Good morning, ladies and gentlemen. My name is Michael O'Leary, the Group CEO of Ryanair. Joining me again this morning is Neil Sorahan, the Group CFO. We are here to present the H1 results. This morning, we report a H1 profit after tax of EUR 2.15 billion, a fall of 15% from the prior year H1 profit after tax of EUR 2.54 billion. The primary cause of this fall was the price of our unhedged jet fuel doubled, and fares, which include peak summer, fell by 4%, while traffic grew 6% to 125.8 million passengers. As we said, traffic grew 6% to 125 million passengers. Revenue per passenger fell 3%, mainly average fares falling 4% in the half year. Unit costs rose 5%, almost all of it due to unhedged 20% of jet fuel prices doubling to about $130 a bbl.
For FY 2027, jet fuel remains 80% hedged at $67 a bbl, and we have this morning extended our FY 2028 cover to 25% of our needs covered at $95 per bbl. Looking back on the first half, H1, as I said, H1 fares fell 4%, primarily because April didn't have a full Easter in it, but also the Middle East conflict, which ran through the summer, led to consumer hesitancy and later bookings. Operating costs rose 10% to EUR 7.69 billion, as the price of our 20% unhedged jet fuel doubled and supplier compensation ceased following delivery of the last of our Boeing 737-8200 Gamechanger aircraft in spring 2026. Ryanair's FY 2027 jet fuel price, which is 80% hedged at $67 per bbl, has widened our cost advantage over all of our EU competitors and has helped insulate this year's earnings.
While oil prices remain extremely volatile, the group has recently extended our FY 2028 hedge cover on recent price dips to 25% at $95 per bbl. The balance sheet remains industry-leading, supported by an unencumbered fleet of 620 Boeing 737 aircraft and strong liquidity. At the end of the half year on September 30, gross cash was EUR 2.6 billion, even after repaying EUR 1.3 billion in debt, EUR 800 million in CapEx, and EUR 400 million in shareholder distributions. In September, we completed the latest EUR 750 million buyback program. We have now retired over 40% of Ryanair's issued share capital since 2008.
The board, however, remains committed to shareholder returns, and in addition to declaring an interim dividend of EUR 0.273 per share, this will be payable in February 2027, we have today announced another EUR 800 million share buyback starting next February when cash flows are typically strong, and we expect this buyback will run for approximately 10 months from end of February to the end of calendar 2027. We welcome the recent FAA certification of the MAX 10 aircraft. We expect that EASA will certify this aircraft before the end of December, and this will enable Ryanair to take delivery of our first 16 MAX 10 aircraft in the spring of 2027, in time for peak summer 2027. This winter, we recently announced we have reduced our exposure to unhedged oil by cutting our full-year traffic target from 216 million- 214 million passengers.
This schedule cut means that our winter traffic during the months of November to March will be broadly flat year- on- year. Next year, with 16 new MAX 10s in our summer 2027 fleet, we plan to grow traffic to over 220 million passengers, growth of about 3%. We will continue to allocate this scarce capacity to those states, regions, and airports who are cutting aviation taxes, lowering fees to incentivize growth, such as Albania, Italy, Morocco, Slovakia, and Sweden, while we switch our scarce capacity and flights away from high-tax, rising-cost markets like Austria, Belgium, Germany, and regional Spain. Our FY 2027 traffic is expected, as I said, to grow 3% to 214 million passengers, while our unit cost leadership continues to widen.
With 80% of our jet fuel hedged at $67 per bbl to March 2027, this year's earnings are very well insulated from the current oil price volatility. The final FY 2027 unit costs will depend on the price of our unhedged jet fuel in the second half of the year. While Q3 demand is strong, with fares recently trending modestly ahead of the same quarter last year, the booking window remains close in, which reduces visibility. The Q3 fare outcome, as always, will depend on the strength of close-in bookings over the remainder of the Christmas holiday period. As is normal at this time of the year, we have zero Q4 visibility, and therefore, it's too early to provide any meaningful FY 2027 profit after tax guidance. However, I think it's important this morning that we address FY 2028 and the surging cost of fuel.
