3rd Quarter Results
Ryanair Holdings PLC
28 January 2004
RYANAIR DELIVERS RECORD Q3 PROFITS,
TRAFFIC GROWS BY 54%, PROFITS RISE BY 10%
Ryanair, Europe's No.1 low fares airline today (Wed 28 Jan 2004) released
financial results for the quarter ended 31 Dec'03 showing record profits and
traffic figures, whilst passengers benefited from fares which were on average
11% lower than the equivalent period last year.
Summary Table of Results (Irish GAAP) - in Euro
Quarter ended Dec 31,2002 Dec 31, 2003 % Increase
Passengers 3.9m 6.1m 54%
Revenue €185.9m €255.0m 37%
Adjusted Profit after
tax Note 1 €43.2m €47.5m 10%
Adjusted EPS (Euro
Cent) Note 1 5.72c 6.27c 10%
Note 1: Adjusted profit after tax and EPS, excludes the exceptional
costs of €6.0m (net of tax) arising from the earlier than planned
retirement of 6 Boeing 737-200 aircraft and a Goodwill charge of €0.6m
Traffic for the quarter grew by 54% to 6.1m, whilst average fares declined by
11%. Total revenues rose by 37%, operating costs rose by 42% - significantly
less than the rate of traffic growth - as unit costs fell by 8%, whilst after
tax margins declined from 23% to 19% for the quarter. Adjusted net profit after
tax rose by 10% to €47.5m.
This quarter marked a number of important milestones in Ryanair's growth as
follows;
•Overtaking Easyjet to become Europe's largest low fares airline.
•Overtaking BA's UK/Europe traffic, making Ryanair Britain's favourite
airline.
•Selected 2 more new European bases in Rome and Barcelona.
•Cumulative after tax profit margin continues to be over 20%.
•Closing cash balances of €1.12 billion.
As we have consistently highlighted in previous quarterly statements, we remain
very cautious in our outlook for fares and yields. Based on initial bookings for
the first three calendar months of 2004 (Q.4 of 2003/04) we now expect that
yields during this final quarter may decline by between 25% to 30% over those
recorded in the comparable quarter last year. These reductions in fares are
significantly greater than the 10% to 15% range recorded over the first three
quarters. If these lower fares and yields occur (bearing in mind we have not
completed even the first month of this quarter) then we would expect net profit
before exceptionals for the fiscal year to reduce by up to 10% from a net profit
of €239m last year to approximately €215m for the current fiscal year.
Announcing these results in London this morning, Ryanair's Chief Executive,
Michael O'Leary said:
'We are very pleased with the strong growth in traffic and profits for the
third quarter which demonstrates the success of our strategy of rapid
capacity expansion across new bases and new routes, over the past year. The
yield reduction of 11% - although greater than originally expected - has
stimulated a 54% increase in traffic, whilst an 8% reduction in unit
operating costs has ensured that our strong profitability continues.
'Early indications for yields in our fourth quarter suggest a marked further
reduction of between 25% to 30% due to 1) our continuing substantial
capacity growth, 2) the launch in January and February of two new bases at
Rome Ciampino and Barcelona Girona, 3) the impact of Sterling's continuing
weakness against the Euro, 4) intense price competition all over Europe as a
result of enormous capacity growth, particularly from chronically loss
making start-up airlines and flag carriers.
'There is therefore considerable downward pressure on fares and yields as
many of these loss making airlines try to compete and survive. Despite this
difficult market Ryanair continues to profitably develop new routes, new
bases and grow market share. In many cases Ryanair is leading the downward
pressure on prices and yields, but unlike our competitors we continue to
generate world leading profit margins as a result of our aggressive cost
management and lowest cost base.
'Ryanair's strategy continues to be successful all over Europe. Traffic has
grown by over 50% so far this year. We have launched 4 new bases in Europe,
and 73 of our 146 routes are in their first 12 months of operation. While we
now expect after tax profits for the current year to dip slightly, our
annualised profit margin will still be in excess of 20% and Ryanair will
continue - by some considerable distance - to be the world's most profitable
airline by margin.
'We have seen a number of these cycles in the industry before. Ryanair
continues to grow strongly and profitably, even during periods such as now
when fares and yields are being lowered at a faster rate than predicted. Our
response to these market conditions will be to continue to lower fares and
yields, exploit our huge cost advantage, and tightly manage further cost
reductions so that we continue to deliver industry leading low fares and
profit margins.
