Welcome to the Ryanair H1 FY 2022 Results. Throughout the call, all participants will be in listen-only mode, and afterwards, there'll be a question and answer session. During the Q&A, in the interest of time and fairness, please limit yourselves to two questions per person. Just to remind you, this conference call is being recorded. Today, I am pleased to present Michael O'Leary, Ryanair Group CEO. Please begin your meeting.
Okay. Good morning, ladies and gentlemen. You're all very welcome to this H1 results call. I'm here with Eddie Wilson and our team in London. Neil, Thomas Fowler, Tracy Malloy, Ryanair CFO here in Dublin. As you'll know, this morning on the website, we posted up the shareholder presentation, did an MD&A, and a Q&A, myself and Neil. We'll take you through the press release pretty quickly and ask Neil for some comments, then we'll leave as much room as we can for Q&A. We're pretty tight for time, we have to finish on or before 11 o'clock. As you'll see this morning, we reported a loss of EUR 48 million as traffic has rebounded very strongly at lower fares.
I think what's interesting in these numbers is that in Q1, the June quarter, we carried 8 million passengers. In the September quarter, that bounced back to 31 million passengers, largely thanks to the success of the EU Digital COVID Certificate, which allowed a very strong traffic recovery from the first of July onwards. I think what's also interesting in this morning's numbers, if you take the full half year, our sectors and traffic has doubled, but revenues have gone up by 83%. Clearly we were discounting and price stimulating into that recovery, but costs have only risen by 63%.
The kind of very large cost savings that we have exploited as a result of COVID will continue onwards and enable us to continue to pass on much lower fares to our customers and very much lead the recovery of EU air travel since the first of July last. No other airline is recovering as quickly as we are. We're now expecting the second half of the year to be operating at about 90% of our pre-COVID capacity. The load factors will continue to be a little bit lower, probably somewhere in the low 80% as opposed to the low 90% pre-COVID. All of that suggests that we will probably exceed our current traffic guidance of 90 million-100 million.
As long as there is no adverse COVID disruption between now and the end of March, I think it looks like we'll carry probably about 103 million-104 million passengers for the full year. We will continue, I believe, to see a very impressive performance in controlling unit costs. All of this will be done in an environmentally, I think, sensitive manner. We've taken delivery of the first of the Gamechanger aircraft, where we'll have 65 of these aircraft in the fleet for summer 2022. Already, we're seeing these aircraft, which have been operating in the fleet since June, offer 4% more seats but consume 16% less fuel and are cutting our noise emissions by 40%.
Tom Fowler and our sustainability team are working hard on developing the supply, research and supply of sustainable aviation fuels. We continue to push the European Commission for reform of the Single European Sky so that we could minimize air traffic control delays and inefficiencies that arise as a result of air traffic control. We're proud of our industry-leading B-minus climate protection rating from the Carbon Disclosure Project, and we're committed to getting that to an A rating within the next two years. The COVID, as I said, the travel recovery post-COVID, on July, has been impressive. We take considerable heart from the Eurocontrol have published numbers there for flights in September. Ryanair was operating at a 9% or 91% of our pre-COVID flights.
Most of Europe's flag carriers were operating at between 50%-60% of their pre-COVID flight volumes, as were easyJet and others. COVID-19 has accelerated the collapse of a significant amount of European airlines, including Flybe, Norwegian, Germanwings, Level, Stobart, et cetera. Alitalia has reformed as ITA, but with only 50% of its pre-COVID fleet. TAP is operating at about 65% of its pre-COVID fleet, as are LOT and SAS. We believe into the summer of 2022, there will be materially less short-haul capacity. I believe it'll be a double-digit number sometime between 10%-20%. Our 65 new aircraft deliveries means we are negotiating extraordinary COVID recovery incentives, growth discount schemes with our airport partners, and increasingly European governments are coming to the table.
The Irish government, I think, came up with a very visionary COVID recovery scheme in the budget about two weeks ago. They're investing about EUR 90 million in for aviation, much of which is being passed on by the Irish airports to the airlines in the form of lower airfares. We've extended our long-term low-cost deal at Stansted Airport in London in return for a more aggressive COVID traffic recovery. I think that's going to be a key cost advantage for Ryanair in the next number of years, particularly in a marketplace where the owners of Heathrow Airport have just jacked up fees to the airlines and passengers by 50% and still complain while still complaining that they're only getting low returns and they want to jack them up more. Gatwick will inevitably follow and raise fees.
Stansted and Ryanair, I think, will continue to be the low-cost haven or an oasis of low-cost traffic recovery and growth for the next five years in London. That situation is being mirrored by other EU countries as well. The U.K. has reduced U.K. APD by 50% on domestic routes. Even the Spanish government has decided that Aena's charge would be frozen for the next five years, which gives us the capacity, the opportunity to add significant capacity to those markets while benefiting from low, or in some cases, lower fares. As you'll have seen for next year, we have announced 14 new bases. More importantly than that is the aircraft allocations that are going to existing bases.
Normally, on this pre-presentation, I'd point you in the slides to, the, slide four, which is the unit cost slide. This time on news, I'd point you to slide 13, which is where the aircraft growth is being allocated for 2021, 2022. We have 29 aircraft being allocated to new bases, ranging from Stockholm to Venice, Zagreb, Zadar in Croatia, Turin in Italy. But much more aircraft being allocated to existing bases. 11 aircraft going into Vienna, six aircraft going into Stansted, where we bought the easyJet slots at Stansted, to continue that growth. Manchester, three more aircraft taking up the, an opportunity there where Thomas Cook has shed capacity. There's more than 20 aircraft going into Italy for summer 2022. Rome, Milan, Naples, Bologna, again, where Alitalia has, you know, taken away a very significant amount of capacity.
easyJet is also either reducing or closing bases in Venice and in Naples, and we're moving in there with lower cost aircraft, taking up that capacity, working with the airports to reverse their COVID traffic declines. Italy, Spain, Portugal will continue to be markets where we will see very significant capacity allocations by Ryanair on the back of lower airport fees and I think accelerated traffic recovery into next year. As a result of that, we've significantly stepped up our growth projections for the next five years. Originally, we had very ambitious targets to grow to 200 million passengers. It is clear, however, that the growth is going to be faster and more aggressive than that.
We've now increased that growth profile for the next five years by another 10% up to 225 million passengers. That means that next year we expect to carry 165 million passengers. That's through the summer of 2022 into the year-ended March 2023. We will build on that over the coming years. No other airline in Europe has the aircraft deliveries coming from Boeing that we have over the next four or five years. All the airports and the governments, I think across Europe, recognize that we will be the vehicle by which they will accelerate their COVID traffic and tourism recovery.
We have a big team of people this morning in London at the World Travel Market, meeting government ministers, airports, and tourism boards all over Europe, and they are beating a path to our door. I think the growth opportunity has never been more exciting. Certainly in my 30 years in this business, I've never seen a growth opportunity like this. I have never seen an opportunity where we have 210 aircraft coming to us for the next five years, and most of our competitors are either cutting their capacity or don't have any aircraft orders at all for the next 5 years. We're expanding very much into a market that is full of opportunity and where there doesn't seem to be much competitor response at all. Touch briefly on the half year results.
