Ryanair 2011 Annual Report Download - page 182

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(b) an “Escalation Factor” designed to increase the Basic Price, as defined in the purchase agreement, of any
individual aircraft by applying a formula which reflects increases in the published U.S. Employment Cost and
Producer Price indices between the time the Basic Price was set and the period of six months prior to the
delivery of such aircraft.
Boeing has granted Ryanair certain price concessions with regard to the Boeing 737-800 “next
generation” aircraft. These take the form of credit memoranda to the Company for the amount of such
concessions, which the Company may apply toward the purchase of goods and services from Boeing or toward
certain payments, in respect of the purchase of the aircraft under the various Boeing contracts.
Boeing and CFMI (the manufacturer of the engines to be fitted on the purchased aircraft) have also
agreed to give the Company certain allowances in addition to providing other goods and services to the
Company on concessionary terms. These credit memoranda and allowances will effectively reduce the price of
each aircraft to the Company. As a result, the effective price of each aircraft will be significantly below the
Basic Price mentioned above. At March 31, 2011, the total potential commitment to acquire all 40 “firm”
aircraft, not taking such increases and decreases into account, will be up to U.S.$2.0 billion. (At March 31, 2010
the potential commitment was U.S.$4.6 billion to acquire 90 “firm” aircraft. At March 31, 2009 the potential
commitment was U.S.$6.8 billion to acquire 134 “firm” aircraft.).
Operating leases
The Company financed 61 of the Boeing 737-800 aircraft delivered between December 2003 and
March 2011 under seven-year, sale-and-leaseback arrangements with a number of international leasing
companies, pursuant to which each lessor purchased an aircraft and leased it to Ryanair under an operating
lease. Between October 2010 and March 2011 10 operating lease aircraft were returned to the lessor at the
agreed maturity date of the lease. At March 31, 2011 Ryanair had 51 operating lease aircraft in the fleet. As a
result, Ryanair operates, but does not own, these aircraft. Ryanair has no right or obligation to acquire these
aircraft at the end of the relevant lease terms. 5 of these leases are denominated in euro and require Ryanair to
make variable rental payments that are linked to EURIBOR. Through the use of interest rate swaps, Ryanair has
effectively converted the floating-rate rental payments due under 2 of these leases into fixed-rate rental
payments. Another 30 leases are also denominated in euro and require Ryanair to make fixed rental payments
over the term of the leases. 16 remaining operating leases are U.S. dollar-denominated, of which two require
Ryanair to make variable rental payments that are linked to U.S. dollar LIBOR, while the remaining 14 require
Ryanair to make fixed rental payments. The Company has an option to extend the initial period of seven years
on 28 of the 51 remaining operating lease aircraft as at March 31, 2011, on pre-determined terms. 3 operating
lease arrangements will mature during the year ended March 31, 2012. The Company has decided not to extend
any of these operating leases for a secondary lease period. The following table sets out the total future minimum
payments of leasing 51 aircraft (2010: 55 aircraft; 2009: 43 aircraft), ignoring interest, foreign currency and
hedging arrangements, at March 31, 2011, 2010 and 2009, respectively:
At March 31,
2011 2010 2009
Minimum
payments
Present
value of
Minimum
payments
Minimum
payments
Present
value of
minimum
payments
Minimum
payments
Present
value of
minimum
payments
1M 1M 1M 1M 1M 1M
Due within one year
................................
100.2 91.7 77.8 71.5 85.8 78.8
Due between one and five
years ................................
................................
325.5 248.5 208.8 160.3 177.8 134.9
Due after five years
................................
164.8 91.8 112.2 64.3 29.1 17.2
Total ................................
................................
590.5 432.0 398.8 296.1
292.7
230.9