Unless there is a swift resolution of the Middle East conflict after the U.S. midterms in early November, we expect jet fuel prices to remain elevated well into 2027. As low-cost oil hedges roll off ahead of summer 2027, almost all EU airlines face a significantly higher fuel bill next year. While we believe European short-haul airfares will increase materially to reflect these much higher jet fuel prices and competitor capacity reductions, we believe this is unlikely to provide a full offset for an estimated EUR 2 billion increase in our FY 2028 fuel bill.
Therefore, to help address this rising fuel bill, we're reviewing all costs across the group airlines, with a particular focus on airport charge negotiations, paying down debt to minimize financing costs, maturing labor agreements, which may require temporary pay freezes from April, lower crewing ratios, and increased use of AI to drive further operating and back-office support function productivity. And with that, Neil, I'll ask you to take us through the slide presentation of the quarterly results.
Okay. Thank you very much, Michael, and good morning all. Ryanair is Europe's lowest-cost airline, and the unit cost advantage that we have, that gap continues to widen between ourselves and all of our competitors. This year, we will grow traffic to 214 million passengers, making Ryanair the second-largest airline in the world now for traffic. We recorded record customer satisfaction scores of 90% in the first half of this year. We continue to rate very highly on all ESG ratings, and we are very excited with our new 300 MAX 10s starting to deliver from next spring. That will underpin a decade of growth. That, coupled with our financial strength and our lowest costs and a rock-solid balance sheet, makes Ryanair the long-term winner. Just looking briefly at the choice and coverage across our network, we have 95 bases, almost 220 airports, and we are operating a fleet of 650 aircraft.
We expect that to grow to 800 aircraft as we start to take in the 300 MAX 10s, and we will grow traffic to annual passenger numbers of 300 million passengers per annum. As you can see at the moment, number two in the world behind American Airlines, well ahead of all of our European counterparts, and we would expect to leapfrog over American when we get to 300 million passengers to be the world's largest airline for traffic by FY 2034. Importantly, and I always focus on this slide, Ryanair enjoys significant cost advantage over all European airlines, and indeed elsewhere. I expect this cost advantage to improve significantly over the next number of years. From next spring, we will start to take delivery of the first MAX 10s into the Ryanair fleet. There is a lot to like about these aircraft.
Apart from being 20% more fuel efficient, there are 20% more seats, so we will be spreading our costs over 20% more passengers. We will have full warranties and all the bells and whistles that you expect from a brand-new aircraft. Then, of course, we are going to start building our own engine shops, which again will widen the cost advantage that Ryanair has over everybody else. So this position and this strength that we have will only get better over the next number of years. Looking at the half itself, traffic, as expected, grew 6% to just under 126 million passengers. That was delivered with flat load factors of 95%. Fares, however, were down. They were down 4%. A number of reasons for that. First and foremost, the timing of Easter. We did not have a full Easter in April of this year.
More importantly, due to the conflict in the Middle East, we noted consumer hesitancy and later bookings, which required price stimulation. Ancillaries did put in a solid performance, rising 6%, flat on a per-passenger basis. As a result, total revenue was up 3% at just under EUR 10.1 billion. Again, due to the conflict in the Middle East, costs were impacted by a spike in our 20% unhedged fuel. It spiked to $130 compared to the 80%, which was hedged at $67 a bbl. As a result, we saw costs increase by 10% to EUR 7.69 billion, and the net result was that we delivered a 15% reduction in profits. Still a strong performance in the current markets at EUR 2.15 billion, down from EUR 2.54 billion last year. Michael has already referred to our rock-solid fortress balance sheet.
