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

Stephen Furlong - Davy, Research Division Damian Brewer - RBC Capital Markets, LLC, Research Division Neil Glynn - Crédit Suisse AG, Research Division Tim Marshall - Redburn Partners LLP, Research Division Andrew Light - Citigroup Inc, Research Division Edward Stanford - Oriel Securities Ltd., Research Division Suzanne R. Todd - Morgan Stanley, Research Division Jarrod Castle - UBS Investment Bank, Research Division Donal O'Neill - Goodbody Stockbrokers, Research Division Anand Date - Deutsche Bank AG, Research Division

Okay. Thank you very much.

Good afternoon, everybody. As you have seen this morning, we announced the Q1 profits we previously guided fell 21% as traffic grew 3% to 23.2 million.

Average fares fell 4% during the quarter, principally due to Easter falling outside of the quarter and the impact of the June French ATC strikes. The revenue for passenger growth rose 1%, primarily due to strong ancillary growth.

As we've previously guided, higher fuel costs and the timing of Easter led to Q1 profit falling EUR 21 million to EUR 78 million. Ancillary revenues grew strongly by 25% to EUR 357 million, principally due to the continued growth of reserve seating, priority boarding and higher admin credit card fees.

Unit costs rose 4%, in line with the increase in sector length, fuel increased 6% to 47% of total operating costs. Excluding fuel, Q1 costs rose by 6%, slightly faster than sector length due to a 2% rise in flight crew pay on the 1st of April, and the increased Eurocontrol, Spanish airport and Italian ATC charges.

And we're well-hedged for FY '14 at $98 -- at probably $98 per barrel, and 70% hedged for H1 FY '15 at $93 a barrel. We've also recently extended our H1 currency hedges on dollar weakness to deliver a 3% cut in our fuel cost per passenger for the 70% already hedged into H1 FY '15.

New -- 7 new bases this summer: Eindhoven; Maastricht; Krakow; Zadar; Chania; Marrakesh; and Fez, performing well. We're currently working on plans to announce more new routes and new bases later this year as we continue to exploit significant growth opportunities in markets where competitors, including Air Berlin, Alitalia, Iberia, LOT and SAS, are cutting back.

With ongoing negotiations with Maastricht Airport Group, who are the new air holder of Stansted, offer a multiyear growth deal which would reverse 6 years of record traffic declines, but there's no guarantees yet that any deal will be concluded. You'll read my usual ramp down right there next about the U.K.

Competition Commission inquiry. A complete and utter waste of time, although these guys are determined to ignore every shred of evidence that the last 6.5 years have shown up, which shows that, one, Ryanair has no influence over Aer Lingus, and two, that it hasn't led to any lessening of competition.

We find ourselves in the remarkable but regulatory middle earth, where on the one hand, the European Commission prevents us from acquiring Aer Lingus on the grounds that competition between the 2 airlines has intensified. But now the Brits have decided that after 6.5 years of evidence of intensified competition, suggests that we should be forced to sell down some or all of our stake on the grounds that competition might be lessened in the future.

And this is a complete bogus waste of time. Only would it appear in a regulated industry like the airline industry, and we intend to fight the UKCC on the beaches, on the hills, in the trees, and wherever else we can find some misguided, politicized, premeditated regulator determined to force us to sell down our stake in Aer Lingus despite the fact that Aer Lingus carries very few, if any, U.K.

consumers at all. It is, however, a side show, so I don't want to waste too much time on it on the call.

In terms of looking forward, as you know, we've recently approved the new order for 175 Boeing 737-800 aircraft, they're delivered during the period of September '14 to December '18. We've also, on the back of that a firm order, now raised our growth targets by nearly 40% to 110 million passengers by FY '19, previously 100 million.

And our fleet will grow to 410, previously 375. The strength in the balance sheet remains a feature of Ryanair, as unmatched by any other airline in the industry.

That strong cash position, as well as the certainty of our CapEx spend over the next 4, 5 -- sorry, 2 to 3 years, has allowed the 3C [ph] to declare that we return a further EUR 1 billion to shareholders. At least 100 -- at least EUR 400 million would be returned this year via share buybacks.

We've just completed EUR 177 million of that, so there's about EUR 230 million to go. And they are up to EUR 600 million either in share buybacks or a combination of share buybacks of special dividends next year, subject always to there being nothing unusual or untoward about currency, yields and profitably trends.

This further EUR 1 billion in returns over the next 2 years would bring to over EUR 2.5 billion the cash rate returned by Ryanair to shareholders in recent years, more than 4x the EUR 580 million we originally raised. In terms of outlook, we still expect Q yields to rise despite last year's very challenging, post-Olympic-boosted comparables.

Although we have noticed in recent weeks that yields on the close-in summer bookings have been slightly weaker, we ascribe most of that to the heat wave in Ireland, the U.K. and Northern Europe.

And never have I seen, where has rain been so welcome as it has been this week. We don't expect that trend to continue, but it has undoubtedly been a weak close-in and we've seen that with tour operators in the U.K.

And some of the airlines -- and many of the airlines in fact, engage in price discounting in late July, or early August, something we haven't seen for a number of years. As ever though, and I think what separates us is our cautious outlook.

We're only reporting the Q1 guidance. We have some degree of visibility on Q2.

We have no visibility over the remainder of the winter and therefore, we continue to be cautious. We expect market conditions to continue to be tough, characterized by recession, austerity, high fuel costs and the spread of excessive government taxes.

