Michael O'Leary - Chief Executive Officer Neil Sorahan - Chief Financial Officer David O'Brien - Chief Commercial Officer Edward Wilson - Chief People Officer Juliusz Komorek - Chief Legal & Regulatory Officer; Company Secretary

Duane Pfennigwerth - Evercore ISI Jarrod Castle - UBS Daniel Röska - Sanford Bernstein Savanthi Syth - Raymond James Stephen Furlong - Davy James Hollins - ExaneBNP Damian Brewer - RBC Johannes Braun - Mainfirst Mark Simpson - Goodbody Alex Paterson - Investec Penelope Butcher - Morgan Stanley Kathryn Leonard - Numis James Goodall - Redburn

Okay, thank you. Good morning, ladies and gentlemen.

You are very welcome to the Ryanair H1 conference call. As is usual at these things we've done a prerecord which is available to you on the investor page of the ryanair.com website setting out the H1 press release, the detailed MD&A, the shareholder slide presentation and also there is a Q&A session with myself and Neil Sorahan.

So I would direct you all to the investor page at the ryanair.com website. While you're there, please feel free to book one of our 1 million seats at 999 for travel in November, December, January and February.

One of the good news of having lower fares is that we can sell more and more cheap fares than anybody else and put further pressure on the competition over the coming months. So this morning we reported H1 profits down 7% to €1.2 billion.

It is rally a function of lower fares, higher oil and higher EU261 costs in the first half of the year and I probably left out full year guidance unchanged from the last changes we made on the 1st of October, the full year range remains in a range of between €1.1 billion and €1.2 billion. H1 highlights include; traffic grew to 6% to 77 million passengers.

The load factor was unchanged at 96%; average fares were down 3%; ancillary revenues continue to grow strongly up 27% to with 6% traffic growth; Laudamotion investment increased to 75% and we have made very significant progress by signing up union agreements with our Irish pilots and cabin crew, UK pilots and cabin crew, the Italian pilots and cabin crew; and last week we have signed up the Portuguese pilots as well as the German cabin crew. And I think there has been far too much noise in the background about unions and labor issues.

We've had eight days of strikes this year but really they have been reasonably small. We had five days of strikes by 25% of our Irish pilots.

We cancelled less than 20 flights out of 300 flights to and from Ireland and three days of strikes by cabin crew across five countries in which we completed more than 90% of the scheduled flights in all of those cases. That hasn’t however, and shouldn’t take away from the fundamental strength of the continuing deliveries of the Ryanair model.

We are still growing strongly. This winter we've cut our trimmed capacity by 1% with closures of the bases in Eindhoven and Bremen on the 5th of November next.

We've cut some flights from [indiscernible], but already for summer 2019 we expect we will grow traffic. We've announced two new bases in France in Bordeaux and Marseille, a new base in London Southend and increased capacity in Luton.

That takes base against a backdrop with oil raising, spot oil raising to $85 per barrel and already we've seen the first wave of casualties across Europe, Skyworks in Switzerland, VLM in Belgium, Small Planet & Azur Air in Germany, Cobalt in Greece last week and Primera Air in Scandinavia and in Stansted have all collapsed in the last three or four weeks. We expect more failures this winter.

Mostly we think one or more of the two Scandinavian airlines is likely to fail over the coming months largely because they are all hedged on oil or essentially are hedged on oil and they couldn’t make money when oil was at $40 a barrel and certainly are not going to make any money when oil is at $85 a barrel. In our case we've increased our investment in Laudamotion to 75% in the end of July.

We think that is going to be a very, over the medial a very successful investment. In the first year though it was so far exceptional losses of 150 million mainly because the aircraft expects to receive from Lufthansa arrived late.

They were late to put that fleet on sale this summer and therefore the yield suffered. Already we've restructured a lot of that business.

The Airbus fleet will grow from 9 to 18 aircraft for summer 2019 and those things are already on sale focusing on three big bases in Vienna, Stuttgart, Düsseldorf, and we believe Laudamotion will come close to breakeven in its second year of operation which would be our FY March 2020. Ancillaries continue to grow strongly and the underlying message I want to impart today is our cost leadership continues.

In fact, if anything, our cost advantage over our competitors is getting wider as they add more expensive aircraft they continue to grow at airports where they are unable to manage either the airport cost or the handling costs, we have had some inflation in our pay, but so have they. There has been a shortage of pilots in the last 12 months.

I think that shortage is ironing itself out particularly as more and more airlines suffer casualties this winter. And then we are about to enter into a period of new aircraft deliveries.

We take the first flight of the MAX-200 aircraft the gamechanger in March and April of next year and remember these have 4% more seats, but 16% lower fuel consumption per seat and these will drive very significant unit cost gains for us over the next five or six years. Punctuality has somewhat has suffered meaningfully as we are at the hands of European air traffic control.

We are on target for the worst ever year of air traffic control strikes and disruptions. All airlines have suffered a very significant impact to their punctuality and in particular we have suffered an impact to the increase in EU261 costs.

Because while we may not be responsible for ATC strikes or disruptions EU261 obliges the airlines to pick up the right to care cost, re-accommodation and right to care and we are by law prohibited from recovering those costs from the ATC providers. It has become a shambles.

Our punctuality in the half year has declined to 11 percentage points of 86% to 75%. We're still the most on-time airline in Europe.

About 13 points of that 11 points is accounted for directly by air traffic control itself. We have made very good progress in our union discussions and we've now signed agreements in most of our bigger European markets.

I think what has been interesting about most of those issues, particularly the noise in the background is that it's not about pay. I think our people and the unions would accept that in many cases we pay better than the competition.

