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Oxford Brookes University

BSc (Hons.) in Applied Accounting

RESEARCH AND ANALYSIS PROJECT

Topic number 8:

The business and financial performance of an


organisation over a three year period

Word count: 6431


Presented by: Mohammad Saad Hassan Khan
ACCA Registration: 1624360
Submission period: 20
MAY 2010.
Research And Analysis Report: Ryanair Holdings PLC

Page 1

List of contents

Page

Introduction

Information Gathered

Use of Analysis techniques and Models

Ryanair: The Company Overview

Financial Analysis

10

Business Analysis

25

Conclusion

28

Appendix 1

30

Appendix 2

32

Appendix 3

35

Appendix 4

39

Skills and Learning Statement

42

Research And Analysis Report: Ryanair Holdings PLC

Page 2

INTRODUCTION

This research report contributes towards the Research and Analysis Project for submission
to the Oxford Brookes University. This research report, in all respects, is prepared in
accordance with the codes and guidelines prescribed by the University and does not breach
confidentiality and anonymity of the organisation(s) involved and the industry being
analysed.

THE TOPIC
Having read all the research topics approved by the University, one of them sounded like a
familiar choice among all and seemed the most interesting. Therefore I chose to work on
The Business and Financial Performance of an Organisation over a three year
period.
The reason I chose this topic was that being an ACCA student I have always been interested
in analysing the published Annual Reports of companies and I took this research work as an
opportunity to exploit my technical and professional skills. The other reason for choosing this
topic was that there was a vast amount of financial and business-related information
available from many different sources.

THE ORGANISATION
For the purpose of this research work I have chosen RYANAIR HOLDINGS PLC. The
reason I chose this organisation was simply because of my familiarity with the airline
industry. Even in the European Airline Industry there was a vast choice of airlines which
could be strategically categorised as:
Scheduled Airlines (Flag carriers)
Charter Airlines
Low Cost Airlines (Budget airlines)
RYANAIR is strategically placed in the Low Cost Airlines industry. To me RYANAIR was the
best choice for this analysis because of its rapid expansion, profitability, the success of it low
cost business model and its capture of the market share Europe-wide. According to the
figures provided by International Air Transport Association (IATA) in 2009, RYANAIR is the
largest airline in terms of annual international passenger numbers. And secondly in terms of
information, taking the fact that RYANAIR is the market leader, I was able to find a vast
amount of published information on this particular airline.

Research And Analysis Report: Ryanair Holdings PLC

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THE OBJECTIVES AND THE APPROACH


As the name suggests, this research project will be focused on the business and financial
analysis of RYANAIR extending over a period of three years. Through this analysis I will be
able to conclude the financial position and performance of RYANAIR and analyse its
business strategy and the industry it operates in. For the purpose of this analysis this report
has been divided into two sections.

(A) FINANCIAL ANALYSIS


To serve this purpose the financial analysis of RYANAIR will be conducted on the
published audited financial statements for the years 2007, 2008 and 2009 under:
1) Trend Analysis
Comparison of present financial ratios with the historic or future ratios to evaluate
whether RYANAIR is financially improving or deteriorating under:
o
o
o
o

Profitability
Liquidity
Gearing
Investor

2) Industry Comparison
Comparison of the financial ratios and market-share of RYANAIR with that of a
competitor in the same industry, EASYJET Airline Company Ltd.

(B) BUSINESS ANALYSIS


And to serve this purpose the following business models and analysis techniques will
be brought into use:
1) Five Forces model
Porters 5-Forces Model will be used to analyse the European airline industry under:
o
o
o
o
o

Threat of new Entrants


Substitute Products
Power of Suppliers
Power of Customers
Industry Competitors

2) SWOT Analysis
Analysing and identifying:
o
o
o
o

Strengths
Weaknesses
Opportunities
Threats

Research And Analysis Report: Ryanair Holdings PLC

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INFORMATION GATHERED

For any research process the information is vital and it is quite a task to gather relevant
information for analysis and evaluation. The nature of the information gathered for an
analysis depends largely upon the purpose. The information sources can be categorised as:
Primary Sources
This is the data collected by the researcher by means of questionnaires, interviews, surveys
etc.
Secondary Sources
This is the data collected by other people but which can be used by the researcher for his
own purpose.

SOURCES USED AND DATA COLLECTION TECHNIQUES

To carry on with this project I decided to take into account only the secondary information
sources to obtain relevant organisation and industry data. The main secondary sources used
are listed below:
o

Annual Reports & Published Accounts


As for the financial analysis I had to gather financial data of the two companies
(RYANAIR and EASYJET) for the years 2007, 2008 and 2009. This contained the
annual audited accounts, the financial and business overview of the companies and
the summary of the business activities. I obtained these reports from the investor
relations websites of the respective companies. This secondary data was easiest to
gather as it was publicly available and could be used for the purpose of this research.

European Low Fares Airline Association (ELFAA)


This body represents the budget airlines operating in the Europe. Their website
contained detailed statistics of the low-cost airline industry. Their published statistics
served as a means to reconcile the Annual Reports of the companies operating in the
industry. Their publications were accessed online.

International Air Transport Association (IATA)


IATA is the global trade organisation of the air transport industry in the world. It is a
representative body of about 93% of the scheduled airlines operating in the world. It
served as a means of preliminary research into the airline industry via online access.

Research And Analysis Report: Ryanair Holdings PLC

Page 5

Civil Aviation Authority (British and Irish)


CAA is the regulatory authority of all the aspects of aviation. This was a good source
of overall regulatory framework observed by the airlines. This was again accessed
online and their publications which were free to be used and downloaded were
considered at different stages of this analysis.

Articles and Online News Archives


The BBC, The Financial Times and The Economist are only a few to mention under
this category. Their articles and news archives were a great means of obtaining
financial and business news. These again were all online accesses and the data
collected was of vital use.

Other Relevant Secondary Sources


This contained the online access to the websites which were used for the
understanding of the business models and books used to grasp better knowledge of
the financial indicators. Also included in this was the material accessed to get a
thorough understanding of the key purposes of this RAP and acquire technical
business report writing skills. The best sources were the Wikipedia, Google and other
search engines.

LIMITATIONS AND ETHICAL ISSUES

During the process of information gathering, I came across many sources that were subject
to copyright and that material could not be used or copied without the express consent of the
organisation involved. This proved to be a barrier to the analysis as I decided not to use any
of the copyrighted material. Therefore in this project, all of the data gathered is free to use
and is publicly available. All the data is from the secondary sources and no primary sources
were used and so no other ethical issues arose during the data collection process. During
the process there was no access to confidential information, data was free from financial
inducements and the research complied fully with the ethical standards published by the
University.

