4- Principal Business Model of the Firm (Product, B2B/C and/or Service)-Shaykhah
13. Organization Design: Structure, Culture, and Control-Shaykhah
17. ​Conclusion (Team perspective of firm)-Shaykhah
COMPANY: Ryanair
o Nominate your team and company for approval by April 13, 2018.
o Prepare a 30-45-minute MS PowerPoint for presentation beginning the week of April 26,
o All team members should present during the class presentation.
o Prepare a Final Paper MS Word 12 -15 pages all-inclusive of exhibits; single space submitted
no later than Midnight, May 07, 2018.
o Financial analysis can be completed using the MS Excel course model.
o Submit the final deliverables on Blackboard.
Professor Evaluation Criteria and weight:
1. Industry, Market and Business analysis. (30%)
2. Financial analysis. (20%)
3. Depth and breadth of research. (10%)
4. Quality of Deliverables. (15%)
5. Original Thought/Perspective. (15%)
6. Individual rating. (10%)
Questions / Topics to Research:
1. Reason for Firm Selection-Megan
2. A Brief History of the Company-Megan
● Started in 1985 by a group of irish businessmen-set up by the Ryan Family
● Began flying between Waterford and Gatwick Airport to compete w/ British Airways and
Aer Lingus in 1987
● CEO Michael O’leary-launched in 1990 as “Europe’s first low fares airline”
● Innovations include “high frequency flights, moving to single aircraft fleet type, and
scrapping free drinks and expensive meals on board.
● 1997 EU deregulated the airline industry, allowing euro carriers to greatly increase their
flights into the area
○ Allowed for rapid expansion and ths success of its low-cost bus model
○ Serves 34 countries in EU, Africa, and the ME
● Carries 130M-2,000 daily flights from 85 bases, connecting 215 destinations in 36
● Years of rapid growth
● Gulf War in 1991-92: caused passenger traffic to drop-lowered airfares and withdrawal
from many routes-only time when traffic and employment falls
● 1994-launches first new route in 5 years-Dublin to Birmingham
● 1995: overtakes Aer Lingus and BA to become largest passenger airline on the
Dublin-London route
● 1997-continues to set up new routes throughout Europe
● Launches website in 2000-within 3 months it is making 50,000 bookings a week-the most
searched travel website in Europe
○ Currently the most visited airline website
● Traffic grows exponentially-approximately 5-20% a year
● Located in Swords, Dublin
● 2013: “Always Getting Better” program-strategy to listen to the customer’s wishes in
order to fix bad reputation
3. Mission/Vision, and Strategic Goals (note any relevant MA &D changes) – Sarah
Ryanair’s mission statement is “to become Europe’s most profitable airline by rolling out proven
low-fare, no frills service in all markets in which we operate to the benefit of passengers, people
and stakeholders” (cite). Their vision statement is to “firmly establish itself as Europe’s leading
low-fares scheduled passenger airline through continuous improvements and expanded offerings
of its low-fares service. Ryanair aims to offer low-fares that generate increased passenger traffic
while maintaining a continuous focus on cost-containment and operating efficiencies” (cite). In
terms of strategic goals, Ryanair is now shifting their focus on increasing their customer service.
4. Principal Business Model of the Firm (Product, B2B/C and/or Service)-Shaykhah
5. Management Structure and Leadership skills
Ryan Air’s aggressive autocratic leadership style is what differentiates itself from its
competitors. Their CEO, Michael O’Leary, has been the one to make decisions and give orders.
The Ryanair subordinates are not given much of a voice and they are managed from a top-down
approach. O’Leary’s leadership style is an interesting one because he mistreats his employees,
acts unprofessionally and craves publicity. However, he is still able to gain trust from his
investors. One of the biggest reasons is because he knows what consumers want. They want low
priced airline tickets and it doesn’t matter how they get it. O’Leary addresses this by giving the
people what they want and being as blunt as possible at the same time. There are no gimmicks or
games with O’Leary.
Ryanair has an extremely high turnover rate because they hire on inexperienced pilots and staff.
During their first 6 months, they are trained and are not paid for their training. However, once
they have accumulated some flying time, they quickly bounce onto bigger and better
corporations. Most staff see Ryanair as a stepping stone to other bigger companies. Additionally,
Ryanair hire a lot of their employees on a basis of zero hour contracts. This basically means that
these employees only work when they are needed and their pay depends on how many hours they
work. This is a terrible way to implementing low cost employment because it creates no trust and
no reason to help the organization. These employees are there only to work to get paid, nothing
more. Furthermore, many employees are scared of stating their opinions because it might make
them vulnerable. As a result, Ryanair has many problems that can easily be fixed if it actually
listened to its employees. However, time will only tell if they decide to change their outlook.
