1.1 The Companys corporate and business strategies 1.2 The Companys SWOT na!ysis II. na!y"e #inancia! $erformance of the Company III. To compare the Companys performance with Industry verage performance I%. Compare the financia! performance of the Company with the companies in the same industry. %. Compare the Company with the c!osest competitor 1.& 'usiness (ode! and Strategy between two companies. 1.) Compare financia! $erformance of two companies. %I. Conc!usion 1.* Overview of +yanair, Ryan family launched Ryanair in 1985 as scheduled passenger airline services operating between Ireland and the United Kingdom. he purpose of Ryanair is an alternative to !er "ingus# a state monopoly carrier. !lthough there was a growth in number of passengers# the $ompany faced a loss# accumulating to IR %&' m at the end of 199'. In early of 199's Ryanair restyled itself to become low fare airlines. It was the first low fare airline in (uro# based on the model of )outhwest !irline. ony Ryan and *ichael +,"eary were appointed the board members of Ryanair. he new model brought new fortunes to the $ompany. In Page 1 Evaluating Financial Performance of Ryanair 199-# the $ompany had flown floated in I.+ on the /ublin )toc0 (1change and in &''& the $ompany listed in 2asda341''. +n 5une 6' th # &'1'# Ryanair has serviced around 1#1'' routes throughout (uropean $ontinental and raised the fre3uency of service on number of ma7or routes. In the fiscal year &'1'# the number of Ryanair, passengers have reached to 88.5 millions. !t the end of 6' th # &'1'# Ryanair owned &5' 9oeing -6-48'' aircrafts# and operated 155 airports and employed 8#''' people. he $ompany will raise its fleet to &-& by *arch &'16. :Ryanair,s annual report &'1';.
1.*.1 +yanairs corporate and business strategies In the last few years# Ryanair has built its image as one of the leading low4fare carriers in the (U with a variety of improvement and e1panding offerings of its low4fares service. hat has brought Ryanair an advantage of increasing passenger percentage on routes. 9esides# that Ryanair is continuously concentrating on efficiently control costs and operating has helped it maintain appropriate low4fares strategy over competitors. )ome elements that are part of Ryanair,s policy will be cited as follows< Low fares< "ow fares are to stimulate the demand. Unli0e other carriers# Ryanair focuses on one4way tic0et policy# in which fare conscious targets li0e businessmen# travelers# who mainly use other methods of transport such as trains# coaches or cars= this policy came into effect since 2ov4&''1. Rather# based on demands for particular flights and the time interval until the planned date of departure# Ryanair designs suitable tic0et pac0ages to meet passengers,purposes. Ryanair sells -'> of seats per flight at the minimum available for the route that means Ryanair pursues ?more sales for more profit@ strategy by an increase in occupied seats. Ryanair promoted a campaign ?fare for free@ in &''6 :e1clusive of government ta1es and passenger services charges; for travelers between )eptember and /ecember# 1-4&''6. In fact# this promotion largely improved its low4fare carrier imageA Page & Evaluating Financial Performance of Ryanair Tight focus on short-haul routes with particular demand $ompared to flight time of other haulers# Ryanair,s average flight duration has been 1.1 hours with an average flight distance of -8B 0ilometers in &''6# helping raise its daily average round trip to 1.9B per trip. $hoosing to e1ploit short4range trips has helped Ryanair to cut unnecessary costs which pay ?frill@ services otherwise e1pected by customers on longer flights. 9esides# the point4to4point flying policy reduces unnecessary costs such as connection# barrage transfer# passenger transit between ranges. his is a one of main differences between the $ompany and traditional carriers. Smart route selection Ryanair chooses secondary airports that have easy access to ma7or population hubs and local airports li0e the center of a circle. 9y establishing convenient transfer centers li0e that# Ryanair could increase its competitive edge# cut costs# minimiCe terminal delays and raise on time departure rates and faster turnoveround times. he faster turnoveround times help the $ompany to ma1imiCe aircraft utiliCation. It is estimated that at the end of fiscal year ended *arch 61# &''6# the $ompany, turnoveround time was about &5 minutes. his permit Ryanair to add two e1tra flights per day that is unable with a 8' minute turnovertime. 9y decreasing turnovertime# it adds DB.B million in incremental revenue per aircraft per year. Operating cost reduction: Ryanair,s management believes that its operating costs are among the lowest of any (uropean passenger carriers# which include< aircraft e3uipment and maintenance cost# personal e1penses# customer service cost# airport charges. It could be cited amongst ma7or rationales behind this< Plane maintenance and equipment costs: Ryanair once set its strategy for controlling aircraft purchasing costs through buying used ones. 2evertheless# the policy has no longer wor0ed nowadays. It is using the state4of4the arts generation of 9oeing -6-48''s# which shares some common spare parts with its running aircraft team. It is believed that by using new aircrafts# Ryanair could avoid needless Page 6 Evaluating Financial Performance of Ryanair maintenance charges and spare parts as it used the older fleet. "i0ewise# limiting the fleet to 6 variants of a single aircraft made by a single ma0er :9oeing; should enable it to limit the associated costs including pilot training# purchase# storage of new spare parts# e3uipment costs and assuring a greater ability to managing crews and e3uipment. *anagement the terms of the contracts of 9oeing aircraft purchasing are very affordable for the carrier. Personnel and administrative expenses: Ryanair is poised to control its administrative costs by continuously bolstering 3uality of its already highly4productive labor force. Incomes of its employees are based on productivity and contributed wor0ing time. In particular# flight attendants, salary is based on on4board sales of products while pilot payment is relied on flight numbers or sectors flown and cabin crew payment is based on industry standards for minimum or ma1imum wor0ing hours. Rather# employees are eligible to participate in annual ()+.s. Cost of customer services: Ryanair has rented third4party contractors at certain airport to do passenger# aircraft 7obs such as boo0ing# guest handling and some services in order for more price competitive and cost efficient. Ryanair also manage to maintain its competitive rates by signing mid4long term contracts at reasonable price which are only ad7usted to inflation on periodic basis. he development of online boo0ing facilities has helped elimination the firm,s travel agent commissions. !lso# it is believed that online tic0eting will continuously contribute much more to its sales while eliminating unwanted costs. It is estimated that direct telephone reservations and sales through Ryanair, website generated appro1imately 8> and 9B> of its scheduled passenger total revenues in fiscal year &''6. Airport Access ees: Ryanair chooses to use charge competitive airports to lower its operating costs. Ryanair see0s to manage airport access and relates services fees by selecting airports with competitive cost offers. Its management based on the fact that its high growth in volume of passengers Page B Evaluating Financial Performance of Ryanair travelling over years would bring it an advantage to negotiate with the airports for access to their ground facilities. *oreover# Ryanair attempts to reduce those charges by choosing cheaper gate locations and outdoor boarding stairs as well rather than e1pensive gateways. Ancillar! Services: Ryanair provides a spectrum of convenience# revenue boosting services that include on4board merchandise# beverage and food catering# accommodation