Research And Analysis Report: Ryanair Holdings PLC

Page 6

USE OF ANALYSIS TECHNIQUES & MODELS

In this section the underlying principles of the financial techniques and business analysis
models have been elaborated. It is important to highlight the issues and the body of
knowledge that underpins each concept and the principles followed throughout this report.
These are dealt as under:

(A) FINANCIAL ANALYSIS


Method used by the stakeholders to evaluate past, current and projected condition
and performance of the firm and ratio analysis is the most common method.
(Allbusiness.com Inc., 2010)

The two types of financial analysis techniques listed under the approach heading are
taken as standard and are self explanatory. They are used as indicators and can be
calculated from the information available from the financial statements. There are
many uses of the financial ratios but these uses come with certain limitations which
are as follows:
o
o
o
o
o

There is no absolute definition of calculating a ratio


Ratios can be subject to manipulation
Ratios can vary according to the accounting policies adapted
Only takes into account the financial numbers ignoring the more important
non-financial indicators that affect the companys performance
Does not take into account the time value of money

(B) BUSINESS ANALYSIS


Investigation into the operation of the business to expose the causes behind the
results achieved, and the effects of those results on the business.
(WebFinance inc., 2010)

To carry on a business analysis, I came across a number of techniques and models.


For this purpose I decided to use the two models mentioned earlier. Here I take the
opportunity to further elaborate each of the models used for this research.

Research And Analysis Report: Ryanair Holdings PLC

Page 7

1) Five Forces model


This is a business analysis model, one of the most popular works of the famous
Michael E. Porter of the Harvard Business School, used for the development of
strategy and the analysis of the industry in which an organisation operates.
Porters five forces are used to determine the intensity of the competition in the
market and the attractiveness of the industry.
This model assists an organisation in:
o
o
o
o

Evaluating the dynamics in an industry


Establishing competitive advantage
Strategic decision making
Analysing the outcomes of the strategy
(The Management Centre, 2006)

2) SWOT Analysis

SWOT is a framework used to generate strategic alternatives from the analysis of


situation of a firm. The strengths and weaknesses (Internal Analysis) are
compared to opportunities and threats (External Analysis).
(Learned Edmund P. et al. 1969)

This is one of the easiest to understand and most effective of the strategic
analysis frameworks.

Research And Analysis Report: Ryanair Holdings PLC

Page 8

RYANAIR: THE COMPANY OVERVIEW


THE FACTS
o
o
o
o
o
o
o

RYANAIR is a low cost airline having its headquarter at the Dublin Airport, Ireland.
RYANAIR is floated on the Dublin and the NASDAQ Stock Exchanges.
It serves over 150 destinations in 26 countries and operates over 1000+ routes.
RYANAIR has a fleet size of 210 aircrafts (233 as of March 2010).
RYANAIR serves routes across Europe and has a well-established market share
particularly in the UK and in the EU.
It continues to operate from over 40 bases Europe-wide and has a long history of
growth and rapid expansion after the deregulation of the European airspace in 1997.
Until the end of December 2009, RYANAIR had captured 40.18% of the market
share of the total European passengers making it a market leader in its strategic
group (i.e. 65.3 million passengers travelled with RYANAIR out of the total 162.5
million European passengers that travelled on low cost airlines.)
(ELFAA, 2009)

In terms of international passengers carried per year, RYANAIR is the largest airline
of the world.
(IATA, 2009)
(Ryanair PLC, 2009)

THE BUSINESS STRATEGY


o

In its early years, RYANAIR operated as a secondary carrier in Ireland but later as a
result of the deregulation of the European airspace in 1990s it diversified into the
Low-Cost Carriers Industry.

RYANAIR has a cost-based competition business strategy. This low-cost airline


business model has been explicitly adapted from the USAs Southwest Airline.
This business model has always kept RYANAIR in direct competition with other LowCost Airlines and Flag-carriers such as EasyJet, AerLingus, and British Airways etc.
(Bamber et al, 2009)

RYANAIR has a no-frills low-cost strategy and has a standard fleet, provides just
the very basic services and charges its customers for whatever it can, saving
company the costs and generating revenues.
(Osborne A., 2009)

Research And Analysis Report: Ryanair Holdings PLC

Page 9

Part A: FINANCIAL ANALYSIS


(1)

Trend Analysis

This is the comparison of the Financial Ratios of RYANAIR for 2007, 2008 and 2009. Please
see Appendix 2 for calculations and Appendix 3 for the Financial Statements.

PROFITABILITY RATIOS
It measures a firms use of its assets and its cost control to generate an acceptable
return.
(Groppelli, A. et al.2000)

Profitability Ratios
Percent (%)

25.0
20.0
15.0
10.0
5.0
0.0

2009

2008

2007

Operating Margin

3.1

19.8

21.1

Net Profit Margin

3.6

17.7

17.9

Return on Capital
Employed

1.8

11.3

10.3

Research And Analysis Report: Ryanair Holdings PLC

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Operating Profit Margin


2007
o
o

At 21.1%, the Operating margin was highest this year, 1% lower compared to 2006.
There was an overall 32% increase in sales.
Scheduled passenger revenue was up by 31% to 1874.8m reflecting a 7%
increase in average fare to 44.
Ancillary revenue increased by 44% due to growth in on-board sales and nonflight scheduled revenues.

There was an increase of 33% in total operating expenses partially due to:
The growth of the airline.
Other contributing factors were higher fuel prices which rose by 50% due to
28% increase in cost per gallon
Rising route and airport charges at some sectors which increased by 21%
and 27% respectively.

The total operating profits were up 26% to 471.7m.

2008
o

Decreased by 1.3% to 19.8% inconsistent with the growth of the airline.

Total revenues increased by 21% to 2713.8m.


Scheduled passenger revenue increased by 19% with 1% decrease in fares
and a 20% increase in passengers due to the launch of 201 new routes this
year.
Ancillary revenue increased by 35% to 488.1m as compared to 362.1m last
year.

Total operating expenses increased by 23%, excluding the 10.6m Accelerated


depreciation to 2166.1m. This was due to:
Higher staff costs, up by 26% to 165.3m due to a 32% increase in
employees.
23% increase in fleet size resulting in higher depreciation charge.
Higher lease cost due to addition of 25 leased aircrafts.
Route and airport charges increase by 30% and 45% respectively due to
addition of new routes, rising passengers and doubling of the charge at a few
bases and airports.

Research And Analysis Report: Ryanair Holdings PLC

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Fuel cost rose by 14% to 793.1m. This was due to the increase in hours
flown. This was offset by fuel hedging and making aircrafts fuel efficient. Fuel
accounts for 37% of the total operating expenses.
o

Total operating profits increased by 14% to 537.1m.

