0RYA Ryanair Holdings Plc

Ryanair Holdings plc and Subsidiaries 

Condensed Consolidated Interim Balance Sheet as at June 30, 2024 (unaudited)

Ryanair Holdings plc and Subsidiaries

Condensed Consolidated Interim Income Statement for the Quarter Ended June 30, 2024 (unaudited)

*'+' is favourable and '-' is adverse period-on-period.

Ryanair Holdings plc and Subsidiaries

Condensed Consolidated Interim Statement of Comprehensive Income for the Quarter Ended June 30, 2024 (unaudited)

Ryanair Holdings plc and Subsidiaries

Condensed Consolidated Interim Statement of Cash Flows for the Quarter Ended June 30, 2024 (unaudited)

Ryanair Holdings plc and Subsidiaries 

Condensed Consolidated Interim Statement of Changes in Shareholders' Equity for the Quarter Ended June 30, 2024 (unaudited)

 

Ryanair Holdings plc and Subsidiaries

MD&A Quarter Ended June 30, 2024 ("Q1 FY25")

Introduction          

For the purposes of the Management Discussion and Analysis ("MD&A") (with the exception of the balance sheet commentary) all figures and comments are by reference to the quarter ended June 30, 2024 results.

Income Statement

Scheduled revenues:

Scheduled revenue was down 6% at €2.33BN. While traffic grew 10% to 55.5M, customers enjoyed substantial savings thanks to 15% lower fares due, in part, to the absence of the first half of Easter which fell into March and more price stimulation than previously expected.

Ancillary revenues:

Ancillary revenue rose 10% to €1.30BN, in line with traffic growth (c. €23.40 per passenger). A solid performance in reserved seating and onboard sales, was offset somewhat by softer priority boarding.

Total revenues:

As a result of the above, total revenue declined 1% to €3.63BN.

Operating Expenses:

Fuel and oil:

Fuel and oil rose 6% to €1.42BN, well below the 11% increase in sectors flown due to favourable jet fuel hedging and lower fuel burn on the new B737-8200 "Gamechanger" aircraft.

Airport and handling charges:

Airport and handling charges rose 13% to €0.47BN, ahead of the 11% increase in sectors, due to higher ground ATC and handling rates.

Staff costs:

Staff costs increased 25% to €0.45BN due to the larger fleet, 11% higher sectors, Boeing delivery delays leading to higher crewing ratios, and the annualisation of crew productivity pay increases implemented late last year.

Depreciation:

Depreciation increased 14% to €0.31BN, primarily due to higher amortisation resulting from higher aircraft utilisation (flight hours up 11%) and 37 more "Gamechanger" aircraft in the fleet.

Route charges:

Route charges increased 14% to €0.31BN, due to the 11% increase in flight hours and higher Eurocontrol rates.

Marketing, distribution and other:

Marketing, distribution and other rose 9% to €0.22BN, less than the 10% traffic growth, as lower EU261 and other operating expenses were offset by higher onboard input costs due to increased sales.

Maintenance, materials and repairs:

Maintenance, materials and repairs increased 3% to €83M as higher utilisation was partially offset by supplier credits.

Other income:

Net finance income was 55% ahead at €28M due to higher deposits and lower gross debt, as the Group maintained a strong net cash position throughout the quarter. Foreign exchange translation reflects the impact of €/US$ exchange rate movements on balance sheet revaluations.

Balance sheet:

Gross cash was €4.49BN at June 30, 2024 despite €0.50BN capex and €0.25BN share buybacks. Gross debt was €2.75BN and net cash was €1.74BN at June 30, 2024 (€1.37BN at March 31, 2024).

Shareholders' equity:

Shareholders' equity increased by €0.21BN to €7.83BN in the period primarily due to a €0.36BN net profit and an IFRS hedge accounting increase in derivatives of €0.10BN, offset by a €0.25BN repurchase (and cancellation) of ordinary shares.

Ryanair Holdings plc and Subsidiaries

Interim Management Report

Introduction

This financial report for the quarter ended June 30, 2024 meets the reporting requirements pursuant to the Transparency (Directive 2004/109/EC) Regulations 2007 and Transparency Rules of the Central Bank (Investment Market Conduct) Rules 2019.