Again, I would point you to, well, the sectors and traffic more than doubled. Revenues up 83%. Scheduled revenues down as we stimulate a traffic recovery. Ancillary revenues performing very strongly, but operating costs increased by just 63%. Looking forward, over the next 12, 18 months, we've hedged our fuel requirements. We're with a mix of jet swaps and caps. We're essentially 60% hedged out for the next 18 months to March 2023 at around $60 a barrel. We have swaps in place for a further 20% both for Q4 of FY 2022 and the first half of FY 2023, the key summer months at around $70 a barrel, which means, you know, we're insulated from the recent short-term spike upwards in oil prices.
The market is in backwardation, so we continue to see significant opportunities to buy fuel forward. The reason we don't wanna lock away 90% on a kind of a rolling jet swap basis is clearly, we learned from the COVID experience that, you know, there could be a return of some kind of lockdowns, and therefore we don't wanna buy forward 90%, but we think that balance of 60%, 60% of jet swaps hedging and 20% of caps is the right place to be. The balance sheet has recovered very strongly as bookings have recovered. Cash flows are now at the half year end, we're north of EUR 4.2 billion.
I would point again, we've repaid the 2014 bond of EUR 850 million, which was priced at just under 2% in June of this year. We've refinanced that with a new EUR 1.2 billion five-year bond, which we priced at less than 1% and 0.85% for five-year money unsecured to an airline. It's extraordinarily low-cost financing, and I think it adds to our price leadership over all of our EU airline competitors, many of whom have been doing expensive sale and leasebacks on their fleet in the last 12 months or have been adding to their fleet at very high prices. We were out there during COVID. We went to our shareholders first.
We raised EUR 400 million by way of a rights issue, and I think that gave the market a significant confidence in the bond market. With the very strong cash position we've taken, the board took the decision last week to repay the U.K. CCF loan of GBP 600 million. We've repaid that five months early because frankly, we don't need the money anymore. We are well funded for our CapEx for the next two years. I should highlight, we're again looking strongly at a potential delisting for the London Stock Exchange. In my personal view, I think we will probably delist sometime in the next six months. I think this is part of the function of airlines to operate under a regulatory constraint that we, as an EU airline, must be 50% EU-owned and controlled.
We're 100% EU-controlled because we've disenfranchised all of the non-EU shareholders post-Brexit. But as you know, from an ownership point of view, we had about 40%, between 40%-44% of our stock held in North America in ADRs, which leaves about 55%-56% held or owned in Europe in ordinaries. But U.K. holders became non-European post-Brexit, we've gone below 50%, and I think the European Commission wants us to be seen to be taking action. We've had our first forced share sale in September last. Another step of that process is delisting from the London Stock Exchange. The trading in our shares in the LSE in London has significantly diminished post-Brexit.
Most of the trading in the ordinary takes place on the Euronext Stock Exchange in Dublin and Brussels, and we would like to see that continue, which is where our primary listing will be. I think it is likely that we will delist from the LSE. It won't have any material effect on our U.K. shareholders, but we do need to move some of our U.K. shareholders into being EU shareholders over the next 12 or 18 months. Looking forward briefly on the outlook, I think the outlook for traffic recovery remains very strong for the remainder of FY 2022. That's why we've taken the traffic forecast up above the existing range of 90 million-100 million. Pricing in the last week of the October midterm break was astonishingly strong.
We think Christmas, again, looks like it's going to be very strong. Forward bookings for Christmas are ahead of where they were last year for COVID. We think the spring midterm break in February will be strong, Easter will be strong, and certainly Summer 2022, the forward bookings, while low at the moment, are pricing very strongly. Currently, prices are about just over 5% ahead of where they were at this time in 2019 for summer of 2020 pre-COVID. We think we'll continue to build on that, and that will be a combination of less capacity in the short-haul market in Europe, and increasingly, people turning to Ryanair with some confidence because we're opening new routes and offering more frequencies to the destinations that they want to travel to.
Pricing, however, outside of those peak periods, I think will remain a challenging. We think November, the first half of December, second half of February, second half of January, early February, will be challenging. As I say, if you look at the last six months, when revenues have risen 83%, costs have only risen 63%. We have a unique cost base advantage now over every other airline in Europe. I think, one of the effects of COVID is that cost advantage has widened because of our low-cost financing, low-cost aircraft delivery. The sensible way we've agreed to pay reductions with our people, for last year and this year, and we're looking forward. We want to begin that pay restoration in April of next year. It will be restored over a two or three-year period.
I think our people take some confidence in the fact that, you know, we minimized job losses, we kept people current, we kept our pilots and cabin crew current. That's been one of the reasons why Ryanair has been able to recover so strongly since July, where many of our competitors, easyJet, Wizz Air, and others, are canceling flights or much slower into the recovery because they don't have enough current pilots or cabin crew. However, it's very difficult. I can't give you any guidance for the full year because there's too much uncertainty over yields. I think we will be strong in terms of volume recovery.
We'll be strong on the cost delivery, but the outturn for the full year, which we think is still a modest loss of between EUR 100 million-EUR 200 million, is heavily dependent on pricing and yields for the remainder of this year. We move into the summer of 2022, FY 2023, there's going to be a very strong traffic recovery, somewhere around 165 million, up at least 10% in our pre-COVID numbers. I personally believe that the pricing will be very strong or the recovery of the pricing will be very strong across summer 2022, and Ryanair is better positioned to capitalize on that recovery, better than anything else, anybody else. That's all I want to add. Neil, anything that you wanna add to that from an MD&A or a cost point of view?
That was a fairly comprehensive run-through. There's just a couple of things I'll re-emphasize. Just on the costs, as the load factor recovers, we've seen unit costs start to track back down again. We were in the 30% in the first half of the year, EUR 38 per passenger, and we would hope as we get back up towards 90% load factors and more game changes in the fleet, that we'll see that recover to pre-COVID levels and then some. On the hedging, as Michael said, very well-placed, well-insulated against any spikes that might happen on both the jet side, but equally on the carbon. We're 100% hedged on our EUA to EUR 24 for this year and about 70% hedged on EUA to EUR 40 for next year.
Balance sheet, very strong BBB ratings. We reduced our net debt by almost EUR 800 million in the first half of the year down to EUR 1.5 billion, and that gave us the confidence, as Michael said, to pay off the CCFF last week, the GBP 600 million financing that we had. Then the London Stock Exchange, we're seeing less than our less than 10% of volumes on the ordinary share going through London at this point in time. There's been a complete migration over to Euronext Dublin and the Nasdaq. I think the board will be in a position to make a decision on that in the not too distant future, next number of months anyhow. That's about it, Michael.
Okay. We'll open up for question and answer, please, and can we limit everybody to no more than two questions, please?
Thank you. The first question comes from the line of Duane Pfennigwerth at Evercore . Please go ahead. Your line is open.
Good morning. Hey, good morning. So you touched on it in your script, but from a yield recovery perspective, into the holidays, can you talk about advanced book loads versus advanced book yields? The question being, how much of your December quarter has already been booked at sharply lower yields?
I wouldn't get into that kind of analysis. I mean, you know, I think the guidance I've given you is that the December bookings, which, you know, drives a huge amount of Q3, are very strong. Forward bookings are strong. Pricing is robust. I think we're gonna see there's a huge, I think, pent-up demand for people to reunite, to see friends and families over this Christmas post the eighteen months of COVID. Now we're entering November today, and what's unusual, we're entering November very close to where we entered October a month ago in terms of the load factors. That's unusual because October generally has the benefit of the school's midterm break. November doesn't have anything in it like that. The pricing in November is a little bit weaker, but we would expect that.
