Ryanair 2010 Annual Report Download - page 45

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The Company’s Rapid Growth May Expose It to Risks. Ryanair’s operations have grown rapidly since
it pioneered the low-fares operating model in Europe in the early 1990s. See “Item 5. Operating and Financial
Review and ProspectsHistory.” During the 2010 fiscal year, Ryanair announced 356 new routes originating
from Belgium, France, Germany, Ireland, Italy, Lithuania, Malta, Norway, Portugal, Slovakia, Spain, Sweden
and the U.K. Ryanair intends to continue to expand its fleet and add new destinations and additional flights,
which are expected to increase Ryanair’s booked passenger volumes in the 2011 fiscal year to approximately
73.5 million passengers (prior to any reduction in passengers arising from the volcanic ash-related flight
cancellations), an increase of approximately 11% over the approximately 66.5 million passengers booked in the
2010 fiscal year. However, no assurance can be given that this target will in fact be met. If growth in passenger
traffic and Ryanair’s revenues do not keep pace with the planned expansion of its fleet, Ryanair could suffer
from overcapacity and its results of operations and financial condition (including its ability to fund scheduled
aircraft purchases and related debt) could be materially adversely affected. See “—Risks Related to the Airline
Industry—Volcanic Ash Emissions Could Affect the Company and Have a Material Adverse Effect on the
Company’s Results of Operations.”
The expansion of Ryanair’s fleet and operations, in addition to other factors, may also strain existing
management resources and related operational, financial, management information, and information technology
systems, including Ryanair’s Internet-based reservation system, to the point that they may no longer be adequate
to support Ryanair’s operations. This would require Ryanair to make significant additional expenditures.
Expansion will generally require additional skilled personnel, equipment, facilities and systems. An inability to
hire skilled personnel or to secure required equipment and facilities efficiently and in a cost-effective manner
may adversely affect Ryanair’s ability to achieve growth plans and sustain or increase its profitability.
Ryanair’s New Routes and Expanded Operations may have an Adverse Financial Impact on its Results.
Currently, a substantial number of carriers operate routes that compete with Ryanair’s, and the Company
expects to face further intense competition. See “Item 4. Information on the Company—Industry
OverviewEuropean Market.”
When Ryanair commences new routes, its load factors initially tend to be lower than those on its
established routes and its advertising and other promotional costs tend to be higher, which may result in initial
losses that could have a material negative impact on the Company’s results of operations as well as require a
substantial amount of cash to fund. In addition, there can be no assurance that Ryanair’s low-fares service will
be accepted on new routes. Ryanair also periodically runs special promotional fare campaigns, in particular in
connection with the opening of new routes. Promotional fares may have the effect of increasing load factors and
reducing Ryanair’s yield and passenger revenues on such routes during the periods that they are in effect. See
“Item 4. Information on the Company—Route System, Scheduling and Fares.” Ryanair expects to have other
substantial cash needs as it expands, including as regards the cash required to fund aircraft purchases or aircraft
deposits related to the acquisition of additional Boeing 737-800s. There can be no assurance that the Company
will have sufficient cash to make such expenditures and investments, and to the extent Ryanair is unable to
expand its route system successfully, its future revenue and earnings growth will in turn be limited. Further
volcanic ash emissions could make consumers less willing to travel and impact the launch of new routes or
bases. See “—Risks Related to the Airline Industry—Volcanic Ash Emissions Could Affect the Company and
Have a Material Adverse Effect on the Company’s Results of Operations.” See also “—The Company Will
Incur Significant Costs Acquiring New Aircraft and the Continued Instability in the Credit and Capital Markets
Could Negatively Impact Ryanair’s Ability to Obtain Financing on Acceptable Terms.”