Ryanair Holdings

Report
By: Thomas Elias, Alison Tardie, Loren Plourde, and Brandon Plourde
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
1
Overview
Company Overview
Strategy Formulation
New Mission and Vision
External Assessment
Strategic Plan for the Future
• A Brief history of Ryanair
• Existing Strategy, Mission, and
Vision
• Existing Objectives and
Strategies
•
•
•
•
Industry analysis
Opportunities and Threats
EFE Matrix
CPM Matrix
Internal Assessment
•
•
•
•
Organizational Structure
Financial Condition
Strengths and Weaknesses
IFE Matrix
•
•
•
•
•
SWOT Matrix
Space Matrix
Grand Strategy Matrix
Matrix Analysis
QSPM Matrix
• Objectives
• Strategies
Strategic Implementation
• Management Issues
• EPS/EBIT
• Projected Financials
Strategic Evaluation
Balanced Score Card
Ryanair Update
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
2
Ryanair History
1985: The Beginning
•25 Employees
•15 Seat Aircraft
•5’2” Standard
2004: Most Popular Online Booking
•Most Popular online, 2003
•98% online booking
1997: We go Public
First “Fare War”
1986:
First Fiscal Year
1995: Low Fares Win!
1987: First Jet
•3 BAC 1-11 Aircrafts
•Opened New Destinations
•Overtakes Aer Lingus, British Airways
•Largest Irish airline, Dublin
•10th Birthday
1990: Rapid Growth And The Upset
•Accumulates £20M Losses
•20m invested
•Copying the Southwest Model
•Michael O’ Leary, Restructured
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
3
Ryanair History Cont’d…
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
4
Existing Strategy, Vision, and Mission
Strategy: Cost Leadership;
Low Cost
Vision
Mission
Firmly Establish itself as Europe’s
leading scheduled passenger
airline through continued
improvements and expanded
offerings of its low-fares service.
Ryanair seeks to offer low fares that
generate increased passenger
traffic while maintaining a
continues focus on costcontainment and operating
efficiencies.
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
5
New Vision
To be the most efficient low-cost carrier in
Europe.
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
6
New Mission
New Mission: Ryanair’s mission is to become the (2) largest
scheduled passenger airline in (3) Europe for (1) international and
domestic travelers. (6)We believe by offering the cheapest fares
and utilizing (4) modern technological services, (7)Ryanair will
provide the best no frills airline service. Ryanair meets
shareholders’ and employees’ needs through (5) sustainable
profits while also providing a (9) safe and productive working
environment. Furthermore, Ryanair protects the (8) community
with our efficient, environmentally friendly fleet.
1.Customers
2.Products or services
3. Markets
4. Technology
5. Concerns for survival, growth, and profitability
6. Philosophy
7. Self-concept
8.Concern for public image
9. Concern for employees
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
7
External Audit
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
8
Industry Analysis
2009
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Thousands
2010
Thousands
Ryanair
65,282
Ryanair
71,229
Lufthansa
41,515
Lufthansa
44,460
easyJet
34,593
easyJet
37,665
Air France
31,256
Air France
30,882
British Airways
27,844
Emirates
30,848
Emirates
25,921
British Airways
26,320
KLM
22,333
KLM
22,787
American Airlines
19,514
Delta Air Lines
21,029
Cathay Pacific Airways
18,102
American Airlines
20,356
Singapore Airlines
16,322
Cathay Pacific Airways
19,723
Source: Centre for Asia Pacific Aviation and IATA
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
9
Cost Comparison
April 2013, Thomas Elias, Alison Tardie,
Brandon Plourde, Loren Plourde, UMFK
10
Opportunities
1. Success in Ancillary services ( leads to new open markets for joint ventures).
2. Open up their aviation repair service and flight training programs to operations
outside the company.
3. Customer base is expected to grow up to 85 million passengers.
4. Pursue web-based advertising and new Reservation system.
5. Start flying into 10 to 12 primary airports (European airports have shown interest).
6. Popularity increasing in Eastern Europe and Asia for tourism and business
gatherings.
7. Corporations pursuing appearance and expansion into African Operations.
8. Expand clientele during hard financial times by gaining customers who do not
desire premium flights.
9. More political and governmental influence/charges in primary airports increases
attractiveness in secondary airports (11 tax on European departures).
