Starting with our results: Ryanair’s Q1 profit after tax fell 34pc to €538m. What were the key drivers?
Neil: As always, there were a number of moving parts. Firstly, traffic performed well, rising 6pc thanks to the additional Gamechangers in the fleet. Fares, however, were down 6pc. Some of that was due to the timing of Easter, we had a full Easter in Q1 last year, whereas half of Easter this year fell into Q4. Importantly, we also saw some consumer hesitancy related to the Middle East situation, which led to more price stimulation and closer-in booking. As a result, fares were down 6pc. The Middle East situation also impacted the price of our unhedged fuel. The cost of our 20pc unhedged portion spiked, doubling to $150 per barrel. Ancillaries, however, delivered another solid performance, rising 5pc to €1.47bn, broadly flat on a per-passenger basis at €24 per passenger.
What’s your current hedging position?
As we’ve previously guided, FY27 jet fuel is 80pc hedged at $67 per barrel. We have now hedged 15pc of FY28 at $85 per barrel. FY27 OPEX is 90pc hedged at €1.15 to the euro, and H1 FY28 is 30pc hedged at €1.20 to the euro.
Moving to the balance sheet, Ryanair’s balance sheet remains industry-leading.
It’s a fortress balance sheet. We have 620 fully unencumbered Boeing 737s on the balance sheet, which is quite unique for an airline. We are now debt-free after paying off our remaining $1.2bn bond in May. We also hold very strong investment-grade ratings, BBB+ from both Fitch and S&P. Liquidity remains strong. We finished the quarter at the end of June with over €2.8bn in cash. This was after paying down €1.3bn in debt and €0.5bn in capex. This liquidity is further supported by our €1.1bn revolving credit facility, which is substantially undrawn. This is a huge competitive advantage for Ryanair. Our competitors are taking on expensive long-term debt and expensive leases, and they lack the hedging lines we have for fuel and currency. That will add to their cost burdens over the coming years.
What are your funding priorities over the coming year?
Our first priority is to fund the MAX 10 introduction and the pre-delivery payments on that order book. We will also fund the two MRO engine shops. We need to pay the balance of our dividends, including the final dividend payable in September, and complete the €750m share buyback. Thereafter, we want to rebuild Group gross cash to €4bn.
Anything surplus to that will be returned to shareholders through dividends and buybacks. Looking longer term, how will you finance the MAX 10s and engine shops?
Thanks to the strength of the balance sheet and our strong investment-grade ratings, we can, and will, continue to be opportunistic. Ultimately it comes down to the lowest cost of finance. At the moment that is cash, but over the next few years we expect to return to the debt markets (banks and/or bonds), so likely a combination of cash and debt.
FY27 capex guidance?
We are guiding approximately €2bn, subject to the timing of the engine shop capex.Is the MAX 10 order book hedged?Yes, it is fairly well hedged. On the 150 firm orders we have 60pc euro-dollar hedging in place at just over $1.23. We are locking in very good levels on what was already a keenly priced order book from Boeing.
Shareholder returns, when is the next dividend payable?
We expect the final dividend of 19.5 cents per share to be paid in September, subject to AGM approval.
How is the €750m buyback progressing?
It is progressing very well. We are now over 90pc complete and expect it to finish towards the end of September. As of today we have bought back and cancelled well over 25m shares at an average price of €26.35. When the current buyback is finished in September, we will have returned and cancelled nearly 40pc of our issued share capital since 2008.
Fleet and growth, is the MAX 10 certification still on track?
We believe so. I spoke with Boeing last week and they remain confident that certification will occur in September or October this year, well in advance of our first 15 deliveries in spring 2027. Boeing have confirmed they have protected those 15 aircraft for us. We are increasingly confident we will have the aircraft in time for summer 2027. Fundamentally, these 300 aircraft, with 20pc more seats and burning 20pc less fuel, will enable us to grow profitably to 300m passengers annually by 2034.
What are your views on European short-haul capacity?
It will remain constrained for some time, at least out to 2030, if not beyond. While Boeing and Airbus are improving production, they are still well behind on deliveries and heavily dependent on engine manufacturers. Pratt & Whitney continue to work through their GTF engine issues, which affect many A320 operators. Consolidation is accelerating, we have the TAP takeover process ongoing, and there are now multiple bids for easyJet that will collectively remove capacity from the market. This winter, weaker carriers are facing very high oil prices and a strong dollar, which we expect will lead to further casualties and capacity reductions.
Where is Ryanair most focused on growing?
In a constrained capacity environment, we are switching our scarce growth to states and airports that are abolishing taxes, cutting ATC fees, and offering aggressive growth incentives. For example, this summer we are moving capacity away from high-cost, high-tax locations such as Vienna, Berlin, Dublin, and regional Spain, and redirecting it to lower-cost destinations like Slovakia (where the government abolished environmental taxes and Bratislava Airport introduced a strong incentive scheme, resulting in 150pc traffic growth), Albania (Tiranë), four regions in Italy that abolished municipal taxes, Morocco, and Sweden. This summer we opened three new bases, Rabat in Morocco, Tiranë in Albania, and Trapani in southern Italy, all performing very well. We are also launching 130 new routes for summer 2026.
How is the engine shop project progressing?
It is very much on track. We hope to announce the first of the two locations towards the end of this year, start construction in early 2027, and have the first shop operational in early 2029. The second shop would follow in the early 2030s.
What are the key cost advantages from the MAX 10?
- 20pc more seats per aircraft
- 20pc lower fuel burn (fuel is by far our largest cost)
- Very attractive pricing secured during COVID
- Improved productivity across crewing, airport & handling, and maintenance (thanks to warranties)
- Lower unit costs overall
- Ability to drive higher ancillary revenue with 20pc more passengers per flight
These aircraft will allow us to grow safely and profitably to 300m passengers annually by March 2034.FY27 outlook?
We continue to target 216m passengers this year, a 4pc increase. Growth is skewed towards the first half (+6pc), with more modest growth in H2 (+2pc).
Our strong fuel hedging (80pc at $67) helps derisk earnings and offsets rising ETS and environmental costs (up €300m this year), as well as pay increases under multi-year collective labour agreements and higher maintenance costs. Full-year unit costs will depend heavily on the price of unhedged fuel for the remainder of the year. Demand into peak summer remains robust, but the booking window is still closer-in and requires some stimulation, with fares trending modestly down year-on-year.
We have limited close-in visibility into August and September, and of course no meaningful visibility yet on H2. It is therefore too early to provide full-year profit-after-tax guidance. However, we remain focused on the MAX 10s. The first deliveries begin in spring 2027. These 300 highly efficient aircraft (20pc more seats, 20pc less fuel burn) will drive our sustainable, profitable growth to 300m passengers by March 2034.
