REG - Ryanair Holdings PLC - Annual Financial Report <Origin Href="QuoteRef">RYA.I</Origin> - Part 4

Ryanair HoldingsAnnouncement

06/09/2014 22:39

- Part 4: For the preceding part double click  ID:nRSd7552Nc 

costs tend to be higher, which may result in initial losses that could have a material
negative impact on Ryanair's results of operations as well as require a substantial amount of cash to fund. In addition,
there can be no assurance that Ryanair's low-fares service will be accepted on new routes. Ryanair also periodically runs
special promotional fare campaigns, in particular in connection with the opening of new routes. Promotional fares may have
the effect of increasing load factors and reducing Ryanair's yield and passenger revenues on such routes during the periods
that they are in effect. Ryanair has other significant cash needs as it expands, including as regards the cash required to
fund aircraft purchases or aircraft deposits related to the acquisition of additional Boeing 737-800 series aircraft. There
can be no assurance that Ryanair will have sufficient cash to make such expenditures and investments, and to the extent
Ryanair is unable to expand its route system successfully, its future revenue and earnings growth will in turn be limited.
See "-The Company Will Incur Significant Costs Acquiring New Aircraft and Any Instability in the Credit and Capital Markets
Could Negatively Impact Ryanair's Ability to Obtain Financing on Acceptable Terms." 
 
Ryanair's Continued Growth is Dependent on Access to Suitable Airports; Charges for Airport Access are Subject to Increase.
Airline traffic at certain European airports is regulated by a system of grandfathered "slot" allocations. Each slot
represents authorization to take-off and land at the particular airport during a specified time period. Although the
majority of Ryanair's bases currently have no slot allocations, traffic at a minority of the airports Ryanair serves,
including some of its primary bases, is currently regulated through slot allocations. In addition, many of the primary
airports that Ryanair intends to serve as part of its recent strategic initiatives are subject to slot allocations. There
can be no assurance that Ryanair will be able to obtain a sufficient number of slots at slot-controlled airports that it
may wish to serve in the future, at the time it needs them, or on acceptable terms. There can also be no assurance that its
non-slot constrained bases, or the other non-slot constrained airports Ryanair serves, will continue to operate without
slot allocation restrictions in the future. See "Item 4. Information on the Company-Government Regulation-Slots." Airports
may impose other operating restrictions such as curfews, limits on aircraft noise levels, mandatory flight paths, runway
restrictions, and limits on the number of average daily departures. Such restrictions may limit the ability of Ryanair to
provide service to, or increase service at, such airports. 
 
Ryanair's future growth also materially depends on its ability to access suitable airports located in its targeted
geographic markets at costs that are consistent with Ryanair's strategy. Any condition that denies, limits, or delays
Ryanair's access to airports it serves or seeks to serve in the future would constrain Ryanair's ability to grow. A change
in the terms of Ryanair's access to these facilities or any increase in the relevant charges paid by Ryanair as a result of
the expiration or termination of such arrangements and Ryanair's failure to renegotiate comparable terms or rates could
have a material adverse effect on the Company's financial condition and results of operations. For example in Spain, the
Spanish government increased airport taxes at the two largest airports, Barcelona and Madrid, by over 100%, while smaller
increases were implemented at other Spanish airports effective from July 1, 2012. As a result, Ryanair cancelled routes and
reduced capacity on remaining routes from Madrid and Barcelona in response to the Spanish government's decision to double
airport taxes at the two airports.  For additional information, see "Item 4. Information on the Company-Airport
Operations-Airport Charges." See also "-The Company Is Subject to Legal Proceedings Alleging State Aid at Certain
Airports." 
 
The Company's Acquisition of 29.8% of Aer Lingus and Subsequent Failure to Conclude a Complete Acquisition of Aer Lingus
Could Expose the Company to Risk. 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 E407.2 million. Following the acquisition of its initial stake and upon the approval of the Company's shareholders,
management proposed to effect a tender offer to acquire the entire share capital of Aer Lingus. This 2006 offer was,
however, prohibited by the European Commission on competition grounds. 
 
In October 2007, the European Commission reached a formal decision that it would not force Ryanair to sell its shares in
Aer Lingus. This decision has been affirmed on appeal. However, EU legislation may change in the future to require such a
forced disposition. If eventually forced to dispose of its stake in Aer Lingus, Ryanair could suffer significant losses due
to the negative impact on market prices of the forced sale of such a significant portion of Aer Lingus' shares. 
 
The United Kingdom's Office of Fair Trading ("OFT") wrote to Ryanair in September 2010, advising that it intended to
investigate Ryanair's minority stake in Aer Lingus. Ryanair objected on the basis that the OFT's investigation was
time-barred. On June 15, 2012, the OFT referred the investigation of Ryanair's minority stake in Aer Lingus to the U.K.
Competition Commission (the "Competition Commission"). 
 
On June 19, 2012, Ryanair announced its third all cash offer to acquire all of the ordinary shares of Aer Lingus it did not
own at a price of E1.30 per ordinary share and immediately commenced pre-notification discussions with the European
Commission for the purpose of preparing a merger filing.  Ryanair contended that, pending the outcome of the European
Commission's review of Ryanair's bid, on the basis of the duty of "sincere cooperation" between the EU and the Member
States, and under the EU Merger Regulation, the UK Competition Commission's investigation of Ryanair's minority stake in
Aer Lingus should not have properly proceeded.  Nevertheless, Aer Lingus argued that the investigation should proceed and
that Ryanair's offer was in breach of certain provisions of the UK Enterprise Act 2002. 
 