We are certainly the best paid 737 low-cost pilots we pay better than Norwegian jet too and in the German market in particular we pay significantly more than the union agreements with Eurowings the German subsidiary. Brexit remains we have more to do but we would expect and hope that we will conclude agreements with most of our pilots and cabin crew unions over this winter period and I think the failures of a number of airlines in recent weeks has provided or certainly it provided a stimulus to those negotiations and made both the unions and our people much more conscious of the fact that they enjoy excellent job security they don’t want to threaten that.

Brexit remains a big challenge for us. It hangs over us in April of next year.

The risks of a no deal or Hard Brexit have risen materially, although on balance we still expect that the UK will stumble into transition at the end of March. That transition period will last at least 21 months out to December 2020.

I am proud to be extended thereafter but the real challenge and the concern for us is that the UK Government may fall. You might stumble into a general election year and there would be a degree of political uncertainty.

What is clear is that there is a Hard Brexit in March 2019 that will be or may be a disruption to flights and we suspect that disruption will be for a very limited period of time because I think it is politically all acceptable to the UK population that they would not be able to access flights to holiday destinations in Spain, Portugal and [indiscernible] next year. But it does I think expose a lot of the mythmaking undertaken by the Brexit here is that the German car manufacturers or the Spanish hoteliers would persuade Europe to give Briton a good deal, it hasn’t happened.

The talks have proceeded very much along the lines that we predicted at the time, but we would hope to see a resolution and a resolution that allows for a very long transition period which would not cause any disruption to flights or to our share ownership base thereafter. In terms of guidance, in far we're entering into what I described this morning as a grim winter.

It is characterized by declining air fares. For instance we saw from the first of October was a kind of a Ryanair phenomenon it was a lack of customer confidence because of your perceived threat to our reliability or disruptions.

In actual fact I think we now believe it's a much wider industry phenomenon, short haul capacity Europe is up around 8% this winter. Airfares across the piece seem to be are falling.

It is not related to Ryanair or unions, it is related to excess capacity and certainly our willingness to continue to lower airfares into this winter. If there's going to be a fare war we want to lead it win it.

And as a result of that we have reduced our guidance as on the first of October we've taken it down slightly to a range of €1.1 billion to €1.2 billion. We got 3% reduction in average fares in the first half of the year.

We expect fares to fall by about 2% in the second half of the year. That is contingent upon there being no further adverse movement in oil.

We are now hedged out to 90% hedged out September 2019 at about $68 a barrel. But we're unhedged for about 10% of our oil requirements.

That is a much stronger position than most of our competitor airlines. For example Norwegian is 85% unhedged for the next 12 months and Wizz is about 60% unhedged and I therefore much prefer our hedging position to theirs given where oil is at the moment and where it is likely to go to.

We have not ruled out and I think we should make it clear to best so we have not ruled out that there may be further base closures or capacity reductions this winter if oil moves materially higher than $85 per barrel or if airfares fall further than the 2% we are guiding at the moment. But there is – or we cannot rule out there might be some upside as well and if there was further failures or competitor failures this winter then the winter trading might be positively impacted.

But on balance we remain comfortable with the new guidance of €1.1 billion to €1.2 billion. The fuel bill will be significantly higher, ancillaries sales will be significantly higher, but the guidance is driven by and the expectation the air fares will fall by 2% and that oil or unhedged oil will rise more than $85 per barrel.

Our guidance for the full year of €1.1 billion to €1.2 billion excludes the Laudamotion's results and we expect it to lose approximately €150 million in the first – out to March 2019. As I said in the second year I expect it to go close to breakeven a small loss or close to breakeven, but it fundamentally dependent on how fares will operate during the summer of 2019.

Laudamotion already has its inventory on sales for summer 2019 in forward bookings are strong and that knows there would be higher fares than they obtained in the summer of 2018. With that, I think we'll just go straight now to Q&A.

Neil [indiscernible] I think the MD&A as written any kinds of pulling or themes you'd like to raise.

I think it is well covered Michael in the previous calls you mentioned as well as the key thing is that oil is a bit of pain this year. On the cost fronts we’re in a pretty good shape as we look forward with the MAXes coming in next year.

Equally as you said I'd highlight the fuel hedging, 90% hedged for the next 12 months and well below current spot prices. And total revenue performed well with the help of ancillaries although we did take the pain on the cost front from fuel, staff and EU261 this year, but other than that, no nothing else to add Michael.

Okay, so we'll open it now for Q&A. We're going to limit everyone to two questions please.

I don’t want three and four part questions and we'll shoot through this as fast as we can.

Duane hi.

If you could talk a little bit about how you see Ryanair flow in consolidation going forward and you mentioned on the webcast that the new work structure sort of helps you with consolidation. Can you expand on that concept generally?

Yes, I mean and now don’t expect us to be a player in consolidation this winter. If you take it our expectation that Norwegian will probably go bust this winter, IAG and Lufthansa have been kind of rumored or as I committed that they are – has expressed some interest in Norwegian, I can't imagine why they'd be interested in something that loses that much money but that's a matter for them.

We don’t expect to be or play a role in that consolidation process. We have moved towards or are moving towards a group structure where we would have three – may, or at least three airlines or AOCs within the group or four.

We have Ryanair itself and Ryanair DAC which currently has a fleet of about 440 aircraft. Laudamotion which next year will have a fleet of 20 aircraft and Ryanair Sun which next year will have a fleet of about 20 aircraft and we would expect over the next number of years that much of our growth will take place through either the Ryanair Sun people in Poland and/or Laudamotion in Austria and in Germany, and because I think that's the more sensitive way for us to grow is to have multiple AOCs, a number of different brands within the business.

