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Ryanair Holdings (NASDAQ:RYAAY)

H1 2013 Earnings Call

November 05, 2012 6:00 am ET

Executives

Michael O'Leary - Chief Executive Officer, Executive Director, Member of Nomination Committee, Member of Executive Committee, Chief Executive Officer of Ryanair Limited and Director of Ryanair Limited

Howard Millar - Chief Financial Officer and Deputy Chief Executive

Analysts

Jarrod Castle - UBS Investment Bank, Research Division

Alexia Dogani - Liberum Capital Limited, Research Division

Edward Stanford - Oriel Securities Ltd., Research Division

Andrew Light - Citigroup Inc, Research Division

Penelope Butcher - Morgan Stanley, Research Division

Damian Brewer - RBC Capital Markets, LLC, Research Division

Neil Glynn - Crédit Suisse AG, Research Division

Peter Hyde - Liberum Capital Limited, Research Division

Geof Collyer - Deutsche Bank AG, Research Division

Michael O'Leary

Welcome. Sorry we ran slightly over on the press conference there, so we're running just a couple of minutes behind. Joining me is Howard Millar, as you know, our deputy CEO and CFO. We're going to briefly run through the slide presentation. I'd do this quickly because you've seen a significant amount of it before, and then we'll open it up to questions and answers.

Strong for the half year numbers this morning. We're still technically in the offer period for Aer Lingus. Our offer is now going to Phase 2 regulatory process with Brussels so therefore, I can't really comment any detail in Aer Lingus. That's just the kind of the usual fully replaced half covering we need to call to [ph] . Europe's also only ultra-low cost carrier continues to grow very strongly with the lowest-fare, lowest-cost model continues to succeed dramatically across Europe. And interestingly, statistics is that our excluding fuel per passenger cost of EUR 26 in the half year is now more than 50% lower than our next closest competitor, easyJet, and significantly lower than any of the other European competitors.

As a result, we're growing strongly 79 million passengers on 1,500 routes from 51 bases across Europe. In terms of fares, the Ryanair average fare in the half-year was EUR 53. easyJet's average fare is more than 50% higher. And everybody else that we're competing with in Europe, which is where a lot of the growth opportunity will come from in the current years, average fare is more than double those of Ryanair. Customer service this year continues to improve despite what you might read in the media over the summer.

We've got a phenomenal on-time performance. 93% of all flights this summer on time, rather that was helped by the fact that there was fewer than normal air traffic control delays, strikes, et cetera. Long may it continue but it does go to show what kind of service could be delivered by Europe's airline if our friends in Brussels actually took some action to ban or remove the right to strike from air-traffic controllers. We keep making the point if the military and the police can't go on strike, why can aircraft controllers close the skies. We should remove the strike weapon from them, which would transform not just the punctuality but also the financial performance of Europe's airlines.

We've lost fewer bags than any other airline and fewer cancellations as well. As a result of which we're growing and we're on track now to exceed 79 million passengers for the full year. Traffic growth of 6% in the first half. It will slow to by 4 -- but it's able to slow in the second half, what is it, about 4%? No, it's flat from the second half -- sorry, 4% overall for the full year.

In terms of coverage, 51 bases, 170 airports, 28 countries, et cetera, et cetera. Actually new slide here, just in terms of cost per passenger this is excluding fuel as compared with to Ryanair with easyJet and Air Berlin here in Europe and with Spirit and Southwest in the states. Our total cost per passenger is EUR 26 in the half-year is less than 1/2 that of easyJet, 1/4 that of Air Berlin and significantly lower than the best-in-class in the states being Spirit and Southwest as well. I think it shows the scale of the growth opportunity that we enjoy here in Europe.

One of the real underlying trends, I think, of the last 12 months has been the extent to which easyJet has been taking aircraft out of short-haul markets where they compete with us at airports like Liverpool, close with the base in Madrid, moving and looking for new routes to places like Israel, Egypt and Moscow, God help them, from the U.K., where they don't face the kind of competition from Ryanair. So whether competing with Ryanair, they're switching or taking capacity away and trying to find those opportunities like British Midland did before them, of finding markets where they don't like it, to face competition from Ryanair. And that has been a significant driver of our growth and will be into the future as well. But what drives that is the fact that our cost per passenger is so much lower than everybody else's. It gives us an enormous amount of pricing power, and I think an enormous amount of available growth for us in Europe in the coming years.

In terms of margins, nobody beats our margins. Our returns has been quite a lot of positive commentary from -- on the easyJet in the recent months. Almost like these guys -- sometimes people seem to have forgotten how fundamentally what a better model the Ryanair model is. Our net margin 13%, is double that of easyJet. And our cash earnings is double that of easyJet, way ahead of Southwest in the States. Our free cash flow is a multiple of that of easyJet. Net cash balance continues. We have very strong net cash position despite the fact that we're still buying and acquiring aircraft.

And over the last 4 years, we've returned, including the end of November, special dividend, over EUR 1.5 billion to shareholders in the form of 2 special dividends and 5 share buybacks. We've returned more to shareholders than we've ever originally raised from them, and so closed [ph] we in 1997, we raised in total, EUR 585 million from shareholders. And remarkably for an airline, we've now returned almost 3x that amount of money to our shareholders while still sitting on close to EUR 4 billion in cash today and an aircraft fleet of nearly 300 aircraft.

We continue to see significant growth potential across Europe in the coming years. We calculate at the moment that at 80 million customers, we are about 12% of the European short-haul market. That's characterized by other so-called low-cost carriers, most of whom don't make any money, flag carriers who clearly can't make any money in the short-haul marketplace. Some of the declining number of presence that charter carries and some others odd and thoughts [ph].

We think it's reasonable for us to target a minimum of 50% growth over the next 10 years, which should take us from 12% to 18% market share. And that's still put us at less than where Southwest are today in the States, at the 20% market share. And I think most of that growth will not come from [indiscernible] or Moscow and Israel. The real growth is going to be still in mainland Europe. We've already announced next year, for example, in U.K. regions significantly increasing aircraft capacity at Liverpool, Manchester and East Midland airports next year. Much of that is driven by easyJet's cost cut withdrawal from Liverpool in favor of Manchester just switching capacity to Manchester. Whereas we're taking up an opportunity afforded to us by the easyJet withdrawal from Liverpool but still growing at Manchester and still growing at East Midlands as well, all of it on the back of very much more efficient airport cost deals that weren't available just a number of years ago, either at Liverpool or at Manchester.