On July 10, 2012, the Competition Commission ruled that Ryanair's bid was not in breach of the UK Enterprise Act, but
nevertheless decided that its investigation of the minority stake could proceed in parallel with the European Commission's
investigation of Ryanair's offer for Aer Lingus.  In July 2012, Ryanair appealed the latter part of the Competition
Commission's ruling to the UK Competition Appeal Tribunal, and the Competition Commission's investigation became suspended
pending the appeal process.  On August 8, 2012, the Competition Appeal Tribunal ("CAT") rejected Ryanair's appeal and found
that the Competition Commission's investigation could proceed in parallel with the European Commission's investigation, but
that the Competition Commission must avoid taking any final decision which could conflict with the European Commission's
ultimate conclusion on Ryanair's bid.  In August 2012, Ryanair appealed the Competition Appeal Tribunal judgment to the UK
Court of Appeal.  In December 2012, the Court of Appeal rejected Ryanair's appeal and subsequently the Competition
Commission's investigation restarted.  On December 13, 2012, Ryanair applied to the UK Supreme Court for permission to
appeal the judgment of the UK Court of Appeal.  The UK Supreme Court refused permission to appeal on April 25, 2013. 
 
On February 27, 2013, the European Commission prohibited Ryanair's bid to acquire the entire share capital of Aer Lingus on
the claimed basis that it would be incompatible with the EU internal market.  Ryanair appealed this decision to the EU
General Court on May 8, 2013. The judgment of the EU General Court is expected in 2015 and may affirm or annul the decision
of the European Commission. 
 
Following the European Commission's decision to prohibit its offer for Aer Lingus, Ryanair actively engaged with the UK
Competition Commission's investigation of the minority stake. On August 28, 2013, the UK Competition Commission (the
"UKCC") issued its final 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."  As a result of its findings, the UKCC ordered Ryanair to
reduce its shareholding in Aer Lingus to below 5 percent of Aer Lingus' issued ordinary shares.  Ryanair appealed the
UKCC's final decision to the CAT on September 23, 2013.  The CAT rejected Ryanair's appeal on March 7, 2014. On April 23,
2014, the CAT granted Ryanair permission to appeal the CAT's judgment to the UK Court of Appeal. Should this appeal or any
subsequent appeal to the UK Supreme Court be unsuccessful, Ryanair could suffer losses due to the negative impact on market
prices of the forced sale of such a significant portion of Aer Lingus' shares.  Ryanair believes that the enforcement of
any such decision should be delayed until the outcome of Ryanair's appeal against the European Commission's February 2013
prohibition decision of Ryanair's 2012 offer for Aer Lingus, and the conclusion of any appeals against the UKCC's decision
in the UK courts.  However, it is possible that the UKCC will seek to enforce any such sell-down remedy at an earlier date.
 For more information, see "Item 8. Financial Information-Other Financial Information-Legal Proceedings-Matters Related to
Investment in Aer Lingus." 
 
Labor Relations Could Expose the Company to Risk. A variety of factors, including, but not limited to, Ryanair's
profitability and its seasonal grounding policy, may make it difficult for Ryanair to avoid increases to salary levels and
productivity payments. Consequently, there can be no assurance that Ryanair's existing employee compensation arrangements
may not be subject to change or modification at any time. These steps may lead to deterioration in labor relations in
Ryanair and could impact Ryanair's business or results. Ryanair also operates in certain jurisdictions with above average
payroll taxes and employee-related social insurance costs, which could have an impact on the availability and cost of
employees in these jurisdictions. Ryanair's crew in continental Europe generally operate on Irish contracts of employment
on the basis thatthose crew work on Irish Territory, (i.e., on board Irish Registered Aircraft). A number of challenges
have been initiated by government agencies in a number of countries to the applicability of Irish labor law to these
contracts, and if Ryanair were forced to concede that Irish jurisdiction did not apply to those crew who operate from
continental Europe then it could lead to increased salary, social insurance and pension costs and a potential loss of
flexibility. In relation to social insurance costs, the European Parliament implemented amendments to Regulation (EC)
883/2004 which, in the majority of jurisdictions, imposes substantial social insurance contribution increases for either or
both Ryanair and the individual employees. While this change to social insurance contributions relates primarily to new
employees, its effect in the long term may materially increase Company or employee social insurance contributions and could
affect Ryanair's decision to operate from those high cost locations, resulting in redundancies and a consequent
deterioration in labor relations.   For additional details see - "Change in EU Regulations in Relation to Employers and
Employee Social Insurance could Increase Costs" below. 
 
Ryanair currently conducts collective bargaining negotiations with groups of employees, including its pilots and cabin
crew, regarding pay, work practices, and conditions of employment, through collective-bargaining units called "Employee
Representative Committees". On June 19, 2009, BALPA (the U.K. pilots union) made a request for voluntary recognition under
applicable U.K. legislation, which Ryanair rejected. BALPA had the option of applying to the U.K.'s Central Arbitration
Committee (CAC) to organize a vote on union recognition by Ryanair's pilots in relevant bargaining units, as determined by
the CAC, but BALPA decided not to proceed with an application at that time. The option to apply for a ballot remains open
to BALPA and if it were to seek and be successful in such a ballot, it would be able to represent the U.K. pilots in
negotiations over salaries and working conditions. Limitations on Ryanair's flexibility in dealing with its employees or
the altering of the public's perception of Ryanair generally could have a material adverse effect on Ryanair's business,
operating results, and financial condition. For additional details, see "Item 6. Directors, Senior Management and
Employees-Staff and Labor Relations." Limitations on Ryanair's flexibility in dealing with its staff or the altering of the
public's perception of Ryanair generally could have a material adverse effect on the Company's business, operating results,
and financial condition. 
 