But as of being a player, I mean our contribution to consolidation this winter is we would expect to speed up the consolidation process by being very aggressive on pricing, at driving down airfares in markets where in particular our competitors are not able to compete with us on price and are essentially unhedged on oil.

Fair enough Michael. And then just for my followup given the outlook for fares and higher fuel, how do you think about the buyback going forward?

Thanks for taking the questions.

I think yes, we're committed to continuing our buybacks, but I think it is appropriate, we've just finished the 750 million buyback Duane. I think it is appropriate given how close we are to Brexit.

We should wait and get some certainty at the outcome next March. As I said, I think it's likely that the UK will stumble into transition and therefore the can will get kicked down the road for at least another 21 months.

Once we have some degree of certainty on that I think we would then begin to probably look at another buyback in the spring of next year that would run through the summer. The reason I'd be a little bit cautious is just on the – in the off chance that there is a no deal Brexit we will be and when we've already agreed measures with the EU commission wishes we would for a period of time I suspect 6 to 12 months we would disenfranchise all non-EU shareholders from voting and we would put restrictions on all non-EU shareholders at least the non-ADR non-EU shareholders that they could only dispose of their shares to EU citizens, residents, which would in very large or very quickly bring us - if you treat the EU share, the UK shareholders as non-EU we will probably move in a hard Brexit to 54% or 55% non-EU shareholding.

By restricting their voting rights and by requiring them only to sell to EU shareholders we would write that from 54%, 55% back down to 49 I think in a number of months or pretty quickly the Commission is happy that those are the appropriate steps for us to take to protect our EU ownership and control and once we have got it back down to 49% we will then re-allow the non-Europeans to vote and we would remove the kind of share ownership restrictions once we have protected the EU license. So I think we would certainly for the six months period not do more share buybacks until we have some more certainty on Brexit and a share buyback might be one of the ways we respond to a no-deal or hard Brexit.

Thank you.

Thanks Duane. Next question please?

Jarrod, hi.

Firstly, two new French bases, I just want to get a bit more color if we could see more and also just about Scandinavia based opportunity? And then just secondly, just on ex unit cost performance obviously quite a challenging year this year, but thinking a little bit ahead to the next financial year, should we start to expect kind of a more normal kind of ex unit cost performance from Ryanair i.e.

flat to maybe even negative again? Thanks.

Thanks Jarrod. Yes I mean we have a lot of opportunities in front and in Scandinavia and I'll ask David may be to give you some flavor.

We had very serious offers on the table, I think about seven offers from French mainly regional airports. We have no particular desire to have a base in Paris, but most of the other - the French, large French regional airports we've selected Marseille and Bordeaux.

We certainly have good deals on the table for another three or four and I think down to Eddie Wilson, the Chief People Officer is already in dialogue with the French pilots and the cabin crew unions, so we could take it that as we open those bases we will do so in compliance with the French labor law and Scandinavia is also interesting. I would, we looked into the moments to do anything in Norway or in Sweden where they are adding travel taxes, but Copenhagen [indiscernible] airport where we've grown very strongly in recent years, I think we're the number three or number two, I think we're the number three airline in Copenhagen and we are – we do have a plan to grow there pretty rapidly if anything untoward would happen to either SAS or Norwegian.

But we have more - as is always the case we have more growth opportunities that we can handle and don’t require any further growth in France or in Scandinavia. We have much more growth in Spain, in Portugal, in the UK, Ireland and over Europe.

Unit costs, yes, I would expect next year particularly as we begin to spool up the volume of deliveries of the MAX 200 aircraft we will have very modest airport and handling costs, unit costs would be flat to slightly down. Route charges could be up, it depends what they do.

Aircraft ownership and maintenance costs will be meaningfully down. Sales, marketing, and other will depend on ATC disruptions and at the moment EU261 costs have their disruptions, but we have a very kind of higher our penal prior year of comp for this year is ATC disruptions.

And I would expect staff, unit cost staffs to be flattish going forward for the next year or two, A as we bed down the national agreements based on national law and local law and local reg with the unions across Europe. And I think what has been interesting about the dialogue with the unions this year is they have been very few have been seeking more money.

I think there's an acceptance that Ryanair does pay well, the pilots and the cabin crew, so most of the issues have been around local labor, local tax, et cetera, et cetera and we have already signaled our willingness to remove the local tax, local regulation from the first of January. And so I would expect that from next year on we are unit cost particularly as we spool up the MAX 200s would continue then to be flat maybe slightly down and in a marketplace where most of our competitors they have unit cost control will continue to be pretty poor as it is at the moment.

I mean what's interesting about our unit cost increase this year is it would probably still be less than most of tenderness unit, the ex unit cost increase at most of our competitor airlines. And David, do you want to comment on France and Scandinavia?

Yes, in the case of France I can us more than doubling our activity in France in the next 18 months. With the case of Scandinavia, that's a market I think that will come to us rather than us rushing there.

There are no real barriers to entry. It is far away from everywhere and there are a lot more opportunities close to the center of Europe.

So we'll see what happens there, but there is no particular urgency. And I think it is worth emphasizing again how within our existing business big markets there is still so much scope for growth.

Like this winter 60% of our growth is in our top four markets. Next summer more than 50% in our top three markets.

So there is no particular urgency about Scandinavia. France, we've made our decision and we will certainly continue to grow there.

And Neil, do you want to add anything on unit costs, I should just for asset under unit cost, all through [indiscernible] hedging position is very strong. We're now 90% hedged on oil out to September 2019 but almost and equally as important, we are although we've hedged oil on the CapEx, the dollar CapEx on the MAX 200s which run out to 2024 at $1.25.

So it can be compared to and current rates are about $1.10, so we are in very good shape on the OpEx and the CapEx hedging as well. These unit costs, anything you want to add?

