Ryanair 2016 Annual Report Download - page 105

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At March 31, 2016, Ryanair had 43 operating lease aircraft in the fleet. As a result, Ryanair operates, but does
not own, these aircraft, which were leased to provide flexibility for the aircraft delivery program. Ryanair has no right or
obligation to acquire these aircraft at the end of the relevant lease terms. 9 leases are denominated in euro and require
Ryanair to make fixed rental payments over the term of the lease. The remaining 34 operating leases are U.S. dollar-
denominated and require Ryanair to make fixed rental payments. The Company has an option to extend the initial period
of seven years on 23 of the 43 remaining operating lease aircraft as at March 31, 2016 on pre-determined terms. In addition
to the above, the Company financed 30 of the Boeing 737-800 aircraft delivered between March 2005 and March 2014
with 13-year euro-denominated JOLCOs. 26 of these JOLCO arrangements are still outstanding as of March 31, 2016.
These structures are accounted for as finance leases and are initially recorded at fair value on the Company’s balance sheet.
Under each of these contracts, Ryanair has a call option to purchase the aircraft at a pre-determined price after a period of
10.5 years, which it may exercise. Ryanair exercised this option for four of these aircraft in fiscal year 2015. Six aircraft
have been financed through euro-denominated 12-year amortizing commercial debt transactions.
Since, under each of the Company’s operating leases, the Company has a commitment to maintain the relevant
aircraft, an accounting provision is made during the lease term for this obligation based on estimated future costs of major
airframe, engine maintenance checks and restitution of major life limited parts by making appropriate charges to the income
statement calculated by reference to the number of hours or cycles operated during the year. Under IFRS, the accounting
treatment for these costs with respect to leased aircraft differs from that for aircraft owned by the Company, for which
such costs are capitalized and amortized.
Ryanair currently has corporate ratings of BBB+ (stable) from both Standard & Poor’s and Fitch Ratings and a
€3 billion EMTN program. Ryanair issued €850.0 million in unsecured Eurobonds with a 7-year tenor at a coupon of
1.875% in June 2014 and €850.0 million in unsecured Eurobonds an 8-year tenor at a coupon of 1.125% in March 2015
under this program that are guaranteed by Ryanair Holdings. The Company used the proceeds from these issuances for
general corporate purposes.
Contractual Obligations. The table below sets forth the contractual obligations and commercial commitments of
the Company with definitive payment terms, which will require significant cash outlays in the future, as of March 31,
2016. These obligations primarily relate to Ryanair’s aircraft purchase and related financing obligations, which are
described in more detail above, and do not reflect the Eurobond issuances in June 2014 and March 2015. For additional
information on the Company’s contractual obligations and commercial commitments, see Note 23 to the consolidated
financial statements included in Item 18.
The amounts listed under “Finance Lease Obligations” reflect the Company’s obligations under its JOLCOs. See
“Item 5. Operating and Financial Review and Prospects Liquidity and Capital Resources.”
The amounts listed under “Purchase Obligations” in the table reflect obligations for aircraft purchases and are
calculated by multiplying the number of aircraft the Company is obligated to purchase under its current agreements with
Boeing during the relevant period by the Basic Price for each aircraft pursuant to the relevant contract, with the dollar-
denominated Basic Price being converted into euro at an exchange rate of $1.1385 = €1.00 (based on the European Central
Bank Rate on March 31, 2016). The relevant amounts therefore exclude the effect of the price concessions granted to
Ryanair by Boeing and CFM, as well as any application of the Escalation Factor described below. As a result, Ryanair’s
actual expenditures for aircraft during the relevant periods will be lower than the amounts listed under “Purchase
Obligations” in the table.
With respect to purchase obligations under the terms of the 2013 Boeing Contract and 2014 Boeing Contract, the
Company was required to pay Boeing 1.0% of the Basic Price of each of the 283 firm-order Boeing 737 aircraft at the time
the contracts were signed (such deposit being fully refundable if the Company had not received the shareholder approval
at the EGMs on June 18, 2013 and November 28, 2014), and will be required to make periodic advance payments of the
purchase price for each aircraft it has agreed to purchase during the course of the two-year period preceding the delivery
of each aircraft. As a result of these required advance payments, the Company will have paid up to 30% of the Basic Price
of each aircraft prior to its delivery (including the addition of an estimated “Escalation Factor” but before deduction of any
credit memoranda and other concessions); the balance of the net price is due at the time of delivery. Similar terms applied
under the 2005 Boeing contract, with the first payment due when the contract was signed in February 2005.