I would point to our BBB+ strong credit ratings and indeed the unencumbered, debt-free 620 Boeing 737s that we have. This, coupled with very strong liquidity, EUR 2.6 billion cash at the end of the half, after having paid down, as Michael said, EUR 1.3 billion in debt, EUR 800 million of CapEx, and EUR 400 million of shareholder distributions, puts us in a very, very strong position. In a rising interest rate environment, Ryanair is funding itself out of our own cash resources at a time when our competitors are taking on expensive debt and expensive leases. This puts us in a very, very strong position as we start to take delivery of our MAX 10s into next year. And with that, Michael will take us through current developments.
Thanks, Neil. Full-year traffic has been cut back to growth of 3% to 214 million passengers. Winter traffic in November to March will be flat year-on-year. That scarce capacity has been switched to those states who are abolishing taxes, airports who are cutting fees to grow. We've extended the fuel hedges opportunistically. We're now 25% covered for FY 2028 at $95 a bbl, but like most European airlines, that's not much cover into 2027. FY 2028 fuel price will be challenging for all airlines. I have no doubt in my mind this is going to lead to significant capacity constraints, more failures, and that will result in higher fares. The question is, will the fares be high, and will the fare increase be big enough to cover rising oil prices?
We have and think that today, the board is convinced this is a unique opportunity to buy back Ryanair shares. At the current share price, having fallen this year, they're a very attractive buy, and therefore we're rolling out another EUR 800 million share buyback commencing in late February, which will also time with the interim dividend. The 737 MAX 10 has now been certified by the Americans. We hope and expect the Europeans will certify it by the end of the calendar year, and that will set us up to take delivery of the first 16 of these aircraft for summer 2027.
These aircraft offer us a unique step change in our productivity and efficiency, 20% more seats, but they burn 20% less fuel, and they will create a platform to enable Ryanair to generate a decade of low-fare profitable growth to 300 million passengers by FY 2034, making Ryanair, as Neil has said, the world's largest passenger airline. If you look at the more recent developments, higher oil is driving significant capacity cuts, failures, and M&A. You've seen airBaltic in Latvia, Volotea in Spain in Chapter 11. TAP, easyJet, SAS, Air Europa, Smartwings, and ITA initially have all been the subject of M&A, and that is leading to further consolidation. We are inexorably moving, as I have long held, towards a state in Europe like North America, where there's four main airlines, three big connecting carriers, and one large low-cost carrier, Ryanair.
Already, in recent weeks and days, airlines across Europe are announcing more capacity cuts through this winter. We believe capacity across Europe this winter will be down by low to mid-single digits, and we believe next summer's capacity will be probably flat or down on summer 2026. The Boeing MAX, we have already covered off. The FAA certified in October. We believe the EASA is on track to certify by the end of December. Our first 16 MAX are due to deliver between January and April of 2027. Boeing have recently confirmed those dates in writing, so we are confident we will have those aircraft in our fleet in time for the peak summer 2027 period. Critical to that is that they give us 20% more seats but burn 20% less fuel. As I said, 300 of those aircraft enable us to grow to 300 million passengers by 2034.
Neil, do you want to finish on the outlook?
Just looking at traffic, well flagged, we will grow by 3% to 214 million passengers. That is after taking out 2 million passengers over the winter, so we will be broadly flat on capacity in the November to March period, although flying significant aircraft during Christmas and the Easter period in Q4. The final outcome for unit costs will very much depend on where unhedged fuel goes for the balance of this year. While we are 80% hedged at $67 a bbl to the end of March, we do expect oil prices to remain elevated for the 20% unhedged. We will also be spreading costs over a slightly lower passenger target this year and expect to see some of the crew CLA pay increases coming through in the second half of the year. Focusing on demands, we have seen strong close in Q3 bookings.