Remember, you know, the budget pricing is also weak in November, the first half week of December. Again, I would give you no more, Duane, than say we did 31 million passengers in the second quarter. I think we will do probably 31 million, the same, maybe fractionally more through the third quarter, the December quarter, but it's too early. Too much of the yield is driven by the close-in bookings for the next six weeks of November and the first two weeks of December to give you any real guidance on yields.
Okay, great. Just for my follow-up,
Yeah.
On labor availability, are you seeing any pockets of challenge there, or is the restructuring of weaker carriers making that more manageable? Thanks for taking the questions.
Pleasure. There's no strictures. I think we're seeing no stress on the pilot side. A huge surplus of pilots. In fact, you know, we've now gone back. We've opened a new training center in Dublin. We're training over about 650-odd pilots going through the cadet program, which is more than we will need for most next year. I don't see any pilot shortage for the next couple of years in Europe, certainly with our ability to train up to 1,000 pilots a year. I don't see also because we're training on 737s as Norwegian has kind of imploded. Jet2 has now moved away from Boeing, placed a big order with Airbus.
I think we'll probably be the only significant employer of 737 pilots in Europe for the next five years. Cabin crew, there'll be pockets of tightness there. I think most that I see in the U.K. You know, we have a large and mobile population across the European Union, where we hire lots of Eastern Europeans, Italians, Spanish, Portuguese, boys and girls who wanna go fly for a couple of years. I think the U.K. will be more challenging and, you know, no great surprise post-Brexit. There's a much more restrictive visa regime here. While we pay, we're a high pay relative to kind of, you know, the retail and hospitality industry here in the U.K. I mean, our cabin crew are earning between GBP 25,000 and GBP 40,000 per annum.
It does take some time across the U.K. bases to train cabin crew. I mean, we're seeing a lot of people join us from retail here in the U.K., apply to us from retail and from hospitality. We don't see any issues in terms of availability, but there will be pinch points, I think, in the U.K., and that's something, you know, where we'll manage our way through it. I think you'd see many other employers in the U.K. bemoaning, many of whom were leading Brexit proponents, such as fellows running pubs and boutiques in the U.K. now looking for visas, extra visas so that they can hire people. They should have thought of that before they were advocating for Brexit, but they are where we are.
I think the U.K. will be challenging, but I think we're well positioned to hire more or to hire and train sufficient cabin crew for the summer of next year and in a marketplace where most of our growth is still taking place across the European Union. The aircraft are being based at European airports. Eddie, anything you would add on the labor side there since you've been closer to it?
Yeah. There's some pressure as well on ground handling in places like Germany in particular, where you're making a transition from government-funded schemes and attracting people back. Berlin was a particular issue for all airlines there over the last number of weeks. I think most of that will wash out as people migrate off those government-sponsored schemes. I'd echo what Michael would say there in terms of the U.K. It's more of a no more than a sort of a supply chain issue that it will work itself out. We're gonna have to hire more people locally here in the U.K., and that is going to be more challenging.
Because on the pilot side, given the structure of pilot recruitment, you have to be ahead of where you want to be for next summer, like 18 months ago, which we were, and we've got zero attrition on pilots at the moment, but the cabin crew you're catching up for about 18 months' worth of recruitment, but we are ahead of it. If there's gonna be any constriction at all, it'll be in the U.K. We have the ability to move people around as well, so.
You know, I would contrast that with a number of our competitors in Europe who have been canceling huge amounts of flight schedules, deferring base openings, because they're massively short of both cabin crew and pilots. Some of our lower fare competitors just furloughed a lot of people, sacked a lot of people into COVID. Now, you know, it takes a while to train those people to get them back. I think we, somewhat by luck and somewhat by foresight, continue to keep all of our pilots and cabin crew on the payroll and current, and why I think we're doing so well into the recovery.
Thank you.
Thanks, Duane. Next question, please.
Thank you. That comes from the line of Alex Irving at Bernstein. Please go ahead. Your line is open.
Hi. Good morning. Two from me, please. First of all, on your 225 million passenger target, are you planning any changes to network structure or productivity in order to achieve this? What gives you the confidence to hit it with just 620 aircraft? That sort of looks like higher passengers per aircraft than you've had previously. Then secondly, on ancillary spend per passenger, please. This has continued to be very, very strong as traffic recovers. Is this EUR 22-EUR 23 starting to look like a new normal? Can you please talk about the headwinds and tailwinds to ancillary spend over the next 12-18 months? Thanks.
Okay. I'll take network. Neil, I might ask you to come in on the ancillary spend part. Just on the network, I mean, you know, we have far more growth opportunities, Alex, out there than we can cope with at the moment. I mean, if I could take my summer 2023 deliveries, which is another 55 aircraft, I could allocate all of those aircraft at the moment for summer 2022. We have airports queuing up, looking desperately, competing with each other, looking to us to give them significant allocations of aircraft. We have to be somewhat judicious in how we allocate those aircraft over the next year or two.
Much of it is driven by us being opportunistic and taking, you know, whichever airports come up with the biggest discounts or which governments come up with the best incentives. Also, you know, we're trying to fill out gaps that I think will never occur again. Like, you know, I point to Vienna, for example. We're gonna base 11 additional aircraft in Vienna next summer, where Austrian have materially reduced their Wizz Air, who two years ago were talking about a 20-aircraft base, are now in retreat. They're down to five, and I suspect they get to zero fairly quickly. Level, which was talking about having a 10 or a 14 aircraft base, have gone bust. There are huge opportunities there.
Manchester, we're adding three aircraft for next year, straight on the back of the Thomas Cook failure. We're gonna place more than 20 new aircraft into Italy next year, taking up huge swathes of capacity that have been abandoned by the Alitalia restructuring. In airports where, you know, they are, to be fair to the Italians, very adept at incentivizing us to return to rapid traffic growth in that market. You know, the government has also reduced the municipal taxes as well. I think. Will there be much of a network change? No. I think if you take our 210 MAX order, load factor recovery back up to 91%.
In fact, I think it, you know, it may well because the capacity constraints the next couple of years, the load factor may even go back above 91%-92%. We might get to 94%-95%. We will need to continue to have and maintain an Airbus fleet within the Lauda Europe operation. I think there we will need a few more aircraft to get to 225 million passengers, but we're seeing remarkable opportunities out there at the moment. I think there's still a lot of white tails out there. The older generation aircraft, the NGs and the CEOs, the NGs on the Boeing and the CEOs on the Airbus, are becoming increasingly available at very attractive lease rates.
I think we'll be opportunistic both with the airport deals we do and with the aircraft deal we do. I have nothing but confidence we'll get to 225 million in the next five years. In fact, I think we'll go over that figure, but we need more aircraft to get over that figure. Neil, ancillaries?
Yeah, Alex , thanks for the question. Yeah. I think kind of 2021, 2022 is the new norm going forward. We did a lot of work last year during the downtime in relation to the dynamic pricing on ancillary products, particularly the likes of the priority boarding and the seats. That's sticking as the volumes grow. We're seeing strong penetration coming through on those two products. Equally, the onboard spend is starting to ramp up again as we're getting more people flying on the aircraft. With the U.K. now outside of Europe, we're able to offer duty free on our U.K. EU flights. Yeah, I think we'll continue to see these kind of levels. FY 2022 will probably end up somewhere close to EUR 22, maybe just under EUR 22 per passenger.
Great. Thank you very much.
Thank you, Alex. Next question, please.
Thank you. That comes from the line of Neil Glynn at Credit Suisse.
Neil, Hi.
