●
S.22 capacity on sale at 114% of S.19
(pre-Covid).
●
5-year growth accelerates to 225m
guests p.a. by FY26 (prev. 200m p.a.).
Ryanair's Michael O'Leary, said:
ENVIRONMENT:
"Every passenger who switches to Ryanair from legacy airlines cuts
their CO₂ emissions by up to 50% per flight. Over the
next 5-years our traffic will grow by 50% to 225m p.a. This
growth will be delivered on a fleet of new
B737 "Gamechanger" aircraft,
which offer 4% more seats, but burn 16% less fuel and reduce noise
emissions by 40%.
Our work with the EU, fuel suppliers, and aircraft manufacturers to
accelerate sustainable aviation fuel (SAF) supply continues, in
partnership with Trinity College Dublin. Ryanair hopes
to power 12.5% of our flights using SAF by 2030. Ryanair aims
to cut CO₂ per passenger/km by 10% to less than 60 grams by
2030. We are working with A4E and the EU Commission to
accelerate reform of the Single European Sky, to minimise ATC
inefficiency and delays which will significantly lower fuel
consumption, CO₂ emissions and flight
delays.
In Q3 Ryanair published our "Aviation with
Purpose" sustainability report
highlighting ambitious environmental and social targets over the
coming years and mapping out Ryanair's path to net carbon zero by
2050. Our environmental strategy, and progress to date,
enabled CDP to upgrade Ryanair's climate protection rating to B
from B- in Dec. 2021. This is a significant advance towards
our goal of an independent climate "A" rating within the next 2
years.
SOCIAL:
Our 5-year growth plan will create over 6,000 new well paid jobs
for highly trained pilots, cabin crew and engineers all over
Europe. Last Oct. Ryanair invested €50m in a
cutting-edge Aviation Skills Training Centre in Dublin and we plan
to invest over €100m in 2 more, high skills, training centres
(one possibly in Spain/Portugal and one in CEE) during this
period. To facilitate this growth, Ryanair recently ordered
up to 8 CAE full flight simulators (at a value of over $80m).
The first of these new sims delivers in FY23.
Following the success of our first Customer Panel meeting in Sept.,
the Panel will meet again in Madrid in the Spring. We
have implemented many of these customer suggestions, including a
Day of Travel service in the Ryanair App to assist customers with
live updates through every step of their Ryanair journey, a new
Ryanair wallet for speedy refunds and an online self-service
hub. Our unbending commitment to delivering our customers the
lowest fares, the most on-time flights, an industry lowest
CO₂ emissions and friendly customer service has seen Ryanair
record its highest ever customer satisfaction ("CSAT") score of 89%
in Q3. Our on-time performance in the 3rd quarter,
including the busy Christmas/ New Year period, was excellent with
almost 90% of all Ryanair flights arriving in
"on-time".
COVID-19 - RECOVERY:
We delivered a strong traffic rebound in Q2 (Sept. quarter)
following the successful rollout of the EU Digital Covid
Certificates ("DCC") in July, and the relaxation of EU travel
restrictions. Q3 got off to a good start with strong bookings for
the Oct. mid-term break, and less confusion (in Oct.) about the UK
Govt.'s absurd 'traffic light' system. Ryanair's load
active/yield passive recovery strategy saw Oct. traffic rise to
11.3m (84% load factor). Our Nov. load factor improved to 86%
(10.2m guests), albeit at lower fares. The sudden emergence
of the Omicron variant (late Nov.), and the media hysteria it
generated in Dec., forced many European Govts. to reimpose travel
restrictions in the run-up to Christmas, which significantly
weakened peak (close-in) Christmas & New Year bookings and
fares. As a result, Dec. traffic slowed to just 9.5m (with a
lower 81% load factor), well behind the expected target of 11m
guests. Jan. capacity was cut by 33% on 22 Dec. which lowered
the Jan. traffic target from 10m to between 6m-7m customers.
We hope that the rollout of booster vaccines across Europe in
recent weeks, and growing evidence that Omicron is less virulent
than other variants, will enable EU Govts. to remove travel
restrictions and restore consumer confidence in inter EU air travel
well in advance of Easter and peak S.22.
The Covid-19 crisis accelerated the collapse of many European
airlines including Flybe, Norwegian, Germanwings, Level, Stobart
and led to material capacity cuts at many others including
Alitalia, TAP, LOT, SAS, etc. The tsunami of State Aid from
EU Govts. to their insolvent flag carriers (Alitalia, Air
France/KLM, Iberia, LOT, Lufthansa, SAS, TAP and others) will
distort EU competition and prop up high cost, inefficient, flag
carriers for some years. Ryanair was one of very few airlines
during the Covid crisis to place significant new aircraft orders,
to expand our airport partnerships and to secure lower operating
costs so that we can pass on even lower fares on many new routes
during the post Covid recovery. Together with our airport
partners, we are leading Europe's traffic recovery and we plan to
deliver accelerated traffic growth and jobs over the next 5
years.
GROWTH:
Over the past 9 months our Route Development team continued to work
with like-minded airport partners to negotiate lower airport costs,
recovery incentives and growth deals. In addition to 15 new
bases (Agadir, Billund, Chania, Corfu, Cork, Madeira, Newcastle,
Nuremberg, Riga, Stockholm, Venice (Marco-Polo), Venice (Treviso),
Turin, Zadar & Zagreb), 720 new routes were announced and
low-cost long term growth deals were extended in Stansted (to
2028), Bergamo (2028), Manchester (2028), East Midlands (2028) and
Charleroi (2030). Our Group has doubled its capacity in Rome
(FCO), Lisbon, Vienna and we will base a record 33 aircraft in
Dublin for S.22. Regrettably, our 5 aircraft base at
Frankfurt Main will close in Mar. as Frankfurt's price increases
rendered it unable to compete with the many low cost airports
across Europe and Germany (Nuremberg) seeking to accelerate traffic
recovery and growth.