'Our determination to continue to reduce fares and yields is strengthened by
our experience in recent quarters where many competitors have been forced to
reduce their frequency and capacity or withdraw from markets were they
compete with Ryanair's low fares.
'Looking forward to the next fiscal year (04/05) it is impossible in the
current climate to make accurate forecasts on fares and yields other than to
state that Ryanair will always offer the lowest fares in all markets.
Despite this overall caution we expect the yield decline next year to be of
a lower order of magnitude for the following reasons;
1. We do not expect any further weakness of Sterling against the Euro.
2. From May onwards, Ryanair's rate of capacity growth will fall from over 50%
for the past two years to just 20% per annum.
3. Initial indications suggest that the two new bases (Rome Ciampino and
Barcelona Girona) will be significantly stronger performers than some of the
new routes and bases launched in previous years.
'We are confident that average seat costs for the coming year will continue
to decline strongly, thanks to continuing cost reductions, the higher
proportion of more efficient 737-800's in service, redelivery of the Buzz
BAe 146 aircraft and the other recent lease-ins. The weaker U.S. dollar will
also have a positive impact on fuel, aircraft and spares costs whilst there
will be continued strong growth in ancillary revenues.
'We are also initiating a detailed review and reduction of certain elements
of our cost base which will include;
a. Reducing airport and handling costs where Ryanair continues to deliver
exceptional growth, whilst at the same time reducing capacity at those
airports that do not share our commitment to lower air fares for consumers.
b. We are already in discussions with lessors to reduce to market rates lease
costs on some of the former Buzz aircraft. These leases are already the
subject of legal dispute and impending proceedings and if these are not
successful, then the aircraft will be returned and Buzz Stansted Ltd will be
wound down.
c. We are renegotiating our long-term maintenance contracts on the basis of our
larger fleet size and we are re-examining the timing of our fleet deliveries
in order to ensure that capacity growth is maintained at 20% to 25% for the
next number of years.
'Even in the light of this revised profit guidance for the current year,
Ryanair will continue to be one of the world's fastest growing, and
certainly the world's most profitable airline by margin. Our net after tax
margin will continue to exceed our benchmark target of 20% for the current
year despite an enormous and sudden reduction in fares and yields. Our
response to competition in all markets will be to beat it by offering lower
prices, No.1 customer service and continued cost reduction. Like Southwest
in the U.S., Ryanair's model is successful. It is by some distance the
lowest cost operator in Europe, we continue to enjoy the support of the
travelling public, and we remain tremendously profitable as well as
enormously cash generative. Our cash balances at the end of Q3 exceed
€1.12bn.
'Some of our loss making competitors will continue to cut back routes or
terminate them, some will consolidate, and some will disappear over the
coming years, but we remain determined to ensure that Ryanair - the lowest
cost airline in Europe - continues to grow and continues to be profitable.
We are building here for the long term and we believe that investors can
continue to share in this growth story'.
ENDS. Wednesday, 28th January 2004
For results and further information Howard Millar Pauline McAlester
please contact: Ryanair Holdings Plc Murray Consultants
www.Ryanair.com Tel: 353-1-8121212 Tel: 353-1-4980300
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 Holdings plc and Subsidiaries
Consolidated Profit and Loss Accounts in accordance
with UK and Irish GAAP(unaudited)
Quarter Quarter Nine months Nine months
ended ended ended ended
Dec 31, Dec 31, Dec 31, Dec 31,
2003 2002 2003 2002
€'000 €'000 €'000 €'000
------- ------- ------- -------
Operating Revenues
Scheduled revenues 216,424 157,407 739,964 568,514
Ancillary revenues 38,575 28,497 111,409 81,979
-------- ------ ------- -------
