WEBVTT - Ryanair Holdings CEO Michael O'Leary Talks Grow Targets & Earnings

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>How Sweat Shares, if Rana Rebounding and Irish Training. The

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<v Speaker 2>company Canton gets passenger growth target for next year because

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<v Speaker 2>of delivery delays from aircraft supplier Bow Inc. MICHAELA. Larry,

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<v Speaker 2>the CEO, John Sarana Taible, Michael Komonic.

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<v Speaker 3>John, good morning, Great to be back in New York.

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<v Speaker 2>Good to see you, sir. Have you spoukls Kelly out back.

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<v Speaker 4>I've poked to Stephanie Pope on Friday afternoon, so she's

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<v Speaker 4>reasonably hopeful that the vote on the new pay deal

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<v Speaker 4>will be approved tonight. It doesn't make a lot of

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<v Speaker 4>difference to us one way or another because we're gone

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<v Speaker 4>into the winter now. Anyway, the big issue for me

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<v Speaker 4>was how's the certification of the Max seven and Max

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<v Speaker 4>ten going. I think the good news the strike hasn't

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<v Speaker 4>delayed that certification. Work Manager's still working certification. She still

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<v Speaker 4>expects the Max seven to get certified first half of

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<v Speaker 4>twenty five, Max ten second half of twenty five. So

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<v Speaker 4>I think we're still good to go on the first

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<v Speaker 4>of our Max ten deliveries in spring of twenty twenty seven.

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<v Speaker 4>And that's what really takes us from our two hundred

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<v Speaker 4>million now to three hundred million pastures by the mid

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<v Speaker 4>twenty thirties.

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<v Speaker 2>How are they stelific? Delight setting your company? Just give

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<v Speaker 2>us an idea.

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<v Speaker 3>I mean, they're they've been very frustrating.

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<v Speaker 4>All we were supposed to get grow to two hundred

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<v Speaker 4>and five million pastures this year, we'll do about one

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<v Speaker 4>nine to nine and change next year was two hundred

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<v Speaker 4>and fifteen million pastures. We now cut it back to

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<v Speaker 4>about two hundred and ten, might get two eight two

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<v Speaker 4>oh seven. So it's frustrating, but in a bizarre way,

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<v Speaker 4>it might actually help our earnings next year, because you

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<v Speaker 4>know we'll be heavily constrained in terms of our capacity growth.

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<v Speaker 4>We had a bit of a disappointment on pricing this summer.

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<v Speaker 4>After two years of twenty percent fair increases, this year

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<v Speaker 4>we're down ten.

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<v Speaker 3>Percent in the first half of the year.

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<v Speaker 4>But with real capacity constraints next summer, with interest rates easing,

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<v Speaker 4>inflation no.

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<v Speaker 3>Longer a worry.

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<v Speaker 4>I think there's a reasonable rebound in consumer spending next year,

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<v Speaker 4>and we hope to see that reflected in modestly upward fares,

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<v Speaker 4>which with Ryanair's very stable cost space will flow largely

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<v Speaker 4>through to the bottom line, so you could.

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<v Speaker 1>See another ten percent maybe a fair increase next year.

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<v Speaker 4>I wouldn't want to put a number and put I mean,

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<v Speaker 4>I think off a ten percent decline this year, I

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<v Speaker 4>think it's reasonable to expect next year that you know,

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<v Speaker 4>affairs will be up. I would hope we'd recover most,

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<v Speaker 4>if not all, of this year's ten percent fair decline.

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<v Speaker 1>So why were fares down earlier if there still is

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<v Speaker 1>all this pent up demand for people to travel, why

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<v Speaker 1>has that been such a soft patch for airlines across

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<v Speaker 1>the world.

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<v Speaker 3>Well, I think this year, I mean, certainly the first

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<v Speaker 3>half of this year. This consumers under real pressure. In Europe.

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<v Speaker 4>You had high interest rates at the central banks really

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<v Speaker 4>squeezing down on inflation.

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<v Speaker 3>First half of the year.

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<v Speaker 4>We had an unusual event ourselves, so we had this

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<v Speaker 4>dispute with the online travel agent started last November. They

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<v Speaker 4>boycotted us from November December. I think that hit us

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<v Speaker 4>this year on pricing. We lost a lot of the

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<v Speaker 4>kind of the advanced bookings of summer holidays, people who

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<v Speaker 4>book well in advance using those OTAs.

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<v Speaker 3>They moved towards the tour operators.

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<v Speaker 4>We've now signed up approved OTA deals with about ninety

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<v Speaker 4>percent of the OTA customers, and we're seeing very strong

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<v Speaker 4>forward books into summer twenty twenty five.