Up to the end of Q3, Ryanair has taken delivery of 41 B737-8200
"Gamechanger" aircraft and we hope to have over 65 new
aircraft in our fleet for peak S.22 when our capacity will be
approx. 114% of S.19 (pre-Covid) levels. These Gamechangers
widen the cost gap between Ryanair and all other European airlines
for the next decade. Their operational reliability, fuel
consumption and CO₂ emissions have so far exceeded
guidelines, with universally positive passenger and crew
feedback. Based on our 210 order book and available fleet
capacity, the Ryanair Group plan to accelerate traffic growth over
the next 5 years. From a pre-Covid annual traffic of 149m, we
now expect to grow by 50% to over 225m guests p.a. by FY26
(previously 33% growth to 200m p.a.).
Q3 FY22 BUSINESS REVIEW:
Revenue & Costs
Q3 scheduled revenues increased 345% to €0.79bn as traffic
recovered strongly from 8.1m to 31.1m guests (at an 84% load
factor). Despite a strong start to Q3, especially the school's
mid-term break in Oct., the Omicron variant, and return of travel
restrictions in early Dec., significantly damaged (higher yielding)
close-in Christmas & New Year bookings. Ave. fares in Q3
were just €25 (down 24% on the same quarter pre Covid).
Ancillary revenue delivered a solid performance, generating
€22 per passenger (+8%), as guests choose priority boarding
and reserved seating. Total revenues increased by over
330% to €1.47bn in Q3.
While sectors more than doubled (+220%) and traffic rose 286%,
operating costs increased by just 136% to €1.59bn, driven
primarily by lower variable costs such as airport & handling,
route charges and improved fuel burn as more Gamechangers enter the
fleet (offset by the higher cost of jet fuel). Lower costs,
coupled with rising load factors, saw unit cost per passenger in Q3
(ex-fuel) reduce to €32, an excellent
performance.
Our fuel requirements are almost fully hedged for Q4 FY22 (over 60%
jet swaps at $580 per metric tonne, with caps hedging the balance
at $750). H1 FY23 is 80% hedged (60% jet swaps at $620 and
20% caps at $715) and H2 FY23 is 70% hedged at $640. Carbon
credits are fully hedged for FY22 and 80% hedged for FY23 at
€24 and €45 per EUA respectively (well below the
current spot price of c.€85). Ryanair's very strong and
sensible hedging policy will deliver significant savings for all
our customers and shareholders at a time when many airline
competitors have unwisely reduced or abandoned sensible hedging
strategies.
Balance Sheet & Liquidity
Ryanair's balance sheet is one of the strongest in the industry
with a BBB (stable) credit rating (S&P and Fitch), almost
€3bn cash (at 31 Dec.) and 90% of our B737 fleet
unencumbered. In Oct. the Group repaid its UK CCFF £600m loan
5 months early. During the Covid crisis, net debt has risen
to over €2bn. We plan to reduce this net debt to zero
as quickly as possible over the next 2 years. Strong
operating cashflows, offset by €0.8bn capex
(mainly Gamechanger deliveries and aircraft deposits), drove a
slight reduction in net debt to €2.1bn at 31 Dec. (31 Mar.:
€2.3bn). The strength of Ryanair's balance
sheet ensures that the Group is well poised to capitalise rapidly
on the many growth opportunities that exist in Europe into the post
Covid-19 recovery in 2022 and 2023.
OUTLOOK:
The outlook for pricing and yields for the remainder of FY22 is
hugely uncertain. As announced on 22 Dec., our Jan. capacity
was cut by 33% (reducing traffic from approx. 10m to between
6m-7m). While recent bookings have improved, following easing of
travel restrictions, the booking curve remains very late and
close-in, so Q4 traffic requires significant price stimulation at
lower prices to quickly recover load factors which suffered steep
declines due to the Omicron collapse in bookings over the
Christmas/New Year period. Ryanair's full year traffic
forecast remains unchanged at 'just under' 100m passengers, but due
to Covid uncertainty the FY22 net loss guidance remains within a
wider than normal range of €250m to €450m. This
outturn is hugely sensitive to any further positive or negative
Covid news flow and so we would caution all shareholders to expect
further Covid disruptions before we here in Europe and the rest of
the world can finally declare that the Covid crisis is behind
us."
ENDS
For
further information
please
contact:
www.ryanair.com
Neil
Sorahan
Ryanair
Holdings plc
Tel: +353-1-9451212
Piaras
Kelly
Edelman
Tel: +353-1-6789333
Ryanair Holdings plc, Europe's largest airline group, is the parent
company of Buzz, Lauda, Malta Air, Ryanair & Ryanair UK.
Carrying 149m guests p.a. (pre Covid-19) on more than 2,500 daily
flights from 90 bases, the Group connects over 230 destinations in
37 countries on a fleet of 484 aircraft, with a further 169 Boeing
737s on order, which will enable the Ryanair Group to lower fares
and grow traffic to 225m p.a. over the next 5 years. Ryanair has a
team of 18,500 highly skilled aviation professionals delivering
Europe's No.1 on-time performance, and an industry leading 36-year
safety record. Ryanair is Europe's greenest, cleanest, airline
group and customers switching to fly Ryanair can reduce their
CO₂ emissions by up to 50% compared to the other Big 4
European major airlines.
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 the
replacement of 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, post-Brexit uncertainties, weather related disruptions,
ATC strikes and staffing related disruptions, delays in the
delivery of contracted aircraft, 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, global pandemics such as
Covid-19 and unforeseen security events.