Most recently, the Walloon government in their idiocy, had announced a plan to levy an air travel tax in Charleroi, from the 1st of January, despite the evidence that the Dutch government and the German government did it, has been very damaging into their air travel. While we expect full year traffic to grow 3% to 81.5 million, again because we have no visibility over next winter yields, but on the -- and on the basis that the recent yield weakness for the close-in summer bookings does not continue for long, we saw no reason to change our full year profit after tax guidance, which remains at between EUR 570 million to EUR 600 million.

Howard, do you want to take the MD&A?

Yes, I think I'll just go ahead and [indiscernible] through the summary, Michael. The detail is attached to the release we've made.

Profit after-tax decreased by 21% to EUR 78.1 million compared to EUR 98.9 million in the quarter ended June 30, 2012, primarily due to a 4% reduction in average fare and an 8% increase in total operating expenses, offset by strong ancillary revenues. Total operating revenues increased by 5% to EUR 1.342 billion, primarily due to strong ancillary revenues, which grew by 25%, significantly faster than the 3% increase in passenger numbers to EUR 356.5 million, offset by a 4% reduction in average fare.

Total revenue per passenger, as a result, increased by 1%, whilst load factor remained flat at 82% compared to the quarter ended June 30, 2012. Total operating expenses increased by 8% to EUR 1.238 billion due to an increase in fuel prices, a higher level of activity and operating costs associated with growth of the airline.

Fuel, which now represents 47% of total operating costs in both the current and comparison period, increased by 6% to EUR 576 million due to the higher price per gallon paid and the increased activity in the period. Unit costs, excluding fuel, increased by 6%, wherever including fuel, unit costs only rose by 4%, the same stage length increase.

Operating margin increased by 2% to 8%, whilst operating profit decreased by 22% to EUR 103.3 million. Net margin, as a result, was down 2 points to 6% compared to June 30, 2012.

Basic earnings per share for the period were down 21% to EUR 5.42 compared to basic earnings of EUR 6.86 cents in the previous period. The balance sheet then.

Gross cash increased by EUR 33.7 million since the end of March to EUR 3.592 billion and gross debt fell by EUR 97 million to EUR 3.401 billion. The group generated cash from operating activities of EUR 535 million, which funded net capital expenditure of EUR 237.3 million, a share buyback as Michael mentioned, of EUR 177 million, and debt repayments during the period.

Other results. The group had a stronger net cash position, which amounted to EUR 191.2 million at the end of the period.

With that, I'll hand you back to Michael.

Okay. Thanks, Howard.

Okay, we'll now open up for questions and answers, please.

I just like -- just, can you go to just a bit on the cost side and particularly airport costs? I know they're up in the quarter, but I think that spaced out as a constant [ph] as we go later on in the year, maybe talk about the Spanish airport costs.

And then just about airports in general. I know you mentioned about maybe your ongoing negotiations with MAG and Stansted.

Maybe if you just talk a bit about that. And also, I mean, Dublin isn't mentioned here so I'm assuming that's kind of down the pecking order in terms of opportunities?

That would be great.

Okay. What's to add is, to be honest, what we've -- what's in the MD&A on airport cost.

As you know, we and the other airlines have been persistently complaining about the crazy idea of the Spanish government to keep hiking airport fees. They're trying to dress up Aena for a privatization.

That's destroyed traffic across many of the Spanish airports. Whereas total air passengers at Spanish Aena airports have fallen from 220 million to under 180 million over the past 5 years, plus -- and never underestimate the ability of governments to destroy an economy.

And in a country where there's 50% youth unemployment, then they should be stimulating tourism, and they're taxing it. And in terms of negotiations, I mean, again, the flavor we tried to communicate at the full year and then at the investor day was we're a plague here, I can -- we can barely get into the office for crawling over the bodies of airport management here on a daily basis, in here, worried about their incumbent airlines causing traffic, taking up more routes, and will we grow there, will we add more aircraft and more capacity.

We ourselves have the discipline for the remainder of this outcome until September of 2014, as we don't have any more aircraft additions. And therefore, it's hard for us to allocate more capacity to new airports unless we churn from airports at the bottom of our pile.

As that process continues, but we won't have any developments down and I think until about September, when we start to finalize the end or the -- finalize the winter schedule, and also update on how the discussions with Stansted have gone. And the discussions with Dublin, unfortunately, have pretty much ended.

We made them a proposal, they came back with a counterproposal, we got close but ultimately, and I think the difficulty for us, as it is with many other airports, a conversation we've had with Dublin airport, is that we have no appetite for paying higher airport fees, even if it's a significant discount off Dublin's very high airport charges, when we have a litany of other airports around Europe where the costs are extremely lower, significantly lower than the discounted levels Dublin is offering us. The discussions are still ongoing with Stansted.

I think it's about 50-50 as to whether they'd be concluded or not. We are still making some progress.

But there's still a gap to be closed, yes, and I think it will be fair because there's a gap between the amount of growth that MAG wished to see at Stansted and how competitive their charges will be. And the more growth they want, then we're very happy to deliver growth, then to lower the discounts that we are looking for.

And essentially, what we're essentially looking for is the reversal of the price doubling that went on in Stansted in 2007 under the sales DAA monopoly and the inadequate CAA regulatory regime. Regardless of whether we do anything at Dublin or Stansted this winter, we have a myriad of other airports to offers on the table.