2009
o
o

There was a steep decline of 16.7% compared to the previous year.


Total revenues increased by 8% to 2942m which was inconsistent with the 15%
actual increase in passengers.
Scheduled passenger revenues increased by 5.3%, lower than the 19%
growth the previous year. There was an 8% decrease in average fare (i.e.
40)
Ancillary revenues increased by 22.5%, an increase of about 110m.

There was an overall increase of 30.9% in the total operating costs. This was due to
the following:
Increase in the number of passenger and sectors flown.
There was a 21% increase in the number of employees which was partially
offset by a decrease in the average rates of pay.
The cost of fuel increased by 59% from 791m in 2008 compared to 1257m
in 2009.
An increase of 11% in the fleet size.
45.6% rise in depreciation and amortisation due to additional aircrafts.
A 10.5% increase in route charges and 11.9% increase in airport charges was
another cause.

Total operating profit decreased 82.7% to 92.6m.

Net Profit Margin


2007
o
o
o
o

At 17.9%, it was again the highest this year.


Net profit was 42% higher amounting to 435.6m.
Adjusted net profit increased by 33% to 401.4m.
Finance income was higher due to rise in cash balances and rising interest rates and
the Finance expense was up 12%, again due to rising payable interest rates.

Research And Analysis Report: Ryanair Holdings PLC

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2008
o
o
o
o
o

Showed a decline of 0.2%.


Net profit was 10% lower than previously.
The adjusted net profit showed an increase of 20% and amounted to 480.9m.
Finance income increased by 33% due to higher deposit rates but partially offset by
lower cash balances.
Finance cost increased by about 17% due to drawing of new debts and higher rates
of interest.

2009
o
o
o
o
o

Fall of 14% reported this year, bringing the net profit margin to 3.6% of sales
(excluding exceptional items).
From 2008s profit for the year of 390.7m, a 143% decline was reported; making it a
loss for the year 2009 of 169.2m.
Adjusted net profit decreased by 78% to 104.9m from 480.9m.
Finance income fell 10.9% due to lower deposit rates, offset by higher cash
balances.
Finance expense increased 34.5% to 130.5m due to increase in debts.

Return on Capital Employed

2007
o
o
o

ROCE was 10.3% which was about 0.4% higher than 2006.
Operating profit increased by 28%
The shareholders equity increased by 547.8m, this increase can be justified by:
Adjusted profits of 401.4m transferred to retained earnings.
11.2m exercised as share options.
And 99m merely because of the treatment of items according to IFRS.

o
o

The non-current liabilities increased by 184.3m (net of payments).


The increase in equity and debt has been largely offset by the rising income.

2008
o

This was 11.3%, 1% higher than the previous year.

There was a 14% rise in operating profits this year and the airline showing stable
growth and returns.

Shareholders equity decreased by 37.6m reflecting the following:

Research And Analysis Report: Ryanair Holdings PLC

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390.7m transferred to retained earnings as profit for the year.


8.4m exercised as share options.
And a reduction of 436.7m due to IFRS treatment of specific items.
o

There was a net increase of 404.4m in the long-term debt.

2009
o

There was a decline of 9.5% in ROCE this year bringing the 11.3% return in 2008
to1.8% in 2009.

This is mainly attributable to a lower operating profit this year due to rapid increase in
operating costs of the business.

The operating profit was 16.7% lower than 2008.

There was a 3% fall in the shareholders equity mainly because of the reported loss
for the year of 169.2m transferred to retained earnings.

Long-term debt increased by 14% mainly due to debts drawn to finance the purchase
the non-current assets.

LIQUIDITY RATIOS

These ratios measure the ability of a company to meet its short-term debt. These indicate
the short-term financial stability of the company.

Liquidity Ratios
2.5

Times

2.0
1.5
1.0
0.5
0.0

2009

2008

2007

Current Ratio

1.8

1.5

2.1

Quick Ratio

1.8

1.5

2.1

Research And Analysis Report: Ryanair Holdings PLC

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Current Ratio
It is the rule of thumb that the current ratio be at least 2.0 times, meaning that a company
should have current assets that are twice the current liabilities.

2007
o

A ratio of 2.1 times suggests that the current assets were twice the amount of current
liabilities. Although a drop of 12.5% as compared to 2006, yet it was stable.

Total current assets increased by 300.7m (14.6%) to 2354.3m in 2007, this change
was mainly due to:
164% increase in Other Assets which includes prepayments, interest
receivable etc.
A 22% decrease in Trade Receivables was reported.
There was a 180% increase in Derivative Financial Instruments consisting of
cash deposits, fuel derivatives and interest rate swaps.
There was a 6.5 %( 93m) decrease in cash.

There was a 32% decrease in current liabilities. This was due to:
31% (i.e. 24.5m) decrease in trade payables.
Accruals and other liabilities increased by 237m (41.6).
There was a 100% increase in the Derivative financial instruments.
Current tax rose by about 5m (33%) in 2007.

2008
o

In 2008, the current ratio decreased by 28.5% to 1.5 times. This is a continued trend
from the year 2006/2007 when the ratio decreased 0.3 times. If such a trend
continues, then the company could be in severe liquidity problems.

Total current assets decreased by 32.8m to 2387.1m, a change of 1.0% which


could be linked to:
Significant rise (118%) in Other Assets of 92m.
A decrease of about 42m in derivative financial instruments and a 33.6m
rise in other derivatives offsets each other.
There was an increase on 124m in cash balances

Current liabilities increased by 439m, a rise of 39%. This was mainly due to the
following:
Trade payables increased by 136% to 129.3m.

Research And Analysis Report: Ryanair Holdings PLC

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A 105%, about 188m, rise in current maturities. And 85.6% (85.6m) rise in
financial instruments. These were the borrowings falling within one year.
These were the main reasons for a falling current ratio.
o

A drop in the ratio of current assets/current liabilities concludes that RYANAIR had to
borrow more and more to finance its sales growth of 21%.

2009
o

Current ratio in 2009 increased by 20% to 1.8 times. Although the ratio was lower
than in 2007 (2.1 times), RYANAIR showed signs of financial stability.

There was a 7% rise (156m) in the total current assets which is attributable to:
Increase in cash balances of 112m (8% change).
Derivative financial instruments increased by 119.7m. This increase was due
to the gains on cash-flow hedging instruments.

The total current liabilities decreased by 11.4% to 1379m i.e. a change of 178m.
This change was mainly due to:
A 1% decline of 13.6m in Accrued expenses and a 3% decrease in Trade
payables.
A decrease of 164m in current maturities of debt.

A rise in the current ratio this year shows a stable financial position of RYANAIR.

