Ryanair 2005 Annual Report Download - page 23

Recruitment and Promotion
During the year 304 of our people were promoted internally
within the group, and Ryanair employed on average an extra
316 staff during the year compared to the preceeding 12
months.
Safety
Safety in the airline remains an absolute priority. This is
Ryanair’s 21st year of safe operations. Ryanair has extensive
safety training programmes to ensure the recruitment of
suitably qualified pilots, cabin crew, ground crews and
maintenance personnel. In addition, the group operates and
maintains all of its aircraft in accordance with the highest
European Aviation Industry Standards which are regulated by
the Irish Aviation Authority.
At each Board Meeting a report prepared by the Air Safety
Committee is circulated in advance and is reviewed by the
Board. The Safety Committee, comprises Michael Horgan
(chairperson), a director of the Board, the Director of Flight
and Ground Operations, the Chief Pilot, the Flight Safety
Officer, Director of Engineering, Director of Personnel and In-
flight, Quality Assurance Manager-Maintenance, Deputy
Director of Ground Operations, Deputy Director of Safety and
the Health and Safety Manager. The Safety committee meets
on a quarterly basis and reports directly to the Board of
Directors. The Flight Safety Officer is responsible for
monitoring and controlling all aircraft related safety issues.
The group also has a Health and Safety Officer who is
responsible for overseeing safety in all areas. The group
continues to operate extensive training and safety
programmes to ensure the health and safety of all its
passengers and employees.
Treasury Policy, Fuel, Currency and
Interest Risk Management
The Audit Committee of the Board of Directors has
responsibility for setting the treasury policies and objectives
of the group which include controls over the procedures used
to manage the main financial risks arising from the group’s
operations which comprise of commodity price, foreign
exchange and interest rate risks. The group uses financial
instruments to manage exposures arising from these risks.
These instruments include borrowings, cash and liquid
resources and derivatives (principally jet fuel derivatives,
interest rate swaps and forward foreign exchange contracts) .
It is the group’s policy that no speculative trading in financial
instruments shall take place.
The group’s historical fuel risk management policy has been to
hedge between 70% and 90% of the forecasted rolling annual
volumes required to ensure that the future cost per gallon of
fuel is locked in. This policy had been adopted to prevent the
group being exposed, in the short term, to adverse movements
in world jet fuel prices. Occasionally however, when deemed to
be in the best interests of the group, it may deviate from this
policy owing to commercial necessity. At August 2nd, 2005
the group had hedged 90% of its fuel exposures for Q3 and Q4
of fiscal 2006 and 90% of it’s exposure for September 2005.
Details of year end fuel derivatives are set out in note 17.
Foreign currency risk in relation to the group’s trading
operations largely arises in relation to non-euro currencies.
These currencies are primarily sterling pounds and US dollar.
The group manages this risk by matching sterling revenues
against sterling costs. Any unmatched sterling revenues are
used to fund forward foreign exchange contracts to hedge US
dollar currency exposures that arise in relation to fuel,
maintenance, aviation insurance, and capital expenditure costs
- including advance payments to Boeing for future aircraft
deliveries.
The group’s objective for interest rate risk management is to
reduce interest risk through a combination of financial
instruments which lock in interest rates on debt and by
matching a proportion of floating rate assets with floating rate
liabilities. In addition, the group aims to achieve the best
available return on long-term investments of surplus cash -
subject to credit risk and liquidity constraints. Credit risk is
managed by limiting the aggregate amount and duration of
exposure to any one counterparty based on third party market
based ratings.
In line with the above interest rate risk management strategy
the group has entered into a series of interest rate swaps to
hedge against fluctuations in interest rates for certain floating
rate financing arrangements. Additionally the group has
entered into floating rate financing for certain aircraft which is
matched with floating rate deposits. Cash deposits have been
set aside as collateral (subject to an agreed capped amount of
200m) to mitigate certain counterparty risk of fluctuations
on long-term derivative and financing arrangements
(“restricted cash”). At March 31, 2005 such restricted cash
amounted to 200.0m (2004: 200.0m). Additional
numerical information on these swaps and on other derivatives
held by the group is set out in notes 15 to 18 of the financial
statements.
(Continued)
Operating & Financial Review 13
ANNUAL REPORT & FINANCIAL STATEMENTS 2005