boo0ing services# car rentals# ground travelling etcE Ryanair applies accommodation services# car rentals# and travel insurance on its website and through traditional reservation offices as well. Ryanair,s leaders believe that with full services pac0ages# Ryanair would be able to maintain high growth in all of its business lines while increasing productivity and reducing costs. Am"itious growth plan: he very first success of Ryanair routed from the Ireland4UK mar0et# afterward# it began to e1pand to operate into continental (urope# Ryanair is poised to pursue a sustainably high growth plan targeting other potential (U mar0ets. Up to now# Ryanair has been severed a total of 9B' routes in continental (U destinations. Commitment to Safet! and #ualit! $aintenance: Ryanair,s top focus is safety standards. hat includes the careful recruitment and training processes for pilots and cabin crews while it annually spends a considerable amount of capital on maintenance# long4term assets to meet the international air transport standards to ma0e sure that it can deliver highest service 3uality at very affordable prices. )ince its establishment# there has not been any incident regarding passengers or flight services 3uality for Ryanair. It is a little strange that safety is one of the most crucial factors helping Ryanair maintain its low4fare strategy. Fowever# Ryanair see0s to sign long4term maintenance# repair services at fi1ed costs with third4party contractors to hedge rising e1pense that might hurt long4term bottom4line prospect. 1.*.2 +yanairs SWOT na!ysis Page 5 Evaluating Financial Performance of Ryanair Strengths %ea&nesses Gide operation base in the (uro "argest and most profitable "$$ in (urope $ompetent# ambitious and efficient management. +ptimal business model helping coherently carry out low cost strategy. )econdary and regional airports drive costs down and bring faster capital turnover. Fealthy financial conditions coupled with stable cash flows allow Ryanair to boost its ability to participate in ambitious growth plan in the short and longer term. $ompetitive edge on new aircraft purchase. Figh seat occupancy rate and lowest cost seat4mile in short4haul flights. )tandardiCed and modern fleet saves on maintenance# training cost# enhance safety and fuel efficiency. Figh rate on punctuality and low baggage loss rate give reliability to the organiCation. Figh rate of aircraft use increases gross margin. /istance of secondary airports from ma7or hubs reduces a portion of passenger segment. "ac0 of appreciate fre3uency in certain routes "ow4fare image might not be recogniCed by new passengers (1posure to outsourcing might shave Ryanair of close control of costs and e1penses (1posure to various laws and regulations governing environment# safety# security may hamper Ryanair,s operations in mid4 long terms. Opportunities Threats (uropean mar0ets are still potential for low4fare carriers li0e Ryanair with the (uropean open s0y agreement )ome flag carriers have attempted to e1ploit low4fares segment by establishing their own subsidiaries to better compete Page 8 Evaluating Financial Performance of Ryanair U)/ wea0ness towards (UR empowers Ryanair,s purchasing power for 9oeing aircrafts. )table geo4political condition in the (U helps reduce systematic ris0. Increasing demand for low4fare air transport vs. other means of transport amongst young population in the region. /ependence on oil mar0et condition# which is a ma7or threat to inefficient carriers $ompetition and alternatives from ground means of transport such as buses# trains# shipsE Increasing charges from secondary airports when more low4fares carriers choose to use them will hurt Ryanair,s growth potential Table 1: Ryanair SWOT Analyse 1.- na!y"e #inancia! $erformance of +yanair
Figure 4: Ryanairs revenue, operating expenses and profit for finanial year Page - Evaluating Financial Performance of Ryanair Hirst of all# we ta0e a 3uic0 loo0 at financial performance of Ryanair in 5 year4period. It can be seen from figure B# revenues increased significantly of -8.5> during the period due to an increase of 91> in number of passengers# from 6B.8 million in &''8 to 88.5 millions in &'1'. Fowever# the profits decreased negatively. It is because of considerably increasing in operating e1penses of 95> during the same period. he reason of increasing in operating e1penses is the negative fluctuation of fuel price during &''8 to &'1' and the growth of airport and handing charges. In fiscal year &''9# it was the first year for long time Ryanair made a loss in the profit. he loss# first# is because of an appro1imately 8'> increase in fuel and cost e1penses from D-91.6 million fiscal year &''8 to D1#&5-.1 million in fiscal year &''9. )econd# it is because of an impairment charge of D&&&.5 million on the available for sale investment in !er "ingus# reflecting a significant decline in the !er "ingus share price from *arch 61#&''8 to *arch 61#&''9 . In &'1'# the $ompany,s fuel and oil e1penses decreased to D896.9 million# Ryanair achieved positive profits of D6'5.6 million. iscal 'ear ended $arch ()* +,), +,,- +,,. +,,/ +,,0 Total 1evenues 1''> 1''> 1''> 1''> 1''> )cheduled Revenues --.8 -9.- 8& 8B 8B.89 !ncillary Revenues &&.& &'.6 18 18 15.61 Total Operating expenses 88.5 98.9 8'.& -9 --.8B )taff $osts 11.& 1'.5 1'.5 1' 1'.16 /epreciation and !mortiCation -.9 8.- 8.5 8 -.65 Huel and +il &9.9 B&.- &9.& 61 &-.6& *aintenance# *aterials# and Repairs &.9 &.6 &.1 & &.&1 !ircraft Rentals 6.& &.- &.- 6 &.8' Route $harges 11.6 9.8 9.5 9 9.-& Page 8 Evaluating Financial Performance of Ryanair !irport and Fanding $harges 15.B 15.1 1B.8 1& 1&.-8 +ther B.8 5.1 5.1 8 5.56 +perating .rofit 16.5 6.1 19.8 &1 &&.18 2et Interest Income :(1pense; :1.8; :1.9; :'.5; +ther Income :(1pense; :'.5; :-.B; :6.1; :1; :&.1B; .rofitI:"oss; before a1ation 11.B :8.&; 18.& &' &'.'& a1ation :1.&; '.B :1.8; :1; :1.9'; .rofitI:"oss; after a1ation 1'.& :5.8; 1B.B 19 18.1& Table !: Su""ary operating and finanial overvie# onsolidated ino"e state"ent data$ %Soure: Ryanair annual report !&1&, !&&', !&&() )cheduled Revenues as percentage of total revenue has decreased during the period from 8B.88> in fiscal year &''8 to --.8> in fiscal year &'1'# primarily reflecting a decrease of 1B.&> in average fares from DB' in fiscal year &''8 to D65 in fiscal year &'1'. !lthough the number of RyanairJs passengers soared appro1imately by 9'> from 65 million in fiscal year &''8 to 8- million in fiscal year &'1'# it demonstrated that the company is successful in opening new routes as well as attracting more customers in e1isting routes. !ncillary Revenues as percentage of total revenue has increased gradually from 15.61> in fiscal year &''8 to &&.&> in fiscal year &'1'. hey include revenues from non4flight scheduled operations# car rentals# in4flight sales and Internet4related services. +perating (1penses as a percentage of revenues# Ryanair,s operating e1penses have increased from --.8B> in fiscal year &''8 to 88.5> in fiscal year &'1'. /ue to the increase of fuel costs# this e1pense was &-> of total of revenue in fiscal year &''8 to increase to 6'> of this total in &'1'. )pecially# in fiscal year &''9# the cost of fuel accounted B&.-> of the $ompany, revenues. !ccording to the table above# airport and handing charges also are the other ma7or e1penses that considerably increased as compared with total of revenues. In fiscal year &''8# airport and handing charges were around 1&> of total revenues# however the fiscal of &'1' was over 15>. Page 9 Evaluating Financial Performance of Ryanair In terms of profit and loss after ta1ation# there is a considerable drop in profit as a percentage of revenues. It can be seen from the table# the $ompany ma0es a profit of 18.1&> as e3ual as total revenue in fiscal year &''8# however# this figure declined to 1'.&> in fiscal year &'1'. It is due to the increase in operating e1pense is higher than the increase in sale revenues.
