Running head: RYANAIR
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Ryanair: Europe¶s Discount Airline Patrick O¶Keefe Peru State College
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Using financial management techniques the purpose p urpose of this research paper is to provide prov ide an overview of Ryanair Holding, Holding, Plc. After analyzing the information information from different resources, this research paper provides analytical datawhich typ ically assist executives to make many decisions required to effectively effectively manage of business and to develop develop impending financial plans for the future requires reliable and pertinent information information on the t he financial performance and financial position position of the firm. Financial analysis is an essential essential element in all businesses businesses and can be a harbingerof financial problems if the analysis a nalysis forecasts serious cash flow flow difficul d ifficulties ties or provides evidence of poor performance. Financial management techniques in today¶s business
The main objective of financial management is is maximizing shareholders¶ shareholders¶ wealth. All companies need sound financing to grow and sufficient cash flow to acqu ire the resources to necessary to operate. Finance traditionally has concerned itself with with the best use of funds for investment and financing of internal organizational organizat ional activities (Petrova& Sinclair, 2006). Financial management concerns the effective decisions used by executives to manage a company¶s finances that provide acceptable returns ret urns to shareholders or business owners. Managing a firm¶s cash and credit resourcesrequires reso urcesrequires expertise, time time and money in a particular way, to achievea specific set of managerial managerial objectives. Thesefinancial objectives typically govern the decisions to be made with respect to a firm¶s strategy strategy and positioning a portion po rtion of which importantly includes financial strategies and outcomes. A company¶s major objective o bjective is maximizing the wealth of its shareholders, but other objectives should be satisfied at the same time, t ime, like managerial objectives, short-term objectives, external stakeholder objectives, objectives, as well as non-financial objectives. objectives. All companies
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needmachines, staff, and working capital to exist and grow in the market, which is one reason financial managers consider investment strategies. In order to understand an organization¶s direction it is necessary to answer questions with respect to t he external environment of the company using both financial and external environmental analysis. Determining the current environment, capacity for change, financial strength and other factors requires the use of such analytical too ls as an external environmental scan sometimes referred to as Poltical, Economic, Social and Technological (PEST) scan and a Strengths, Weaknesses, Opportunities and Threats (SWOT) assessment which can help to analysis the company¶s existing situation. The rule of thumb is that long-term funds and short-term assets should finance long-term assets by short-term funds. Short-term finance is usually cheaper than long-term finance. This is largely due to the risks underwritten by creditors. About
Ryanair
The Irish company, Ryanair, is a low-fare airline company in Europe. Started in 1985, Ryanair went publicin 1997 with an Initial Public Offering (IPO) when it floated Ryanair Holdings, PLC on the Dublin and on the New York (NASDAQ) Stock exchanges. In 1997, executives stated goals were for the Ryanair to become Europe¶s largest airline by 2005, eight years from the IPO. Ryanair currently operates 950 routes across 11 European countries and in the North African country of Morrocco. The company offers daily services on routes in these countries. By 1999, Ryanair had become the biggest passenger carrier on the Dublin-London route. However, compared with other large airlines, Ryanair was limited to operations on European continental routes. At the time of the case. Ryanair lacks links with other continents (³Annual Report´, 2000).