Hi. I'll also ask two questions, please. The first one just following on from the previous question on labor market tightness, and I know Eddie mentioned briefly ground handlers. Just interested where across the U.K. in particular, a lot of people will have left the aviation industry, and on the airport side and on the ground handling side, you obviously have less control. Do you need to change your approach at all in terms of working more closely with your suppliers in the U.K. or do anything differently this time around? One structural difference you have from the recovery from the global financial crisis is the multi-AOC or multi-airline strategy. I'd love to understand what benefits do you think this provides Ryanair in this recovery situation? Is there a next leg to the multi-AOC strategy that we should be thoughtful about at this point?
Okay. I'll ask Eddie maybe to take the labor market. Do we need to change your approach? Then ask you about the multi-AOC strategy. Eddie.
I mean, we're talking about the U.K. in particular. I mean, we made a change just prior to COVID, where we have locked away our sort of self-handling model in Stansted. We are actually in control of that at our major base. Anywhere where we see
You know, any sort of potential structural weakness in terms of dealing with third-party handlers. We are now more adept at looking at self-handling. We've done that also in Poland, and we've done it in Spain, very successfully at all bases. We're much more in control of that. I don't see any real change to that. I think you will just see. Like, I have no difficulty on, say, pay rates or that we have on the ground handling side. I think it's temporary in terms of the wash out that you will see of people migrating off government schemes. It's been well ventilated on the cabin crew side. There is a particular difficulty in the U.K. We will get through it.
I don't necessarily agree with you about the sort of migration of people out of the industry. It's still relatively attractive to work in aviation. You know, if you're a cabin crew member, you're still restricted from working a maximum of 900 hours a year, and that's essentially a part-time job at full-time wages, you know, when you look at how they would move between other parts of the hospitality industry. I think we're on top of it, but we do have a challenge in the U.K. over the next number of months. We are adept at this particular issue of solving labor issues. I don't see a difficulty. We have plenty of, I suppose, elbow room with having 86 bases around Europe. Even if you were to come up against any sort of short-term operational problems, but I don't see any.
I agree. You know, I think that if you look at the strength of our recovery post-July, where we're now operating 9 million. Eurocontrol produced numbers there for the month of September, where we are operating 91% of our pre-COVID capacity. easyJet's doing about 60% of its pre-COVID capacity. Lufthansa, Air France, KLM, less than 50% of their pre-COVID capacity. We were out the door with our pilots and our cabin crew, all of whom are delighted to be back working again. You know, I think there's certainly a significant lift internally, I think in the morale of the team generally. On the multi-AOC strategy, look, we originally moved towards that when we unionized in 2017, 2018. The biggest demand we had from our people.
They wanted local contracts and paying local tax. They were paying local social tax, wanted local labor tax. We were operating under this terrible burden in Ireland of this Finance Act Section 127B, where because we were Irish owned and managed, all of our people had to pay their taxes in Ireland. Ireland, you know, has this reputation as being a great tax haven, which is, it may or may not be if you're a corporate, but if you're an individual, you're generally paying the marginal rate of tax at some really, you know, EUR 35,000-EUR 37,000 per annum. The only way out of that was to go with the multi-AOC strategy. We moved all of our Eastern European people onto the Buzz AOC.
Malta Air, with the Maltese AOC, meant we moved our people in France, in Italy, in Germany onto Maltese contract, the Maltese employment, so they could pay their taxes locally in Germany, in Italy, in France, have the benefit of local contracts. Thankfully, as usual, after the horse has bolted, the Irish government in this week's budget two weeks ago, has finally abandoned Section 127B, which means, you know, the few remaining people we have, the remainers we have now in Spain and Portugal, will all from first of January move on to paying local taxes in their country, which regularizes everything.
It also means we will no longer have the penalty that we had in the past of paying high Irish marginal tax rates for our pilots and our cabin crew, who will now benefit from, you know, generally speaking, because of the situation with TAP and Iberia in Spain, the pilots and cabin crew have some advantageous sort of tax expense treatment there. Our people will now begin to share in those more advantageous personal kind of tax regimes in those countries. That was very much the driver of it. It also though create an opportunity to, I think, where we can develop more management talent. You know, we now have five airlines. We have, you know, four other CEOs. It's created new opportunities for people to get promoted into, you know, leading positions, commercial role.
We have five commercial directors, five CFOs, five operations directors. It's a very good way of us getting more people to come up through the management chain and create opportunities for people to get promoted into senior positions. I think we'll be very much a training ground for, I hate to say it, but for the next group or for the next round of the next round of management replacements. We need more of those skills and talents coming through. We've seen a large measure. You know, we've promoted a lot of women, which I'm particularly proud of to senior management positions now.
Again, using those multi-AOCs, we're bringing a lot of middle management talent through that will challenge us for our positions in the next, I should say four or five years, but maybe I might hope to be the challenge for our positions in the next five or 10 years. Nevertheless, there have been opportunities that have come up apart from but their multiple AOC was really set up to avoid or bypass the Irish 127B. Now we have, I think four or five AOCs, and we're very proud of the way those airlines and the management teams, and I think they're all building an individual culture there. Like, the people in Buzz are very proud to work for Buzz. People in Malta Air, proud to be working for Malta Air, and the same with Lauda Europe as well.
Great. Thank you.
Thanks, Neil. Next question, please.
That's from the line of James Hollins at BNP Paribas.
Hi. Morning. Yeah, I haven't made it to Axon yet. On the delisting, I mean, historically, you've talked about a potential agreement between the EU and U.K. on reciprocity of shareholder ownership. Is this something you're no longer expecting? Perhaps more importantly, do your U.K. shareholders not really care about you delisting? The second one is on buying and leasing other aircraft. I think on your video there, you talked about not selling any more aircraft, but you've got the 29 A320s up for lease ending 2022, 2023 winter. Do you think it's something where you'll buy some of these white tails soon in order to, you know, certainly address that issue or perhaps obviously extend the leases? Do you expect Boeing to hold good on delivering up to 65 by the summer, given their historic issues? Thanks.
Yeah. Thanks, James. A couple of quick answers. Look, the delisting, I think is an inevitability post-Brexit. As we said, the market, the trading volumes through London are tiny now, hugely outweighed by what's trading through the Euronext in Dublin and in Brussels. I think Europe is going to be, particularly given the fraught state of relations, I think, between Europe and the U.K. The European Commission, and I think led largely by the French and the Germans for obvious reasons, are going to be much more aggressive about ensuring that European airlines are majority EU-owned and controlled from 2022 onwards. We've already had our first compulsory share disposal.
Delisting from the LSE is another measure that we want to be seen to be taking so that we're clearly doing everything we can over a reasonably short period of time to move back to being majority EU owned as well as being EU controlled. Do our U.K. shareholders care? I don't think so. You know, we have a number of very significant U.K. shareholders who've been holders for a long period of time. They get the business model, they understand the strategy. We do want to kind of, you know, there has been a number, quite a number of, you know, small U.K. investors buying our shares since Brexit who shouldn't be buying our shares. You know, you're not allowed to buy our shares unless you can fill in the form, the CREST form saying that you're an EU shareholder.
You know, we just have to work our way through that. On the aircraft leasing, I mean, to get to 225 million passengers over the next five years, we clearly will have to slow down our aircraft sales program. That's the obvious way of getting there. We take the 210 aircraft from Boeing. There are opportunities out there at the moment, certainly in both white tails of Airbus COs and Boeing NGs. Also the leasing companies are becoming much more aggressive. Like, nobody really wants the older 12, 14-year-old COs or NGs. If lease rates continue to fall for those, I think again, we'll be opportunistic about adding maybe another 30, 40, 50 of those aircraft. I don't think it will be in the short term.