Profita"ilit! ratio: Figure *: +rap, of Ryanairs RO-. and ROSF s,o#ing ,anges fro" previous years !ccording to figure 5# Ryanair,s R+)H and R+$( were stable with high level during three fiscal years from &''8 to &''8. Fowever# fiscal year &''9 of both shows loss in profit. he 0ey reason for this loss is surge increase fuel bill rose around 8'> to D1.59 billion# in &''8 oil prices were nearing K1B' a barrel. he bill accounted for B6> of company, operating e1penses and compared to 6&> in previous years. Fowever# after fiscal year &''9 by using derivative to hedge negative effect of fuel and the 7et fuel price was decreasing# therefore# R+)H and R+$(,s Ryanair shows a positive recovery. Page 1' Evaluating Financial Performance of Ryanair 2fficienc! 1atio Figure (: T,e grap, of Ryanair Total asset turnover and fix asset turnover !ccording to figure 8# it shows that there is a slight improvement of its total asset utiliCation during 5 year periods. In fact# in &''8# Ryanair invested D1 in asset it generated D'.B in the $ompany,s revenue# however# in &'1' D1 invested in total assets that created D'.B6 in the $ompany,s revenue. In the same time# ratio for fi1 asset turnover rose from '.88 in &''8 to '.-- in &''9. In general# these ratios indicate that the company has utiliCed its assets effectively during the five4year period. !lthough Ryanair has invested heavily to raise its aircrafts from 1'6 in &''8 to &6& in &'1'# the fi1 asset turnover ratios are stable and slight increase. It indicated that new aircrafts are efficiently used to immediately generate the company,s revenue. Page 11 Evaluating Financial Performance of Ryanair
Figure /: Ryanairs average trade reeivable olletion period and average trade payable pay"ent period Ge can see from the graph# the trend of average trade payables period increase slightly from 1-.1 days in &''8 to 18.81 days in &'1'. he increase can be e1plained by the company using advantage of the business of scale and scope to raise the time payable for its suppliers. In other words# it is using more free finance provided by suppliers. In contract# because of more competition in this industry# Ryanair has police to credit for its customers to encourage the demand and increase its sales. herefore# average trade receivable collection period increased from 6.&8 days in &''- to 5.B1 days in &'1'. inancial gearing: Page 1& Evaluating Financial Performance of Ryanair Figure ': T,e grap, of Ryanair finanial gearing s,o#ing ,anges fro" previous years In terms of gearing# Ryanair uses more borrowing to fund its business during the period. It can be seen form the graph# in &''8# 5B > of financial resource came from borrowing# however# the figure in &'1' rose to 8'>. It means Ryanair relies on e1ternal finance to run its business. It can be seen that in case of interest cover# in &''9 operating income were negative# it is because of the financial crisis and surge increase fuel price# therefore it could not cover its interest# all of other years for this periods# interest cover were around 5 and 8 times. It shows that the $ompany strong ability to pay its debts. 3nvestment 1atios Page 16 Evaluating Financial Performance of Ryanair
Figure 0: T,e grap, of Ryanair .1S s,o#ing ,anges fro" previous year (.) ratio is useful method to measure the performance of a business,s share. he assessment of potential investment can be performed by e1amining the trend in earnings per share. !ccording to the graph# the earnings generated by Ryanair, business has decreased during the period. It seems that the prospect of Ryanair,s share was not good. Figure 1&: T,e grap, of Ryanair 1rie and 12. s,o#ing ,anges fro" previous years .I( ratio presents the e1pectation of investors to the future of a business. he firms have a higher .I( ratio# it shows the investors are more confidence in the future prospect of the business. !s a result# investors are willing to pay more present cash flow in e1change for the Page 1B Evaluating Financial Performance of Ryanair future earnings stream from the business.It can be seen form the graph# trend in .I( dropped considerably during the period from &''- to &''9 and has recovered after &'1'. his recovery in &'1' of .I( ratios shows that investors e1pect a better prospect of the Ryanair,s business. 1!anair4s 5ividends Polic! )ince 1998# the $ompany has not announced or paid dividends to its shareholders. Fowever# in 5anuary &'1'# Ryanair announced to intend a pay special dividend of D5'' million# to be performed on +ctober &'1'. It also declared a plan to pay other dividend of D5'' million before the end of fiscal year &'16. he company has police that may pay dividends from time to time or may not pay any dividends at all. Its profitability is used to purchases further aircraft and other significant capital e1penditures. 1.. To compare +yanairs performance with Industry verage performance, Page 15 Evaluating Financial Performance of Ryanair Scheduled Passergers Carried 3nternational 1an& Airline Thousands 1 Ryanair 71,229 2 Lufthansa 44,460 3 easyJet 37,665 4 Air France 30,882 5 Emirates 30,848 6 ritish Air!ays 26,320 7 "L# 22,787 8 $e%ta Air Lines 21,029 9 American Air%ines 20,356 10 &athay 'acific air!ays 19,723 Table 3: World largest international s,eduled airlines 6Source: he International !ir ransport !ssociation :I!!; &'1'78 !ccording to the International !ir ransport !ssociation# Ryanair is the world,s largest international airline. he number of Ryanair, customers reached to over -1 million in &'1'. his number is much higher with the second biggest international airline "ufthansa with over BB#B million and the closest competitor in low4fare airline company easy5et : 6- million;. Average fares Ryanair (44 EasyJet (66 Air er%in (82 Aer Lin)us (94 Lufthansa (235 Air France (267 ritish Air!ays (324 Table 4: Airlines average fares %Soure: 4ased on !