The Company is Dependent on External Service Providers.Ryanair currently assigns its engine overhauls and "rotable" repairs
to outside contractors approved under the terms of Part 145, the European regulatory standard for aircraft maintenance
established by the European Aviation Safety Agency ("Part 145"). The Company also assigns its passenger, aircraft and
ground handling services at airports other than Dublin and certain airports in Spain and the Canary Islands to established
external service providers. See "Item 4. Information on the Company-Maintenance and Repairs-Heavy Maintenance" and "Item 4.
Information on the Company-Airport Operations¾Airport Handling Services." 
 
The termination or expiration of any of Ryanair's service contracts or any inability to renew them or negotiate replacement
contracts with other service providers at comparable rates could have a material adverse effect on the Company's results of
operations. Ryanair will need to enter into airport service agreements in any new markets it enters, and there can be no
assurance that it will be able to obtain the necessary facilities and services at competitive rates. In addition, although
Ryanair seeks to monitor the performance of external parties that provide passenger and aircraft handling services, the
efficiency, timeliness, and quality of contract performance by external providers are largely beyond Ryanair's direct
control. Ryanair expects to be dependent on such outsourcing arrangements for the foreseeable future. 
 
The Company is Dependent on Key Personnel. Ryanair's success depends to a significant extent upon the efforts and abilities
of its senior management team, including Michael O'Leary, the Chief Executive Officer, and key financial, commercial,
operating and maintenance personnel. Mr. O'Leary's current contract may be terminated by either party upon 12 months'
notice.  See "Item 6. Directors, Senior Management and Employees-Compensation of Directors and Senior Management-Employment
and Bonus Agreement with Mr. O'Leary." Ryanair's success also depends on the ability of its executive officers and other
members of senior management to operate and manage effectively, both independently and as a group. Although Ryanair's
employment agreements with Mr. O'Leary and some of its other senior executives contain non-competition and non-disclosure
provisions, there can be no assurance that these provisions will be enforceable in whole or in part. Competition for highly
qualified personnel is intense, and either the loss of any executive officer, senior manager, or other key employee without
adequate replacement or the inability to attract new qualified personnel could have a material adverse effect upon
Ryanair's business, operating results, and financial condition. 
 
The Company Faces Risks Related to its Internet Reservations Operations and its Announced Elimination of Airport Check-in
Facilities. Over 99% of Ryanair's flight reservations are made through its website. Although Ryanair has established a
contingency program whereby the website is hosted in three separate locations, each of these locations accesses the same
booking engine, located at a single center, in order to make reservations. 
 
A back-up booking engine is available to Ryanair to support its existing platform in the event of a breakdown in this
facility. Nonetheless, the process of switching over to the back-up engine could take some time and there can be no
assurance that Ryanair would not suffer a significant loss of reservations in the event of a major breakdown of its booking
engine or other related systems, which, in turn, could have a material adverse effect on Ryanair's operating results or
financial condition. 
 
Since October 1, 2009, all passengers have been required to use Internet check-in. Internet check-in is part of a package
of measures intended to reduce check-in lines and passenger handling costs and pass on these savings by reducing passenger
airfares. Ryanair has deployed this system across its network. Any disruptions to the Internet check-in service as a result
of a breakdown in the relevant computer systems or otherwise could have a material adverse impact on these
service-improvement and cost-reduction efforts. There can be no assurance, however, that this process will continue to be
successful or that consumers will not switch to other carriers that provide standard check-in facilities, which would
negatively affect Ryanair's results of operations and financial condition. 
 
The Company Faces Risks Related to Unauthorized Use of Information from the Company's Website. Screenscraper websites gain
unauthorized access to Ryanair's website and booking system, extract flight and pricing information and display it on their
own websites for sale to customers at prices which may include hidden intermediary fees on top of Ryanair's fares. Ryanair
does not allow any such commercial use of its website and objects to the practice of screenscraping also on the basis of
certain legal principles, such as database rights, copyright protection, etc. Ryanair is involved in a number of legal
proceedings against the proprietors of screenscraper websites in Ireland, Germany, The Netherlands, France, Spain, Italy
and Switzerland. Ryanair's objective is to prevent any unauthorized use of its website. Ryanair does allow certain
companies who operate fare comparison (i.e. not reselling) websites to access its schedule and fare information for the
purposes of fare comparison provided they sign a license and use the agreed method to access the data. Ryanair also permits
Travelport (trading as Galileo and Worldspan, a GDS operator) to provide access to Ryanair's fares to traditional travel
agencies. Ryanair has received favourable rulings in Ireland, Germany and The Netherlands, and unfavorable rulings in
Spain, France and Italy, in its actions against screenscrapers. However, pending the outcome of these legal proceedings and
if Ryanair were to be ultimately unsuccessful in them, the activities of screenscraper websites could lead to a reduction
in the number of customers who book directly on Ryanair's website and consequently to a reduction in Ryanair's ancillary
revenue stream. Also, some customers may be lost to Ryanair once they are presented by a screenscraper website with a
Ryanair fare inflated by the screenscraper's intermediary fee. This could also adversely affect Ryanair's reputation as a
low-fares airline, which could negatively affect Ryanair's results of operations and financial condition. 
 
For additional details, see "Item 8. Financial Information-Other Financial Information-Legal Proceedings-Legal Proceedings
Against Internet Ticket Touts." 
 
Ryanair is Subject To Cyber Security Risks And May Incur Increasing Costs In An Effort To Minimise Those Risks. As almost
all of Ryanair's reservations are made through its website, security breaches could expose it to a risk of loss or misuse
of customer information, litigation and potential liability. Although Ryanair takes steps to secure its website and
management information systems, the security measures it has implemented may not be effective, and its systems may be
vulnerable to theft, loss, damage and interruption from a number of potential sources and events, including unauthorized
access or security breaches, cyber attacks, computer viruses, power loss, or other disruptive events. Ryanair may not have
the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber attacks. Attacks may be
targeted at Ryanair, its customers and suppliers, or others who have entrusted it with information. 
 