The final Q3 outcome, however, fares trending modestly ahead at the moment, but the final outcome will very much depend on where we get to on the October, early November midterms, school midterms, more importantly, the peak Christmas and New Year travel period. As is always the case at this time of year, almost zero visibility into Q4. I think given where oil volatility is, given the lack of visibility, it is just way too early to provide meaningful profit after tax guidance at this stage. I would, however, I suppose, refer to the MAX 10s, which are going to come in from next year. They deliver 20% fuel savings, 20% more seats on the aircraft. As Michael said, I think capacity will come out of the market as we face into a rising fuel environment next year with hedges rolling off.
We would expect to see some meaningful fare increases, but unlikely to be enough to offset the increase in the fuel. Ryanair's balance sheet, therefore, comes into its own. We are in a rising interest rate environment. Ryanair is funding itself out of its own cash resources. Again, the cost gap widening between ourselves and everybody else. Very excited about the opportunities to grow to 300 million passengers in a profitable and sustainable manner over the next decade. Thank you.
Michael, Neil, good morning. Starting with your results, H1 profits fell 15% to EUR 2.15 billion. What were the key drivers?
Well, as always, there are a number of moving parts in here. Traffic performed well, increasing 6% to just under 126 million passengers, but we did have to stimulate fares. Fares down 4% in the first half of the year. A number of reasons. Firstly, timing of Easter. We did not have a full Easter in April, but probably more importantly, the Middle East conflict led to consumer hesitancy closer in bookings, and therefore, more fare stimulation. More so in the first quarter than in the second. Ancillaries put in another solid performance, rising 6% to just EUR 3.1 billion, or flat on a per-passenger base at about EUR 24.50 per passenger. Costs, however, badly impacted by a spike in oil prices. Our 20% unhedged fuel spiked to $130 a bbl, which was double the hedged price that we were paying at $67 a bbl.
As a result of all of that, as you said, profit down 15% to EUR 2.15 billion.
What is your current hedge position?
FY 2027 is 80% hedged at $67 a bbl. However, the unhedged 20% is currently trading at about $130, $140 a bbl, so double our hedge price. We recently extended FY 2028 on dips, so that we are 25% covered at $95 per bbl. FY 2027 OpEx is 80% hedged at a $1.16 to the euro. FY 2028 OpEx is 21% hedged at a $1.19 to the euro.
Moving to the balance sheet, Ryanair continues to have an industry-leading balance sheet. What are the key highlights?
Yeah, it is a fortress balance sheet. We enjoy rock-solid BBB+ ratings from both Fitch and S&P. This is underpinned by 620 debt-free, fully unencumbered Boeing 737s, which is quite unique for our industry. Liquidity was very strong at the end of the half. We finished with EUR 2.6 billion gross cash, supplemented by another EUR 700 million undrawn under our revolving credit facility. To put that in context, that is after we paid down EUR 1.3 billion debt in the period, including our last euro bond in May, had EUR 800 million of CapEx and EUR 400 million of shareholder distributions. So we continue to fund ourselves out of our own cash resources in a rising interest rate environment where our competitors are taking on expensive long-term debt, expensive long-term leases. So this is a huge competitive advantage for Ryanair.
What's FY 2027 CapEx guidance?
It's pretty much unchanged at close to EUR 2 billion.
Shifting to shareholder returns, when's the next dividend payable?
Well, in line with our dividend policy, the board have this morning declared an interim dividend of EUR 0.273 per share, which, same as last year, will be paid at the back end of February.
You announced another EUR 800 million buyback today. What are the details?
We completed the last EUR 750 million share buyback in September, which means we've now bought back and retired over 40% of our issued share capital since 2008. The board believes that the current pricing is attractive, particularly having paid down debt and with the certainty of the new MAX 10s coming on stream. So we today announced a new EUR 800 million buyback, timed to start in February next year and run for a 10-month period to December next year.
Touching on fleet and growth, do you still expect the first MAX 10 to deliver in spring 2027?
