Ryanair 2010 Annual Report Download - page 87

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Aircraft Rentals. Aircraft rental expenses amounted to 195.5 million in the 2010 fiscal year, a 22.1%
increase from the 178.2 million reported in the 2009 fiscal year, reflecting an increase in the weighted average
number of leased Boeing 737-800 aircraft by ten, bringing the total to 50 during the 2010 fiscal year, the
negative effect of which was somewhat offset by lower lease rates and the impact of a weaker euro versus the
U.S. dollar.
Route Charges and Airport and Handling Charges. Ryanair’s route charges per ASM increased 3.4%
in the 2010 fiscal year, while airport and handling charges per ASM decreased 8.8%. In absolute terms, route
charges increased 17.3%, from 1286.6 million in the 2009 fiscal year to 1336.3 million in the 2010 fiscal year,
primarily as a result of the 12.3% increase in sectors flown. In absolute terms, airport and handling charges
increased 3.5%, from 1443.4 million in the 2009 fiscal year, to 1459.1 million in the 2010 fiscal year, reflecting
the overall growth in passenger volumes, partially offset by lower average costs at Ryanair’s newer airports and
bases.
Marketing, Distribution and Other Expenses. Ryanair’s marketing, distribution and other operating
expenses, including those applicable to the generation of ancillary revenues, decreased 16.0% on a per-ASM
basis in the 2010 fiscal year, while in absolute terms, these costs decreased 4.7%, from 1151.9 million in the
2009 fiscal year to 1144.8 million in the 2010 fiscal year, with the overall decrease primarily reflecting the
achievement of cost reductions, through an increased focus on Internet-based selling.
Operating Profit. As a result of the factors outlined above, operating profit more than tripled on a per-
ASM basis in the 2010 fiscal year, and also increased sharply in absolute terms, from 192.6 million in the 2009
fiscal year to 1402.1 million in the 2010 fiscal year.
Finance Income. Ryanair’s interest and similar income decreased 68.8%, from 175.5 million in the
2009 fiscal year to 123.5 million in the 2010 fiscal year reflecting the combined impact of lower market interest
rates and a shift in the Company’s policy towards placing its deposits with highly rated and guaranteed financial
institutions which typically provide a lower yield, which factors were partially offset by higher average cash
balances on hand.
Finance Expense. Ryanair’s interest and similar charges decreased 44.7%, from 1130.5 million in the
2009 fiscal year to 172.1 million in the 2010 fiscal year, primarily due to the impact of lower market interest
rates, the impact of which was partly offset by the drawdown of debt related to the acquisition of additional
Boeing 737-800 aircraft. These costs are expected to increase as Ryanair further expands its fleet.
Foreign Exchange (Losses) Gains. Ryanair recorded foreign exchange losses of 11.0 million in the
2010 fiscal year, as compared with foreign exchange gains of 14.4 million in the 2009 fiscal year, with the
different result being primarily due to the strengthening of the U.K. pound sterling and U.S. dollar exchange
rates against the euro during the 2010 fiscal year.
Taxation. The effective tax rate for the 2010 fiscal year was 10.5%, as compared to a tax benefit of
(6.3%) in the 2009 fiscal year. The effective tax rate reflects the statutory rate of Irish corporation tax of 12.5%,
the positive impact of the reduced rates of tax applicable to Internet-related businesses and the loss due to the
impairment of the Company’s available-for-sale financial asset (its Aer Lingus holding, which is not subject to
corporation tax). Ryanair recorded an income tax provision of 135.7 million in the 2010 fiscal year, compared
with a tax credit of 111.3 million in the 2009 fiscal year (the tax credit of 111.3 million was primarily due to the
recognition of a deferred tax asset of 134.3 million in respect of net operating losses incurred and available to
carry forward to future periods). The determination regarding the recoverability of the deferred tax asset was
based on future income forecasts, which demonstrated that it was more likely than not that future profits would
be available in order to utilize the deferred tax asset. A deferred tax asset’s recoverability is not dependent on
material improvements over historical levels of pre-tax income, material changes in the present relationship
between income reported for financial and tax purposes, or material asset sales or other non-routine transactions.