Total operating
revenues
-continuing operations 254,999 185,904 851,373 650,493
-------- ------ ------- -------
Operating expenses
Staff costs 29,506 21,822 90,984 68,554
Depreciation and
amortisation 25,009 19,014 71,728 56,877
Aircraft
retirement costs 6,773 - 9,491 -
Other operating
expenses
Fuel & Oil 43,128 29,355 127,474 97,777
Maintenance,
materials and
repairs 8,796 6,197 30,983 23,340
Marketing and
distribution
costs 1,045 2,865 11,028 10,972
Aircraft
rentals 2,730 - 6,450 -
Route
charges 27,442 15,944 80,331 49,694
Airport and
Handling
charges 38,123 26,224 110,202 82,430
Other 19,083 15,772 58,769 44,643
-------- ------ ------- -------
Total operating
expenses 201,635 137,193 597,440 434,287
-------- ------ ------- -------
Operating profit before
exceptional items and goodwill 53,364 48,711 253,933 216,206
Buzz re-organisation
costs - - (3,012) -
Amortisation of
goodwill (586) - (1,757) -
-------- ------ ------- -------
(586) - (4,769) -
Operating profit after
exceptional items and goodwill 52,778 48,711 249,164 216,206
-------- ------ ------- -------
Other income/(expenses)
Foreign exchange gains/
(losses) (581) (1,012) 852 (1,733)
(Loss) on disposal of fixed
assets - (8) (8) (29)
Interest receivable and
similar income 5,115 8,187 17,642 24,192
Interest payable and similar
charges (12,499) (8,083) (35,302) (22,137)
-------- ------ ------- -------
Total other income/
(expenses) (7,965) (916) (16,816) 293
-------- ------ ------- -------
Profit before
taxation 44,813 47,795 232,348 216,499
Tax on profit on ordinary
activities (3,852) (4,643) (22,446) (22,401)
-------- ------ ------- -------
Profit for the
period 40,961 43,152 209,902 194,098
======== ====== ======= =======
Earnings per ordinary
share
-Basic(Euro cent) 5.40 5.72 27.72 25.71
-Diluted(Euro cent) 5.33 5.63 27.41 25.34
Adjusted Earnings per
ordinary share*
-Basic(Euro cent) 6.27 5.72 29.46 25.71
-Diluted(Euro cent) 6.19 5.63 29.13 25.34
Number of ordinary shares (in 000's)
-Basic 758,608 755,031 757,143 755,031
-Diluted 767,928 766,705 765,779 765,853
* Calculated on Profit for period before exceptional items (net of tax) and
Goodwill and excluding Aircraft retirement costs. Page 1
Ryanair Holdings plc and Subsidiaries
Consolidated Balance Sheets in accordance with
UK and Irish GAAP(unaudited)
December 31, March 31,
2003 2003
€'000 €'000
------- -------
Fixed assets
Tangible assets 1,611,127 1,352,361
Intangible Assets 45,085 -
---------- -------
Total fixed assets 1,656,212 1,352,361
---------- -------
Current Assets
Cash and liquid resources 1,124,671 1,060,218
Accounts receivable 11,478 14,970
Other assets 22,977 16,370
Inventories 24,183 22,788
---------- -------
Total current assets 1,183,309 1,114,346
---------- -------
Total assets 2,839,521 2,466,707
========== =======
Current liabilities
Accounts payable 82,491 61,604
Accrued expenses and other
liabilities 223,679 251,328
Current maturities of long term
debt 79,545 63,291
Short term borrowings 4,454 1,316
---------- -------
Total current liabilities 390,169 377,539
---------- -------
Other liabilities
Provisions for liabilities and
charges 97,915 67,833
Accounts payable due after one year 268 5,673
Long term debt 893,285 773,934
---------- -------
Total Other liabilities 991,468 847,440
---------- -------
Shareholders' funds - equity
Called - up share capital 9,637 9,588
Share premium account 559,717 553,512
Profit and loss account 888,530 678,628
---------- -------
Shareholders' funds - equity 1,457,884 1,241,728
---------- -------
Total liabilities and shareholders'
funds 2,839,521 2,466,707
========== =======
Page 2
Ryanair Holdings plc and Subsidiaries
Consolidated Cashflow Statements in accordance
with UK and Irish GAAP (unaudited)
Ryanair Ryanair
Holdings plc Holdings plc
Nine months Nine months
ended ended
Dec 31, Dec 31,
2003 2002
€'000 €'000
------- -------
Net cash inflow from operating
activities 295,459 260,950
Returns on investments and servicing
of finance (17,086) (4,257)
Taxation 207 (2,212)
Capital expenditure(including aircraft
deposits) (338,329) (270,867)
Acquisitions and disposals (20,795) -
-------- --------
Net cash (outflow) before financing
and management of liquid resources (80,544) (16,386)
Financing 141,859 161,675