Quick Ratio
A quick ratio is similar to the current ratio but the current assets in the numerator do not
include inventories in the calculation. RYANAIR carried an average inventory of 2.2m in
each of the three years. This amount is relatively immaterial to the balance sheet and
therefore does not bring any change to the quick ratio.
Thus, an analysis of the quick ratio will be exactly same as of the current ratio.

Research And Analysis Report: Ryanair Holdings PLC

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GEARING RATIOS

This is a measure of financial risk incorporated in a company.


Gearing is a measure of financial leverage, demonstrating the degree to which a firm's
activities are funded by owner's funds versus creditor's funds.
(Investopedia ULC, 2010)

Debt to Equity
Percent (%)

150.0
100.0
50.0
0.0
Debt to Equity

2009

2008

2007

106.5

90.6

80.1

Times

Interest Cover
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Interest Cover

2009

2008

2007

0.7

5.5

5.7

Interest Cover
It is a measure to determine the ability of a company to meet its interest payments on its
debts.

2007
o
o
o
o
o

There was a12% rise in the ratio in 2007 as compared to 2006 and the interest cover
ratio was 5.7 times.
This was due to 26% rise in operating profits to 471.7m.
A 100% increase in lease financing to 183.1m.
To finance the aircrafts and simulators, the company drew 185m (net of
repayments) in loans.
Bank loans increased by 12% to 82.4m.

Research And Analysis Report: Ryanair Holdings PLC

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Due to the above, the total interest charge increased by 12.2% to 82.8m.

2008
o
o
o
o
o

In 2008, the ratio decreased by 3.5% to 5.5 times.


The total operating profits increased by 14% to 537m.
Loans raised to finance the assets increased by 22% (404m).
There was a 72% increase in finance leases to 316m.
As a result the total annual interest charge to the income statement increased by
17%, more than the increase in operating profits, thus decreasing the cover ratio.

2009
o
o
o
o
o

This year, interest cover ratio decreased drastically by 87% to 0.7 times.
The operating profit was in steep decline and reduced by 82.7% to 92.6m. This was
mainly due to some exceptional items and rising fuel prices.
Finance lease liabilities increased by 32% to 435m.
Loans raised to finance the assets increased 5.8%, a change of 132m.
Therefore the total interest charge increased 34% to 130.5m.

Debt to Equity Ratio


The debt to equity ratio indicates the relative proportion of shareholders equity and debt
used to finance the companys assets.
(Peterson, 1999)

2007
o

o
o

The debt to equity ratio was 80.1% in 2007, indicating that the debt was 80.1% of the
total shareholders equity. This is a decrease of 11.2% compared to the previous
year.
The total non-current debt increased by 13% to 2033.7m. (The reasons of its
increase have been outlined in the Interest Cover ratio of the same year).
The total shareholders equity increased by 27.5% to 2539.7m due to:
The share capital and premium accounts increased by 1.8%. This was due to
the issue of new ordinary shares and the exercise of the share-options.
The change in Other Reserves was due to the changes in accounting
policies (adoption of IFRS in the prior year).
The remaining increase was in the retained earnings i.e. profits for the year.

Research And Analysis Report: Ryanair Holdings PLC

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2008
o
o
o

The D/E ratio increased by 13% to 90.6% this year, reflecting an increase in the
financial risk to the company.
The total non-current debt increased by 12% to 2268.2m.
Shareholders equity decreased this year by 1.0% to 2502.2m. This decrease was
due to the net effect of:
The issue of 3.2m new shares and the cancellation of 59.5m shares relating
to a share buyback.
The change in reserves was due to the net effect of the addition of the profit
for the year to retained earnings and a loss on the fair value of available for
sale financial assets.

2009
o

o
o

This year the D/E ratio increased 17.5% to 106.5% as the total non-current debt of
RYANAIR was more than the shareholders equity. This year the company was very
highly geared representing a very high financial risk.
The total non-current debt increased by 14% to 2583.6m. (Reasons outlined in the
Interest Cover ratio).
The shareholders equity decreased by 3% due to the effect of the following:
The issue of 0.7m new shares and the cancellation of 18.1m shares through
buyback.
Losses of 169.2m suffered during the year, reducing the retained earnings.
Other Reserve changed due to the gains on the fair valuation of financial
assets, i.e. the impairment of investment in AerLingus.

Research And Analysis Report: Ryanair Holdings PLC

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INVESTMENT RATIOS

Earnings per Share (Basic)


EPS is an indicator of a companys profitability. It is the portion of a firms profit allocated to
each outstanding ordinary share.
(Investopedia ULC, 2010)

Euro Cents

Basic Earnings per Share


40
30
20
10
0
-10
-20
Basic Earnings per
Share

2007

2008

2009

28.2

25.84

-11.44

2007
o
o
o

EPS increased by 41% to 28.2 Euro cents.


Net profits increased by 42% to 435.6m.
Ordinary shares increased by 0.7%

2008
o
o
o

A decrease of 8.4% dropped the EPS to 25.84 Euro cents in 2008.


This was due to a 10% fall in the profits for the year.
And a decrease of 2.1% in the no. of ordinary shares.

2009
o
o
o

EPS decreased by 144% to -11.44 Euro cents this year.


A decrease of 143% in the net profits this year (a loss of 169.2m) led to the
disastrous fall in the EPS.
And a further 2.2% decrease in the ordinary shares.

Research And Analysis Report: Ryanair Holdings PLC

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Price-Earnings Ratio
It is the valuation of the companys share price compared to its per-share earnings.
(Investopedia ULC, 2010)

P/E Ratio
40.0
Times

20.0
0.0
-20.0
-40.0
P/E Ratio

2007

2008

2009

20.7

10.8

-25.3

2007
o

P/E ratio increased by 5.6% to 20.7 times, this was due to:
A 48% (1.91) increase in the share price of RYANAIR in 2007.
Increased EPS by 41% to 28.2 Euro cents.

2008
o

The P/E ratio decreased by 48% to 10.8 times, due to:


A fall of 3.03 (52% change) in the share prices.
And a decrease of 8.4% in the EPS.

2009
o

A fall of 334% was recorded in the P/E ratio this year, due to:
A 144% decrease in the EPS to -11.44 Euro cents this year.
Although the share-price went up by 9.0 Euro cents (a 3% rise), it could not
accommodate the heavy fall in the EPS and therefore a falling P/E ratio.

Dividend per Share


Since the incorporation, it is the policy of RYANAIR that it does not pay or intend to pay or
declare any dividends to the holders of its ordinary shares. Such a dividend policy is
formulated by the directors due to the capital intensive nature of the business and its growth
prospects.
Research And Analysis Report: Ryanair Holdings PLC

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(2)

Industry Comparison

This is the comparison of the financial ratios of RYANAIR with that of its biggest
competitor EASYJET, for the financial year 2009.

