REG - Ryanair Holdings PLC - Annual Financial Report <Origin Href="QuoteRef">RYA.I</Origin> - Part 8
06/09/2014 22:39
- Part 8: For the preceding part double click ID:nRSd7552Ng
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.
The amounts listed under "Operating Lease Obligations" reflect the Company's obligations under its aircraft operating lease
arrangements.
Obligations Due by Period
Contractual Obligations Total Less than 1 year 1-2 years 2-5 years After 5 years
(in millions of euro)
Long-term Debt (a)........................ 2,366.8 352.7 334.4 908.3 771.4
Finance Lease Obligations........... 716.8 115.2 49.8 369.2 182.6
Purchase Obligations (b).............. 10,246.7 626.2 2,277.0 7,343.5 -
Operating Lease Obligations ...... 472.7 118.7 89.9 202.2 61.9
Future Interest Payments (c) ............. 281.6 68.4 57.3 103.5 52.4
Total Contractual Obligations..... E14,084.6 E1,281.2 E2,808.4 E8,926.7 E1,068.3
E8,926.7
E1,068.3
(a) For additional information on Ryanair's long-term debt obligations, see Note 11 and Note 23 to the consolidated
financial statements included in Item 18.
(b) These are noted at a non-discounted "list" price.
(c) In determining an appropriate methodology to estimate future interest payments we have applied either the
applicable fixed rate or currently applicable variable rate where appropriate. These interest rates are subject to
change and amounts actually due may be higher or lower than noted in the table above.
OFF-BALANCE SHEET TRANSACTIONS
Ryanair uses certain off-balance sheet arrangements in the ordinary course of business, including financial guarantees and
operating lease commitments. Details of each of these arrangements that have or are reasonably likely to have a current or
future material effect on the Company's financial condition, results of operations, liquidity or capital resources are
discussed below.
Operating Lease Commitments. The Company has entered into a number of sale-and-leaseback transactions in connection with
the financing of a number of aircraft in its fleet. See "-Liquidity and Capital Resources-Capital Resources" above for
additional information on these transactions.
Guarantees. Ryanair Holdings has provided an aggregate of E4,805.4 million in letters of guarantee to secure obligations of
certain of its subsidiaries in respect of loans and bank advances, including those relating to aircraft financing and
related hedging transactions. This amount excludes guarantees given in relation to the 2013 Boeing Contract which total
approximately $14.1 billion at list prices and which became effective following Ryanair Holdings shareholder approval at an
extraordinary general meeting on June 18, 2013. In addition, Ryanair Holdings guarantees the E850.0 million eurobond
issuance in June 2014 (maturing in June 2021).
TREND INFORMATION
For information concerning the principal trends and uncertainties affecting the Company's results of operations and
financial condition, see "Item 3. Key Information-Risk Factors," "Item 5. Operating and Financial Review and
Prospects-Business Overview," "-Results of Operations," "-Liquidity and Capital Resources" and "Item 4. Information on the
Company-Strategy-Responding to Current Challenges" above.
INFLATION
Inflation did not have a significant effect on the Company's results of operations and financial condition during the three
fiscal years ended March 31, 2014.
Item 6. Directors, Senior Management and Employees
Ryanair Holdings was established in 1996 as a holding company for Ryanair. The management of Ryanair Holdings and Ryanair
are integrated, with the two companies having the same directors and executive officers.
DIRECTORS
The following table sets forth certain information concerning the directors of Ryanair Holdings and Ryanair as of July 25,
2014:
Name Age Positions
David Bonderman (a)(b)....................................... 71 Chairman and Director
Michael Horgan (d)............................................... 77 Director
Charles McCreevy (c)........................................... 64 Director
Declan McKeon (c)............................................... 63 Director
Kyran McLaughlin (a)(b)..................................... 70 Director
Dick Milliken (c)..................................................... 63 Director
Michael O'Leary (a)(b)(f)..................................... 53 Director and CEO
Julie O'Neill (e)....................................................... 59 Director
James Osborne (a)(e)............................................ 65 Director
Louise Phelan (e)................................................... 47 Director
47
Director
______________
(a) Member of the Executive Committee.
(b) Member of the Nomination Committee.
(c) Member of the Audit Committee.
(d) Member of the Air Safety Committee.
(e) Member of the Remuneration Committee.
(f) Mr. O'Leary is also the chief executive officer of Ryanair Holdings and Ryanair. None of the other directors are
executive officers of Ryanair Holdings or Ryanair.
David Bonderman (Chairman). David Bonderman has served as a director since August 1996 and has served as the chairman of
the Board of Directors since December 1996. Mr. Bonderman also serves on the Boards of the following public companies:
Caesars Entertainment Corporation and CoStar Group, Inc. He also serves on the Supervisory Board for VTB Bank. In addition,
he serves on the Boards of The Wilderness Society, the Grand Canyon Trust, and the American Himalayan Foundation and is a
U.S. citizen.
Michael Horgan (Director). Michael Horgan has served as a director since January 2001. A former Chief Pilot of Aer Lingus,
he has acted as a consultant to a number of international airlines, civil aviation authorities, the European Commission and
the European Bank for Reconstruction and Development. Mr. Horgan is the Chairman of the Company's Air Safety Committee and
is an Irish citizen.
Charles McCreevy (Director). Charles McCreevy has served as a director since May 2010. Mr. McCreevy has previously served
as EU Commissioner for Internal Markets and Services (2004-2010) and has held positions in several Irish Government
Ministerial Offices, including Minister for Finance (1997-2004), Minister for Tourism & Trade (1993-1994) and Minister for
Social Welfare (1992-1993) and is an Irish citizen.
Declan McKeon (Director). Declan McKeon has served as a director since May 2010. Mr. McKeon is a former audit partner of
PricewaterhouseCoopers and continues to act as a consultant to PricewaterhouseCoopers. He is currently a director, chairman
of the audit committee, and a member of the compensation committee of Icon plc and is an Irish citizen.