In addition, data and security breaches can also occur as a result of non-technical issues, including breaches by Ryanair
or by persons with whom it has commercial relationships that result in the unauthorized release of personal or confidential
information. Any such cyber attack or other security issue could result in a significant loss of reservations and customer
confidence in the website and its business which, in turn, could have a material adverse effect on Ryanair's operating
results or financial condition and potentially entail its incurring significant litigation or other costs. 
 
The Irish Corporation Tax Rate Could Rise. The majority of Ryanair's profits are subject to Irish corporation tax at a
statutory rate of 12.5%. Due to the size and scale of the Irish government's budgetary deficit and although Ireland has
exited the "bailout" which was funded by a combination of loans from the International Monetary Fund and the European
Union, there remains a risk that the Irish government could increase Irish corporation tax rates above 12.5% in order to
repay current or future loans or to increase tax revenues. 
 
At 12.5%, the rate of Irish corporation tax is lower than that applied by most of the other European Union member states,
and has periodically been subject to critical comment by the governments of other EU member states. Although the Irish
government has repeatedly publicly stated that it will not increase corporation tax rates, there can be no assurance that
such an increase in corporation tax rates will not occur. 
 
In the event that the Irish government increases corporation tax rates or changes the basis of calculation of corporation
tax from the present basis, any such changes would result in the Company paying higher corporate taxes and would have an
adverse impact on our cash flows, financial position and results of operations. 
 
Change in EU Regulations in Relation to Employers and Employee Social Insurance Could Increase Costs. The European
Parliament passed legislation governing the payment of employee and employer social insurance costs in May 2012. The
legislation was introduced in late June 2012. The legislation governs the country in which employees and employers must pay
social insurance costs. Prior to June 2012, Ryanair paid employee and employer social insurance in the country under whose
laws the employee's contract of employment is governed, which is either the U.K. or Ireland. Under the terms of this new
legislation, employees and employers must pay social insurance in the country where the employee is based. The legislation
includes grandfathering rights which means that existing employees (i.e. those employed prior to the introduction of the
new legislation in June 2012) should be exempt from the effects of this legislation for a period of 10 years up until 2022.
However, both new and existing employees who transfer from their present base location to a new base in another EU country
may be impacted by the new rules in relation to employee and employer contributions. Each country within the EU has
different rules and rates in relation to the calculation of employee and employer social insurance contributions. Ryanair
estimates that the change in legislation will not have any initial material impact on its salary costs although it will
have an adverse impact over time in the majority of jurisdictions in which Ryanair currently operates from. 
 
Ryanair is Subject to Tax Audits. The Company operates in many jurisdictions and is, from time to time, subject to tax
audits, which by their nature are often complex and can require several years to conclude. While the Company is of the view
that it is tax compliant in the various jurisdictions in which it operates, there can be no guarantee, particularly in the
current economic environment, that it will not receive tax assessments following the conclusion of the tax audits.  If
assessed, the Company will robustly defend its position.  In the event that the Company is unsuccessful in defending its
position, it is possible that the effective tax rate, employment and other costs of the Company could materially increase.
See "-The Irish Corporation Tax Rate Could Rise" above. 
 
Risks Associated with the Euro. The Company is headquartered in Ireland and its reporting currency is the euro. As a result
of the ongoing uncertainty arising from the Eurozone debt crisis, in 2012 there was widespread speculation regarding the
future of the Eurozone, including with regard to Ireland, the country in which the Company is headquartered. Although the
economic environment in Ireland has considerably improved, there is still a risk of contagion spreading to the weaker
Eurozone members. To date, however, there have been no exits from the Eurozone. Ryanair predominantly operates to/from
countries within the Eurozone and has significant operational and financial exposures to the Eurozone that could result in
a reduction in the operating performance of Ryanair or the devaluation of certain assets. Ryanair has taken certain risk
management measures to minimize any disruptions, however these risk management measures may be insufficient. 
 
The Company has cash and aircraft assets and debt liabilities that are denominated in euro on its balance sheet. In
addition, the positive/negative mark-to-market value of derivative-based transactions are recorded in euro as either assets
or liabilities on the Company's balance sheet. Uncertainty regarding the future of the Eurozone could have a materially
adverse effect on the value of these assets and liabilities. In addition to the assets and liabilities on Ryanair's balance
sheet, the Company has a number of cross currency risks as a result of the jurisdictions of the operating business
including non-euro revenues, fuel costs, certain maintenance costs and insurance costs. A weakening in the value of the
euro primarily against U.K. pound sterling and U.S. dollar, but also against other non-Eurozone European currencies and
Moroccan Dirhams, could negatively impact the operating results of the Company. 
 
Recession, austerity and uncertainty in connection with the euro could also mean that Ryanair is unable to grow. The recent
European recession and austerity measures still in effect in several European countries could mean that Ryanair may be
unable to expand its operations due to lack of demand for air travel. 
 
Risks Related to the Airline Industry 
 
The Airline Industry Is Particularly Sensitive to Changes in Economic Conditions: A Continued Recessionary Environment
Would Negatively Impact Ryanair's Result of Operations. Ryanair's operations and the airline industry in general are
sensitive to changes in economic conditions. Unfavorable economic conditions such as government austerity measures, the
uncertainty relating to the Eurozone, high unemployment rates, constrained credit markets and increased business operating
costs could lead to reduced spending by both leisure and business passengers. Unfavorable economic conditions, such as the
conditions persisting as of the date hereof, also tend to impact Ryanair's ability to raise fares to counteract increased
fuel and other operating costs. A continued recessionary environment, combined with austerity measures by European
governments, will likely negatively impact Ryanair's operating results. It could also restrict the Company's ability to
grow passenger volumes, secure new airports and launch new routes and bases, and could have a material adverse impact on
its financial results. 
 