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<v Speaker 1>Hours result, there's a larger question here. If you're depending

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<v Speaker 1>on going to come up with some planes, you're reading

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<v Speaker 1>the news about the strike, You're talking to executives finding

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<v Speaker 1>out the blow by blow about when they can actually

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<v Speaker 1>get back to the floor and produce again, do you

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<v Speaker 1>have an alternative?

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<v Speaker 3>Orre you looking at alternatives?

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<v Speaker 1>So you're thinking to yourself, really, am I really doing

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<v Speaker 1>this again?

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<v Speaker 4>I mean, the honest answer is no airline has an alternative.

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<v Speaker 4>There's two manufacturers in the world. You've got Airbus and

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<v Speaker 4>you got Boeing. Boeing gets all the negative pr they have,

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<v Speaker 4>the strike, they've had the max grounding.

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<v Speaker 3>Airbus are and as much of a mess as Boeing r.

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<v Speaker 3>I mean, Airbus are way.

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<v Speaker 4>Behind them their monthly production, the engines, the protect with

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<v Speaker 4>the engines on the Airbos aircraft are dud, so they're

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<v Speaker 4>taking them off the wing. They're going through twelve month

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<v Speaker 4>repair processes. And you know Europe is an airbus marketplace,

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<v Speaker 4>so Airbos are just as bad as Boeing are. I'm

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<v Speaker 4>very happy to be a Boeing customer. I think the

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<v Speaker 4>Boeing aircraft is a better aircraft. The newer aircraft we're

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<v Speaker 4>taking now the game changes. We're carrying four percent more pastors,

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<v Speaker 4>we're burning sixteen percent less fuel.

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<v Speaker 3>That's transformation into our numbers.

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<v Speaker 4>You look at our numbers this morning, and in a

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<v Speaker 4>year a summer where we carry nine percent more pastures

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<v Speaker 4>uster flat.

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<v Speaker 3>We're the only year that.

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<v Speaker 4>I would flat unit costs in North America or in

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<v Speaker 4>European this year.

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<v Speaker 3>Yes, we've taken a bump on fares.

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<v Speaker 4>I think that's good if your passes are getting lower prices. Yes,

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<v Speaker 4>we'll take a hit in the short term on profitability,

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<v Speaker 4>but we're taking huge amounts of market share of everybody else.

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<v Speaker 4>And next year, if I think we see a bit

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<v Speaker 4>of a bump upwards in airfares, I think it'll come

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<v Speaker 4>straight through to our bottom line.

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<v Speaker 5>Michael, do you think there are times of charm? Well,

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<v Speaker 5>this deal that's on the table right now get through.

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<v Speaker 4>I mean again, I think bows call on might call

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<v Speaker 4>on Friday they think it's fifty to fifty. I mean,

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<v Speaker 4>very hard to see how any labor group turns down

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<v Speaker 4>a thirty eight percent pay increase with the ridiculous sign

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<v Speaker 4>on bonuses. I think on bands, I think they probably

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<v Speaker 4>will turn it down. I think they'll hold out for forty,

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<v Speaker 4>but it's a short term.

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<v Speaker 3>This is a frustration Boeing go to forty. If they

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<v Speaker 3>turn down thirty eight, I don't know where else do

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<v Speaker 3>you go.

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<v Speaker 4>They're not going to go backwards towards thirty, I think,

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<v Speaker 4>I mean, I hope it's resolved to seeing whether it's

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<v Speaker 4>thirty eight or forty. I think we're at where at

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<v Speaker 4>the endgame. It doesn't make much difference to us. I

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<v Speaker 4>had nine deliveries in November and deceventh. They're going to

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<v Speaker 4>get pushed out into February and March. The big issue

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<v Speaker 4>for me, Boy is supposed to deliver me twenty nine

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<v Speaker 4>aircraft before June next year. I think now we're looking

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<v Speaker 4>only getting half of those, so about fourteen of the

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<v Speaker 4>twenty nine aircraft. So I've had to walk back my

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<v Speaker 4>growth next year. Instead of two hundred and fifteen million pastors,

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<v Speaker 4>it'll be two hundred and ten million, and that number

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<v Speaker 4>might creep slightly downwards. So it's frustrating, but really over

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<v Speaker 4>the medium turn, the big issue for me is bowing

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<v Speaker 4>when you can get the Max seven certified, when are

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<v Speaker 4>you going to get the Max ten certified? If they

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<v Speaker 4>get those certified in twenty five, we're looking taking delivery

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<v Speaker 4>of an aircraft in twenty twenty seven that carries twenty

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<v Speaker 4>percent more pastors with birds twenty percent as fuel. I

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<v Speaker 4>just blew up the entire competition in Europe. No airbus

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<v Speaker 4>aircraft will be able to compete with me.

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<v Speaker 5>I want to ask you about the competition in the UK.

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<v Speaker 5>I used to live in the UK, used to fly

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<v Speaker 5>on Ryanair. Now you're reviewing your schedule out of the

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<v Speaker 5>UK because the government is charging two pounds more person.