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Balance Sheet as at December 31,
2021 (unaudited)
At Dec 31,
At Mar 31,
2021
2021
Note
€M
€M
Non-current assets
Property, plant and equipment
9
8,749.3
8,361.1
Right of use assets
147.2
188.2
Intangible assets
146.4
146.4
Derivative financial instruments
11
198.9
111.3
Deferred tax
12.2
14.0
Other assets
59.8
48.7
Total non-current assets
9,313.8
8,869.7
Current assets
Inventories
4.0
3.6
Other assets
328.3
179.8
Assets held for sale
9
40.9
-
Trade receivables
11
20.6
18.6
Derivative financial instruments
11
450.3
106.0
Restricted cash
11
22.7
34.1
Financial assets: cash > 3 months
11
-
465.5
Cash and cash equivalents
11
2,957.6
2,650.7
Total current assets
3,824.4
3,458.3
Total assets
13,138.2
12,328.0
Current liabilities
Provisions
6.6
10.3
Trade payables
11
663.3
336.0
Accrued expenses and other liabilities
1,779.2
1,274.9
Current lease liability
54.2
52.5
Current maturities of debt
11
379.5
1,725.9
Derivative financial instruments
11
41.2
79.2
Current tax
56.5
48.1
Total current liabilities
2,980.5
3,526.9
Non-current liabilities
Provisions
69.2
47.4
Derivative financial instruments
11
-
6.4
Deferred tax
232.1
272.4
Trade payables
11
239.6
179.9
Non-current lease liability
92.2
130.6
Non-current maturities of debt
11
4,596.1
3,517.8
Total non-current liabilities
5,229.2
4,154.5
Shareholders' equity
Issued share capital
6.8
6.7
Share premium account
12
1,199.1
1,161.6
Retained earnings
3,095.7
3,232.3
Other undenominated capital
3.5
3.5
Other reserves
623.4
242.5
Shareholders' equity
4,928.5
4,646.6
Total liabilities and shareholders' equity
13,138.2
12,328.0
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Income Statement for the Quarter
ended December 31, 2021 (unaudited)
(Loss) for the nine months - all attributable to equity holders of
parent
(143.4)
(731.3)
(Loss)
per ordinary share (€)
Basic
(0.1270)
(0.6619)
Diluted
(0.1270)
(0.6619)
Weighted
avg. no. of ord. shares (in Ms)
Basic
1,129.4
1,104.8
Diluted
1,129.4
1,104.8
*'+' is favourable and '-' is adverse year-on-year.
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Statement of Comprehensive Income
for the quarter ended
December 31, 2021
(unaudited)
Quarter
Quarter
Ended
Ended
Dec 31,
Dec 31,
2021
2020
€M
€M
(Loss) for the quarter
(95.8)
(320.8)
Other comprehensive income:
Items that are or may be reclassified to profit or
loss:
Movements in hedging reserve, net of tax:
Net movements in cash-flow hedge reserve
55.7
134.6
Other comprehensive income for the quarter, net of income
tax
55.7
134.6
Total comprehensive (loss) for the quarter - all attributable to
equity holders of parent
(40.1)
(186.2)
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Statement of Comprehensive Income
for the nine months ended
December 31, 2021
(unaudited)
Nine months
Nine months
Ended
Ended
Dec 31,
Dec 31,
2021
2020
€M
€M
(Loss) for the nine months
(143.4)
(731.3)
Other comprehensive income:
Items that are or may be reclassified to profit or
loss:
Movements in hedging reserve, net of tax:
Net movements in cash-flow hedge reserve
380.0
68.0
Other comprehensive income for the nine months, net of income
tax
380.0
68.0
Total comprehensive income/(loss) for the nine months - all
attributable to equity holders of parent
236.6
(663.3)
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Statement of Cash Flows for the nine
months ended December 31, 2021 (unaudited)
Nine months
Nine months
Ended
Ended
Dec 31,
Dec 31,
2021
2020
Note
€M
€M
Operating activities
(Loss)
after tax
(143.4)
(731.3)
Adjustments to reconcile (loss) after tax to net cash from
operating activities
Depreciation
529.8
439.4
Increase
in inventories
(0.4)
(0.3)
Tax
(credit) on (loss)
(89.3)
(63.5)
Share-based
payments
5
7.7
3.1
(Increase)/decrease
in trade receivables
(2.0)
31.7
(Increase)/decrease
in other assets
(165.5)
44.9
Increase/(decrease)
in trade payables
253.2
(268.8)
Increase/(decrease)
in accrued expenses
512.6
(1,309.7)
Increase/(decrease)
in provisions
18.1
(32.7)
Decrease/(increase)
in finance income
-
6.7
(Increase)
in finance expense
(24.2)
(25.4)
Hedge
ineffectiveness/foreign exchange
-
(230.1)
Income
tax refunded
10.0
81.4
Net cash inflow/(outflow) from operating activities
906.6
(2,054.6)
Investing activities
Capital
expenditure - purchase of property, plant and
equipment
9
(783.4)
(248.9)
Disposal
proceeds
9
69.3
112.0
Supplier
reimbursements
113.9
250.9
Decrease
in restricted cash
11.4
0.3
Decrease
in financial assets: cash > 3 months
465.5
158.9
Net cash (used in)/from investing activities
(123.3)
273.2
Financing activities
Net
proceeds from shares issued
12
37.6
417.1
Finance
raised
1,192.0
1,533.4
Repayments
of long term borrowings
(1,677.5)
(171.9)
Lease
liabilities paid
(39.7)
(61.2)
Net cash (used in)/from financing activities
(487.6)
1,717.4
Increase/(decrease) in cash and cash equivalents
295.7
(64.0)
Net
foreign exchange differences
11.2
(94.7)
Cash
and cash equivalents at beginning of the period
2,650.7
2,566.4
Cash and cash equivalents at end of the period
2,957.6
2,407.7
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Statement of Changes in
Shareholders' Equity for the nine months ended December 31, 2021
(unaudited)
Issued
Share
Other
Other
Ordinary
Share
Premium
Retained
Undenom.