&&' publis,ed annual reports) !ccording to table above# it can be seen that# there is a wide the gap between Ryanair average fares and other (uropean airline competitors. Ryanair drives down air fares for customers all over (urope to encourage the demand and growth of its traffic. Ryanair uni3uely guarantees ?no fuel surcharges@ regardless of how high oil prices rise# while many of carrier competitors continue to levy un7ustified fuel surcharges. herefore# Ryanair, average fares is lower in comparison with other airline companies. In fact# in &''8 Ryanair,s customers pay average DBB per tic0et while the price offered by other low4fair carrier (asy5et was D88. In contrast# traditional airlines such as "ufthansa# !ir Hrance and 9ritish !irways Page 18 Evaluating Financial Performance of Ryanair charge their passengers for very high price. "ufthansa, passengers paid average D&65 per tic0et and 9ritish airways was D6&B per tic0et. Airline Average 1ay Ryanair 5 *&,3** Air Frane2678 5 40,*&4 7uft,ansa 5 44,33* 4ritis, Air#ays 5 4&,&&/ Table *: Airlines Average 1ay %Soure: 4ased on !&&' publis,ed annual report) Airlines4 passengers per 2mplo!ee 1!anair -*0/- 2as!9et 0*//+ :ristish Airwa!s /(; Air rance<=L$ /); Lufthansa 0+> Table (: Airlines passengers per ."ployee %Soure: 4ased on !&&' publis,ed annual reports) !ccording to airline average pay, table# Ryanair,s pay is among the highest of any ma7or (uropean airlines. In &''8# each employee in average of Ryanair receives over D5'#''' that is much higher than that of 9ritish !irway,s employee about DB'#'''. In addition# he $ompany 0eeps continuing to manage its rosters in order to ma1imiCe its people,s productivity. he company,s productivity remains high. !ccording to !irline4.assengers per (mployee# in &''8 Ryanair carried almost 1'#''' passengers per employee# a figure that is some ten times better than our principal competitors across (urope. 1./ Compare the financia! performance of +yanair with ir!ine companies 1!anair ?ntied =ingdom 2uropean ?nion 2uropean ?nion6@on- 2uro7 %orld .I( 1'.88 16.BB 8.BB &-.'6 15.59 (.) '.&5 4 '.56 4 4 /iv yield :>; ' '.88 '.B9 '.59 1.-6 R+( :>; 1&.88 11.&1 45'.-9 8.'B 41-.9- Page 1- Evaluating Financial Performance of Ryanair .I9oo0 1.55 &.&& 1.9B 1.9B &.-& .I)ales 1.&8 '.59 '.6B 1.&B 1.15 *ar0et $apitaliCation :million; 8#5&-.'& 1#6B8.8' &#'88.&1 1#''B.8' 1#-8'.16 Luic0 Ratio 1.89 1.1B 1.&8 '.8- '.9 $urrent Ratio 1.89 1.B8 1.66 1.19 1.5 Interest $over 5.1 5.&6 4-.16 4'.5 1.8- "ong term debtI(3uity 1.1& '.86 '.95 '.'5 &.1& "ong term debtI$apital '.5& '.6& '.6- '.51 '.65 "iabilityI(3uity 1.91 &.'9 5.69 4'.68 B.8 "iabilityIotal !ssets '.88 '.81 '.- '.-1 1.'& Table /: Su""ary finanial perfor"ane of Ryanair and region of airline %Soure: Reuters Finanial 9atabase in !&11)$ !s shown in the above comparative table# the performance of Ryanair is better than the industry average performance in many places in the world. R+( of Ryanair is 1Y> meanwhile the ratio for other regions such as (uropean Union and Gorld suffered a loss or 0eeping low rates (uropean Union :2on4(uro; and United Kingdom were 8.'B> and 11.&1> respectively. he short4term li3uidity ratios are used to measure the ability of firm in converting the current asset into cash when it has some urgent financial obligations to be settled in a short4term period. Ryanair, current ratio and 3uic0 ratio has remained at 1.89>. $omparing to the airline industry in many places in the world# Ryanair has maintained a higher in average both current ratio and 3uic0 ratio than its competitors. In other words# Ryanair has a better position than average airline industry to meet its short4term financial obligations. In terms of mar0et capitaliCation# Ryanair is more than 6 times larger comparing airline industry company average. Page 18 Evaluating Financial Performance of Ryanair Page 19 Evaluating Financial Performance of Ryanair 1!anair Southwest 2as!9et l!"e Aroup 9et:lue Birgin :lue Aol Air :erlin Air Asia %est 9et @orwegian
61I6I&'11 61I1&I&'1' 6'I9I&'1' 61I6I&'11 61I1&I&1' 6'I8I&'1' 61I1&I&'1' 61I1&I&'1' 6I1&I&'1' 61I1&I&'1' 61I1&I&'1' Compan! 1eport 3tems Revenue 6#8&9.5' 8#88'.BB 6#B&8.-1 81-.58 7'.1- 1#858.'8 6#1B6.6B 6#-&6.58 958.98 1#8'6.15 1#1'6.61 +perating $osts 6#1B1.6' 8#6'8.&6 6#&18.55 8-6.'6 -5.58 1#996.5& &9.'- 6#-88.89 898.98 1#--'.B9 1#'-8.6B .reta1 .rofit and loss B&'.9 558.8& 1--.5 4B.8- 1&'.66 &6.55 1-B.'- 41B1.8& &88.65 1B-.B6 61.& a1 B8.6 &16.-8 6-.89 49.1- B-.86 8.9& --.8 4BB.B8 9.'8 BB.9B 9.&- .rofit after ta1 6-B.8 6B6.'8 169.81 B.6 -&.5 1B.8& 98.B- 49-.18 &5-.&8 1'&.B9 &1.96 otal !ssets 8#598 11#55-.&6 B#816.1- B88.8B B#9&-.89 ͚.'5 B#'8&.'9 -'.1& 6#&'9.66 -'.96 8B9.59 otal "iabilities 5#8B&.1' 8#895.8& Ͷ.5' 6B8.56 6#891.B- &#'1-.65 &#-8&.88 1#88B.-8 &8.-9 1#5B'.88 819.1& )hareholders, (3uity μ.9' B#881.81 1#-&9.88 1&&.11 1#&68.&& 8B'.-1 1#619.&1 5'5.6B 88&.5B 1#16'.&5 &6'.B8 Table ': :ey finanial ite"s for lo# ost airline !&1& and !&1 %Soure:Retuers) Page &' Evaluating Financial Performance of Ryanair Hrom the table above# )outhwest is the low cost airline which has the highest revenue# D8.8 billion. he following is !ir 9erlin and Ryanair which Revenue are appro1imately D6.-& and D6.8 billion. )o it can be said that# Ryanair is ran0ed of the third largest low cost airline in respect of revenue. In addition# Rynair is the second biggest low cost airline in terms of .reta1 .rofit and loss# and the biggest low fair airline in aspect of .rofit after ta1# appro1imately D6-B.8 million that is higher than the profit after ta1 of )outhwest. )outhwest is the biggest airline in terms of total assets# while Ryanair is the second biggest that owns assets near double to compare the rest of low fare airlines. Page &1 Evaluating Financial Performance of Ryanair 1!anair Southwest 2as!9et l!"e Aroup 9et:lue Birgin :lue Aol Air :erlin Air Asia %est 9et @orwegian 61I6I&'11 61I1&I&'1' 6'I9I&'1' 61I6I&'11 61I1&I&1' 6'I8I&'1' 61I1&I&'1' 61I1&I&'1' 6I1&I&'1' 61I1&I&'1' 61I1&I&'1' Profita"ilit! ratios Return on (3uity 1&.88 -.68 8.'8 6.5& 5.88 &.