1st Quarter Results
Ryanair Holdings PLC
7 August 2001
RYANAIR NET PROFITS INCREASE BY 28% DESPITE ADVERSE INDUSTRY CONDITIONS
Ryanair, Europe's largest low fares airline today (7 August 2001) announced
strong growth and record financial results for the Q.1 ended 30 June, 2001.
Passenger traffic increased by 42% to 2.4m. and total revenues grew by 31% to
Euro150.8m. reflecting a decline in average fares of 8% due to the launch of
13 new routes early in the quarter and the continued driving down of average
air fares. Operating expenses increased (at a fractionally higher rate than
revenues) by 32% to Euro122.1m. As a result after tax profits rose
significantly ahead of target by 28% to Euro23.2m.
Summary Table of Results (Irish GAAP) - in Euro
Quarter Ended June 30, 2001 June 30, 2000 % Increase
Passengers 2.4m 1.7m 42%
Revenue Euro150.8m Euro115.0m 31%
Profit after tax Euro23.2m Euro18.1m 28%
Basic EPS (Euro Cents) 6.41 5.16 24%
Commenting on these results in London this morning Ryanair's CEO, Michael
O'Leary said;
'Ryanair's strong growth in Q.1 reflects the successful roll out of our low
fares formula on 13 new routes across Europe. We continue to grow traffic in
both new and existing markets because Ryanair remains the only airline in
Europe which guarantees that its fares will be the lowest. Due to the earlier
launch of these new routes (compared to last year) our traffic growth at 42%
has been artificially enhanced. We expect it to return to our target level of
25% by Q.2 when this timing difference will have been corrected.
'During the quarter we launched seven new routes from London Stansted to
Gothenburg and Stockholm (Vasteras) in Sweden, Esbjerg in Denmark, Salzburg in
Austria, Pescara and Trieste in Italy. We also successfully launched our
first Continental European base with six new routes from Brussels (Charleroi).
The load factor across these new routes has been ahead of expectations
although the average air fares were lower than budgeted in their early months.
'Our successful entry on to these routes has been impressive when set against
the challenging economic backdrop of high fuel prices, the economic downturn,
and the continuing effects of foot and mouth disease. Whilst Ryanair's low
fares formula continues to deliver strong growth and profits, most of our
major European competitors are issuing profit warnings or increasing losses.
'We have recently announced our 14th new route from Dublin to Edinburgh which
will start on 30th August next, with four daily return flights. Because we
guarantee the lowest fares in every market, Ryanair has offered every seat on
every flight for the first two months on the route at just £5 one way and we
have already sold out almost all of these 100,000 seats for September and
October. Our Winter Schedule will see additional capacity on Glasgow-London,
Glasgow-Brussels and Glasgow-Dublin, with extra frequencies added on
London-Frankfurt, London-Brussels and London-Venice. In addition, we are
increasing our weekend ski market capacity with extra flights to Salzburg,
Turin and St-Etienne.
'We have recently advised Boeing that we have cancelled options on five new
737-800 aircraft which were scheduled for delivery between March and May 2003.
Despite continuing negotiations with Boeing we have been unable to agree
acceptable prices for these deliveries. This decision does not affect the
already agreed firm delivery of 13 more 800's between late 2001 and the end of
2002. We are continuing to negotiate with Boeing, but unless their pricing
begins to reflect the current market realities we will be forced in due course
to cancel our remaining twelve options for 2004 and 2005 deliveries as well.
We are also continuing our active discussions to purchase up to 50 second hand
737's (300's and 400's), which will adequately meet our fleet expansion
programme from 2003 onwards. We are seeing further weakening in lease rates
and sale prices and we believe this trend will continue, which will enable
Ryanair to meet our 25% passenger growth objectives for 2004 and beyond at
very competitive prices.
'Yet another quarter has now passed with very strong growth for Ryanair,
particularly at Stansted, Prestwick and Brussels, while Irish traffic, jobs
and tourism continue to suffer. The damage done to Irish tourism by our inept
Minister and her absurd policy of protecting a high cost airport monopoly at
the expense of consumers continues. Increased costs at Dublin Airport have
resulted in higher fares and a reduction in traffic volumes from the UK (our
biggest market) on a year on year basis. It is no coincidence that this
failed policy has resulted in one of the worst ever years for Irish tourism.
