Usama Basharat

Analysis

Introduction:

This article is about the Ryanair, one of the cheap operating airlines in Europe. Its headquarters is in
Dublin, Ireland. They started their operations from Dublin to UK at first, but they faced losses back then
in 1990 which made them restructure their business models and had to opt the model of South West
airlines. They were incorporated in 1996 as a holding company for Ryanair limited. Now, they operate in
27 countries with 1500 flights per day. According to the Exhibit 5 Ryanair increased their profit from
318.8 million euro to 400.7 which is tremendous growth for the company.

Identification of issues and problems:

The company had different problems starting from the top executives to their strategies that they
implemented in the wrong ways:

 First the C.E.O of the airlines Michael O,LEARY was the problem for the company which is that
he was blunt in front of media and for just coverage he could say anything even if the stake of
the company is also in line.
 C.E.O also gave remarks about its customers who complained about the services that they can
also stand during a flight and cover there destination.
 Experts reviewed O, Leary as he was still not imitate after all these blunt comments.
 They had advertisement issues i.e they displayed the false picture in their advertisement and
narrated the wrong information to their customers.
 DOT( external factor) initiated the rule that if the company leads to any issues relating flights
then they will pay back their customers the determined amount set by the DOT.
 They also faced the lash back of the customers when they bought online tickets on the end time
of the flights which costed them much more than the actual value .
 ASA criticised them of false statement about the emission of carbon dioxide in the air, i.e they
said they just account for 2% of the emissions in the air.
 Fuel priced increased in the end of 2010 which lead to the hedging of the fuel and if not handled
carefully they had to ground their planes which could led them to massive loss.
 They also displayed the girl in the bikini which showed that the place shown in the ad has sun
which means people can hang out there however in reality that place just gets the sunlight for 3
hours a day only.

Financials of the company:

 Ancillary revenues were the base of the low-cost strategy of the company which lead to meet
the operating expenses of the company and help compete to rival airlines.
 Ancillary revenues increased from 663 million euros to 802 million euros in 2011, which ranked
them no 1 among the top airlines of the world.
 According to exhibit 5 the income ( ancillary revenues) of the company increased 23.5 to 27.2
million euro which means that company depends on the general charges and services like that
of carriage, transportation, early flight bookings, reserved seats etc.
 Their total expenses increased by 20% as the fuel prices were increased but also due to the
increased operations.
 Growth of the airlines also increased the dividends paid to shareholders and earning per share
increased upto 26.97 from 21.59 which shows that the company has done well in its strategies.