(Increase) in liquid resources (108,139) (156,153)
-------- --------
(Decrease) in cash (46,824) (10,864)
======== ========
Analysis of movement in liquid
resources
At beginning of year 982,352 816,023
Increase in period 108,139 156,153
-------- --------
At end of period 1,090,491 972,176
======== ========
Analysis of movement in cash
At beginning of year 76,550 77,747
Net cash (outflow) during period (46,824) (10,864)
-------- --------
At end of period 29,726 66,883
======== ========
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
€'000 €'000 €'000 €'000
-------- ------- ------- -------
Balance at April 1,
2003 9,588 553,512 678,628 1,241,728
Issue of ordinary equity
shares 49 6,205 - 6,254
Profit for the period - - 209,902 209,902
--------- -------- ------- --------
Balance at December 31,
2003 9,637 559,717 888,530 1,457,884
========= ======== ======= ========
Reconciliation of adjusted Earning per share(unaudited)
Quarter Quarter Nine months Nine months
ended ended ended ended
Dec 31, Dec 31, Dec 31, Dec 31,
2003 2002 2003 2002
€'000 €'000 €'000 €'000
------- ------- ------- -------
Profit for the period under
UK and Irish GAAP 40,961 43,152 209,902 194,098
Adjustments
-------------
Aircraft retirement
costs 6,773 - 9,491 -
Buzz re-organisation
costs - - 3,012 -
Amortisation
of goodwill 586 - 1,757 -
Taxation adjustment for
above (779) - (1,084) -
--------- -------- -------- --------
Adjusted Profit under UK and
Irish GAAP 47,541 43,152 223,078 194,098
========= ======== ======== ========
Number of ordinary
shares (in 000's)
-Basic 758,608 755,031 757,143 755,031
-Diluted 767,928 766,705 765,779 765,853
Adjusted Earnings per
ordinary share
-Basic 6.27 5.72 29.46 25.71
-Diluted 6.19 5.63 29.13 25.34
Page 4
Ryanair Holdings plc and Subsidiaries
Consolidated Profit and Loss Accounts in accordance
with US GAAP (unaudited)
Quarter Quarter Nine months Nine months
ended ended Ended ended
Dec 31, Dec 31, Dec 31, Dec 31,
2003 2002 2003 2002
€'000 €'000 €'000 €'000
------- ------- ------- -------
Operating Revenues
Scheduled revenues 216,424 157,407 739,964 568,514
Ancillary revenues 38,575 28,497 111,409 81,979
-------- ------- ------- -------
Total operating
revenues
-continuing operations 254,999 185,904 851,373 650,493
-------- ------- ------- -------
Operating expenses
Staff costs 29,286 21,558 90,344 67,780
Depreciation and
amortisation 25,009 19,014 71,728 56,877
Aircraft
retirement
costs 6,773 - 9,491 -
Other operating
expenses
Fuel & Oil 43,128 29,355 127,474 97,777
Maintenance,
materials and
repairs 8,796 6,197 30,983 23,340
Marketing and
distribution
costs 1,045 2,865 11,028 10,972
Aircraft
rentals 2,730 - 6,450 -
Route
charges 27,442 15,944 80,331 49,694
Airport and
Handling
charges 38,123 26,224 110,202 82,430
Other 19,061 15,750 58,703 44,577
-------- ------- ------- -------
Total operating
expenses 201,393 136,907 596,734 433,447
-------- ------- ------- -------
Operating profit before
exceptional items 53,606 48,997 254,639 217,046
Buzz re-organisation
costs - - (3,012) -
-------- ------- ------- -------
Operating profit after
exceptional items 53,606 48,997 251,627 217,046
-------- ------- ------- -------
Other income/(expenses)
Foreign exchange gains/
(losses) (581) (1,012) 852 (5,922)
(Loss) on disposal of
fixed assets - (8) (8) (29)
Interest receivable and
similar income 5,115 8,187 17,642 24,192
Interest payable and
similar charges (10,493) (6,492) (29,605) (18,406)
-------- ------- ------- -------
Total other income/
(expenses) (5,959) 675 (11,119) (165)
-------- ------- ------- -------
Profit on ordinary
activities
before taxation 47,647 49,672 240,508 216,881
Tax on profit on ordinary
activities (4,130) (4,869) (23,238) (22,091)
-------- ------- ------- -------
Net Income 43,517 44,803 217,270 194,790
======== ======= ======= =======
Net Income per ADS
-Basic(Euro cent) 28.68 29.67 143.48 128.99
-Diluted(Euro cent) 28.33 29.22 141.86 127.17
Adjusted Net Income per
ADS *
-Basic(Euro cent) 33.15 29.67 151.54 128.99
-Diluted(Euro cent) 30.10 29.22 145.40 127.17
Weighted Average number of
shares
-Basic 758,608 755,031 757,143 755,031
-Diluted 767,928 766,705 765,779 765,853
* Calculated on Net Income before exceptional items (net of tax), and Aircraft
retirement costs.