The short-haul potential across Europe remains large, largely by taking traffic away from restructured or so-called low-cost airlines going bust. Our significant continuing restructuring in the short-haul models off flag carriers like Iberia, like SAS, like Air Berlin in Germany, but also, stimulating further traffic growth. At the slide here, which shows the potential for further top line growth across Europe, where the number of short-haul flights per capita is significantly less across many of the bigger European economies than it is in a country like Ireland. Now Ireland is an island, but also one where there's been a lot of economic problems in recent years.

We believe there's still significant opportunity for Spain, the U.K., France and Germany to grow something not necessarily as high as Ireland but certainly to grow from where they are at the moment. Now if you look at Poland, which is a market where we're very focused on at the moment and growing very rapidly, it's the number of flights or short-haul flights per capita is a tiny fraction of what it is at the other established European economy.

Just to touch briefly on the financial results. Passengers up 7% and average fare, up 6%; revenue per passenger, up 7%; ancillaries up 20 -- up 15% (sic) [20%] ; and profit after-tax, up 10%. Very strong balance sheet, recently described by Bloomberg as the strongest balance sheet in the world, the world's least indebted airline. We moved from a net debt position this time last year of EUR 372 million despite acquiring a number of more aircraft and completing 2 share buybacks. We've gone to a net cash position currently at EUR 250 million. That will obviously impacted by the EUR 500 million dividend at the end of November.

Highlights of the half year, again profits, up; ancillary revenues, up 20%; passengers, up 7%. We've raised the full year guidance from EUR 400 million to EUR 440 million now on the bank of the strong half year and reasonable outlook into Q3, with still almost 0 visibility in Q4. Raised the full year numbers to EUR 490 million to EUR 520 million. Gross cash is just under EUR 4 billion. The fleet size is now 298 aircraft with 11 more deliveries through September and December of this year. Special dividend paid at the end of November. And the Aer Lingus offer has gone to the Phase 2 process.

Outlook for the remainder of FY '13. I think we're reasonably cautiously optimistic. We've significantly raised the guidance now that we've had a completely strong first half. Expect traffic to rise 4% to EUR 79 million. Our total fuel bill will rise this year by EUR 260 million, much of that in quarters 1, 2 and 3. There is much of a step-up in fuel in Q4 because of a higher prior year comparable. Interestingly unit cost, excluding fuel, up 2%, largely the Italian air traffic control cost increase of the Spanish, doubling of the Spanish airport fees, which were unexpected surprise in June and July. Nevertheless, average fares up 4% for the full year. That's 6% in the first half, probably about 2% in the second half, subsequent in Q4 [indiscernible] .

And again, competitors continuing to restructure, we had a very significant restructuring within Iberia, some of the Lufthansa subsidiaries, Air France, Alitalia, SAS and Air Berlin. Net cash at the year end post the -- will still be net cash position at the year end having paid out the nearly EUR 500 million special dividend at the end of November.

Delighted and amused, we've launched the 2013 charity calendar. I have some copies here for GBP 10 each, over 450 volunteers, I'm happy to say, 430 of whom were female, 20 of whom were male. 15 cabin crews were selected. Shot in Paphos with the help of the Cyprus tourist authorities and selling out like hot cakes.

In summary, therefore, we continue to be Europe's only ultra-low-cost carrier, growing strongly in a marketplace where competitors are structurally loss-making and being forced into continuing restructurings, we continue to expect to see strong growth over the coming years. We've raised full year guidance. We're returning cash to shareholders. We still have some aircraft deliveries in December. But over the medium term, we would expect -- I think there'll be no aircraft over the short term, by the way, but over the medium term, maybe years 3 to 5, we'll see another significant aircraft order. Just to touch on the appendices, network 51 bases across Europe.

In terms of the fuel hedging, we just said that we're 85% hedged for the first half of FY '14 at slightly lower rates than the prior year, $970, $960. We expect that, that trend will be continued into Q3 and Q4. And we'd be disappointed if we're not hedged at slightly lower fuel rates this year over next. But obviously, the currency will be going against us, so there will be a fuel cost increase into next year.

To touch briefly on safety where we've had an extraordinary summer of nonsense largely in Spain, generated mostly by completely inaccurate leak to the Spanish media by the transport department down there. We have an unblemished 28-year safety record, fully compliant with all EASA, FAA and Boeing requirements. The published report into the 3 Valencia fuel reports in 26th of July where we had 3 fuel emergencies, all confirmed that all 3 aircraft carried excess fuel, they all diverted with more than final diversionary fuel, all declared a fuel emergency procedure in accordance with EU regulations and all landed with the more than minimum reserve fuel.

There was a recent media, the joint meeting of the Irish and Spanish government, generally at the request of Spanish government where a joint statement confirmed that Ryanair safety is on a par with the safest EU airlines. And the published report in the Spanish press which originated with the Transport Ministry, which is of 1,201 safety-related incidents in the first half of the year has now been confirmed by the Spanish transport minister [ph] as being untrue. There is no such report. We ourselves are under pressure on the Spanish. We have confirmed that there were 2 safety incidents in Spain in the first half of this year, not 1,201. And I think we're gradually we'll put that issue to bed.

In terms of Stansted airport sales, we continue to be concerned by the way the BA Ferrovial have managed the process. This is an airport which has doubled charges since 2007 and seen traffic fall by 25% even as Gatwick and Heathrow have returned to growth. Ferrovial is still running around, bleeding on about low consumer confidence causing traffic declines at Stansted. We said it was low consumer confidence causing traffic at Stansted. Please explain why Gatwick, Heathrow firmly who managed, they are growing with the same apparently low consumer confidence.

Remarkably, for Ryanair, has been excluded from this sale process by Ferrovial. We're fairly sure the reason we've been excluded is they didn't want us to get hold of the investment memorandum, which would say things like the fact that actually costs have been significantly padded over recent years. The regulator is an idiot who you can fool all of the time. The asset, underlying asset base stands at EUR 630 million versus the regulator has allowed us to inflate to EUR 1.3 billion over recent years. And even when you could spectacularly screw up as BA have with the abandoned second runway project at Stansted, you still get to keep EUR 230 million of those completely unnecessary cost into the regulatory asset base and inflate them every year, while the dimwits in the CA will be looking the other way. This is a sales process which the Competition Commission said would be a customer-focused sale. We have asked them to explain how in the name of Christ you can have a customer-focused sale with 70% customer excluded from the process, but apparently the Competition Commission don't have the ability to regulate how the sale goes ahead as long as Ferrovial finds somebody acceptable, then that's all the Competition Commission will do, which is typical of the unique and spectacular incompetence of the regulatory agencies in this country in the aviation sector.

