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TABLE OF CONTENTS
Company Overview..............................................................................................3
Key Facts...............................................................................................................3
SWOT Analysis.....................................................................................................4
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COMPANY OVERVIEW
Ryanair Holdings plc (Ryanair or the company) operates low fare scheduled passenger airline
serving short haul, point to point routes between the UK, Ireland, and Continental Europe, as well
as Morocco. It is headquartered in Dublin, Ireland and employed 8,992 people as of March 31, 2014.
The company recorded revenues of E5,036.7 million ($6,750.2 million) during the financial year
ended March 2014 (FY2014), an increase of 3.1% over FY2013. The operating profit of the company
was E658.6 million ($882.7 million) in FY2014, a decrease of 8.3% compared to FY2013. The net
profit of the company was E522.8 million ($700.7 million) in FY2014, a decrease of 8.2% compared
to FY2013.
KEY FACTS
Head Office
Phone
Fax
Web Address
http://www.ryanair.com
March
Employees
8,992
London Stock
Exchange Ticker
RYA
Irish Stock
Exchange Ticker
RY4B
NASDAQ Global
RYAAY
Select Market Ticker
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SWOT ANALYSIS
Ryanair operates low fare scheduled passenger airline serving short haul, point to point routes
between Ireland, the UK, and Continental Europe, as well as Morocco. The company's distinctive
business model focusing on low operational cost enables it to achieve high asset utilization and
deliver stable financial performance. However, intense competition could impact the company's
ability to grow passenger volumes as well as expand its operational network, which could have
adverse impact on its market share.
Strengths
Weaknesses
Legal proceedings
Opportunities
Threats
Strengths
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Weaknesses
Legal proceedings
Ryanair is involved in various lawsuits, claims, and legal proceedings, arising in the ordinary course
of its business. Some of these legal proceedings and claims seek damages, fines, or penalties in
substantial amounts or remediation of environmental contamination. For instance, European
Commission initiated investigations into Ryanair's agreements with the Lubeck, Alghero, Frankfurt
(Hahn), Zweibrucken, Altenburg, Klagenfurt, Stockholm (Vasteras), Paris (Beauvais), La Rochelle,
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Carcassonne, Brussels (Charleroi), Cagliari, Girona and Reus airports. The investigations seek to
determine whether the arrangements constitute illegal state aid under European law. In July 2014
the European Commission announced a no state aid decision in respect of Dusseldorf (Weeze)
airport, as well as findings of state aid to Ryanair in its arrangements with Pau, Nimes and Angouleme
airports. The commission also ordered Ryanair to repay a total of approximately E9.7 million ($13
million) of alleged aid.
In addition to the European Commission investigations, Ryanair is facing allegations that it has
benefited from unlawful state aid in a number of court cases, including in relation to its arrangements
with Frankfurt (Hahn) and Lubeck airports. Adverse rulings in these matters could be used as
precedents by competitors to challenge Ryanair's agreements with other publicly owned airports
and could cause Ryanair to strongly reconsider its growth strategy in relation to public or state-owned
airports across Europe. Hence, such legal proceedings would adversely impact the image of the
company besides resulting in huge financial penalties.
Opportunities
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The European airlines industry is expected to grow positively in the coming periods. According to
MarketLine (a unit of Informa), the European airlines industry generated total revenues of $185,119.3
million in 2014, representing an increase of 2.3% over 2013. Furthermore, the industry is expected
to grow at a CAGR of 3.5% for 2014-18 periods to reach a value of approximately $212,375.2 million
in 2018. Ryanair is one of the leading providers of passenger air transportation services in Europe.
As of June 30, 2014, Ryanair offered around 1,600 scheduled short-haul flights per day serving
approximately 186 airports throughout Europe. Thus, the positive growth of European transportation
services industry could provide increased business opportunities to the company.
Network and fleet expansion could help to grow customer base and financial performance
Ryanair focuses on the continuous expansion of bases and addition of new routes to enhance its
competitiveness and grow business. For instance, in January 2015, the company announced a new
route from Glasgow to Berlin, and a 4th daily Glasgow London Stansted service. Similarly in
December 2014, Ryanair extended its London Stansted summer 2015 schedule with a new route
to Deauville in France which will operate twice weekly. In the same month, the company added three
new routes to its Athens Summer 2015 schedule, to and from Budapest, Bratislava and Santorini,
which will deliver over 2.2 million customers in 2015. Further in November 2014, Ryanair announced
plans to open its 1st Slovakian base (base No.71) at Bratislava with two based aircraft and 16 routes
including one new route to Madrid, which will deliver almost one million customers per annum.