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Besides route availability, the actual flight schedule is a major factor in gaining passenger traffic and is important to maximize the available flying time for aircraft, as money is generated by flights in the air, not by idled planes sitting on the ground. Thus passenger capacity, number of flights, availability and convenience of scheduled departures and arrivals are an airline¶s most significant intangible asset. Employees who serve the airline from flight crews to ground crews and from ticketing agents to baggage handlers are critical in quick turns of aircraft to keep planes flying and thus generating revenue. The most tangible assets, of course, is the aircraft. Ryanair has a fleet of 200 Boeing 737-800 aircraft (³Annual Report´, 2009). Over the past ten years, Ryanair has increased its annual traffic from under 700,000 to over 15 million passengers. In accomplishing this passenger traffic growth, Ryanair changed the face of air travel, broke higher fare cartels, rocked airport monopolies and made it possible for millions to travel at deeply discounted prices. ³A first mover competitive advantage could explain why the most successful airlines seem to be able to maintain « market leadership´ (Malighetti, Paleari&Redondi, 2009, p. 196) such as Southwest Airlines and JetBlue in the US and by Ryanair and Easyjet in Europe. Ryanair provide unique services with low price. Like Southwest Airlines, Ryanair uses a version of open seating, where in when seats are not booked, customers may sit in any open seat in the cabin. However, like Southwest Airlines. Ryanair¶s in-flight services are strictly limited. For example, customers have to for drinks or food. One complaint about airlines in general is the gernal policy of overbooking flights. Ryanair, like its industry counterparts, frequently receives complaints from customers about overbooked flights. Ryanair has committed itself to safe operations and has put in place extensive safety training programs to ensure the recruitment of suitably qualified pilots and maintenance
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personnel. In addition, the company is also committed to the operation and maintenance of its aircraft in accordance with the highest European Aviation Industry Standards, which are closely monitored by the Irish Aviation Authority. In year 2000, Ryanair launched Europe¶s largest travel website at www.ryanair.com, which within three months of its launch was tak ing over 50,000 bookings per week, by offering unbelievably low airfares. The passenger acceptance of this website enabled Ryanair to reduce travel agent commission.The result is that Ryanair has o utperformed rivals in terms of increased passenger traffic and share price (Gill, 2010). Ryanair is well positioned in European market to implement its low cost strategy. After the full EU air transport deregulation in 1997, Ryanair was free to set up new routes to Continental Europe. The airline entering these market offered airfares, which were more than 50% lower than the cheapest fares then provided by the flag carrier airlines. The European airline sector is dominated by high-cost, long-haul national carriers like British Airways, Lufthansa, and KLM. These airlines control 50-60% of market share, but are beginning to lose the bottom end of the market to low cost carrier like Ryanair. Competition
Ryanair now has a number of low-cost competitors. In 2004, approximately 60 new lowcost airlines were formed. Although traditionally a full-service airline, Aer Lingus moved to a low-fares strategy from 2002, leading to a much more intense competition with Ryanair on Ir ish routes. Airlines which attempt to compete directly with Ryanair are treated harshly, with Ryanair reducing fares to significantly undercut their competitors. In response to MyTravelLite, who started to compete with Ryanair on the Birmingham to Dublin route in 2003, Ryanair set up
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competing flights on some of MyTravelLite's routes until they pulled out. Go was another airline which attempted to offer services from Ryanair's hub at Dublin to Glasgow and Edinburgh in Scotland. A fierce battle ensued, which ended with Go withdrawing its service from Dublin.[73] In September 2004, Ryanair's biggest competitor, EasyJet, announced routes to the Republic of Ireland for the first time, beginning with the Cork to London Gatwick route. Until then, easyJet had never competed directly with Ryanair on its home ground. Easyjet announced in July 2006, that it was withdrawing its Gatwick-Cork, Gatwick-Shannon and Gatwick-Knock services; within two weeks, Ryanair also announced it would withdraw its own service on the Gatwick-Knock and Luton-Shannon routes. Ryanair has asked the high court to investigate why it has been re fused permission to fly from Knock to Dublin. This route was won by CityJet, which was unable to operate the service. The runner up, AerArann, started flights, a move Ryanair criticizes on the basis that not initiating an additional tender process was unlawful. Financial Situation
The major revenues of Ryanair gain from the tickets sold during the year. That is the only different with the tangible stock value. Once the tickets are sold, the company gets the revenues from the operation. The company receives the cash and books the incomeon its ledger. The company uses cash to pay the relevant cost, like staff wages, fuel and o il cost, marketing and distribution cost as well as other operating expenses. The rest of the revenues are retained profit as the capital of company. If the profit grows, the company share price will increase accordingly. Once the share price increased, the shareholders enjoy a return on investment, more and more investors will have more interest in the company. Therefore, the company achieves the
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source of finance. After that, Ryanair must consider shareholderswhen investing for grwth potential to expand thecompany. In 2009, Ryanair company¶s operation revenues were $4.02 billionan increase of than 2001). It includes net cash inflow from operating activities: 125417. This should thank for the contribution of the sales team. Ryanair insists to offer lower airfares in European countries and try to increase sales continuously. Increased revenue is one of the major sources of finance.