&8 -.61 419.&6 &9.15 9.'- 9.5& Return on otal !ssets B.8B 6.'9 6.18 1.'& 1.B8 '.59 &.B5 4B.'8 8.8& 6.8- &.9B Return on $apital (mployed -.88 1'.8B 8.8& '.B1 -.69 6.'9 1'.88 4&.58 9.8 1'.B 5.59 +perating *argin 16.B5 8.51 8.'- '.15 9.-8 &.88 1' 4'.9& &-.1- 1'.&9 &.BB Return on Hi1ed !ssets -.-9 B.15 5.19 1.9- 1.89 '.-8 6.B- 48.18 1'.88 5.88 B.-B Aearing ratios "ong term debtI(3uity 1.1& '.B8 '.-& '.8& 1.-& 1.85 1.18 1.8 &.'1 '.5- 1.'9 "ong term debtI$apital '.5& '.6& '.B '.6B '.86 '.81 '.56 '.81 '.8- '.68 '.5& Luic0 Ratio 1.89 1.&& 1.'9 1.&1 1.56 '.89 1.55 1.5 '.81 $urrent Ratio 1.89 1.&9 1.B& 1.1& 1.&5 '.-8 1.86 '.96 1.58 1.5& '.86 Interest $over 5.1 8.86 -.-8 '.61 1.85 '.96 &.65 4'.51 &.81 B.11 1'.8- Liquidit! and Asset 1atios otal !ssetsI(mployees :milliom; 1 '.66 '.86 '.18 '.51 '.&& '.&- '.88 '.69 '.B otal !ssetsI(3uity &.91 &.B8 &.8- 6.8B 6.99 B.15 6.'9 B.89 6.8B &.68 6.89 )alesI!ssets '.B5 '.-8 '.-- 1.B- '.5& '.-5 '.8 1.58 '.6& '.88 1.B8 )alesIReceivables &8.68 B6.&8 16.8B -.69 1B.86 &'.55 1&.-8 11.-& 6.55 5-.&6 1'.&8 )alesIGor0ing $apital &.6 1B.19 8.86 4B5.&9 1'.B- 48.&- 1&.-8 48B.&& 5.1& 8.'1 468.66 Table 0: :ey finanial ratio for lo#;fare airlines, !&1& and !&11 %Soure: Reuters) Page && Evaluating Financial Performance of Ryanair It can be seen from the table above# Ryanair,s financial performance is better in comparison to that of other low cost airlines as a whole# in terms of profitability. +nly profitability ratios of !ir !sia are better than that of Ryanair. In fact# !ir !sia, R+$(# R+)H are 9.8> and &9.15> respectively. *eanwhile# R+$( and R+)H of Ryanair are lower -.88> and 1&.88>. Fowever# the siCe of !ir !sia is much smaller compared with Ryanair. he largest low cost airline in the Gorld# )outhwest# presents lesser success than Ryanair. )outhwest, R+$( and R+)H are 1'.8B> and -.68>. Ryanair is the best low fair airline in ability to its short term debts. Ryanair,s $urrent Ratio is 1.89 while that of )outhwest and !ir !sia are 1.&9 and 1.58 respectively. (ven though each employee of Ryanair uses around D1 million in assets# the ratio salesIassets is lower than other main low fair airlines. It means Ryanair utiliCes its assets less effectively than others. In fact if Ryanair invests D1 in assets# it generates only D'.B5 pence. Fowever if )outhwest invests D1 in assets# it generates D'.-8 pence# and that for (asy5et is D1 investment in assets# it generates D'.-- pence. 1.0 Comapre +yanair and 1asy2et, 1.0.1 'usiness (ode! and Strategy between two companies, hough operating as low4fare airlines# there some difference between the two carriers< (asy5et tends to use central# primary airports# so carrying higher costs and charges. $learly# it targets business class customers. !irports used by easy5et are to be named< $harles de Maulles of .aris# )chiphol in !msterdam# +rly of .arisE In &''&# easy5et ac3uired 1&' planes from !irbus in a contentious move to ?diversifying the fleet@. Fowever# it was seen that the mi1ed team of !irbus and 9oeing would drive costs of pilot training# maintenance and operation of its fleet up. +therwise# Ryanair continued to use it pure 94-6- fleet. Up to now# 94-6- is still the wor0horse of various low4fare carriers as the first choice. In spite of signing with !irbus on crew training# spare parts supplies# (asy5et still bear a %5 million on training for operating its new !irbus aircrafts. Page &6 Evaluating Financial Performance of Ryanair hat the (U goes against state subsidy for airports will come more badly for Ryanair than for (asy5et since (asy5et already concentrates on central# primary airports that always charge higher and (asy5et,s fares are fully reflected by the costs and charges. In term of e1pansion# Ryanair is somewhat more successful than (asy5et. In the *N! deal to ac3uire Mo# Ryanair paid only a net D1million on a carrier with B million passenger base while (asy5et spent DB'' million on another potential 5 million passenger airliner. !nother time# easy5et failed to buy /eutsche 9!# after being unable to reach a nearly feasible deal with the Merman carrier,s pilot and cabin crews to wor0 in its business model. )imultaneously# Ryanair succeed in persuading 9uCC personnel to sign on its employment terms to operate in 16 new routes to the (U# including Mermany. =e! Statistics:
igure )): Comparison of Scheduled passengers "etween 2as!9et and 1!anair It can be seen from the figure 6# there was a slight difference between numbers of passengers between two airline companies in &''8. (asy5et serviced 66 millions of passengers and the number of Ryanair was 6B.8 million. /uring the 5 years period# the speed increase in numbers of customers of Ryanair is much higher than that of easy5et. In fact# &'1' the Page &B Evaluating Financial Performance of Ryanair number of Ryanair,s passenger reached to 88.5 million# however# the number of easy5et was about B9 million. It is because of Ryanair rapider opening new routes and purchasing new aircrafts to grow the number of passengers. Figure 1!: Comparison of total routes "etween 2as!9et and 1!anair +pening new routes# in &''8 two airline companies had the same number of routes :&8&;# however Ryanair, routes was nearly double to compare with easy5et in &'1'# the number of Ryanair, route was 9B' compared to that of easy5et about 5'9. 9eside that# Ryanair was more than double number of aircraft after 5 year4period from 1'6 in &''8 to &6& aircrafts in &'1'. !lthough in &''8 easy5et, fleets was 1&& higher than Ryanair# in &'1' was 198.