Nevertheless, [indiscernible] will be sold off for RAB [ph] of 1.3 billion. The RAB [ph] is overly meaningless. I think the new buyer, I understand but only from the papers that we're down to 2 pension funds in for Tiller McQuarie [ph] , Manchester and possibly PPG [ph]. We would clearly like to see [indiscernible] the long-term pension fund whose rates of returns are significantly lower than Mac and PPG. We don't think that Mac buying Stansted is the way forward, given that they haven't been very progressive at lowering cost at Manchester over recent years until they face some real competition from Liverpool which to be fair to Mac, has had a transformational effect on Manchester Airport. But we would like the pension funds with a 40-year investment horizon in the 4%, 5% rate of return buy it as opposed to PPG, which would have a double-digit rate of return, which I don't think would enable them to meet our objective.

I always said to everybody, look, if there's a significant cost in airport charges, Stansted and Ryanair will deliver a very significant traffic growth. If there isn't or if you think you're going to buy this and keep raising prices on the back of the regulatory incompetence in the CAA then traffic at Stansted will continue to decline. There was also some recent speculation in Italy about us not making, paying our taxes. We have paid all of our taxes. We are fully compliant with the EU regulations on transport workers. They all paid their taxes. Irish contracts paid their taxes and social taxes in Ireland.

A new regulation is introduced in Europe in mid-June that the social taxes will now be paid where the individuals are resident, and we're happy to bring all of our people who will comply with those new rules as well. And interestingly, this issue has been tackled in the courts in Germany, in Belgium and Spain. And they have lost in all cases because Irish law is the governance of those contracts. We think there's nothing in that but the usual kind of Italian shakedown which we will not be that sensitive to.

Aer Lingus, EU consolidation process continues. Ryanair has submitted an unprecedented remedies package in both multiple upfront buyers coming to Ireland to open base at the airports, others to enter routes where Aer Lingus and Ryanair would have no competitor. That would be a competitive -- a competitor remedy on all 42 of the crossover routes, something that's never been achieved in any previous EU mergers. And yet despite this comprehensive remedies, we've been shoved into Phase 2. While at same time BA with rubbish are well out to buy BMI on Phase 1.

I think on balance we suspect that the EU was doing its level best to prohibit this offer, although we're going to do our level best to make it impossible for them to prohibit by submitting revolutionary remedies that they will find very difficult to get through at the European Courts on any kind of credible basis given that the precedence which now includes the BA, the #1 airline in Heathrow buying the #2. It seems to me to be bizarre that the #1 airline in Ireland can't buy the #2. Howard, you want to add to that?

Howard Millar

No.

Question-and-Answer Session

Unknown Executive

We'll move to questions. We're on the web cam so just going to expect you to say your name and who you represent for the viewers. And we may return to them after we've dealt with most of the questions here.

Jarrod Castle - UBS Investment Bank, Research Division

It's Jarrod Castle from UBS. I'm just going to limit it to two, I guess. The 120 million target, you currently got a fleet of let's say roughly, 300 planes. Does it mean you have to buy another 150 to get to 120 million passengers? And then I guess, you said probably no plane deal for the next 3 to 5 years, will you just keep building up the cash balance now that you're going to be throwing a lot of cash for, I guess, for March 14? And then just secondly, just, I guess, some housekeeping. What was the currency impact on yields for the quarter and I'm just talking about pounds, that you're converting into euros. And just secondly, I mean, what is the yield environment looking like in terms of your forward bookings? Is it around 2% given the guidance? The yield environment on your forward booking, is it around 2%, just given the half year guidance.

Michael O'Leary

I'll give you the aircraft one first. For us to go to 120 million passengers, we need to add probably about 200 aircraft over the next 10 years there will be some replacement of our older aircraft as well. But we already have more than sufficient. I mean, we have -- within our own operations sufficient growth for 4% to 5% traffic growth for the next 2 years with the new aircraft [indiscernible] that takes care of summer 2013. We will then be able to deliver 4% growth by sitting at fewer aircraft on the ground in the winter of '13, '14 and the winter of '14, '15, if need be. I think we would look to -- we could do a short term, whether re-leasing or be opportunistic in buying aircraft or airlines that go bust. And so we don't see the need. When I say, it's unlikely that there'll be an aircraft order in the next 12 months, I do think there'll be an aircraft order in the period of 1 to 3 years for deliveries within years 3 to 5, if that makes some sense. And I think we'll continue to be opportunistic in that. There'll clearly be further aircraft closures, I mean, if you look at say, for example, some of Boeing's order book on the MAX aircraft at the moment, they have 100 aircraft from Norwegian, not sure Norwegian confirmed the 100 aircraft. At Ryanair [ph] in for a 100. Southwest have ordered 150, but then said they're not taking any more aircraft deliveries until their ratio return goes back to 15%, which could be a long time. So I'm not sure about how robust the order book according to manufacture is and the real test to that is the strength in the secondhand aircraft market. And the secondhand aircraft market has been particularly weak for the last 2 years. We haven't sold any secondhand aircraft, partly because there's been no real demand for them. And so I think we'll wait to see what happens. We are in talks with Boeing, but I wouldn't put any more stronger than talks. We continue to be in talks with the board [indiscernible] in negotiations. I think we look to -- will probably approach Airbus again. But at this point in time, it feels to us that we're in a very comfortable position. We have capacity growth there that will allow us to grow to 84 million, 88 million over the next 2 fiscal years without an aircraft order. But clearly, if there's an opportunity, pricing opportunity, we could place a very large aircraft order, and we will do this with a lot of cash. And I think our focus on that, generally at the moment, would be on the end of line NGs or the A320s, the non-EU A320s, where I think both Airbus and Boeing have a difficulty given that they have 4, 5 more years of production of old generation aircraft where residual values would be hard to finance and the leasing companies don't want them anymore because of the residual value issue. We, as an end-user, would be a very likely candidate for those kind of aircraft, but only if they're priced accordingly. Do you want to do the impact -- Euro's currency effect?

Howard Millar

Yes. In the half year, the impact was about 2.4% of the movement of 6%. And interesting on the other side, on the cost side, it is a significant contributor to the 2% adverse movement on fuel. That is quite a lot of moving parts in those. But the actual -- it was slightly lower than 2.4%, just below 2%. So much of the increase in first half unit cost was due to the movement of sterling on both sides, a little bit more because we have a big percentage of our revenues in sterling than we have in cost.