Comparison of Market-Share
In the year 2009, the European Low-Cost Airline Industry showed a modest growth of 8.7%
in passenger numbers. An analysis by passenger numbers and market share can be done
as under:

Passengers (millions)

EU LCC Industry Passenger Numbers


(2009)
70
60
50
40
30
20
10
0
easyJet

Norwegi
an

Ryanair

vueling

Wizz Air

Others

46.1

10.8

65.3

8.2

7.8

24.3

PASSENGERS

Market Share (2009)


15%

easyJet
28%

5%

Norwegian
Ryanair

5%

vueling
7%
40%

Wizz Air
Others

(ELFAA, 2009)
(ELFAA, 2008)

Research And Analysis Report: Ryanair Holdings PLC

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As compared to 2008, RYANAIRs EU market-share has increased by 3.6% to 40% whereas


EasyJets share decreased by 6% to 28% in 2009. This is a clear indicator that RYANAIR
has outperformed EasyJet and will remain the dominant firm in the European air-space.
Comparison of Financial Ratios
The key financial ratios of the two companies are as under:
RATIO

RYANAIR

EASYJET

2009

2009

3.1
3.6
1.8

2.3
2.3
2.3

1.8
1.8

1.4
1.4

0.7
106.5

2.2
99.7

11.44

18.20

PROFITABILITY RATIOS
Operating Margin (%)
Net Profit Margin (%)
Return on Capital Employed (%)
LIQUIDITY RATIOS
Current Ratio (Times)
Quick Ratio (Times)
GEARING RATIOS
Interest Cover (Times)
Debt to Equity (%)
INVESTOR RATIOS
Basic Earnings per Share ( Cents)
Basic Earnings per Share( Pence)
P/E Ratio

25.26

16.62
24.98

SUPPLEMENTARY INFORMATION

no of shares 31st Mar (in '000)


no of shares 30th Sep

1,478,472
-

price per share 31st Mar ( Cents)

289.00

price per share 30th Sep ( Pence)

Research And Analysis Report: Ryanair Holdings PLC

428,300,000
415.2
379.2

Page 23

Percent (%)

4.0
3.0
2.0
RYANAIR

1.0

EASYJET

0.0
Operating Margin Net Profit Margin Return on Capital
(%)
(%)
Employed (%)
Comparison of Profitability Ratios

In 2009, although there was severe loss of profitability for RYANAIR yet its profit margins
were higher than that of EasyJet. This indicates RYANAIRs better cost control techniques
such as fuel hedging, interest rate swaps and a 3% cut down on other related costs.
EasyJets revenue increased by 12.9% as compared to 8% of RYANAIRs which was due to
lowering of average fares by 8%, but this was in-line with the industry growth of 8.7%.
RYANAIRs financial risk in 2009 was more than that of EasyJet as it was financed more by
the non-current debts than equity. This is a very high-risk capital structure adopted by
RYANAIR and is primarily due to the capital intensive nature of the industry. Investors may
perceive RYANAIR a high-risk investment as the Interest Cover is relatively low.

108.0

20.00

106.0

15.00

104.0

10.00

102.0

5.00

RYANAIR
EASYJET

100.0

Cents

Percent (%)

RYANAIRs EPS fell by 144% while EasyJet sustained the downturn with only a 14.6% drop
avoiding a loss this year. RYANAIRs loss was due to heavy losses on investments which
can be treated as exceptional and therefore the company has very bright future prospects for
investors taking in view its market dominance, profitability and growth potential. Through this
comparison we can conclude that RYANAIR is a relatively high-risk investment with lower
returns and its shareholders suffering capital losses.

RYANAIR

98.0

-5.00

96.0

-10.00
Debt to Equity
(%)

EASYJET

Basic Earnings
per Share (
Cents)

-15.00

Comparison of Financial Gearing

Research And Analysis Report: Ryanair Holdings PLC

Comparison of Basic EPS

Page 24

Part B: BUSINESS ANALYSIS

Porters Five Forces model


The nature and degree of competition in an industry hinge on five forces: the threat of
new entrants, the bargaining power of customers, the bargaining power of suppliers, the
threat of substitute products or services [where applicable), and the jockeying among
current contestants.
(Porter, 1979, p.137)

The analysis of the EU Airline industry is as follows:

1) Threat of new entrants


This makes the industry less attractive for existing firms. For RYANAIR, this threat is
moderate.
o
o
o
o
o

European airspace is de-regulated and air lines can fly freely among the EU
countries, eliminating any political constraints.
The industry requires very high capital-injection which acts as a high barrier.
Airlines already operating and the new-comers have to seek authorisations from the
Civil Aviation Authorities.
Availability of landing rights and slots at airports also acts as a barrier to entry.
New entrants have to cope with immediate price-wars with existing firms who have
already experienced the Experience Curve.

2) Power of Customers
The customers of RYANAIR are powerful because:
o
o
o
o

They are price-sensitive to the fares.


There are no associated switching costs.
Power of travel agents has been eliminated.
The customers lack loyalty in no-frills airlines and are attracted only to low prices.

3) Power of Suppliers
The suppliers bargaining powers were moderate because:

Research And Analysis Report: Ryanair Holdings PLC

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o
o
o
o
o

The industry is served only with two main aircraft suppliers, Boeing and Airbus, who
are rivals themselves.
Boeing is the main supplier to RYANAIR and there are very high switching costs.
RYANAIR only uses secondary airports that are relatively low in power.
There is no control over fuel suppliers as it is an international market issue.
The low cost business model needs very high negotiations with suppliers.

4) Threat of Substitutes
The substitute products/services threat was moderate due to:
o
o
o

Other means of travel in the Europe, e.g. Eurostar, Ferries, by road etc.
Lack of loyalty in customers and no switching costs.
RYANAIR calls only to secondary airports which may increase the threat as
customers may use alternate transport.

5) Industry Competitors
o
o
o
o

The market is very competitive with different airlines operating on the same
segments.
There was growth in customer numbers, indicating very high competitive
environment.
The competitors imitate the factors of competitive advantage to a firm.
But having the highest market-share, RYANAIR remained dominant throughout.

Strength, Weaknesses, Opportunities and Threats (SWOT)


STRENGHTS
o
o

Through aggressive pricing and marketing strategy, RYANAIR is a renowned brand


name.
Reputation of Europes largest carrier with the highest numbers of:

o
o
o

Daily flights, routes and destinations


Passengers
Permanent employees
Aircrafts

Tendency to decrease costs through hedging of risks and lowering fares and
providing customers with value-for-money.
All online bookings and being most efficient in terms of punctuality, lost baggage etc.
Creative reductions on costs.