Figure 13: -o"parison of total airrafts bet#een .as<=et and Ryanair Page &5 Evaluating Financial Performance of Ryanair
Figure 14: -o"parison of nu"ber of e"ployees bet#een .asy=et and Ryanair /uring the time# Ryanair has the smaller number of employees of is smaller than easy5et. Fowever# in &'1' the number of Ryanair, employees was over the number of easy5et. Page &8 Evaluating Financial Performance of Ryanair 1.0.2 Compare financia! $erformance of +yanair and 1asy2et, Profita"ilit! ratio anal!sis 1OC2:
Figure 1*: -o"parison of .asy=et RO-. and Ryanair he return on capital employed ratio is a fundamental measure of business performance. his e1presses the relationship between the operating profit generated during a period and the average long4term capital invested in the business during that period. In the graph# Ryanair and (asy5et,s R+$( have decreased between &''8 and &'1' due to a considerable increase in operating profit. It is because of the negative effect of the financial crisis and surge increasing fuel price. In general# Ryanair,s R+$( is better than that of (asy5et all of the time. +nly in &''9 Ryanair,s R+$( is negative 46.8> while that of (asy5et,s is &.1>. 1OS:
Figure 1(: -o"parison of .asy=et ROSF and Ryanairs Page &- Evaluating Financial Performance of Ryanair he Return on shareholder, fund ratio :R+)H; shows us how much profit that shareholders can earn from their investments. Hrom the graph# we can see that# R+)H of Ryanair and (asy5et have increased between &''8 and &''-# but the situation has changed in &''8. R+)H of Ryanair and (asy5et has reduced. It is due to increasing operating e1penses. R+)H of Ryanair is larger than (asy5et all most the period of time e1ception &''9# Ryanair,s R+)H was negative 48.98> while (asy5et,s is 5.B5>. @et Profit $argin:
Figure 1/: -o"parison of >et 1rofit 8argin bet#een .asy=et and Ryanair he trends of 2et .rofit *argin for both Ryanair and (asy5et have decreased as a result of the faster increase of the operating profit than that of revenue. Hurthermore# (asy5et, 2et profit margin is much smaller than that of Ryanair. o sum up# financial performance of Ryanair is better in comparison to that of (asy5et,s as a whole# in terms of R+$(# R+)H and 2et .rofit *argin. Page &8 Evaluating Financial Performance of Ryanair 2fficienc! ratios and Liquidit! ratios anal!sis ixed asset turnover:
Figure 1': -o"parison of fixed Assets turnover bet#een .asy=et and Ryanair he fi1ed4asset turnover ratio e1presses how ability a company uses its fi14asset to generate revenue. In the graph# (asy5et, fi1ed assets turnover is higher than that of Ryanair during the period. In other words# (asy5et has been more effective in utiliCing its fi14assets to generate sale revenue than Ryanair. In fact# in &'1' if (asy5et invested D1 in fi14assets# it would generate D1.& in revenue. Fowever if Ryanair invested D1 in fi14assets# it would generate only D'.88 in revenue. Trade 1eceiva"les collection period: Figure 10: -o"parison of trade reeivables olletion days bet#een .asy<et and Ryanair Page &9 Evaluating Financial Performance of Ryanair ! company always attempts to 0eep the amount of its receivables at a minimum level to avoid shortage of cash flow. he company,s cash flow can be strongly affected by how well the company manages its credit policy. he average settlement period for trade receivables ratio measure how long# on average# credit customers ma0e a payment to the firm that provides them goods and services on credit. It can be seen from graph# while Ryanair,s trade receiables collection days stay low level around 5 to 8 days# while that of (asy5et are very high over &' days in &''9. It means Ryanair needs around 5 to 8 days to collect money from their customers= meanwhile (asy5et needs more than &' days to withdrawn. It shows that the ability to management of Ryanair, cash flows much better than that of (asy5et. Trade pa!a"le pa!ment period:
Figure !&: -o"parison of trade payable pay"ent period bet#een .asy<et and Ryanair he average settlement period for trade payables ratio calculates how long# on average# the firm ma0e a payment to suppliers who provide them goods and services on credit. In the graph# the number of days that Ryanair ta0e to pays for its suppliers is longer than (asy5et all of these years. In other words# Ryanair has been more and more using free source of finance provided by its supplier than (asy5et. It primarily due to Ryanair,s is bigger of the business scale and it achieves the favorable conditions from its suppliers. In addition# both companies have trend increasing the use of free source of finance provided by suppliers to their business. Page 6' Evaluating Financial Performance of Ryanair Current ratio:
Figure !1: -o"parison of urrent ratio bet#een .asy=et and Ryanair $urrent ratio e1presses the firms,s ability to pay its short4term debt in time. Hrom the graph# there is decrease in ability to pay the debt in both companies during the period between &''8 and &'1'. In fact# in &''8 Ryanair had O&.B6 in li3uid assets for every O1 it owes. Fowever# in &'1' Ryanair had only O1.98 in li3uid assets for every O1 it owes. he figural for (asy5et was much lower in &''8 O&.11 in li3uid assets for O1 borrowing and in &'1' O1.B& for O1 it owes. Fowever# the ratio of both is 3uite good# and it does not have short4term debt problems in both companies. Hurthermore# the graph shows Ryanair, ability to pay its short4term liabilities better than (asy5et all the time. Page 61 Evaluating Financial Performance of Ryanair Aearing ratio: Figure !!: -o"parison of gearing bet#een .asy=et and Ryanair In term of gearing ratio# during the period Ryanair and (asy5et, gearing ratio is similar. he gearing ratio of (asy is slight higher than that of Ryanair. In can be seen from the graph# in &''8# 5B> of financial resource of Ryanair came from borrowing# however# the figure in &'1' rose 8'>. In the same time# the figure for (asy5et was 5B> in &''8 and 86> for &'1'. o sum up# both Ryanair and (asy5et are being more relied on e1ternal financial to run them business Shareholder returns: 3nvestment ratio anal!sis 2PS: Page 6& Evaluating Financial Performance of Ryanair
Figure !3: -o"parison of earning per s,are ratio %.1S) bet#een .asy=et and Ryanair he earnings per share is important ratio that helps to assess potential of an investment opportunity in a firm. It measures the earning that each share of firm generates during a particular period. )hareholders usually pay most attention to earning per share because that indicates firms, capability in creating cash flows for shareholders. In the graph# the trend in earnings per share of Ryanair decreased from B' pence per share in &''8 to 411.BB pence per share in &''9 and then recovered to &'.88 pence in &'1'. In contrast# there was a fluctuation in earning per share of (asy5et between 18.9 pence per share and 6B.8 pence per share during this period of time. o sum up# (.) of (asy5et is more stable than that of Ryanair. )o the prospect of (asy5et seems to be more stable than Ryanair,s. P<2 ratio: Page 66 Evaluating Financial Performance of Ryanair
Figure !4: -o"parison of 1rie earning per ratio %12.) bet#een .asy=et and Ryanair .rice earnings ratio can e1press the relationship between the capital value of the share and its current level of earnings# and it can affect the mar0et confident in the future of a company# so it is very useful. wo airline companies, .I( was fluctuation during 5 years period. herefore# the confidence of two airline companies, shareholders varies. Fowever# in &'1' Ryanair,.I( is higher than that of (asy5et# so it may indicates investors will e1pect a better future prospect of Ryanair. 2mplo!ee ratio: (mployee ratio demonstrates the productivity of the company, employees.
Figure !*: -o"parison of turnover per e"ployee bet#een .asy=et and Ryanair Page 6B Evaluating Financial Performance of Ryanair he average settlement period for trade payables ratio calculates how long# on average# the firm ma0e a payment to suppliers who provide them goods and services on credit. his ratio is most useful when compared against other companies in the same industry. Ideally# a company wants the highest revenue per employee possible# as it denotes higher productivity. In the graph# turnover per employees ratio of (asy5et is higher than that of Ryanair all of the time. It means that easy5et,employees is higher productivity in comparison to that of Ryanair in terms of generating revenue.
Figure !(: -o"parison of profit per e"ployee bet#een .asy=et and Ryanair Fowever# in case of profit per employee# each employee of Ryanair generates more profit than (asy5et,s during 5 years period. It due to Ryanair is better off reducing unnecessary operating e1penses.