So long as monopoly protectionism, higher costs and Ministerial incompetence
continues to adversely impact Irish tourism, Ryanair will continue to expand
rapidly in Europe by opening new routes, guaranteeing lowest air fares and
creating up to 500 new jobs outside of Ireland.
'We remain cautious - as we have been during the last few quarters - in our
outlook. However, we believe that the general economic sluggishness in Europe
will be good for low fare traffic growth but may result in slightly lower than
expected yields. Thus far we haven't seen this negative impact on air fares.
Despite the adverse market conditions Ryanair continues to grow profitably at
a time when many of Europe's flag carriers are suffering. We therefore remain
pleased with our current performance and comfortable with the general range of
analysts estimates for the coming year.'
ENDS.
For results and further information Howard Millar Pauline McAlester
please contact: Ryanair Holdings Plc Murray Consultants
www.Ryanair.com Tel: 353-1-8121212 Tel: 353-1-6633332
Certain of the information included in this release is forward looking and is
subject to important risks and uncertainties that could cause actual results
to differ materially. It is not reasonably possible to itemise all of the many
factors and specific events that could affect the outlook and results of an
airline operating in the European economy. Among the factors that are subject
to change and could significantly impact Ryanair's expected results are the
airline pricing environment, fuel costs, competition from new and existing
carriers, market prices for replacement aircraft, costs associated with
environmental, safety and security measures, actions of the Irish, U.K.,
European Union ('EU') and other governments and their respective regulatory
agencies, fluctuations in currency exchange rates and interest rates, airport
access and charges, labour relations, the economic environment of the airline
industry, the general economic environment in Ireland, the UK and Continental
Europe, the general willingness of passengers to travel and other economics,
social and political factors.
Ryanair is Europe's largest low fares airline with 55 low fare routes across
12 countries. Ryanair has a fleet of 36 Boeing 737's, and firm orders for up
to a further 13 new 737-800's which will be delivered over the next 2 years.
Ryanair currently employs a team of 1,500 people and will carry 9 million
scheduled passengers in the current year.
www.RYANAIR.COM was launched in January 2000 and is already Europe's largest
travel website. This is the only internet site to guarantee the lowest fares
on the web.
Ryanair Holdings plc and Subsidiaries
Consolidated Profit and Loss Accounts in accordance
with UK and Irish GAAP(unaudited)
Quarter Quarter
ended ended
June June
30, 30,
2001 2000
Euro Euro
'000 '000
Operating Revenues
Scheduled revenues 134,545 103,268
Ancillary revenues 16,299 11,773
Total operating revenues
-continuing operations 150,844 115,041
Operating expenses
Staff costs 18,831 14,822
Depreciation and amortisation 15,672 13,290
Other operating expenses
Fuel & Oil 26,355 13,370
Maintenance, materials and repairs 7,300 5,098
Marketing and distribution costs 6,145 11,037
Aircraft rentals 2,874 2,444
Route charges 11,510 8,196
Airport and Handling charges 21,677 15,206
Other 11,720 9,312
Total operating expenses 122,084 92,775
Operating profit - continuing operations 28,760 22,266
Other income/(expenses)
Interest receivable and similar income 5,211 3,311
Interest payable and similar charges (4,564) (1,715)
Foreign exchange losses (1,939) (1,141)
Gains on disposal of fixed assets 7 0
Total other income/(expenses) (1,285) 455
Profit on ordinary activities
before taxation 27,475 22,721
Tax on profit on ordinary activities (4,259) (4,634)
Profit for the period 23,216 18,087
Earnings per ordinary share
-Basic(Euro cents) 6.41 5.16
-Diluted(Euro cents) 6.32 5.10
Number of ordinary shares(in 000's)*
-Basic 362,053 350,253
-Diluted 367,570 354,459
Page 1
Ryanair Holdings plc and Subsidiaries
Consolidated Balance Sheets in accordance with
UK and Irish GAAP
June March
30, 31,
2001 2001
Euro Euro
'000 '000