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o
o

A uniform Boeing 737 fleet with high seat-density, high load factor, lower turn-around
times and lower training and maintenance costs.
A non-unionised labour force with lowest rates of pay in the industry.

WEAKNESSES
o
o
o
o
o
o
o
o

Aggressive implementation of low-cost business model has led to unhappy


customers with no loyalty to the airline.
Issues of staff morale and loyalty as RYANAIR have the lowest pay rates and the
employment contract includes the non-unionisation clause.
Negative publicity through press which leads to a longer-term disadvantage.
Allegations of controversial and misleading advertisements by the regulators.
The low-cost business model has made RYANAIR to be very sensitive as all the
costs and savings are transferred directly to the customers.
Use of secondary airports which are, in most cases, far from the cities they actually
serve.
Very poor customer service, on the ground and even on-board the flight.
Sensitivity to governments regulations over passenger air duty.

OPPORTUNITIES
o
o
o
o

Orders of new aircrafts reflect tremendous growth potential of the airline and can be
seen as an opportunity.
Being a dominant firm, RYANAIR still has potential to capture more of the European
market-share.
Launch of long-haul routes in 2014 with a complete diversification towards
Differentiation rather than Cost-based can prove to be very fruitful for RYANAIR.
The current and continuing economic downturn has been good for the low-cost
carriers profitability.

THREATS
o
o
o
o
o
o
o

Rising fuel prices will adversely affect the companys profits.


Customers are becoming more price-sensitive.
There has been an increased competition with airlines directly targeting each other.
Airport handling and other charges are rising significantly.
Any adverse changes in the government regulations over passenger duty, tax and
other matters may have severe consequences for the airline.
Price wars with immediate competitors continue and the intensity of the competition
keeps on rising.
A ruling against RYANAIR by the Competition Regulators over the AerLingus takeover has limited the growth of airline through acquisition.
(Ryanair PLC, 2008)
(Ryanair PLC, 2009)

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CONCLUSION
The European airline industry is very dynamic and is growing at a moderate pace.
RYANAIRs current business strategy based on the low-cost operating model has been
adapted from the Southwest Airline Company (USA) and since the early 1990s, it has been
aggressively implemented. And as a result of this successful implementation of the low-cost
business model, RYANAIR has emerged to be the largest airline in Europe with
achievements such as the best in punctuality, Europe coverage, traffic growth, highest
market capitalisation (5.3bn until May 2009), lowest average fares and highest number of
international passengers carried are just to name a few. RYANAIR is currently the dominant
firm in the European industry and If the current growth rate in the number of passengers
continue, then in a few years time RYANAIR will probably face a monopoly situation.

FINANCIALS

RYANAIR has a history of growth in profitability and records an annual increase in the
amount of assets held, thus a strong balance sheet. But at this point it should be noted that
the future operating results of the company are dependent on the following factors:

Passenger volume
Fuel prices
Competitive pricing
Seasonal fluctuations
Availability of finance
Relations with suppliers
Availability of airports (for growth)
Economic and political conditions
Terrorist threats
(Ryanair PLC, 2009)

As far as the financial position and past performance of the company is concerned, from
2007 through to 2009, RYANAIRs total operating revenues (scheduled and ancillary) has
been increasing (2007: +32%, 2008: +21%, and 2009: +8%). This increase is not in line with
the rising number of annual passengers or even the rate of decrease in the average fares.
Implementing the low-cost business model, RYANAIR tends to lower its fares to make itself
attractive to the price sensitive customer which explains the falling scheduled revenues. But
a significant proportion of the revenues are attributable to Ancillary Revenues generated
from non-scheduled services, in-flight sales of beverages, foods and merchandise etc.
RYANAIRs reliance on such revenues is vital and its slowing growth rate (2007: + 40%,
2008: +35% and 2009: +22%) could be a factor for the airline to place its focus on.

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The adjusted net profit figures (excluding exceptional items such as accounting for tax
provisions, accelerated depreciations, investment fair value write-offs etc.) showed growth in
2007 and 2008, but in 2009, due to the rise in fuel costs (a 59% total increase) and other
costs led RYANAIR to record a loss on operating activities affecting its Earnings per share
and ultimately reducing its share prices.
Such a performance, as compared to another firm operating in the same industry and faced
with the same business environment, is almost in line with the industry averages as the
financial performance and position of RYANAIR Holdings PLC was in many aspects very
similar to those of EASYJET Airline Company Ltd. Such a comparison indicated that
RYANAIR, as compared to EasyJet, was more profitable due to economies of scale leading
to lower unit costs but the investment in EasyJet showed higher rates of return, lower
associated financial risk, better longer-term solvency and rewarded its shareholders with
higher capital gains.

BUSINESS

The Global Airline Industry in general and the European Low-cost Airline Industry in
particular will continue to remain attractive for the firms already operating in it or other firms
trying to enter it through market/product diversification. The analysis of RYANAIR reflected
its strong dominance in the EU market and how it enjoyed its strategic position in such a
competitive environment where there are many competitors.
The competitive advantage to RYANAIR is its recognition (brand name), its economies of
scale due to its being the largest international carrier, and its negotiation powers due to its
relative size in the industry. Most of the Porters Five Forces remained in favour of
RYANAIR as it enjoys a near monopoly market in Europe and has potential to cope with
each of the five forces of competition in a positive way reflecting its current and very
successful low-cost business strategy.
Since the early 1990s, when RYANAIR was re-structured strategically (to a low-cost nofrills airline) by the current CEO Michael OLeary, the airline has continued to grow from a
very small scale operation to a very large network serving across 26+ countries with 1000+
routes. If RYANAIR continues to grow as planned, exploits its strengths, overcomes its
weaknesses and take full advantage of the opportunities, its success will be inevitable.

End of Report.
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APPENDIX 1: List of References

Allbusiness.com Inc. (2010) www.allbusiness.com [Online]. Allbusinedd.com Inc.