Yes, we very much welcome the FAA's recent certification of the MAX 10, and we'd be hopeful that EASA, the European Union Aviation Safety Agency, will do likewise before the end of this calendar year, as Michael already pointed out. So if that happens, we're likely to take our first aircraft in January, early February of next year. We're expecting 16 of these aircraft in the fleet for the summer of 2027. So that'll enable us to grow by another 3% to just over 220 million passengers next year in FY 2028.
Is the MAX 10 order book hedged?
Yes. Essentially, the 150 firm orders are 60% hedged at $1.23 to the euro, which locks in even more savings on these already keenly priced aircraft deliveries.
Where is Ryanair most focused on growing?
Well, we've very limited capacity. This winter, we're broadly flat on our capacity, and into next year, we're only growing by another 3%. We're very choosy on where we deploy our capacity. We're very keen to reward states, regions, and airports that are either stimulating growth with low costs or removing aviation environmental taxes. I would refer to the likes of, for example, Tirana, which will get another aircraft this winter in Albania. We continue to grow in places like Italy, where they've been removing municipal taxes, Sweden, into Bratislava, where they've seen a lot of the Vienna traffic move in their direction, and indeed in Morocco. At the same time, we're closing bases in places like Germany, in Berlin, where prices have remained very expensive. Vienna, which, as I said, a lot of capacity moved into Bratislava and some of the regions in Spain.
I would expect this trend to continue over the next number of years. Airports are hungry for reliable growth, and Ryanair has a reliable order book coming over the next decade.
What is your views on European short-haul capacity?
It is declining. All airlines are announcing capacity cuts into the winter of 2026. We believe those cuts will continue into the summer of 2027. Over the medium term, we expect short-haul capacity will remain constrained out to the early 2030s because, with the exception of Ryanair, very few European airlines have significant short-haul aircraft orders. The two big aircraft manufacturers are well behind on their production targets, and we have already seen in recent months unprofitable airlines in Europe face a very difficult winter. airBaltic and Volotea are already in Chapter 11, and we think they will be joined by other currently unprofitable or loss-making European airlines who will head the same way, particularly as we face into a winter with high oil prices and constrained capacity.
Touching on some other areas, how will H2 unit costs perform?
It all very much depends on what happens with fuel for the second half of the year. While we are very well hedged, 80% hedged at $67 a bbl out to the end of March, the 20% unhedged fuel has spiked, and we will have to see where that goes over the coming weeks and months. I would also flag to analysts and shareholders that we are spreading costs over a lower traffic target, 214 compared to the original target of 216 million passengers. Some of the benefits that we saw in the first half of the year will rise a little bit into the second half as we take on more of the pay increases under the crew negotiated CLAs, the timing of maintenance, et cetera. But I still expect a strong cost outcome for the year.
What are the key cost advantages coming from the MAX 10s?
We think the MAX 10 is going to be transformational for Ryanair's costs and for our earnings. These aircraft offer us 20% more seats and burn 20% less fuel. We priced these aircraft as we emerged out of COVID, so we got an extremely attractive price on the entire 300 aircraft order. I would compare that to some of our competitors in Europe who are buying expensive aircraft, doing even more expensive sale and leasebacks, and mortgaging their future on running Ponzi schemes. The MAX 10 improves our productivity on crewing, unit costs, and we have maintenance warranties that run for the first five years post-delivery of each aircraft. This fleet enables us to grow our traffic from 214 million passengers this year to over 300 million passengers by 2034, which means we will continue to grow strongly, and I believe grow profitably over that period of time.
The question frequently asked, particularly given the current uncertainty, is do I still believe that our profit per passenger can rise to 14, 15 euros per passenger? I believe absolutely it will, particularly with the MAX 10 aircraft when they become the core of our operating fleet.
What is the latest on your engine shop project?
Yeah, it is progressing very well. We are in advanced negotiations with a number of locations and would hope to announce the first of the two engine shops before the end of 2026. That would then enable us to break ground in the first calendar quarter of next year and have the first shop operational at the back end of 2029. The second shop would then come online as we start to put the LEAP engines in for their first heavy checks in the early 2030s. It is going well.