The Introduction of Government Taxes on Travel Could Damage Ryanair's Ability to Grow and Could Have a Material Adverse
Impact on Operations. The U.K. government levies an Air Passenger Duty ("APD") of £13 per passenger. The tax was previously
set at £5 per passenger, but it was increased to £10 per passenger in 2007, £11 in 2009, £12 in 2010 and subsequently to
£13 in April 2012.  The increase in this tax is thought to have had a negative impact on Ryanair's operating performance,
both in terms of average fares paid and growth in passenger volumes. In 2008, the Dutch government introduced a travel tax
ranging from E11 on short-haul flights to E45 on long-haul flights (withdrawn with effect from July 1, 2009). On March 30,
2009, the Irish government also introduced a E10 Air Travel Tax on all passengers departing from Irish airports on routes
longer than 300 kilometers but subsequently reduced it to E3 on March 30, 2011. On April 1, 2014 the tax imposed by the
Irish government was abolished. In Germany, the government introduced an air passenger tax of E8 in January 2011 which was
subsequently reduced to E7.50 in January 2012. In Austria, the government also introduced an ecological air travel levy of
E8 in January 2011. The Moroccan government has also introduced a similar tax (equivalent to approximately E9) from April
2014. 
 
Other governments also have introduced or may introduce similar taxes. See "Item 4. Information on the Company-Airport
Operations-Airport Charges." The introduction of government taxes on travel has had a negative impact on passenger volumes,
particularly given the current period of decreased economic activity. The introduction of further government taxes on
travel across Europe could have a material negative impact on Ryanair's results of operations as a result of
price-sensitive passengers being less likely to travel. 
 
EU Regulation on Passenger Compensation Could Significantly Increase Related Costs. EU Regulation (EC) No. 261/2004
requires airlines to compensate passengers (holding a valid ticket) who have been denied boarding or whose flight has been
cancelled or delayed more than 3 hours on arrival (even where the reason for the delay or cancellation is beyond the
control of the airline). This legislation, which came into force on February 17, 2005, imposes fixed levels of compensation
to be paid to passengers in the event of the situations described above. In November 2009, the Court of Justice of the EU
in the Sturgeon case decided that provisions of the legislation in relation to monetary compensation are not only
applicable to denied boarding and flight cancellations but also to flight delays (over three hours on arrival). However,
such provisions do not apply when the flight cancellation or delay (over three hours on arrival), is caused for reasons
outside of the control of the airline (extraordinary circumstances)  such as unsafe weather conditions, air-traffic control
strikes/delays, unexpected flight safety shortcomings, sabotage, aircraft manufacturing defects,  security risks, political
instability. A recent UK court case - Huzar vs. Jet2 heard in the UK Court of Appeal in May 2014 has narrowed the
'extraordinary circumstances' defence, this case is currently on appeal to the UK Supreme Court and has a suspensory effect
on all passenger claims brought in the UK in relation to flight delays or cancellations caused by unexpected flight safety
shortcomings. The regulation calls for compensation of  E250, E400, or E600 per passenger, depending on the length of the
flight. As Ryanair's average flight length is less than 1,500 km - the upper limit for short-haul flights - the amount
payable is generally E250 per passenger. Passengers subject to flight delays over 2 hours are also entitled to
"assistance," including meals, drinks and telephone calls, as well as hotel accommodations if the delay extends overnight.
For delays of over five hours, the airline is also required to offer the option of a refund of the cost of the unused
ticket. There can be no assurance that the Company will not incur a significant increase in costs in the future due to the
impact of this legislation, if Ryanair experiences a large number of cancelled flights, which could occur as a result of
certain types of events beyond its control. See "-Risks Related to the Airline Industry-Volcanic Ash Emissions Could Affect
the Company and Have a Material Adverse Effect on the Company's Results of Operations." 
 
EU Regulation of Emissions Trading Will Increase Costs. On November 19, 2008, the European Council of Ministers adopted
legislation to add aviation to the EU Emissions Trading Scheme ("ETS") with effect from 2012. This scheme, which has thus
far applied mainly to industrial companies, is a cap-and-trade system for CO2 emissions to encourage industries to improve
their CO2 efficiency. Under the legislation, airlines are granted initial CO2 allowances based on historical performance
and a CO2 efficiency benchmark. Any shortage of allowances will have to be purchased in the open market and/or at
government auctions. The cost of such allowances in the context of the Company's energy costs are not material at current
market prices. There can be no assurance that Ryanair will be able to obtain sufficient carbon credits or that the cost of
the credits will not have a material adverse effect on the Company's business, operating results, and financial condition. 
 
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, 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. 
 
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. 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 30 year safety record.
In past years, however, accidents or other safety-related incidents involving certain 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. 
 
Terrorism in the United Kingdom or Elsewhere in Europe Could Have a Material Detrimental Effect on the Company. On August
10, 2006, U.K. security authorities arrested and subsequently charged eight individuals in connection with an alleged plot
to attack aircraft operating on transatlantic routes. As a result of these arrests, U.K. authorities introduced increased
security measures, which resulted in all passengers being body-searched, and a ban on the transportation in carry-on
baggage of certain liquids and gels. The introduction of these measures led to passengers suffering severe delays while
passing through these airport security checks. As a result, Ryanair cancelled 279 flights in the days following the
incident and refunded a total of E2.7 million in fares to approximately 40,000 passengers. In the days following the
arrests, Ryanair also suffered reductions in bookings estimated to have resulted in the loss of approximately E1.9 million
of additional revenue. As in the past, the Company reacted to these adverse events by initiating system-wide fare sales to
stimulate demand for air travel. 
 