Reserves
Other
Shares
Capital
Account
Earnings
Capital
Hedging
Reserves
Total
M
€M
€M
€M
€M
€M
€M
€M
Adj. balance at April 01, 2020
1,089.2
6.5
738.5
4,245.0
3.5
(111.3)
32.3
4,914.5
Loss for the nine months
-
-
-
(731.3)
-
-
-
(731.3)
Other comprehensive income
Net movements in cash-flow reserve
-
-
-
-
-
68.0
-
68.0
Total other comprehensive income
-
-
-
-
-
68.0
-
68.0
Total comprehensive income
-
-
-
(731.3)
-
68.0
-
(663.3)
Transactions with owners of theCompany recognized directly in
equity
Issue of ordinary equity shares
38.3
0.2
419.2
(2.3)
-
-
-
417.1
Share-based payments
-
-
-
-
-
-
3.1
3.1
Transfer of exercised and share based awards
-
-
-
3.9
-
-
(3.9)
-
Balance at December 31, 2020
1,127.5
6.7
1,157.7
3,515.3
3.5
(43.3)
31.5
4,671.4
Loss for the three months
-
-
-
(283.0)
-
-
-
(283.0)
Other comprehensive income
Net movements in cash-flow reserve
-
-
-
-
-
254.6
-
254.6
Total other comprehensive income
-
-
-
-
-
254.6
-
254.6
Total comprehensive income
-
-
-
(283.0)
-
254.6
-
(28.4)
Transactions with owners of theCompany recognized directly in
equity
Issue of ordinary equity shares
0.6
-
3.9
-
-
-
-
3.9
Transfer of exercised and share based awards
-
-
-
-
-
-
(0.3)
(0.3)
Balance at March 31, 2021
1,128.1
6.7
1,161.6
3,232.3
3.5
211.3
31.2
4,646.6
Loss for the nine months
-
-
-
(143.4)
-
-
-
(143.4)
Other comprehensive income
Net movements in cash flow reserve
-
-
-
-
-
380.0
-
380.0
Total other comprehensive income
-
-
-
-
-
380.0
-
380.0
Total comprehensive income
-
-
-
(143.4)
-
380.0
-
236.6
Transactions with owners of theCompany recognized directly in
equity
Issue of ordinary equity shares
5.0
0.1
37.5
-
-
-
-
37.6
Share-based payments
-
-
-
-
-
-
7.7
7.7
Transfer of exercised and expired share based awards
-
-
-
6.8
-
-
(6.8)
-
Balance at December 31, 2021
1,133.1
6.8
1,199.1
3,095.7
3.5
591.3
32.1
4,928.5
Ryanair Holdings plc and Subsidiaries
MD&A Quarter Ended December 31, 2021
Introduction
As a result of European Government's Covid-19 travel
restrictions/lockdowns during the prior period comparative (quarter
ended December 31, 2020), the Group experienced a significant
reduction in traffic. In the quarter ended December 31, 2021
traffic increased by 286% to 31.1M. The Omicron variant, and return
of travel restrictions in early December, significantly weakened
(higher yielding) close-in Christmas and New Year bookings. The
following discussion should be read in that context.
Income Statement
Scheduled revenues:
Scheduled revenues increased by 345% to
€788.1M due to a
286% increase in traffic (from 8.1M to 31.1M) and a 15% increase in average fares to
€25.
Ancillary revenues:
Ancillary revenues increased to €681.8M due
to a 286% rebound in traffic and a solid performance in priority
boarding and reserved seating.
Total Revenue:
As a result of the above, total revenues increased
by 331%
to €1,469.9M.
Operating Expenses:
Fuel and oil:
Fuel and oil increased by €444.5M (+292%) to
€596.9M due to a
220% increase in sectors flown and higher jet fuel prices offset by
fuel burn savings on the new B737-8200s.
Airport and handling charges:
Airport and handling charges rose by €166.2M (+197%) to
€250.6M, below the 220%
increase in sectors and 286% increase in
traffic.
Depreciation:
Depreciation increased by 35% to
€193.6M, primarily due to
higher amortisation resulting from increased aircraft utilisation
and the 41 new B737-8200 aircraft in the fleet.
Staff
costs:
Staff costs increased by 49% to
€193.0M due to higher
sectors.
Route
charges:
Route charges increased by 205% to
€169.7M,
due to a 220% increase in sectors flown.
Marketing, distribution and other:
Marketing, distribution and other rose by 124% to
€114.0M due to
higher activity in the period, offset by cost
savings.
Maintenance, materials and repairs:
Maintenance, materials and repairs increased
by 21% to
€68.6M due to higher
aircraft utilisation.
Other
expense:
Net finance expenses increased by €11.6M to
€24.0M due to higher
negative interest rates on euro deposits. The impact of negative
deposit interest rates was managed by reducing the duration of term
deposits.
MD&A Nine Months Ended December 31, 2021
Introduction
The Ryanair Group's fleet was effectively grounded due to European
Governments travel restrictions/ lockdowns for much of the prior
period comparative (nine months ended December 31, 2020).
Sectors (up 137%) and traffic (+179%) are therefore significantly
higher in the nine months ended December 31, 2021 (although still
below pre Covid-19 levels) and the following discussion should be
read in that context.
Income Statement
Scheduled revenues:
Scheduled revenues increased by 113% to
€2,061.4M due to a
179% increase in traffic, from 25.2M to 70.2M. While traffic increased significantly, the
delayed relaxation of Government travel restrictions across Europe
until July 2021 (and the reintroduction of restrictions in December
due to the Omicron variant) meant that fares required significant
price stimulation, with average fares down 24% at just
€29.
Ancillary revenues:
Ancillary revenues increased to €1,563.4M due
to a 179% rebound in traffic and a solid performance in priority
boarding and reserved seating.
Total revenues:
As a result of the above, total revenues increased
by 139%
to €3,624.8M.
Operating Expenses:
Fuel and oil:
Fuel and oil increased by €814.6M (+164%) to
€1,310.0M due to a
137% increase in sectors flown and higher jet fuel prices offset by
fuel burn savings on the new B737-8200s.
Airport and handling charges:
Airport and handling charges rose by €333.4M (+131%) to
€587.5M below the
137% increase in sectors and a 179% increase in
traffic.
Depreciation:
Depreciation increased by 21% to
€529.8M, primarily due to
higher amortisation resulting from increased aircraft utilisation
and the delivery of 41 new B737-8200 aircraft in the
period.
Staff
costs:
Staff costs increased by 36% to
€496.1M due to higher
sectors.
Route
charges:
Route charges increased by 134% to
€399.7M,
broadly in line with higher sectors.
Marketing, distribution and other:
Marketing, distribution and other rose by 79% to
€282.3M due to
higher activity in the period, offset by cost
savings.
Maintenance, materials and repairs:
Maintenance, materials and repairs increased
by 34% to
€186.4M due to
higher aircraft utilisation and the handback of leased aircraft in
the period.
Other
expense:
Net finance expenses increased by €40.9M to
€68.7M due to higher
average gross debt in the period and negative interest rates on
euro deposits. The impact of negative deposit interest rates was
managed by reducing the duration of term
deposits.
Balance sheet:
Gross cash decreased by €0.17BN to €2.98BN at December
31, 2021.
Gross debt fell by €0.30BN to €5.12BN primarily due to
€1.68BN debt repayments offset by a €1.2BN bond
issuance in May 2021.
Net debt was €2.14BN at December 31, 2021, down from
€2.28BN at March 31, 2021.