This interim management report includes the following:

· Principal risks and uncertainties relating to the remaining nine months of the year;

· Related party transactions; and

· Post balance sheet events.

Results of operations for the quarter ended June 30, 2024 compared to the quarter ended June 30, 2023, including important events that occurred during the quarter, are set forth above in the MD&A.

Principal risks and uncertainties for the remainder of the year

Jet fuel is subject to wide price fluctuations as a result of many economic and political factors and events occurring throughout the world that Ryanair can neither control nor accurately predict, including increases in demand, sudden disruptions in supply and other concerns about global supply, as well as market speculation. Oil prices increased significantly following Russia's invasion of Ukraine in February 2022 and remain volatile in light of the Israel-Hamas conflict in the Middle East.

Despite the Group's strong recovery from the Covid-19 pandemic, future developments may again have a material adverse impact on the Company's business, results of operations, financial condition and liquidity.

Among other factors that are subject to change and could significantly impact Ryanair's expected results for the remainder of the year are the airline pricing environment, capacity growth in Europe, competition from new and existing carriers, market prices for the replacement of aircraft, costs associated with environmental, safety and security measures, the availability of appropriate insurance coverage, actions of the Irish, U.K., European Union ("EU") and other governments and their respective regulatory agencies, delays in the delivery of contracted aircraft, supply chain disruptions/delays, weather related disruptions, ATC strikes and staffing related disruptions, uncertainties surrounding Brexit, fluctuations in currency exchange rates and interest rates, airport access and charges, labour relations, increasing fares to cover rising business costs, cyber security risks and increased costs to minimise those risks, increasingly complex data protection laws and regulations, dependence on key personnel, the expectation that corporation tax rates will rise, the economic environment of the airline industry, the general economic environment in Ireland, the U.K., and Continental Europe, including the risk of a recession or significant economic slowdown, the general willingness of passengers to travel, other economic, social and political factors and unforeseen security events.

Board of Directors

Details of the members of the Company's Board of Directors are set forth on pages 123 and 124 of the Group's 2024 Annual Report. As highlighted in that report, Michael Cawley and Louise Phelan retired from the Board in June 2024, and both Jinane Laghrari Laabi and Amber Rudd were appointed to the Board with effect from July 1, 2024.

Related party transactions - Please see note 9.

Post balance sheet events - Please see note 12.

Going concern

The Directors, having made inquiries, believe that the Group has adequate resources to continue in operational existence for at least the next 12 months and that it is appropriate to adopt the going concern basis in preparing these condensed consolidated interim financial statements. The continued preparation of the Group's condensed consolidated interim financial statements on the going concern basis is supported by the financial projections prepared by the Group.

In arriving at this decision to adopt the going concern basis of accounting, the Board has considered, among other things:

·    The Group's net profit of €0.36BN in the quarter ended June 30, 2024;

·    The Group's liquidity, with €4.49BN gross cash and €1.74BN net cash at June 30, 2024, €0.26BN undrawn funds under the Group's €0.75BN revolving credit facility and the Group's continued focus on cash management;

·    The Group's solid BBB+ (stable) credit ratings from both S&P and Fitch Ratings;

·    The Group's strong balance sheet position with its 566 owned B737 fleet unencumbered;

·    The Group's access to the debt capital markets, unsecured/secured bank debt and sale and leaseback transactions;

·    Strong cost control across the Group;

·    The Group's fuel hedging position (approx. 75% of FY25 and 40% of FY26 jet fuel requirements were hedged at June 30, 2024); and

·    The Group's ability, as evidenced throughout the Covid-19 crisis, to preserve cash and reduce operational and capital expenditure in a downturn.

Ryanair Holdings plc and Subsidiaries

Notes forming Part of the Condensed Consolidated

Interim Financial Statements

1.            Basis of preparation and material accounting policies

Ryanair Holdings plc (the "Company") is a company domiciled in Ireland. The unaudited condensed consolidated interim financial statements for the quarter ended June 30, 2024 comprise the results of the Company and its subsidiaries (together referred to as the "Group").

These unaudited condensed consolidated interim financial statements ("the interim financial statements"), which should be read in conjunction with our 2024 Annual Report for the year ended March 31, 2024, have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU ("IAS 34"). They do not include all of the information required for full annual financial statements and should be read in conjunction with the most recent published consolidated financial statements of the Group. The consolidated financial statements of the Group as at and for the year ended March 31, 2024, are available at http://investor.ryanair.com/.

