comparative analysis of: ryanair and british airways ryanair and british airways dr agata kocia
TRANSCRIPT
Comparative analysis of:Comparative analysis of: Ryanair and British AirwaysRyanair and British Airways
dr Agata Kocia
Ryanair
established: 1985 flies to more than 150 cities in Europe with
more than 230 aircrafts headquarters: London Stansted employs more than 7 000 people short-haul carrier aim 1: improve punctuality aim 2: focus on cost cutting
reduce the number of complaints (due to for example, lost luggage) online booking one model-type aircraft
British Airways
established: 1974 flies to over 300 destinations worldwide with
more than 238 aircrafts headquartered in Heathrow, London long-haul distance carrier possible impact on financial reports: a merger
with Iberia brand aim 1: maintain positive brand perception aim 2: Create new channels of income
Air carrier sector: Risks
brand reputation competitor prices fuel prices government regulation security issues long-term disruptions exchange rate fluctuations
Macroeconomic and financial analysis
Macroeconomic analysis
IRELANDIRELAND UNITED KINGDOMUNITED KINGDOM
20072007 20082008 20092009 20072007 20082008 20092009
Gross domestic Gross domestic product (GDP) (%)product (GDP) (%)
4,94,9 4,44,4 -3,4-3,4 2,82,8 3,13,1 0,70,7
Inflation (%)Inflation (%) 3,93,9 4,94,9 4,14,1 3,03,0 2,32,3 3,63,6
Unemployment (%)Unemployment (%) 4,64,6 4,64,6 6,16,1 2,92,9 5,35,3 5,65,6
Trade deficitTrade deficit 23502350 21022102 28852885 32803280 37243724 24982498
Stock exchange index Stock exchange index value value
9,4089,408ISEQ®
6,9506,950ISEQ®
2,3612,361ISEQ®
6,6216,621FTSE 100
6,0536,053FTSE 100
4,4174,417FTSE 100
Financial statement overview (1)
British AirwaysBritish Airways 20072007 20082008 20092009
Income from operationsIncome from operations £602 mln£602 mln £875 mln£875 mln (£220) mln(£220) mln
RevenuesRevenues 8,4928,492 8,7538,753 8,9928,992
Fuel costsFuel costs 1,9311,931 2,0552,055 2,9692,969
Airplane maintenance costs Airplane maintenance costs 414414 451451 510510
Total short-term assetsTotal short-term assets 3,4313,431 3,1483,148 2,3462,346
Cash and cash equivalentsCash and cash equivalents 713713 683683 402402
Cash flows from operations Cash flows from operations 756756 303303 133133
RyanAirRyanAir 20072007 20082008 20092009
Net income Net income €€435,600 435,600 mlnmln
€€390,708 390,708 mlnmln
(€169,173) (€169,173) mlnmln
Income from operationsIncome from operations 2,236,8952,236,895 2,713,8222,713,822 2,941,9652,941,965
Fuel costsFuel costs 1,257,0621,257,062 791,327791,327 693,331693,331
Airport costsAirport costs 273,613273,613 396,326396,326 443,387443,387
Total long-term debtTotal long-term debt 2,033,7422,033,742 2,268,2072,268,207 2,583,6102,583,610
Cash and cash equivalentsCash and cash equivalents 1,346,4191,346,419 1,470,8491,470,849 1,583,1941,583,194
Net flows from operationsNet flows from operations 900,836900,836 703,902703,902 413,134413,134
Financial statement overview (2)
Ratio analysis
Ratios (1)
Return on assets (ROA) 2007 2008 2009 Ryanair 7,9% 6,5% -2,6% British Airways 2,7% 6,1% -3,2%
Return on equity (ROE) 2007 2008 2009 5-letnia średnia dla
branży
Ryanair 19,2% 15,5% 0,0% -3,4% British Airways 13,7% 27,3% -29,2% -3,4%
Ratios (2)
Current ratio 2007 2008 2009 Ryanair 2,11 1,53 1,80 British Airways 0,95 0,97 0,56
Ratios (3)
Debt to equity ratio 2007 2008 2009 Ryanair 0,69 0,76 1,03 British Airways 1,20 0,85 1,65
Currency risk
Currency risk comes from … receivables from the sale of air
tickets liabilities related to the purchase of
fuel foreign debt purchase of / merger with other
companies
Currency risk: Receivables from the sale of tickets
value of a ticket denominated in pounds can be reduced (increased) if the pound is losing (increasing in) value
foreign demand for domestic and international flights is inversely proportional to the value of national currency
domestic demand for international flights is inversely proportional to the value of national currency
Strategies to protect against currency risk
natural hedging only works if the currencies move in the
opposite direction foreign exchange reserves and matching
strategies foreign exchange hedging derivatives diversification policy
Currency risk graph (1)
Currency risk graph (2)
Currency risk graph (3)
Currency risk graph (4)
Thank you for your attention!