And the challenge for us, I think, in the next 12 months, where we really will have -- we have no capacity growth, is to be very selective and very disciplined about where we allocate our capacity because it's got to come from somewhere else within the system. It becomes a little bit easier once we get to September '14, when we start placing the deliveries of the new aircraft deliveries on the running for summer '15 -- into summer '15 and summer '16.

It's also one of the features that America was at discussions with the airports at the moment where, they recognize in fact, I think one of the characteristics over, if you're looking forward to summer '14, '15 and '16, it's this very lenient aircraft capacity additions in Europe, generally. easyJet have very few deliveries.

Even their new NEO order essentially only commenced at -- on February 18. Norwegian has a few around the edges, but in they kind of cost space, I wouldn't hold my breath on a lot of growth.

And we, I think, are increasingly seen as being the only show in town, if you want to have an airport that needs to deliver significant growth. And there's undoubtedly enormous opportunities unfolding in countries like Poland, we went there and LOT are cutting their capacities.

In Italy, where Alitalia is cutting capacity, in Spain where Iberia are cutting capacity, although we don't much like the airport fees structured in Spain at the moment so we're unlikely to grow there. And certainly in Scandinavia, were SAS continue to implode.

Yes, Michael, if I might add to that, one of the things we've seen in Q1 was that the Italian air traffic control charges had been front-loaded because -- that's because the increase happened in July of last year. So once we -- once that becomes annualized in Q2, the rate of increase in past -- in airport charges will start to slow down as we go through the remainder of the year.

So quarter 1 is slightly distorted by the fact that the comparison of last year didn't include those quadrupling of air traffic control charges. Obviously, we have those higher unit charges as Michael as well mentioned, which will continue for the remainder of the year.

Two questions if I can. I just want to explore the interaction between your fuel costs and your staff costs if possible, please.

I have noticed the flow now is up 9%. Obviously, the stage lengths don't seem to be up as much, nor do the amount of sector slowing.

So could you explain what's going on there, are the aircraft, flying a little bit slower? Are you changing the way you're flying the aircraft?

And what's that doing to your staff costs in terms of the staff hours used, and how would that develop going forward if you continue down that trend? How much of that efficiency have you got in place, and how much more to come?

And then the second question, which is ancillary revenue. How much of the change in the ancillary revenue per passenger was from the reserved seating?

How developed is that? And again, how much more of that process do you think there is to come once we get through to the second half of this calendar year when you're mapping its introduction?

Damian, I'll take the second one first. We don't break down the ancillary down the quarterly numbers, but I mean, I think we've given you the 3 highlighted areas, which was significant growth in priority boarding, the reserve seating, and also the main credit card fees.

I think it's fair to say that we have continued, I guess, to see a drift of business-type passengers switching to us, particularly in those markets where we have decent frequencies, 2 or 3 flights daily. That's an increasing trend, I think, towards people becoming aware of the reserve seating facility.

That, and then combine that with the reliability and the punctuality operation which has been phenomenal. Particularly in the last 2 quarters, we're running above 90% punctuality with the success of the 3 days of the French ATC strikes.

They're running about -- around 94%. And that are like very low prices.

It's a compelling business-type proposition, although we try not to fall over ourselves courting business passengers. You're not going to see us on GDSs.

We're not going to be selling to travel agents or any of the other business-type products that just add to cost. But I think there is a -- we have been, I think, I'd say, for about the last 18 months now, pleasantly surprised by the uptake of reserve seating and also by the fact that reserve seating haven't cannibalized priority boarding.

It's had some impacts to it, where originally, the concern was that it would simply eliminate all priority boarding. It hasn't.

And you'd see us continue to develop that by one, increasing the number of reserve seats. Now it's now up to 8 rows of reserved seats, and also beginning to yield-manage that by using a degree of pricing on some of the longer -- during the peak periods on the longer routes and on some of the business-ing-type routes, where there appears to be -- where the growth is very strong.

In relation to the fuel costs and staff costs issue, yes, one of the big focuses of our -- for us in the last, I think, 2 years, has been to we've gone -- begun get very active on the fuel management side. And one of the things that we have been very good at, and unlike most other airlines, we have this kind of formula on telemetry on all the aircraft called, OFDMs.

I think it's operational on flights that have the monitoring [ph]. We get all the kind of heights, speed, everything else that the planes are flying at.

We're now able to manage our flights in order to require our pilot to comply with what we have to be approved flight profiles, which is the takeoff speed, the cruise speeds, the descent, the landing, all that kind of stuff. So in essence, what we're doing is encouraging or requiring pilots to fly slightly slower.

It also makes their flying slightly safer, you have less rapid descent, less rapid takeoff, and that's having the very significant -- it has a minor increase in flight times, which does have, I mean, impact on staff pay and on sector length, but with very significant gain on the fuel side and in terms of the fuel consumption. And when fuel is running now at 47% of a total -- excuse me, 47% of comps -- or revenues -- total comps, obviously I think that reduces our fuel.

You have seen this receiving [ph] hesitation. We have some of the more misguided pilot unions around Europe.

We publish these monthly fuel tables, which are portrayed by the misguided unions as an attempt by us to get our pilots to fly with less fuel. [indiscernible] has nothing to do with fuel loads, but it has everything to do with, essentially, flight speeds and flight profiles.

Basically, it can get kind of misused by a lot of them to say, "Oh, this is Ryanair is skimping out on fuel, we're flying with too little fuel." Cost of fuel, table 2, is they manage fuel burn.