In adopting the going concern basis in preparing the interim financial statements, the Directors have considered Ryanair's available sources of finance including access to the capital markets, sale and leaseback transactions, secured and unsecured debt structures, undrawn funds under the Group's revolving credit facility, the Group's cash on-hand and cash generation and preservation projections, together with factors likely to affect its future performance, as well as the Group's principal risks and uncertainties.

The June 30, 2024 figures and the June 30, 2023 comparative figures do not include all of the information required for full annual financial statements and therefore do not constitute statutory financial statements of the Group within the meaning of the Companies Act, 2014. The consolidated financial statements of the Group for the year ended March 31, 2024, together with the independent auditor's report thereon, are available on the Company's Website and will be filed with the Irish Registrar of Companies following the Company's Annual General Meeting. The accounting policies, presentation and methods of computation followed in the unaudited condensed consolidated interim financial statements are consistent with those applied in the Company's latest Annual Report.

The Audit Committee, upon delegation of authority by the Board of Directors, approved the unaudited condensed consolidated interim financial statements for the quarter ended June 30, 2024 on July 19, 2024.

Except as stated otherwise below, the condensed consolidated interim financial statements for the quarter ended June 30, 2024 have been prepared in accordance with the accounting policies set out in the Group's most recent published consolidated financial statements, which were prepared in accordance with IFRS as adopted by the EU and also in compliance with IFRS as issued by the International Accounting Standards Board (IASB).

New IFRS standards and amendments adopted during the period

The following new and amended IFRS standards, amendments and IFRIC interpretations, have been issued by the IASB, and have also been endorsed by the EU unless stated otherwise. These standards are effective for the first time for the Group's financial year beginning on April 1, 2024 and therefore have been applied by the Group in these condensed consolidated interim financial statements:

·    Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements (effective on or after January 1, 2024).

·    Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current, Classification of Liabilities as Current or Non-current - Deferral of Effective Date, and Non-current Liabilities with Covenants (effective on or after January 1, 2024).

·    Amendments to IFRS 16 Leases: Lease Liability in a Sale & Leaseback (effective on or after January 1, 2024).

The adoption of these new or amended standards did not have a material impact on the Group's financial position or results in the quarter ended June 30, 2024, and are not expected to have a material impact on financial periods thereafter.

New IFRS standards and amendments issued but not yet effective

The following new or amended standards and interpretations will be adopted for the purposes of the preparation of future financial statements, where applicable. While under review, we do not anticipate that the adoption of these new or revised standards and interpretations will have a material impact on our financial position or performance:

·    Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (effective on or after January 1, 2025).*

·    IFRS 18 Presentation and Disclosure in Financial Statements (effective on or after January 1, 2027).*

·    IFRS 19 Subsidiaries without Public Accountability: Disclosures (effective on or after January 1, 2027).*

·    Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7) (effective on or after January 1, 2026).*

* These standards or amendments to standards are not as of yet EU endorsed.

2.            Judgements and estimates

The preparation of financial statements in conformity with IFRS requires management to make estimates, judgements and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances, and the results of such estimates form the basis of carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from these estimates. These underlying assumptions are reviewed on an ongoing basis. A revision to an accounting estimate is recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if these are also affected. Principal sources of estimation uncertainty have been set forth below. Actual results may differ from estimates.

Critical estimates

Long-lived assets

At June 30, 2024, the Group had €10.94BN of property, plant and equipment long-lived assets, of which €10.70BN were aircraft related. In accounting for long-lived assets, the Group must make estimates about the expected useful lives of the assets and the expected residual values of the assets.

In estimating the useful lives and expected residual values of the aircraft component, the Group considered a number of factors, including its own historic experience and past practices of aircraft disposals, renewal programmes, forecasted growth plans, external valuations from independent appraisers, recommendations from the aircraft supplier and manufacturer and other industry-available information.

The Group's estimate of each aircraft's residual value is 15% of market value on delivery, based on independent valuations and actual aircraft disposals during prior periods, and each aircraft's useful life is determined to be 23 years.