6. External Analysis (PESTEL Framework)-Megan
Who holds the company
● Political
○ Aviation is a global industry that is highly influenced by international trade and
○ Deregulations/Liberalisation of the Euro airline industry
■ People don’t want regulation bc of the concept that air transport is a public
■ Historically and generally, many airlines were and still are fully or
partially owned by govts
● Many countries focused on creating a major national airline often
with help from the govt-argument that an unregulated industry
would endanger national owned airlines
■ Existing regulations limited pricing freedom and product
differentiation-which restricted capacity growth and excluded new
■ Without these regulations a more competitive environment could exist that
allowed for lower fares and diff
■ EU-freedom of movement and trade
● Third air liberation package
■ “Freedoms of the air”
● 1987: 1st “package” of measures-started to relax the established
○ Limited the right of govts to object to the introduction of
new fares
○ New entrants at 30-40% lower costs
● June 1990: 2nd package opened up the market further allowing
flexibility over the setting of fares and capacity-sharing
● July 1992: freedom to provide services throughout EU
● Demand for air services doubled. Decrease in fare price
● Allowed RA to
○ BREXIT (April 2019)
■ Serious risk of disruption of UK-EU flights unless a UK-EU bilateral os
agreed upon by 2018
■ Most extreme scenario-probs won’t happen-ground flights post-brexit
■ Ryanair is wanting clarity from the gov’t on transition arrangements and
future trading agreements
■ In December of 2017, RA applied for a British air operating license to
ensure its domestic UK routes can keep flying after Brexit-2% of revenue
■ Airline said in 2017 that it planned to pivot its growth away from britain
■ UK must strike a deal with the EU in order to keep the status quo or they
must create an entirely new framework
■ Sharp decline in the sterling after the referendum affected the exchange
rate and their profits
■ Must sign a bilateral agreement
○ EU-freedom of movement and trade
■ Third air liberation package ^^
■ Passenger rights in the EU
● Legislation that aims to improve rights for travellers from EU
● Practice of overbooking
○ 250,000 were being denied each yr-legislation to increase
compensation to deter airlines from using this practice
○ 250 to 600 euros depending on mileage
○ Must also reschedule flight/refund and pay for food/lodging
■ Change from national safety rules to common safety rules throughout the
● Est of EASA:European Aviation Safety Agency
● Minimum level of assistance when cancellations etc
○ Increasing security measures
○ For the most part there is a peaceful political climate in euro
○ Terrorism: security threats across europe
■ Difficult trading environment as a result of attacks across Europe
● Large switch of charter capacity from Turkey, Egypt, and North
Africa to mainland Euro (Spain & Portugal) where RA is the
largest airline
■ New security requirements increase operational costs and waiting times,
making air travel less attractive
● Economic
○ Oil/fuel prices-unstable fuel prices
■ Fuel cost are 10-14% of an airlines operating costs
■ Fuel-efficient aircraft
■ Efficient financial management if fuel reserves including trading with
options and futures us getting more and more important to keep costs
○ World economy: air travel is characterized by very high income elasticity
■ 2-1 relation between demand for air travel and world GDP
■ Thus, very reliant on world economy and its cycles
■ In years of eco downturn, ryanair and other LFA tend to do better in years
of downturn as they attract the “no frills” passenger
■ Still does well in upturn to as more people are travelling in general-can be
difficult to increase capacity (new aircrafts/employees etc)
■ Eco downturn does reduce the purchasing power
● Social
○ Increasing travel lifestyle-increased popularity of holiday abroad
○ Increase in business travel
○ Aging population-older travelers tend to travel less
○ Growing concern for the environment
○ Increased visibility and awareness of airline wrong doings
● Technological
○ It tech developments-internet bookings
○ Ticketless travel-ryanair app, increased online sales and online check-in
○ Increase in popularity of video conferencing-more likely to hold virtual
meetings-no longer have to fly
■ Instant messaging and mobile phones
○ Tech advances that allow jets to operate with improved
○ Development of high speed rail trains such as Eurostar-decrease in air passengers
○ Ryanair Labs
■ Most visited airline sire in Euro-over 45M visits per month
○ Lower operating costs
■ Modern aircrafts are more economic to run, making possible cheap air
● Environmental
○ Demands have been made for airlines to lower their carbon emissions