Figure !/: -o"parison of total Asset per e"ployee bet#een .asy=et and Ryanair Page 65 Evaluating Financial Performance of Ryanair 2 Conc!usions his paper analyCes Ryanair,s financial performance between &''8 and &'1' by ratio analysis. Ryanair,s performance and strategies are evaluated and compared with low cost airline industry average performance as well as strategies with the closest competitor :(asy5et;. 9ased on my research results# I find that< 2.1 +yanairs financia! performance between 233- and 2313, Hinancial performance of Ryanair in 5 year4period from &''8 to &'1' is not very impressive. !lthough revenues increased significantly of -8.5> during the period# the profits have decreased. It is because of considerably increasing in operating e1penses of 95> during the same period. In terms of profit and loss after ta1ation# there is a considerable drop in profit as a percentage of revenues. $ompany ma0es a profit of 18.1&> as e3ual as total revenue in fiscal year &''8# however# this figure declined to 1'.&> in fiscal year &'1'. It is due to the increase in operating e1pense is higher than the increase in sale revenues. Profita"ilit! ratio: Ryanair,s R+)H and R+$( were stable with high level during three fiscal years from &''8 to &''8. Fowever# fiscal year &''9 of both shows loss in profit. he 0ey reason for this loss is a surge in fuel bill# which rose around 8'> to D1.59 billion. In &''8 oil prices were nearing K1B' a barrel. 2fficienc! 1atio It shows that there is a slight improvement of its total asset utiliCation during 5 year periods. In fact# in &''8# Ryanair invested D1 in asset it generated D'.B in the $ompany,s revenue# however# in &'1' D1 invested in total assets created D'.B6 in the $ompany,s revenue. In the same time# ratio for fi1 asset turnover rose from '.88 in &''8 to '.-- in &''9. Page 68 Evaluating Financial Performance of Ryanair In general# these ratios indicate that the company has utiliCed its assets effectively during the five4year period. !lthough Ryanair has invested heavily to raise its aircrafts from 1'6 in &''8 to &6& in &'1'# the fi1 asset turnover ratios are stable and slight increase. It indicated that new aircrafts are efficiently used to immediately generate the company,s revenue.
inancial gearing: Ryanair uses more borrowing to fund its business during the period. In &''8# 5B > of financial resource came from borrowing= however# the figure in &'1' rose to 8'>. It means Ryanair relies on e1ternal finance to run its business. In case of interest cover# in &''9 operating income were negative# it is because of the financial crisis and surge increase fuel price# therefore it could not cover its interest# all of other years for this periods# interest cover were around 5 and 8 times. It shows that the $ompany has strong ability to pay its debts. 3nvestment 1atios he earnings generated by Ryanair, business has decreased during the period. It seems that the prospect of Ryanair,s share was not good. In term of .I(# trend in .I( dropped considerably during the period from &''- to &''9 and has recovered after &'1'. his recovery in &'1' of .I( ratios shows that investors e1pect a better prospect of the Ryanair,s business. 2.2 The comparison between the performances of +yanair with industry average, he performance of Ryanair is better than the industry average performance in many places in the world. R+( of Ryanair is 1Y> meanwhile the ratio of airlines in other regions such as (uropean Union and Gorld suffered a loss or 0eeping low rates (uropean Union :2on4(uro; and United Kingdom were 8.'B> and 11.&1> respectively. Ryanair, current ratio and 3uic0 ratio has remained at 1.89>. $omparing to the airline industry in many places in the world# Ryanair has maintained an average high level in both current ratio and 3uic0 ratio than its competitors. In other words# Ryanair has a better position than average airline industry to meet its short4term financial obligations. Page 6- Evaluating Financial Performance of Ryanair In terms of mar0et capitaliCation# Ryanair is more than 6 times larger comparing airline industry company average. )outhwest is the low cost airline which has the highest revenue# D8.8 billion. he following is !ir 9erlin and Ryanair which Revenue are appro1imately D6.-& and D6.8 billion. Ryanair is the biggest low fare airline regarding profit after ta1# appro1imately D6-B.8 million that is higher than the profit after ta1 of )outhwest. )outhwest is the biggest airline in terms of total assets# while Ryanair is the second biggest that owns assets nearly double to the rest of low fare airlines. Ryanair,s financial performance is better in comparison to that of other low cost airlines as a whole# in terms of profitability. +nly profitability ratios of !ir !sia are better than that of Ryanair. In fact# !ir !sia, R+$(# R+)H are 9.8> and &9.15> respectively. *eanwhile# R+$( and R+)H of Ryanair are lower -.88> and 1&.88>. Fowever# the siCe of !ir !sia is much smaller compared with Ryanair. RyanairJs ratio salesIassets is lower than other main low fare airlines. It means Ryanair utiliCes its assets less effectively than others. In fact if Ryanair invests D1 in assets# it generates only D'.B5 pence. Fowever if )outhwest invests D1 in assets# it generates D'.-8 pence# and that for (asy5et is D1 investment in assets# it generates D'.-- pence. 2.& The comparison between +yanair and 1asy2et, The comparisons the difference strategies: Ryanair and (asy7et are operating as the same mode< low4fare airlines# there some difference between the two carriers< 4 (asy5et tends to use central# primary airports# so carrying higher costs and charges. Ghile Ryanair uses secondary and regional airports. 4 (asy5et uses the mi1ed team of !irbus and 9oeing that would drive costs of pilot training# maintenance and operation of its fleet up. *eanwhile# Ryanair continued to use it pure 94-6- fleet. 4 In term of e1pansion# Ryanair is somewhat more successful than (asy5et. In the *N! deal to ac3uire Mo# Ryanair paid only a net D1million on a carrier with B million passenger base while (asy5et spent DB'' million on another potential 5 million passenger airliner. Page 68 Evaluating Financial Performance of Ryanair The Comparison financial performance "etween 1!anair and 2as!9et: Profita"ilit! ratio anal!sis 1OC2C 1OS: Ryanair and (asy5et,s R+$( and R+)H have decreased between &''8 and &'1' due to a considerable increase in operating profit. It is because of the negative effect of the financial crisis and surge increasing fuel price. In general# Ryanair,s R+$( and R+)H are better than that of (asy5et all of the time. +nly in &''9 Ryanair,s R+$( is negative 46.8> and 48.98> while that of (asy5et,s is &.1> and 5.B5>. 