The strength of the performance is highlighted by the fact that the groups¶ cash on hand is equivalent to 53.6% of annual turnover. This figure is a little bit high according to their sale growth. They should invest the cash flow to generate more return. However, there is a special reason that they have to maintain a deposit US$500,000 with the guarantor bank for as long as the bank gave its guarantee.
The operating expenses during the year are 229740; Net cash inflow from operating activities is 12304; profit and loss account is 112758. As the growth of the profit during the year, EPS increased by 17% to 35.16 and is based on 164,759,808 shares, which represent the weighted average number of ordinary shares outstanding during the year. We can see the profit is increasing; the capital of the company is increasing. Because the market is growing, Ryanair should think about where they should invest and how. i.e. Invest new aircraft, improve quality of service or setup new routes.
Ryanair announced a new investment program with a US$2billion order for up to 45 new Boeing 737-800 series aircraft. Continued strong cash flows generated from trading operations
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combined with the proceeds of the London offering and the receipt of debt financing for the first of the Boeing 737-800 next generation aircraft, has allowed the group to increase its cash on hand by 74m. Before Ryanair makes decision about buying what type of aircraft, the two alternatives would be mutually exclusive, in that the choice of one will exclude the other. The company may use NPV and IRR to calculate which one may give more return.
Ratio Analysis
Ratios are a common method of analyzing financial management. Financial ratios refer to the use of simple ratios, which are ca lculated from the figures of financial statements in order to measure certain aspects of a firm¶s financial condition.A set of financial ratios conducted on Ryanair is located in Appendix D.
Ratios make comparisons with: The performance of the business in previous years The budgeted or planned performance in the current years The performance of similar business
The ratios make easier to make better decision. However, there are some limitations in ratio analysis. For instance, since ratios are constructed from accounting data, if we do comparison within two different firms, their accounting policies (i.e. depreciation charge, t he accounting years) could lead to the inaccurate illustration.
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The Net Profit Ratio was dramatically increased by 15% during the year 2001 and 2002. Even though their expenses cost had increased by a certain percentages in different items and because of their low fares system. They still gained a high return in net profit when compared to 2001. The reason of this was that the rise of sales and the interest received. These revenues gave the company a good return that could cover the expenses and other additional costs. The increase in profitability reflects the positive impact of the growth in passenger¶s volume because o f the increase in seat capacity on existing routes and the launch of new seven European routes during the year.
In the Return On Capital Employed Ratio the amount of money that the investors can get back after investing in the company, the ratio decreased to 28% in that year. The explanation of this figure was because their company needed to consider the contract that with Boeing worth US$2 billion by ordering for up to 45 aircraft in the coming years, in order to succeed the expansion of our company.
Asset Turnover Ratio is a measure of productivity as much as profitability. Within 2001 and 2002, the ratio dropped from 1.56 to 1.04, it meant that more assets were to be used to generate every unit of sales .The reason was because their introduction on new fleet o f 22 aircraft on our network of 27 routes in request to increase the level of passengers and the low fares system.
According to the Current Asset Ratio, the company had a well cover of their current liabilities under current assets. Even though in Acid Test Ratio, which we examined that by excluding the inventories, their current assets also covered the liabilities by 1.14 in 2001, and 1.60 in 2002. It
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increased by 46%. From the current assets, cash was the major inflows to their company in the past two years. Especially in 2002, there was an increase in cash from 892160 TO 12742400.
Move to the cash flows statement. Cash is King. Company fail, not because of their insufficient profits, but because they have run out of cash to pay their liabilities. Cash and bank balances should be kept to a minimum, as they earn nothing for the company, but make sure you have enough cash to pay employees and creditors. Cash generated from operating activities grew up for 25.6 million. This increase was due to the increase of sales and profits and the add back of the non-cash items primarily depreciation charge since they had a new aircraft during the year. The cash flows was from trading operations combined with the proceeds of the London offering and the receipt of debt financing for the first Boeing 737-800 next generation aircraft, has allowed the group to increase the cash on hands despite having to pay advance deposits to Boeing. The performance is highlighted by the fact that the cash on hand is equivalent to 53.6%of annual turnover.
