Ryanair 2009 Annual Report Download - page 39

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Ryanair plans to finance its purchases of firm-order aircraft through a combination of bank loans,
operating and finance leases – including via sale-and-leaseback transactions – and cash flow generated from the
Company’s operations. As in the past, Ryanair expects a majority of its financing to be supported by guarantees
granted by the Export-Import Bank of the United States (“ExIm Bank”). Nonetheless, due to the significant
general deterioration in the availability of bank credit facilities over the last year, no assurance can be given that
sufficient financing will be available to Ryanair or that the terms of any such financing will be favorable. Any
inability of the Company to obtain financing for new aircraft on reasonable terms could have a material adverse
effect on its business, results of operations, and financial condition.
In addition, the financing of new and existing Boeing 737-800 aircraft has already and will continue to
significantly increase the total amount of the Company’s outstanding debt and the payments it is obliged to
make to service such debt. Furthermore, Ryanair’s ability to draw down funds under its existing bank-loan
facilities to pay for aircraft as they are delivered is subject to various conditions imposed by the counterparties
to such bank loan facilities and related loan guarantees, and any future financing is expected to be subject to
similar conditions. The Company currently has arranged financing for all 65 aircraft to be delivered in the
period to October 2010 through ExIm Bank-supported finance and operating leases (though financing for 55 of
such aircraft remains subject to the issuance of credit guarantees by ExIm Bank). The Company also has
financing mandates in place covering the following 12 firm-order aircraft deliveries through operating leases.
For additional details on Ryanair’s financings, see “Item 5. Operating and Financial Review and Prospects—
Liquidity and Capital Resources.”
Ryanair has also entered into significant derivative transactions intended to hedge its current aircraft
acquisition-related debt obligations. These derivative transactions expose Ryanair to certain risks and could
have adverse effects on its results of operations and financial condition. See “Item 11. Quantitative and
Qualitative Disclosures About Market Risk.”
The Company’s Rapid Growth May Expose It to Risks. Ryanair’s operations have grown rapidly since
it pioneered the low-fares operating model in Europe in the early 1990s. See “Item 5. Operating and Financial
Review and ProspectsHistory.” During the 2009 fiscal year, Ryanair announced 236 new routes originating
from Belgium, France, Germany, Ireland, Italy, Spain, Sweden and the U.K. Ryanair intends to continue to
expand its fleet and add new destinations and additional flights, which are expected to increase Ryanair’s
booked passenger volumes in the 2010 fiscal year to approximately 67 million passengers, an increase of
approximately 14% over the 2009 fiscal year level of approximately 58.6 million passengers, although no
assurance can be given that this target will in fact be met. If growth in passenger traffic and Ryanair’s revenues
do not keep pace with the planned expansion of its fleet, Ryanair could suffer from overcapacity and its results
of operations and financial condition (including its ability to fund scheduled aircraft purchases and related debt)
could be materially adversely affected.
The expansion of Ryanair’s fleet and operations, in addition to other factors, may also strain existing
management resources and related operational, financial, management information, and information technology
systems, including Ryanair’s Internet-based reservation system, to the point that they may no longer be adequate
to support Ryanair’s operations. This would require Ryanair to make significant additional expenditures.
Expansion will generally require additional skilled personnel, equipment facilities, and systems. An inability to
hire skilled personnel or to secure the required equipment and facilities efficiently and in a cost-effective
manner may adversely affect Ryanair’s ability to achieve growth plans and sustain or increase its profitability.