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--> <--Nine months ended-->
Dec 31, Dec 31, Dec 31, Dec 31,
2003 2002 2003 2002
€000 €000 €'000 €'000
------ ------ ------- -------
Profit as reported in the
consolidated profit and
loss accounts in accordance with
UK and Irish GAAP 40,961 43,152 209,902 194,098
Adjustments
Pension 220 148 640 425
Derivative financial
instruments(net of tax) - - - (4,189)
Amortisation of goodwill 586 - 1,757 -
Employment grants - 116 - 349
Capitalised interest re aircraft
acquisition programme 2,006 1,591 5,697 3,731
Darley Investments Limited 22 22 66 66
Taxation- effect of above
adjustments (278) (226) (792) 310
------ ------ ------- -------
Net income under US GAAP 43,517 44,803 217,270 194,790
======= ====== ======= =======
43,517 44,803 217,270 194,790
(B) Consolidated Cashflow Statements in accordance
with US GAAP
<--Nine months ended-->
Dec 31, Dec 31,
2003 2002
€'000 €'000
------- -------
Cashflow from operating
activities 278,580 254,481
Cash (outflow) from
investing activities (932,690) (233,687)
Cash inflow from financial
activities 144,997 157,965
------- -------
(Decrease)/increase in cash and
cash equivalents (509,113) 178,759
Cash and cash equivalents at
beginning of year 537,476 482,492
------- -------
Cash and cash equivalents at end
of period 28,363 661,251
======= =======
Cash and cash equivalents
under US GAAP 28,363 661,251
Restricted cash 198,300 -
Deposits with a maturity of
between three and six months 898,008 379,603
------- -------
Cash and liquid resources under UK and Irish
GAAP 1,124,671 1,040,854
======= =======
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
Dec 31, Dec 31,
2003 2002
€'000 €'000
------- -------
Shareholders' equity as reported in the
consolidated balance
sheets (UK and Irish GAAP) 1,457,884 1,196,372
Adjustments:
Pension 3,751 2,839
Employment grants - (120)
Goodwill 1,757 -
Capitalised interest re aircraft 15,986 8,758
acquisition programme
Darley Investments Limited (173) (261)
Minimum pension liability(net of (2,656) -
tax)
Derivative financial instruments(net (54,968) (68,528)
of tax)
Tax effect of adjustments (2,467) (1,450)
------- -------
Shareholders' equity as adjusted to accord
with US GAAP 1,419,114 1,137,610
======= =======
Opening shareholders' equity under US
GAAP 1,177,187 1,019,607
Comprehensive Income adjustments
Unrealised gains/(losses) on derivative financial
instruments(net of tax) 18,403 (76,787)
------- -------
18,403 (76,787)
Net income in accordance with US 217,270 194,790
GAAP
Stock issued for cash 6,254 -
------- -------
Closing shareholders' equity under US
GAAP 1,419,114 1,137,610
======= =======
Page 7
Ryanair Holdings plc
Management Discussion and Analysis of Results
Introduction
Profit after tax including exceptional costs of €6.0m(net of tax), and goodwill
of €0.6m arising from the 'Buzz' acquisition decreased by 5.1% to €41.0m. This
profit also includes an additional depreciation charge of €0.5m relating to an
adjustment to the residual value of a Boeing 737-200 aircraft that was retired
earlier than planned (see Note 4). Adjusted profit after tax, excluding goodwill
of €0.6m, and exceptional costs are comprised of aircraft depreciation of €0.5m
and lease in costs of €5.5m(net of tax), increased by 10.2% to €47.5m. For the
purposes of the MD&A the discussion below is by reference to the adjusted profit
and loss account excluding the exceptional costs referred to above.
Summary - Quarter ended December 31, 2003
Profit after tax has increased by 10.2% to €47.5m, compared to €43.2m in the
previous quarter ended December 31, 2002, driven by continued strong growth in
passenger volumes and tight cost control partly offset by lower average fares.