The next ratio is Gearing which means how reliable of the company on the financial institutions when raising the finance. Even though the ratio was slightly increased by 2 %, the company still in a low-geared situation in these two years. The interest coverage was good since Ryanair only needs to pay interest once a year and they could pay 4.4 times in 2001 and 6.6times in 2002.
The Earning Per Share (EPS) considers the profits that could be paid to each ordinary shareholder. The increase in profit resulted in the increase in EPS. This also stated that the increase in the value of shareholders as the company¶s profit and traffic has grown.
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After finishing the ratio analysis, Ryanair is financially healthy. Ryanair, in comparison with other major airline companies and industrial averages, Is above average in sales over 2009, but below industry averages in net income (See Appendix C). The industry ratios suggest that Ryanair¶s performance is good, but could improve. Other non-financial considerations Ryanair has a bad reputation for over booking and early check-in time. On the other way, every company has limitation. For airline companies, these problems are normal. Ryanair changed their booking system last Christmas and the new system is more accurate and working well. Company said that they would not only improve the hardware but also the staff. There are a group of new staffs now is trained by American Airline.
Conclusion After reading the research paper, hopefully you have an understanding of airline finance. Ryanair is a new member of airline companies (started from 1985). It is young and healthy. Based on Europe and has a strong relationship with America, there are many areas that it can improve and expand to. Ryanair is developing speed like a flying superman, going up and away. It is the kind of company we should put money in.
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12 References
Creaton, Siobhán (2007). Ryanair: The full story of the controversial low-cost airline. London, UK, Aurum Press. Creaton, Siobhán (2004). Ryanair: How a Small Irish Airline Conquered Eu rope. London: Aurum Press. Gill, Rob (2010, July 23). Airlines handle the t urbulence. Travel Trade Gazette UK & Ireland , 2922, p. 16. Malighetti, P., Paleari,s. &Redondi, R. (2009, July).Pricing strategies of low-cost airlines: The Ryanair case study. Journal of Air Transport Management , 15(4), 195-203. doi: 10.1016/j.jairtraman.2008.09.017. McCormick, T. (2010, October). Understanding costs using the value chain a Ryanair example. Accountancy Ireland, 42(5) 28-30
.
Yahoo! Finance (2010). Retrieved November 15, 2010 from
APPENDICES
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Running head: RYANAIR
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Appendix A Report Date Currency Audit Status Consolidated Scale
03/31/2010 EUR Not Qualified Yes Thousands
Aircraft, cost Accumulated depreciation - aircraft Aircraft, net Hangar & buildings, cost Accumulated depreciation - hangar & buildings Hangar & buildings, net Plant & equipment, cost Accumulated depreciation - plant & equipment Plant & equipment, net Fixtures & fittings, cost Accumulated depreciation - fixtures & fittings Fixtures & fittings, net Motor vehicles, cost Accumulated depreciation - motor vehicles Motor vehicles, net Property, plant & equipment, cost 5,151,100 Accumulated depreciation - property, plant & equipment (836,900) Property, plant & equipment 4,314,200 Intangible assets 46,800 Available for sale financial assets 116,200 Derivative financial instruments 22,800 Total non-current assets 4,500,000 Consumables Inventories 2,500 Prepayments 74,100 Interest receivable 6,500 Refundable deposits Value added tax recoverable Other assets 80,600 Current tax -
