Ryanair 2012 Annual Report Download - page 54

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expected revenue levels could have a material adverse effect on the Company‘s growth or financial
performance. See ―Item 5. Operating and Financial Review and Prospects.‖ The very low marginal costs
incurred for providing services to passengers occupying otherwise unsold seats are also a factor in the industry‘s
high susceptibility to price discounting. See ―—The Company Faces Significant Price and Other Pressures in a
Highly Competitive Environment‖ above.
Safety-Related Undertakings Could Affect the Company’s Results. Aviation authorities in Europe and
the United States periodically require or suggest that airlines implement certain safety-related procedures on
their aircraft. In recent years, the U.S. Federal Aviation Administration (the ―FAA‖) has required a number of
such procedures with regard to Boeing 737-800 aircraft, including checks of rear pressure bulkheads and flight
control modules, redesign of the rudder control system, and limitations on certain operating procedures.
Ryanair‘s policy is to implement any such required procedures in accordance with FAA guidance and to
perform such procedures in close collaboration with Boeing. To date, all such procedures have been conducted
as part of Ryanair‘s standard maintenance program and have not interrupted flight schedules nor required any
material increases in Ryanair‘s maintenance expenses. However, there can be no assurance that the FAA or
other regulatory authorities will not recommend or require other safety-related undertakings or that such
undertakings would not adversely impact the Company‘s operating results or financial condition.
There also can be no assurance that new regulations will not be implemented in the future that would
apply to Ryanair‘s aircraft and result in an increase in Ryanair‘s cost of maintenance or other costs beyond
management‘s current estimates. In addition, should Ryanair‘s aircraft cease to be sufficiently reliable or should
any public perception develop that Ryanair‘s aircraft are less than completely reliable, the Company‘s business
could be materially adversely affected.
Risks Related to Ownership of the Company’s Ordinary Shares or ADRs
EU Rules Impose Restrictions on the Ownership of Ryanair Holdings’ Ordinary Shares by Non-EU
Nationals, and the Company Has Instituted a Ban on the Purchase of Ordinary Shares by Non-EU Nationals.
EU Regulation No. 1008/2008 requires that, in order to obtain and retain an operating license, an EU air carrier
must be majority-owned and effectively controlled by EU nationals. The regulation does not specify what level
of share ownership will confer effective control on a holder or holders of Ordinary Shares. The Board of
Directors of Ryanair Holdings is given certain powers under Ryanair Holdings‘ articles of association (the
―Articles‖) to take action to ensure that the number of Ordinary Shares held in Ryanair Holdings by non-EU
nationals (―Affected Shares‖) does not reach a level that could jeopardize the Company‘s entitlement to
continue to hold or enjoy the benefit of any license, permit, consent, or privilege which it holds or enjoys and
which enables it to carry on business as an air carrier. The directors, from time to time, set a ―Permitted
Maximum‖ on the number of the Company‘s Ordinary Shares that may be owned by non-EU nationals at such
level as they believe will comply with EU law. The Permitted Maximum is currently set at 49.9%. In addition,
under certain circumstances, the directors can take action to safeguard the Company‘s ability to operate by
identifying those Ordinary Shares, American Depositary Shares (―ADSs‖) or Affected Shares which give rise to
the need to take action and treat such Ordinary Shares, the American Depositary Receipts (―ADRs‖) evidencing
such ADSs, or Affected Shares as ―Restricted Shares.‖ The Board of Directors may, under certain
circumstances, deprive holders of Restricted Shares of their rights to attend, vote at, and speak at general
meetings, and/or require such holders to dispose of their Restricted Shares to an EU national within as little as
21 days. The directors are also given the power to transfer such Restricted Shares themselves if a holder fails to
comply. In 2002, the Company implemented measures to restrict the ability of non-EU nationals to purchase
Ordinary Shares, and non-EU nationals are currently effectively barred from purchasing Ordinary Shares, and
will remain so for as long as these restrictions remain in place. There can be no assurance that these restrictions
will ever be lifted. Additionally, these foreign ownership restrictions could result in Ryanair‘s exclusion from
certain stock tracking indices. Any such exclusion may adversely affect the market price of the Ordinary Shares
and ADRs. On April 19, 2012, the Company obtained shareholder approval to repurchase ADRs as part of its
general authority to repurchase up to 5% of the issued share capital in the Company traded on the NASDAQ.
See ―Item 10. Additional Information—Limitations on Share Ownership by Non-EU Nationals‖ for a detailed
discussion of restrictions on share ownership and the current ban on share purchases by non-EU nationals. As of
June 30, 2012, EU nationals owned at least 54.17% of Ryanair Holdings‘ Ordinary Shares (assuming conversion
of all outstanding ADRs into Ordinary Shares).