Ryanair Holdings plc (RYAAY) Earnings

Management highlights

### Financial Position & Capital Returns - The company ended FY '26 with EUR 3.6 billion in gross cash and EUR 2.1 billion in net cash after spending EUR 1.9 billion on CapEx, EUR 1.2 billion on debt repayment, and over EUR 900 million on shareholder distributions in the year. - The company will repay its final EUR 1.2 billion bond the week after the call, becoming effectively debt-free, an unusual position for a non-government-owned airline. The company maintains a BBB+ credit rating from both Fitch and S&P. - Ryanair repurchased 2% of issued share capital in FY '26, and has retired 38% of issued share capital since 2008. A final dividend of EUR 0.195 per share is proposed, payable in September 2026 subject to AGM approval. The EUR 750 million current share buyback program is 80% complete (EUR 600 million spent) and will be finished by mid-to-late August 2026. - Management targets a EUR 4 billion gross cash balance to buffer against industry cyclicality and external shocks, with all excess cash above this level returned to shareholders via dividends and buybacks going forward. Fleet & Operational Updates - All 210 ordered Boeing Gamechanger aircraft have been delivered. Boeing expects MAX 10 certification by end of Q3/early Q4 2026, with the first 15 MAX 10 deliveries planned for spring 2027, in line with original contract dates. 300 total MAX 10 aircraft will be delivered by March 2034; these aircraft offer 20% more seats while burning 20% less fuel, which will transform Ryanair's operating economics. - Ryanair is extending leases on its 26 Lauda Airbus A320 aircraft out to 2030-2031 at materially reduced lease rates to align with MAX 10 delivery timing, even though the A320s are less fuel-efficient, as the lower lease rates make continued operation profitable. - 80% of FY '27 jet fuel requirements are hedged at $67 per barrel ($668 per metric ton), and 80% of FY '27 dollar requirements are hedged at $1.15 per euro. 30% of H1 FY '28 dollar requirements are already hedged at $1.20 per euro, and 60% of firm MAX 10 order CapEx is hedged at just over EUR 1.23 per dollar to lock in currency savings. - Ryanair completed an in-house multiyear engine maintenance agreement with CFM, which is expected to cost roughly half what a third-party power-by-the-hour contract would cost, creating a larger cost gap with competitors. Network & Strategy - Ryanair is adding 130 new routes for summer 2026, including three new bases in Rabat (Morocco), Tirana (Albania), and Trapani (Southern Italy). Scarce capacity is being reallocated to regions and airports that cut aviation taxes and offer growth incentives, such as Sweden, Slovakia, Albania, and regional Italy. - Capacity is being shifted away from high-tax, uncompetitive markets including Austria, Belgium, Germany, and regional Spain; for example, Ryanair is closing its Berlin base and reducing capacity at Vienna, with that capacity moved to lower-cost markets like Slovakia, which saw 170% year-over-year traffic growth in April 2026. - CEO Michael O'Leary has reached an outline agreement for a contract extension to April 2032 (from the current end date of 2028), with 10 million share purchase options that only vest if ambitious profit after-tax and share price growth targets are met by 2030. - Management continues an aggressive strategy of negotiating lower airport charges, and will only add capacity at airports that agree to sustainable, lower cost terms. Airports increasingly are offering favorable long-term deals to secure Ryanair growth, as they face risk of competitor capacity reduction or failure.

Guidance

- Full year FY '27 passenger traffic is expected to grow 4% to 216 million passengers. Capacity growth is smoothed to ~3% over the next two years due to MAX 10 delivery timing, with stronger growth resuming in FY '30 once Boeing ramps up deliveries to 40-50 aircraft per year. - FY '27 CapEx is expected to be roughly EUR 2 billion, with FY '28 CapEx expected between EUR 2.5 billion and EUR 3 billion, with most CapEx in these years weighted toward maintenance rather than new aircraft deliveries, creating a de facto CapEx holiday. - If unhedged fuel prices remain at current elevated levels through the full FY '27, unit costs are expected to rise by a mid-single-digit percentage. EU environmental ETS taxes are expected to rise EUR 300 million to EUR 1.4 billion for FY '27, further raising costs. Ex-fuel unit costs remain well controlled, with any near-term increases largely driven by timing of crew pay increases and engine maintenance overhauls, which will be offset by MAX 10 efficiencies starting in 2027. - Q1 FY '27 fares are expected to be down mid-single-digits compared to Q1 FY '26, due to the timing of Easter (the first week of Easter fell into March last year, boosting FY '26 Q1 results). Q2 (peak summer 2026) pricing is currently trending broadly flat year-over-year, down from prior expectations of a low single-digit increase. The final outcome will depend on close-in peak booking trends and resolution of Middle East conflict uncertainty. - Management is not providing meaningful FY '27 profit guidance at this time due to zero second half visibility and significant fuel price and supply volatility tied to the Middle East conflict. - Management reaffirms its long-term target of EUR 12 to EUR 14 profit per passenger, which it expects to remain on track even in a higher fuel environment, as competitor capacity reductions will support pricing.