Increased activity in the nine month period (including a 137%
increase in sectors and 179% rise in traffic), and higher forward
bookings (unearned revenue) led to significant movements in Other
Assets (+€0.16BN), Trade Payables (+€0.39BN), and
Accrued Expenses and Other Liabilities
(+€0.51BN).
Shareholders'
equity:
Shareholders' equity increased by €0.28BN to €4.93BN in
the period primarily due to an IFRS hedge accounting unrealised
gain for derivatives of €0.38BN, offset by the €0.14BN
net loss.
Ryanair Holdings plc and Subsidiaries
Interim Management Report
Introduction
This financial report for the nine months ended December 31, 2021
meets the reporting requirements pursuant to the Transparency
(Directive 2004/109/EC) Regulations 2007 and Transparency Rules of
the Central Bank of Ireland.
This interim management report includes the following:
● Principal risks and uncertainties relating to the
remaining three months of the year;
● Related party transactions;
and
● Post balance sheet events.
Results of operations for the nine months ended December 31, 2021
compared to the nine months ended December 31, 2020, including
important events that occurred during the nine months, are set
forth above in the MD&A.
Principal risks and uncertainties for the remainder of the
year
The full extent of the ongoing impact of Covid-19 on the Group's
longer-term operational and financial performance will depend on
future developments, many of which are outside of the Group's
control, including the duration and spread of Covid-19 and related
travel advisories and restrictions, the impact of Covid-19 on
overall long-term demand for air travel, the impact of Covid-19 on
the financial health and operations of the Group's business
partners (particularly Boeing), and future governmental actions,
all of which are highly uncertain and cannot be
predicted.
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, fuel costs, competition from new and existing carriers,
market prices for the replacement of aircraft, costs associated
with environmental, safety and security measures, actions of the
Irish, UK, European Union ("EU") and other governments and their
respective regulatory agencies, delays in the delivery of
contracted aircraft, 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, 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, other economic, social and political factors
and unforeseen security events.
Board of Directors
With the exception of Geoff Doherty, who joined the Board in
October 2021, details of the members of the Group's Board of
Directors are set forth on page 16 of the Group's 2021 annual
report.
Related party transactions - Please see note 13.
Post balance sheet events - Please see note 14.
Going concern
The Directors, having made inquiries, including consideration of
the possible future financial effects associated with the Covid-19
pandemic, 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 interim financial statements. While there is uncertainty as
to the full extent of the impact on the Ryanair Group, the
continued preparation of the Group's 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 liquidity with almost
€3BN cash at December 31, 2021, a €0.14BN reduction in
net debt in the first nine months (despite €0.8BN capital
expenditure) and the Group's continued focus on cash
management;
●
The Group's solid BBB credit ratings
combined with a stable outlook (from both S&P and Fitch
Ratings);
●
The Group's strong balance sheet
position with approximately 90% of its B737 fleet
unencumbered;
●
The Group's access to the debt capital
markets. In May 2021, the Group raised a €1.2BN, 5-year
unsecured, Eurobond at a low coupon of 0.875%;
●
The repayment of the HMT & Bank of
England CCFF £600M loan in October means that the Group has no
significant debt maturities until March 2023;
●
Ongoing cost reductions across the
Group;
●
The widespread rollout of the Covid-19
vaccine and booster program in Europe;
●
Increased
bookings;
●
The Group's flexibility to react
quickly to improved customer demand following vaccine rollouts and
the launch of EU Digital Covid Certificates;
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 significant accounting policies
Ryanair Holdings plc (the "Company") is a company domiciled in
Ireland. The unaudited condensed consolidated interim financial
statements of the Company for the nine months ended December 31,
2021 comprise 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 2021 Annual Report for the year ended March
31, 2021, have been prepared in accordance with International
Accounting Standard No. 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, 2021, are available
at http://investor.ryanair.com/.
The December 31, 2021 figures and the December 31, 2020 comparative
figures 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, 2021, together with the independent auditor's report
thereon, were filed with the Irish Registrar of Companies following
the Company's Annual General Meeting and are also available on the
Company's Website. The auditor's report on those financial
statements was unqualified.
The Audit Committee, upon delegation of authority by the Board of
Directors, approved the condensed consolidated interim financial
statements for the nine months ended December 31, 2021 on January
28, 2022.
Except as stated otherwise below, this period's financial
information has 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
year
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. These standards are effective for the first
time for the Group's financial year beginning on April 1, 2021 and
therefore have been applied by the Group in these condensed
consolidated interim financial statements:
●
Amendments to IFRS 4 Insurance
Contracts - Deferral of IFRS 9 (effective on or after January 1,
2021).
●
Amendments to IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16 Interest Rate Benchmark Reform - Phase 2
(effective on or after January 1, 2021).
●
Amendment to IFRS 16 Leases - Covid-19
Related Rent Concessions Beyond June 30, 2021 (effective on or
after April 1, 2021).
The Group has evaluated the extent to which its cashflow hedging
relationships are subject to uncertainty driven by IBOR reform as
at December 31, 2021. The Group's hedged items and hedging
instruments continue to be indexed to EURIBOR. These benchmark
rates are quoted each day and the IBOR cash flows are exchanged
with counterparties as usual.
The calculation methodology of EURIBOR changed during 2020. In July
2020, the Belgian Financial Services and Markets Authority granted
authorisation with respect to EURIBOR under the European Union
Benchmarks regulation. This allows market participants to continue
to use EURIBOR for both existing and new contracts and the Group
expects that EURIBOR will continue to exist as a benchmark for the
foreseeable future.
The adoption of these new or amended standards did not have a
material impact on the Group's financial position or results from
operations in the quarter ended December 31, 2021.
New IFRS standards and amendments issued but not yet
effective
The following new or revised IFRS standards and IFRIC
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 the other new or
revised standards and interpretations will have a material impact
on our financial position or results from operations:
●
Annual Improvements 2018-2020
(effective on or after January 1, 2022).
●
Amendments to IAS
37 Provisions, Contingent
Liabilities and Contingent Assets: Onerous Contracts - Cost of Fulfilling a
Contract (effective for on or after January 1,
2022).
●
Amendments to IAS
16 Property, Plant and
Equipment: Proceeds before
Intended Use (effective on or after January 1,
2022).