03/31/2009 EUR Not Qualified Yes Thousands -
-
03/31/2007 EUR Not Qualified Yes Thousands -
03/31/2006 EUR Not Qualified Yes Thousands
4,296,526
4,206,174
3,344,908 (486,682) (350,577) 2,858,226 23,037 13,265 (4,359) (3,674) 18,678 9,591 9,954 6,540 (5,846) (4,876) 4,108 1,664 13,247 11,773 (10,910) (9,923) 2,337 1,850 1,609 981 (905) (606) 704 375 3,392,755 2,902,644
(651,702) 3,644,824 46,841 93,150 59,970 3,844,785 2,075 67,185 5,244 15,801 2,823 91,053 -
(624,048) 3,582,126 46,841 311,462 3,940,429 1,997 121,555 10,014 34,104 3,907 169,580 1,585
(508,702) 2,884,053 46,841 406,075 3,336,969 2,420 2,420 39,253 9,028 24,088 5,338 77,707 -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
RYANAIR Trade receivables, gross Provision for impairment - trade receivables Trade receivables Derivative financial instruments Restricted cash Financial assets: cash more than 3 months Cash & cash equivalents Total current assets Total assets Trade payables Accruals Taxation Unearned revenue Accrued expenses & other liabilities Current maturities of debt Current tax Derivative financial instruments Total current liabilities Provisions Derivative financial instruments Deferred tax Other creditors Non-current maturities of debt Total non-current liabilities Issued share capital Share premium account
03/31/2008 EUR Not Qualified Yes Thousands
-
(369,656) 2,532,988 46,841 763 2,580,592 3,422 3,422 14,643 9,076 5,734 29,453 -
15 44,400 (100) 44,300 122,600 67,800 1,267,700 1,477,900 3,063,400 7,563,400 154,000 282,300 545,600 1,088,200 265,500 900 41,000 1,549,600 102,900 35,400 199,600 136,600 2,690,700 3,165,200 9,400 631,900
41,928 (137) 41,791 129,962 291,601 403,401 1,583,194 2,543,077 6,387,862 132,671 260,300 231,877 447,516 905,715 202,941 425 137,439 1,379,191 71,964 54,074 155,524 106,549 2,195,499 2,583,610 9,354 617,426
34,315 (137) 34,178 10,228 292,431 406,274 1,470,849 2,387,122 6,327,551 129,289 226,322 230,970 405,005 919,349 366,801 141,711 1,557,150 42,790 75,685 148,088 101,950 1,899,694 2,268,207 9,465 592,761
23,600 (188) 23,412 52,736 258,808 592,774 1,346,419 2,354,276 5,691,245 54,801 283,374 193,887 405,938 807,136 178,918 20,822 56,053 1,117,730 28,719 58,666 151,032 112,177 1,683,148 2,033,742 9,822 607,433
30,362 (453) 29,909 18,872 204,040 328,927 1,439,004 2,053,627 4,634,219 79,283 207,311 111,291 349,642 570,614 153,311 15,247 27,417 845,872 16,722 81,897 127,260 46,066 1,524,417 1,796,362 9,790 596,231
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Trade receivables, gross Provision for impairment - trade receivables Trade receivables Derivative financial instruments Restricted cash Financial assets: cash more than 3 months Cash & cash equivalents Total current assets Total assets Trade payables Accruals Taxation Unearned revenue Accrued expenses & other liabilities Current maturities of debt Current tax Derivative financial instruments Total current liabilities Provisions Derivative financial instruments Deferred tax Other creditors Non-current maturities of debt Total non-current liabilities Issued share capital Share premium account Capital redemption reserve Retained earnings (accumulated deficit) Other reserves Shareholders' equity Total liabilities & shareholders' equity
44,400 (100) 44,300 122,600 67,800 1,267,700 1,477,900 3,063,400 7,563,400 154,000 282,300 545,600 1,088,200 265,500 900 41,000 1,549,600 102,900 35,400 199,600 136,600 2,690,700 3,165,200 9,400 631,900 500 2,083,500 123,300 2,848,600 7,563,400
