Ryanair 2009 Annual Report Download - page 84

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Depreciation and Amortization. Ryanair’s depreciation and amortization per ASM decreased by
10.7%, while in absolute terms these costs increased 22.6% from €143.5 million in the 2007 fiscal year, to
€175.9 million in the 2008 fiscal year. This reflects an additional 27 owned aircraft (net of disposals) in the fleet
at March 31, 2008 and accelerated depreciation of €10.6 million arising on the agreement to dispose of aircraft
at future dates in the fiscal years ended March 31, 2009 and 2010, offset by a lower depreciation charge of €9.6
million due to changes in estimates associated with the revision of the residual value of the fleet to reflect
current market valuations and the positive impact of the stronger Euro (versus the U.S. dollar) on estimates of
maintenance component costs.
Fuel and Oil. Ryanair’s fuel and oil costs per ASM decreased by 11.5%, while in absolute terms these
costs increased by 14.1% from €693.3 million in the 2007 fiscal year to €791.3 million in the 2008 fiscal year,
in each case after giving effect to the Company’s fuel hedging activities. The 14.1% increase reflected a 27.0%
increase in the number of hours flown, an increase of 6.6% in the average sector length and the significant
increase in the average dollar-denominated fuel price discussed below, offset in part by the positive impact of
Ryanair’s fuel hedging program and the strengthening of the Euro against the U.S. dollar during the period. Fuel
and oil costs include the direct cost of fuel, the cost of delivering fuel to the aircraft and aircraft de-icing costs.
The average fuel price paid by Ryanair (calculated by dividing total scheduled fuel costs by the number of U.S.
gallons of fuel consumed) decreased 8.7% from €1.83 per U.S. gallon in the 2007 fiscal year to €1.67 per U.S.
gallon in the 2008 fiscal year, in each case after giving effect to the Company’s fuel hedging activities.
Maintenance, Materials and Repairs. Ryanair’s maintenance, materials and repair expenses, which
consist primarily of the cost of routine maintenance and the overhaul of spare parts, increased 4.5% on a per-
ASM basis, while in absolute terms these expenses increased by 34.9% from €42.0 million in the 2007 fiscal
year, to €56.7 million in the 2008 fiscal year. The absolute increase during the fiscal year reflected the higher
number of leased Boeing 737-800 aircraft, which grew to 35 from 32 during the year and the increased level of
activity, offset in part by a lower level of maintenance costs incurred due to the improved reliability of the
Boeing 737-800s operated and the positive impact of the strengthening of the Euro against the U.S. dollar during
the period.
Marketing and Distribution Costs. Ryanair’s marketing and distribution costs (including baggage-
handling commissions) per ASM decreased 44.1%, while in absolute terms these costs decreased by 27.7%,
from €23.8 million in the 2007 fiscal year to €17.2 million in the 2008 fiscal year. The decrease in absolute
terms was primarily the result of tight control on expenditure and the increased focus on Internet-based
promotions.
Aircraft Rentals. Ryanair recorded €72.7 million in aircraft rental expense during the 2008 fiscal year,
a 24.9% increase from the €58.2 million reported in the 2007 fiscal year, reflecting an increase in the weighted
average number of leased Boeing 737-800 aircraft by 10, bringing the total to 35 during the 2008 fiscal year, the
effect of which was somewhat offset by lower lease rates and the impact of a stronger Euro (versus the U.S.
dollar).
Route and Airport and Handling Charges. Ryanair’s route charges per ASM increased 0.9% in the
2008 fiscal year, while airport and handling charges per ASM increased 12.3%. In absolute terms, route charges
increased 30.1%, from €199.2 million in the 2007 fiscal year, to €259.3 million in the 2008 fiscal year, primarily
as a result of the 21.2% increase in sectors flown and the increase of 6.6% in average sector length. In absolute
terms, airport and handling charges increased 44.9%, from €273.6 million in the 2007 fiscal year, to €396.3
million in the 2008 fiscal year, reflecting the overall growth in passenger volumes as well as increased costs at
London Stansted Airport, where unit costs doubled during the 2008 fiscal year, and higher charges at Dublin
Airport, offset in part by lower average costs at the new airports and bases.
Other Expenses. Ryanair’s other operating expenses, including those applicable to the generation of
ancillary revenues, decreased 9.8% on a per-ASM basis in the 2008 fiscal year, although in absolute terms, these
costs increased 16.3%, from €104.9 million in the 2007 fiscal year to €122.0 million in the 2008 fiscal year due
to increased passenger numbers.
Operating Profit. As a result of the factors outlined above, operating profit decreased 10.0% on a per-
ASM basis in the 2008 fiscal year, but increased 13.9% in absolute terms, from €471.7 million in the 2007 fiscal
year, to €537.1 million in the 2008 fiscal year.