(unaudited)
Fixed assets
Tangible assets 630,476 613,591
Financial 36 36
assets
Total fixed 630,512 613,627
assets
Current Assets
Cash and liquid resources 668,385 626,720
Accounts receivable 10,375 8,695
Other assets 13,947 12,235
Inventories 16,374 15,975
Total current assets 709,081 663,625
Total assets 1,339,593 1,277,252
Current
liabilities
Accounts payable 33,549 29,998
Accrued expenses and other liabilities 175,515 139,406
Current maturities of long term debt 27,595 27,994
Short term borrowings 9,452 5,078
Total current liabilities 246,111 202,476
Other
liabilities
Provisions for liabilities and charges 33,790 30,122
Long term debt 366,578 374,756
400,368 404,878
Shareholders' funds - equity
Called - up share capital 9,194 9,194
Share premium account 371,849 371,849
Profit and loss account 312,071 288,855
Shareholders' funds - equity 693,114 669,898
Total liabilities and shareholders' funds 1,339,593 1,277,252
Page 2
Ryanair Holdings plc and Subsidiaries
Consolidated Cashflow Statements in accordance
with UK and Irish GAAP (unaudited)
Quarter Quarter
ended ended
June 30, June 30,
2001 2000
Euro'000 Euro'000
Net cash inflow from operating activities 76,814 63,637
Returns on investments and servicing of finance 1,716 1,140
Taxation (112) 0
Capital expenditure(including aircraft deposits) (32,550) (139,011)
Net cash inflow/(outflow) before financing
and use of liquid resources 45,868 (74,234)
Financing (8,577) 141,502
(Increase) in liquid resources (40,479) (68,200)
(Decrease) in cash (3,188) (932)
Analysis of movement in liquid resources
Liquid resources at beginning of year 564,782 334,149
Increase in period 40,479 68,200
Liquid resources at end of period 605,261 402,349
Analysis of movement in cash
At beginning of year 56,860 17,319
Net cash outflow (3,188) (932)
Net cash at end of period 53,672 16,387
Page 3
Ryanair Holdings plc and Subsidiaries
Consolidated Statement of Changes in Shareholders' Funds - Equity
in accordance with UK and Irish GAAP(unaudited)
Share Profit
Ordinary premium and loss
shares account account Total
Euro'000 Euro'000 Euro'000 Euro'000
Balance at April 1, 2001 9,194 371,849 288,855 669,898
Profit for the period - - 23,216 23,216
Balance at June 30, 2001 9,194 371,849 312,071 693,114
Page 4
Ryanair Holdings plc and Subsidiaries
Consolidated Profit and Loss Accounts in accordance
with US GAAP (unaudited)
Quarter Quarter
ended ended
June 30, June 30,
2001 2000
Euro'000 Euro
'000
Scheduled revenues 134,545 103,268
Ancillary revenues 16,299 11,773
Total operating revenues
-continuing operations 150,844 115,041
Operating expenses
Staff costs 18,630 14,623
Depreciation and amortisation 15,672 13,000
Other operating expenses
Fuel & Oil 26,355 13,370
Maintenance, materials and 7,300 5,098
repairs
Marketing and distribution 6,145 11,037
costs
Aircraft rentals 2,874 2,444
Route charges 11,510 8,196
Airport and Handling charges 21,677 15,206
Other 11,698 9,290
Total operating expenses 121,861 92,264
Operating profit - continuing operations 28,983 22,777
Other income/(expenses)
Interest receivable and similar income 5,211 3,311
Interest payable and similar charges (4,564) (1,715)
Foreign exchange (losses)/gains (1,939) 1,331
Gains on disposal of fixed assets 7 0
Total other income/(expenses) (1,285) 2,927
Profit on ordinary activities
before taxation 27,698 25,704
Tax on profit on ordinary activities (4,276) (5,317)
Net Income 23,422 20,387
Net Income per ADS *
-Basic(Euro cents) 32.35 29.10
-Diluted(Euro cents) 31.86 28.76
Weighted Average number of shares*
-Basic 362,053 350,253
-Diluted 367,570 354,459
*Each ADS represents five ordinary shares
Page 5
Ryanair Holdings plc and Subsidiaries
Summary of significant differences between UK,
Irish and US generally accepted accounting
principles(unaudited)
(A) Net income under US GAAP
<-----Quarter ended----->
June 30, June 30,
2001 2000
Euro'000 Euro'000
Profit as reported in the consolidated
profit and loss accounts and in
accordance with UK and Irish GAAP 23,216 18,087
Adjustments
Pension 85 58
Unrealised gains on forward exchange 0 2,472
contracts
Employment grants 116 141
Basis of accounting for August 1996 0 180
transaction