Kyran McLaughlin (Director). Kyran McLaughlin has served as a director since January 2001, and is also Deputy Chairman and
Head of Capital Markets at Davy Stockbrokers. Mr. McLaughlin also advised Ryanair during its initial flotation on the
Dublin and NASDAQ stock markets in 1997. Mr. McLaughlin also serves as a director of a number of other Irish private
companies and is an Irish citizen.
R.A. (Dick) Milliken (Director). Dick Milliken has served as a director since July 2013. Mr. Milliken is a former CFO of
the Almac Group and former CEO of Lamont plc. A qualified Chartered Accountant, Mr. Milliken serves as a director of Bank
of Ireland Mortgage Bank, NI Science Park Foundation and a number of private companies. Mr. Milliken is a graduate of
Queens University Belfast, a Fellow of the Institute of Chartered Accountants in Ireland and former Council member. He is a
British citizen.
Michael O'Leary (Executive Director). Michael O'Leary has served as a director of Ryanair since 1988 and a director of
Ryanair Holdings since July 1996. Mr. O'Leary was appointed chief executive officer of Ryanair in 1994 and is an Irish
citizen.
Julie O'Neill (Director). Julie O'Neill has served as a director since December 2012. Ms. O'Neill served as Secretary
General of the Department of Transport, Ireland from 2002 to 2009 and, in a career that spanned 37 years in the Irish
public service, worked in strategic policy development and implementation in eight Government Departments. She is now an
independent strategic management consultant and serves as a director of Permanent TSB plc and the Irish Museum of Modern
Art. She is a board member of the Sustainable Energy Authority of Ireland and also chairs the audit committee of Trinity
College Dublin and is an Irish citizen.
James Osborne (Director). James Osborne has served as a director of Ryanair Holdings since August 1996, and has been a
director of Ryanair Ltd., since April 1995. Mr. Osborne is a former managing partner of A & L Goodbody Solicitors. He is
also a former Chairman of Independent News and Media plc and a director of James Hardie Industries plc. He also serves as a
director of a number of Irish private companies and is an Irish citizen.
Louise Phelan (Director). Louise Phelan has served as a director since December 2012. Ms. Phelan is VP for PayPal Global
Operations Europe Middle East and Africa (EMEA), leading over 2,000 people in Dublin, Dundalk and Berlin. Ms. Phelan is the
current President of the American Chamber of Commerce in Ireland and a prominent member of the Dublin Chamber of Commerce
Ireland, CCMA Ireland, the Women's Executive Network (WXN), and is an Irish citizen.
The Board of Directors has established a number of committees, including the following:
Executive Committee. The Board of Directors established the Executive Committee in August 1996. The Executive Committee can
exercise the powers exercisable by the full Board of Directors in circumstances in which action by the Board of Directors
is required but it is impracticable to convene a meeting of the full Board of Directors. Messrs. Bonderman, McLaughlin,
O'Leary and Osborne are the members of the Executive Committee.
Remuneration Committee. The Board of Directors established the Remuneration Committee in September 1996. This committee has
authority to determine the remuneration of senior executives of the Company and to administer the stock option plans
described below. The Board of Directors as a whole determines the remuneration and bonuses of the chief executive officer,
who is the only executive director. Mr. Osborne, Ms. O'Neill and Ms. Phelan are the members of the Remuneration Committee.
Audit Committee. The Board of Directors established the Audit Committee in September 1996 to make recommendations
concerning the engagement of independent chartered accountants; to review with the accountants the plans for and scope of
each annual audit, the audit procedures to be utilized and the results of the audit; to approve the professional services
provided by the accountants; to review the independence of the accountants; and to review the adequacy and effectiveness of
the Company's internal accounting controls. Messrs. McKeon, McCreevy and Milliken are the members of the Audit Committee.
In accordance with the recommendations of the Irish Combined Code of Corporate Governance (the "Combined Code"), a senior
independent non-executive director, Mr. McKeon, is the chairman of the Audit Committee. All members of the Audit Committee
are independent for purposes of the listing rules of the NASDAQ and the U.S. federal securities laws.
Nomination Committee. The Board of Directors established the Nomination Committee in May 1999 to make recommendations and
proposals to the full Board of Directors concerning the selection of individuals to serve as executive and non-executive
directors. The Board of Directors as a whole then makes appropriate determinations regarding such matters after considering
such recommendations and proposals. Messrs. Bonderman, McLaughlin and O'Leary are the members of the Nomination Committee.
Air Safety Committee. The Board of Directors established the Air Safety Committee in March 1997 to review and discuss air
safety and related issues. The Air Safety Committee reports to the full Board of Directors each quarter. The Air Safety
Committee is composed of Mr. Horgan and Howard Millar, Chief Financial Officer and Accountable Manager for Safety (who both
act as co-chairman), as well as the following executive officers of Ryanair: Messrs. Hickey, O'Brien and Wilson and the
Chief Pilot, Ray Conway.
Powers of, and Action by, the Board of Directors
The Board of Directors is empowered by the Articles to carry on the business of Ryanair Holdings, subject to the Articles,
provisions of general law and the right of stockholders to give directions to the directors by way of ordinary resolutions.
Every director who is present at a meeting of the Board of Directors of Ryanair Holdings has one vote. In the case of a tie
on a vote, the chairman of the Board of Directors has a second or tie-breaking vote. A director may designate an alternate
director to attend any Board of Directors meeting, and such alternate director shall have all the rights of a director at
such meeting.
The quorum for a meeting of the Board of Directors, unless another number is fixed by the directors, consists of three
directors, a majority of whom must be EU nationals. The Articles require the vote of a majority of the directors (or
alternates) present at a duly convened meeting for the approval of any action by the Board of Directors.