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
11
Threats
1. New IAA Rules on flying hours and aircraft regulations could increase
future expenses.
2. Unpredictable and uncontrollability of rising fuel costs; €350 million in
2012 regardless of hedging.
3. Greek debt crisis and unstable European economy negatively affecting
future operations.
4. Last year 14,000 Ryanair flights were cancelled due to volcanic ash
disruptions, airport snow closures and repeated ATC strikes.
5. The majority of Ryanair’s profits are subject to Irish Corporation Tax at a
rate of 12.5% and a raise may adversely impact Ryanairs' cash flows,
finances, and operations.
6. Already paid 88 million in claims last year due to the EU 261 regulations
where the airline has to cover accommodations and compensation.
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
12
Threats Cont’d…
7. In the future legislation will require airlines to pay about €1.4 billion for
emissions of carbon dioxide which will rise to €7 billion by 2020.
8. Too much growth too fast; Expansion into Eastern Europe means
competing with already existing players in the market and operating on
even tighter margins.
9. Increased competition from alternative forms of travel.
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
13
External Factor Evaluation (EFE)
Opportunities:
Weights Rating
1. Success in Ancillary services ( leads to new open markets for joint ventures).
0.07
4
2. Open up their aviation repair service and flight training programs to operations outside the company .
0.05
2
3. Customer base is expected to grow up to 85 million passengers.
0.07
4
4. Pursue web-based advertising and further expansion in web services.
0.08
3
5. Start flying into 10 to 12 primary airports (European airports have shown interest).
0.03
1
6. Popularity increasing in Eastern Europe and Asia for tourism and business gatherings.
0.05
3
7. Corporations pursuing appearance and expansion into African Operations.
0.04
1
8. Expand clientele during hard financial times by gaining customers who do not desire premium flights.
0.06
4
9. More political and governmental influence/charges in primary airports increases attractiveness in
secondary airports ($11 tax on European departures).
0.05
2
Threats:
1. New IAA Rules on flying hours and aircraft regulations could increase future expenses.
0.05
3
2. Unpredictable and uncontrollability of rising fuel costs; €350 million in 2012 regardless of hedging.
0.09
4
3. Ryanair plans to ground 80 aircraft in the winter months of 2012 as opposed to 40 last year because
overall traffic is expected to be lower.
0.05
2
4. Last year 14,000 Ryanair flights were cancelled due to volcanic ash disruptions, airport snow closures and
repeated ATC strikes.
0.08
2
5. The majority of Ryanair’s profits are subject to Irish Corporation Tax at a rate of 12.5% and a raise may
adversely impact Ryanair’s cash flows, finances and operations.
0.02
2
6. Already paid 88 million in claims last year due to the EU 261 regulations where the airline has to cover
accommodations and compensation.
0.08
2
7. In the future legislation will require airlines to pay about €1.4 billion for emissions of carbon dioxide
which will rise to €7 billion by 2020.
0.05
4
8. Too much growth too fast; Expansion into Eastern Europe means competing with already existing players
in the market and operating on even tighter margins.