●
Amendments to IFRS
3 Business
Combinations: Reference to the
Conceptual Framework (effective on or after January 1,
2022).
●
Amendments to IAS
12 Income
Taxes: Deferred Tax related to
Assets and Liabilities arising from a Single Transaction (effective
on or after January 1, 2023).*
●
Amendments to IAS
8 Accounting Policies, Changes
in Accounting Estimates and Errors: Definition of Accounting Estimates (effective on
or after January 1, 2023).*
●
Amendments to IAS
1 Presentation of Financial
Statements and IFRS
Practice Statement 2 Making Materiality
Judgments: Disclosure of
Accounting policies (effective on or after January 1,
2023).*
●
Amendments to IAS
1 Presentation of Financial
Statements: Classification of
Liabilities as Current or Non-current and Classification of Liabilities as Current or
Non-current - Deferral of Effective Date (effective on or after
January 1, 2023).*
●
IFRS 17 Insurance
Contracts (effective on or
after January 1, 2023).
●
Amendments to IFRS 17 Insurance
contracts: Initial Application of IFRS 17 and IFRS 9 - Comparative
Information (effective on or after January 1,
2023)*
*These standards or amendments to standards are not as of yet EU
endorsed.
2.
Judgements and estimates
The preparation of financial statements requires management to make
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ
from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements and key sources of
estimation uncertainty were the same as those that applied in the
most recent published consolidated financial
statements.
Derivative financial instruments
The Group uses various derivative financial instruments to manage
its exposure to market risks, including the risks relating to
fluctuations in commodity prices and currency exchange rates.
Ryanair uses forward contracts for the purchase of its jet fuel
(jet kerosene) and carbon credit (Emission Trading Scheme)
requirements to reduce its exposure to commodity price risk. It
also uses foreign currency forward contracts to reduce its exposure
to risks related to foreign currencies, principally the U.S. dollar
exposure associated with the purchase of new Boeing 737 aircraft
and the U.S. dollar exposure associated with the purchase of jet
fuel.
The Group recognises all derivative instruments as either assets or
liabilities in its consolidated balance sheet and measures them at
fair value. At December 31, 2021, a net asset of €299.5M
(2020 net liability €263M) was recognised on balance sheet in
respect of the Group's jet fuel forward contracts and carbon
credits and a net asset of €275.9M (2020 net asset
€68M) was recognised in respect of its foreign currency
derivative instruments associated with future aircraft
purchases.
In determining the hedge effectiveness of derivative instruments
used to hedge Ryanair's fuel requirements, there is significant
judgement involved in assessing whether the volumes of jet fuel
hedged are still expected to be highly probable forecast
transactions. Specifically, significant judgement is required in
respect of the assumptions related to the timing of the full
removal of flight restrictions imposed by governments relating to
the Covid-19 pandemic, the expected recovery of passenger demand
and the subsequent flight schedules. All of these assumptions
impact upon forecast fuel consumption, and minor changes to these
assumptions could have a significant effect on the assessment of
hedge effectiveness.
In respect of foreign currency hedge effectiveness for future
aircraft purchases, there is a high degree of judgement involved in
assessing whether the future aircraft payments are still considered
highly probable of occurring, and the timing of these future
payments for aircraft. The timing of future payments for aircraft
is dependent on the aircraft manufacturer's ability to meet
forecast aircraft delivery schedules.
As at December 31, 2021 the Group had entered into forward jet fuel
hedging contracts covering approximately 60% of its estimated
requirements for fiscal year 2022 and approximately 65% of its
estimated requirements for fiscal year 2023. The Group believes
these hedges to be effective for hedge accounting
purposes.
Long-lived
assets - Useful lives, residual values and
impairment
At
December 31, 2021, the Group had €8,749.3M of property, plant
and equipment long-lived assets, of which €8,580.4M were
aircraft. In accounting for long-lived assets, the Group must make
estimates about the expected useful lives of the assets, the
expected residual values of the assets, the cost of major airframe
and engine overhaul.
In
determining the useful lives and expected residual values of the
aircraft, and the cost of major airframe and engine overhaul, the
Group has based the estimates on a range of factors and
assumptions, including its own historic experience and past
practices of aircraft disposal and 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 the
current market value of new aircraft, and each aircraft's useful
life is determined to be 23 years. For the 41 new Boeing 737-8200
aircraft delivered during the nine-months ended to December 31,
2021, the Group has determined the estimated useful life to be 23
years and estimated residual value to be 15% of its current market
value upon delivery.
Revisions
to these estimates could be caused by changes to maintenance
programs, changes in utilization 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.
The
Group evaluates, at the end of each reporting period, whether there
is any indication that its long-lived assets may be impaired.
Factors that may indicate potential impairment include, but are not
limited to, significant decrease in the market value of an aircraft
based on observable information, a significant change in an
aircraft's physical condition and operating or cash flow losses
associated with the use 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 credit for the nine-months ended
December 31, 2021 of €89.3M (December 31, 2020: €63.5M)
comprises a current tax credit of €2.1M and a deferred tax
credit of €87.2M primarily relating to the temporary
differences for property, plant and equipment and net operating
losses. This consolidated tax credit is the aggregation of separate
tax charges and tax credits on the profits earned and losses
suffered by each of the Group's operating companies calculated in
accordance with differing tax rules and rates applicable in each
jurisdiction where the Group operates. No significant or unusual
tax charges or credits arose during the period. The effective tax
rate of approximately 39% for the nine-months ended December 31,
2021 (December 31, 2020: approximately 8%) is the result of the mix
of profits and losses incurred by Ryanair's operating subsidiaries
primarily in Ireland, Malta, Poland and the UK.
5.
Share based payments
The terms and conditions of the Group's share-based remuneration
programmes are disclosed in the most recent, published,
consolidated financial statements. The charge of €7.7M in the
nine months ended December 31, 2021 (December 31, 2020:
€3.1M) is the fair value of options granted in prior periods
and a conditional share grant under LTIP 2019, in the current
period, to over 80 managers across the Group (the Executive and
Non-Executive Directors were not included in this LTIP grant). The
charge is recognised within the income statement in accordance with
employee services rendered. During the nine-months ended December
31, 2021, 5.0M ordinary shares were issued at strike prices between
€6.25 and €12.00 per share following the exercise of
vested share options.