Composition and Term of Office
The Articles provide that the Board of Directors shall consist of no fewer than three and no more than 15 directors, unless
otherwise determined by the stockholders. There is no maximum age for a director and no director is required to own any
shares of Ryanair Holdings.
Directors are elected (or have their appointments confirmed) at the annual general meetings of stockholders. Save in
certain circumstances, at every annual general meeting, one-third (rounded down to the next whole number if it is a
fractional number) of the directors (being the directors who have been longest in office) must stand for re-election as
their terms expire. Accordingly the terms of David Bonderman, James Osborne and Michael O'Leary will have expired and they
will be eligible to offer themselves for re-election at the next annual general meeting of Ryanair. In addition, Michael
Cawley, who was Ryanair's Chief Operating Officer up to March 2014, will also offer himself for appointment to the Board of
Directors at the next Annual General Meeting, which is scheduled to be held on September 25, 2014.
Exemptions from NASDAQ Corporate Governance Rules
The Company relies on certain exemptions from the NASDAQ corporate governance rules. These exemptions, and the practices
the Company adheres to, are as follows:
· The Company is exempt from NASDAQ's quorum requirements applicable to meetings of shareholders, which require a
minimum quorum of 33% for any meeting of the holders of common stock, which in the Company's case are its Ordinary Shares.
In keeping with Irish generally accepted business practice, the Articles provide for a quorum for general meetings of
shareholders of three shareholders, regardless of the level of their aggregate share ownership.
· The Company is exempt from NASDAQ's requirement with respect to audit committee approval of related-party
transactions, as well as its requirement that shareholders approve certain stock or asset purchases when a director,
officer or substantial shareholder has an interest. The Company is subject to extensive provisions under the Listing Rules
of the Irish Stock Exchange (the "Irish Listing Rules") governing transactions with related parties, as defined therein,
and the Irish Companies Act also restricts the extent to which Irish companies may enter into related-party transactions.
In addition, the Articles contain provisions regarding disclosure of interests by the directors and restrictions on their
votes in circumstances involving conflicts of interest. The concept of a related party for purposes of NASDAQ's audit
committee and shareholder approval rules differs in certain respects from the definition of a transaction with a related
party under the Irish Listing Rules.
· NASDAQ requires shareholder approval for certain transactions involving the sale or issuance by a listed company of
common stock other than in a public offering. Under the NASDAQ rules, whether shareholder approval is required for such
transactions depends, among other things, on the number of shares to be issued or sold in connection with a transaction,
while the Irish Listing Rules require shareholder approval when the size of a transaction exceeds a certain percentage of
the size of the listed company undertaking the transaction.
· NASDAQ requires that each issuer solicit proxies and provide proxy statements for all meetings of shareholders and
provide copies of such proxy solicitation to NASDAQ. The Company is exempt from this requirement as the solicitation of
holders of ADSs is not required under the Irish Listing Rules or the Irish Companies Acts. Details of our annual general
meetings and other shareholder meetings, together with the requirements for admission, voting or the appointment of a proxy
are available on the website of the Company in accordance with the Irish Companies Acts and the Company's Articles of
Association. ADS holders may provide instructions to The Bank of New York, as depositary, as to the voting of the
underlying Ordinary Shares represented by such ADSs. Alternatively, ADS holders may convert their holding to Ordinary
Shares, subject to compliance with the nationality ownership rules, in order to be eligible to attend our annual general
meetings or other shareholder meetings.
· NASDAQ requires that all members of a listed company's Nominating Committee be independent directors, unless the
Company, as a foreign private issuer, provides an attestation of non-conforming practice based upon home country practice
and then discloses such non-conforming practice annually in its Form 20-F. As permitted by the UK Corporate Governance
Code, Michael O'Leary, the Company's Chief Executive Officer, serves as a member of the Company's Nominating Committee.
The Company also follows certain other practices under the UK Corporate Governance Code in lieu of those set forth in the
NASDAQ corporate governance rules, as expressly permitted thereby. Most significantly:
Independence. NASDAQ requires that a majority of an issuer's Board of Directors be "independent" under the standards set
forth in the NASDAQ rules and that directors deemed independent be identified in the Company's annual report on Form 20-F.
The Board of Directors has determined that each of the Company's nine non-executive directors is "independent" under the
standards set forth in the UK Corporate Governance Code. Under the UK Corporate Governance Code, there is no bright-line
test establishing set criteria for independence, as there is under NASDAQ Rule 5605(a)(12). Instead, the Board of Directors
determines whether the director is "independent in character and judgment," and whether there are relationships or
circumstances which are likely to affect, or could appear to affect, the director's judgment. Under the UK Corporate
Governance Code, the Board of Directors may determine that a director is independent notwithstanding the existence of
relationships or circumstances which may appear relevant to its determination, but it should state its reasons if it makes
such a determination. The UK Corporate Governance Code specifies that relationships or circumstances that may be relevant
include whether the director: (i) has been an employee of the relevant company or group within the last five years; (ii)
has had within the last three years a direct or indirect material business relationship with such company; (iii) has
received payments from such company, subject to certain exceptions; (iv) has close family ties with any of the company's
advisers, directors or senior employees; (v) holds cross-directorships or other significant links with other directors;
(vi) represents a significant shareholder; or (vii) has served on the Board of Directors for more than nine years. In
determining that each of the nine non-executive directors is independent under the UK Corporate Governance Code standard,
the Ryanair Holdings Board of Directors identified such relevant factors with respect to non-executive directors Messrs.