0.03
3
9. Increased competition from alternative forms of travel.
0.05
2
Totals:
1
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
Weighted
0.28
0.10
0.28
0.24
0.03
0.15
0.04
0.24
0.10
0.15
0.36
0.10
0.16
0.04
0.16
0.20
0.09
0.10
2.82
14
Competitive Profile Matrix
Ryanair
Critical Success factors
British Airways
EasyJet
Weights
Rating
Score
Rating
Score
Rating
Score
Advertising
0.06
1
0.06
2
0.12
3
0.18
Financial position
0.10
3
0.30
2
0.2
4
0.40
Customer loyalty
0.09
2
0.18
4
0.36
3
0.27
E-commerce
0.07
4
0.28
3
0.21
2
0.14
Management
0.08
2
0.16
3
0.24
4
0.32
Ticket Fare competitiveness
0.10
4
0.40
2
0.2
3
0.30
Fleet
0.11
4
0.44
3
0.33
2
0.22
Customer service
0.12
2
0.24
4
0.48
3
0.36
Market share
0.09
4
0.36
2
0.18
3
0.27
Organization structure
0.08
3
0.24
1
0.08
4
0.32
Employee morale
0.10
1
0.10
3
0.3
4
0.40
Totals:
1
2.76
2.7
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
3.18
15
Internal Audit
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
16
Organizational Structure
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
17
Income Statement
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
18
Balance Sheet
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
19
Ratio Analysis
Liquidity Ratios:
Current Ratio
Quick Ratio
Leverage Ratios:
Debt to Total Assets
Debt to Equity
Long-term Debt to Equity
Times Interest
Efficiency Ratios:
Fixed Assets Turn
Total Assets Turn
Profitability Ratios:
Gross Profit
Operating Profit
Net Profit
ROA
ROE
EPS
PE Ratio
Growth Rates:
Sales( 3 Year Average)
Net Income ( 3 Year Average)
EPS ( 3 Year Average)
Dividend per Share ( 3 Year Average)
Ryanair (2011)
1.89
1.89
EasyJet
1.48
1.48
British Airways
0.75
0.72
0.66
1.91
1.29
5.48
0.62
1.62
0.93
9.3
0.76
3.08
1.76
5.2
0.74
0.42
1.6
0.77
25.70%
14.20%
10.30%
4.40%
12.70%
0.2514
110.58
11.20%
-1.40%
-1%
N/A
Industry
1.3
1.3
Analysis
Good
Good
6.9
Average
Average
Average
Average
1.73
0.88
0.8
Bad
Bad
16.50%
7.70%
6.50%
5%
13.20%
0.52
670.00
16.40%
8.40%
6.70%
5.90%
24%
23.72%
7.37%
5.40%
4.60%
14.80%
15.40%
57%
57.10%
N/A
4.70%
-1.10%
N/A
N/A
0.79
21.7
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
Good
Good
Good
Average
Bad
Bad
Good
Average
Bad
Bad
20
Net Worth Analysis
Company Worth Analysis
1.) SE-Goodwill-Intangibles
2.) Net Income*5
$2,907.10
$1,873
3.) (SP/EPS)* NI
$41,423.55
4.) #Shares * Stock Price
5.) Four Method Average
41,424.78
$21,907.10
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
21
Strengths
1. Modern/Low Cost Fleet single aircraft type; average plane age 2.94
and no plane older than 8 years on fleet.
2. Profits increased by 25.6% from 2010-2011.
3. Traffic grew 8% to 72 million in 2011.
4. Ancillary revenues grew by 21% to €802 million for fiscal year 2011.
5. Dividend of €500 million paid to shareholders in 2011 equaling €846
million returned in the past 3 years.
6. At March 31, 2010, the company had hedged approximately 90% of
its estimated fuel exposure for the year ending March 31, 2011.
7. Number one on-time airline in Europe.
8. Added 328 new routes to their already existing routes which gives
them a total of more than 1300 routes.
9. Revenue passenger miles (rpm) grew 14.4% between 2009 and 2010.
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
22
Weaknesses
1. Bad Public Image; Has had several complaints filed against them by
Advertising Standards Board (ASA)
2. Complex Fee System leading to customer dissatisfaction; charges
fees where others do not 52% of average final cost is in extras and
fees.
3. Only arrive at secondary airports; no option for arrival at Primary
Airports.
4. Ryanair incurred a €2.2 million loss on its Aer Lingus shareholdings
due to a decline in the Aer Lingus share price from €0.73 to €0.72.
5. They do not offer round trips.
6. Fuel costs rose 37% from ‘10-’11.
7. Employee moral is poor with cabin crew.
8. Debt to equity ratio is 1.91 compared to .79 of the industry average.
9. Earnings per share is only 25 euro cents compared to main
competitor Easy Jet at 52 Euro cents.
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
23
Internal Factor Evaluation (IFE)
Strengths:
Weights
1. Modern/Low Cost Fleet single aircraft type; average plane age 2.94 and no plane older than 8
years on fleet
0.07
2. Profits increased by 25.6% from 2010-2011
0.04
3. Traffic grew 8% to 72 million in 2011.
0.06
4. Ancillary revenues grew by 21% to €802 million for fiscal year 2011.
0.08
5. Dividend of €500 million paid to shareholders in 2011 equaling €846 million returned in the
past 3 years.
0.05
6. At March 31, 2010, the Company had hedged approximately 90% of its estimated fuel exposure
for the year ending March 31, 2011.