We've no requirement for additional aircraft for the next two, three, four years. We were disappointed, I think, by Boeing's decision to look for a price increase for a follow-on order on MAX 10, particularly at a time when Boeing's order book is going nowhere in a hurry. You know, their last few remaining customers in Europe, Norwegian, have canceled all their orders. Even Jet2, which was a significant Boeing customer here in Europe, has now ordered Airbus. IAG, which really had signed up an MoU for a 200 MAX order, they've now opened that up invited Airbus to come back in and retender for that.
With the new Spanish management running IAG, I would be astonished if that order doesn't move to Airbus sometime in the next 12 or 24 months. Boeing's order book is going nowhere. We don't need any aircraft until 2026. You know, we remain one of Boeing's largest customers worldwide. I think we're just having one of those marital tantrums at the moment. Until they see the rightness of our view of the world, there won't be another Boeing order either. How are Boeing doing on the deliveries? I would be hopeful, Rob, more than optimistic that we'll have 65 aircraft delivered by next summer. The deliveries are not going well.
I mean, Boeing have committed to delivering us eight aircraft a month from the period from September through to April. So far, the best they've managed has been six in September, six in October. They're talking about five in November, like really silly stuff. You know, there's not that many airlines queuing up to take a lot of aircraft deliveries from Boeing, and the fact that they're not even able to deliver us two a week is not good. I don't think we're overly impressed by the management locally in Seattle. I think they need to get their shit together. You know, Neil is meeting with the new Boeing CFO in the U.S. this week.
I continue to have you know to be in regular contact with Dave Calhoun, who I think is a good guy. But on the ground in Boeing, they really gotta get their act together, and it's not together at the moment. Having said that, I think Boeing's deliveries will run late, but Boeing are committed to delivering us 65 aircraft by the end of April. I don't think they'll hit that by the end of April, but I'd be reasonably confident that you know as long as we work with them to resolve these delays, I think we get 65 aircraft in probably by the end of June. We will have all of them there for the key peak summer months next year, July, August and September.
You know, on the ground at the moment, things are not particularly good with Boeing. We would have expected a lot more delivery from them, given they've been sitting there on the aircraft, sitting on the ground for 18 months. Look, we'll work with them. We remain a very committed Boeing customer, but we're only a committed Boeing customer when the price is right.
Appreciate the thoughts. Cheers, Michael.
Thanks, James. Next question, please.
That's from the line of Jaime Rowbotham at Deutsche Bank.
Morning, guys. Two from me. The exit fuel cost performance was clearly very good in the September quarter. On a per seat basis, I make it about 8% below the same quarter in 2019 at around EUR 26 . Is that sort of year-on-year reduction sustainable now over the winter, do you think? Anything to say on ex-fuel unit cost expectations for the year to March 2023? Second one was just slide nine in today's presentation. There's lots of ways you could show your market share and how you along with perhaps Wizz Air are close to running pre-crisis levels of capacity unlike many of the competitors. Was there a particular reason for showing this in terms of the ATC fees, where we know you're expecting some hefty inflation? Thanks.
Neil, I mean, I'd ask you to comment on the ex-fuel unit cost performance. Let me just deal with slide nine. Slide nine is nothing just to give you other than a snapshot of what, you know, how the recovery is going and who's recovering quickly, because I think that's fundamentally going to underpin market share gains for the next two or three years. These are independent. They're, you know, Eurocontrol figures, September 2021 over September 2019. I think the underlying strength of this is we're operating at 91% of our pre-COVID capacity. The other reasonably impressive one Wizz Air, who are operating at kind of 93% of their pre-COVID capacity. However, they've added something of the order about 40 aircraft over that 18-month period. They should be doing...
If they were doing as well as us, they would be operating at above their pre-COVID capacity at the moment. Everybody else is blowing their brains out running at about 60% of pre-COVID. Now, a lot of that is labor issues. Clearly with the bigger guys, Lufthansa, Air France, BA, it is the fact that the long-haul transatlantic Asian markets have collapsed. A huge amount of their short-haul recovery or short-haul traffic depends on long-haul connectivity. That's going, it's not going to recover either this winter or I think it certainly won't recover fully into summer of next year. If you look at us, Ryanair, with exactly the same fleet pre-COVID and as post-COVID in September 2021, are operating at 91%.
easyJet, you know, whose fleet has actually got smaller over the 18 months, are only operating at 40% or 57% of Wizz Air, whose fleet has gone up by something of the order of 20%, should be operating at above their pre-COVID capacity, but aren't. They're still operating at 7% below their pre-COVID capacity. I think all we're trying to give you here with slide nine is not a view of the ATC fees, but to show you who's responding, who's recovering much more rapidly than everybody else, and it's Ryanair. Neil, with that, I may ask you to give him your insight.
Sure.
on the ex-fuel unit cost performance and its sustainability.
Yeah, sure, Jamie, I think we'll continue to perform well on the unit costs. You're right, we come in just over EUR 32, under EUR 33 in the second quarter. I think on a full year basis, we're probably just gonna be a sliver under EUR 35 on the unit cost ex-fuel. The unknown is what's gonna happen with ATC and enroute charges from January onwards. My best guess would be somewhere close to EUR 35 on an annualized basis.
Thanks, Neil. Next question, please.
Thank you. That's from the line of Hunter Keay, Wolfe Research.
Thanks. Good morning.
Hunter, hi.
The double-digit price increase that you referenced on the Gamechanger, what baseline is that off of? Is that off what you paid for the Gamechanger or is that off of a prior conversation you had? Second question is, Michael, what is your outlook on the recovery of business travel in Europe next year and beyond? Thank you.
Sorry, I didn't understand the first half of the question. What double-digit price increase?
I thought you said earlier in your prepared remarks that Boeing was looking at like double-digit price increases. Did you not say that?
Oh, sorry. Oh, yeah. Yeah. For the MAX 10, yes.
Yeah, on the MAX 10.
There would be a double-digit price increase. I wouldn't go into any further detail than that, but you know, I would regard any price increase. Anything above zero would be unacceptable to us. In fact, you know, given that your existing customer base, including Jet2, Norwegian, and IAG are all switching out of Airbus, out of Boeing and into Airbus, and we're your last customer outside of North America, you'd want to be, if anything, cutting from zero to a minus number, in which case, you know, we'll happily sign up for an order of MAX 10s, but these are for deliveries in 2026, the period 2026 to 2030. There's no particular pressure on us at the moment. I don't think the quantum of the double digit is important. It's the fact that I think Boeing are just misreading the marketplace.
The leasing companies and the other airlines are not ordering a lot of Boeing aircraft at the moment. We're very happy to order Boeing aircraft, but only if the price is right. The second half of the question I missed because it was.
Yeah, I was just kinda curious.
Oh, yeah, business travel. Yeah.
What your outlook was for business travel. Yeah.
I mean, I think. Yeah, the outlook for business travel, again, I split it in two. Short-haul business travel has recovered very strongly. I think certainly in our network, we're seeing lots of businesses out there, meeting customers, doing deals, back to selling, you know, whatever it is they sell. You know, there's a World Travel Market meeting in London all this week, and there's huge volumes of people moving in and out. I do think business travel on long haul will be a much slower and more painful recovery. You know, I think the idea that people. Well, you know, if a business that, what is it? Bloody Skype or, what's the other? Zoom are going to replace short-haul business.
