Mr. Willie Walsh:

I hope the committee has had the opportunity to read the update we sent. I will not go over it word for word, but I want to make some general comments. The airline industry has gone through an extremely difficult period in 2020-2021 and the first part of 2022. I am pleased to say it is now recovering and that recovery is strong and gaining momentum. Looking at international passenger traffic, which was the area hardest hit as a result of border closures, we are now operating at about 70% of where we were in 2019. Most domestic markets have recovered strongly. Globally the domestic markets are at 81%, but that is heavily impacted by ongoing disruption in China. The Chinese domestic market represented about one quarter of all domestic travel globally. With the ongoing pursuit of zero Covid and restrictions in China, it remains heavily impacted, and traffic in the domestic market is operating at about 40% of where it was in September 2019.

I am pleased to say Ireland is recovering strongly in line with, if not slightly stronger than, the rest of Europe. Obviously the first three months continued to be impacted by some border closures but the second half of this year has been strong. There has been strong performance on flights from Ireland to Europe and Ireland to North America. Flights from Ireland to the UK are gathering momentum but lagging behind the other major markets.

Globally we expect the market to recover to 2019 levels in 2024. We expect Ireland to be back to 2019 levels probably in 2023 given the pace of recovery, but certainly by 2024. In fact, our projections for Ireland in 2024 are for a strong recovery beyond where we were in 2019. That is despite the headwinds faced by the industry. We are seeing global GDP slow down. We are seeing very high fuel prices.

A particular concern for the industry is the high price of jet fuel. which has significantly increased. Even when we have seen a reduction in the price of Brent crude, we have seen jet fuel remain stubbornly high. Turning to figures for the first ten months of this year to the end of October, we see Brent average at about $104 per barrel, but jet fuel at $141 per barrel. What we call the crack spread, which is the price difference between jet and Brent, has widened to an average of 36% this year. Traditionally, that sits at around 17% to 18%. Despite some relaxation in the price of Brent, we have continued to see very high jet fuel prices.

For the airline industry fuel represents the single biggest cost. In the ten years between 2010 and 2019, which I would take as an average of a good period in the industry, fuel represented about 27% of an airline's cost base. That can vary widely, depending on the business model. However, the high prices of oil have had a big impact on airline cost bases this year. The war in Ukraine has had some impact, principally affecting the price of oil and the volatility associated with that. In terms of its impact on global traffic or on traffic into and out of Ireland, it has been very limited.

To summarise, it has been a very tough period for the industry, but we are seeing a strong recovery. Despite the headwinds that are obvious and evident, we continue to believe the industry will recover strongly for the rest of this year and through 2023.