Bonderman, McLaughlin, Osborne and Horgan. The Board has considered Kyran McLaughlin's independence given his role as
Deputy Chairman and Head of Capital Markets at Davy Stockbrokers. Davy Stockbrokers are one of Ryanair's corporate brokers
and provide corporate advisory services to Ryanair from time to time. The Board has considered the fees paid to Davy
Stockbrokers for these services and believe that they are immaterial to both Ryanair and Davy Stockbrokers given the size
of each organisation's business operations and financial results. Having considered this relationship, the Board has
concluded that Kyran McLaughlin continues to be an independent non-executive director within the spirit and meaning of the
2012 Code Rules. The Board has also considered the independence of David Bonderman given his shareholding in Ryanair
Holdings plc. As at March 31, 2014, David Bonderman had a beneficial shareholding in the Company of 7,655,671 ordinary
shares, equivalent to 0.55% of the issued share capital. Having considered this shareholding in light of the number of
issued shares in Ryanair Holdings plc and the financial interest of the director, the Board has concluded that the interest
is not so material as to breach the spirit of the independence rule contained in the 2012 Code. The Board has further
considered the independence of Messrs. David Bonderman, James Osborne, Kyran McLaughlin and Michael Horgan as they have
each served more than nine years on the Board. The Board considers that each of these directors is independent in character
and judgment as they either have other significant commercial and professional commitments and/or brings his own level of
senior experience gained in their fields of international business and professional practice. When arriving at this
decision, the Board has taken into account the comments made by the Financial Reporting Council in their report dated
December, 2009 on their review of the impact and effectiveness of the Code, in particular their comment that independence
is not the primary consideration when assessing the composition of the Board, and that the over-riding consideration should
be that the Board is fit for purpose. For these reasons, and also because each director's independence is considered
annually by the Board, the Board considers it appropriate that these directors have not been offered for annual re-election
as is recommended by the 2012 Code. When arriving at the decision that these directors are nonetheless independent, the
Board of Directors has taken into account the comments made by the Financial Reporting Council in its report dated December
2009 on its review of the impact and effectiveness of the UK Corporate Governance Code. The NASDAQ independence criteria
specifically state that an individual may not be considered independent if, within the last three years, such individual or
a member of his or her immediate family has had certain specified relationships with the company, its parent, any
consolidated subsidiary, its internal or external auditors, or any company that has significant business relationships with
the company, its parent or any consolidated subsidiary. Neither ownership of a significant amount of stock nor length of
service on the board is a per se bar to independence under the NASDAQ rules.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive officers of Ryanair Holdings and Ryanair at
June 30, 2014:
Michael Hickey.............................................. 51 Group Director of Operations
Kenny Jacobs................................................. 40 Chief Marketing Officer
Juliusz Komorek............................................. 36 Director of Legal & Regulatory Affairs; Company Secretary
Howard Millar................................................. 53 Deputy Chief Executive; Chief Financial Officer
David O'Brien................................................. 50 Chief Commercial Officer
Michael O'Leary............................................ 53 Director and Chief Executive Officer
Edward Wilson............................................... 50 Director of Personnel and In-flight
53
Director and Chief Executive Officer
Edward Wilson...............................................
50
Director of Personnel and In-flight
Michael Hickey (Group Director of Operations). Michael was appointed as Group Director of Operations in January 2014 having
held the position of Director of Engineering since January 2000. Michael who has an MSC in Air Safety Management from City
University in London is a licensed aircraft engineer and holds an EASA private pilot's license. He has held a wide range of
senior positions within the Engineering Department since he joined Ryanair in 1988 and was Deputy Director of Engineering
between 1992 and January 2000. Prior to joining Ryanair, Michael worked as an aircraft engineer with Fields Aircraft
Services and McAlpine Aviation, working primarily on executive aircraft.
Kenny Jacobs (Chief Marketing Officer). Kenny Jacobs was appointed Chief Marketing Officer in January 2014. He is
responsible for sales, marketing and customer service at Ryanair. Previously Kenny was CMO for Moneysupermarket plc. which
has a set of digital brands saving consumers money on insurance, finance, energy and travel. Kenny has spent most of his
career in retail with Tesco PLC as marketing director in Tesco Ireland and brand director for Tesco UK. Prior to that he
worked for German retailer Metro Group GmbH in various roles in marketing and IT in Europe and Asia.
Juliusz Komorek (Director of Legal & Regulatory Affairs; Company Secretary). Juliusz Komorek was appointed Company
Secretary and Director of Legal and Regulatory Affairs in May 2009, having served as Deputy Director of Legal and
Regulatory Affairs since 2007. Prior to joining the Company in 2004, Juliusz had gained relevant experience in the European
Commission's Directorate General for Competition and in the Polish Embassy to the EU in Brussels, as well as in the private
sector in Poland and the Netherlands. Juliusz is a lawyer, holding degrees from the universities of Warsaw and Amsterdam.
Howard Millar (Deputy Chief Executive; Chief Financial Officer). Howard Millar was appointed Deputy Chief Executive and
Chief Financial Officer on January 1, 2003, having served as Director of Finance of Ryanair from March 1993. Between April
1992 and March 1993 he served as Financial Controller of Ryanair. Howard was the Group Finance Manager for the Almarai
Group, the largest integrated dairy food processing company in the world, in Riyadh, Saudi Arabia, from 1988 to 1992. On
June 30, 2014, the Company announced that Howard has decided to step down from his full-time executive role on December 31,
2014 to pursue other career opportunities; Howard has been invited to join the board of directors of Ryanair after he steps
down as a full-time executive. The current Finance Director Neil Sorahan has been appointed Chief Financial Officer with
effect from October 1, 2014.
David O'Brien (Chief Commercial Officer). David O'Brien was appointed Chief Commercial Officer in January 2014 having
previously served as Ryanair's Director of Flight and Ground Operations from December 2002. A graduate of the Irish
Military College, David followed a military career with positions in the airport sector and agribusiness in the Middle
East, Russia and Asia.
Michael O'Leary (Chief Executive Officer). Michael O'Leary has served as a director of Ryanair since 1988 and a director of
Ryanair Holdings since July 1996. Mr. O'Leary was appointed chief executive officer of Ryanair in 1994.