6.
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.
7.
Capital commitments
At
December 31, 2021 the Group had an operating fleet of 455 (2020:
428) Boeing 737s and 29 (2020: 29) 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 (135 firm and 75 options). In December 2020, the
Group increased its firm orders from 135 to 210 Boeing 737-8200
aircraft. In the nine-months ended December 31, 2021, the Group
took delivery of 41 of these aircraft and expects to have over 65
Boeing 737-8200s in the Group fleet ahead of peak Summer 2022. The
remaining aircraft are due to be delivered before the end of fiscal
year 2025.
8.
Analysis of operating segment
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 currently comprises four key separate airlines, Buzz,
Lauda, Malta Air and Ryanair DAC. Ryanair DAC and Malta Air are
separate reportable segments as they each exceed the applicable
quantitative thresholds for reporting purposes. Buzz 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/(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 optimize consolidated
financial results.
Reportable segment information is presented as
follows:
Ryanair DAC
Malta Air
Other Airlines
Elimination
Total
Nine-Months Ended
Dec 31,
Dec 31,
Dec 31,
Dec 31,
Dec 31,
2021
2021
2021
2021
2021
€M
€M
€M
€M
€M
Scheduled revenue
2,025.3
-
36.1
-
2,061.4
Ancillary revenue
1,563.4
-
-
-
1,563.4
Inter-segment revenue
511.9
504.5
295.0
(1,311.4)
-
Segment
revenue
4,100.6
504.5
331.1
(1,311.4)
3,624.8
Reportable segment (loss)/profit after income tax
(156.1)
8.9
3.8
-
(143.4)
Other segment information:
Net Finance Expense
65.9
-
2.8
-
68.7
Depreciation
485.6
-
44.2
-
529.8
Additions
994.7
-
3.5
-
998.2
Segment assets
12,865.9
56.9
215.4
-
13,138.2
Segment liabilities
7,548.0
69.7
592.0
-
8,209.7
Ryanair DAC
Malta Air
Other Airlines
Elimination
Total
Nine-Months Ended
Dec 31,
Dec 31,
Dec 31,
Dec 31,
Dec 31,
2020
2020
2020
2020
2020
€M
€M
€M
€M
€M
Scheduled revenue
950.9
-
17.2
-
968.1
Ancillary revenue
549.2
-
0.1
-
549.3
Inter-segment revenue
438.1
346.9
142.1
(927.1)
-
Segment
revenue
1,938.2
346.9
159.4
(927.1)
1,517.4
Reportable segment (loss) after income tax
(589.9)
(10.2)
(131.2)
-
(731.3)
Other segment information:
Net Finance Expense
24.4
-
3.4
-
27.8
Depreciation
389.4
-
50.0
-
439.4
Additions
(438.4)
-
9.2
-
(429.2)
Segment assets
12,090.7
308.9
282.5
-
12,682.1
Segment liabilities
7,028.8
321.7
660.2
-
8,010.7
Ryanair DAC
Malta Air
Other Airlines
Elimination
Total
Quarter Ended
Dec 31,
Dec 31,
Dec 31,
Dec 31,
Dec 31,
2021
2021
2021
2021
2021
€M
€M
€M
€M
€M
Scheduled revenue
783.9
-
4.2
-
788.1
Ancillary revenue
681.8
-
-
-
681.8
Inter-segment revenue
179.3
139.2
110.2
(428.7)
-
Segment
revenue
1,645.0
139.2
114.4
(428.7)
1,469.9
Reportable segment (loss)/profit after income tax
(75.6)
(20.7)
0.5
-
(95.8)
Other segment information:
Net Finance Expense
23.1
-
0.9
-
24.0
Depreciation
178.2
-
15.4
-
193.6
Additions
441.4
-
1.6
-
443.0
Segment assets
12,865.9
56.9
215.4
-
13,138.2
Segment liabilities
7,548.0
69.7
592.0
-
8,209.7
Ryanair DAC
Malta Air
Other Airlines
Elimination
Total
Quarter Ended
Dec 31,
Dec 31,
Dec 31,
Dec 31,
Dec 31,
2020
2020
2020
2020
2020
€M
€M
€M
€M
€M
Scheduled revenue
175.5
-
1.8
-
177.3
Ancillary revenue
163.9
-
-
-
163.9
Inter-segment revenue
142.7
117.2
33.0
(292.9)
-
Segment
revenue
482.1
117.2
34.8
(292.9)
341.2
Reportable segment (loss) after income tax
(272.0)
(5.7)
(43.1)
-
(320.8)
Other segment information:
Net Finance Expense
11.0
-
1.4
-
12.4
Depreciation
125.2
-
17.7
-
142.9
Additions
(523.7)
-
5.2
-
(518.5)
Segment assets
12,090.7
308.9
282.5
-
12,682.1
Segment liabilities
7,028.8
321.7
660.2
-
8,010.7
The following table disaggregates revenue by primary geographical
market. In accordance with IFRS 8 paragraph 13, revenue by country
of origin 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 European countries"
includes all other countries in which the Group has
operations.
Nine-Months Ended
Dec 31, 2021
Nine-Months Ended
Dec 31, 2020
Quarter Ended
Dec 31, 2021
Quarter Ended
Dec 31, 2020
€M
€M
€M
€M
Italy
897.7
393.9
360.5
93.8
Spain
666.4
264.5
258.4
61.9
United Kingdom
408.6
143.6
186.0
46.6
Ireland
159.4
35.3
77.2
13.9
Other European countries
1,492.7
680.1
587.8
125.0
Total revenue
3,624.8
1,517.4
1,469.9
341.2
Ancillary revenues comprise of revenues from non-flight scheduled
operations, in-flight sales and Internet related services.
Non-flight scheduled revenue arises from the sale of priority
boarding, allocated seats, car hire, travel insurance, 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 recognized 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, paragraph 114.
9.
Property, plant and equipment
Acquisitions and disposals
During the nine-months ended December 31, 2021, net capital
additions amounted to €987.3M principally reflecting aircraft
pre-delivery deposits, capitalised maintenance, 41 aircraft
deliveries and supplier reimbursements of €114M.