And the fuel burn is not driven by whether you fill your tank full to the brim. Fuel burn is driven by whether you're driving at 140 miles an hour or 60 miles an hour, but the air -- or 140 miles an hour with the air-conditioning on, the windows open, as opposed to driving at 60 miles an hour with the air-conditioning off and the windows closed.

We will not take any bulls*** from the pilot's union. We know they're a bit distracted at the moment agreeing in pay cuts and job cuts, both in the airlines like Alitalia and Iberia.

And so you continue to see some mewling and puking from various pilot representatives about our fuel lead [ph] tables, but as you can see on the fuel side, they're a very effective tool, which enhances safety by encouraging and requiring our pilots to fly the approved flight profiles and at the approved flight speed.

First of all, if I could ask a question with respect to May and June average fares. We'll be interested to know how they developed year-on-year.

Then second question on the ancillary side, really leading towards your other costs. So other costs were only up 1% on a per passenger basis in the first quarter.

At the same time, those ancillaries were up 21% or so. I know that's obviously a function of priority boarding and reserve seating not having a cost attached.

But it leads me to the question in terms of, as you grow your ancillary revenues through in-flight improvements, et cetera, are there further cost savings to be gained, or can you grow that attractively without attaching costs?

Neil, as we're not going to be breaking down the yields by month yields. As you'll see from the results, the average fare fell 4% for the quarter.

Most of that was due -- or a significant proportion of that was due to Easter falling outside the quarter, and like frankly, if you want monthly yields, you're on the wrong conference call. On ancillary revenues, I think, yes.

A lot of the ancillary revenue comes from -- the growth in the quarter has been driven by -- we've highlighted the 3 significant areas, which was the payment admin fee, the priority boarding and the reserve seating. Obviously, whereas the admin fees do have a cost impact, much of the development on yield management on priority boarding and reserve seating has no commensurate cost increase, and so the margins have widened a little bit on the ancillary revenues.

Understood. If I could just follow up with one more for Howard, just on the FX hedging.

Howard, would it be possible to confirm exactly what U.S. dollar hedging there is in place at the moment?

Yes, we are fully hedged out to the end of this year. And we have extended our hedging into FY '15 H1.

So we say we have 70% of our fuel hedge in H1, we also have 70% of the currency, which enables us to say on a cost per passenger basis, for what we've hedged will fall by 3%.

And I trust that's at around 1 31, 1 32?

Yes, any time you see that 1 31, 1 32, yes, we're generally active. That will be a target number for us.

Just a quick question. The second quarter yield guidance seems to be at least 5% compared to last year.

Would that have been materially different without the recent weakness you're seeing for the heat wave on bookings, or really, there wouldn't have been a comment on that had it not recently happened?

If not, we don't expect -- sorry, we don't expect the recent close-in weakness to continue through the third -- second quarter. I mean, it's hard, I'd say, what weakness is at heart, I'd come up with a reason for it and has been relatively recent I mean, in closing last year in Q1, bookings in the year were strong.

We think a lot of it has to do with the unusual heat wave here in Northern Europe, and where people postponing traveling abroad. We were blessed with rain and heavy ground conditions here last year.

A lot of people pissed off and going away on a holiday. So it's not built in to the -- into the Q2.

So we don't expect it to recur in the Q2. But, and again, I would temper everything we say with a degree of caution, if it does continue into Q2, then the 5 -- the kind of 5% yield guidance on Q2 may not be achieved.

But at this point in time, we don't expect it to. It's started raining again in Ireland and U.K.

10 days ago and by the time we get into Q2, the kids are back in school anyway. So we would expect, based on what we see to date, certainly on the forward bookings, we're comfortable with the Q2, with the full year guidance.

But we'll have to wait and see what the close-in bookings look like as we move through July, August and September. I say, put it the other way.

If we thought there was a reason to be concerned, we would be taking down the Q2 guidance at this point in time. We don't see any reason to be concerned.

But we would keep a weather eye out for yields and what airlines would generally doing about pricing in the next couple of weeks. You just have to watch yourselves, as we will.

I am surprised you haven't taken the guidance down slightly by reducing the fuel cost guidance by EUR 30 million and not changing the net profit guidance. Was there a discussion around that?

No. We -- I mean, I don't mean to be clever, Tim, but the guidance was EUR 670 million to EUR 700 million.

The guidance is still 670 -- or EUR 570 million to EUR 600 million. What moves within that, frankly, at the end of Q -- We -- I mean, some of the analysts have been a bit kind of, I think -- feedback this morning, oh, easyJet were much more buoyant, snappy.

Yes, easyJet are reporting on the weight of their fourth quarter. It's very easy if we were giving you numbers to the half year now, we'd be quite -- it would be very easy to give them to you.

It's a difficulty for us at this time of the year. We're reporting on Q1s, we have good visibility on Q2s, and we haven't a bull's notion what's going to happen for the winter.

So I think caution is the proper way to approach Q1 numbers. Don't waste too much time on them, it's much more important what we'll see in Q2.

And the only trends we've really noticed in 2Q is we're doing a little bit better on the fuel, [indiscernible] is coming in a little bit lower, our fuel management is working very well, and the yields have been a little bit softer for the close-in stuff through the back end of June into July. No more than that, frankly, in the May to June.

Just three questions. First of all, your thoughts on the potential -- potentially another aircraft order now that Boeing's gone firm on the specification and is it we're likely to see some kind of acceleration on there.