If the Middle East conflict is not resolved soon, what will happen to Ryanair's FY 2028 fuel bill?
I think the fuel bill of all EU airlines is going to be significantly higher in 2027. We were all reasonably well hedged in 2026. We are reasonably unhedged into 2027. Therefore, it is, I think, in my view, certain that capacity will be heavily constrained this winter and into the summer of 2027. That will lead to materially higher airfares across Europe in summer 2027 to reflect these higher oil prices and the fact that airlines have less hedging in place. In Ryanair's case, we think we are looking at a EUR 2 billion increase in our fuel bill for 2027, up about a third on this year. We need about a 20% fare increase to cover that kind of fuel price increase. I am not sure we will get to 20%, but I think we are certainly looking at double-digit fare increases across Europe from all airlines in 2027.
But as we enter that period of time, we are now reviewing all costs, so accelerating our airport charge discussions. Unlike other airlines, we have paid all our debts, so we are not funding higher borrowing costs or higher aircraft leasing costs. But we are looking at all aspects of costs, including a pay freeze from April onwards.
Lastly, on outlook, what is the group's FY 2027 outlook?
Okay. Well, traffic, as we have already discussed, will be up about 3%, 214 million passengers. So, broadly flat capacity over the winter, the November to March period. Although, as I previously said, flying significant capacity over the peak Christmas and Easter timeframe. The final unit cost outcome very much depends on unhedged jet fuel. We will see a little tick up, as Michael already said, on certain things, on the staff line with CLAs and the timing of maintenance, and we are spreading that over lower traffic in the second half of the year. But it will be a relatively good performance. On demand, Q3 bookings are strong, and fares are trending modestly ahead of the prior year. But the final Q3 outcome very much depends not only on the October, November school midterm breaks, but importantly on the peak Christmas and New Year travel timeframe.
As is always the case at this time of year, almost zero visibility on Q4. So, I think given the volatility on fuel, given the lack of visibility, it would not make sense to provide guidance at this point in time. It would not be meaningful. Looking beyond that, MAX 10s start to come in from next year. Delighted to get these fuel-efficient aircraft, which will continue to widen the cost gap between ourselves and everybody else, 20% more seats. Very keenly priced aircraft in any event. As Michael has already said, we do expect that everybody will face a fuel challenge into next year. Fares will rise, but we do not think they will rise sufficiently, so we are looking at all costs within the business. But Ryanair is very well placed. We are going to grow profitably and sustainably to 300 million passengers by March 2034. Thank you.
There you have it, ladies and gentlemen. These are exciting times in our industry. We have been here before, whether it was 9/11, Gulf War I, Gulf War II, Putin's invasion of Ukraine. During periods of high oil prices or significant volatility, the airlines that do well and emerge stronger are those airlines that have low debt, strong balance sheets, are not doing sale and leasebacks, and paying excessive rates for their aircraft, and those airlines that have a huge pricing advantage over all of our competitors. This is an era when Ryanair will do very well, and that is why we are launching another share buyback today. It will run through 2027. We believe this is a unique opportunity to buy Ryanair shares at a very low entry point, because we see no difference to our growth objectives, growing to 300 million passengers over the next eight years to FY 2034.
We believe once we move through this period of present uncertainty, our profitability will continue to rise towards EUR 14 or EUR 15 per passenger. These are exciting times. This is a very exciting company, and we are going to take the battle to the competition, provide lower fares for our customers during these uncertain times, and Ryanair will win out. We have an extensive roadshow underway this week for the half-year results, and we look forward to seeing you all. If you would like a meeting with us, please contact either our brokers, Citi, Davy, or Goodbody, or our Head of IR, Jamie, here through the office in Dublin. Look forward to seeing you all over the coming week and to discussing the exciting opportunities that exist in these current uncertain times. Thank you.