Jarrod Castle - UBS Investment Bank, Research Division

And just coming back to the airplane potential deal, will you just continue to build a cash balance now?

Michael O'Leary

Yes, I think there would be no special dividend next year. I'd be very surprised if there'd be one in 2 years' time. I think our focus now, having done 2 special dividends of nearly EUR 1 billion in the last 3, effectively 3 years, I think that's enough for the moment. We now will focus on building up cash partly because I think financing market is tight. We did a fantastic -- Howard's team did a fantastic job. We raised aircraft on an aircraft financing bond at run [ph] rate of 1.7%, which compares to the Air Berlin which did a bond at 11%. But I would want to be -- I think we would need to be putting down more cash on the next aircraft order just given the state of the worldwide financing market.

Alexia Dogani - Liberum Capital Limited, Research Division

Alexia Dogani from Liberum. I just have 2 questions at the moment. Just firstly, can you explain why the fuel guidance has been reduced from sort of the start of year from EUR 320 million to EUR 260 million and what is driving that? And then secondly, if you could give us an update on the reserve seating safety and sort of how the take-up has been in Q2 and obviously you've increased there for now this winter?

Michael O'Leary

The fuel -- I mean, it's a combination of 2 things: one, we've got slightly fuel, for the non-hedged portion of fuel has been slightly weaker through the summer, and we've been a beneficiary of that. So we've also been very active in kind of managing in fuel efficiency policy. We have a team that manages fuel, both what we put into plane, regulating the speed, largely the speed, height which our air pilots can fly the planes. We're actually we've been slowing down the speed of the aircraft in order to conserve or to reduce fuel usage, and there's been a number of other measures as well largely by requiring using our OFTN [ph] to require pilots to fly in compliance with our SOPs, the standard operating procedures, which is speed, height, rate of deceleration, rate of acceleration. And that has been significant, particularly when you bill over the first half year result for EUR 1 billion. And that will continue. The second part of the question was?

Alexia Dogani - Liberum Capital Limited, Research Division

Reserved seatings.

Michael O'Leary

It continues to rise. I mean, there's been -- I think we've seen, in some cases, when we first launch reserve seating, the take was very high on the longer flights, so like the Canaries, those longer kind of charter-type routes. Increasingly, this spread across the entire system. We're seeing now through the summer, we were routinely running at more than 50% of reserve seats across the network being sold. But I think, what's been more interesting in the whole reserved seating sale is the fact it hasn't cannibalized priority boarding. It's almost been where the bulk reserve seating. Reserve seating obviously includes the priority boarding. But reserve seating is almost been incremental to priority boarding. I think priority boarding has gone from 8% back to about 7% of passengers, whereas reserve seating is running now typically close to 50%. Now we think it'll be weaker in the winter than in the summer. But we would like -- we think it will keep building towards about 50% of reserved seating over the full year, not in FY '13 but into FY '14. We will see about 50% of all the reserve seats being sold, higher on longer routes and more business type routes, lower on really price-sensitive markets like Poland, for example, has a very poor uptake at reserved seating and priority boarding generally. But I think as people become aware of the service, that the service is there and that gives them the advantage to board last, get the front rows of seats on first, there's an increasingly big take-up. I mean I see it myself particularly on the Dublin-London routes, where at this time last year, there was very few people in reserve seats now, routinely, we see 50%, 100% of these seats on those flights. Our reserve seats on those flights are being taken up.

Alexia Dogani - Liberum Capital Limited, Research Division

Do you expect to sort of roll it off to the whole plane, eventually?

Michael O'Leary

I think it's unlikely. I don't believe in rolling it out to the whole plane. I would be concerned in our model if we roll out reserve seats to the whole plane. You go back to where we started, I think we'd be stuck up in the pub or in the duty free shop knowing that they've an allocated seat, they don't have to show up until the departure time. And that's core to our punctuality and why our punctuality so good. I think we would look for opportunities maybe to roll it out a little bit more because we're now to 7 seats -- 6 rows of seats. We may go to 8, 10 rows of seats. I think it's highly unlikely that we'll roll it out across the entire aircraft. We're certainly still in the easyJet model, which seems to be obviously the other way of doing it. And I'd say, you say, everybody has now got an allocated seat, but the first things as those of you who book early pay a fee. When we think there's a tipping point where we think I would rather that we continue to have a priority boarding service and a reserved seating service. But it will extend the number of rows of reserved seats and target it that way because that I think is the way that you don't compromise your punctuality. The difference with an easyJet is that increasingly easyJet are operating at congested airports like Gatwick, like Charles de Gaulle, they're allowing building in longer flight times and longer turnarounds. So they're less exposed to delays as a result of allocated seating. But that's not to say they're not maybe right. We might be also be the [indiscernible] there, but I would, at this point in time, suspect we'll keep going with our strategy. I don't necessarily believe I think the danger for all this that we would run into too many flight delays if went to all allocate it and people suddenly got back to the ill discipline of, "Ah, I have my seat, so I don't need to be down there early."

Howard Millar

I think we have different views on this. I mean, it's certainly -- we've been very surprised I think that the take up of reserved seating penetration rates are well above where we expected. There is, as Michael said, a consumer learning process. And it is a big jump to extend it out to all the seats because you get into a whole lot of different issues, which I understand from [indiscernible] media this morning that easyJet are experiencing on board. So we need to look at it very closely, see how they get on with this. But certainly, all our experiences, certainly, on the longest sector is very, very successful.

Edward Stanford - Oriel Securities Ltd., Research Division

Edward Stanford from Oriel. Two questions, if I may. You mentioned that you're being excluded from the sale prices of Stansted. To what extent are you able to and/or having substantive conversations with the potential bidders about the sort of deal that you might get into? And secondly, a completely different question, I think you mentioned you had quite a good late bookings in the latter part of the first half. To what extent did that continue into the third quarter?

Michael O'Leary

On Stansted, we have no discussion with them since the formal sale process kicked off. We've had extensive discussions with most of the 4 consortia, well, all of them. If the final 4 that have been inside [ph] in the press are the final 4, then we've had discussions with all of those. In all cases, the discussion was remarkably similar. If you significantly, i.e. reverse the price doubling in 2007, we will deliver you very rapid and very significant traffic growth, which will be self financing given that you're getting this thing for a steal and you don't need a lot of CapEx to handle that traffic growth. And if you don't significantly reduce those charges, then I think you're faced with no traffic growth or possibly continuing traffic decline.