41,928 (137) 41,791 129,962 291,601 403,401 1,583,194 2,543,077 6,387,862 132,671 260,300 231,877 447,516 905,715 202,941 425 137,439 1,379,191 71,964 54,074 155,524 106,549 2,195,499 2,583,610 9,354 617,426 493 1,777,727 20,061 2,425,061 6,387,862
34,315 (137) 34,178 10,228 292,431 406,274 1,470,849 2,387,122 6,327,551 129,289 226,322 230,970 405,005 919,349 366,801 141,711 1,557,150 42,790 75,685 148,088 101,950 1,899,694 2,268,207 9,465 592,761 23,432 2,000,422 (123,886) 2,502,194 6,327,551
23,600 (188) 23,412 52,736 258,808 592,774 1,346,419 2,354,276 5,691,245 54,801 283,374 193,887 405,938 807,136 178,918 20,822 56,053 1,117,730 28,719 58,666 151,032 112,177 1,683,148 2,033,742 9,822 607,433 1,905,211 17,307 2,539,773 5,691,245
Running head: RYANAIR
16 Appendix
B
Balance Sheet
Assets Cash and Short Term Investments
2,745.6
1,986.6
1,877.12
1,939.19
1,767.93
50.8
65.66
82.2
61.87
44.72
2.5
2.08
2.0
2.42
3.42
Cash & Equivalents Short Term Investments Total Receivables, Net Accounts Receivable - Trade, Net Accounts Receivable - Trade, Gross Provision for Doubtful Accounts Receivables - Other Total Inventory
30,362 (453) 29,909 18,872 204,040 328,927 1,439,004 2,053,627 4,634,219 79,283 207,311 111,291 349,642 570,614 153,311 15,247 27,417 845,872 16,722 81,897 127,260 46,066 1,524,417 1,796,362 9,790 596,231 1,467,623 (81,659) 1,991,985 4,634,219
Running head: RYANAIR
16 Appendix
B
Balance Sheet
Assets Cash and Short Term Investments
2,745.6
1,986.6
1,877.12
1,939.19
1,767.93
50.8
65.66
82.2
61.87
44.72
2.5
2.08
2.0
2.42
3.42
Prepaid Expenses
74.1
67.19
121.56
94.24
14.64
Other Current Assets, Total
190.4
421.56
304.24
311.54
222.91
Total Current Assets
3,063.4
2,543.08
2,387.12
2,409.27
2,053.63
Property/Plant/Equipment, Total - Net
4,314.2
3,644.82
3,582.13
2,901.51
2,532.99
0.0
0.0
0.0
0.0
0.0
Intangibles, Net
46.8
46.84
46.84
46.84
46.84
Long Term Investments
116.2
93.15
311.46
406.08
0.0
Note Receivable - Long Term
0.0
0.0
0.0
0.0
0.0
Other Long Term Assets, Total
22.8
59.97
0.0
0.0
0.76
Other Assets, Total
0.0
0.0
0.0
0.0
0.0
7,563.4
6,387.86
6,327.55
5,763.69
4,634.22
Cash & Equivalents Short Term Investments Total Receivables, Net Accounts Receivable - Trade, Net Accounts Receivable - Trade, Gross Provision for Doubtful Accounts Receivables - Other Total Inventory
Goodwill, Net
Total Assets
Liabilities and Shareholders' Equity
Accounts Payable Payable/Accrued
154.0 0.0
Accrued Expenses
Notes Payable/Short Term Debt
132.67 0.0
260.3
129.29 0.0
226.32
127.24 0.0
283.37
79.28 0.0
207.31
109.68
0.0
0.0
0.0
0.0
0.0
Current Port. of LT Debt/Capital Leases
265.5
202.94
366.8
178.92
153.31
Other Current Liabilities, Total
869.8
817.26
777.69
676.7
503.6
1,549.6
1,379.19
1,557.15
1,190.17
845.87
2,690.7
2,195.5
1,899.69
1,683.15
1,524.42
199.6
155.52
148.09
151.03
127.26
Total Current Liabilities
Total Long Term Debt Long Term Debt Deferred Income Tax
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Minority
Interest
0.0
0.0
0.0
0.0
0.0
274.9
232.59
220.43
199.56
144.69
4,714.8
3,962.8
3,825.36
3,223.91
2,642.23
Redeemable Preferred Stock
0.0
0.0
0.0
0.0
0.0
Preferred Stock - Non Redeemable, Net
0.0
0.0
0.0
0.0
0.0
Common Stock
9.4
9.35
9.47
9.82
9.79
Other Liabilities, Total Total Liabilities
Additional Paid-In Capital
Retained Earnings (Accumulated Deficit)
631.9
617.43
615.82
607.43
596.23
2,207.3
1,798.28
1,876.91
1,922.52
1,385.96
0.0
0.0
0.0
0.0
0.0
Total Equity
2,848.6
2,425.06
2,502.19
2,539.77
1,991.99
Total Liabilities & Shareholders Equity
7,563.4
6,387.86
6,327.55
5,763.69