Basis of accounting for aircraft acquired 0 110
from Northill Limited
Darley Investments Limited 22 22
Tax effect of adjustments (17) (683)
Net income under US GAAP 23,422 20,387
(B) Consolidated Cashflow Statements in
accordance
with US GAAP
Cash inflow from operating activities 78,418 64,776
Cash (outflow) from investing (276,289) (128,231)
activities
Cash (outflow)/ inflow from financial (4,203) 139,381
activities
(Decrease)/ increase in cash and cash (202,074) 75,926
equivalents
Cash and cash equivalents at beginning 389,059 121,430
of year
Cash and cash equivalents at end of 186,985 197,356
period
Cash and cash equivalents under US GAAP 186,985 197,356
Deposits with a maturity of between three 481,400 223,040
and six months
Cash and liquid resources under UK and Irish 668,385 420,396
GAAP
Page 6
Ryanair Holdings plc and Subsidiaries
Summary of significant differences between UK,
Irish and US generally accepted accounting
principles(unaudited)
(C) Shareholders' funds - equity
June 30, June 30,
2001 2000
Euro'000 Euro'000
Shareholders' equity as reported in the
consolidated balance
sheets (UK and Irish GAAP) 693,114 459,900
Adjustments:
Pension 1,748 981
Unrealised gains/(losses) on forward exchange 4,189 (142)
contracts
Employment grants (817) (1,193)
Basis of accounting for August 1996 0 (1,351)
transactions
Basis of accounting for aircraft acquired 0 (69)
from Northill Limited
Darley Investments Limited (393) (481)
Investments 668 988
Unrealised gains on derivative financial 4,760 0
instruments( net of tax)
Tax effect of adjustments (621) 550
Shareholders' equity as adjusted to accord 702,648 459,183
with US GAAP
Opening shareholders' equity under US 674,386 439,340
GAAP
Comprehensive Income adjustments
Investments 80 (1,000)
Unrealised gains on derivative financial 4,760 0
instruments(net of tax)
4,840 (1,000)
Net income in accordance with US GAAP 23,422 20,387
Stock issued for cash 0 456
Closing shareholders' equity under US 702,648 459,183
GAAP
Page 7
Ryanair Holdings plc
Management Discussion and Analysis of Results
Summary Quarter Ended June 30, 2001
Consolidated Profit and Loss
Profit after tax, for the quarter increased by 28% to Euro23.2m, compared to
Euro18.1m in the previous quarter due to strong growth in passenger volumes
and continued tight cost control.
Passenger volumes increased by 42% to 2.4m whilst Total Operating Revenues
grew by 31% to Euro150.8m. This was slower than the growth in passenger volume
due to the impact of the company's objective of driving down average airfares,
combined with the launch of 13 new routes.
Total Operating Expenses increased by 32% to Euro122.1m, due to the increased
level of activity, and the increased costs, primarily, fuel, staff and airport
& handling costs associated with the growth of the airline. These costs were
partly offset by savings in Marketing and Distribution costs which declined by
44% due to the increase in the level of direct bookings on Ryanair.com, and
the termination of the Galileo distribution contract. Profit before Tax has
increased by 21%. The effective Corporation Tax rate was 16% compared to 20%
for the previous quarter, and reflects the decline in the headline rate of
corporation tax in Ireland. For the reasons outlined Net Margin has marginally
declined from 15.7% to 15.4% in the quarter.
Balance Sheet
The balance sheet continues to strengthen and Cash and Liquid Resources have
increased by Euro41.7m from Euro626.7m at March 31, 2001 to Euro668.4m at June
30, 2001, reflecting the increased cash flows from the profitable trading
performance. The company incurred capital expenditure of Euro32.6m mainly on
aircraft deposits, and Shareholder's Funds at June 30, 2001 have increased to
Euro693.1m, compared to Euro669.9m at March 31, 2001.
Detailed Discussion and Analysis Quarter Ended June 30, 2001
Profit after tax, increased by 28% to Euro23.2m driven by strong growth in
passenger volumes. Operating margins have remained constant at 19% which has
resulted in Operating Profit increasing by Euro6.5m to Euro28.8m compared to
previous quarter.
Total Operating Revenues increased by 31% to Euro150.8m whilst passenger
volumes increased by 42% to 2.4m.