And there's been -- each of the discussions, there've been variants on that kind of discussion. So I think they all are aware of the fact that Ryanair is willing to grow very rapidly. They're all well aware of what the costs are we want for that kind of traffic growth. And I think there would be -- I'd be very disappointed if there isn't a meeting of minds on that with whoever the new order will be. The real problem for us is, can the new order get in there quickly enough so that we can start growing in summer 2013. And I'm fairly sure that Ferrovial will find some way to delay the process into Q1 of next year rather than doing it pre-Christmas. So they can kind of contaminate the whole summer '13 and preserve or influence what happens at Heathrow for at least one more summer. But -- and if you had any useful regulatory function here in the Competition Commission or the CAA, they would be fast forwarding that sales process but we don't see much of either -- of that even from either candidate. And in terms of the bookings, yes, it's been stronger post the Olympics. I mean I have to say it was quite weak in the run up to the Olympics. At the first half of the summer, we looked -- when we run the full year results for June, it was very watery out there. We were having to discount -- we were hitting our numbers, but we were having to discount for it. It does seem to have appreciably altered post the Olympics. I don't know whether that's the Olympics because the Olympics might have affected the London market business, most or rest of Europe. But there's been, I think, a noticeable strengthening since the end of July into early August. For the moment, this has continued through into September, October and the early part of November. Although I'd be suspicious to whether it will continue into Q4. It's very hard for us to put our finger on why it's a little bit more robust. We expect it to be weaker; it's a little bit stronger. I think a lot of that because it's a risk-capacity [ph] discipline. There is more short-haul capacity coming out of the marketplace. Oldham [ph] helped them in measurably would be a couple of other failures in Europe and in the autumn or in the run up to Christmas. And individually, Windjet in Italy, in other word [ph], P Express in Poland don't look like much. They really have a very significant impact of their withdrawal from those individual markets. And so on balance, I think it'll get weaker into Q4, unless there's another 1 or 2 more significant failures. But if you take our kind of year guidance, which has been up 6% in the first half of the year and up 2% in the second half of the year, which for us is fairly unusual for us to be kind of bash [ph] on what could be positive on yield at this time of the year, given that we have limited visibility, no visibility in Q4. If I can be cautiously kind of optimistic for the remainder of the year, now I think there's been a somewhat slight degree of irrational exuberance this morning in some of the analyst coverage. I would like us all to strongly rein in the irrational exuberance. It's still an airline. Oil is still a I think a bit of a moving feast, and Europe is in the s*** and will continue in the s*** for the foreseeable future. But that poses great opportunities for Ryanair. If the people keep flying but they get more price-sensitive, they move to us. Whereas on the other hand, if there was 1 or 2 more casualties and we suspect that there will be, and that would be very good for the model through the remaining half or into H2.

Unknown Executive

Maybe about close on bookings...

Howard Millar

Yes. What we've seen in the last -- certainly, in the last 9 months or so, is that change to closing bookings has been quite strong. So we've seen that consumers are making that decision to travel somewhat later. And you may see with some of the other guys, some of the carriers are seeing that as well. So that's generally a positive trend in terms of drive in bookings particularly notably across to somewhere [ph] when we got the bad stretch of weather.

Michael O'Leary

But I mean, again, just to push some a little bit of caution into the outlook, the bit that would worry me most would be the tendency of European governments to continue to impose very unexpected taxes on air travel. The Spanish government doubled the charges at Madrid and Barcelona in the 1st of July with almost no notice to anybody. And the Italians doubled air traffic control charges in Italy without any notice or they quadrupled without any arrears. We got told after the event. With the [indiscernible] in Italy. With -- the first time we heard of it was actually when the first -- the bill came through. So, yes, you've got to be very careful here because I think and the danger if you look at the success and the amount of money the U.K. government raise out of APD, there is an unlikelihood that there will be more of this type of stealth taxation, particularly of air travel, particularly of short-haul air travel, which could have short-term impact on our numbers. I think over the medium term, as long as it doesn't distort the price differential between us and the competition, it won't change the growth model. But in the short term, I'd be very cautious, particularly into Q2 and into next year's numbers. Although I know I can't restrain some of you. I'd be just a little bit cautious. It's not hard. It's very easy to put a blue-sky scenario together, but I think we should be cautious because there will be more political or regulatory shock to the system.

Who's next?

Howard Millar

Andrew Light from Citi.

Andrew Light - Citigroup Inc, Research Division

One effect of Stansted -- is it a simpler question of just lowering the value of the asset base, and therefore, the tariffs will come down accordingly. Would you think there's some obvious cost-reduction areas at Stansted that could be addressed or should be addressed?

Michael O'Leary

You really have -- it's only when you actually analyze the regulatory accounts for Stansted. You realize just how much cost padding has gone on there. I mean I think taking out from under the BAA will reduce Stansted's cost by about we think between GBP 20 million and GBP 30 million a year. I mean, for example, in 2010, about something of the order of GBP 10 million of Heathrow's electricity cost was reversed back into Stansted on a what the BAA euphemistically called it redistribution of electricity charges, group electricity charges, following the sale of Gatwick. What it had to do with Stansted was beyond us. And when you actually drill down into it, they said the BAA just by the way that the electricity allocation has been wrongly allocated in 1993 between Heathrow, Gatwick and Stansted when Stansted traffic was about 1.5 million passengers per annum. And somehow they f***** up the reallocation of the -- they underallocated electricity from Heathrow to Stansted at that point in time. It was just a rampant doctoring of the books, where if you have any regulator worth their salt, they'd been all over it like a rash. The fact that they allowed the EUR 200 million of the fare [ph] of the SG2 project, which originally they told us that the SG2 don't go ahead, it's at the BAA's risk, the BAA will carry that risk. Lo and behold, you finish up in time the RAB face [ph] every year and that's the cost of recovery. So there's been rampant profiteering being outtaken by Ferrovial in recent years. There's clearly no capital or CapEx acquired at Stansted. It has [indiscernible] capacity particularly with our model now, over 70% of passengers at Stansted will buy in [ph] passengers really don't check in a bag, carry only 1 carry-on bag. Therefore, they -- you could easily -- the current capacity of the terminal in Stansted is about 30 million. I think it's closer to 40 million. If we could get Stansted up from 17 million to 30 million, 35 million passengers with almost no CapEx whatsoever. And all it needs is someone in there with a focus on growing. And if you grow traffic, the benefits in terms of retail in the ancillary business are amazing. If you look at an interesting quote from Stansted's own the statutory accounts, which of course are entirely different from the regulatory accounts, the statutory accounts have some wonderful euphemisms in it such as that Stansted continues to benefit from a passive regulatory regime, that's why the traffic continues -- is expected to decline in 2012. This will more than be made up for by revenue increases in passenger charges and commercial sales, naked [indiscernible] profiteering.

