Ryanair 2010 Annual Report Download - page 70

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The following table details Ryanair’s fuel consumption and costs for scheduled operations (i.e. it
excludes costs related to de-icing) after giving effect to the Company’s fuel hedging activities for fiscal years
ended March 31, 2010, 2009 and 2008. The excluded de-icing costs amounted to 111.6 million, 19.7 million,
and 15.5 million, respectively, for the fiscal years ended March 31, 2010, 2009 and 2008. De-icing costs, which
are costs incurred for the labor and anti-freeze used to de-ice aircraft, have increased significantly in recent
years as the Company’s route network and number of sectors flown have increased.
Fiscal Year ended March 31,
2010 2009 2008
Scheduled fuel consumption
(millions of U.S. gallons)
................................
582.5 530.5 469.5
Available seat miles (ASM) (millions)
................
53,469.6 47,102.5 41,342.2
Scheduled fuel consumption (U.S. gallons)
per ASM ................................
.........................
0.011 0.011 0.011
Total scheduled fuel costs (a) (1 millions)
...........
882.3 1,247.3 785.8
Cost per U.S. gallon ................................
.............
11.515 12.351 11.674
Total scheduled fuel costs as a percentage
of total operating costs................................
....
34.1% 43.8% 36.1%
______________
(a) Omits de-icing costs.
INSURANCE
Ryanair is exposed to potential catastrophic losses that may be incurred in the event of an aircraft
accident or terrorist incident. Any such accident or incident could involve costs related to the repair or
replacement of a damaged aircraft and its consequent temporary or permanent loss from service. In addition, an
accident or incident could result in significant legal claims against the Company from injured passengers and
others who experienced injury or property damage as a result of the accident or incident, including ground
victims. Ryanair maintains aviation third-party liability insurance, passenger liability insurance, employer
liability insurance, directors and officers liability insurance, aircraft insurance for aircraft loss or damage, and
other business insurance in amounts per occurrence consistent with industry standards. Ryanair believes its
insurance coverage is adequate, although not comprehensive. There can be no assurance that the amount of such
coverage will not need to be increased, that insurance premiums will not increase significantly or that Ryanair
will not be forced to bear substantial losses from accidents. Ryanair’s insurance does not cover claims for losses
incurred when, due to unforeseen events, airspace is closed and aircraft are grounded, such as the airspace
closures described on page 48, which resulted from volcanic ash in the northern European airspace during April
and May 2010.
The cost of insurance coverage for certain third-party liabilities arising from “acts of war” or terrorism
increased dramatically as a result of the September 11, 2001 terrorist attacks. In the immediate aftermath,
aircraft liability war indemnities for amounts above $50 million were, in the absence of any alternative
coverage, provided by the Irish Government at pre-September 11, 2001 levels of coverage on the basis of a per-
passenger surcharge. In March 2002, once such coverage was again commercially available, Ryanair arranged
coverage to replace that provided by the government indemnity. The replacement insurance coverage operated
on the basis of a per-passenger surcharge with an additional surcharge based on hull values. Ryanair’s insurers
have indicated that the scope of the Company’s current war-related insurance coverage may exclude certain
types of catastrophic incidents, which may result in the Company seeking alternative coverage. Ryanair to date
has passed increased insurance costs on to passengers by means of a special “insurance levy” on each ticket.
During the 2006 fiscal year, Ryanair established Aviation Insurance (IOM) Limited (“AIL”), a wholly
owned insurance company subsidiary, to provide the Company with self-insurance as part of its ongoing risk-
management strategy. AIL’s activities are currently limited to underwriting a portion of the Company’s aviation
insurance program, which covers not only the Company’s aircraft but also its liability to passengers and to third
parties. AIL reinsures virtually all of the risk it underwrites with recognized third parties in the aviation
reinsurance market, with the amount of AIL’s maximum aggregate exposure not currently subject to such
reinsurance agreements being equal to approximately $15.6 million.