what do you make of the challenge to Ryanair of reduced traffic, cash flow and yield in the context of Ryanair's committment to purchase so many aircraft (whose arrival cannot be deferred)?
It would be helpful if your assessment took into account the consequences to Ryanair's cash reserves due to (a) previous aircraft deliveries, (b) fuel-hedging errors, (c) the failed efforts to take-over Aer Lingus and other recent demands on their cash reserves (such as losses). Bonus question: what are the current, unencumbered, cash reserves available to Ryanair and is their business model at any risk?
Fair question
This should be in the FR section...
What reduced traffic ? Aena is already stating that they are increasing number of routes by 16% but not offering full capacity i.e. daily flights by x times on those routes.
Early summer capacity down by 4.8% in Europe; Norwegian in pole position for growth | anna.aero
Previous and current aircraft deliveries have been funded by US EXIM bank and Sale and Leaseback with RBS and some straight cash so you buy real cheaply plus they have a lot of leases. But biggest benefit is that if you optioned a plane in 2002 for $25M it would have cost you 27M Euros if paid for then, now it would cost FR less than 19M Euros and some still getting delivered from the old contracts. Even paying full price means you way better off........not so with anybody in Eurozone buying from Airbus.
They have also sold on quite a number of the delivery slots options to other airlines since 2007 ...23 at last declaration so guess thats a nice benefit and profit. As for selling on aircraft they sold 8 in last quarter for 169M Euros and took deposits for others which they are offloading in 2009. They used proceeeds of this to buy back shares and pay off some debt. Its all public available info which is my source.
Cash flow is helped by not paying excessively for fuel and avoid the mistakes of hedging too late as last year but that has already been declared and absorbed.....pretty much every airline in same boat but FR screwed up bigtime and have stated the cost impact. Some have hedged very expensively going forward assumming the $200 a barrel was going to happen, but FR are hedged around $700 a tonne.
Effort to take over EI was I believe more to do with not taking a downvaluation against profit in Q3 results as EI share price was 1 Euro before bid and FR has it stated at 1.40. Cost of bidding for EI in 2008 was couple of million if that for advisers. Write down of this investment has no impact on cash flow but a big hole in profits but they have used this to screw the pilots for pay cuts.
On Cash reserves they have 2 Bn in the bank and current liabilities of 1.2 Bn, so free cash of 800m. They have other debt of 1.9 Bn but thats payable of anything up to 10 years with assets of 3.6 Bn so unless they ceased trading and couldn't sell the aircraft cash flows from existing business will account for that.
My presumption is you wish to debate rather than cheap point score.