Howard Millar

They have enough staff, security staff, to man every security point 366 days of the year.

Michael O'Leary

In the last 5 years, the traffic at Stansted declined by 25%. The security staffing has doubled. That is apparently explained away by Stansted, "Well that's because of the liquids ban that was introduced in 2007." Now if only most of their [indiscernible] adjusted to that, Manchester staff at [indiscernible] hasn't increased at all in the last 5 years. While their traffic has -- it hasn't grown but it hasn't declined by as much as Stansted. And then just all they've been doing is gaming the regulatory. To be fair, it's very hard to blame Ferrovial. You have an idiot regulator deal that's asleep most of the time. What else do you do? You just game the system. You increase the -- you understate the regulatory recovery and you overstate the actual for underlying profitability because you know you're going to be forced to sell it in 2 or 3 years' time. If you can delay the sale for 2 or 3 years while you max out the profitability, well and good. And ultimately, I don't think it would make a difference going forward because I'm not sure the regulatory asset base would be the regulatory model doing forward. There'll be a bit more competition between Stansted and Heathrow and Gatwick, and that will ultimately drive charges.

Andrew Light - Citigroup Inc, Research Division

All right. Can I just ask by how much Gatwick charges came down under the new ownership and also same for Manchester when it starts to compete with everybody, just get an order of magnitude?

Michael O'Leary

What interesting is that what they've done at Gatwick and Stansted is actually charge the [indiscernible] but it's been a much more like almost the way the airlines do it. Pricing at Gatwick has come down materially in the afternoon and off-peak periods. So they're out there actively trying to stimulate growth and volume at off-peak rates, whereas they jacked up charges at the peak rates. So one of the big problems for easyJet going forward is that they keep getting screwed by Gatwick for all the base aircraft that you have there. Manchester has done pretty much the same thing. One of the things we've complained most, especially about Stansted is that at Stansted, there's no off-peak charging. And there isn't much of a peak at Stansted anymore anyway. But there's no off-peak charging. They won't give any discount, for example, for winter traffic, which we've requested in the last number of years and which is why we just ground the aircraft. And the reality is, there's no incentive for them to do that because Stansted has been very happy in recent years to have fewer passengers but a higher yield per passenger and higher commercial yield per passenger because they know they're going to be forced to sell it. It makes more sense to do it that way. But I hope we have a change under a new owner. Next question, whoever's got the microphone.

Penelope Butcher - Morgan Stanley, Research Division

Penny Butcher from Morgan Stanley. Two questions, the first probably for Howard. Just to understand in terms of the cost evolution over the next couple of years, say, pre-aircraft order. I mean, you're talking about currency being a factor mostly in the 2% increase. Would it be fair to assume that we're talking flattish underlying in the midterm? Or do you have other reasons to expect inflation to be in that sort of 2% range x currency?

Howard Millar

It's very difficult to give much guidance beyond the end this year, Penny. But I think as we set out earlier on this year, we don't really see any real significant drivers increase in the cost base. And so unless, we get the crazy stuff like we had in Italy where we've got a quadrupling of charges retrospectively, and that's the kind of stuff that can upset [ph] the cost base. But over the medium term, we don't see really any great drivers of cost increase.

Penelope Butcher - Morgan Stanley, Research Division

Okay. And second question is, you referred earlier on to potential changes in the major carriers and Western Europe still being the source of growth. I mean, what markets are you talking about there? You mentioned, obviously, the U.K.-based opportunity. But say, for example, Iberia announces a fairly significant restructuring. Is that enough to get to you back to that market right now or do you still think the charging mechanism is impediment to adding capacity back to Spain?

Michael O'Leary

No, I think we're continuing to grow in Spain although like it's selective, we're declining in Alicante where screwing us around in air bridges but growing elsewhere. I mean I think it's hard to identify which market and which comes first, which is second, which is third. Because you look at that, there would be significant structuring of Iberia short-haul in the Spanish market. There'll be a very significant restructuring of those in the Scandinavian market. Iberia or Alitalia is absolutely set for a very significant short-haul restructuring. And Air Berlin has no choice but to do a very significant short-haul restructuring. So Luft will be a very significant restructuring in the Polish market, but it's pretty small anyway. So there'll be lots of different opportunities that you can identify and be point to. In the U.K., to be fair, BAA has largely restructured the short-haul either down to the kind of minimum short-haul fee. But the charge for airlines here, Thomas co car [ph] told that very again reducing the fleet sizes, that market is going to, I think, disappear. I'm not sure yet that the likes of that the second tier types the Jet2s and these people whether they're really long this world, particularly as we and easyJet expand to places like Manchester, Liverpool in this business would have been wholesale. So those kinds of opportunities, it's very easy to see how we get from 80 million to 120 million passengers over the next 5 or 10 years as those opportunities unfold. What we would ask if that they don't unfold kind of chaotically. What we want to see is a gradual kind of reduction and managed reduction of Iberia short-haul capacity and Atalia's loss making short-haul capacity SAS-es. What we really don't want to see is the kind of structural catastrophe like a Malév closing or a Spanair closing because it's much harder for us to take up those opportunities immediately, whereas somebody gradually, some big behemoth, gradually dying under the weight of its own excess kind of bloated weight is a much better way for us to expand.

Penelope Butcher - Morgan Stanley, Research Division

And well just to follow up quickly to that, what about -- I mean, I gather you were asked the questions this morning in the press conference about Moscow and et cetera, et cetera, et cetera. What about other markets? Is North Africa worth looking at again or is that a similar issue?

Michael O'Leary

We continue to talk. We're looking in North Africa. We've had some discussions with the Russians. We're looking at Israel. But in the context of where's the next 50% of growth going to come from, they'll be small. There are opportunities there. And we can't do London, Moscow at the moment because the registration is now ashamed, does not allow us to do it. We're talking to some airports in the former Russian states, Georgia, Ukraine, again. But dialogues and those negotiations going on with those airports, but they'll be relatively small compared to, I think, the opportunities in Western Europe, Central Europe and Poland, which are very large area of growth for us this year with the new bases in Poland and the new bases in Budapest. Those opportunities continue. Whereas in the kind of the rush to look at Israel and Moscow, people take their eyes off the opportunities that there are in Liverpool and Manchester in the East Midlands because they're not kind of fashionable. There's going to be lot of growth for us in those big, strong cash mint [ph] in the next 12 months largely because easyJet are kind of removing capacity out of those markets.