Operating margins have decreased by 2.6 points to 23.6% whilst Operating profit
increased by €11.4m to €60.1m compared to the comparative period last year.
Total operating revenues increased by 37.2% to €255.0m whilst passengers numbers
increased by 54.4% to 6.1m.
Scheduled Passenger revenues increased by 37.5% to €216.4m due to strong
passenger volume growth, offset by a 10.9% decline in average fares during the
period.
Ancillary revenue increased by 35.4% to €38.6m, which is less than the growth in
passenger volumes and reflects strong growth in non-flight scheduled revenue,
car hire and hotel revenue offset by the cessation of the charter programme as
Ryanair replaced charter capacity with scheduled services. Ancillary revenues
were also negatively impacted by the strength of the euro versus sterling, as
65% of ancillary revenues are denominated in sterling. Ancillary revenue,
excluding charters increased by 45.4% and now accounts for 15.1% of total
revenues compared to 14.3% in quarter 3 of fiscal '03.
Total operating expenses increased by 42% to €194.9m due to the increased costs
associated with the higher level of activity, primarily staff costs, fuel, route
charges, depreciation and airport & handling costs associated with the growth of
the airline. Costs continue to increase at a lower rate than the growth in
passenger numbers principally reflecting the increased operational efficiencies
arising from the higher proportion of 737-800 aircraft operated. However they
increased at a faster rate than the growth in revenues due to decreases in
yields described above.
Other income/expenses declined significantly by €7.1m due to lower deposit
interest rates and higher interest payable arising from the increased level of
debt during the period.
Net margins as a result of the above declined from 23.2% to 18.6% whilst net
profit increased by 10.2% to €47.5m.
Adjusted earnings per share have increased by 9.6% to 6.27 euro cent.
Balance Sheet
Cash and liquid resources have increased by €64.4m from €1,060.2m at March 31,
2003 to €1,124.7m at December 31, 2003, reflecting the increased cash flows from
the profitable trading performance during the period. Nine additional aircraft
were delivered in the period of which one was financed via an operating lease
and these, in addition to aircraft deposits, accounted for the bulk of the
€338.3m incurred in capital expenditure. This was part funded by the draw down
of long term debt, which increased, net of repayments, by €135.6m during the
period. Shareholders' funds at December 31, 2003 have increased to €1,457.9m,
compared to €1,241.7m at March 31, 2003.
Detailed Discussion and Analysis - Quarter Ended December 31, 2003
Profit after tax has increased by 10.2% to €47.5m driven by strong growth in
passenger volumes and continued tight cost control, offset by lower average
fares. Operating margins have declined by 2 points to 23.6% compared to the
previous period. Operating profit increased by 23.5% to €60.2m compared to the
quarter ended December 31, 2002 whilst profit before tax increased by 9.2%.
Total operating revenues increased by 37.2% to €255.0m whilst passenger volumes
increased by 54.4% to 6.1m.
Scheduled passenger revenues increased by 37.5% to €216.4m, reflecting the
increase in passenger volumes offset by lower average fares of 10.9%. The
decline in average fares is due to the launch of new routes and new bases
earlier in the year, the weakness of sterling to the euro (which accounted for
5% of the decline), and Ryanair's policy of offering the lowest airfares.
Ancillary revenues increased by 35.4% to €38.6m, which, excluding charters
ancillary revenues has actually increased by 45.4%. This reflects strong growth
in all areas of ancillary revenues particularly car hire, non-flight scheduled
revenues, hotels and internet related activities. These gains were partly offset
by the impact of the depreciation of the sterling currency against the euro in
this period due to the large volume of sterling denominated sales.
Total operating expenses increased by 42.0% to €194.9m due to the increased
level of activity, and the increased costs, primarily staff, depreciation, fuel,
route charges and airport & handling costs associated with the growth of the
airline. The weakness of sterling to euro had a positive impact on operating
costs as did the efficiencies arising from the increased proportion of 737-800
aircraft in operation.
Staff costs have increased by 35.2% to €29.5m reflecting a 34% increase in
average employee numbers to 2,356 and the impact of a 3% pay increase granted
during the period offset by savings arising from the stronger euro to sterling
exchange rate.