Revisions to these estimates could be caused by changes to maintenance programmes, changes in utilisation of the aircraft, governmental regulations on ageing aircraft, changes in new aircraft technology, changes in governmental and environmental taxes, changes in new aircraft fuel efficiency and changing market prices for new and used aircraft of the same or similar types. The Group therefore evaluates its estimates and assumptions in each reporting period, and, when warranted, adjusts these assumptions. Any adjustments are accounted for on a prospective basis through depreciation expense.

Critical judgements

In the opinion of the Directors, the following significant judgements were exercised in the preparation of the financial statements:

Long-lived assets

On acquisition a judgement is made to allocate an element of the cost of an acquired aircraft to the cost of major airframe and engine overhauls, reflecting its service potential and the maintenance condition of its engines and airframe. This cost, which can equate to a substantial element of the total aircraft cost, is amortised over the shorter of the period to the next maintenance check (usually between 8 and 12 years) or the remaining useful life of the aircraft.

3.            Seasonality of operations

The Group's results of operations have varied significantly from quarter to quarter, and management expects these variations to continue.  Among the factors causing these variations are the airline industry's sensitivity to general economic conditions and the seasonal nature of air travel.  Accordingly, the first half-year typically results in higher revenues and results.

4.            Income tax expense

The Group's consolidated tax expense for the quarter ended June 30, 2024 of €41M (June 30, 2023: €78M) comprises a current tax charge of €23M and a deferred tax charge of €18M primarily relating to the temporary differences for property, plant and equipment and net operating losses. No significant or unusual tax charges or credits arose during the quarter.  The effective tax rate was approximately 10.2% for the quarter ended June 30, 2024 (June 30, 2023: 10.5%) and is the result of the mix of profits and losses incurred by Ryanair's operating subsidiaries primarily in Ireland, Malta, Poland and the U.K.

5.            Contingencies

The Group is engaged in litigation arising in the ordinary course of its business.  The Group does not believe that any such litigation will individually, or in aggregate, have a material adverse effect on the financial condition of the Group. Should the Group be unsuccessful in these litigation actions, management believes the possible liabilities then arising cannot be determined but are not expected to materially adversely affect the Group's results of operations or financial position.

6.            Capital commitments

At June 30, 2024 the Group had an operating fleet of 567 (2023: 530) Boeing 737 and 27 (2023: 28) Airbus A320 aircraft. In September 2014, the Group agreed to purchase up to 200 (100 firm and 100 options) Boeing 737-8200 aircraft which was subsequently increased to 210 firm orders in December 2020. At June 30, 2024, the Group had taken delivery of 156 of these aircraft. The remaining aircraft are due to be delivered ahead of Summer 2025. In May 2023, the Group ordered up to 300 (150 firm and 150 options) new Boeing 737-MAX-10 aircraft for delivery between 2027 to 2033. This transaction was approved at the Company's AGM in September 2023.

7.            Analysis of operating revenues and segmental analysis

The Group determines and presents operating segments based on the information that internally is provided to the Group CEO, who is the Company's Chief Operating Decision Maker (CODM).

The Group comprises five separate airlines, Buzz, Lauda Europe (Lauda), Malta Air, Ryanair DAC and Ryanair UK (which is consolidated within Ryanair DAC). Ryanair DAC is reported as a separate segment as it exceeds the applicable quantitative thresholds for reporting purposes. Buzz, Malta and Lauda do not individually exceed the quantitative thresholds and accordingly are presented on an aggregate basis as they exhibit similar economic characteristics and their services, activities and operations are sufficiently similar in nature. The results of these operations are included as 'Other Airlines.'

The CODM assesses the performance of the business based on the profit or loss after tax of each airline for the reporting period. Resource allocation decisions for all airlines are based on airline performance for the relevant period, with the objective in making these resource allocation decisions being to optimise consolidated financial results. Reportable segment information is presented as follows:

The following table disaggregates revenue by primary geographical market. In accordance with IFRS 8, revenue by country of departure has been provided where revenue for that country is in excess of 10% of total revenue. Ireland is presented as it represents the country of domicile. "Other" includes all other countries in which the Group has operations.

Ancillary revenues comprise revenues from non-flight scheduled operations, inflight sales and internet-related services. Non-flight scheduled revenue arises from the sale of discretionary products such as priority boarding, allocated seats, car hire, travel insurance, airport transfers, room reservations and other sources, including excess baggage charges and other fees, all directly attributable to the low-fares business.