Damian Brewer - RBC Capital Markets, LLC, Research Division

Damian Brewer, RBC. A couple of questions. You've mentioned Stansted but in a more broader context as European air traffic movements continue to sink, is there more to do with other airports in Europe in terms of revisiting what you pay them and revisiting those that you've maybe not gone to before that could go to again in future with a better economic case? And then secondly, inspired by a few carriers, but it doesn't seem to have taken off yet in Europe, people seem to fight for overhead baggage space. Is it something you'd ever consider paying for getting them to pay partly for?

Michael O'Leary

Okay. On the new airports, I think most importantly, we have about 3 teams of airports, new airport, new route development people who are in almost continuous dialogue with airports both existing and new airports, airports that we have previously flown to before, now we're still talking to. Alicante, for example, we have an operation at the moment to grow them by 600,000 passenger next year despite that the airport has lost 1 million passengers this year all on the back of this ridiculous imposition of mandatory airport use and airport -- and airbridge fees. So those -- that dialogue continues all the time. We have, at any given time, a mix of probably 20, of course, the offers on the table from new airports that we don't fly to, from airports that we flew to but have a row with Stansted or an airport that we're presently flying to who want more growth. And we're all the time balancing those deals to see which gives us the best new deals. So, yes, there's lots of opportunities and continued growth opportunities in European airport. I think the opportunities are getting better. We're certainly being approached by more airports in Spain and Scandinavia and Italy, where I think airports that wouldn't have talked to us previously are now genuinely terrified that they're going to lose 20%, 30% of their short-haul side carrier business and unfortunately, may not like this course talking to us but recognize that we're the only show in town.

In terms of the charge with the carry-on bags, I think it's an interesting concept. We're looking closely at what Spirit are at, at the moment. I wouldn't say never. I think it may be something we may do at some point in time in the future. But for the moment, our focus would still be on getting rid of the check-in bags, reducing our handling costs, continuing to allow people to carry a free carry-on bag but we're usually imposing one carry-on bag per person. I think you might, at some point in time in the future, be charged for carry-on bags. But for the moment, when the driver -- the focus of our drive is to still get us away from check-in bags. I think it would be a bit of a contradictory kind of position to be saying, "Well, we don't want you to carry a check-in bag and now we're going to charge you for the carry-on bag." Spirit has in the States, with various degrees of success. I think it's -- with their -- with those thinking with much of an implementation within Wizz Air, it seems to be -- it seems to be a fairly positive policy of "pay for it online." And if you don't pay for it online, they won't actually stop you at the boarding gate anyway. That's not the way we do things. If we introduce a policy, we introduce a policy. But I think we don't have a plan to do it in '13 and the foreseeable future this -- the rest of this fiscal year, but it's something we would keep under review.

Howard Millar

Just going back maybe what Penny said earlier on, if you are to look at our cost base, I would say probably the biggest opportunity in the airports and handling cost because we group those 2 together. I think there are still very significant opportunities out there to use our size of scale. And as our growth rate slows down to look at moving that capacity around to what gives us the best offer.

Michael O'Leary

Who's got the next question?

Neil Glynn - Crédit Suisse AG, Research Division

Neil Glynn from Crédit Suisse. If I could start with the question, you've highlighted potential financing challenges for Norwegian but arguably, their recent base charges provide an interesting snapshot onto the future developments since obviously a good amount of overlap with you in Spain and also in London. Just interested in your approach, do you fend that off -- fend that minor threat off head on or do you take a more wait-and-see approach?

Michael O'Leary

For Norwegian. If they had to be threatened by an airline that has an average fare of over EUR 100 -- to be fair, I think Norwegian has a nice model. It's very much a niche player at the moment. And it depends. I think Norwegian's success is a by-product of SAS' failure. I think the real threat for Norwegian, though, is as SAS significantly restructures, the dangers that will kind of arrive up in Scandinavia in which case, the Norwegian model is in deep s***. And they would be a viable competitor in the Scandinavian marketplace for the moment. But on the couple of times that we've come up against the Norwegian of Dublin, of Stansted, they have retreated quite sensibly. And [indiscernible] they were there, main bases in all of the Riga. But when we went to all of Riga, but I think within 6 months of us showing up at Riga, they'd gone back to offload [indiscernible], which is -- I think to be fair, they've enough sense to follow the easyJet strategy, which is to stay out of Ryanair's way, and where Ryanair is short, get out of the way. But they have really significant challenges. I think there would be an enormous challenge for Norwegian to fund and find a home for 200 short-haul aircraft, but good luck to them.

Neil Glynn - Crédit Suisse AG, Research Division

Just a second question on you mentioned that the first quarter some softness in Eastern Europe and also in Spain, can you give us an update as to whether things are improving? Is that improving with along with the rest of your network?

Michael O'Leary

I think what we said in first quarter has largely continued through into the second, and we think the third quarter; yields in Central Europe, particularly out of the new bases in Warsaw and Budapest are very low. We are engaged in pretty imaginative competition with Wizz Air at those marketplaces. Wizz Air tends to have a kind of a -- they're kind of flip-flop around a bit. They have a weak credit. They decide they want to compete with us on price in which case, they go down to like PLN 4. We get out to PLN 1. After a week, they've gone back up to PLN 300. So we may go back up to PLN 10. And so I'm not sure what their policy is. But I mean, we have a very simple philosophy. We have 80% load cycle at those bases that performing very well but at very low prices. I think that will serve us growth over time when Wizz realizes they have no future in competing with us head-to-head but if they want to, the want to. Spain is a slightly different issue. In Spain, the business is growing strongly. The fares aren't bad, but you have this government-sponsored thievery going on where there are AENAs. They pass the load that doubles AENA's charges overnight, which will have a very damaging effect on traffic volumes at the Spanish airports. I think you're seeing one of the reasons why easyJet has closed in Mediterranean base. And why Iberia is going to have very significant cutback in their short-haul operations is this kind of doubling of airport charges. And you can't -- I think the Spanish government camps [ph] can be fatten up by AENA for some sort of spectacular asset sale while at the same time completely trashed both their tourism industry and use their employment numbers over there. Who's next?