Depreciation and amortisation increased by 31.5% to €25.0m due to an increase in
the average number of aircraft owned from 49 to 71, offset by savings arising
from the increase in the number of fully depreciated aircraft, lower
amortisation of capitalised maintenance costs primarily due to the retirement of
737-200 aircraft, and the lower euro denominated cost of new aircraft due to the
strengthening of the euro to US$ exchange rate.
Fuel costs increased by 46.9% to €43.1m due to a 61% increase in the number of
hours flown, a stronger euro to US$ exchange rate and an improvement in the
fleet fuel burn rate due to a higher proportion of 737-800 aircraft operated.
Maintenance costs increased by 41.9% to €8.8m reflecting an increase in the size
of the fleet operated, an increase in the number of flight hours, and the
increase in maintenance provisions relating to the leased 'Buzz' aircraft,
offset by maintenance savings due to improved reliability arising from the
higher proportion of 737-800 aircraft operated as a percentage of the total
fleet.
Marketing and distribution costs decreased by 63.5% to €1.0m due to a lower
spend in the quarter on new routes as most new routes were launched in Quarter
1. In addition advertising spend is more focussed on new markets with existing
market spend declining as the company promotes its fares directly to the
customer via its internet site.
Aircraft rental costs of €2.7m arose during the period reflecting the lease
rental costs associated with the acquired 'Buzz' aircraft. The charge also
includes one month rental relating to the first aircraft delivered to Ryanair
under the new operating lease agreement signed during the quarter.
Route Charges increased by 72.1% to €27.4m due to an increase in the number of
sectors flown, an increase in the average sector length and an increase in the
size of the aircraft operated which incur a higher charge offset by the impact
of a weaker sterling to euro exchange rate.
Airport and handling charges increased by 45.4% to €38.1m which is less than the
growth in passenger volumes and reflects the lower charges on our new European
routes and at our new bases.
Other expenses increased by 21.0% to €19.1m which is less than the growth in
ancillary revenues and reflects improved margins on some new and existing
products and continued cost control on other indirect costs.
Operating profits have increased by 23.5% to €60.1m due to the reasons outlined
above.
Interest receivable decreased by €3.1m to €5.1m reflecting the lower interest
rates obtained on cash deposits during the quarter. Interest payable increased
by €4.4m to €12.5m due to the increased level of debt arising from the
acquisition of new aircraft.
Taxation is 10.2% of pre-tax profits and amounted to €4.6m during the period.
The Company's balance sheet continues to benefit from the strong growth in
profits. Tangible fixed assets increased to €1,611.1m from €1,352.4m principally
as a result of the purchase of eight new 737-800 additional aircraft since March
31, 2003 and the payment of deposits for new deliveries. The Company generated
cash from operating activities of €295.5m, which funded advance payments on
future deliveries of €149.9m whilst the balance is reflected in the higher cash
and liquid resources figure of €1,124.7m. Advance delivery deposits amounted to
€396.5m at the period end. Total debt has increased by a further €135.6m, net of
repayments, since March 31, 2003 to €972.8m. Shareholder's funds at December 31,
2003 have increased to €1,457.9m compared to €1,241.7m at March 31, 2003.
Detailed Discussion and Analysis - Nine months ended December 31, 2003
Profit after tax has increased by 14.9% to €223.1m driven by strong growth in
passenger volumes at lower average fares and continued tight cost control.
Operating margins declined 2.3 points to 30.9% whilst net margins declined by
3.6 points to 26.2% compared to the previous period.
Total operating revenues increased by 30.9% to €851.4m whilst passenger volumes
increased by 48% to 17.4m.
Scheduled passenger revenues increased by 30.2% to €740.0m primarily due to
increased passenger numbers on new and existing routes, offset by a 12.0%
decline in average fares. The decline in average fares is due to the launch of
new routes and new bases, the weakness of sterling to the euro (which accounted
for 5% of the decline), and Ryanair's policy of offering the lowest airfares.
Ancillary revenues increased by 35.9% to €111.4m, which is lower than the growth
in passenger volumes, and reflects the cessation of the charter programme as
Ryanair replaced Charter capacity with scheduled services, and also the weakness
of sterling to the euro due to ancillaries being predominantly sold in sterling.
Excluding charters ancillary revenues increased by 56% due mainly to strong car
hire revenues, non-flight scheduled revenues and other ancillary product
revenues.
Total operating expenses increased by 35.4% to €587.9m due to the increased
level of activity, and the increased costs primarily staff, depreciation, fuel,
route charges and airport & handling costs associated with the growth of the
airline.