0.08
7. Number one on-time airline in Europe
0.04
8. Added 328 new routes to their already existing routes which gives them a total of more than
1300 routes
0.05
9. Revenue passenger miles (rpm) grew 14.4% between 2009 and 2010.
0.03
Weaknesses:
1. Bad Public Image; Has had several complaints filed against them by Advertising Standards
Board (ASA)
0.06
2. Complex Fee System leading to customer dissatisfaction; charge fees where others do not 52%
of average final cost is in extras and fees.
0.08
3. Only arrive at secondary airports; no option for arrival at Primary Airports
0.05
4. Ryanair resulted in a €2.2 million loss on its Aer Lingus shareholdings due to a decline in the
Aer Lingus share price from €0.73 to €0.72.
0.02
5. They do not offer round trips
0.07
6. Fuel Costs rose 37% from ’10-’11
0.06
7. Employee morale is poor with cabin crew
0.07
8. Debt to equity ratio is 1.91 compared to .79 of the industry average.
0.04
9. Earnings per share is only 25 euro cents compare to main competitor Easy Jet at 52 euro cents
0.05
Totals:
1
Rating
Weighted Score
4
3
3
4
0.28
0.12
0.18
0.32
3
0.15
4
3
0.32
0.12
3
3
0.15
0.09
1
0.06
1
2
0.08
0.10
2
1
2
1
2
2
0.04
0.07
0.12
0.07
0.08
0.10
2.45
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
24
Strategy Formulation
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
25
SWOT Matrix
S-O Strategies:
1. Additional routes to further increase number of passengers and total overall traffic.
(O3, O6, S3, S8, S9, S7)
2. Expand and diversify Ancillary Services both offline and online. (O1, S4, O4)
3. Teach aviation/engineering courses through a university that utilizes their assets to
start new business ventures. (S2, S1, O2)
4. Start business in primary airports. (O1, O3, O5, S3, S7, S8)
W-O Strategies:
1. Start flying into primary European airports. (W3, O8, O5)
2. Upgrade web advertising and services that are not as publicly controversial.
(W1,O4)
3. Begin offering round trips at competitive prices. (W7, O8)
4. Offer package deals on ancillary fees to increase attractiveness. (O1, O8, O3, W2)
5. Hire corporate travel agents to syndicate traveling process for consumers in
need.(W2, W3, W5, W7, O1, O3, O8)
6. Incorporate marketing and HR executives to better promote company. (W1, W2,
W5, O3, O4)
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
26
SWOT Matrix Cont’d…
S-T Strategies:
1. Have a set percentage of fuel costs hedged per year in continuing to hedge fuel
costs.(S6, T2)
2. Discover new cabin layouts to seat more customers per flight. (T1, T2, T8, S2, S3, S9)
3. Start offering flights outside of Europe. (T3, T4, T6, S3, S8, S9)
4. Convert older planes and start new business in delivering freight & cargo. (T4, T6, T8,
T9, S1, S7)
5. Offer incentive programs (frequent flyer miles etc.) (S3, S4, S8, T3, T9)
T-W Strategies:
1.
2.
3.
4.
5.
Start new ethical, socially responsible, and positive attitude advertising campaigns.
(T4, T8, W1, W2)
Diversify current asset investments. (T3, W4)
Ad marketing and HR Officers/ Segments to ensure all business aspects are more
accurately analyzed and coordinated. (W5, W1, W2, T1, T8)
Raise prices. (W6, W9, T2, T4, T6, T7)
Incorporate incentive programs to consumers that fly using Ryanair both ways.
