Ryanair Holdings plc

Company Profile
Publication Date: 11 Jan 2008

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Ryanair Holdings plc

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TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................4
Key Facts...............................................................................................................4
SWOT Analysis.....................................................................................................5

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Ryanair Holdings plc

Company Overview

COMPANY OVERVIEW
Ryanair Holdings operates low fare scheduled passenger airline serving short haul, point to point
routes between Ireland, the UK, and Continental Europe. It is headquartered in Dublin, Ireland and
employs about 4,500 people.
The company recorded revenues of E2,236.9 million during the fiscal year ended March 2007, an
increase of 32.2% over 2006. The operating profit of the company was E471.7 million during fiscal
year 2007, an increase of 25.8% over 2006. The net profit was E435.6 million in fiscal year 2007,
an increase of 42% over 2006.

KEY FACTS
Head Office

Ryanair Holdings plc

Dublin Airport
Dublin
IRL

Phone

353 1 812 1212

Fax

353 1 812 1213

Web Address

http://www.ryanair.ie

Revenue / turnover 2,236.8

(EUR Mn)
Financial Year End

March

Irish Stock
Exchange Ticker

RYA

NASDAQ Stock
Exchange Ticker

RYAAY

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SWOT Analysis

SWOT ANALYSIS
Ryanair Holdings (Ryanair) is Europe's leading low-fare scheduled passenger airline. The company
operates short-haul, point-to-point routes between Ireland, the UK and Continental Europe. The
company's leading market position provides the company with the ability to leverage its market
position to further expand its operating network. However, a likely rise in crude oil prices could result
in higher operating costs of the company, which would impact the company's margins.
Strengths

Weaknesses

Leading low cost airline

Strong revenue growth
Business strategy

Weakening employee relations

Lack of scale

Opportunities

Threats

Launch of new routes

Fleet expansion
Global airline market

Increasing aviation fuel prices

Threats to security
EU regulations on denied boarding
compensation

Strengths

Leading low cost airline

Ryanair Holdings (Ryanair) is Europe's leading low-fare scheduled passenger airline. The company
operates short-haul, point-to-point routes between Ireland, the UK and Continental Europe. Ryanair
operates 487 low fare routes across Europe carrying approximately 42.5 million passengers a year
across 25 European countries. The company is considered to have the largest airline user, almost
monopoly at both Dublin and Stansted airports.
Ryanair is considered to be the airline with the best punctuality and highest frequency, as compared
to its major competitors like Lufthansa, Air France, SAS, Aer Lingus, easyJet and British Airways.
The company was ranked as the worlds largest international airline by International Air Transport
Association (IATA) in March 2007. A strong market position provides Ryanair with brand recognition,
and further expands its operating network.
Strong revenue growth
Ryanair has been reporting strong revenue growth. The company reported revenues of E2,236.9
million during the fiscal year ended March 2007, an increase of 32.2% over 2006. The increase was

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SWOT Analysis

primarily attributable to an increase in passenger volumes. The company's revenues increased at

a CAGR of 29.1% during 2003-2007. Additionally, Ryanair's five year average revenue growth of
29.1% is higher than the industry average of 12%. The company's strong consistent revenue growth
provides its operations with financial stability and the ability to fund expansion strategies.
Business strategy
Ryanair has an extremely strong business strategy, which is focused on its objective to firmly establish
itself as Europe's leading low-fares scheduled passenger airline. The company offers low fares
designed to stimulate demand, particularly from fare conscious leisure and business travelers.
Ryanair sells seats on a one-way basis, and sets fares on the basis of the demand for particular
flights. The company favors secondary airports, as they are generally less congested than major
airports and can be expected to provide higher rates of on-time departures. By choosing secondary
airports, the company can thus achieve faster turnaround times and fewer terminal delays and gain
competitive handling costs.
The strategy has enabled the company to have a better 'on time' performance record, than its bigger
competitors (including Lufthansa, Air France, easyJet and British Airways). Ryanair's 'on time'
performance record for calendar year 2006 was 85%, exceeding that of its principal competitors,
including Air France (80%), easyJet (73%), and British Airways (70%). Faster turnaround times are
a key element in Ryanair's efforts to maximize aircraft utilization.
In addition, Ryanair enters into agreements with third party contractors to handle passenger and
aircraft handling, ticketing and other services. The company fixes its contracts on competitive terms
by negotiating multi-year contracts, at prices that are fixed or subject only to periodic increases linked
to inflation. Ryanair's strong business strategy enables the company to synchronize its operational
strategies in accordance with the market requirements, thereby enabling the company to maintain
a cost effective business strategy.

Weaknesses

Weakening employee relations

Ryanair has been involved in a number of labor union disputes. In 2006, Ryanair workers in Girona
airport went on a series of one-day strikes called by the Spanish CCOO trade union to protest about
the working conditions of Ryanair ground staff in Spanish airports.
The company was yet again faced with a potential strike action called by Walloon Government
employed security staff at Brussels Charleroi airport in December 2006. Though the strike was called
off, it resulted in cancelling and reinstating flights. The failure to maintain good employee relations
could result in a halt in its operations and cause significant monetary loss for the company.
Lack of scale

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SWOT Analysis

The company is small in size compared to its competitors. Many of its competitors, such as Air
France, Lufthansa and British Airways are larger in size and enjoy a competitive advantage in
accessing financial, technical and human resources. Air France, which primarily operates in Europe
and North Africa, offers industrial maintenance and other air-transport-related services, including
catering and charter services and generated $ 31,595.9 million revenues during fiscal 2007. Lufthansa
generated $27,176.3 million revenues and British Airways generated $17,212.8 million revenues
during the same year.
In addition, these competitors are able to absorb raw material price hikes better than Ryanair holdings,
which generated revenues of around $3,062.6 million during 2007. Therefore, the weak revenues
of the company as compared to its peers indicate the lack of scale and weaker market position of
the company.