Edward Wilson (Director of Personnel and In-flight). Edward Wilson was appointed Director of Personnel and In-flight in
December 2002, prior to which he served as Head of Personnel since joining Ryanair in December 1997. Prior to joining
Ryanair he served as Human Resources Manager for Gateway 2000 and held a number of other human resources-related positions
in the Irish financial services sector.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation
The aggregate amount of compensation paid by Ryanair Holdings and its subsidiaries to the nine sitting non-executive
directors and seven executive officers named above in the 2014 fiscal year was E6.8 million. For details of Mr. O'Leary's
compensation in such fiscal year, see "-Employment and Bonus Agreement with Mr. O'Leary" below
Each of Ryanair Holdings' nine non-executive directors is entitled to receive E35,000 plus expenses per annum, as
remuneration for their services to Ryanair Holdings. The Chairman of the Board receives a fee of E100,000 per annum. Prior
to the 2014 fiscal year, Mr. Bonderman had waived his entitlement to receive remuneration. The additional remuneration paid
to Committee members for service on that committee is E15,000 per annum. Mr. Horgan receives E40,000 per annum in
connection with his additional duties in relation to the Air Safety Committee.
For further details of stock options that have been granted to the Company's employees, including the executive officers,
see "Item 10. Additional Information-Options to Purchase Securities from Registrant or Subsidiaries," as well as Note 15 to
the consolidated financial statements included herein.
Employment and Bonus Agreement with Mr. O'Leary
Mr. O'Leary's current employment agreement with the Company is dated July 1, 2002 and can be terminated by either party
upon 12 months' notice. Pursuant to the agreement, Mr. O'Leary serves as Chief Executive Officer at a current annual gross
salary of E968,425, subject to any increases that may be agreed between the Company and Mr. O'Leary. Mr. O'Leary is also
eligible for annual bonuses as determined by the Board of Directors of the Company; the amount of such bonuses paid to Mr.
O'Leary in the 2014 fiscal year totaled E783,000. Mr. O'Leary is subject to a covenant not to compete with the Company
within the EU for a period of two years after the termination of his employment with the Company. Mr. O'Leary's employment
agreement does not contain provisions providing for compensation on its termination.
STAFF AND LABOR RELATIONS
The following table sets forth the details of Ryanair's team at each of March 31, 2014, 2013 and 2012:
Management.......................................... 105 99 99
Administrative....................................... 290 282 280
Maintenance.......................................... 139 139 138
Ground Operations............................... 220 229 243
Pilots....................................................... 2,665 2,625 2,429
Flight Attendants.................................. 5,573* 5,763 5,199
Total........................................................ 8,992 9,137 8,388
Flight Attendants..................................
5,573*
5,763
5,199
Total........................................................
8,992
9,137
8,388
* Decrease on prior year due to lower aircraft in operation in March 2014 and cabin crew staff being furloughed.
Ryanair's pilots, flight attendants and maintenance and ground operations personnel undergo training, both initial and
recurrent. A substantial portion of the initial training for Ryanair's flight attendants is devoted to safety procedures,
and cabin crew are required to undergo annual evacuation and fire drill training during their tenure with the airline.
Ryanair also provides salary increases to its engineers who complete advanced training in certain fields of aircraft
maintenance. Ryanair utilizes its own Boeing 737-800 aircraft simulators for pilot training.
IAA regulations require pilots to be licensed as commercial pilots with specific ratings for each aircraft to be flown. In
addition, IAA regulations require all commercial pilots to be medically certified as physically fit. At March 31, 2014, the
average age of Ryanair's pilots was 35 years and their average period of employment with Ryanair was 5.2 years. Licenses
and medical certification are subject to periodic re-evaluation and require recurrent training and recent flying experience
in order to be maintained. Maintenance engineers must be licensed and qualified for specific aircraft types. Flight
attendants must undergo initial and periodic competency training. Training programs are subject to approval and monitoring
by the IAA. In addition, the appointment of senior management personnel directly involved in the supervision of flight
operations, training, maintenance and aircraft inspection must be satisfactory to the IAA. Based on its experience in
managing the airline's growth to date, management believes that there is a sufficient pool of qualified and licensed
pilots, engineers and mechanics within the EU to satisfy Ryanair's anticipated future needs in the areas of flight
operations, maintenance and quality control and that Ryanair will not face significant difficulty in hiring and continuing
to employ the required personnel. Ryanair has also been able to satisfy its needs for additional pilots through the use of
contract agencies. These contract pilots are included in the table above. In addition, Ryanair has also been able to
satisfy its needs for additional flight attendants through the use of contract agencies. These contract flight attendants
are included in the table above.
Ryanair has a licensed approved organization in Holland to operate pilot training courses using Ryanair's syllabus, in
order to grant Boeing 737 type-ratings. Each trainee pilot must pay for his or her own training and, based on his or her
performance, he or she may be offered a position operating on Ryanair aircraft. This program enables Ryanair to secure a
continuous stream of type-rated co-pilots.
Ryanair's crews earn productivity-based incentive payments, including a sales bonus for onboard sales for flight attendants
and payments based on the number of hours or sectors flown by pilots and flight attendants (within limits set by industry
standards or regulations fixing maximum working hours). During the 2014 fiscal year, such productivity-based incentive
payments accounted for approximately 44% of an average flight attendant's total earnings and approximately 32% of the
typical pilot's compensation. Pilots at 65 out of Ryanair's 69 bases are covered by four or five year agreements on pay,
allowances and rosters which fall due for negotiation at various dates between 2014 and 2019. Cabin crew at all Ryanair
bases are also party to long term collective agreements on pay, allowances and rosters which expire March 2017. In March
2013, Ryanair agreed to increase the pay of pilots and cabin crew in accordance with the terms of individual base
agreements. Ryanair's pilots are currently subject to IAA-approved limits of 100 flight-hours per 28-day cycle and 900
flight-hours per fiscal year. For the 2014 fiscal year, the average flight-hours for Ryanair's pilots amounted to
approximately 68 hours per month and approximately 812 hours for the complete year, an approximately 2% increase on the
previous fiscal year. If more stringent regulations on flight hours were to be adopted, Ryanair's flight personnel could
experience a reduction in their total pay due to lower compensation for the number of hours or sectors flown and Ryanair
could be required to hire additional flight personnel.