In addition, reservations on Ryanair's flights to London dropped materially for a number of days in the immediate aftermath
of the terrorist attacks in London on July 7, 2005. Although the terrorist attack in Glasgow on June 30, 2007 and the
failed terrorist attacks in London on July 21, 2005 and June 29, 2007 had no material impact on bookings, there can be no
assurance that future such attacks will not affect passenger traffic. In the 2014 fiscal year, 16.6 million passengers were
booked on Ryanair's flights into and out of London, representing approximately 20.4% of the total passengers booked on all
of the Company's flights in the fiscal year. Future acts of terrorism or significant terrorist threats, particularly in
London or other markets that are significant to Ryanair, could have a material adverse effect on the Company's
profitability or financial condition should the public's willingness to travel to and from those markets decline as a
result. See also "-The 2001 Terrorist Attacks on the United States Had a Severe Negative Impact on the International
Airline Industry" below. 
 
The 2001 Terrorist Attacks on the United States Had a Severe Negative Impact on the International Airline Industry. The
terrorist attacks on the United States on September 11, 2001, in which four commercial aircraft were hijacked, had a severe
negative impact on the international airline industry, particularly on U.S. carriers and carriers operating international
services to and from the United States. Although carriers such as Ryanair that operate primarily or exclusively in Europe
were generally spared from such material adverse impacts on their businesses, the cost to all commercial airlines of
insurance coverage for certain third-party liabilities arising from "acts of war" or terrorism increased dramatically after
the September 11 attacks. See "Item 4. Information on the Company-Insurance." In addition, Ryanair's insurers have
indicated that the scope of the Company's current "act of war"-related insurance may exclude certain types of catastrophic
incidents, such as certain forms of biological, chemical or "dirty bomb" attacks. This could result in the Company's
seeking alternative coverage, including government insurance or self-insurance, which could lead to further increases in
costs. Although Ryanair to date has included increased insurance costs in the ticket price charged to passengers, there can
be no assurance that it will continue to be successful in doing so. 
 
Because a substantial portion of airline travel (both business and personal) is discretionary and because Ryanair is
substantially dependent on discretionary air travel, any prolonged general reduction in airline passenger traffic may
adversely affect the Company. Similarly, any significant increase in expenses related to security, insurance or related
costs could have a material adverse effect on the Company. Any further terrorist attacks in the U.S. or in Europe,
particularly in London or other markets that are significant to Ryanair, any significant military actions by the United
States or EU nations or any related economic downturn may have a material adverse effect on demand for air travel and thus
on Ryanair's business, operating results, and financial condition. See also "-Terrorism in the United Kingdom or Elsewhere
in Europe Could have a Material Detrimental Effect on the Company." 
 
The Company Faces the Risk of Loss and Liability.Ryanair has an excellent 30 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
States. See "-The 2001 Terrorist Attacks on the United States Had a Severe Negative Impact on the International Airline
Industry" above. Substantial claims resulting from an accident in excess of related insurance coverage could have a
material adverse effect on the Company's results of operations and financial condition. Moreover, any aircraft accident,
even if fully insured, could lead to the public perception that Ryanair's aircraft were less safe or reliable than those
operated by other airlines, which could have a material adverse effect on Ryanair's business. 
 
EU Regulation No. 2027/97, as amended by Regulation No. 889/2002, governs air carrier liability. See "Item 4. Information
on the Company-Insurance" for details of this regulation. This regulation increased the potential liability exposure of air
carriers such as Ryanair. Although Ryanair has extended its liability insurance to meet the requirements of the regulation,
no assurance can be given that other laws, regulations, or policies will not be applied, modified or amended in a manner
that has a material adverse effect on Ryanair's business, operating results, and financial condition. 
 
Airline Industry Margins are Subject to Significant Uncertainty. The airline industry is capital intensive and is
characterized by high fixed costs and by revenues that generally exhibit substantially greater elasticity than costs.
Although fuel accounted for approximately 46% of total operating expenses in the 2014 fiscal year, management anticipates
that this percentage may vary significantly in future years. See "-Changes in Fuel Costs and Fuel Availability Affect the
Company's Results and Increase the Likelihood of Adverse Impact on the Company's Profitability" above. The operating costs
of each flight do not vary significantly with the number of passengers flown, and therefore, a relatively small change in
the number of passengers, fare pricing, or traffic mix could have a disproportionate effect on operating and financial
results. Accordingly, a relatively minor shortfall from expected revenue levels could have a material adverse effect on the
Company's growth or financial performance. See "Item 5. Operating and Financial Review and Prospects." The very low
marginal costs incurred for providing services to passengers occupying otherwise unsold seats are also a factor in the
industry's high susceptibility to price discounting. See "Risks Related to the Company-The Company Faces Significant Price
and Other Pressures in a Highly Competitive Environment" above. 
 
Safety-Related Undertakings Could Affect the Company's Results. Aviation authorities in Europe and the United States
periodically require or suggest that airlines implement certain safety-related procedures on their aircraft. In recent
years, the U.S. Federal Aviation Administration (the "FAA") has required a number of such procedures with regard to Boeing
737-800 aircraft, including checks of rear pressure bulkheads and flight control modules, redesign of the rudder control
system, and limitations on certain operating procedures. Ryanair's policy is to implement any such required procedures in
accordance with FAA guidance and to perform such procedures in close collaboration with Boeing. To date, all such
procedures have been conducted as part of Ryanair's standard maintenance programme and have not interrupted flight
schedules nor required any material increases in Ryanair's maintenance expenses. However, there can be no assurance that
the FAA or other regulatory authorities will not recommend or require other safety-related undertakings or that such
undertakings would not adversely impact Ryanair's operating results or financial condition. 
 