Yes, just the only thing I'd add there Mike is that the kind of from the back end of FY '20 onwards we start handing back some of the older leases and we'll also start disposing some of the older aircraft which will be helpful on the maintenance line. So we start to see the benefit of the MAXs really coming through as we have the critical numbers checking into FY '21, but we see somewhat in FY '20 as well.

Thank you, very much.

Okay, next question please?

Gentlemen, and more on the European consolidation, given that your fleet delivery pace is slowing down a bit in 2019 and 2020 how do you see the opportunity on capitalizing of that consolidation, is that more about pivoting out of less profitable routes today into that light space or is it more about really additional growth in opening bases in Cypress for example? And secondly, a little bit more strategically on your revenue management once you get through the growing sector phase of high capacity and high fuel would you consider shifting some IT development capacity kind of within the labs to improve your inventory revenue management systems would you see more opportunity here in being a little bit more yield active on the shares or would you rather look at starting to revenue manage some of the ancillaries a bit more?

Thanks.

Thanks Daniel. Capitalizing on consolidation, I think we would be opportunistic.

We do have a slowdown this year, this winter we only take 20 new aircraft but next winter which is the winter of 1920 we back up to 45 aircraft deliveries. So this is the one year, the one winter where we have a slowdown in capacity.

I think we would be very happy to see some capacity got to consolidate, we think 8% shortfall capacity growth this winter is clearly too much. I think that is why there is such a bearish pricing environment out there even as oil prices are rising.

I expect some of that capacity will fail and come out to the market this winter. I think I would be an optimist on summer 2019.

I think the last five cycles airfares tend to follow fuel with about 12 months lag, fuel has been rising for more than 12 months now and I think into next summer you will see that the major legacy airlines restore fuel surcharges, I think in certainly Lufthansa in the German market, IAG and Air France you will see the remerge of fuel surcharges, we will be very happy to let our fares crack up behind somebody else’s fuel surcharge. But I would rather see that capacity come out of the marketplace.

Would we move some capacity around? Yes, we would if there was an appropriate opportunity and clearly we think that opportunity is in Scandinavia, but I wouldn’t rush madly or headlong into Scandinavia either.

I mean the Norwegians are still talking about rising carbon taxes which is somewhat ironic for a country whose main export is oil. Sweden has a similar attitude.

But if there was a major failure up there this winter and I think there will be, certainly we are already in negotiations with a number of the Scandinavian airports over moving some aircraft up there, if they confirm and if they are appropriate for us to do so. Going forward on revenue management, no we wouldn’t be using labs to somehow reengineer the revenue management system.

We operate in load factor management system. It’s a very successful formula.

We maintain a 95% year round load factor, except I think in the next 12 months we will maintain that 95% load factor certainly if there is more capacity consolidation or if oil prices remain at 85%, there will be upward momentum in pricing certainly into the summer of 2019. We will and will continue to use labs though to exploit and identify other means of boosting ancillary revenues.

And I think if you have got a 27% jump in ancillary revenues in the first half of the year, you can see the kind of jobs that labs are doing. The next big step and that will be on the 1st of November when we move to restricting the non-priority passengers to only one carryon bag, admitting that carryon bag is 40% increase in terms of size.

So we are seeing I think a material offset in the uptick of priority boarding. There will be some trading down or passengers with checked-in bags in the 20 kg, checked-in bags in the 10 kg, checked in bags, but I think labs has clearly demonstrated over the last two, three years that it is the way forward.

We started a big program in labs this winter that will take about 12 months. I might ask John Hurley just opened labs 3.0 where we begin to do much more develop much more personalization on the mobile app and on the website.

So that when you come to the website in the summer of next year in each case you will identify the routes that you've flown on in the past. You will identify the services you've taken in the past.

I think you haven’t for example taken hotels in the past, it won't bug you, with offering you with hotels. So we have a much more personalized product.

I think that is key to when we do big seats there instead of us send you an email going with the million seats at 999, it will be much more tiered Daniel, if you were to follow last year we have a 999 seat sale on the far row route in November and December would you like to take up an opportunity with us. So much better personalization and that is where the future will be in labs, but in terms of revenue management and using it to boost somehow airfares at the expense of load factor is not in the plan, not in the plan for a very long time.

Thanks a lot. It's kind of spooky that you picked forward though.

Thanks.

Thanks Daniel. Next question, please?

Savi, hi.

What's said, I wonder if you could kind of discuss if there is any changes as a result of kind of going into local contract on either the system side or operational side, does that create any complexities there or anything like that? And for my second question, just could you provide an update from an operational standpoint and then on also revenue standpoint kind of the result of the change in the bag policy recently?

Okay, so I’m just writing the notes here, on the local contracts there would be very few changes operationally or in terms of efficiency. Remember, I mean there is kind of a mix put out there are narrowed by the unions that somehow we all have people on Irish contracts because Ireland is in some kind of social dumping ground.

You know Ireland complies with exactly the same EU Labor Law as all of the other EU countries. The one penalty of operating out of Ireland actually though is that personal tax rates are high in Ireland.

We have in Ireland an image of tax haven for corporates, but personally you are paying top rates of tax which is 55% at about €33,000. So unusually for many of our people, both pilots and cabin crew, there will be an income tax saving by moving to local contracts and local taxation.

That is why we are trying to move them there by agreement with the unions as early as we can in 2019 and we're hoping for 1 January 2019, so I wish we agree with the Unions. There is very few restrictions, there is definitely no operational restrictions that would cause us any issues and in almost all cases both the pilots and the pilots are very keen to stay on our fixed 514 of rosters.

In terms of changing the bag policy, no I mean there is nothing to share really at this point in time. We see a significant uplift in priority boarding.