Secondly, have you had a chance to set what might be the impact of these new European Commission-proposed guidelines on airport financing and the ability to provide startup up costs, the new routes and so forth? And thirdly, just a little one.

This new aircraft advertising initiative you announced recently, can you put a kind of order of magnitude what that might mean in terms of revenue? For the 4 A303 aircraft for example?

Okay. Let me start with the middle, work my way back.

The aircraft advertising initiative, I think it will be relatively small. We don't know how much kind of business it generates.

It's an interesting product. It should be attractive to some people, particularly given that we have access to 80 million passengers, all of whom have to board the aircraft by passing the nose, which is where the advertising is, and it's certainly a lot cheaper for advertisers when we were previously pushing the tailfins.

But the tailfins made it a very complicated process of painting and repainting with the leading edges of the rudders that have to be taken down and repainted. This is a much simpler panel but it's worth trying it.

Again, it's a bit like priority boarding reserved seating, whatever it brings in would largely be straight to the bottom line. I would see how it grows.

The EU guys have done airport financing, we think we welcome them. I think there's a bit of a misunderstanding as usual because a lot of these reports said this is the EU getting though on Ryanair's airport deals.

And actually the fact is it's actually the opposite. If the EU reflects the new regulation, the findings of the European Court to the trial of our case, which throughout the EU's previous bizarre claims that this was some sort of state aid.

What the new guidelines effectively say is that if an airport is operating in accordance with the MEIP, the market economy investor principal i.e. with a view towards making a profit over a 5 or 10-year period, then these guidelines effectively don't apply.

If you're not operating on the market investor principal i.e. you could lose money for a number of years as long as you're doing it with kind of -- to a growth plan that enables you to cover your cost, then start of marketing assistance is limited for 2 years only but you -- and you only have -- but you also then have to use [indiscernible] to cover your operating costs.

In other words, they accept the fact that whatever was the original cost to build Frankfurt Hahn, which was covered by the U.S. Air -- NATO, our bids on [ph] Charleroi have no idea originally [indiscernible] for Charleroi, doesn't get billed to your airline customers.

We think this finding removes -- based on our analysis of the current -- we have about 23 cases which are presently being investigated by the EU Commission as called state aid, and remember, those cases are only being investigated because, indeed, these are one of our competitors that are lobbing the complaint. And probably, 19, 20, 21 of them will straight away be dismissed on the basis that they're all operating accordant to the MEIP principle.

There would be 1 or 2 where they're not operating under the MEIP principle, in those cases, the aid will be limited, I think, to a couple of years, but there's 10 years for transition arrangement as well. So even if the airport is clearly not making money and has no prospect of making money, they can continue to do whatever it is they do for a 10-year period until the regulations come into place and then something else would have to change.

But I think, fundamentally, at 99% of all of our airports, they will pass the MEIP principle. Again, you go back to the Charleroi case.

Charleroi, which had 20,000 passengers before we showed up is now making something in the order of EUR 25 million to EUR 30 million a year in profit, and has grown to carry 8 million passenger a year so it would pass all those tests. So I think the guidelines are very welcome.

In effect, according to EU guidelines, the effect of the EU court ruling on the Charleroi case and remove the ability of a lot of our competitor airlines to be running around making spurious complains that we're receiving state aid. In fact, it's Air France and [indiscernible] who continue to receive huge state aid in the form of legal PSO subsidies.

On the third one, again, it's a bit early for the potential aircraft order. As you know, well, at the time that we announced that when we did the 175 aircraft order, we have a small senior team, Ryanair and Boeing working on the MAX project.

Part of that was to finalize the design specs with Boeing and also the pricing. We're due to meet again with Boeing at senior level in September, with the kind of fugitive deadline for a deal by the end of the calendar year.

I'm not particularly -- I'm open to whether we'll get the deal done by the end of the year or not. Although if there's a deal, if there's a favorable kind of specs and pricing and delivery dates, then we'd be very happy to do a deal.

But no, we'll work with Boeing on that, I wouldn't expect there to be any new development or any announcement on that until much later in this calendar year or in the early part of the next calendar year. It's really a matter for Boeing.

They've had lots of distractions over recent months with the 787, and whenever they're ready to sit down with us again and talk about the MAX, we'd be very happy to talk to them.

Just 2 questions, please if I may. One is, I think, you touched on -- so you mentioned you're seeing perhaps a heightened level of discounting in the market at the moment.

Perhaps you could provide a little bit more color on that, where are you seeing it and who's doing it? And secondly, I hesitate to talk about Aer Lingus, but you've made your comments about putting the stake up for sale if anyone bids for the airline.

You appear to rule out bidding for the airline again. And I appreciate that this is going to get bogged down with lawyers for many years.

But is there a point at which we should just try [indiscernible] stake?

Let's deal with the color on the weakness. I'm not sure how much color you want other than we know there's been a weakness for about the past 4 or 5 weeks on the remaining close-in bookings, which is usually where there's a degree of pricing strength.

We see most of that emerging out of the Irish, U.K. and Scandinavian markets.

It's particularly prevalent, we think, in the U.K., although we've also seen a lot of tour operators out there doing holiday deals at the last minute, et cetera, et cetera. easyJet are offering relatively cheap fares closed in with those airports like Gatwick, which are normally held out out as a paragon of high fares and lots of business class passengers.

And we're doing the same thing. We have taken, off until about 2 weeks ago, our kind of promotional fare with 22 quid as we now take them down to 19.99 quid.