Retrieved from: http://www.allbusiness.com/glossaries/financial-statementanalysis/4950854-1.html [Accessed 8 May 2010]
Bamber, G.J., Gittell, J.H., Kochan, T.A. & von Nordenflytch, A. (2009) Up In the Air: How
Airlines Can Improve Performance by Engaging their Employees. Ithaca: Cornell University
Press.
EasyJet Airline Company Ltd. (2009) Annual report and Accounts 2009 [Online]. EasyJet
Ltd. Retrieved from: http://corporate.easyjet.com/investors/reports-and-accounts.aspx
[Accessed 1 May 2010]
EasyJet Airline Company Ltd. (2008) Annual report and Accounts 2008 [Online]. EasyJet
Ltd. Retrieved from: http://corporate.easyjet.com/investors/reports-and-accounts.aspx
[Accessed 1 May 2010]
EasyJet Airline Company Ltd. (2007) Annual report and Accounts 2007 [Online]. EasyJet
Ltd. Retrieved from: http://corporate.easyjet.com/investors/reports-and-accounts.aspx
[Accessed 1 May 2010]
European Low Fares Airline Association (2009) Members Statistics December 2009
[Online]. European Low Fares Airline Association. Retrieved from:
http://www.elfaa.com/statistics.htm [Accessed 30 Apr 2010]
European Low Fares Airline Association (2008) Members Statistics December 2008
[Online]. European Low Fares Airline Association. Retrieved from:
http://www.elfaa.com/statistics.htm [Accessed 30 Apr 2010]
European Low Fares Airline Association (2007) Members Statistics December 2007
[Online]. European Low Fares Airline Association. Retrieved from:
http://www.elfaa.com/statistics.htm [Accessed 30 Apr 2010]
Groppelli, Angelico A.; Ehsan Nikbakht (2000). Finance, 4th ed. Canada: Barron's
Educational Series, Inc. [Online] Barron's Educational Series. Retrieved from:
http://books.google.co.uk/books?id=Fjue-1y4XgC&printsec=frontcover&dq=ISBN+0764112759.&source=bl&ots=npbuzbEJkO&sig=rvTUsji
6fCw1NkpuWcvpkSqRNNo&hl=en&ei=MjvxS6V7g_n5Bte8hc0J&sa=X&oi=book_result&ct=r
esult&resnum=1&ved=0CB0Q6AEwAA#v=onepage&q&f=false [Accessed 12 May 2010]
International Air Transport Association, IATA (2009) World Air Transport Statistic.53rd
Edition. Montreal: IATA.
Investopedia ULC (2010) www.investopedia.com [Online] Investopedia ULC. Retrieved from:
http://www.investopedia.com/terms/g/gearingratio.asp [Accessed 18 May 2010]

Research And Analysis Report: Ryanair Holdings PLC

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Investopedia ULC (2010) www.investopedia.com [Online] Investopedia ULC. Retrieved from:


http://www.investopedia.com/terms/e/eps.asp [Accessed 19 May 2010]
Investopedia ULC (2010) www.investopedia.com [Online] Investopedia ULC. Retrieved from:
http://www.investopedia.com/terms/p/price-earningsratio.asp [Accessed 19 May 2010]
Learned Edmund P., C. Roland Christiansen, Kenneth Andrews and William D. Guth (1969)
Business Policy, Text and Cases. Homewood, IL: Irwin
Osborne, A. (2009) Ryanairs lose loss strategy typifies its win, win focus on low fares
Telegraph, 2 June 2009 [Online] Retrieved from:
http://www.telegraph.co.uk/finance/comment/5431689/Ryanairs-lose-loos-strategy-typifiesits-win-win-focus-on-low-fares.html [Accessed 9 May 2010]
Peterson, P. (1999) Analysis of Financial Statements. New York: Wiley
Porter, Michael E. (1979) How Competitive Forces Shape Strategy. Cambridge,
Massachusetts: Harvard Business School Publishing.
Ryanair Holdings Plc. (2009) Annual Report 2009 [Online]. Ryanair Holdings Plc. Retrieved
from: http://www.ryanair.com/en/investor/download [Accessed 1 May 2010]
Ryanair Holdings Plc. (2008) Annual Report 2008 [Online]. Ryanair Holdings Plc. Retrieved
from: http://www.ryanair.com/en/investor/download [Accessed 1 May 2010]
Ryanair Holdings Plc. (2007) Annual Report 2007 [Online]. Ryanair Holdings Plc. Retrieved
from: http://www.ryanair.com/en/investor/download [Accessed 1 May 2010]
The Management Centre (2006) Porters Five Forces Model [Online] Retrieved from:
http://www.resourcealliance.org/documents/masterclass_bernard_ross__fiona_duncan_porter.pdf [Accessed 7
May 2010]
WebFinance Inc. (2010) www.businessdictionary.com [Online]. WebFinance Inc. Retrieved
from: http://www.businessdictionary.com/definition/business-analysis.html [Accessed 8 May
2010]

Research And Analysis Report: Ryanair Holdings PLC

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APPENDIX 2: Ratio Analysis Spreadsheet


Calculation of Financial Ratios using Microsoft Excel 2007

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Sample Formula Sheets

Calculation of Ratios: RYANAIR 2007 and 2008

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Calculation of Ratios: Ryanair and EasyJet (2009)

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APPENDIX 3: Financial Statements of Ryanair


Holdings PLC

(This page is intentionally left blank)

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APPENDIX 4: Presentation Slides

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Oxford Brookes University


BSc (Hons.) in Applied Accounting

SKILLS AND LEARNING STATEMENT

Word count: 1891


Presented by: Mohammad Saad Hassan Khan
ACCA Registration: 1624360
Submission period: 20
MAY 2010.

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Skills and Learning Statement


The undertaking of this Research and Analysis Project was quite a task and completing this
project under time constraints demanded a planned approach, and for this reason planning
was inevitable. As I had never undertaken such a project before, the first stage was to grasp
an overall understanding and gain an insight of the RAP from the Info Pack published by
the University. Next was to devise a timetable with attainable time frames.
The choice of the topic and an easy decision to make but the challenging task was to choose
a specific organisation. Having selected the airline industry, I gathered some preliminary
information about the companies operating in this industry. Through my ACCA studies I had
enough knowledge of the financial and business analysis techniques to be used and it was a
less time-consuming task to complete. By doing so I was all ready for the meeting with my
mentor.

THE MEETINGS
At the first meeting, the list of short-listed organisations was thoroughly discussed and we
reviewed the gathered information and ultimately one organisation was selected, Ryanair. I
had a number of analysis techniques in my mind and as I had already gathered more
information on these techniques and model, through mutual discussion and useful advice
from my mentor, I was able to finalise the methods to be used. The third point of discussion
was my timetable which seemed unrealistic to my mentor and I was perplexed with his
questioning. The RAP wasnt the only thing I had to focus on, the ACCA June exam session
was ahead too. Concluding the first meeting I had decided the topic, the organisation,
revised my timetable and briefly worked out the research objectives which were pretty clear
as the topic was the business and financial evaluation of a company. Concluding the first
meeting, I was exposed to one of my weaknesses that was unrealistic planning which I
overcame with the help of my mentor.
When it was time for the second meeting, I was mid-way through the report. The
information gathering part was complete and I had already word-processed about 2000
words and prepared the spreadsheet for ratio analysis. My mentor critically considered my
work and praised me for the quality of the information I had collected which I would see as
one of my strengths. The interaction with the mentor at this stage proved to be very fruitful
and the feedback he provided me with was of crucial importance to me. Although my overall
progress was satisfactory yet he managed to convince me to make some changes to the
way I was handling my spreadsheet, further polishing my Excel skills. By the end of second
meeting, I was quite confident about the progress of the report and was learning a lot from
the interactions with my mentor.