We see a diminution in baggage revenues because there will be some trading down from people who are currently booking our 20 kg bag at €25 and there would be some trading down of those guys to the 10 kg bag which you can now buy from €8. But the critical thing for us is we are happy for this to be a revenue neutral change as long as it can eliminate gate bags or the gate bag problem which has caused flight delays through the summer period and so that would help us to deliver improved punctuality and better customer experience.

And what's been interesting despite some sort of regulatory pushback, actually the feedback from customers has been overwhelmingly positive. A lot of customers have seen and experienced kind of flight delays this summer, the inconvenience of the gate bags and are certainly welcoming the move to clarifying that the priority customers can have the two gate bags and the non-priority who choose to be non-priority would travel with one.

So have you seen that operational improvement Michael as we make the change?

No, I mean I wouldn’t expect to yet, but I think we will see, you really won’t see the operational improvements Savi until next summer, when we introduce this change in November, it’s the winter schedule, we don’t tend now to have a lot of bag, gate bags during the winter schedule, we don’t have a lot of leisure travel, there will be some at Christmas. But it’s essentially a way we have all into the summer of next year particularly on the European airports where you are doing remote stands or you are boarding passengers with buses.

The key there is to reduce the amount of bags being brought to the gate. It speeds up the customer experience and airport security and it speeds up the airport, the aircraft boarding process.

Got it, thank you. A - Michael O'Leary Thanks Savi.

Next question, please?

Stephen, hi.

Yes Michael, can you just talk about Italy how do you see that playing out with Alitalia, it is an important market obviously for you? And the second question is I just wanted to maybe if you can go through just a bit about the new handling provider at Stansted and what that is going to do or help you at least with the OTC upgrades?

Thank you.

Thank you. Italy continues to be a major market for us with the number one airline in Italy.

I think the key development in Italy is obviously the new government which is a coalition of Five Star and the Northern League look to have moved I think decisively away from a sale of Alitalia to go to other more competent management to Lufthansa or somebody else. I think they are now talking about possibly refinancing Alitalia or selling it to the Italian Railway System, I think anything that keeps Alitalia in Italian ownership is good both for Alitalia and for the Italian market generally and it is certainly good for Ryanair’s continued expansion in the Italian market.

So we are very happy with the Italian market. We are continuing to grow in the Italian market and we see further opportunities for growth, particularly as some of the others the EasyJet, Lufthansa and others continue to trim capacity in the Italian market.

The new handling provider in Stansted was a recognition that I think Swiss Board have mismanaged our handling this summer. We have had some problems there particularly with staffing and staffing at weekends and we have moved, we put it out to tender again and for reasonably similar cost there will be no change in cost but we are much more now in control of the staffing levels, per shift, the number of teams per crew and we are investing Ryanair itself is buying the ground handling equipment now the steps, the togs [ph] to make sure that we are, I think one of the problems we had this summer was we think Swiss Board took on too much third party business and so there was a surge flight this summer and we found they had people who were supposed to be handling our fights were off handling charter airlines or something else during the peak period.

The critical element of the OmniServ contract next year is dedicated to Ryanair. They will not be handling any other airlines.

They are not going off to handle somebody else's flights. They are not going to off to DI somebody else's aircraft.

We will have more staffing, more on the ramp and at front of house that they would be dedicated solely to handing Ryanair's passengers at the front of house and Ryanair's aircraft on the ramp. And we think that that will probably add, probably three or four points to our punctuality because Stansted is critical to the entire kind of punctuality operation because so much of our businesses is in and out Stansted through today.

And it is critical to be at Stansted right next summer. I think at - but at any weekend this year they were understaffed and the staff that were there were running off to handle somebody else's aircraft, but we account for 90% of their business and we're not willing to accept that again.

Okay, thank you.

Thanks, Steve. Next question please?

Good morning. Just two from me.

Some guidance actually probably about Neil, on the Laudamotion if we go into Q1 I think you were talking about a year €250 million loss, I probably needed 40 to 50 aircraft to be making positive contribution. You are now talking about breakeven up to 30 million loss.

Does that sort of relate to some of the bullish comments on summer 2019 or is it something else? And then the second one on guidance, so you need to put a number on ancillary unit revenue guidance, you've obviously done about 11% underlying in H1.

I think the full year you talked about plus 3 to 5, I was wondering if you could put a number on it again for us for the full year? Thank you.

Okay, just looking at the Laudamotion guidance, since we're gone up steadily to 75% James we're now helping out with our hedging that are included in our hedge program for next year, we're looking at the airport deals. We've managed to source along with our team relatively inexpensive leases for next summer, so that our costs are going to be transformed as we look into next year.

They also have managed to get their flights on sale significantly earlier than they would have done this year they were very late to market this year and that they are now eight, nine months in advance of the summer already selling their share too. So again we would expect to see the revenues increase significantly.

They’ll also get more access to unsavory products that they might and otherwise have had in the current year. So that's what's really driving the improved performance into FY '20 as why we're talking about possibly breakeven more likely a small loss and then in the block fully in the third year of operations.

Ancillary unit cost?

Yes, we would expect ancillary unit cost to be in the low double digits on the full year basis.

So you mean the unit revenue right?

This is on the revenue yes, revenue per pack.

And one other thing I'd add to the Laudamotion guidance for next year is that Laudamotion one of the big problems challenge they faced this summer they were unhedged on oil so they've been paying full spot, whereas in our hedged program right up to September 2019 we have hedged Laudamotions fuel at $68 a barrel next year, so they are material aircraft savings, material fuel savings and a much better run into we think be materially better. I mean the reason we're kind of so wide up the guidance bending between north to $30 million is we read much of where the fares will finish up into the peak of next year, but we think with a strong base in Vienna, Stuttgart, Dusseldorf and a very major, a large program of flights to and from [indiscernible] to New York where the Germans love to go in the summer.

