Ryanair 2012 Annual Report Download - page 46

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personnel, equipment, facilities and systems. An inability to hire skilled personnel or to secure 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.
Ryanair’s New Routes and Expanded Operations may have an Adverse Financial Impact on its Results.
Currently, a substantial number of carriers operate routes that compete with Ryanair‘s, and the Company
expects to face further intense competition. See ―Item 4. Information on the Company—Industry
Overview European Market.‖
When Ryanair commences new routes, its load factors and fares tend to be lower than those on its
established routes and its advertising and other promotional costs tend to be higher, which may result in initial
losses that could have a material negative impact on the Company‘s results of operations as well as require a
substantial amount of cash to fund. In addition, there can be no assurance that Ryanair‘s low-fares service will
be accepted on new routes. Ryanair also periodically runs special promotional fare campaigns, in particular in
connection with the opening of new routes. Promotional fares may have the effect of increasing load factors and
reducing Ryanair‘s yield and passenger revenues on such routes during the periods that they are in effect. See
―Item 4. Information on the Company—Route System, Scheduling and Fares.‖ Ryanair expects to have other
significant cash needs as it expands, including as regards the cash required to fund aircraft purchases or aircraft
deposits related to the acquisition of additional Boeing 737-800s, although Ryanair has only another 11 aircraft
to finance under the terms of its purchase agreement with Boeing. There can be no assurance that the Company
will have sufficient cash to make such expenditures and investments, and to the extent Ryanair is unable to
expand its route system successfully, its future revenue and earnings growth will in turn be limited. Further
volcanic ash emissions, similar to those experienced in April and May 2010, could make consumers less willing
and/or able to travel and impact the launch of new routes or bases. See ―—Risks Related to the Airline
Industry—Volcanic Ash Emissions Could Affect the Company and Have a Material Adverse Effect on the
Company‘s Results of Operations.‖ See also ―—The Company Will Incur Significant Costs Acquiring New
Aircraft and the Continued Instability in the Credit and Capital Markets Could Negatively Impact Ryanair‘s
Ability to Obtain Financing on Acceptable Terms.‖
Ryanair’s Continued Growth is Dependent on Access to Suitable Airports; Charges for Airport Access
are Subject to Increase. Airline traffic at certain European airports is regulated by a system of grandfathered
―slot‖ allocations. Each slot represents authorization to take-off and land at the particular airport during a
specified time period. Although the majority of Ryanair‘s bases currently have no slot allocations, traffic at a
minority of the airports Ryanair serves, including its primary bases, is currently regulated through slot
allocations. There can be no assurance that Ryanair will be able to obtain a sufficient number of slots at slot-
controlled airports that it may wish to serve in the future, at the time it needs them, or on acceptable terms.
There can also be no assurance that its non-slot constrained bases, or the other non-slot constrained airports
Ryanair serves, will continue to operate without slot allocation restrictions in the future. See ―Item 4.
Information on the Company—Government Regulation—Slots.‖ Airports may impose other operating
restrictions such as curfews, limits on aircraft noise levels, mandatory flight paths, runway restrictions, and
limits on the number of average daily departures. Such restrictions may limit the ability of Ryanair to provide
service to, or increase service at, such airports.
Ryanair‘s future growth also materially depends on its ability to access suitable airports located in its
targeted geographic markets at costs that are consistent with Ryanair‘s ultra-low cost strategy. Any condition
that denies, limits, or delays Ryanair‘s access to airports it serves or seeks to serve in the future would constrain
Ryanair‘s ability to grow. A change in the terms of Ryanair‘s access to these facilities or any increase in the
relevant charges paid by Ryanair as a result of the expiration or termination of such arrangements and Ryanair‘s
failure to renegotiate comparable terms or rates could have a material adverse effect on the Company‘s financial
condition and results of operations. In Spain, the Spanish government has announced that airport charges at the
two largest airports, Barcelona and Madrid, will increase by over 100%, while smaller increases will take place
at smaller Spanish airports effective from July 1, 2012. Ryanair recently cancelled routes and reduced capacity
on remaining routes from Madrid and Barcelona, in response to the Spanish government‘s decision to double
airport taxes at the two airports. Ryanair anticipates redeploying this capacity to lower cost airports in Europe.
For additional information see ―Item 4. Information on the Company—Airport Operations—Airport Charges.‖
See also ―—The Company Is Subject to Legal Proceedings Alleging State Aid at Certain Airports.‖