Further in August 2014, the company launched its Glasgow summer 2015 schedules, with nine new
Glasgow International routes to Bydgoszcz, Carcassonne, Chania, Derry, Dublin, London Stansted,
Riga, Warsaw Modlin and Wroclaw, and 16 Glasgow Prestwick routes, which together will deliver
over 1.35 million customers per annum to and from Glasgow. In August 2014, Ryanair launched a
new (three times daily) Dublin-Brussels Zaventem route, with nine new routes and increased flights
on 21 existing routes to and from Dublin Airport. Ryanair launched three new routes to Cologne,
Edinburgh and Glasgow as well as increased frequencies on 24 other routes.
Additionally, Ryanair intends to continue to expand its fleet and add new destinations and additional
flights. For instance, in March 2015, the company purchased an additional three Boeing 737-800
aircraft, for delivery in early 2016, valued at $280 million, bringing its total order to 183 737 NGs, in
addition to orders for 200 Boeing MAX 200 aircraft, which will allow Ryanair to grow its traffic to 160
million customers per annum by 2024. During September 2014, Ryanair signed an agreement with
Boeing to purchase up to 200 new Boeing 737 MAX 200 aircraft (100 firm and 100 options). The
company took delivery of the first of its 180 new Boeing 737-800 NG order, worth $16 billion. Hence,
continued focus on network and fleet expansion helps the company to expand its market reach and
customer service, which in turn could grows its customer base and financial performance.
Threats
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The airline industry is highly competitive. The principal competitive factors in the airline industry
include fares, customer service, routes served, flight schedules, types of aircraft, safety record and
reputation, code-sharing relationships, capacity, in-flight entertainment systems and frequent flyer
programs. Airline profits are sensitive to even slight changes in average fare levels and passenger
demand. Unlike Ryanair, certain competitors are state-owned or state-controlled flag carriers and
in some cases may have greater name recognition and resources and may have received, or may
receive in the future, significant amounts of subsidies and other state aid from their respective
governments.
Ryanair's main competitors include Air France, British Airways, easyJet, Lufthansa, and Alitalia,
among others.The price competition between airlines occurs through price discounting, fare matching,
increased capacity, targeted sale promotions and frequent flyer travel initiatives. A relatively small
change in pricing or in passenger traffic could have a disproportionate effect on an airline's operating
and financial results. Therefore, intense competition could impact the company's ability to grow
passenger volumes as well as expand its operational network, which could have adverse impact on
its market share.
Grounding of fleet due to tough operating environment
In recent years, in response to an operating environment characterized by high fuel prices, typically
lower seasonal yields and higher airport charges and/or taxes, Ryanair adopted a policy of grounding
a certain portion of its fleet during the winter months (from November to March inclusive). In the
winter months of FY2014, Ryanair grounded approximately 70 aircraft and the company intends to
ground approximately 50 aircraft during the winter months of FY2015. While seasonal grounding
does reduce Ryanairs variable operating costs, it does not avoid fixed costs such as aircraft ownership
costs, and it also reduces Ryanairs potential to earn ancillary revenues. Reducing the number and
frequency of flights may also negatively affect Ryanairs labor relations, including its ability to attract
flight personnel only interested in year round employment. Thus seasonal grounding of fleet may
negatively impact its financial condition and results of operations.
Rising airport charges and introduction of air travel taxes
The introduction of airport charges and air travel taxes may negatively impact the company's
operations. Currently, the UK government levies an air passenger duty (APD) of 13 ($19.4) per
passenger from 10 ($14.9) per passenger in 2007. The Moroccan government has also introduced
a similar tax of E9 ($12) from April 2014. The German government introduced an air passenger tax
of E8 ($10.7) in 2011 which was subsequently reduced to E7.5 ($10) in 2012. In Austria, the
government introduced an ecological air travel levy of E8 ($10.7) in 2011. Other governments also
have introduced or may introduce similar taxes. According to the company, the increase in this tax
had a negative impact on Ryanairs operating performance, both in terms of average fares paid and
growth in passenger volumes.
Therefore, the decline in the passenger volume due to various charges and additional air travel taxes
could erode Ryanair's revenue-base which in turn would create operational imbalance due to the
rise in cost structure of the company. The introduction of government taxes on travel could have a
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negative impact on passenger volumes, during period of decreased economic activity, thus impacting
operations and revenues.
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