Getting on a flight and going to meet a supplier or a customer, you know, 1 hour or 1 hour 50 minutes away, whether that's across Europe, that's back, and I think it's going to recover very strongly. If anything, I think there's pent-up demand. Again, there's lots of supply chain issues. People need to go out. Certainly I speak from somebody in Ireland, you know, there's lots of supply chain issues getting stuff from the U.K., and we're seeing lots of people switching to sourcing alternative suppliers in Portugal and Germany and Italy, builders and all that kind of stuff. If anything, I think that's going to be good. We'll see growth in short-haul business travel. Personally, and while it's not a market I'm in, I think long-haul business travel will be much more challenged for longer.
I think you'll see a lot of these multinationals now, you know, who used to hold big conferences or everybody get together once a month or once every two weeks, that's all going to move to Zoom. I do believe you know, this idea though that, you know, business travel will never recover or ever never ever really works. Ultimately business travel will recover. We are social animals. We do best when we're doing business, whether that's sales or buying stuff, meeting people, having dinner with them, you know, bonding with people personally. I think the recovery in long haul will be much slower. It'll be, I'd say, I don't see anything but a 50% recovery in long haul into the summer of 2022, 'cause fundamentally, I think the Asians won't travel.
The Americans probably will to Europe, but they'll be slow and reluctant. I think it's gonna be summer 2023 before you're gonna see the full recovery of long-haul travel. Long-haul business travel I think will take a bit longer than that. It'll take four or five years, I think, for long-haul business travel to recover because some of that is long, is I think structurally going to move to Zoom and Zoom and Skype and all that kind of stuff. Short haul, people are already back. I would say our business, no, certainly in our numbers, our business travel is back up and we see that already. I think the fact that we're entering November just 1% with a load factor, forward load factor 1% down to where we entered October.
October is usually driven by the school midterm break, which was phenomenally strong. Yet we're now going into November today, 1 percentage point behind in load factor where we were. That's really business travel across Europe. There's not a lot of leisure travel. I mean, there might be a bit of Christmas market stuff going on there, but fundamentally, I think a lot of that is business travel, Italian domestic, Spanish domestic, back on the move again.
Thank you.
Next question, please.
Next from Stephen Furlong at Davy.
Stephen, hi.
Hi, Michael. Just in terms of page 13, can you just go through that again in terms of the Italian market? I know there's a big opportunity there. You've added 20 aircraft to new and existing bases, and as ITA is or the-
Yeah.
When you do these deals, are you seeing any competition from anyone else, whether it's Wizz Air or anyone else, for that kind of market growth opportunity? Thanks a lot.
I'll give that to Eddie first, and I'll come back in at the end of it. Eddie.
Yeah. It's Stephen, it's not just Alitalia that are withdrawing from that market, like easyJet as well have started to exit, you know, particularly from places like Naples and Venice. Certainly I have seen the appetite for, because don't forget, when we looked at where we're gonna allocate capacity in the middle of the pandemic, a lot of it was driven by where we thought people were still gonna be able to move with some certainty in the Greek Islands and domestics in Spain, and domestics, particularly in Italy, where Italians continued to travel. Our ability to sort of close out deals in places like Treviso was one, Turin is another. You look at some of the bases that we have down there, whereby we're able to have longer term deals there.
The ability to get into places like Bologna or Treviso, where we have. They're pretty much maxed out now. Like, there are no early morning departure slots in terms of physical infrastructure down there. It's very difficult for anyone else to base aircraft in those places. You're only looking at the same in Bergamo as well. You're looking at places that have come, I suppose, later to the low cost model, which is Venice, Malpensa and places like that, and Rome Fiumicino, to a lesser extent, still a very, a relatively expensive airport. We have the capacity. We're really the only show in town, and people know that if we commit to going there, we're going to stay there.
Some of the airports have remarked to us that those that are making announcements, you know, don't have the aircraft to do it, are putting in leased-in aircraft that are smaller than what they have in their fleet and leaving passengers at the airport on that. We have the presence and we've got the frequency, and I think we've got the sort of street cred down there over the last 20 years that when we say we're gonna deliver, we're gonna deliver and we're gonna be there for the long term.
Yeah, I agree with that. I think Eddie's summarized it very well. I mean, the one point I'd make about the Italian market, it's not just the collapse of Alitalia's capacity from 110 aircraft to 55. It's that easyJet have been closing bases and withdrawing aircraft from markets like Italy and Portugal. Rightly, I think they're focusing back on, if you like, their kind of, their fortresses in Gatwick and Charles de Gaulle and Orly and Switzerland. They really don't wanna compete with us in these, other markets like, Italy and, Portugal. But also, Wizz Air have been out there.
You know, they're great for making announcements about new bases and new routes, and almost as soon as they've made the announcement of new base and new routes, they announce or they don't announce, they just then cut or they defer the openings, they cancel the flights, they take out huge capacity, and it never. It doesn't kind of surface. It doesn't appear. Now, you know, I think a lot of that is that kind of operational chaos that they've been dealing with for the last three or four months, frequently denied, yet, you know, never yet explained. I think they will struggle as they have done in Germany and in Norway, and they're struggling in Italy, in that they, you know, their labor model simply is not sustainable in a Western European market.
They're certainly under, I think, intense pressure from the German unions and the Italian unions about this labor scam they operate with Hungarian contracts and paying, trying to pay people from a Swiss pay point while trying to base them in Germany, Italy. You know, it's not sustainable. It's not gonna survive. They're reasonably small in the Italian market. They don't have much awareness in Italy. The three big ones in Italy would be Alitalia, easyJet, and Ryanair, and of those, two are in retreat and one is growing very aggressively.
Got it. Thanks, Michael.
With a lower cost base.
Thanks.
Thanks, Stephen. Next question, please.
Thank you. That is from Sathish Sivakumar of Citi.
Sathish, how are you?
Hi, Michael. Thank you. I just actually follow up on Italy. So you actually-
Yeah.
Reported about EUR 422 million of revenues in Q2 on a EUR 58 fare. It's like 7 million passengers, and Alitalia used to carry about 22 million. Given you're adding about seven new bases, would it be more like organic or market share gains? Or do you actually see that low price point would stimulate more air travel? Do you see an opportunity in terms of offering some transfer traffic connectivity here?
Sorry, some of you faded in and out there on the other side. I mean, I think there's gonna be very dramatic market share gains in the next two years for Ryanair. We do not see our expansion being driven by low price stimulation for the next year or two. There isn't much. I mean, net overall capacity across Europe is going to be in decline, I think by a double-digit number for summer of 2022, maybe a high single digit, low double digit for summer 2023. Therefore, we roll these aircraft out into new airports where slots and capacity have been ceded to us by, you know, the shrinking of Alitalia's fleet, TAP's fleet, the bankruptcy of Thomas Cook, Flybe, Level, Germanwings, you name it.
The legacy guys have all significantly cut back the short-haul capacity because they don't have the long-haul feed to and from. I don't see we're using low fares to grow the overall market. I think for the next two or three years, we're taking market share. It's my personal view that we'll do that in the summer of 2022 at higher fares. I think actually prices, and we saw that certainly in the October midterm break last week. You know, people who are booking late were paying very high one-way fares, north of EUR 200 one way. I think that's going to recur again in Christmas. I urge everybody, book early for Christmas, because if you're booking at the end of November, early December, you're going to be paying very high airfares.
