Ryanair 2016 Annual Report Download - page 65

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Volcanic Ash Emissions Could Affect the Company and Have a Material Adverse Effect on the Company’s Results
of Operations. Between April 15 and April 20, 2010 and May 4 and May 17, 2010, a significant portion of the airspace
over northern Europe was closed by authorities as a result of safety concerns presented by emissions of ash from an
Icelandic volcano. This closure forced Ryanair to cancel 9,490 flights. In May 2011, there were further periodic closures
of parts of the European airspace due to emissions of ash from another Icelandic volcano, which resulted in the cancellation
of 96 flights.
Under the terms of Regulation (EC) No. 261/2004, described above, in addition to the payment of compensation,
Ryanair has certain duties to passengers whose flights are cancelled. In particular, Ryanair is required to reimburse
passengers who have had their flights cancelled for certain reasonable, documented expenses – primarily for
accommodation and food. Passengers must also be given a re-routing option if their flight is delayed over three hours or
if it is cancelled. Such re-routing options are not limited to Ryanair flights and other carriers must be considered if no
suitable Ryanair flight can be sourced. If a passenger elects for a refund, Ryanair’s reimbursement and re-routing
obligations cease.
Volcanic emissions may happen again and could lead to further significant flight cancellation costs which could
have a material adverse impact on the Company’s financial condition and results of operations. Furthermore, volcanic
emissions (whether from current or new sources) or similar atmospheric disturbances and resulting cancellations due to
the closure of airports could also have a material adverse effect on the Company’s financial performance indirectly, as a
consequence of changes in the public’s willingness to travel within Europe due to the risk of flight disruptions.
Any Significant Outbreak of any Airborne Disease Could Significantly Damage Ryanair’s Business. Worldwide,
there has, from time to time, been substantial publicity in recent years regarding certain potent influenza viruses and other
disease epidemics. Publicity of this type may have a negative impact on demand for air travel in Europe. Past outbreaks of
MERS, SARS, foot-and-mouth disease, avian flu and swine flu have adversely impacted the travel industries, including
aviation, in certain regions of the world, including Europe. If it spreads to Europe, the present outbreak of the Zika Vi rus
may have similar consequences. The Company believes that if any influenza or other pandemic becomes severe in Europe,
its effect on demand for air travel in the markets in which Ryanair operates could be material, and it could therefore have
a significantly adverse impact on the Company. A severe outbreak of swine flu, MERS, SARS, foot-and-mouth disease,
avian flu or another pandemic or livestock-related disease also may result in European or national authorities imposing
restrictions on travel, further damaging Ryanair’s business. A serious pandemic could therefore severely disrupt Ryanair’s
business, resulting in the cancellation or loss of bookings, and adversely affecting Ryanair’s financial condition and results
of operations.
The Company is Dependent on the Continued Acceptance of Low-fares Airlines. Ryanair has an excellent 31-year
safety record. In past years, however, accidents or other safety-related incidents involving certain other low-fares airlines
have had a negative impact on the public’s acceptance of such airlines. Any adverse event potentially relating to the safety
or reliability of low-fares airlines (including accidents or negative reports from regulatory authorities) could adversely
impact the public’s perception of, and confidence in, low-fares airlines like Ryanair, and could have a material adverse
effect on Ryanair’s financial condition and results of operations.
The Company Faces the Risk of Loss and Liability. Ryanair has an excellent 31-year safety record; however, it is
exposed to potential catastrophic losses that may be incurred in the event of an aircraft accident or terrorist incident. Any
such accident or incident could involve costs related to the repair or replacement of a damaged aircraft and its consequent
temporary or permanent loss from service. In addition, an accident or incident could result in significant legal claims
against the Company from injured passengers and others who experienced injury or property damage as a result of the
accident or incident, including ground victims. Ryanair currently maintains passenger liability insurance, employer liability
insurance, aircraft insurance for aircraft loss or damage, and other business insurance in amounts per occurrence that are
consistent with industry standards.
Ryanair currently believes its insurance coverage is adequate (although not comprehensive). However, there can
be no assurance that the amount of insurance coverage will not need to be increased, that insurance premiums will not
increase significantly, or that Ryanair will not be forced to bear substantial losses from any accidents not covered by its
insurance. Airline insurance costs increased dramatically following the September 2001 terrorist attacks on the United