The year will be materially better.

Well then, cheers Michael and Neil.

Thanks James. Thank you.

Next question please?

Damian, hi.

Good morning, two questions if allowed. First of all can you just give us some update what will happen with the European competition complaints and particularly the expected earlier aspect of it about other companies' crew being involved in union negotiations?

And secondly, can you just come back on the airports, I hear what you are saying that the underlying cost per passenger is up just shy of 4% in Q2, so could you give us a feel for what the constant currency level looked like and in particular what's changing there that will keep that constrained and even maybe slightly better than that into next year? Thank you.

Okay, I will ask Juliusz just to address the competition complaint. On the cost per passenger this year much of that was the impact of Sterling on the cost base of the UK airports and we do expect with the new deals that David has been doing in places like Bordeaux, Marseille, some of the growth incentives we've put in place, we would expect that the airport cost per passenger would be flat slightly downish for the next year or two once we get through this year.

And that again will be material growth in Stansted where we continue to have a significant incentive and some of the, there has been a noticeable improvement in some of the growth deals being offered to us at airports in Scandinavia, in Italy and in some of the German airports where there's been failures in recent weeks. Juliusz, so you would touch base on the competition complaints?

Just briefly I will remind everyone our complaint which is now about three weeks has old two pillars supporting it and the first one is I think a thing which is called collective boycott. It is a - to be unknown competition loss term.

So it's quite challenging, but we firmly believe in this case. The second pillar is the more immediate one and that is competitor-employee’s participation in union negotiations involving Ryanair.

And this is the one where we have asked the European Commission to issue an urgent decision confirming that it would be illegal that it would be a breach of competition law for our competitor employees to participate in our union negotiations. We have been in touch with the European Commission on this matter several times since we have filed the case.

There has been a change of personnel in the unit in the Commission which deals with this case and we are discussing this matter with the new person involved on Wednesday this week, so we will hopefully have an update in the coming days.

And some of the unions have been very helpful in I think in aiding that case in recent weeks. I mean, some of you may have seen we had that oh the fake photograph of cabin crew allegedly sleeping in a crew room in Malaga which is entirely staged.

What's remarkable is that most of the commentary comes out of a guy called Fernando Gándara who's an easyJet cabin crew in Portugal. So our friend fake Fernando who's widely quoted is this is and here where he started off I think this cabin crew sleeping on the floor.

He's now moved his position to this for just a protest photograph which I think is a euphemism for just a fake photograph by fake Fernando, but here you have an easyJet cabin crew making the running in Portugal on this issue. In Spain we have a Norwegian cabin crew doing the same thing.

And last week we had somewhat silly press release issued by a guy, a Lufthansa Captain on behalf of the ECA calling for declarations of war on Ryanair. I mean what Lufthansa pilots and easyJet cabin crew or Norwegian cabin crew are doing in the middle of our negotiations with our pilots is somewhat unusual.

And the point we have made is that TAP wouldn't accept a Ryanair cabin crew negotiating with them and Lufthansa certainly wouldn't accept having Ryanair pilots negotiating there on behalf of the Lufthansa pilots with Lufthansa. It is bizarre and it's unacceptable.

We're very happy to deal with the unions. But I think what's unusual is the vast majority of our negotiations with the unions, the unions have had no difficulty in eliminating competitor employees.

The German pilots have taken Lufthansa out of the room, the Portuguese pilots have taken out the TAP pilots. It's just in Spain and Portugal, we have to deal with these and the Norwegian cabin crew has no interest even when we're in front of the mediator in Spain in coming out with a sensible agreement.

He just wants to cause as much disruption as possible. So we have put up with it and but we'll be making the point, this is fundamentally anticompetitive much the same way that if Ryanair were in - Ryanair people were employees when they're disrupting negotiations with easyJet and their people, easyJet would feel equally aggrieved.

So we would hope to have some ruling not, I mean but that's not to constrain what the people of the unions can choose have in their delegation, but if you choose who you want, but preferably they should be Ryanair employees' aide in the system by full time union officials. They shouldn't be competitor employees who have a vested interest in disrupting Ryanair services for the betterment of their employers.

Next question please?

Johannes hi.

Yes, hi just two technical financial questions I guess for Neil. Firstly, your operating cash flow has been down 30% in H1 and the cash flow statement I can see a negative impact of €94 million write up of intangibles and also some €80 million year-over-year negative impact from other current assets.

I guess this has to do with the Laudamotion acquisition, so it is right to assume that excluding of these write ups to losses at Laudamotion would have been worse than the €45 million loss which is reported in European for H1? And then secondly, there was this unusual tax rate in Q2 I think only 8% or so driven by some €30 million total tax credits, I think some referred to Laudamotion and some to yourself.

But is this something that will reverse in H2 or will that impact full year profits and therefore its relevant for your net profit guidance?

Okay, Johannes on the intangibles first, that's tied in with the slot valuations and on the slots that we've acquired from Laudamotion. We've only consolidated Laudamotion to our numbers from early August, do you recall that we treated any losses prior to that as associate losses where we took 25%.

So they've only been fully consolidated from early August since the numbers which is what you're seeing and the intangibles effectively are the slots that we've acquired. On the tax rate you're correct there was a one off adjustment rates to Laudamotion there where we've booked a deferred tax asset on the losses that they have post consolidation and on a full year basis ex-Lauda we would expect our tax rate to be somewhere in the region about 9.5% to 10% close to 9.5% I would estimate.

There were some timing differences in there as we take delivery of more aircraft over the course of the year.