(W7, W3, T3, T8, T9)
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
27
Space Matrix
Financial Position
rating is 1 (worst) to 7 (best)
1 Sales growth 21% Past Year
2 Quick ratio at 1.89
3 Highest Profitability Ratios amongst competitors
4 Debt to equity at 1.91
Financial Position Total
Ratings
4.0
4.0
6.0
1.0
15.0
Industry Position Total
5.0
6.0
4.0
5.0
20.0
Stability Position Total
-7.0
-6.0
-5.0
-4.0
-22.0
Competitive Advantage Total
-1.0
-2.0
-4.0
-2.0
-9.0
Industry Position
rating is 1 (worst) to 7 (best)
1 Moderately High Government Regulation
2 Barriers of Entry are High
3 Growth Potential
4 Reliance on flight turnarounds and plane productivity
Stability Position
rating is -1 (best) to -7 (worst)
1 Rising and Unstable oil prices
2 Cooperation with weather and natural disasters
3 ATC Strikes and employee walkouts
4 Price competiveness amongst other airlines
Competitive Advantage
rating is -1 (best) to -7 (worst)
1 Market Share
2 Modern, Economically friendly fleet
3 Use of Modern Technology compared to rivals
4 #1 on time major airline
X Coordinate
Y Coordinate
2.75
-1.75
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
28
Space Matrix Cont’d…
Possible Strategies:
1. Backwards, Forward, or
Horizontal Integration
2. Market Penetration
3. Market Development
4. Product Development
X Coordinate
Y Coordinate
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
2.75
-1.75
29
Grand Strategy Matrix
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
Possible Strategies:
1. Backwards, Forwards,
or Horizontal
Integration
2. Market Penetration
3. Market Development
4. Product Development
5. Diversification (Related)
30
Matrix Analysis
Alternative Strategies
Forward Integration
Backward Integration
Horizontal Integration
Market Penetration
Market Development
Product Development
Related Diversification
Unrelated Diversification
Retrenchment
Divestiture
IE
SPACE
X
X
X
X
X
X
GRAND
X
X
X
X
X
X
X
BCG
COUNT
2
2
2
2
2
2
1
Liquidation
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
31
Possible Strategies
Market Penetration
1. Additional routes to further increase number of passengers and total overall traffic. (O3, O6, S3,
S8, S9, S7)
2. Expand and diversify Ancillary Services both offline and online. (O1, S4, O4)
3. Start business in primary airports. (O1, O3, O5, S3, S7, S8)
4. Upgrade web advertising and services that are not as publicly controversial. (W1,O4)
5. Begin offering round trips at competitive prices. (W7, O8)
6. Offer package deals on ancillary fees to increase attractiveness. (O1, O8, O3, W2
7. Incorporate marketing and HR executives to better promote company. (W1, W2, W5, O3, O4)
8. Discover new cabin layouts to seat more customers per flight. (T1, T2, T8, S2, S3, S9)
9. Offer incentive programs (frequent flyer miles etc.) (S3, S4, S8, T3, T9)
10. Start new ethical, socially responsible, and positive attitude advertising campaigns. (T4, T8, W1,
W2)
Market Development
1. Teach aviation/engineering courses through a university that utilizes their assets to start new business
ventures. (S2, S1, O2)
2. Start offering flights outside of Europe. (T3, T4, T6, S3, S8, S9)
Product Development
1. Convert older planes and start new business in delivering freight & cargo. (T4, T6, T8, T9, S1, S7)
2. Hire corporate travel agents to syndicate traveling process for consumers in need.(W2, W3, W5, W7,
O1, O3, O8)
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
32
Start Flying Increase and
Increase
into
Diversify
Online/Offline Primary
Ancillary
Advertising
Airports
Services
Weight AS TAS AS
TAS
AS
TAS
1 to 4
1 to 4
1 to 4
Quantitative Strategic Planning Matrix (QSPM)
External Key Factors
Opportunities:
1. Success in Ancillary services ( leads to new open markets for joint ventures)
2. Open up their aviation repair service and flight training programs to operations outside the company.
3. Customer base is expected to grow up to 85 million passengers.
4. Pursue web-based advertising and new Reservation system.
5. Start flying into 10 to 12 primary airports (European airports have shown interest).
6. Popularity increasing in Eastern Europe and Asia for tourism and business gatherings.
7. Corporations pursuing appearance and expansion into African Operations.
8. Expand clientele during hard financial times by gaining customers who do not desire premium flights.
9. More political and governmental influence/charges in primary airports increases attractiveness in
secondary airports (€ 11 tax on European departures).
Threats:
1. New IAA Rules on flying hours and aircraft regulations could increase future expenses.
2. Unpredictable and uncontrollability of rising fuel costs; €350 million in 2012 regardless of hedging.
3. Greek debt crisis and unstable European economy negatively affecting future operations.
4. Last year 14,000 Ryanair flights were cancelled due to volcanic ash disruptions, airport snow closures
and repeated ATC strikes.