Opportunities

Launch of new routes

During fiscal 2007, the company announced 153 new routes and extended its operations to three
new countries, adding destinations in Marseille, Madrid and Bremen. It also started 16 new routes
across Europe and its 19th base in Dusseldorf in February 2007. Following this the company had
announced 13 new routes in July 2007 that will start in October 2007 from its Bristol, East Midlands,
Liverpool and Glasgow bases, and three new routes from Belfast City Airport.
Most recently, Ryanair announced six new routes from Dublin and two new routes from Bremen to
Alicante and Palma de Mallorca in August 2007. Expanding its operations to new countries would
help in reducing the company's dependence on the UK-Ireland market. Launch of new routes is
expected to drive the top line growth of the company.
Fleet expansion
Ryanair entered into an agreement with Boeing in 2005 to purchase 70 new Boeing 737-800 series
aircrafts over a five year period from 2006 to 2011 and acquired additional option to purchase up to
an additional 70 such aircrafts. The new Boeing 737-800s are the most technologically advanced
airplane in the single isle market. The new plane is outfitted with the latest entertainment system
and safety systems (including autoland capability and traffic collision avoidance systems). The
enlarged fleet would allow the company to support the existing capacity on existing routes and
expand its network capacity to open new routes.
Global airline market
The global airline market primarily comprising of passenger transportation witnessed stronger growth
during 2001-2005. This industry generated total revenues of $318.6 billion in 2005, representing a
compound annual growth rate (CAGR) of 2.6% for the five-year period spanning 2001-2005. Further,

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it is estimated to reach a value of $475.3 billion by 2010, an increase of 49.2% compared to 2005.
The passenger volume is also estimated to reach 3,270 million in 2010, from the passenger volume
of 2,489.7 million in 2005, representing a growth rate of 31.3%.
Moreover, the demand for low cost airlines is growing. Ticket price is the number one criterion for
most passengers when selecting a flight, well ahead of the availability of a non-stop service. In view
of this growing trend, the company is planning to expand its global fleet size and could be in a position
to benefit from the growing airline industry.

Threats

Increasing aviation fuel prices

Due to the rising oil prices globally, the prices of aviation fuel have gone up substantially in the past
few years. The average cost of a gallon of commercial jet fuel in the Rotterdam has more than
doubled since 2001, from $0.77 per-gallon in January 2001 to $2.07 per-gallon in June 2007. Also,
the Air Transport Association (ATA) averaged the jet fuel cost as $70 per barrel or $1.67 per gallon
in 2006, a 90% increase from 2001. As a result of increased aviation fuel prices, the companys fuel
cost increased by 50% to E693.3 million in fiscal 2007 over 2006. The rising fuel prices are likely to
have a direct impact on the companys margins since price volatility in fuel costs may cause an
increase in operating expenses of the company disproportionately to its sales volume
Threats to security
Security issues often pose a challenge to Ryanair. On August 10, 2006, UK security authorities
arrested and subsequently charged eight individuals in connection with an alleged plot to attack an
aircraft operating on transatlantic routes. As a result of these arrests, UK authorities immediately
introduced increased security measures on all UK outbound flights, which resulted in all passengers
being body searched, and banned the transportation in carry-on baggage of certain liquids and gels.
The introduction of these measures led to passengers suffering severe delays while passing through
these airport security checks. As a result, Ryanair cancelled 279 flights in the days immediately
following the incident and refunded a total of E2.7 million in fares to approximately 40,000 passengers.
In the days following the arrests, Ryanair also suffered reductions in bookings estimated to have
resulted in a loss of an additional approximately E1.9 million in revenue. As in the past, the company
reacted to these adverse events by initiating system-wide fare sales to stimulate demand for air
travel.
Future acts of terrorism or significant terrorist threats, particularly in London or other markets that
are significant to Ryanair, could have a material adverse effect on the company's profitability or
financial condition.
EU regulations on denied boarding compensation

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SWOT Analysis

The European Union has passed legislation for compensating airline passengers who have been
denied boarding on a flight for which they hold a valid ticket, that come into effect from February
2005. The legislation also imposes fixed levels of compensation to passengers for cancelled flights,
except where the airline can prove that such cancellation is caused by extraordinary circumstances,
such as weather, air-traffic control delays or safety issues. As Ryanair's average flight duration is
less than 1,500 km and therefore considered a short-haul flight, the amount payable would therefore
generally be E250 per passenger, per occurrence.
Passengers subject to long delays (in excess of two hours for short haul flights) would also be entitled
to assistance including meals, drinks and telephone calls, as well as hotel accommodation if the
delay extends overnight. In addition for delays, over five hours, the airline would be required to
reimburse the cost of the ticket or provide rerouting to the passenger's final destination. Ryanair
does not currently offer any such compensation or other benefits to its passengers as part of its
low-fares service. The imposition of the regulation would significantly increase the expenses incurred
by the company and affect its profitability.

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