Ryanair considers its relations with its employees to be good. Ryanair currently negotiates with groups of employees,
including its pilots, through "Employee Representation Committees" ("ERCs") regarding pay, work practices and conditions of
employment, including conducting formal negotiations with these internal collective bargaining units. Ryanair's senior
management meets regularly with the different ERCs to discuss all aspects of the business and those issues that
specifically relate to each relevant employee group.
Ryanair Holdings' shareholders have approved a number of share option plans for employees and directors. Ryanair Holdings
has also issued share options to certain of its senior managers. For details of all outstanding share options, see "Item
10. Additional Information--Options to Purchase Securities from Registrant or Subsidiaries."
Item 7. Major Shareholders and Related Party Transactions
As of June 30, 2014, there were 1,384,203,806 Ordinary Shares outstanding. As of that date, 112,316,349 ADRs, representing
561,581,745 Ordinary Shares, were held of record in the United States by 55 holders, and represented in the aggregate
40.57% of the number of Ordinary Shares then outstanding. See "Item 10. Additional Information¾Articles of Association" and
"¾Limitations on Share Ownership by Non-EU Nationals."
MAJOR SHAREHOLDERS
Based on information available to Ryanair Holdings, the following table summarizes the holdings of those shareholders
holding 3% or more of the Ordinary Shares as of June 30, 2014, June 30, 2013 and June 30, 2012, the latest practicable date
prior to the Company's publication of its statutory annual report in each of the relevant years.
As of June 30, 2014 As of June 30, 2013 As of June 30, 2012
No. of Shares % of Class No. of Shares % of Class No. of Shares % of Class
Capital Research and Management Company................................................ 230,832,565 16.7% 190,022,595 13.4% 239,479,390 16.6%
Baillie Gifford ............................................ 79,001,583 5.7% 71,863,457 5.0% 52,883,746 3.7%
BlackRock Inc............................................ 70,993,234 5.1% 68,532,811 4.8% 74,688,280 5.2%
Manning and Napier................................... Not Reportable n/a 48,194,525 3.4% 85,044,870 5.9%
Michael O'Leary ....................................... 51,381,256 3.7% 51,081,256 3.6% 51,081,256 3.5%
51,381,256
3.7%
51,081,256
3.6%
51,081,256
3.5%
As of June 30, 2014, the directors and executive officers of Ryanair Holdings as a group owned 59,739,183 Ordinary Shares,
representing 4.3% % of Ryanair Holdings' outstanding Ordinary Shares as of such date. See also Note 19(d) to the
consolidated financial statements included herein. Each of our shareholders has identical voting rights with respect to its
Ordinary Shares.
As of March 31, 2014, there were 1,383,237,668 Ordinary Shares outstanding.
Based on information available to Ryanair Holdings plc, the following table summarizes shareholdings in excess of 3% or
more of the Ordinary Shares as of March 31, 2014, March 31 2013 and March 31, 2012.
As of March 31, 2014 As of March 31, 2013 As of March 31, 2012
No. of Shares % of Class No. of Shares % of Class No. of Shares % of Class
Capital Research and Management Company................................................. 230,917,315 16.7% 191,997,595 13.3% 275,514,695 18.9%
Baillie Gifford ............................................ 77,578,902 5.6% 70,323,718 4.9% Not Reportable n/a
BlackRock Inc............................................. 75,178,344 5.4% 66,399,232 4.6% 66,163,716 4.5%
Manning and Napier................................... Not Reportable n/a% 59,095,500 4.1% 73,249,220 5.0%
Michael O'Leary ....................................... 51,081,256 3.7% 51,081,256 3.5% 51,081,256 3.5%
Standard Life .............................................. 44,213,767 3.2% Not Reportable n/a Not Reportable n/a
3.2%
Not Reportable
n/a
Not Reportable
n/a
RELATED PARTY TRANSACTIONS
The Company has not entered into any "related party transactions" (except for remuneration paid by Ryanair to members of
senior management and the board of directors as disclosed in note 27 to the consolidated financial statements) as defined
in Item 7.B. of Form 20-F in the three fiscal years ending March 31, 2014 or in the period from March 31, 2014 to the date
hereof.
Item 8. Financial Information
CONSOLIDATED FINANCIAL STATEMENTS
Please refer to "Item 18. Financial Statements."
OTHER FINANCIAL INFORMATION
Legal Proceedings
The Company is engaged in litigation arising in the ordinary course of its business. Although no assurance can be given as
to the outcome of any current or pending litigation, management does not believe that any of such litigation will,
individually or in the aggregate, have a material adverse effect on the results of operations or financial condition of the
Company, except as described below.
EU State Aid-Related Proceedings. On December 11, 2002, the European Commission announced the launch of an investigation
into the 2001 agreement among Ryanair, the Brussels (Charleroi) airport and the government of the Walloon Region of
Belgium, the owner of the airport, which enabled the Company to launch new routes and base up to four aircraft at Brussels
(Charleroi). The European Commission's investigation was based on an anonymous complaint alleging that Ryanair's
arrangements with Brussels (Charleroi) constituted illegal state aid.