5. The majority of Ryanair’s profits are subject to Irish Corporation Tax at a rate of 12.5% and a raise
may adversely impact Ryanair's cash flows, finances, and operations.
6. Already paid 88 million in claims last year due to the EU 261 regulations where the airline has to
cover accommodations and compensation.
7. In the future legislation will require airlines to pay about €1.4 billion for emissions of carbon dioxide
which will rise to €7 billion by 2020.
8. Too much growth too fast; Expansion into Eastern Europe means competing with already existing
players in the market and operating on even tighter margins.
9. Increased competition from alternative forms of .
0.07
0.05
0.07
0.08
0.03
0.05
0.04
0.06
3
3
4
2
4
0.21
0.05
3
0.05
0.09
0.05
-
-
-
0.08
-
-
-
0.02
-
-
-
0.08
-
-
-
0.05
2
0.1
1
0.05
3
0.15
0.03
0.05
1
4
-
0.12
2
-
0.06
3
-
0.09
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
0.07
0.24
1
2
1
4
1
0.15
1
0.21
0.32
0.06
0.06
4
4
3
1
2
0.129
0.05
2
0.1
0.14
0.08
0.12
0.28
0.28
0.24
0.03
33
Increase and
Start Flying
Increase
Diversify
into
Primary
Online/Offline
Ancillary
Services
Airports
Advertising
Weight
AS
TAS
AS
TAS
AS
TAS
1 to 4
1 to 4
1 to 4
Quantitative Strategic Planning Matrix Cont’d…
Internal Key Factors
Strengths:
1. Modern/Low Cost Fleet single aircraft type; average plane age 2.94 and no plane
older than 8 years on fleet.
2. Profits increased by 25.6% from 2010-2011.
3. Traffic grew 8% to 72 million in 2011.
4. Ancillary revenues grew by 21% to €802 million for fiscal year 2011.
5. Dividend of €500 million paid to shareholders in 2011 equaling €846 million returned in the
past 3 years.
6. At March 31, 2010, the Company had hedged approximately 90% of its estimated fuel
exposure for the year ending March 31, 2011.
7. Number one on-time airline in Europe.
8. Added 328 new routes to their already existing routes which gives them a total of more than
1300 routes.
9. Revenue passenger miles (rpm) grew 14.4% between 2009 and 2010.
Weaknesses:
1. Bad Public Image; Has had several complaints filed against them by Advertising Standards
Board (ASA).
2. Complex Fee System leading to customer dissatisfaction; charge fees where others do not
52% of average final cost is in extras and fees.
3. Only arrive at secondary airports, no option for arrival at primary airports
4. Ryanair resulted in a €2.2 million loss on its Aer Lingus shareholdings due to a decline in the
Aer Lingus share price from €0.73 to €0.72.
5. Organizational structure lacks key executive positions.
6. High operating costs: fuel Costs itself rose 37% from ’10-’11.
7. Do not offer roundtrips.
8. Debt to equity ratio is 1.91 compared to .79 of the industry average.
9. Earnings per share is only 25 Euro cents compare to main competitor Easy Jet at 52 Euro
cents.