I think that will encourage people again to book earlier for spring midterm break, for Easter and for next summer. You know, the figure I gave you this morning, as of last Friday, the average fares into summer of 2022 are about 5% ahead of where they were pre-COVID. Now, it's a reasonably small number of full bookings, but you know, the fact that they are you know, we are not having to price discount at all into summer 2022, I think shows the potential demand that's out there over that period. Does that answer the question or did I-
No, I got it. Yeah. Thanks, Michael.
Great. Okay.
A few follow-up questions.
Thanks, Sathish. Okay.
On the load factor, do you actually see any pockets of strength and weakness across the market? Like, do you see U.K. underperforming with the-
Load factor, you see strength. I think. Sorry. I mean, again, the load factor recovery has been, you know, again, astonishingly strong. We did 79% in July, and then for August, September, October, we've been north of 80%. Don't tell anybody, but, you know, we'll be announcing our October traffic numbers tomorrow morning, and the load factors.
Oh, went out tomorrow? Today. [crosstalk]
Well, as you can see in October, the load factor jumped to 84%, up from 81% in September and in August. We did 11.3 million passengers. Now, you know, we're not back at the pre-COVID numbers yet, which was kind of 92%-93%. You know, I don't think it makes sense to do that. We're happy to wait for the overall market recovery. All through last weekend of the school midterm break, the systemwide load factor was in the 90%. I don't see any weak pockets of weakness in load factor out there. You know, that's because we tend to use yields to fix load factors. You know, we're a load factor active yield passive.
I would be very surprised if we don't see load factors next summer go back up to pre-COVID levels, 91%-92%. I think with shortage of capacity or with capacity reductions in Europe for the next two or three years, I would be surprised if our load factor doesn't creep up to 94%-95%. It'll be above where it was pre-COVID.
Okay. Yeah. Thanks, Michael.
That's on aircraft with 4% more seats burning 16% less fuel. Good for the environment, good for shareholders. Thanks, Sathish. Next question, please.
That's from the line of Jarrod Castle at UBS.
Jarrod, hi.
Hi, Michael. I'll ask two, but you're welcome to answer one, given it's nearly 11.
No.
Yeah. Just on your net debt, I mean, it's coming down quite nicely now. How should we think about kind of the balance sheet going forward? You've got these fleet deals, but you know, you're throwing off decent levels of cash. Would you require an even stronger balance sheet, you know, given kind of the lessons from COVID? Or should, you know, investors still think about, you know, the old way in terms of cash returns, you'll give it back if you've got excess cash? Then just again, you know, you're welcome to answer whichever one if you don't have time. Also just some color on the customer advisory panel.
I know you spoke about it on the pre-prepared remarks, but, you know, what are some of the areas that you will listen to the customer panel on? What are some of those areas that, you know, thanks, but no thanks, you know, let's say enhancing the product, which leads to increased costs, et cetera. So just some flavor in, you know,
Okay.
What you're taking away from it.
I'm gonna ask Eddie to do the customer panel. They kept me away from the customer panel for some strange reason I didn't quite understand, but Eddie led it in Dublin. I'll do a quick overview on the balance sheet, and I might ask Tracy Malloy then just to give us a comment as well. You know, as bookings and cash flows have surged post July, the balance sheet net debt's gone from EUR 2.3 billion at the end of March down to EUR 1.5 billion at the end of September. Very strong. I think the balance sheet will repair itself very quickly going forward. I don't think we need any more capital or more cash.
I mean, I think we would, as a company, want to continue to operate at a zero net debt. That's always been, I think, a very comfortable position. It's where we've generally been over a 20-year period. When we get above zero net debt, we return those funds to shareholders. I see us getting back to zero net debt in the next 12 or 18 months, reducing from EUR 1.5 billion net debt down to zero. I point out here the fact, again, we entered COVID with a zero net debt, and we've come through COVID very strongly. Yes, we went back to shareholders for a reasonably small equity raise, EUR 400 million.
I think that was more to send a signal to the markets that we asked shareholders to put their hands in their pockets first before we went to the bond market or anybody else. I would contrast that with the likes of Heathrow, who expect to put their hands in their customers' pockets first and never ask their shareholders to come up with any cash. Thereafter, once we go back to zero net debt, I think we're back into shareholder returns. I think going forward, though, that the recovery, if it is going to be strong and as profitable as we think it will be, I think the challenge in the next two years, well, firstly, we want to restore pay.
You know, we're conscious of the fact that, you know, management and staff have all taken pay cuts in the last two years, and we owe it first to them to restore those pay cuts next year and in the next two and three years. Thereafter, then I think we would want to see returning money to shareholders. Going forward, I suspect we're probably going to be more open to a mix of dividends than share buybacks. I think given our size and scale, share buybacks become much more difficult because they need to be big and lumpy. I think, you know, unusually, I think we'll look at probably once we've restored the debt, we'll restore the balance sheet to zero net debt and restore pay.
I think shareholders will be next in line with a mix of dividends and share buybacks. Tracey, have you anything else you want to add there on the balance sheet and the cash returns thereafter?
Yeah. Probably just on the balance sheet, we may not be as optimistic as you to get to net debt within a year. I think a little bit longer, probably closer to 18-24 months before we get to that, net debt zero. I think it is all about repairing the balance sheet for us, you know, and getting to where we'd like to be, which is closer to zero. Probably be mindful with two bonds to be repaid in FY 2023 and 2024, then with big CapEx spend. Again, it all depends on how we finance the CapEx over the next two years.
Good. Thanks, Tracy. Eddie, color on the customer panels.
Well, we did invite you to the customer panel, but it obviously got caught in your spam folder. We advertised in midsummer there, and we got about 10,000 applications from our customers. We whittled that down to, I think it was six people that came to Dublin. It was a good cross-section there by gender, age group, and market. They didn't tell us a lot that we didn't know already ourselves. Certainly, there were some things on our comms that particularly on how we our the number of emails that we send people, some useful issues on the website. Also they really wanted communications on day-of-travel.
Last week we launched a day-of-travel app, and it gives you really good information on, you know, your gate, terminal, and we're gonna continue to grow that. I mean, just sensible information that people will want in terms of making that experience go much better. I mean, we also have the issue of having over 300 airports. We don't have our own people on the ground. Even though it goes right for 99.95% of people all of the time in terms of the lowest fare, gets you there on time.
When it goes wrong, and it goes wrong in an airport where we don't have people on the ground, our ability to actually recover the situation while our operations people are very, very good at recovering the aircraft, and that's their job, and recovering the crew. Our speed at communicating with passengers is something that the day-of-travel app and those, you know, where it's gone wrong, we've been able to do that through the app, through video, to the 189 people sitting in Viareggio last Saturday when the weather closed in and their aircraft was diverted to Santander, and somebody's on within 5 minutes.
Equally, we had some cancellations in Lisbon over the weekend, able to get to people, like, directly to people, rather than doing it in the Twitter sphere, where everyone's got an opinion, get to the people who can, to your customers. The day-of-travel app, I think, is going to something that's going to grow. The functionality that we put on the website in terms of wallets and all that sort of good stuff in terms of what we learned throughout the whole COVID crisis in terms of refunds, where we had to get through 25 million-plus, we leveraged that sort of proprietary knowledge that we now have, and we're able to put that out there to our customers.
It's gonna continue to grow, and actually, it'll be a softer way of doing it as well in terms of leveraging extra sales on the ancillary side. You know, wanna add a bag, you know, I'm going to the airport and security queues are this long. Do you want to actually buy, you know, a fast pass or whatever to get through? So it's the start of it, but I think it's really functional and it's useful for customers.