Great, thank you.

Thanks Johannes. Next question please?

Thank you. It could be said that the second quarter ex IFRS 15 performance was a little bit disappointing at 9.3% underlying per packs rev against 11.5% in Q1, I wonder if you could just tell us in a sense what might have driven that change?

And then with Lauda I think you mentioned obviously expectation of ancillary to come through on that. The presentation in the release shows zero ancillary, then if I just pause the presentation or what do you think you can do with Lauda passengers going forward in terms of achieving I don’t like for like ancillary per packs numbers?

Okay and I wouldn’t get into quarterly break on the ancillary, but we're very happy with ancillary revenue growth up 27% in H1 with a lot of the lines moving favorably are past the penetration on reserved seating, party boarding, even baggage rising a bit in the first half of the year. The one that continues to sort of underperform almost the plan is hotels where we continue to give away the commission in order to build revenue.

So it has an impact on the revenue line but we don't get a contribution from it. We would expect that to continue over the next year or two.

We would expect ancillaries continue to perform strongly at or ahead of scheduled traffic growth certainly for the next year or two. In Lauda and Lauda didn't have any ancillary income in the first half of the year.

One of the things we inherited was a contract with Laudamotion where they gave away the in-flight revenue to a third party provider for no contribution and we have now terminated that contract with effect from the end of January of next year. Ryanair will be taking over the in-flight and the ancillary revenue management from Laudamotion we would expect in reasonably short order that Laudamotion would be generating an ancillary revenue not necessarily as quite high as Ryanair but something in line with the general Ryanair numbers.

I mean Laudamotion don't want to sell scratch cards and that's fine we said that's your decision and they also won't have slightly difference, so there are some slightly different policies in relation to baggage and we said again that's their decision. They can copy our policies, but if they choose to defer from our policies and it works for them then that's fine we are happy to see that happen.

But impress that the key issue is that they subcontract the way all of their insights sales for the first 12 months and a contract you know terminated with effect from January and Ryanair so they will have a significant ancillary income fee building up over the second year of operation.

That's great, thanks.

Thanks Mark. Next question please?

Two questions please. Firstly, just on the lease savings from Laudamotion where you, you're exiting the leases with Lufthansa and going elsewhere, I wonder if you could give an approximate quantification of that?

And secondly, just on your reporting going forward, will you show Laudamotion separately and this is for sort of passenger numbers revenue starts sort of saying or just provide a combined business as you go into FY '20 please?

Okay, thanks for that. Laudamotion leases, obviously we are constrained by the settlement agreement with Lufthansa from all we can say.

Laudamotion has agreed with Lufthansa to return the nine aircraft. I think it's safe to say though that the monthly lease rentals of the 18 aircrafts that we have now negotiated for summer 2019.

The monthly lease rentals is a fraction under €200,000 per month. And that would be a material improvement on where we were.

I mean the monthly outflows on the Lufthansa leases were more than double that €200,000 per month, so they were way significantly above market. But we can't obviously specify the detail numbers because it's subject to a confidentiality agreement.

And going forward, I think what you'll see us do in the disclosure, but Neil you're more expert at this, I mean I think what we will see into year two is we will separately report Laudamotion on traffic, monthly traffic, and customer stats, but it will be consolidated for the purposes of the quarterly and the annuals because that's actually will add at some point in time over I expect over the next 12 or 24 months we will move to take, we will buyout Niki Lauda's 25% we will move to a 100%. But because I think we were anxious to show this year as exceptional because really the year one losses are truly exceptional in Laudamotion because of the late start, the fewer aircraft numbers in fact that we've had to lease them 10 aircrafts so that they could take up and use the south this summer.

And next year therefore it will simply be incorporated into our numbers at the group line and we won’t show it separately, separate trading.

You are correct Mike. The reason why we're splitting it out this year Alex as Michael just said, is that we want to make it easier for you guys to understand that the business ex and the business including Laudamotion, but the plan is as we move into next year we'll be guiding on a full Ryanair Group basis and we'll be consolidating on a full Ryanair group basis on the numbers in the P&L and balance sheet.

Great thank you.

Okay, thanks Alex. Next question please?

Penny, hi. Penny, go ahead.

No next question please? Oh sorry Penny, sorry go ahead.

The line cut out, so we couldn't hear who the person was. Just one question on my side, just to check in on the status of agreements in terms of, I guess what we call JVs with Aer Lingus and other carriers in terms of trans passengers and those types of deals if there are any update you can share on that front as to the progress?

I am certain we can't. unfortunately Aer Lingus one is going nowhere and we're still waiting for them to get their IT shit together and we have no update from them when they write or rewrite the programs and each do to be able to do the, but the delay and if we could do, we've done our IT work, but I think they're still running six, nine, 12 months delay on Aer Lingus because I so contractual of their IT so it falls into some sort of a sequencing within for them.

David has done a deal with Air mortar s Air Malta, so we're now – are we connecting our feeding into Air Malta David, is that correct?

No, we’re simply selling them at the moment, connection is sometime away.

Okay, so connection there is some time away. So really I would say you know we are sometime away on the feeding of those airlines and other airlines at the moment.

Okay, thanks very much.

Next question please?

Kathryn, hi.

Hi, good morning everyone and two from me please. I'm just wondering if you could give us an update in the last three weeks whether - what you see in terms of progression on yield under the third quarter and in particular for the October and Christmas key trading period, so I was just wondering whether it’s better and how that 3Q and countries that minus 3% you are roughly guiding to?

And then the second question just in terms of the ancillary penetration, I know you talk about the guidance for the full year and but I am just wondering where we are on cost of boarding penetration and reserve seats and previously spoken about the 50% threshold to those two?