Segment performance

Ryanair operates as a single integrated airline segment across Europe and adjacent regions. For full year FY '26, the company reported a record after-tax profit of EUR 2.26 billion, a 40% increase over the prior year's EUR 1.6 billion profit. Total passenger traffic grew 4% to a record 208.4 million passengers. Unit costs increased only 1% year-over-year, demonstrating strong cost discipline. Ancillary revenue per passenger grew 2% for the full year, with a 1% dip in Q4 that management attributed to seasonal timing of Easter and noted is not a material trend. At year-end, the fleet stood at 647 aircraft, including all 210 ordered Boeing Gamechanger 737 MAX aircraft, with 620 unencumbered aircraft in the fleet.

Risks & headwinds

- The ongoing conflict in the Middle East and closure of the Strait of Hormuz has caused a sharp spike in unhedged jet fuel prices and created significant market uncertainty. If the Strait remains closed and oil prices stay at current elevated levels through FY '27, Ryanair could face higher-than-expected unit cost increases, and competitor capacity reductions or failures would not fully offset these impacts in the short term. - Boeing MAX 10 certification could be delayed beyond the current expected timeline of late 2026, which would push back first deliveries and capacity growth plans. While Boeing has made positive progress on certification, there is always risk of unforeseen delays. - Passenger booking hesitancy related to Middle East conflict uncertainty has led to softer forward booking trends for peak summer 2026, requiring marginal 1-2% discounting to hit volume targets, which could pressure near-term profitability if uncertainty persists through the peak season. - Ongoing ETS taxes that only apply to EU airlines create an unfair competitive disadvantage against non-EU competitors, and rising ETS costs continue to pressure ticket prices and profitability. No meaningful reform of ETS pricing is expected in the near term under current EU leadership. - Labor negotiations with multiple national pilot and cabin crew unions are ongoing, and there is risk of higher-than-expected pay increases that could pressure costs if agreements are not reached on favorable terms. - Regulated monopoly airports in high-cost markets like Dublin continue to pursue large unproductive CapEx programs that would lead to higher airport charges, forcing further capacity reallocation away from these markets if costs do not come down.

Analyst Q&A

• Q: Will elevated oil prices lead to widespread European airline failures, and would Ryanair be interested in additional aircraft if they become available from distressed competitors? /

  A: If the Strait of Hormuz remains closed and oil stays at $150 per barrel through FY '27, 3-4 major European airlines could fail, as most competitors are only hedged through October 2026 with little protection for winter 2026/27, and have high leverage and high cost structures. Ryanair will maintain its 4% traffic growth plan and is well positioned to gain market share. Boeing cannot currently supply additional aircraft beyond the existing MAX 10 order due to production backlogs and certification delays, but Ryanair will opportunistically consider additional discounted aircraft if they become available from distressed lessors or airlines, supported by its strong debt-free balance sheet.

• Q: If jet fuel prices and Middle East conflict do not resolve in the next two months, will Ryanair need to downgrade its summer 2026 pricing outlook similar to a past 2024 downgrade? What is the split of unit cost increases between fuel and non-fuel costs? /

  A: Current flat Q2 pricing guidance reflects the current trend of passenger hesitancy related to the conflict, with 1-2% discounting needed for forward peak bookings, but close-in May bookings have been strong in both volume and pricing. If the conflict resolves in the next 1-2 months, management expects pricing to rebound strongly as booking confidence returns, so the current guidance is a conservative worst case. Mid-single-digit full year unit cost increases are driven almost entirely by elevated unhedged fuel prices; ex-fuel unit costs remain below mid-single-digit growth, with well controlled airport and other costs. Crew pay deals have front-loaded increases, but these are offset by productivity gains over the 5-year contract term.

• Q: Will you top up the current share buyback program given the recent share price decline, and is your long-term EUR 12-EUR 14 profit per passenger target still intact with elevated fuel prices? /

  A: Ryanair will complete the current EUR 750 million buyback by mid-to-late August, but will not approve an additional buyback before the end of 2026, as cash is first being used to repay the final EUR 1.2 billion bond. From FY 2028 onward, after the bond repayment and with a multi-year CapEx holiday from slower MAX 10 deliveries, strong cash generation will support resumed large dividends and buybacks. The long-term EUR 12-EUR 14 profit per passenger target remains unchanged; the current fuel shock is expected to be temporary, and widespread competitor failures would reduce industry capacity and support stronger pricing, potentially accelerating long-term profit growth.

• Q: How do you expect airport charges to trend over the next 2-3 years as you reallocate capacity? /

  A: Management has an aggressive target to keep average airport charges flat or nudging them lower over time. Regulated monopoly airports like Dublin that pursue wasteful large CapEx programs and push for higher charges will see Ryanair cap or reduce capacity, while airports that cut taxes and offer growth incentives (such as Sweden, Slovakia, and Albania) will gain capacity. Airports across Europe are increasingly offering favorable long-term deals to secure Ryanair growth, as they face risk of capacity reductions from struggling competitors, so management expects to continue securing favorable terms as it re-churns the network.