pratt & Whitney continue to work through their GTF engine issue, which impacts a lot of A320 operators. Consolidation is accelerating here in Europe. We've got the TAP takeover process ongoing, but interestingly, we've a number of bids now in relation to easyJet, which I believe will collectively take more capacity out of the market. Then, of course, this winter, weaker carriers are being hit by very high oil prices, very strong U.S. dollar, and I think this will lead to some casualties and capacity in the market as well.
Where is Ryanair most focused on growing?
In our constrained capacity, we focus on switching that scarce growth to those states who are abolishing taxes, cutting ATC fees, those regions and airports who are incentivizing growth. That means, for example, this summer, we're switching a lot of capacity away from high-cost, high-tax countries like Vienna in Austria, Berlin in Germany, Dublin Airport, which has increased fees this year, and regional Spain, switching that capacity to new low-cost or to low-cost destinations like Slovakia, where the government has abolished environmental taxes, cut ATC fees. Bratislava Airport has come up with a very aggressive growth incentive scheme, as a result of which they've grown their traffic by about 150% year-on-year. Other examples of that are Albania, Tirana in Albania, Italy. There's four regions of Italy that have abolished their municipal taxes.
Morocco and Sweden, where they've abolished both environmental taxes and are now reducing ATC fees as well. This summer, we've opened three new bases, Rabat in Morocco, Tirana in Albania, and Trapani in southern Italy, all of which are performing very well. We're selling 130 new routes to consumers in summer of 2026.
Moving to some other areas, how is your engine shop project progressing?
It's all very much on track. We would hope to be in a position to announce the first of the two locations towards the back end of this year, start construction in early 2027, have the first shop operational in early 2029. The second shop would likely come online somewhere in the early 2030s.
What are the key cost advantages coming from the MAX-10s?
Well, firstly, the aircraft have 20% more seats, they burn 20% less fuel, and fuel is by far and away our biggest cost. We have a very low-cost pricing on that 300 aircraft order because they were ordered and priced during COVID. We believe the MAX-10 will significantly improve productivity. If you go back to slide four on the crewing line, airport and handling line, maintenance warranties, therefore they will improve unit costs across that slide. It'll also enable us to drive ancillary revenues because we're carrying 20% more passengers per flight. At the top line, we believe that this order of aircraft will enable us to grow safely and profitably to carry 300 million passengers annually by 2034.
Lastly, a network look. What's the group's FY 2027 outlook?
Well, we're still very much targeting 216 million passengers this year. That's a 4% increase. That's skewed slightly towards the first half of the year, where we're growing by 6%, thanks to the deliveries of the Gamechangers over the winter just gone, then slower growth into the second half of the year, where we grow by just 2%. Our strong fuel hedging not only de-risks our earnings at we're 80% hedged at $67 /bbl, but it helps offset increasing ETS and environmental costs. They're up EUR 300 million this year. Rising pay increases as part of multi-year CLAs that are ongoing at the moment, then some increased maintenance. If we look at the full-year costs, the full-year unit costs are going to totally hinge on what happens to our unhedged fuel for the balance of the remaining quarters of this year.
Looking towards demand, as Michael already said, demand is robust into the peak summer period. The booking window remains somewhat closer in, still needs a little bit more stimulation, and fares are trending modestly down year-on-year. We don't really have the close-in visibility into August and September, and that'll totally determine where the H1 outcome lands. As regards H2, as is normal this time of year, absolutely zero visibility. Based on all of that, it's just far too early to give full-year profit after tax guidance. I would, however, again, focus in on the MAX-10s. The first of these starts delivery in the spring of next year. 300 of these phenomenal aircraft coming in, very fuel efficient, 20% more seats, 20% less fuel burn, and they'll drive our sustainable profitable growth to 300 million passengers by March 2034.
Well done, Neil. L adies and gentlemen, that's the end of this presentation. As you know, there's an analyst and investor call takes place at 10:00 A.M. this morning. We look forward to speaking to you all during that call. Thank you very much.