Now we don't sell that promotional fare within 40 days, but again, it's an indication that there's a little bit of weakness there closing, so we'll build up the forward bookings a little bit stronger. As I've said, we are going to see, we've been kind of sacrificing yields to ensure, as is always the case, that we maintain our load factors [ph] and our passenger traffic targets.

And the yields, we will always be a price taker, the yield will right itself whenever the yield rights itself. And most of our operation, this joy we have in line here is because we have such a unit cost advantage over every other airline.

And that unit cost advantage is getting wider because the unit cost growth in most of our competitor airlines is actually running much faster than it is in Ryanair. A lot is being covered up admittedly by our good yield performance.

But over the medium term, yield performance gets competed away whereas unit costs eats your breakfast. So I don't know if there's much color I can give you on this.

It's a bit weaker, our environment in the U.K. and Scandinavia in the last number of weeks.

Do we expect that to continue? Not really.

We expect the weather to break and then people will go back again well, okay, let's go back on holidays [ph]. In the Aer Lingus segment, without droning and boring the arse off everybody.

The Aer Lingus thing is a farce. We've owned them in our segment for 6.5 years.

[indiscernible] know we have no influence on Aer Lingus, which is why they keep making crazy commercial decisions like closing the Shannon base then reopening it, opening a Gatwick base only to close it back, opening a big Belfast base then close it back, ordering EUR 2.4 billion worth of aircraft, only 3 months later to cancel the entire order. And most recently, for example, we voted against the election of the Ireland's big trade union boss, a guy called David Begg who would know more about airlines than I would know about being nice to trade unions.

And he got elected to the board of Aer Lingus, like, because he knows nothing about airlines whatsoever, but of course, he is the boss of the Irish trade union and the government wants to be nice to him and the government has appointed the entire board of Aer Lingus. So we have no influence whatsoever.

I think what happened here is we got sucked into a -- when we -- the EU ruled in our minority stake 6.5 years ago, they said, you don't have to take the fact that you are in control there, so we're not going to force you to sell the minority stake. The Irish Competition Authority said, yes, you don't have any [indiscernible] we're not going to force you to sell down because of the minority stake.

But then 6.5 years later, a bunch of dimwits in a basement in London somewhere, called the OFT, wrote a letter, which at the time headed by a former Irish government employee called John Fingleton, writes a letter to the UKCC saying, we think U.K.' s aviation could be shattered to its very core foundation.

And U.K. consumers, despite the fact there's probably only about 10 of them ever fly Aer Lingus in any given year, will be badly damaged if this 6.5 year old sales minority stake is allowed to continue.

The problem the UKCC has run into is that the third sale was prohibited in February this year, precisely because Aer Lingus and the Irish government provided evidence to the European Commission that showed competition between the 2 airlines has intensified over the last 6.5 years. And because competition intensified, and consumers are getting a better deal, we shouldn't be allowed to buy Aer Lingus.

Now the Brits are running around going s***, well, we can't come up with a different finding because they have a duty, a legal obligation to sincere cooperation with the European Union. They can't make an opposite finding, which is that competition has intensified.

But they desperately seem to want to find some reason to force us to sell down the stake because, let's face it, Ryanair acquiring Aer Lingus would be probably more significant for the U.K. economy than BSkyB buying ITN -- or ITV.

And what they're doing now is they're a -- so they've invented 3 future concerns. One of which is that Ryanair might block Aer Lingus issuing new shares or rights issues.

The problem with that is there's 6.5 years of evidence that we bring to them every year, saying, we will support any rights issue you want to make at any time, only because we want to prevent dilution. So there's an inconvenience for the -- more inconvenience for the UKCC, and that actually, the 6.5 years of evidence completely disproves that claim.

They then came up with a second even more fairytale one, which is that our share of stake will be used to block Aer Lingus disposing of Heathrow slot. Now the kind of an interesting phenomenon here is that if we use our stake to block Aer Lingus disposing of the Heathrow slot, then that maximizes competition on the Ireland-London route between Ryanair and Aer Lingus, and you'd think it would be good for U.K.

consumers. But apparently, these dimwits have now decided that actually because we might block the Heathrow slot, which would increase competition, we should be forced to sell down our stake.

Again, and somewhat inconveniently for UKCC, they have managed to completely ignore the evidence of the most recent April 2013 sale by Aer Lingus of a pair of Heathrow slots to BA, when they wrote to Ryanair and said, "Do you have any objection?" We said, "No, we couldn't care less, as long as we're getting market value for the slot, we go."

So s***, all the evidence have now been taken away from that one as well, which leaves these dimwits, well, rather desperately, scrabbling around trying to invent the only remaining competition concern that remains, which is that Ryanair's 25% -- 30% stake would be used to prevent another EU airline and it can only be another EU airline, because a takeover of Aer Lingus has to result in [indiscernible] some efficiencies for Aer Lingus for making a stronger competitor. The only ones who can do that is another EU airline.

We have submitted 6.5 years worth of evidence, which shows repeatedly that no EU airline has any interest in Aer Lingus because it's too small, too poriferous, too much run by the government and the trade unions, and it can't compete Ryanair in its home market. But there is, and to be fair to them at least, some legal support for that concern, on the basis of actually, under Irish takeover rules, if we don't sell out our 29% stake, we could stop -- we could prevent ourselves being squeezed out.