Scheduled Passenger Revenues increased by 30% to Euro134.5m due to a
combination of increased passenger numbers on existing routes and the
successful launch of 13 new routes. Passenger volume growth in this quarter at
42% was ahead of the annualised target of 25% due mainly to the timing impact
of the early launch of these new routes.
Ancillary Revenues increased by 38% to Euro16.3m, which is lower than the
growth in passenger volumes, and reflects the increase in the level of car
hire rentals, other ancillary products, and internet-related revenues, offset
by, a reduction in Charter revenues due to the continued focus on the
scheduled operation.
Total Operating Expenses increased by 32% to Euro122.1m, due to increased
costs primarily, fuel, staff, airport & handling costs associated with the
growth of the airline.
Staff costs have increased by 27% to Euro18.8m. This increase reflects an 8%
increase in average employee numbers to 1,539. Pilots, who earn higher than
the average salary, accounted for 62% of the increase in employment. Staff
costs also rose due to the impact of pay increases, which were between 3% and
5.5%.
Depreciation and Amortization increased by 18% to Euro15.6m due to an increase
in the number of aircraft operated from 29 to 36, and the amortisation of
capitalised maintenance costs.
Fuel costs rose by 97% to Euro26.4m due to a 42% increase in the number of
hours flown, a 38% increase in the average US$ cost per gallon of fuel, and
the adverse impact of the strengthening of the US dollar to the Euro.
Maintenance costs increased by 43% to Euro7.3m due to the increase in the size
of the fleet, and an increase in the number of flight hours.
Marketing and Distribution Costs decreased by 44% to Euro6.1m due to a
combination of an increase in the level of direct bookings via the internet,
and the termination of the distribution agreement with Galileo in August 2000,
offset by a higher spend on the advertising of the 13 new routes.
Aircraft Rental Costs increased by Euro0.4m to Euro2.9m reflecting the need to
rent additional seat capacity during the period.
Route Charges increased by 40% to Euro11.5m due to an increase in the number
sectors flown, and an increase in the average sector length.
Airport and Handling Charges increased by 43% to Euro21.7m due to an increase
in the number of passengers flown, the impact of increased airport and
handling charges on some existing routes, offset by, lower charges on our new
European routes.
Other Expenses increased by 26% to Euro11.7m, which is less than the growth in
ancillary revenues reflecting improved margins on some new and existing
products.
Operating Margins have remained constant due to the reasons outlined above and
Operating Profits have increased by 29% to Euro28.8m during the year.
Interest Receivable increased by Euro1.9m to Euro5.2m reflecting the strong
growth in cash resources arising from the profitable trading performance
during the quarter and the receipt of proceeds from a secondary offering in
February 2001. Interest Payable increased by Euro2.8m due to the higher level
of debt arising from the acquisition of new aircraft.
Taxation decreased in the quarter by Euro0.4m to Euro4.3m due to a decline in
the tax rate from 20% to 16% primarily reflecting the reduction in the
headline rate of Corporation Tax in Ireland.
The Company's Balance Sheet continues to strengthen due to the combined
benefit of strong growth in profits and receipt of the net proceeds of the
secondary offering of Euro124.1m during February 2001. The Company generated
cash from operating activities of Euro76.8m, which funded additional capital
expenditure (mainly aircraft deposits) of Euro32.6m during the quarter. Cash
and liquid resources at June 30, 2001 were Euro668.4m compared to Euro626.7m
at March 31, 2001.
Shareholder's Funds at June 30, 2001 have increased to Euro693.1m compared to
Euro669.9m at March 31, 2001.
Notes to the Financial Statements
1. Accounting Policies
With effect from April 1, 2001 Ryanair adopted Statement of Financial
Accounting Standards no. 133, 'Accounting for Derivative Instruments and
Hedging Activities'(SFAS no. 133), as amended. Ryanair has not recorded any
cumulative adjustment to earnings as a result of the implementation of the
SFAS no. 133. All other accounting policies followed in the preparation of
these consolidated financial statements for the quarter ended June 30, 2001
are consistent with those set out in the Annual Report for the year ended
March 31, 2001.
2. Approval of the Financial Statements
The consolidated financial statements for the quarter ended June 30, 2001 were
approved by the Audit Committee on August 3rd, 2001.
3. Generally Accepted Accounting Policies
The Management Discussion and Analysis of Results for the quarter ended June
30, 2001 are based on the results reported under Irish and UK GAAP.
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