Ryanair 2010 Annual Report Download - page 81

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Historical Results Are Not Predictive of Future Results
The historical results of operations discussed herein may not be indicative of Ryanair’s future operating
performance. Ryanair’s future results of operations will be affected by, among other things, overall passenger
traffic volume; the availability of new airports for expansion; fuel prices; the airline pricing environment in a
period of increased competition; the ability of Ryanair to finance its planned acquisition of aircraft and to
discharge the resulting debt service obligations; economic and political conditions in Ireland, the U.K. and the
EU; terrorist threats or attacks within the EU; seasonal variations in travel; developments in government
regulations, litigation and labor relations; foreign currency fluctuations, competition and the public’s perception
regarding the safety of low-fares airlines; the value of its equity stake in Aer Lingus; changes in aircraft
acquisition, leasing, and other operating costs; flight interruptions caused by volcanic ash emissions or other
atmospheric disruptions; and the rates of income taxes paid. Ryanair expects its depreciation, staff and fuel
charges to increase as additional aircraft and related flight equipment are acquired. Future fuel costs may also
increase as a result of the depletion of petroleum reserves, the shortage of fuel production capacity and/or
production restrictions imposed by fuel oil producers. Maintenance expenses may also increase as a result of
Ryanair’s fleet expansion and replacement program. In addition, the financing of new Boeing 737-800 aircraft
will increase the total amount of the Company’s outstanding debt and the payments it is obliged to make to
service such debt. The cost of insurance coverage for certain third-party liabilities arising from “acts of war” or
terrorism increased dramatically following the September 11, 2001 terrorist attacks. Although Ryanair currently
passes on increased insurance costs to passengers by means of a special “insurance levy” on each ticket, there
can be no assurance that it will continue to be successful in doing so. See “Item 3. Key Information—Risk
Factors—The 2001 Terrorist Attacks on the United States Had a Severe Negative Impact on the International
Airline Industry.”
RECENT OPERATING RESULTS
For the quarter ended June 30, 2010 (the first quarter of the Company’s 2011 fiscal year), the Company
recorded a decrease in operating profit, from 1154.7 million in the first quarter of the 2010 fiscal year to 1119.4
million in the recently completed quarter. Total operating revenues increased from 1774.7 million in the first
quarter of 2010 to 1896.8 million in the first quarter of 2011. The decrease in operating profit was therefore due
to a 25% increase in operating expenses. Operating expenses increased from 1620.0 million in the first quarter
of 2010 to 1777.4 million in the first quarter of 2011, due primarily to a 34% increase in fuel costs, an increase
in other operating costs associated with a higher level of activity in line with the growth of the airline including
an estimated 150 million costs relating to the closure of airspace in April and May 2010 due to the Icelandic
volcanic ash disruption. The Company’s profit after taxation for the quarter ended June 30, 2010 was 193.7
million, as compared to 1123.0 million for the corresponding period of the previous year. The Company’s cash
and cash equivalents, restricted cash and financial assets with terms of less than three months amounted to
13,072.8 million at June 30, 2010 as compared with 12,500.1 million at June 30, 2009.
CRITICAL ACCOUNTING POLICIES
The following discussion and analysis of Ryanair’s financial condition and results of operations is
based on its consolidated financial statements, which are included in Item 18 and prepared in accordance with
IFRS.
The preparation of the Company’s financial statements requires the use of estimates, judgments, and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the periods presented. Actual results may differ from
these estimates.
The Company believes that its critical accounting policies, which are those that require management’s
most difficult, subjective and complex judgments, are those described in this section. These critical accounting
policies, the judgments and other uncertainties affecting application of these policies and the sensitivity of
reported results to changes in conditions and assumptions are factors to be considered in reviewing the
consolidated financial statements included in Item 18 and the discussion and analysis below. For additional
detail on these policies, see Note 1, “Basis of preparation and significant accounting policies,” to the
consolidated financial statements included in Item 18.