Research And Analysis Report: Ryanair Holdings PLC

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At the third meeting I had to deliver a presentation to my mentor about my project findings
which was a task more difficult than the actual analysis. By this time my project was on the
verge of completion and a draft was ready to be handed over to the mentor for further advice
and changes if needed. There were five people present at the presentation and I was of
course nervous but it went well and I was praised at the end. The 15-minute time limit was
very difficult to maintain and was easily breached. This made me learn a new skill of
presenting your findings in a logical and effective way.

ANSWERS TO THE RESEARCH QUESTIONS

The research questions and the objectives of this research report were clear from the title
Business and Financial performance of an organisation and the main objectives were to
evaluate and analyse the financial performance of the company internally and comparing it
to the industry averages (competitor comparison). This financial analysis would answer my
research question that whether Ryanair was performing well or its financial performance was
deteriorating over time. Another aspect to be covered was the business analysis which
would provide me with the answers about the strategic position of Ryanair, and its external
and internal analysis. This analysis would have provided me with the answers as to the
relative position of Ryanair in the market and its future prospects. And from the beginning of
information gathering process through to the analysis and evaluation stages, I was in pursuit
of answering the research questions up to the extent the available information allowed me
to. Answering these questions and meeting the project objectives was pretty clear in my
mind and I had devised a plan on how to achieve them through discussions with my mentor
which proved to be a lot of help in this case.
The major threat was that the information was available online in bulk quantities and the
selection of relevant points was crucial as I could have easily crossed the word limit
prescribed. I eliminated this threat by efficiently managing the information relevant to my
objectives.
Evaluating ones own performance isnt easy but in my opinion I think that I have been fully
able to answer my research questions and meet the project objectives. Being an
accountancy student it was easy for me to reach a conclusion to the financial analysis as it
was not a great deal for me to reach a conclusion related to historic and current financial
performance of Ryanair. Concerning this issue, I would rate my overall performance as
above-average and in my view I have had no difficulty answering my research questions.
But the business analysis part of this report was the one I was new to and lacked experience
of analysing the companys internal and external factors that affect it and due to my hard
work and focus I was finally able to reach a conclusion on the Business Analysis portion,
successfully answering all of my research questions. This project takes the knowledge of
Business Analysis Models and Techniques as pre-requisite but I had to really word hard
enough on these techniques, firstly grasping the breadth of knowledge underlying the issues
and secondly applying them in my project work was a great deal which I think I have been
successful in.
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INTERPERSONAL AND COMMUNICATION SKILLS

Before this project I had never undertaken any research report and it was challenging for me
to finalise it even with the advice of my mentor. But having done this report I have not only
mastered the skill of the business report writing but I have also learned a lot from my project
mentor who was absolutely potent to guide me all the way through and help me with his
valuable advice.
I took this research report as a learning tool and this RAP was an opportunity for me to
exploit my strengths and overcome my weaknesses. My information gathering was
particularly strong and part of which is attributable to my familiarity with the airline industry.
Being an ACCA student I have always been interested in the financial performances of the
organisation and with this project I have polished my analytical skills and techniques
providing me with a vast experience of analysing the business and financial performances.
During the three meetings, as prescribed by the University, the interaction with the mentor
played a vital part in the overall learning process and from meeting 1 I was keen to take
part in discussions. From the first meeting I critically observed my mentor and started
adapting things from him. It is quite obvious that when two people interact with each other,
its not only the verbal communication that is important but the body language is equally
important. And when the meetings are held in a formal setup, then behaving in an
appropriate manner is the key to a successful dialogue.
At the first meeting I was a bit hesitant and it was my mentor who emphasised on my taking
part in the discussion so that the outcomes are appropriate. Observing my mentor I realised
that the skill of communicating my thoughts in an effective way was the one which I had to
work on. From my mentor I also learned the skill of time management which was for me the
core of this whole project as the deadline was approaching. I have had many experiences of
working under time pressure sitting exams and also in my previous employment, but this
project was an extraordinary task to me which had a time frame in weeks instead of hours or
days. Working under such conditions was a whole new experience and I was able to
accomplish the task at the end.
By the second meeting I was part-way through the project and was a lot more confident
regarding many of the issues explained in the prior paragraph. Therefore I was actively
taking part in the discussions with my mentor and benefiting from his advice and constructive
criticism. He is a qualified accountant and a member of the ACCA and those formal
interactions with him were one of its kind.
The requirement of the presentation at the third meeting plays a crucial part in the overall
learning process and I again took it as an opportunity to exploit my strengths. This
presentation made me learn new skills and during the preparation of the presentation I
polished my Microsoft Office skills.
The overall experience of undertaking this RAP has made me learn a lot of new transferable
skills and analyse my strengths and weaknesses which will one day be very useful for me in
my practical life. This made me realise my potential and I fell a lot more confident as far as
my communication and interpersonal skills are concerned.
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RAP AND THE ACCOUNTING STUDIES

As already mentioned that I took this RAP as a tool to learning and exploiting my knowledge,
I was able to practically apply the knowledge gained from the ACCA qualification to an
existing business which led to an in-depth understanding of the ideas and logics that
underpins them.
While doing this project I was also preparing for the ACCA papers Corporate Reporting (P2)
and Business Analysis (P3). This project work was reasonably the best method for the
application of the business models that I was learning from my lecturers which led to a better
understanding and provided me with a whole new horizon of knowledge.
Through this project I have pretty much improved my writing skills and now can easily
communicate my thoughts and plot my views according to the situations. The 6500 word
limit was a barrier and this project has taught me an additional skill of concise writing. This
will particularly be of help when I will be sitting my ACCA exams where time is a major factor
in passing and failing. During the writing of this project I learnt where to place emphasis and
where not to and now while sitting the theory papers, I will be much more confident than I
previously was and can communicate effectively while expressing my views particularly on
case studies.
This project has armed me with the practical know-how of the companies, how they operate
and strive for the customers in a market, the affect of the regulations from the government
and other regulators and the internal and external risks involved. With this real-life
understanding of the firms, I would be better able to grasp other technical knowledge further
in my studies.

End of Statement.
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