Ryanair 2011 Annual Report Download - page 54

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subject to direct exchange rate risks between the euro and the U.S. dollar because a significant portion of its
operating costs are incurred in U.S. dollars and none of its revenues are denominated in U.S. dollars.
Although the Company engages in foreign currency hedging transactions between the euro and the U.S.
dollar, between the euro and the U.K. pound sterling, and between the U.K. pound sterling and the U.S. dollar,
hedging activities cannot be expected to eliminate currency risks. See “Item 11. Quantitative and Qualitative
Discussion About Market Risk.”
Risks Related to Ownership of the Company’s Ordinary Shares or ADRs
EU Rules Impose Restrictions on the Ownership of Ryanair Holdings’ Ordinary Shares by Non-EU
Nationals, and the Company Has Instituted a Ban on the Purchase of Ordinary Shares by Non-EU Nationals.
EU Regulation No. 1008/2008 requires that, in order to obtain and retain an operating license, an EU air carrier
must be majority-owned and effectively controlled by EU nationals. The regulation does not specify what level
of share ownership will confer effective control on a holder or holders of shares. The Board of Directors of
Ryanair Holdings is given certain powers under Ryanair Holdings’ articles of association (the “Articles”) to take
action to ensure that the number of shares held in Ryanair Holdings by non-EU nationals (“Affected Shares”)
does not reach a level that could jeopardize the Company’s entitlement to continue to hold or enjoy the benefit
of any license, permit, consent, or privilege which it holds or enjoys and which enables it to carry on business as
an air carrier. The directors, from time to time, set a “Permitted Maximum” on the number of the Company’s
Ordinary Shares that may be owned by non-EU nationals at such level as they believe will comply with EU law.
The Permitted Maximum is currently set at 49.9%. In addition, under certain circumstances, the directors can
take action to safeguard the Company’s ability to operate by identifying those shares, American Depositary
Shares (“ADSs”) or Affected Shares which give rise to the need to take action and treat such shares, the
American Depositary Receipts (“ADRs”) evidencing such ADSs, or Affected Shares as “Restricted Shares.”
The Board of Directors may, under certain circumstances, deprive holders of Restricted Shares of their rights to
attend, vote at, and speak at general meetings, and/or require such holders to dispose of their Restricted Shares
to an EU national within as little as 21 days. The directors are also given the power to transfer such shares
themselves if a holder fails to comply. In 2002, the Company implemented measures to restrict the ability of
non-EU nationals to purchase Ordinary Shares, and non-EU nationals are currently effectively barred from
purchasing Ordinary Shares, and will remain so for as long as these restrictions remain in place. There can be no
assurance that these restrictions will ever be lifted. Additionally, these foreign ownership restrictions could
result in Ryanair’s exclusion from certain stock tracking indices. Any such exclusion may adversely affect the
market price of the Ordinary Shares and ADRs. See “Item 10. Additional Information—Limitations on Share
Ownership by Non-EU Nationals” for a detailed discussion of restrictions on share ownership and the current
ban on share purchases by non-EU nationals. As of June 30, 2011, EU nationals owned at least 52.7% of
Ryanair Holdings’ Ordinary Shares (assuming conversion of all outstanding ADRs into Ordinary Shares).
Holders of Ordinary Shares are Currently Unable to Convert those Shares into American Depositary
Receipts. In an effort to increase the percentage of its share capital held by EU nationals, on June 26, 2001,
Ryanair Holdings instructed The Bank of New York Mellon, the depositary for its ADR program (the
“Depositary”), to suspend the issuance of new ADRs in exchange for the deposit of Ordinary Shares until
further notice. Holders of Ordinary Shares cannot convert their Ordinary Shares into ADRs during this
suspension, and there can be no assurance that the suspension will ever be lifted. See also “—EU Rules Impose
Restrictions on the Ownership of Ryanair Holdings’ Ordinary Shares by Non-EU nationals and the Company
has Instituted a Ban on the Purchase of Ordinary Shares by Non-EU Nationals” above.
The Company’s Results of Operations May Fluctuate Significantly. The Company’s results of
operations have varied significantly from quarter to quarter, and management expects these variations to
continue. See “Item 5. Operating and Financial Review and Prospects—Seasonal Fluctuations.” Among the
factors causing these variations are the airline industry’s sensitivity to general economic conditions, the seasonal
nature of air travel, and trends in airlines’ costs, especially fuel costs. Because a substantial portion of airline
travel (both business and personal) is discretionary, the industry tends to experience adverse financial results
during general economic downturns. The Company is substantially dependent on discretionary air travel.
The trading price of Ryanair Holdings’ Ordinary Shares and ADRs may be subject to wide fluctuations
in response to quarterly variations in the Company’s operating results and the operating results of other airlines.
In addition, the global stock markets from time to time experience extreme price and volume fluctuations that