Peter Hyde - Liberum Capital Limited, Research Division

Peter Hyde from the Liberum. Just 2 questions. One is that I noticed ancillary revenue keeps kind of outperforming passenger fares. Do you think that's going to be a trend that continues? Do you still think the 20% target is there or is it too low? Or what are your thoughts on that? And then coming back to Spain, I mean, I know we don't really know, but I mean, if Iberia was to restructure quite materially, when you talk about offers on the table, do you think there might be some quite significant offers or do you see those significant offers on the table now on the basis that, I mean, you've just said Spain has got significant unemployment, I mean, needs to get its economy moving somewhat? And would you consider materially increasing your capacity in Spain if Iberia was the materially reduce its capacity?

Michael O'Leary

Okay. I think ancillary -- I think still our general guidance is at a 20%. So it gets -- historically, we're getting very good at kind of exploiting ancillaries and increasing the takeup and differentiating the problem between seatings like priority boarding and reserved seating. And we've been genuinely surprised by how well reserved seating has taken up without cannibalizing priority boarding. But ultimately, the revenue, the average fare performance in recent years has been sluggish which is partially to separate slightly [ph] distorted. I do think over the medium term, average fares will rise a bit more, not because we have been putting prices up. I think just because competition will be putting short-hauls up so significantly. I still think we're likely for next year to stay slightly ahead of 20% on ancillary revenues. But I think on longer term, 20% ancillary revenues, 80% scheduled revenues is where it will fall.

In terms of Spain, I think Spain is a very interesting marketplace. Like most airline restructurings, I think Iberia will do not one big bang. It will be 3 or 4 different goes at it before they eventually get it right. I think really having gone through the process there Aer Lingus and more recently with BAA will be pushing I think for more revolutionary approach, but it's a very politicized market down there as we found to our -- as we found out this somewhat particularly in the area of safety. And I think there are certain markets in Spain where the local politics lends itself to them doing more revolutionary-type deals, particularly our experiences been in the islands, the Balearics, the Canaries, where to be fair to them, the airport and the local politicians seem to have a lot more independence from the dead hand of Madrid. On mainland Spain, dead hand of Madrid seems to have a lot more sway. But I just think that the whole mess in Spain ultimately the Spanish such a large industry for them down there. It's an industry that needs directly go influenced by government. The property market will take years to recover, whereas the 50% youth unemployment in Spain, most got their first jobs in a bar or restaurant or hotel or something, and that's where most kids get their first jobs. And I think ultimately, although, there's not much chance under the current government, they have to come up with some kind of job-creation strategy in Spain and that will be tourism-led. And if it's going to be tourism-led, you start with going to be tourism-led, you start with AENA and tell them to stop building big, shiny, bloody palaces named after some local political bigwig when the existing older [indiscernible] is fine, get the cost down, break up some of the kind of crazy structure when -- we have ground-handling cost in Spain are determined by Iberia's ground-handling costs is convenial, where Iberia basically get together its handlers every year agrees to 10% pay increase, and that then gets imposed on everybody else's handling costs. That kind of -- those Spanish practices have to end. But I've been waiting for a long time in Europe for those kind of Spanish practices to end and they seem to survive longer in Europe than anywhere else. But I do think over the medium term, there will be much more radical restructuring of the Spanish economy, and that will be good for our model.

Peter Hyde - Liberum Capital Limited, Research Division

Without getting on about it, but you're kind of having a vision of more over period of time than the sort of big bang, let's say, in 6 months' time or 3 months' time or even a year's time.

Michael O'Leary

It's more 3 to 5 years than big bang 6 months' time. That's not to say there won't be a big bang in 6 month's time, but for a big bang in 6 months' time, you need Iberia to implode. That's not going to happen. I think Iberia will restructure significantly but not on a revolutionary scale.

Geof Collyer - Deutsche Bank AG, Research Division

Geof Collyer from Deutsche. I have 2 quick questions. Can you split out the EUR 97 million increase in ancillary revenue since the reserve in priority boarding and the other internet sales. And then secondly, given that you've given document you've provided remedies is for every single reet [ph] with Aer Lingus, are you able to say what proportion of Aer Lingus you would expect to keep before your remedies were accepted?

Michael O'Leary

The answer to your first question is we wouldn't be able to break out of the analysis of ancillary down there kind of quarterly or a half-year basis. We do it on an annualized basis. But it's not all, the growth of the EUR 97 million hasn't all just been reserved seating and priority boarding. There are other things in there like credit card, income, at [indiscernible]. We've also been bedrest [ph] targeting with the dividend [ph] -- increase in-flight sales. So it's generally well spread across most of the sectors, in car hires.

Howard Millar

Hotels. The penetration rate has improved...

Michael O'Leary

The best thing on the plan is we're getting at the penetration and increasing penetration across most of the segment. There've been no significant decline in any particular segment, and they've all contributed to growth in ancillary revenues. On the second part of the question, which I have forgotten again. Yes, the ambience of the remedies. If the [indiscernible] were taken up we would be handing over about 25% Aer Lingus 9.3 million passengers would be handing over 2.5 million out of 3 million of Aer Lingus' existing traffic. We'll be switching those aircraft away from some of those aircraft away from the Irish airports to all the European airports. There would be no job losses. There would be actually job growth because Aer Lingus aircraft would still fly except somewhere else, and then the other airlines will come into Dublin and create new jobs. So this kind of myth that it will result in a big decline in jobs is untrue. We are not closing any part of Aer Lingus' operation, but we'll be switching aircraft elsewhere. But it will account I think in total from between something [ph] 2.5 million and 3 million of Aer Lingus' existing passenger base. And we would still have that factored into our overall objective of growing Aer Lingus' traffic from 9.5 million to 50 million passengers within the 5-year period would still -- would take account of those -- of that switch. So net-net for Ireland, there will be further traffic growth from Aer Lingus, but also from the up front buyers. Next question? Okay, folks, there are no more...

Howard Millar

Are we going to take any...

Michael O'Leary

Are we going to take any questions from overseas? No. Okay. Thanks, everybody. As I said, we are on a week-long roadshow, which is partly I have to apologize we're doing the conference call here so early. I'm on the way to the West Coast. Howard is going to the East Coast of the States. Anybody have the follow-up questions, we'll be here for a few minutes or route it back to the Investor Relations. We'd have to get back to you later on in the week or early next week. Thanks very much, everybody.

Howard Millar

Thank you.

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