Significant Hedging in relation to Debt Obligations Owing to the debt obligations which are related to the acquisition of the new aircrafts by the company, there have been considerable derivative transactions being carried out by the company in order to hedge its financial obligations. Such derivative transactions have exposed the company to greater market risks and can pose unfavourable effects on the operational and financial position of the company (Ryan Air 2011, Madura 2009). Operational Exposure (Economic / Competitive / Strategic Exposure) Increased Competitiveness in Market One of the most significant areas of concern for Ryan Air is the increasing competition in the airline industry across Europe. Considering the need to be proactive in this scenario, the Ryan Air aims at competing in a robust manner with its competitors in the industry in relation to pricing and attracting more passengers. However, in such a scenario it is possible that the competitors of the company may compete in price and acquire the company’s passengers and thereby reducing the overall revenue of the company and thus a lower profitability. Apart from this type of competition, the company also faces competition from other forms of transportation which include railways and travelling by sea (Ryan Air 2011, Madura 2009, Koller and Goedhart 2010). Effects of Variations in Fuel Costs and Availability The company’s ability to generate profits is largely dependent on its ability to control costs and in turn maintain itself a low-fare airline. In this regard, it is pertinent to consider that in case the fuel prices rise in future, there is a possibility that the company’s operating profits may decline. In order to reduce its exposure to volatile and potentially rising fuel costs, Ryan Air places hedges on the jet fuel prices on a regular basis (Ryan Air 2011, Madura 2009). The forward contracts for the last three years for jet fuel are as follows: At March 31, 2011 2010 2009 €M €M €M Jet fuel forward contracts – fair value 383.8 42.6 (106.7) Source: (Ryan Air 2011) In addition to controlling fuel costs, ensuring the timely availability of fuel is also an area on which the operations of Ryan Air are dependent and therefore there is always an operational risk that in case fuel is not readily available, the operations of the company will be significantly affected (Ryan Air 2011, Kevin 2009). Launching of New Routes The company plans to commence its operations on new routes in the days to come and in this regard it is expected that apart from the increase in turnover of the company, there will be more costs involved. The launch of new routes will involve the conduct of marketing activities to attract passengers on board. These costs will definitely lower down the profits of the company and it is also not assured that the policy of low fares of Ryan Air will be successful on new routes or not. In addition to these areas of concern, owing to the launch of new routes, the company will require additional cash reserves in order to finance the
Ryan Air – Transactional, Operational and Translational Exposures [Instructor Name] Ryan Air – Transactional, Operational and Translational Exposures While reviewing the annual report and the financial statements of Ryan Air, there are various issues which are faced by the company and the resulting exposures can be understood from such issues…
Change of policies pertaining to the European Union owing to outbreak of viral epidemics and also rise of terror threat tends to affect its spontaneous flight services in several European regions (Hagele, 2006, p.2). Economic RyanAir’s operation in the European region is held to grow owing to the sustenance and growth of political and economic situation of Europe.
However, after four years the costs for the firm increased rapidly, making it to make losses amounting to ?20 Million and despite the fact that consumers continued to fly with it because its costs were very low, the firm needed some changes during this time, and this could have enabled it to revamp (Ryanair).
These formal expressions emanate from the works of Frederick Winslow Taylor who developed the idea of scientific management. Prior to the introduction of scientific management, employees were provided the flexibility to perform their work at such a speed and quality which they believed were fit for them.
This paper highlights these strategies that were taken by Ryanair, and also their resources and capabilities which made them one of the biggest airline industries in Europe. It also identifies the future steps that Ryanair will take in response to the challenges ahead of it.
Michael O’Leary’s dynamic but often unpredictable move resulted to the other weak points of the company as well which includes its issues with customer relations and satisfactions as well as the hostile relationship with
According to the author of the text, the business was set up by Mr. Bernard Ryan and specializes in Building Services Engineering, Sustainable Design, Energy Conservation, and Project Management. Notably, Mr. Ryan is a Building Services Engineer with over nine years experience in both technical and managerial positions.
Apart from fuel costs related risks, the company aims at expanding its existing fleet size by acquiring new aircrafts; however, any occurrence of an unfavourable event in relation to the availability of the credit could have an unfavourable impact on the
According to the discussion findings the difference between transaction exposure and translation exposure is related to currency and the parent and subsidiaries companies. The translation exposure considers only the currency and effect on parent companies, whereas transaction exposure considers both.
The author states that from the human perspective nature, it has been proved from the branches of philosophy, medical science, religion that each and every person in the world has a multiple nature. On top of that, the analysis was given a credit by discovering that the psyche of a human being is always multi faceted.
11 pages (2500 words)Essay
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