The European Commission issued its decision on February 12, 2004. As regards to the majority of the arrangements between
Ryanair, the airport and the region, the European Commission found that although they constituted state aid, they were
nevertheless compatible with the EC Treaty provisions and therefore did not require repayment. However, the European
Commission also found that certain other arrangements did constitute illegal state aid and therefore ordered Ryanair to
repay the amount of the benefit received in connection with those arrangements. On April 20, 2004, the Walloon Region wrote
to Ryanair requesting repayment of such state aid, although it acknowledged that Ryanair could offset against the amount of
such state aid certain costs incurred in relation to the establishment of the base, in accordance with the European
Commission's decision. Ryanair made the requested repayment.
On May 25, 2004, Ryanair appealed the decision of the European Commission to the Court of First Instance ("CFI"),
requesting the court to annul the decision because:
· the European Commission infringed Article 253 of the EC Treaty by failing to provide adequate reasons for its
decision; and
· the European Commission misapplied Article 87 of the EC Treaty by failing to properly apply the Market Economy
Investor Principle (MEIP), which generally holds that an investment made by a public entity that would have been made on
the same basis by a private entity does not constitute state aid.
In March 2008, Ryanair had its hearing before the CFI, and in December 2008, the CFI annulled the European Commission's
decision. Ryanair was repaid the E4.0 million that the Commission had claimed was illegal state aid. The Belgian government
has also withdrawn a separate E2.3 million action against Ryanair arising from the European Commission's decision.
In January 2010, the European Commission concluded that the financial arrangements between Bratislava airport in Slovakia
and Ryanair do not constitute state aid within the meaning of EU rules, because these arrangements were in line with market
terms. In July 2012, the European Commission similarly concluded that the financial arrangements between Tampere airport in
Finland and Ryanair do not constitute state aid. In February 2014, the European Commission decided that the financial
arrangements between Aarhus, Berlin (Schönefeld) and Marseille airports, and Ryanair, did not constitute state aid. On July
23, 2014 the European Commission announced a 'no state aid' decision in respect of Dusseldorf (Weeze) airport, as well as
findings of state aid to Ryanair in its arrangements with Pau, Nimes and Angouleme airports, ordering Ryanair to repay a
total of approximately E9.7m of alleged aid. Ryanair will appeal these 'aid' decisions to the EU General Court where
proceedings are expected to take between 2 and 4 years.
Ryanair is facing similar legal challenges with respect to agreements with certain other airports, notably Lübeck, Alghero,
Frankfurt (Hahn), Zweibrücken, Altenburg, Klagenfurt, (Stockholm) Vasteras, Paris (Beauvais), La Rochelle, Carcassonne,
Cagliari, Brussels (Charleroi), Girona and Reus. These investigations are ongoing and Ryanair currently expects that they
will conclude in mid to late 2014, with any European Commission decisions appealable to the EU General Court.
State aid complaints by Lufthansa about Ryanair's cost base at Frankfurt (Hahn) have been rejected by German courts, as
have similar complaints by Air Berlin in relation to Ryanair's arrangement with Lubeck airport, but following a German
Supreme Court ruling on a procedural issue in early 2011, these cases will be re-heard by lower courts. In addition,
Ryanair has been involved in legal challenges including allegations of state aid at Alghero, Marseille and Berlin
Schönefeld airports. The Alghero case (initiated by Air One) was dismissed in its entirety in April 2011. The Marseille
case was withdrawn by the plaintiffs (subsidiaries of Air France) in May 2011. The Berlin Schönefeld, initiated by
Germania, case was discontinued following the European Commission's finding in February 2014 that Ryanair's arrangement
with the airport contained no state aid.
In September 2005, the European Commission announced new guidelines on the financing of airports and the provision of
start-up aid to airlines departing from regional airports, based on the European Commission's finding in the Brussels
(Charleroi) case, which Ryanair successfully appealed. The guidelines applied only to publicly owned regional airports, and
placed restrictions on the incentives these airports could offer airlines to deliver traffic. The guidelines applied only
in cases in which the terms offered by a public airport are in excess of what a similar private airport would have offered.
Ryanair deals with airports, both public and private, on an equal basis and receives the same cost agreements from both.
The guidelines have therefore had no impact on Ryanair's business, although they have caused significant uncertainty in the
industry in relation to what public airports may or may not do in order to attract traffic.
Ryanair believes that the positive decision by the CFI in the Brussels (Charleroi) case has caused the European Commission
to rethink its policy in this area, and that the revised guidelines, published by the European Commission in April 2014,
will provide more certainty in the industry as to how public airports may deal with airlines in offering incentives for
traffic growth. However, adverse rulings in the above or similar cases could be used as precedents by other competitors to
challenge Ryanair's agreements with other publicly owned airports and could cause Ryanair to strongly reconsider its growth
strategy in relation to public or state-owned airports across Europe. This could in turn lead to a scaling back of
Ryanair's growth strategy due to the smaller number of privately owned airports available for development. No assurance can
be given as to the outcome of these proceedings, nor as to whether any unfavorable outcomes may, individually or in the
aggregate, have a material adverse effect on the results of operations or financial condition of the Company.
In November 2007, Ryanair initiated proceedings in the CFI against the European Commission for its failure to take action
on a number of state aid complaints Ryanair had submitted against Air France, Lufthansa, Alitalia, Volare and Olympic
Airways. Following the European Commission's subsequent findings that illegal state aid had been provided to Air France and
Olympic Airways, Ryanair withdrew the two relevant proceedings. The case related to Lufthansa concluded with the EU General
Court's ruling in May 2011, in which the Court found that while the European Commission has not failed to act, it has
unreasonably delayed the launch of the investigation, which justified Ryanair's action for failure to act. Consequently,
the Court ordered the European Commission to pay 50% of Ryanair's costs in the proceedings. Similarly, in October 2011, the
General Court found that the European Commission has failed to act on Ryanair's 2005-2006 complaints against state aid to
Alitalia. The European Commission appealed the ruling to the Court of Justice of the European Union, and on May 16, 2013,
the European Commission's appeal was rejected.