Staff costs have increased by 32.7% to €91.0m. This increase reflects a 34%
increase in average employee numbers to 2,273, and the impact of a 3% pay
increase granted during the period offset by savings arising from the strength
of the euro exchange rate to sterling.
Depreciation and amortisation increased by 26.1% to €71.7m(excluding additional
depreciation charges on retired aircraft) due to an increase in the average
number of aircraft owned from 49 to 71 offset by lower amortisation on
capitalised maintenance costs due to the retirement of 737-200 aircraft, and
savings due to the increase in the number of aircraft fully depreciated.
Fuel costs increased by 30.4% to €127.5m due to a 58% increase in the number of
hours flown, offset by a decrease in the average US$ cost per gallon, an
improvement in the fuel burn rate due to a higher proportion of 737-800 aircraft
operated, and the positive impact of the strengthening of the euro to the US$.
Maintenance costs increased by 32.7% to €31.0m reflecting an increase in the
size of the fleet operated, higher maintenance due to the acquisition of the
'Buzz' aircraft and an increase in the number of flight hours, offset by savings
due to improved reliability arising from the higher proportion of 737-800
aircraft operated as a percentage of the total fleet.
Marketing and distribution costs amounted to €11.0m in line with the previous
period reflecting a lower level of expenditure on existing routes and markets,
which were promoted via fare offerings on the internet offset by increased
expenditure on advertising and promotion of new routes/bases.
Aircraft rental costs of €6.5m arose during the period reflecting the lease
rental costs associated with the leased 'Buzz' aircraft and one month's rental
for the first aircraft delivered under the new operating lease agreement.
Route charges increased by 61.7% to €80.3m due to an increase in the number of
sectors flown, an increase in the average sector length and an increase in the
size of the aircraft operated which incur a higher charge, offset by the impact
of a weaker sterling to euro exchange rate.
Airport and handling charges increased by 33.7% to €110.2m 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 and at our new bases.
Other expenses increased by 31.6% to €58.8m, which is less than the growth in
ancillary revenues due to improved margins on some new and existing products,
and cost reductions achieved on other indirect costs.
Operating margins have declined by 2.3 points to 30.9% for the reasons outlined
above whilst operating profits increased by 21.8% to €263.4m during the period.
Interest receivable decreased by 27.1% to €17.6m reflecting the strong growth in
cash resources arising from the profitable trading performance, offset by lower
deposit interest rates in the period. Interest payable increased by 59.5% to
€35.3m due to the increased level of debt arising from the acquisition of new
aircraft.
Taxation has increased by 5% during the period, less than the growth in pre-tax
profits and primarily reflects the continued decline in the headline rate of
corporation tax in Ireland.
Notes to the Financial Statements
1. Accounting Policies
The accounting policies followed in the preparation of these
consolidated financial statements for the nine months ended December 31,
2003 are consistent with those set out in the Annual Report for the year
ended March 31, 2003.
2. Approval of the Financial Statements
The Audit Committee approved the consolidated financial statements for
the Quarter and Nine months ended December 31, 2003 on January 26th,
2003.
3. Generally Accepted Accounting Policies
The Management Discussion and Analysis of Results for the Quarter and
Nine months ended December 31, 2003 are based on the results reported
under Irish and UK GAAP.
4. Aircraft retirement costs
Six aircraft (five in Q2, one in Q3) were retired earlier than expected
due to the detection during the period of scratch marks ('scribing')
that occurred during an aircraft painting programme on these aircraft in
1995. It has been determined that the cost of repairing these aircraft
is uneconomic due to the short remaining life of the aircraft.
Accordingly the Company has determined that the residual value of US$1m
(€794k) for these aircraft is excessive and as a result has reduced it
to €250k per aircraft. The cost of this adjustment charge has been
reflected in the results for Quarter 2 and 3. Arising from the aircraft
scratch marks, which resulted in the earlier than planned retirement of
the aircraft, the company is seeking to claim the costs of repairs under
its aircraft insurance policies. Amounts paid, if any, will be accounted
for as exceptional revenues.
As a result of these early retirements the Company has been obliged to
lease in seat capacity during the period to enable it to continue its
normal flight schedule. The charge in the quarter of €6.2m is reflected
in Aircraft retirement costs. It is planned that the Company will
terminate these rentals by March 31, 2004.
This information is provided by RNS
The company news service from the London Stock Exchange
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