2fficienc! ratios and Liquidit! ratios anal!sis ixed asset turnover: (asy5et, fi1ed assets turnover is higher than that of Ryanair during the period. In other words# (asy5et has been more effective in utiliCing its fi14assets to generate sale revenue than Ryanair. In fact# in &'1' if (asy5et invested D1 in fi14assets# it would generate D1.& in revenue. Fowever if Ryanair invested D1 in fi14assets# it would generate only D'.88 in revenue. Trade 1eceiva"les collection period: Ryanair,s trade receivables collection days stay low level around 5 to 8 days# while that of (asy5et are very high over &' days in &''9. It means Ryanair needs around 5 to 8 days to collect money from their customers= meanwhile (asy5et needs more than &' days to get the receivables settled. It shows that the ability to management of Ryanair, cash flows much better than that of (asy5et. Trade pa!a"le pa!ment period: he number of days that Ryanair ta0e to pays for its suppliers is longer than (asy5et all of these years. In other words# Ryanair has been more and more using free source of finance provided by its supplier than (asy5et. It primarily due to Ryanair,s is bigger of the business scale and it achieves the favorable conditions from its suppliers. In addition# both companies have trend increasing the use of free source of finance provided by suppliers to their business. Page 69 Evaluating Financial Performance of Ryanair Current ratio: here is decrease in ability to pay the debt in both companies during the period between &''8 and &'1'. In fact# in &''8 Ryanair had O&.B6 in li3uid assets for every O1 it owes. Fowever# in &'1' Ryanair had only O1.98 in li3uid assets for every O1 it owes. he figural for (asy5et was much lower in &''8 O&.11 in li3uid assets for O1 borrowing and in &'1' O1.B& for O1 it owes. Fowever# the ratio of both is 3uite good# and it does not have short4term debt problems in both companies. In addition# Ryanair, ability to pay its short4term liabilities is better than (asy5et all the time. Aearing ratio: he gearing ratio of (asy is slightly higher than that of Ryanair. In &''8# 5B> of financial resource of Ryanair came from borrowing# however# the figure in &'1' rose 8'>. In the same time# the figure for (asy5et was 5B> in &''8 and 86> for &'1'. o sum up# both Ryanair and (asy5et are being more relied on e1ternal finance to run their business 3nvestment ratio anal!sis 2PS: he trend in earnings per share of Ryanair decreased from B' pence per share in &''8 to 411.BB pence per share in &''9 and then recovered to &'.88 pence in &'1'. In contrast# there was a fluctuation in earning per share of (asy5et between 18.9 pence per share and 6B.8 pence per share during this period of time. o sum up# (.) of (asy5et is more stable than that of Ryanair. )o the prospect of (asy5et seems to be more stable than Ryanair,s. P<2 ratio: wo airline companies, .I( fluctuates during 5 years period. herefore# the confidence of two airline companies, shareholders varies. Fowever# in &'1' Ryanair,s .I( is higher than that of (asy5et# so it may indicates investors will e1pect a better future prospect of Ryanair. 2mplo!ee ratio: urnover per employees ratio of (asy5et is higher than that of Ryanair all of the time. It means that easy5et,employees is higher productivity in comparison to that of Ryanair in terms of generating revenue. Fowever# in case of profit per employee# each employee of Ryanair generates more profit than (asy5et,s during 5 years period. It due to Ryanair is better off reducing unnecessary operating e1penses. Page B' Evaluating Financial Performance of Ryanair Overall Conclusion: o sum up# although Ryanair is e1panding its businesses# in terms of number of pasengers# new routes# fleets# employees# the financial perfomance of Ryanair during &''8 to &'1' is not so impressive. It is because of negative effects such as surging oil price as well as strong competition in airline industry. Fowever# the financial performance of Ryanair is much better than the closest competitor (asy7et as well as other low fair airlines as a whole. Page B1 Evaluating Financial Performance of Ryanair & +eferences and 'ib!iography &*R*"+thari,2004-* Research meth+.+%+)y/ #eth+.s an. techni0ues* 1e! A)e 2nternati+na%* 'er3e4 5* 5rnhau) " ,2010-* Research meth+.s in 6usiness stu.ies* F7 'rentice 8a%%* J+se9h F*8air,Fr*, Arthur 8*#+ney, 'hi%%i9 :am+ue%, #i;e 'a)e,2007-/ Research #eth+.s f+r 6usiness* <est 5ate/ J+hn <i%ey= :+n Lt.* $a3i. A%e>an.er, Anne ritt+n, Ann J+rissen* ,2007-* 2nternat+na% Financia% Re9+ritin) an. Ana%ysis* L+n.+n/ 7h+ms+n Learnin)* 5e+r)e 7*Frie.%+6, Ly.ia L*F*:ch%eifer ,2003-* Essentia%s +f financia% ana%ysis* 1e! Jersey/J+hn <i%ey = :+ns* $anny #i%%er,1988-* Re%atin) '+rter?s usiness :trate)ies t+ En3ir+nment an. :tructure/ Ana%ysis an. 'erf+rmance 2m9%icati+ns* Ace.emy +f #ana)ement J+urna% 1988 @+%*31 1+ 2, 280A308* 5erry J+hn "e3an :ch+%es an. Richar. <hittin)t+n ,2005-* E>9%+rin) &+r9+rate :trate)y/ 7e>t an. &ases* Esse>/ 'ears+n E.ucati+n Limite.* 'hi%i9 B?Re)an*,2006-* Financian% 2nf+rmati+n Ana%ysis* L+n.+n/ J+hn <i%ey = :+ns Lt.* 'au% <ether%y an. $+rr+n Btter ,2011-* 7he usiness En3ir+nment/ 7hemes an. 2ssues* B>f+r./ B>f+r. Cni3ersity E>9ress* :i+han &reat+n,2004-* Ryanair/ h+! a sma%% 2rish air%ine c+n0uere. Eur+9e* L+n.+n/ Aurum 'ress Lt.* &reat+n an. :i+6han,2007-* Ryanair/ 7he fu%% st+ry +f the c+ntr+3ersia% %+!Ac+st air%ine* L+n.+n/ Aurum 'ress Lt.* Page B& Evaluating Financial Performance of Ryanair 'eter Atri%% ,2009*- Financia% mana)ement f+r .ecisi+n ma;ers* /F7 'rentice 8a%%* <en.y #c"en4ie ,2010- Csin) an. inter9retin) c+m9any acc+unts* /F7 'rentice 8a%%* 'au% &ashian ,2007-* Ec+n+mics, strate)y an. the firm* 8am9shire/ 'a%)ra3e #ac#i%%inan* 'at 8an%+n ,2007-* 5%+6a% air%ines/ &+m9etti+n in a transnati+na% in.ustry* B>f+r./ E%se3ier Lt.* Atrill and McLaney (2008). Accounting and Finance for Non-Specialists. FT rentice !all. Ryanair annua% re9+rts 2006, 2007, 2008, 2009, 2010 are a3ai%a6%e +n%ine at htt9/DD!!!*ryanair*c+mDenDin3est+rD.+!n%+a.D EasyJet annua% re9+rts 2006, 2007, 2008, 2009, 2010* are a3ai%a6%e +n%ine at/ htt9/DDannua%re9+rt*easyEet*c+mD Ray 'r+ct+r ,2009-* #ana)eria% Acc+untin) f+r 6usiness .ecisi+ns* Esse>/ 'ear+n E.ucati+n Limite.* Jae "* :him an. J+e% 5*:ie)e% ,2007-* 8an.6++; +f financia% Ana%ysis, F+recastin), an. #+.e%in)* &hica)+/ &&8* :te9hen 8+%%+!ay ,2003-*:trai)ht an. Le3e%/ 'ractica% Air%ine Ec+n+mics* 8am9shire/ :te9hen 8+%%+!ay*
Ri)as $+)anis ,2001-* 7he air%ine usiness in the 21 st century*L+n.+n/ R+ut%e.)e* :te9hen :ha! ,2011-* Air%ine #ar;etin) an. #ana)ement* B>f+r.shire/ Ash)ate 'u6%ishin) Limite.* Page B6 Evaluating Financial Performance of Ryanair J+hn 5*<ens3een,2007-* Air 7rans9+rtati+n/ A #ana)ement 'ers9ecti3e* 8am9shire/ Ash)ate 'u6%ishin) Limite.* Richar. .e 1euf3i%%e an. Ame.e+ B.+ni ,2003-* Air9+rt :ystems/ '%annnin), .esi)n an. #ana)ement* 1e! F+r;/ the #c5ra!A8i%% &+m9anies* s Page BB