Yes, this is Michael. The ancillary penetration has been obviously, they're probably boarding and capped 50% of seats because that beyond 50% wouldn’t be priority.

We are certainly moving close to 50%. We would expect after November that we would be at or close to the 50% cap on most flights, but that the revenue boost there will be eaten up somewhat by some trading down or yields off of some of the check-in bags where people will trade down from the current 20kg, €25 check-in bag to the €8 check-in bag.

And on yield progression there hasn't been anything significant movement. I mean we saw the yields getting soft into the third quarter [in deferred] really at the last week of September, first week of October.

I think what's changed in the last two, three weeks is at that point in time we thought it was a Ryanair specific issue and as is always the case as soon as we see something we warn, we thought it was a Ryanair specific issue related to kind of customer conference on Unions. I think what we see in the last three weeks is not that issue, it's much more a sectoral issue to do with overcapacity in the sector this winter.

We have seen a number of failures in the last couple of weeks. We have seen very little, I mean our forward bookings are strong and certainly we will maintain the load factor year-on-year.

Our forward bookings through November, December, January, are running about 1% ahead where they were at this time last year. The fares are slightly lower than last year I think the 2% lower yield guidance is reasonable.

There is a risk it could get slightly worse than that over the winter and I think we should be cautious. We're certainly being aggressive on airfares.

We've got 1 million [retail] out there at 999 for travel today in November, December, January and February. We see other airlines also you see other airlines pricing down below where they were pricing this time last year.

We've seen that in easyJet, with Norwegian, but also we see it materially in Aer Lingus, BA, Air France and Lufthansa short haul, which is somewhat of a surprise given that Lufthansa now controls the German domestic market itself. So the yield progression hasn't altered materially in the last three weeks.

We still think it is - that the trend is downwards and I wouldn't rule out that our yield guidance could move for the winter from minus 2 to minus 3, minus I don't even go to minus 4, but I think there's going to be more bad news before there is good news this winter. And to that extent therefore I would expect to see further failures, but in many respects if there is a large failure then that would alter the kind of the pricing outlook for the remainder of the winter period.

So it's hard to tell Kathryn, but there has been no material worsening in the last three weeks and there's been no material improvement if that makes any sense or if that’s helpful.

Yes, that’s great. Thank you very much.

Thank you. Next question please?

Guys, we've got about five more minutes and then we've got to go and do Investor Meeting, so if you don't mind but we're trying take as many questions as we can now in the next five minutes.

One, if you've only got five minutes, on the ex fuel costs net saving flat to down does that include Laudamotion because I see that's got a fairly dilutive impact and if it does, does the guidance still hold?

Yes it includes Laudamotion, but I recon you got cut off there, does the guidance still include something.

Yes, I did, yes, so it does include Laudamotion and if you would then exclude Laudamotion what would the guidance be, would it be flat slightly down still or flat slightly up?

Which the unit cost guidance?

Yes, ex fuel cost.

No, I think sort of having flat here, but the reasonable assumption for FY ex-fuel flat for FY '20 is reasonable assumption. We'll be trying to deliver slightly down, but I would start off with flattish.

Okay.

Okay, we can sit out for another couple of minutes, so if there are any more questions we can take another one or two.

When you say, let’s call it flat for FY 2020 including Laudamotion, would that be historically adjusting 2019 numbers to include Laudamotion in the base or is it of what you would report in 2019 to what you would report in 2020 and then '20 you'll have Laudamotion in 2019 you would not be consolidating other than at the exceptional levels?

Jeez! That’s the most complicated question.

Neil, go and have a good guess if that's what you want your answer is beyond my pay grade. I would imagine…

From a pure accounting basis Alex at year-end we will give you statement like we did today breaking it out. We will ultimately have to consolidate Laudamotion into our GAAP numbers at year-end, so we will be talking on a like-for-like GAAP accounting basis as we guide into next year.

Okay, thank you very much.

But I would still think that I would give a still flat to slightly flat muted costs, what it will do if fully consolidate Laudamotion is that the yield comparable with the yield issue will be down and the yield compared with prior year comparable will be easier for to follow FY 2020. Most of Laudamotion €150 million loss this year has been on the yield and ancillary revenue side rather than the cost side.

Their cost aren’t bad, apart from the aircraft leases.

Okay, thank you very much.

Okay, thanks Alex. Okay, everybody that's all of the questions done.

We have a road show on the road for most of this week. If you haven’t got a meeting, you would like one please talk to us through Cindy [ph] or Davy who will be happy to facilitate the meeting, otherwise Shane O'Toole, who is Head of the IR, otherwise hope to see you sometime later during the week.

And I think remember that the key thing here is there is a lot of background noise out there at the moment on oil, on unions and on kind of disruptions, it’s really noise. There has been no change to the fundamental Ryanair’s story which we have a very strong unit cost leadership, pricing leadership over every other airline in Europe.

We are phasing into a five-year period where we start taking delivery of 200 MAX aircraft which will give us 4% more seats and 16% lower fuel costs and we will roll out that incremental fleet on routes all over Europe where I expect there will be consolidation over the next 12 months on the back of higher oil prices and then moving into summer 2019 I expect to see some upward traction on pricing in airfares as pricing begins to follow or trend up behind oil prices with a 12-month lag. So I would be generally optimistic there will be short term pain this winter, but thereafter over the next one to five years there will continue to be a restoration of very strong per delivery by Ryanair and a very strong performance both on the top line passenger growth and bottom line profit growth.

So and hold tight for the next six months. Ignore all the background noise because all of this is background noise and then continue to focus on our monthly delivery of traffic and profitability.

Thanks very much everybody. We'll see you at some show in the week.

Bye-bye.