Okay. I'm conscious of the fact that we're tight for time. We're at 11:05 A.M., so I'm gonna limit this to two more questions, please. Then I'm afraid we'll have to cut it off because we have investor meetings that I have investors standing outside the door here. Can we do two more questions? Then if you haven't got a question, please route them directly back to Peter, or we will see you. I know that we have an extensive roadshow going on in the next week. Next question, please.
The next is from Mark Simpson at Goodbody Stockbrokers.
Mark?
Yeah. Hi. Morning. Thanks. Two quick ones. One, if you could just have a CapEx update, just given just the sort of targets on aircraft coming in. The other one, which I think is more kind of strategic, is to what extent will you look to green chain customers onto your flights over the next couple of years? You've got a good sort of basis to do that. Will you be overtly aggressive in pushing that message?
Yeah. Thanks, Mark. Neil, do you want to take the CapEx, and I'll do the-
The green opportunity.
No opportunity, Mark. There's been no change on the guidance. We're still guiding EUR 1.2 billion this year, including maintenance CapEx and peak CapEx of EUR 2.3 billion next year. Then we will start to see it coming down again.
Okay.
Great. Thank you. Just on the green opportunity, it's a very strong message we're communicating to the market now. If people want us to really travel in an environmentally friendly way, switching from Europe's legacy carrier to Ryanair reduces your emissions by 50% on the short-haul flights across Europe. As we can add more and more of the game changers, you'll be flying on aircraft now that will significantly reduce emissions, 4% more seats, but burn 16% less fuel. We are determined to take our emissions down from 68 g per passenger kilometer below 60 g in the next five years. The game changer will be very much the way we do that. Meanwhile, you know, Lufthansa, Air France and others are up at 120 g, 130 g per passenger kilometer.
Michael, we know that message, but I'm talking about the broader market and have you ready to exploit that in terms of getting customers to come to you.
I think, I mean, honestly, Mark, if you look at our traffic recovery in the last three or four months, we have no difficulty getting customers to come to us. They're, you know, beating each other over the head to get come to us. I think that will continue. It is a longer sell, but we have, I think, pivoted our communications much more towards an environmental message, you know, and in every communication we have now, we keep stressing our commitment to the environment and to more responsible flying in an environmentally friendly way.
Plus, Mark, I think our continued improvement with the likes of CDP, Sustainalytics and others is getting us more positive pickup in the media and with the customers. The message of you can cut your carbon footprint by 50% by moving to us is getting out there. Absolutely.
Mark, it's Thomas. I think if EU Ecolabel comes in across Europe with the rest, that will show our stats compared to the other airlines, if every airline signs up to it.
Thomas, anything else you want to add from an environmental point of view? Sorry, I should have brought you in on the call earlier.
No, no, you're grand. No, I think your message is right, Michael. Like, the passengers are obviously fucking coming back to fly with us as is. Our stats are out there. I think, like, you know, with the Gamechanger coming in, we'll see that coming down, and hopefully we see better initiatives on SAF and see uptake in SAF, which will further bring down our CO2 emissions.
Okay. Okay, Thomas. Thank you. Last question then, please, and apologies for cutting it short, but we can only really handle one more.
That's from Savanthi Syth at Raymond James.
Savi, hi.
Hey, good morning. Just two for me. I was a bit surprised to see the sale of aircraft in the September quarter, and was that before the accelerating kind of growth targets? Just curious what you were thinking of in terms of kind of lease returns and aircraft sales over the next couple of years.
Was there a second question?
Just if you could provide, you know, a quick update on, you know, how outstanding flight credits look compared to historical norms and if you expect the air traffic liability to kind of be more normal, historical patterns going forward. Thanks.
Okay. Neil, you want to take the sales of aircraft in the September quarter and maybe ask Tracy to talk about the refunds or outstanding flight credits?
Well, Savi, these are the oldest 10 aircraft in the fleet, which were starting to become expensive to maintain. We were somewhat opportunistic in that there's a high demand for that age of aircraft for cargo conversion. It sort of straddled the decision on the breakdown in the negotiations with Boeing on the MAX 10 as well. We're fairly happy to get these older aircraft out. They're going to a good home, where they've improved their environmental story, where they're replacing 747 400. On lease returns, we have returned all of the Boeing 737 800 at this point in time, with 29 A320 on lease. First of those are due to go back in the winter of next year. As Michael has said, you know, we'll talk to the lessors.
If it makes sense economically to extend, we'll look at that equally if there are other opportunities on the NG side to enter into cheap leases, we'll look at that.
Yeah, I think just to add to that, I mean, the 10 that you've seen in the September quarter were kind of pre-sold before the MAX 10 had broke or the discussion broken down and before we had stepped up the growth profile to 225 million passengers. Tracey, you wanna give it a quick update on the refund situation?
[crosstalk]
Hi.
Tracey McCann, go ahead.
Hi. We've received over EUR 1.6 billion in refunds given back to customers as of today. There's a few customers still sitting there without it, but we're starting to see a very high redemption rate on them. I think as Savi asked, we'll start to see it, you know, return to normalized liability. Pretty much all the refunds are cleared as of today. The new customer service wallet will allow people to get a refund within five days, a cash refund if they wish. Pretty much everything is cleared.
I think, Savi, you're starting to see a build now on earn future fly on the balance sheet. I mean, that's fairly obvious at the half year end.
I'm just gonna have Tracey here, Head of Customer Services here just to add to that as well.
Savi, just to say that with the exception of a few of the OTA, the online travel agency bookings, we have effectively got no refunds in the queue. I think the new technologies that we launched last week is really first with the industry in relation to putting the power of, you know, future purchases back in the hands of the customer as well. The wallets will enable the credits to go within 24 hours. I think again, we have, you know, gone above and beyond in relation to commitment then in terms of cashing out that refund. We should be in a position where we have future-proofed, you know, the growth in the airline to make sure that we have no future big challenges, the way we would have experienced in the COVID crisis.
I think the commitment we rolled out last week is that, you know, going forward, refunds will be issued within five working days. Once the refund has been cleared, the payment will take place within five working days back to the original method of payment. We'll be, you know, faster than any other airline has committed to. Clearly we can't envisage a circumstance where all our offices are closed as they were in COVID last year, which caused the big backlog of refunds. On an ongoing steady state basis, those passengers, and there's not many passengers on an ongoing basis who are entitled to refunds because we have so few cancellations. Once the refund is approved, they will receive it in five working days back to their credit card and to their bank accounts. Okay, ladies and gentlemen.
Thank you very much for participating in the call. I'm sorry we can't take any more, but we have extensive roadshows going across the U.S., the U.K. and continental Europe for the remainder of this week. If you'd like a meeting with any of us, please talk to Davy or Citi. They'll be happy to arrange a meeting. If we haven't answered those questions, I'm sure we'll get to it at individual meeting with you over the next four or five days. Thank you sincerely for all your support over the last very difficult, traumatic 18 months. I hope you'll agree with certainly me, that you know, we've taken very sensible decisions during COVID.
We've reduced costs, we have expanded our aircraft orders opportunistically, and I have never seen a growth opportunity that like the one that has unveiled before us for the next four or five years. I cannot remember in the last 25 years where we could take up so much growth, and I think so much of that growth will be profitable and at very low cost, and I think we'll deliver lower fares to our customer base for the next five years. Thank you for your time and for your support, and we look forward to meeting you over the next five days. Thank you. Bye-bye.
This now concludes the conference. Thank you all very much for attending. You may now disconnect your lines.