The vast majority of ancillary revenue is recognised at a point in time, which is typically the flight date. The economic factors that would impact the nature, amount, timing and uncertainty of revenue and cashflows associated with the provision of passenger travel-related ancillary services are homogeneous across the various component categories within ancillary revenue. Accordingly, there is no further disaggregation of ancillary revenue required in accordance with IFRS 15.

8.            Property, plant and equipment

Acquisitions and disposals

During the quarter ended June 30, 2024, net capital additions amounted to €0.39BN principally reflecting aircraft deliveries in the period and capitalised maintenance offset by depreciation.

9.            Related party transactions

The Company's related parties include its subsidiaries, Directors and Key Management Personnel. All transactions with subsidiaries eliminate on consolidation and are not disclosed.

There were no related party transactions in the quarter ended June 30, 2024 that materially affected the financial position or the performance of the Group during that period and there were no changes in the related party transactions described in the 2024 Annual Report that could have a material effect on the financial position or performance of the Group in the same period.

10.          Financial instruments and financial risk management

The Group is exposed to various financial risks arising in the normal course of business. The Group's financial risk exposures are predominantly related to commodity price, foreign exchange and interest rate risks. The Group uses financial instruments to manage exposures arising from these risks.  

These condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements and should be read in conjunction with the 2024 Annual Report. There have been no changes in our risk management policies in the period.

Fair value hierarchy

Financial instruments measured at fair value in the balance sheet are categorised by the type of valuation method used. The different valuation levels are defined as follows:

·     Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

·     Level 2: inputs other than quoted prices included within Level 1 that are observable for that asset or liability, either directly or indirectly.

·     Level 3: significant unobservable inputs for the asset or liability.

Fair value estimation

Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used to estimate the fair value of each material class of the Group's financial instruments:

Financial instruments measured at fair value

·     Derivatives - interest rate swaps: Discounted cash-flow analyses have been used to determine their fair value, taking into account current market inputs and rates. The Group's credit risk and counterparty's credit risk is taken into account when establishing fair value (Level 2).

·     Derivatives - currency forwards, jet fuel forward swap contracts and carbon contracts: A comparison of the contracted rate to the market rate for contracts providing a similar risk profile at June 30, 2024 has been used to establish fair value. The Group's credit risk and counterparty's credit risk is taken into account when establishing fair value (Level 2).

·     Derivatives - jet fuel call options: The fair value of jet fuel call options is determined based on standard option pricing valuation models (Level 2).

The Group policy is to recognise any transfers between levels of the fair value hierarchy as of the end of the reporting period during which the transfer occurred. During the quarter ended June 30, 2024, there were no reclassifications of financial instruments and no transfers between levels of the fair value hierarchy used in measuring the fair value of financial instruments.

Financial instruments not measured at fair value

·     Long-term debt: The repayments which the Group is committed to make have been discounted at the relevant market rates of interest applicable at June 30, 2024 to arrive at a fair value representing the amount payable to a third party to assume the obligations.

The fair value of financial assets and financial liabilities, together with the carrying amounts in the condensed consolidated balance sheet, are as follows:

*The fair value of each of these financial instruments approximate their carrying values due to the short-term nature of the instruments.

11.          Shareholders' equity and shareholders' returns

In line with the Group's Dividend Policy, the Directors proposed a final dividend of €0.178 per share payable after the Company's AGM in September 2024.

In the quarter ended June 30, 2024 the Company bought back, and cancelled, approximately 12M ordinary shares (as part of a €700M share buyback programme announced, and launched, in May 2024) at a total cost of €249M. This buyback was equivalent to approximately 1% of the Company's issued share capital at March 31, 2024.

As a result of the share buybacks in the quarter ended June 30, 2024, share capital decreased by approximately 12M ordinary shares with a nominal value of €0.1M and the other undenominated capital reserve increased by a corresponding €0.1M. The other undenominated capital reserve is required to be created under Irish law to preserve permanent capital in the Parent Company.

12.          Post balance sheet events

Between July 1, 2024 and July 18, 2024 the Company bought back approximately 7M ordinary shares at a total cost of €130M under its €700M share buyback programme which commenced in May 2024. This brought total spend under the programme to €379M.