There also can be no assurance that new regulations will not be implemented in the future that would apply to Ryanair's
aircraft and result in an increase in Ryanair's cost of maintenance or other costs beyond management's current estimates.
In addition, should Ryanair's aircraft cease to be sufficiently reliable or should any public perception develop that
Ryanair's aircraft are less than completely reliable, Ryanair's business could be materially adversely affected. 
 
Risks Related to Ownership of the Company's Ordinary Shares or ADRs 
 
EU Rules Impose Restrictions on the Ownership of Ryanair Holdings' Ordinary Shares by Non-EU Nationals, and the Company Has
Instituted a Ban on the Purchase of Ordinary Shares by Non-EU Nationals. EU Regulation No. 1008/2008 requires that, in
order to obtain and retain an operating license, an EU air carrier must be majority-owned and effectively controlled by EU
nationals. The regulation does not specify what level of share ownership will confer effective control on a holder or
holders of Ordinary Shares. The Board of Directors of Ryanair Holdings is given certain powers under Ryanair Holdings'
articles of association (the "Articles") to take action to ensure that the number of Ordinary Shares held in Ryanair
Holdings by non-EU nationals ("Affected Shares") does not reach a level that could jeopardize the Company's entitlement to
continue to hold or enjoy the benefit of any license, permit, consent, or privilege which it holds or enjoys and which
enables it to carry on business as an air carrier. The directors, from time to time, set a "Permitted Maximum" on the
number of the Company's Ordinary Shares that may be owned by non-EU nationals at such level as they believe will comply
with EU law. The Permitted Maximum is currently set at 49.9%. In addition, under certain circumstances, the directors can
take action to safeguard the Company's ability to operate by identifying those Ordinary Shares, American Depositary Shares
("ADSs") or Affected Shares which give rise to the need to take action and treat such Ordinary Shares, the American
Depositary Receipts ("ADRs") evidencing such ADSs, or Affected Shares as "Restricted Shares." The Board of Directors may,
under certain circumstances, deprive holders of Restricted Shares of their rights to attend, vote at, and speak at general
meetings, and/or require such holders to dispose of their Restricted Shares to an EU national within as little as 21 days.
The directors are also given the power to transfer such Restricted Shares themselves if a holder fails to comply. In 2002,
the Company implemented measures to restrict the ability of non-EU nationals to purchase Ordinary Shares, and non-EU
nationals are currently effectively barred from purchasing Ordinary Shares, and will remain so for as long as these
restrictions remain in place. There can be no assurance that these restrictions will ever be lifted. Additionally, these
foreign ownership restrictions could result in Ryanair's exclusion from certain stock tracking indices. Any such exclusion
may adversely affect the market price of the Ordinary Shares and ADRs. On April 19, 2012, the Company obtained shareholder
approval to repurchase ADRs as part of its general authority to repurchase up to 5% of the issued share capital in the
Company. During fiscal 2014, the Company repurchased 6,018,800 ADRs equivalent to 30,094,000 ordinary shares at a price of
$49.01 per ADR, equivalent to approximately E7.41 per ordinary share. See "Item 10. Additional Information-Limitations on
Share Ownership by Non-EU Nationals" for a detailed discussion of restrictions on share ownership and the current ban on
share purchases by non-EU nationals. 
 
As of June 30, 2014, EU nationals owned at least 52.8% of Ryanair Holdings' Ordinary Shares (assuming conversion of all
outstanding ADRs into Ordinary Shares). 
 
Holders of Ordinary Shares are Currently Unable to Convert those Shares into American Depositary Receipts. In an effort to
increase the percentage of its share capital held by EU nationals, on June 26, 2001, Ryanair Holdings instructed The Bank
of New York Mellon, the depositary for its ADR program (the "Depositary"), to suspend the issuance of new ADRs in exchange
for the deposit of Ordinary Shares until further notice. Holders of Ordinary Shares cannot convert their Ordinary Shares
into ADRs during this suspension, and there can be no assurance that the suspension will ever be lifted. See also "-EU
Rules Impose Restrictions on the Ownership of Ryanair Holdings' Ordinary Shares by Non-EU nationals and the Company has
Instituted a Ban on the Purchase of Ordinary Shares by Non-EU Nationals" above. 
 
The Company's Results of Operations May Fluctuate Significantly. The Company's results of operations have varied
significantly from quarter to quarter, and management expects these variations to continue. See "Item 5. Operating and
Financial Review and Prospects-Seasonal Fluctuations." Among the factors causing these variations are the airline
industry's sensitivity to general economic conditions, the seasonal nature of air travel, and trends in airlines' costs,
especially fuel costs. Because a substantial portion of airline travel (both business and personal) is discretionary, the
industry tends to experience adverse financial results during general economic downturns. The Company is substantially
dependent on discretionary air travel. 
 
The trading price of Ryanair Holdings' Ordinary Shares and ADRs may be subject to wide fluctuations in response to
quarterly variations in the Company's operating results and the operating results of other airlines. In addition, the
global stock markets from time to time experience extreme price and volume fluctuations that affect the market prices of
many airline company stocks. These broad market fluctuations may adversely affect the market price of the Ordinary Shares
and ADRs. 
 