So another EU airline could acquire the government stake, get the 50.1% but then couldn't get us off the share register. So to be fair, the dimwits in the UKCC, they have a bit of evidence there.

The obvious way for us to remove any remaining shred of f******* credibility from this farce is actually to say, all right, if that's what your concern is, we'll prove to you that nobody has any interest in buying Aer Lingus, buying irrevocably and unconditionally committing. If any other EU airline wants to offer and buy Aer Lingus, and if they get just 50.1%, never mind 70%, 75% risk, if they get just 50.1%, we will automatically, unconditionally, irrevocably sell our 29.9% stake for exactly the same terms and conditions that they offered for the rest of the airline.

In other words, we're volunteering to be squeezed out. And what we now say to the UKCC is, there you go, naughty big ears to the rest of you, you now believe that somebody's actually interested in buying Aer Lingus, even though the entire market, including Air France and IAG have said they have no interest in Aer Lingus because it's a pension deficit with wings, run by the trade unions and the Irish government.

But even if you could fantasize that somebody in EU air wants to come and take it, we've now removed any ability that you have to argue that somehow Ryanair will sit there and block this because we will happily take 29.9% stake off the table. Having done all that, and having provided all that evidence, we are convinced that these guys will still write a recommendation that not alone should we be forced to sell down our stake, that it should be sold down in its entirety, and even more draconian stakes than was imposed on these guys in IATA [ph].

And -- which is why it's kind of best to nothing for us because they have to accept the evidence before them, which so far not only have they managed to ignore it, they've actually obscured the evidence from the documents that they published under their provisional thinking [ph]. They're simply just ignoring the evidence.

But even if they don't do it and go ahead, we give ourselves incredibly strong grounds for an appeal here because these guys just completely will engage in the process that's a farce where they're ignoring evidence and simply dreaming of their own f****** fairytales to force us to sell down the stake. It will take me on to the last question, well, why don't we just sell the stake?

I'm blue in the face telling people, we would sell the stake. If only anybody would come and buy it.

There isn't anybody out there who wants 29.9% stake of an airline which, in recent weeks, has proposed pissing away another EUR 200 million of shareholders' funds to top off a deficit in a pension scheme which the management and boards of that airline has told the market in its IPO for September [ph] the 19, 2007 and every single annual report thereafter, they say, define contribution pension scheme, which we have no liability for. So I think if I could clear any confusion in anybody's mind, it really was our f****** -- John Spinetta [ph] or whoever it is who came after him, or the at Lufthansa or any other lunatic out there wants to buy a small piggy regional airline in Ireland with a huge pension deficit, where the board is run by the government and the trade union, where they elect each other to the board of that company, but if they want to buy our 29% stake, all you have to do is make an offer for the other bit of it.

The government, if you're non-Ryanair, would clearly accept the offer straight away, because the only aviation policy this government has is anybody but Ryanair. And we will be irrevocably and unconditionally committed to selling our 29.9% stake, all of which proves there isn't one shred of evidence available to the UKCC to support this asinine fairytale that our 29% stake is blocking any other EU airline buying that s***** airline.

But please, I don't want to waste any more time on our investor call, on that f****** -- minority stake at Aer Lingus, which, by the way, if none of that happens, we are very happy to sit there as a minority shareholder with no control or no influence whatsoever. And it's not as if -- if Randy [ph] inevitably gets into financial difficulty and it inevitably will, as it continues to be mismanaged in the interest of its staff unions and not its shareholders, then maybe the situation would change.

And as with every other EU precedent where the FBA [ph] was allowed to buy British Midland but the UKCC and the OFT had no concern whatsoever about it, or Vueling was allowed to buy -- Iberia was allowed to buy Vueling. Again the UKCC has no f****** interest in it whatsoever, we might be allowed to buy Aer Lingus at some point down in the future.

But who knows. All I can tell you is that the UKCC come out with any ruling that says, we have control influence with Aer Lingus or that somehow, we are preventing Aer Lingus being acquired by any other EU airline, we will appeal it over every hill, ditch, mountain, stream, God knows wherever else, until we get to the European Court of Human Rights.

Michael, it's Howard here, on that note, I've got the exit stage left here, I've got to go get a flight. Talk to you soon.

By the way, I should say, the problem with asking that question now is everybody's going to raise, we're obsessed with f****** Aer Lingus yada, yada, yada. We're not.

Michael, if we can just go back there to the 2Q guidance, if you don't mind. In terms of the guidance, we're under 5%, can you just clarify if that is passenger yields you're talking about?

And maybe you can give us some color on stability of the ancillary yields? It's clearly very strong in the first quarter as what you're seeing in the second quarter?

It's a bit early yet in the second quarter. And again, I think, specifically, we don't see any changes, no alteration to guidelines.

We expect the trend in the yields to be up approximately 5%, and February to continue their recent trend.

Great. And can I just ask on the sector length.

You've been previously guiding for a 3% increase in the full year. I understand that might be coming down slightly now.

Can you give us an idea of what you expect for the full year and also how it's been in the first half and the second?

No, don't change for [indiscernible] we still haven't finalized the winter schedule, which could be affected by the outcome discussions with MAG, whether there's some Stansted growth. Until we kind of finalize the winter schedule, I wouldn't want -- we shouldn't be making any changes on sector length for the full year.

Okay. Do we keep around 3% sector length and the x fuel unit cost grow in line with that?

Yes.

Just 2, quickly. One, can you say anything in terms of what you're seeing on the secondhand market, on the ability to sell claims?

