Ryanair 2012 Annual Report Download - page 68

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winter 2010 by 17% and the number of aircraft based at London (Stansted) would be reduced to 22. Ryanair
also noted that, as a result of other capacity reductions at its U.K. bases except for the bases at Edinburgh and
Leeds Bradford, its total U.K. capacity fell by 16% in the period from November 1, 2010 to March 31, 2011.
See ―Item 3. Risk Factors Risks Related to the Company Ryanair‘s Continued Growth is Dependent on
Access to Suitable Airports; Charges for Airport Access are Subject to Increase.‖ See also ―Item 8. Financial
Information Other Financial Information Legal Proceedings EU State Aid-Related Proceedings‖ for
information regarding legal proceedings in which Ryanair‘s economic arrangements with several publicly
owned airports are being contested.
FUEL
The cost of jet fuel accounted for approximately 43% and 39% of Ryanair‘s total operating expenses in
the fiscal years ended March 31, 2012 and 2011, respectively (in each case, this accounts for costs after giving
effect to the Company‘s fuel hedging activities but excludes de-icing costs, which accounted for approximately
1% of total fuel costs in each of the fiscal years ended March 31, 2012 and 2011). Jet fuel costs experienced
substantial variance in the fiscal years ended March 31, 2012 and 2011. The future availability and cost of jet
fuel cannot be predicted with any degree of certainty, and Ryanair‘s low-fares policy limits its ability to pass on
increased fuel costs to passengers through increased fares. Jet fuel prices are dependent on crude oil prices,
which are quoted in U.S. dollars. If the value of the U.S. dollar rises against the euro, Ryanair‘s fuel costs,
expressed in euro, may increase even absent any increase in the U.S. dollar price of jet fuel. Ryanair has also
entered into foreign currency forward contracts to hedge against some currency fluctuations. See ―Item 11.
Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency Exposure and Hedging.‖
Ryanair has historically entered into arrangements providing for substantial protection against
fluctuations in fuel prices, generally through forward contracts covering periods of up to 18 months of
anticipated jet fuel requirements. Ryanair (like many other airlines) has, in more recent periods, entered into
hedging arrangements on a much more selective basis. As of July 27, 2012, Ryanair had entered into forward jet
fuel (jet kerosene) contracts covering approximately 90% of its estimated requirements for the fiscal year ending
March 31, 2013 at prices equivalent to approximately $1,000 per metric ton. In addition, as of July 27, 2012,
Ryanair had entered into forward jet fuel (jet kerosene) contracts covering approximately 50% of its estimated
requirements for the first half of the fiscal year ending March 31, 2014 at prices equivalent to approximately
$935 per metric ton, and had not entered into any jet fuel hedging contracts with respect to its expected fuel
purchases beyond that period. See ―Item 3. Key Information—Risk Factors—Risks Related to the Company—
Changes in Fuel Costs and Fuel Availability Affect the Company‘s Results and Increase the Likelihood of
Adverse Impact to the Company‘s Profitability‖ and ―Item 11. Quantitative and Qualitative Disclosures About
Market Risk—Fuel Price Exposure and Hedging‖ for additional information on recent trends in fuel costs and
the Company‘s related hedging activities, as well as certain associated risks. See also ―Item 5. Operating and
Financial Review and Prospects—Fiscal Year 2012 Compared with Fiscal Year 2011—Fuel and Oil.‖
The following table details Ryanair‘s fuel consumption and costs for scheduled operations (i.e. it
excludes costs related to de-icing and EU emissions trading costs) after giving effect to the Company‘s fuel
hedging activities for fiscal years ended March 31, 2012, 2011 and 2010. The excluded de-icing costs amounted
to €9.3 million, €11.2 million and €11.6 million, respectively, for the fiscal years ended March 31, 2012, 2011
and 2010. De-icing costs are costs incurred for the labor and anti-freeze used to de-ice aircraft. The excluded EU
emissions trading costs amounted to €2.2 million, nil and nil, respectively for the fiscal years ended March 31,
2012, 2011 and 2010.