Ryanair 2016 Annual Report Download - page 92

92
Expanding passenger volumes and capacity, high load factors and aggressive cost containment have enabled
Ryanair to continue to generate operating profits despite increasing price competition and increases in certain costs.
Ryanair’s total break-even load factor was 72% in both the 2015 and 2016 fiscal years. Cost per passenger was €50.92 in
the 2015 fiscal year and €47.69 in the 2016 fiscal year, with the decrease primarily reflecting the lower fuel cost per
passenger of €19.46 in the 2016 fiscal year as compared to €22.00 in the 2015 fiscal year. Ryanair recorded operating
profits of €1,042.9 million in the 2015 fiscal year and €1,460.1 million in the 2016 fiscal year. The Company recorded a
profit after taxation of €866.7 million in the 2015 fiscal year and €1,559.1 million in the 2016 fiscal year. Ryanair took
delivery of 41 Boeing 737-800 aircraft in the 2016 fiscal year. The Company will take delivery of a further 52 Boeing 737-
800 aircraft in the 2017 fiscal year and expects that these deliveries, net of lease handbacks, will allow for an approximately
10% increase in fiscal 2017 traffic. See “Item 3. Key Information—Risk Factors—Risks Related to the Company—
Ryanair Has Seasonally Grounded Aircraft.”
Investment in Aer Lingus and Subsequent Sale of this Investment in Fiscal 2016
During the 2007 fiscal year, the Company acquired 25.2% of Aer Lingus. The Company increased its interest to
29.3% during the 2008 fiscal year, and to 29.8% during the 2009 fiscal year at a total aggregate cost of €407.2 million.
In 2006 and 2012, Ryanair made offers to acquire the entire share capital of Aer Lingus, but both of these offers
were prohibited by the European Commission on competition grounds. In addition, from 2010 to 2013 the U.K.
competition authority investigated Ryanair’s minority stake in Aer Lingus. On August 28, 2013, it issued its decision in
which it found that Ryanair’s shareholding “gave it the ability to exercise material influence over Aer Lingus” and “had
led or may be expected to lead to a substantial lessening of competition in the markets for air passenger services between
Great Britain and Ireland”, and ordered Ryanair to reduce its shareholding in Aer Lingus to no more than five percent of
Aer Lingus’ issued ordinary shares. Ryanair appealed this decision on procedural and substantive grounds, but withdrew
the appeal in September 28, 2015, following the sale of its stake in Aer Lingus in July 2015.
On June 19, 2015, IAG issued a formal offer for Aer Lingus Group plc. The offer, which was recommended by
the Board of Aer Lingus Group plc, consisted of cash consideration of €2.50 per ordinary share plus a €0.05 ordinary
dividend (already paid in May 2015). On July 10, 2015, Ryanair confirmed that the Board of Ryanair Holdings voted
unanimously to accept the IAG offer for Ryanair’s 29.8% shareholding in Aer Lingus Group plc, subject to that offer
receiving merger clearance from the European Commission, which was subsequently granted on July 14, 2015. On
September 1, 2015 Ryanair received total consideration of €398.1 million for the sale of its stake in Aer Lingus.
Historical Results Are Not Predictive of Future Results
The historical results of operations discussed herein may not be indicative of Ryanair’s future operating
performance. Ryanair’s future results of operations will be affected by, among other things, overall passenger traffic
volume; the availability of new airports for expansion; fuel prices; the airline pricing environment in a period of increased
competition; the ability of Ryanair to finance its planned acquisition of aircraft and to discharge the resulting debt service
obligations; economic and political conditions in Ireland, the U.K. and the EU; terrorist threats or attacks within the EU;
seasonal variations in travel; developments in government regulations, litigation and labor relations; foreign currency
fluctuations, the impact of the banking crisis and potential break-up of the Eurozone; Brexit; competition and the public’s
perception regarding the safety of low-fares airlines; changes in aircraft acquisition, leasing, and other operating costs;
flight interruptions caused by volcanic ash emissions or other atmospheric disruptions; flight disruptions caused by periodic
and prolonged air traffic controller strikes in Europe; the rates of income and corporate taxes paid, and the impact of the
financial and Eurozone crisis. Ryanair expects its depreciation, staff and fuel charges to increase as additional aircraft and
related flight equipment are acquired. Future fuel costs may also increase as a result of the depletion of petroleum reserves,
the shortage of fuel production capacity and/or production restrictions imposed by fuel oil producers. Maintenance
expenses may also increase as a result of Ryanair’s fleet expansion and replacement program. In addition, the financing of
new Boeing 737-800 aircraft and Boeing 737-MAX-200 will increase the total amount of the Company’s outstanding debt
and the payments it is obliged to make to service such debt. The cost of insurance coverage for certain third-party liabilities
arising from “acts of war” or terrorism increased dramatically following the September 11, 2001 terrorist attacks. Although
Ryanair currently passes on increased insurance costs to passengers by means of a special “insurance levy” on each ticket,
there can be no assurance that it will continue to be successful in doing so. See “Item 3. Key Information—Risk Factors—