Ryanair Holdings May or May Not Pay Dividends. Since its incorporation as the holding company for Ryanair in 1996, Ryanair
Holdings has only occasionally declared special dividends on both its Ordinary Shares and ADRs. The directors of the
Company declared on June 1, 2010 that Ryanair Holdings intended to pay a special dividend of approximately E500 million,
and following shareholder approval at its annual general meeting on September 22, 2010 this special dividend was paid on
October 1, 2010. Directors of the Company also declared on May 21, 2012 that Ryanair Holdings intended to pay a special
dividend of E0.34 per ordinary share (approx. E492 million) and following shareholder approval at the annual general
meeting on September 21, 2012 this special dividend was paid on November 30, 2012. The Company may pay other dividends from
time to time. In June 2013, the Company detailed plans to return up to E1 billion to shareholders over the next two years.
The Company completed E481.7 million in share buybacks in the fiscal year 2014 (including just over 6.0 million ADR
buybacks) and indicated on May 19, 2014 that it plans to pay a special dividend of up to approximately E520 million in the
fourth quarter of fiscal year 2015, subject to shareholder approval at its annual general meeting on September 25, 2014.
The Company has made no further commitments in relation to the payment of dividends, share buybacks or other shareholder
distributions. See "Item 8. Financial Information-Other Financial Information-Dividend Policy." As a holding company,
Ryanair Holdings does not have any material assets other than the shares of Ryanair. 
 
Increased Costs for Possible Future ADR and Share Repurchases. In April 2012, the Company held an extraordinary general
meeting ("EGM") to authorize the directors to repurchase Ordinary Shares and ADRs for up to 5% of the issued share capital
of the Company traded on the NASDAQ Stock Market ("NASDAQ").  Up until April 2012, shareholders had only authorized the
directors to repurchase Ordinary Shares. As the ADRs typically trade at a premium of 15% to 20% compared to Ordinary
Shares, this may result in increased costs in performing share buy-backs in the future. In fiscal 2014, the Company bought
back 6,018,800 ADRs for cancellation, which is equivalent to 30,094,000 Ordinary Shares, as part of its overall share
buyback during fiscal year 2014 of 69.5 million Ordinary Shares. On June 20, 2013 the Company detailed plans to return up
to E1 billion to shareholders over the next two years. The Company completed E481.7 million in share buybacks in the fiscal
year 2014. On May 19, 2014 the Company indicated that it plans to pay a special dividend of up to approximately E520
million in the fourth quarter of fiscal year 2015, subject to shareholder approval at its annual general meeting on
September 25, 2014. However, there can be no assurance that such amount will be returned to shareholders, as the Company's
plans are subject to shareholder approval, its continuing profitability, and the economic environment, as well as its
obligations for capital expenditures and other commitments. The Company has made no further commitments in relation to the
payment of dividends, share buybacks or other shareholder distributions. 
 
Item 4. Information on the Company 
 
INTRODUCTION 
 
Ryanair Holdings was incorporated in 1996 as a holding company for Ryanair Limited. The latter operates an ultra-low cost,
scheduled-passenger airline serving short-haul, point-to-point routes between Ireland, the U.K., Continental Europe, and
Morocco. Incorporated on November 28, 1984, Ryanair Limited began to introduce a low-fares operating model under a new
management team in the early 1990s. See "Item 5. Operating and Financial Review and Prospects¾History." As of June 30,
2014, Ryanair had a principal fleet of 297 Boeing 737-800 aircraft and 5 additional leased aircraft acquired on short term
leases for the summer of 2014 to provide extra capacity, Ryanair Limited offered over 1,600 scheduled short-haul flights
per day serving approximately 186 airports largely throughout Europe. See "¾Route System, Scheduling and Fares¾Route System
and Scheduling" for more details of Ryanair's route network. See "Item 5. Operating and Financial Review and
Prospects¾Seasonal Fluctuations" for information about the seasonality of Ryanair's business. 
 
Ryanair recorded a profit on ordinary activities after taxation of E522.8 million in the 2014 fiscal year, as compared to a
profit on ordinary activities after taxation of E569.3 million in the 2013 fiscal year. This decrease of approximately 8%
was primarily attributable to an increase in fuel costs of approximately 7% from E1,885.6 million to E2,013.1 million, and
a reduction of approximately 4% in average fares, offset by strong ancillary revenues growth and increased traffic. Ryanair
generated an average booked passenger load factor of approximately 83% in fiscal 2014, compared to 82% in fiscal 2013, and
average booked passenger fare of E46.40 per passenger in the 2014 fiscal year, down from E48.20 in the prior fiscal year.
The Company has focused on maintaining low operating costs (E53.61 per passenger in the 2014 fiscal year, an increase from
E52.56 in fiscal 2013). 
 
The market's acceptance of Ryanair's low-fares service is reflected in the "Ryanair Effect" - Ryanair's history of
stimulating significant annual passenger traffic growth on the new routes on which it has commenced service since 1991. For
example, on the basis of the "U.K. Airports Annual Statement of Movements, Passengers and Cargo" published by the U.K.
Civil Aviation Authority and statistics released by the International Civil Aviation Organization (the "ICAO"), the number
of scheduled airline passengers traveling between Dublin and London increased from 1.7 million passengers in 1991 to 3.9
million passengers in the 2013 calendar year. Most international routes Ryanair has begun serving since 1991 have recorded
significant traffic growth in the period following Ryanair's commencement of service, with Ryanair capturing the largest
portion of such growth on each such route. A variety of factors contributed to this increase in air passenger traffic,
including the relative strength of the Irish, U.K., and European economies in past years. However, management believes that
the most significant factors driving such growth across all its European routes have been Ryanair's low-fares policy and
its superiority to its competitors in terms of flight punctuality, levels of lost baggage, and rates of flight
cancellations. 
 


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