0.07
0.04
0.06
0.08
3
3
3
0.05
-
0.08
0.04
3
0.12
2
0.08
1
0.04
0.05
0.03
3
3
0.15
0.09
1
1
0.05
0.03
2
4
0.1
0.12
0.06
4
0.24
1
0.06
2
0.12
0.08
0.05
2
0.1
4
0.2
1
0.05
0.02
0.07
0.06
0.07
0.04
4
-
0.05
1
3
0.12
0.18
0.24
2
2
2
0.08
0.12
0.16
-
0.28
0.15
3.08
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
1
2
4
4
4
0.16
0.24
0.32
-
0.07
0.1
1.58
2
-
0.14
4
0.2
2.78
34
Strategic Objective
• Market Penetration:
– Addition of Human
Resources & Marketing
Divisions
– Increase Funds for
Marketing/Advertising
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
35
New Organizational Structure
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
36
Investment Figures
2 New Sectors
• Increasing from 8 to 10
• Each sector costs €47M in
Staff Costs (376.1/8)
• €94M rough costs
• Estimated €110 for
Projections
Total Investment
Costs: €210M
Increased Marketing
• 60% increase in Marketing
Expense from last
year(2011)
• 154.6 254.6 €100M
increase
*All Investment Costs will be
funded from Cash Account
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
37
3 Year Goals
• 2012
– Organize and Implement new Organization Structure
– Increase revenues from 2011 by 20% €4,355
• 2013
– Increase revenues from 2012 by 25%€5,444
• 2014
– Increased revenues from 2013 by 25% €6,805
• 88% increase in revenues from 2011
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
38
Strategic Implementation
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
39
Management Issues
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
40
Projected Income Statement
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
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Projected Balance Sheet
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
42
Projected Ratios
Liquidity Ratios
Current Ratio
Ryanair (2011)
Leverage Ratios
Debt to Total Assets
Debt to Equity
Long-term Debt to Equity
Effeciency Ratios
Total Assets Turn
Profitability Ratios
Operating Profit
Net Profit
ROA
ROE
Projected
1.89
1.88
0.66
1.91
1.29
0.63
1.7
1.15
0.42
0.49
14.20%
10.30%
4.40%
12.70%
11.50%
8.40%
4.10%
11%
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
43
Strategic Evaluation
Areas of Objectives
Measure of Target
Time Expectation
Primary Responsibility
Customers
1. Satisfaction
2. Brand Identity
1.) Random Customer
Survey with at Least 85%
Satisfaction Rate
2.) Industry Reports
Yearly Evaluation
Caroline Green
(Director of Customer Service)
Employees
1. Quality and Service Training
2. Employee Satisfaction
1.) Online & In Class
Training
2.) Employee Surveys (85%)
through focus groups
Yearly Evaluation
Michael Cawley
(Chief Operating Officer)
Marketing
1. Number of Passengers
1.) 2% Increase per year
Yearly Evaluation
Michael O’Leary
(Chief Executive Officer)
Business Ethics/Natural Environment
1. Waste Reduction
2. Ethics Training
1.) Upkeep on fleet
maintenance
2.) Employee Workshops
Quarterly
Evaluation
Michael Hickey
(Director of Engineering)
Financial
1. Revenues
2. Ratio Analysis
1.) Year 1 20%, Year 2&3
25% per year
2.) Better than Main
Competitors
Yearly Evaluation
Howard Miller
(Chief Financial Officer)
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
44
Ryanair Update
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
45
Stock Performance
49% Increase in Stock Price
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
46
Ryanair Update
•Ryanair named Europe's Greenest and Most Efficient
Airline
• #1 In European Airline Traffic 79M
•93% on time Arrival Rates; Closest competitor
Lufthansa at 85%
•Expanded from 44 bases to 57 bases; 1,500+ routes
from 1,200
April 2013, Thomas Elias, Alison Tardie,
Brandon Plourde, Loren Plourde, UMFK
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Questions
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
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References
•
Ryanair. Securities Exchange Commision, (2011). Form 20f (0 - 29304). Retrieved from Ryanair
website: http://www.ryanair.com/doc/investor/2011/20F_2011.pdf
•
Ryanair. (2011). Annual report. Retrieved from Ryanair website:
http://www.ryanair.com/doc/investor/2011/Annual_Report_2011_Final.pdf
•
CAPA. (June, 2009 03). Ryanair swot analysis: Addicted to growth, a great model for bad
times. Retrieved from http://centreforaviation.com/analysis/ryanair-swot-analysis-addictedto-growth-a-great-model-for-bad-times-7633
•
Major opportunities remain in europe-ryanair route director. (November, 2010 11). Retrieved
from http://www.routesonline.com/news/29/breaking-news/97447/amajor-opportunitiesremain-in-europea-a-ryanair-route-director/
CAPA (June, 2008 08). Delta now world’s largest carrier; ryanair stays top international
airline. Retrieved from http://centreforaviation.com/analysis/delta-now-worlds-largestcarrier-ryanair-stays-top-international-airline-53030
•
•
David, F. (2013). Strategic management: Ryanair holdings case. (14th ed., pp. 111-122).
Upper Saddle River, New Jersey: Prentice Hall.
April 2013, Thomas Elias, Alison Tardie, Brandon Plourde, Loren Plourde, UMFK
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