And secondly, you just gave an update in June about kind of potential funding, but since then, we've seen British Airways do a double ATC fundraising? Is that still something which is high up on the agenda when we're looking to fund the fleet?

Yes. I think, our secondhand market, I mean, we don't actively kind of watch the secondhand market, we're not buying second hand planes.

But we haven't seen a lot of people coming towards looking to acquire secondhand aircraft. So we assume the secondhand market continues to be relatively quiet and weak, which has always been the kind of one of the issues we have with the aircraft order.

The manufactures were saying that the order books were full to the gills but the secondhand market was weak. And I think it continues to be characterized by weakness but then you're coming in to the second half of the year.

And a lot will depend on which other EU or certainly European airlines go bust between now and October and November, and we expect there will be some more close between now and November but I don't expect that there will be anything materially different. Our potential funding, we haven't done much on it at the moment yet, the EETC will be significant indeed.

But as with the job post [ph], we're going -- we're doing a bit more marketing currently. Howard came back after the full year results after the week in Asia.

I'm going out there with the half year results and to destroy our reputation out there in Asia as well. But I think we're conscious of the fact that certainly in the future, a lot of the funding and the funding available will be emerging from the Asian markets where, remarkably, Ryanair is quite well-known largely because of what every other airline in Asia is out there trying to persuade the investment that they're Asia's answer to the Ryanair.

Two quick ones for me. First of all, can you give us any guideline to the timing of the share buyback, the EUR 230 million, EUR 240 million to be done at some point this year?

And the second question, you touched on new bases, what are the new bases you're looking at for the remainder of the year?

Timing of share buyback, I think we can try to continue to be somewhat opportunistic. And as I've said, it's what we've done and I hope what's different about the last share buyback is that there was a blend of ADRs, as well as ordinaries, part of the problem for us though is that our ADRs are relatively tightly held that there isn't a lot of turnover in them.

I think what we're going to continue to do is to talk to some of the -- as many of the larger ADR holders we have. And if at some point in time, one or more of them wants to sell a decent flow of ADRs, then that might be the trigger for a second share buyback.

We don't have any timing imperative on it. We've given ourselves to the end of the year.

And I'm surprised, although we saw yields, we've done EUR 177 million so far. And I think we'll try as best we can to balance it, sort of half ADR, half ordinaries going forward.

But really, I think what we try not to do is to -- we don't want to kind of drive the market artificially forward. What we try to do is do call around where there's decent volumes of shares for sale, then I think that incentivizes us to begin another -- to start another buyback program.

But there's not much point in us out there being -- buying 100 here or 0.5 million shares there. I think, that's the case, we're just artificially pushing the market forward, I think that's the wrong thing from a shareholder point of view because once you finish, it will come back down again.

New bases, we have no comment on new bases. As you know, we are engaged in multiple negotiations with multiple bases, multiple airports.

We have far more opportunities than we can handle. There is a qualitative element to those discussions, and that it is driving out much more significant to airport's cost advantages, not just in terms of the airport fees themselves but also the handling.

And I think, as those competitor airlines like the easyJet and the Norwegians and others, though we wouldn't necessarily recognize as competitors, but as they continue to focus on slots at high cost airports, it seems to be kind of leaving the other airports more exposed or more key to get us to fly there. So we'll continue to focus on the quality of deals we can do.

Obviously, if we reach agreement with Stansted, we'll let you know that. We will be announcing something very significant there.

If for some reason, Dublin decides they want to talk to us again, again, you'll be among the first to know. But I think an awful lot of the discussions we're having now with multiple airports will be around growth that will start in September '14, once we start taking the next flood of deliveries and into summer '15.

The next year, there will be very little growth, it will be 2% or 3%. And most of that will be winter growth, which will be slightly negative to -- good for our passenger traffic but it would be negative to yields, we'll be growing in the weaker 2 quarters.

But we will be laying down a lot of cost and growth opportunities once we get to September '14, and the new aircraft deliveries arrive.

Just going back to Q2 yields. I was just wondering, how elastic is the full year guidance to current bookings?

So if we imagine that the current trends continue, does it take 2 weeks, is it 1 month or was it the whole of Q2 before you feel that you might have to comment on that number?

Honestly, I think that's a question that's nearly impossible to answer. Like how elastic is these 3 [ph].

We're giving you some visibility, some flavor at the moment, we have no reason to change the Q2 yields kind of outlook. Our comments on the yield generally will be a forecast of the yield to guidance.

We have no reason to change the full year guidance. We have highlighted there's been weakness in recent weeks on the close-in summer bookings, we think it's a relatively short-term weather phenomenon.

There's just no point in getting into it. I think the most compelling thing, if you take it in the -- today's kind of -- in relation to guidance is, we still expect in our Q2 yield numbers, despite the fact that the Q2 in the prior year have that big post-Olympic surge on yield.

There's nothing untoward, so let's not waste a lot of time on giving more color on elasticity or anything else. It is what it is, read the numbers.

Fine. Okay, folks, thank you very much for coming on the call.

Obviously, John and the rest of the team were here at Dublin all week. There's no roadshow on the Q1.

Howard will be in London today just briefing media and analyst. If anybody has any follow-up questions, please feel free to come through back to us by phone and we'll be happy to take them.

And if anybody wants to come visit during the month of August, please do, we're generally all around and we'll see you there. Thanks very much everybody.

Bye-bye.