Assets held for sale
In the nine-months ended December 31, 2021 the Group entered into
an agreement to sell 10 Boeing 737-800NG aircraft for delivery in
fiscal year 2022. 6 of these aircraft were sold in the nine-month
period ended December 31, 2021. The remaining 4 aircraft are
reflected as segment assets within the Ryanair DAC airline at
December 31, 2021 (Note 8).
10.
Government grants and assistance
During
the nine-months to December 31, 2021, many European countries in
which the Ryanair Group operates continued to make available
payroll support schemes. The Ryanair Group utilised a number of
these employment retention schemes to protect jobs within the
Group. These schemes were a mix of short term Covid-19 specific
programmes and long-term schemes linked to social security that
existed pre Covid-19. The total amount of payroll supports received
by the Group under the various schemes amounted to approximately
€59.9M (2020: €66.0M) and are offset against staff
costs in the Consolidated Income Statement.
In
April 2020, the Group raised £600M unsecured debt for general
corporate purposes under the HMT and Bank of England CCFF. The
0.44% interest rate was the prevailing rate for strong BBB rated
companies. This debt was extended in March 2021 for a further 12
months at a 0.46% interest rate. In October 2021 the
Group repaid the £600M HMT and Bank of England CCFF in
full.
There are no unfulfilled conditions attaching to government
assistance at December 31, 2021.
11. 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 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
2021 Annual Report. There have been no changes in our risk
management policies in the year. While there have been no changes
in our risk management policies in the period, the Group has
started using jet fuel call options to manage the risk associated
with rising fuel prices. These options set a maximum price that the
Group will pay for fuel.
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 swap contracts and EUA
contracts: A comparison of
the contracted rate to the market rate for contracts providing a
similar risk profile at December 31, 2021 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
options: The fair value of
aircraft fuel options is determined based on market accepted
valuation techniques, primarily Black-Scholes modelling (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
December 31, 2021, 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 (including credit spreads) at
December 31, 2021 to arrive at a fair value representing the amount
payable to a third party to assume the
obligations.
While there have been improvements in business and economic
circumstances during the quarter ended December 31, 2021, the
future outlook for the business is such that there has been no
material change to the fair values of financial assets and
financial liabilities.
The fair value of financial assets and financial liabilities,
together with the carrying amounts in the condensed consolidated
financial balance sheet, are as follows:
At Dec 31,
At
Dec 31,
At Mar
31,
At Mar
31,
2021
2021
2021
2021
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
Non-current financial assets
€M
€M
€M
€M
Derivative
financial instruments:
- U.S.
dollar currency forward contracts
173.3
173.3
109.4
109.4
- Jet
fuel & carbon derivative forward contracts
23.3
23.3
-
-
-
Interest rate swaps
2.3
2.3
1.9
1.9
198.9
198.9
111.3
111.3
Current financial assets
Derivative
financial instruments:
- U.S.
dollar currency forward contracts
206.0
206.0
99.5
99.5
- GBP
currency swap
-
-
5.4
5.4
- Jet
fuel options
25.3
25.3
-
-
- Jet
fuel & carbon derivative forward contracts
217.4
217.4
-
-
-
Interest rate swaps
1.6
1.6
1.1
1.1
450.3
450.3
106.0
106.0
Trade
receivables*
20.6
18.6
Cash
and cash equivalents*
2,957.6
2,650.7
Financial
asset: cash > 3 months*
-
465.5
Restricted
cash*
22.7
34.1
3,451.2
450.3
3,274.9
106.0
Total financial assets
3,650.1
649.2
3,386.2
217.3
At Dec 31,
At
Dec 31,
At Mar
31,
At Mar
31,
2021
2021
2021
2021
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
Non-current
financial liabilities
€M
€M
€M
€M
Derivative
financial instruments:
- U.S.
dollar currency forward contracts
-
-
6.4
6.4
-
-
6.4
6.4
Non-current
maturities of debt:
-
Long-term debt
960.6
963.5
1,077.5
1,083.2
-
Bonds
3,635.5
3,736.7
2,440.3
2,545.5
4,596.1
4,700.2
3,517.8
3,628.7
Trade
payables
239.6
239.6
179.9
179.9
4,835.7
4,939.8
3,704.1
3,815.0
Current financial liabilities
Derivative
financial instruments:
- Jet
fuel & carbon derivative forward contracts
0.6
0.6
19.8
19.8
- U.S.
dollar currency forward contracts
40.6
40.6
59.4
59.4
41.2
41.2
79.2
79.2
Current
maturities of debt:
-
Short-term debt
159.6
159.6
875.1
875.1
-
Promissory notes
219.9
219.9
-
-
-
Bonds
-
-
850.8
852.6
379.5
379.5
1,725.9
1,727.7
Trade
payables*
663.3
336.0
Accrued
expenses*
975.0
888.2
2,059.0
420.7
3,029.3
1,806.9
Total
financial liabilities
6,894.7
5,360.5
6,733.4
5,621.9
*The fair value of these financial instruments approximate their
carrying values due to the short-term nature of the
instruments.
The
Group issued senior, unsecured bonds for €1.2BN in May 2021.
The bond has a coupon of 0.875% and a maturity date of June 2026.
During the nine-months ended December 31, 2021 the Group repaid the
maturing €850M (2014) Eurobond issued at a coupon of 1.875%
and repaid the £600M HMT and Bank of England CCFF in
full.
During
the nine-months ended December 31, 2021, the Group issued
promissory notes to the value of €220M with maturity dates of
October 2022. The notes were issued in settlement of certain
aircraft trade payables and are non-interest bearing. The carrying
value of the promissory notes is not considered to be materially
different from its fair value.
12.
Shareholders equity and shareholder returns
During the nine-months ended December 31, 2021 5.0M
ordinary shares were issued at a strike price
between €6.25 and €12.00 per share following
the exercise of vested options for total proceeds of €37.6M.
There were no shareholder returns during the nine-months ended
December 31, 2021.
13. Related
party transactions
The Company's related parties comprise 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 nine-months ended
December 31, 2021 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 2021
Annual Report that could have a material effect on the financial
position or performance of the Group in the same
period.
14. Post
balance sheet events
There were no significant post balance sheet events.
[1] CDP
- Carbon Disclosure Project is an independent, non-profit, global
environmental reporting organisation.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.