In November 2008, Ryanair initiated proceedings in the CFI contesting the European Commission's refusal to grant Ryanair
access to documents relating to the European Commission's state aid investigations at Hamburg (Lubeck), Tampere, Berlin
(Schonefeld), Alghero, Pau, Aarhus, Bratislava and Frankfurt (Hahn) airports. These cases were heard on July 7, 2010 and a
judgment was issued in December 2010. The CFI found that the European Commission had acted in line with applicable
legislation, which highlighted the unfairness inherent in state aid procedures in the EU, whereby alleged beneficiaries of
aid have no right of access to the European Commission's files and therefore cannot properly exercise their rights to
defense and good administration. The CFI ordered the European Commission to pay Ryanair's costs in three of the eight
access to documents cases.
As a result of rising airport charges and the introduction of an Air Travel Tax, in March 2009, of E10 on passengers
departing from Irish airports on routes longer than 300 kilometers from Dublin Airport (E2 on shorter routes), Ryanair
reduced its fleet at Dublin airport to 13 during winter 2010 (down from 22 in summer 2008 and 20 in winter 2008). Ryanair
also complained to the European Commission about the unlawful differentiation in the level of the Irish Air Travel tax
between routes within the EU. From April 2011, a single rate (E3) of the Air Travel Tax was introduced on all routes (and
subsequently eliminated entirely in April 2014). In July 2012 the European Commission found that Ryanair, Aer Lingus and
Aer Arann had received state aid from the Irish government by way of a two-tier air travel tax levied on passengers
departing from Irish airports. Ryanair appealed this decision and a hearing in the EU General Court took place in June 2014
and judgment is expected within six months of the hearing. Also in July 2012, Ryanair issued proceedings before the Irish
courts seeking repayment of the entire amount of the air travel tax paid by Ryanair during the period (E87.8 million) where
it was two-tier on the basis of its illegality. In April 2013 the Irish government issued proceedings against Ryanair
seeking recovery of E12 million of alleged state aid attributable to Ryanair, arising from the European Commission
decision. There is a risk that Ryanair will be ordered by the Irish courts to pay the E12 million amount to the Irish
government notwithstanding Ryanair's claim for repayment of the entire amount of the tax.
Matters Related to Investment in Aer Lingus. 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. Ryanair filed an appeal with the CFI,
which was heard in July 2009. On July 6, 2010 the Court upheld the European Commission's decision. (see also: "Item 5.
Operating and Financial Review and Prospects-Business Overview").
The then EU Commissioner for Competition, Neelie Kroes, said on June 27, 2007 that, "Since Ryanair is not in a position to
exert de jure or de facto control over Aer Lingus, the European Commission is not in a position to require Ryanair to
divest its minority shareholding, which is, by the way, not a controlling stake." In October 2007, the European Commission
also reached a formal decision that it would not force Ryanair to sell its shares in Aer Lingus. However, Aer Lingus
appealed this decision before the CFI. In January 2008, the CFI heard an application by Aer Lingus for interim measures
limiting Ryanair's voting rights, pending a decision of the CFI on Aer Lingus' appeal of the European Commission's decision
not to force Ryanair to sell the Aer Lingus shares. In March 2008, the court dismissed Aer Lingus' application for interim
measures. Aer Lingus' main appeal was heard in July 2009. On July 6, 2010, the court rejected Aer Lingus' appeal and
confirmed that Ryanair cannot be forced to dispose of its 29.8% stake in Aer Lingus. Aer Lingus chose not to appeal this
judgment to the Court of Justice of the EU. EU legislation may change in the future to require such a forced disposal. 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.
On December 1, 2008, Ryanair made a second offer to acquire all of the ordinary shares of Aer Lingus it did not own at a
price of E1.40 per ordinary share. Ryanair offered to keep Aer Lingus as a separate company, maintain the Aer Lingus brand,
and retain its Heathrow slots and connectivity. Ryanair also proposed to double Aer Lingus' short-haul fleet from 33 to 66
aircraft and to create 1,000 associated new jobs over a five-year period. If the offer had been accepted, the Irish
government would have received over E180 million in cash. The employee share ownership trust and employees who owned 18% of
Aer Lingus would have received over E137 million in cash. The Company met Aer Lingus management, representatives of the
employee share ownership trust and other parties. The offer of E1.40 per Aer Lingus share represented a premium of
approximately 25% over the closing price of E1.12 on November 28, 2008. Ryanair also advised the market that it would not
proceed to seek EU approval for the new bid unless the shareholders agreed to sell their stakes in Aer Lingus to Ryanair.
However, as the Company was unable to secure the shareholders' support it decided, on January 28, 2009, to withdraw its
second offer for Aer Lingus.
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. Ryanair contended that the OFT had and missed the opportunity to investigate Ryanair's minority stake within
four months from the European Commission's June 2007 decision to prohibit Ryanair's takeover of Aer Lingus. The OFT agreed
in October 2010 to suspend its investigation pending the outcome of Ryanair's appeal against the OFT's decision that its
investigation is not time barred. On July 28, 2011, the Competition Appeal Tribunal ruled that the OFT was not time barred
when it attempted in September 2010 to open an investigation into Ryanair's 2006 acquisition of a minority non-controlling
stake in Aer Lingus. Ryanair subsequently appealed the Competition Appeal Tribunal's decision. On November 24, 2011, the
UK Court of Appeal ordered a stay of the OFT's investigation into Ryanair's minority stake in Aer Lingus pending the
outcome of the appeal. On May 22, 2012, the UK Court of Appeal found that the OFT was not time barred to investigate
Ryanair's minority stake in Aer Lingus in September 2010. Ryanair subsequently sought permission to appeal this ruling to
the UK Supreme Court but permission was refused. On June 15, 2012, the OFT referred the investigation of Ryanair's
minority stake in Aer Lingus to the UK 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. 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
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