4,634.22
Total Common Shares Outstanding
1,478.94
1,473.36
1,490.8
1,547.03
1,542.03
Total Preferred Shares Outstanding
0.0
0.0
0.0
0.0
0.0
Other Equity, Total
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18 Appendix C
Statement of Cash Flows
Period End Date Period Length
2010
2009
2008
2007
2006
03/31/2010
03/31/2009
03/31/2008
03/31/2007
03/31/2006
12 Months
Stmt Source
12
Months
12
Months
12
Months
12
Months
20-F
20-F
20-F
20-F
20-F
Stmt Source Date
07/20/2010
07/29/2009
07/31/2008
07/31/2008
07/31/2008
Stmt Update Type
Updated
Updated
Updated
Reclassified
Restated
Net Income/Starting Line
341.0
-180.49
438.93
451.04
338.89
Depreciation/Depletion
235.4
256.12
175.95
143.5
124.41
0.0
0.0
0.0
0.0
47.1
245.31
104.41
15.84
11.59
248.0
92.19
-15.39
290.46
135.69
871.5
413.13
703.9
900.84
610.57
-997.8
-702.02
-937.12
-525.96
-546.23
-551.3
313.68
244.81
-663.04
208.94
-1,549.1
-388.33
-692.31
-1,188.99
-337.29
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Issuance (Retirement) of Stock, Net
14.5
-44.4
-291.59
11.23
30.59
Issuance (Retirement) of Debt, Net
557.8
131.95
404.43
184.34
262.87
Cash from Financing Activities
572.3
87.55
112.84
195.57
293.46
Amortization
Non-Cash Items Unusual Items Other Non-Cash Items Changes in Working Capital Accounts Receivable Inventories Other Assets Accounts Payable Taxes Payable Other Liabilities Other Operating Cash Flow Cash from Operating Activities
Capital Expenditures Purchase of Fixed Assets Other Investing Cash Flow Items, Total Sale of Fixed Assets Purchase of Investments Other Investing Cash Flow Cash from Investing Activities
Financing Cash Flow Items Other Financing Cash Flow Total Cash Dividends Paid
0.0
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Foreign Exchange Effects
0.0
0.0
0.0
0.0
0.0
-105.3
112.35
124.43
-92.59
566.75
Net Cash - Beginning Balance
1,583.2
1,470.85
1,346.42
1,439.0
872.26
Net Cash - Ending Balance
1,477.9
1,583.19
1,470.85
1,346.42
1,439.0
Net
Change in Cash
Running head: RYANAIR
20 Appendix
D
Key Financial Ratios
Price Ratio Current P/E Debt/Equity Ratio Current Ratio Quick Ratio Return on Equity (ROE) Return on Assets (ROA) Receivable Turnover Inventory Turnover
Company
18.7 .99 2.3 2.3 11.8 4.8 71.1 820.5
Industry Average 21.5 .77 1.2 1.1 15.2 4.1 39.8 206
S&P 21.3 1.4 1.4 .09 25.4 8.0 17.0 10.8
RYANAIR
21 Appendix
D
SWOT Analysis Strengths
Weaknesses
Low cost leader
Declining profitability
Innovative cost reductions
Volatile customer r elations
First mover advantage
Dependence on Michael O¶Leary
Robust route network
Antagonistic relationships with competitors
Strong fleet operaitons
Unfunded employee post-retirement benefits
Opportunities
Threats
Growth
Global Recession
Continued cost reduction
Ireland national debt problem
EU Expansion
Increased competition
Increased tourism and destinations
New entrants of low cost competitors Availability of alternative transportation
RYANAIR Appendices: Net Profit Ratio: In 2001, 54822/233736*100%=23% In 2002, 112758/298124*100%=38%
Return On capital Employed: In 2001, 56736/149385*100%=38% In 2002, 68410/287752*100%`=28%
Asset Turnover: In 2001, 233736/149385=1.56 In 2002, 298124/287752=1.04
Current Assets Ratio: In 2001, 88979/71877=1:1 In 2002,
22
RYANAIR 197879/115319=2:1
Acid-Test Ratio: In 2001, (88979-6638)/71877=1:1 In 2002, (197879-13021)/115319=1:1
Total Gearing: In 2001, 14834/(134551+14834)*100%=10% In 2002, 34760/(252992+34760)*100%=12%
Equity Gearing: In 2001, 14834/134551*100%=11% In 2002, 34760/252992*100% =13%
Interest Cover: In 2001, 63017/(1087+13388)=4.4times
23
RYANAIR In 2002, 76662/(239+11368)=6.6times
24
