Ryanair 2012 Annual Report Download - page 85

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Staff costs. Ryanair‘s staff costs, which consist primarily of salaries, wages and benefits, decreased
1.7% on a per-ASM basis, while in absolute terms, these costs increased 10.3%, from €376.1 million in the 2011
fiscal year (which included €4.6 million in relation to volcanic ash expenses) to €415.0 million in the 2012 fiscal
year. The increase in absolute terms was primarily attributable to a 10.5% increase in hours flown and a
Company-wide pay increase of 2% granted in April 2011, partially offset by a €2.5 million reversal of
previously recognized share-based payment compensation expense for awards that did not vest.
Depreciation and amortization. Ryanair‘s depreciation and amortization per ASM decreased by 0.8%,
while in absolute terms these costs increased 11.3% from €277.7 million in the 2011 fiscal year, to €309.2
million in the 2012 fiscal year. The increase was primarily attributable to the addition of 14 owned aircraft (net
of disposals) to the fleet during the 2012 fiscal year. See ―—Critical Accounting Policies—Long-lived Assets‖
above.
Fuel and oil. Ryanair‘s fuel and oil costs per ASM increased by 15.7%, while in absolute terms, these
costs increased by 29.9% from €1,227.0 million in the 2011 fiscal year to €1,593.6 million in the 2012 fiscal
year, in each case after giving effect to the Company‘s fuel hedging activities. The 29.9% increase reflected an
18.2% increase in average fuel prices paid, the impact of a 10.5% increase in the number of hours flown and a
6.1% increase in the average sector length. 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 fuel costs by the number of U.S. gallons of fuel consumed) increased 18.2% from €1.76 per U.S.
gallon in the 2011 fiscal year to €2.08 per U.S. gallon in the 2012 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, decreased 1.3% on a per-
ASM basis, while in absolute terms these expenses increased by 10.8% from €93.9 million in the 2011 fiscal
year to €104.0 million in the 2012 fiscal year. The increase in absolute terms during the fiscal year reflected the
additional costs arising from increased level of activity and the opening of new bases.
Aircraft rentals. Aircraft rental expenses amounted to €90.7 million in the 2012 fiscal year, a 6.7%
decrease from the €97.2 million reported in the 2011 fiscal year, reflecting the lower lease costs on newer
aircraft and the handback of 3 aircraft due to the maturity of leases.
Route charges and airport and handling charges. Ryanair‘s route charges per ASM decreased 0.1% in
the 2012 fiscal year, while airport and handling charges per ASM increased 0.3%. In absolute terms, route
charges increased 12.2%, from €410.6 million in the 2011 fiscal year to €460.5 million in the 2012 fiscal year,
primarily as a result of the 5.8% increase in sectors flown. In absolute terms, airport and handling charges
increased 12.6%, from €491.8 million in the 2011 fiscal year, to €554.0 million in the 2012 fiscal year,
reflecting the overall growth in passenger volumes and higher charges at Dublin and Stansted airports, partially
offset by lower average costs at Ryanair‘s newer airports and bases.
Marketing, distribution and other expenses. Ryanair‘s marketing, distribution and other operating
expenses, including those applicable to the generation of ancillary revenues, decreased 4.0% on a per-ASM
basis in the 2012 fiscal year, while in absolute terms, these costs increased 7.8%, from €167.0 million in the
2011 fiscal year to €180.0 million in the 2012 fiscal year, with the overall increase primarily reflecting the
higher level of activity and increased onboard product costs reflecting the higher level of sales.
Operating profit. As a result of the factors outlined above, operating profit increased 24.6% on a per-
ASM basis in the 2012 fiscal year, and also increased in absolute terms, from €488.2 million in the 2011 fiscal
year to €683.2 million in the 2012 fiscal year. See ―Item 3. Key Information—Risk Factors—Ryanair Has
Decided to Seasonally Ground Aircraft. The Company‘s decision to ground aircraft did not have a material
impact on the results of the Company for the year ended March 31, 2012 and, at present, is not anticipated to
have a material impact on future operations. The Company anticipates that any revenues which could have been
generated had the Company operated the grounded aircraft, would have been lower than the operating costs
associated with operating these aircraft, due to significantly higher fuel costs, airport charges and taxes. The
Company does not anticipate that any material staff costs will be incurred during future periods of the grounding
of aircraft, as the relevant staff can be furloughed under the terms of their contract without compensation and the
maintenance costs associated with the grounded aircraft will be minimal. However, the Company will still incur