That really needs only two sort of smaller independent players left in Europe, which is easy to get, focused around Paris, Switzerland and Gatwick. I don’t believe in the next five years, there’ll be an independent there. I think there will be subject to M&A activity and with probably a mix of Air France, KLM and or IAG. And at least Wizz, I would have said Lufthansa would probably buy Wizz and give it a footprint back in Central Eastern Europe. [In Greece] (ph), I think as Wizz grows in the Middle East, perhaps it may be way with Middle East and interest will be able to acquire the Middle East and we’ll be able to get access to aircraft. But I think if we return in five years’ time, I think you’re going to see a European market that looks remarkably similar to North America today with four large substantial airline competitors three legacy guys, Lufthansa, Air France KLM, IAG, and one very large low-cost point to point.
Ryanair will be the southwest of the US, except that Ryanair fares will be materially lower than those in Southwest after 10 years of consolidation in North America. Southwest average fare last year was about $140. Ryanair’s average fare across Europe was about — was under EUR50, which does show we are materially lower, cheaper and lower cost in Southwest, but it gives us significant headroom for us to grow our business and I think modestly grow airfares in a consolidated capacity constrained market over the next three to five years. In a manner that will enable us to pay down our debt refund our aggressive CapEx and be able continue to put in place multiyear pay deals for our people. Next question please, I think.
Operator: Thank you. The next question comes from James Hollins from ExaneBNP Paribas. Please go ahead, James. Your line is now open.
James Hollins: Hi, guys. Good morning and many thanks. Just a couple for me. On the unit cost, I need it not to work for year 25, but Neil, perhaps the way you’re thinking about unit cost, so this will give us some indications on trends. And I’ll probably be mainly thinking about wages and whether the pilots in particular start agitating for a bit more from their deals. And then secondly, what is it you know that the rest of the airlines don’t know that [indiscernible] is pretty sanguine about their Pratt Whitney issues, but you’re calling it out as very significant for them. Just run us through your thinking on why percent of share bigger than some of the airlines are letting on? Thank you. And I might ask maybe [Neal Mcmahon] (ph) to come in on the what we are – gives our update on what we think we need about the Pratt & Whitney issues.
Neil Sorahan: Okay, James. It’s a bit early to be talking about FY25 unit costs and that we haven’t done our budget at this stage, but what I am sure about is that we’ll continue to keep the gap that exists between ourselves and everybody else on the unit cost. We have multi-year agreements in place with our unions. There is modest inflation coming through on the back of those, but that’s something that we will cover through other areas of the business. For example, we’ve already locked in about 300 million worth of savings on our fuel bill based on the hedging that we have into next year, but it’ll be likely May before I start to give you color on unit costs for FY25. I need to get the budget over the line with the board first.
Michael O’Leary: And Neil, what we got on the Pratt & Whitney issue [indiscernible]?
Neil Sorahan: Yeah, so we know that Pratt & Whitney have significant issues with the GTF engines which will affect over 20% for Wizz and kind of 5% to 10% for other carriers around Europe. The reason why we think this is significant is we know that MRO slots are already full for this winter. This is an unexpected issue that wasn’t planned into the maintenance schedule for the engine, for the engine shops. And therefore, we’re likely to see delays or our competitors are likely to see delays for engines to come out of the shops. This will increase the lease costs. We already know engine lease costs have increased. So airlines who are looking to lease in engines are seeing prices soar because there’s the scarcity of lease engines.
And we think that this is going to have a significant impact on capacity for S24 might not be baked into other airlines numbers yet, but I think as we go through the winter, they’re going to see that the turnaround times for engines are going to be significantly slower that’s going to materially impact capacity for S24.
Michael O’Leary: I mean, we take the view, James, about there’s anything between 5% and 10% of the European short haul A320 fleet is going to get grounded through most of next summer, which again will further constrain capacity. Some competitors, [indiscernible] will be more affected than others or they have some new deliveries, some deliveries, new aircraft deliveries. This is an issue that affects the Lufthansa, Air France, IAG, short haul fleet. And if Europe is operating at 94% of pre-COVID capacity today, there’s consolidation continuing, which will mean more capacity will be taken out. The OEMs are running behind both Airbus and Boeing are running behind on their deliveries. I mean Boeing is likely to leave us up to 10 aircraft short of our 57 deliveries before the summer of 2024 and you add this Pratt & Whitney issue on top.
Again, I think there’s going to be a real challenge on inter European capacity next summer. We will add maybe 40, 45, 47 aircraft. But overall, there’s no chance that Europe returning to its pre COVID capacity next summer. We will see more Asian visitors, I would hope next summer. I think that under — gives us a reasonable prospect of another strong summer of profit and pricing, and that’s already reflected in strong forward bookings. Forward bookings already for winter — summer 2024, either this early date are running significantly ahead of where they were this time last year. Next question please.
Operator: The next question comes from Alexander Irving from Bernstein. Please go ahead. Your line is now open.
Alex Irving: Good morning, gentlemen. Two for me, please. First, on capital structure. So how much liquidity do you see is required on an ongoing basis? Think about this, the reference to the announced dividends, which suggests your net cash position will continue to grow. Is that in line with your expectations? Second, drilling into cost a little bit more. So your airport and handling cost per passenger was up 11% year-on-year in Q1. 13% in Q2. What’s driving that please? And should we take the current levels per passenger as rough indication of what’s stable? Thank you.
Michael O’Leary: Thanks, Alex. May Tracey, maybe you might take the second part of that question. As you look at capital structure and Neil come in if there’s anything you want to add. I mean, I think we’re historically, we want to be in zero net debt position as we pay down debt aggressively. I think the board is of a view that we should keep a reasonably size of a chunk of cash far the inevitable crises that this industry and whenever we think we can do aircraft deals. So I think moving forward over the next number of years, we’d want to keep $3 billion to $4 billion of gross cash on the balance sheet, which is the number we’ve been operating at for about the last five or six years. We will though pay down the last $2 billion of debt in 2025, 2026.