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<v Speaker 4>I mean you with this Bonker's labor government. You know

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<v Speaker 4>they got elected on this kind of pro We're.

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<v Speaker 3>Going to be pro growth. We're going to grow whatever

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<v Speaker 3>is we're going to grow. And the first they do

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<v Speaker 3>on an island of the Europe, we're going to put

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<v Speaker 3>up travel taxes. You can't grow, So will you've cut capacity?

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<v Speaker 4>We're going to switch along. I mean, we do about

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<v Speaker 4>fifty five million pastores a year to the UK. We're

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<v Speaker 4>going to switch about five million of that capacity, which

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<v Speaker 4>maybe takes place on aircraft that are based in Europe

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<v Speaker 4>to fly into the UK. We're going to move that

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<v Speaker 4>now next year to Italy, Sweden, Hungary where they're abolishing

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<v Speaker 4>travel taxes, so we have the flexibility to move that

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<v Speaker 4>capacity around. And again I think it'll be good for

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<v Speaker 4>my pricing in the UK next year. Bad for growth.

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<v Speaker 4>I mean, the UK has no chance of growing if

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<v Speaker 4>this idiot Chancellor thinks that the way forward is going

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<v Speaker 4>to be increasing.

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<v Speaker 3>Tax on air travel. You want to grow, scrap air

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<v Speaker 3>travel taxes.

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<v Speaker 4>The Italians get it, the Swedes get it, The Irish

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<v Speaker 4>God of the bridge will eventually work it out. But

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<v Speaker 4>you know, these guys haven't been in powerful about fifteen years,

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<v Speaker 4>and I think they're going to learn some very harsh

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<v Speaker 4>lessons in the next year or two.

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<v Speaker 2>I asked you if you Spikin's calliop, but have you

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<v Speaker 2>spouken to Chancellor Race now?

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<v Speaker 4>And I suspect the chances of me having a conversation

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<v Speaker 4>with her in the next couple of weeks will be

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<v Speaker 4>are diminishing rapidly, you know, Like I mean, this is

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<v Speaker 4>a girl who you know, her background was in the Treasury.

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<v Speaker 4>She should understand that the way to you know, you

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<v Speaker 4>really want to deliver growth in the UK, particularly in

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<v Speaker 4>the regions, tourism is the one industry you can turn

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<v Speaker 4>on turn off at the drop of a hat. And

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<v Speaker 4>her first measure is to increase travel taxes.

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<v Speaker 3>You've got to be insane to do that.

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<v Speaker 2>When you do that, Micaelde, two pounds on showhold travel

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<v Speaker 2>per passenger, grand scheme of things. You step back your site.

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<v Speaker 2>Two pounds might not sound back a lot from your perspective,

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<v Speaker 2>you're fantastic with the numbers. Walk us through how two

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<v Speaker 2>pounds changes the game for you? How does that ripple

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<v Speaker 2>through the system.

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<v Speaker 4>See the point is it's two pounds up in the UK.

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<v Speaker 4>But in Italy at the moment they're reducing the municipal tax.

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<v Speaker 4>There's scrappy municipal tax which is a reduction of six

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<v Speaker 4>fifty so.

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<v Speaker 3>On all of it. The move now is ten euros.

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<v Speaker 4>So do I put another flight into Italy next year

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<v Speaker 4>or do I put another flight into the UK? I

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<v Speaker 4>move capacity out of the UK into Italy. Sweden, they've

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<v Speaker 4>bought Sweden, the home of travel, the home of flight shaming.

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<v Speaker 4>Greta Tonberg where she got her limited education up there

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<v Speaker 4>have now scrapped aviation taxes. There's a new right Wing

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<v Speaker 4>Transport minister se who gets it. Greta was wrong. She

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<v Speaker 4>should go back to bloody school and stop boycotting school.

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<v Speaker 3>They're scrapping the traffic. So if I move an aircraft

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<v Speaker 3>from the UK next year, it's.

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<v Speaker 4>Not a too quid differential, But if I move that

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<v Speaker 4>up to Sweden, it's a ten euro differential and that's transformative.

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<v Speaker 4>If I can lower my fares to Sweden next year

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<v Speaker 4>by ten euros, I will carry many more passages to Sweden.

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<v Speaker 3>I'll carry fewer in the UK.

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<v Speaker 4>Airfares in the UK will rise, Regional traffic and tourism

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<v Speaker 4>in the UK will fall, Sweden will boom, Italy will boom.

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<v Speaker 4>Until Ratio re works it out that this is not

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<v Speaker 4>the way forward.

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<v Speaker 2>Michael A. Larry continue the conversation if you like, if

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<v Speaker 2>you want to stick around it because.

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<v Speaker 3>Nay love you see you all come back to Europe.

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<v Speaker 2>We need you the Ryan Essa Michael Alarry