○ Opportunity for ryanair to be more ethical by going green
○ Its business model will need to change as they like to keep their planes as long as
○ Among the 20 largest airlines by passenger volume, RA is the cleasest
■ They used barely more than a third the fuel to transport the avg passenger
1 mile compared to least efficient
■ Known as Euro greenest and cleanest airlines
■ Invested billions to acquire new aircraft which carry more passengers
while burning less fuel
● Reduced fuel consumption per passenger by 45%
○ Increase in awareness and affection for eco-friendliness
● Legal
○ Spanish Union Vs Ryanair
■ Spanish airline unions are launching lawsuits against ryanair bc they say
they fail to comply with Spanish law
■ RA recognized unions for the first time in dec 2017
■ Pilots were demanding conditions similar to high-cost rivals
■ RA says they are complying to EU and spain employment law
■ Likely to fail
○ RA Vs Expedia
■ RA is accusing Expedia of screen scraping its flights and fares
■ Ex scrapes RA website without authorization and violates the Computer
Fraud and Abuse Act
■ RA claims Expedia harms the airline’s reputation by charging consumers
fees without informing them and makes the tickets nonrefundable and
nontransferable-which often contrasts RA policies
■ Ex claims that RA is a foreign company and does not have any claim to
the act
○ Legal action over flight cancellations and hidden fees ($500M)
7. Describe Nature of Industry, and the competitive environment (Porter 5 Forces)-Megan
● Power of Buyers: High
○ Customers have high bargaining power because switching to another airline is
extremely simple and it does not require additional expenses
○ Airline industry in general “the bargaining power of buyers is relatively high and
increasing, since most airline companies are forced to cut cost by aggressive
competitors”- (Szymanski, 2011, p7)
○ Highly price sensitive customers
○ Ryanair is highly vulnerable to any price reduction measures introduced by
competitors due to the lack of brand loyalty associated with Ryanair
○ Customer satisfaction is somewhat low
● Power of Suppliers: Medium to High
○ Boeing and Airbus is traditionally Ryanair’s supplier
○ reports that ryanair is interested in Comac’s C919 aircraft
■ Comac (chinese jet manufacturer is attracting Ryanairs interest due to
greater amount of seats and increased level of efficiency associated with
energy consumption
■ Signals Ryanair’s increasing bargaining towards its main supplier
○ Supplier switching costs for ryanair is extremely high due to significant amount of
expenses involved associated with pilot retaining needs
○ Airline pilots have strong bargaining power
○ Walsh (2011): confirms, highly intensified level of competition among airports
has significantly increased the bargaining power of airline companies in their
relationship with airports
○ Struck deal with Boeing and Airbus for reduced prices (⅓ of listed price) in bulk
○ Ryanair has avoided paying premium prices to Boeing
■ Ryanair is boeing’s fastest growing competitor-fasted growing
customer-gained 20% of EU market share
■ If they would change their preference to airbus or an alternative aircraft
producer would lead to a rapid fall in production of planes as demand
would decline
■ Ryanair bought the bulk of its fleet in 2005 when demand was at a record
low post-9/11 and the Gulf War
● Paid ⅓ of the price-suggests that Boing does not have the
bargaining power over Ryanair that you would expect in a duopoly
○ Jet Fuel: prices governed by world trade-cannot attempt to bargain with them over
the prices of jet fuel
○ Airport: RA goes to secondary airports that have a quicker turnaround time and
cheaper cost
■ RA does not require as much from airports-don’t need business lounges,
high level check in service
■ Secondary airports tend to not be congested
■ Company is more flexi in fighting costs
■ Caters to secondary airports that are below BE point
● Threat of Substitutes: Low
○ Many other airlines
○ Excellent railway train systems connecting all the major cities that Ryanair flies
to-trains are normally much more expensive
■ 50 pounds to 180 pounds
■ Only 2-3% of air traffic is potentially in trouble from trains as most are on
longer flights than 400km
○ Ferries are often at the same price-more time consuming
○ low customer satisfaction may lead them to other alternatives
○ Compared to other airline companies, it is not as high
○ Video conferencing
● Threat of New Entrants: Low
○ Significant entry barriers in the airline industry-includes econ of scale, high
capital requirements, access to distribution channels, and airport slot availability
○ RA has been able to create econ of scale-not by having larger carriers but throught
their low cost structure
○ Struck deal with Boeing and Airbus for reduced prices (⅓ of listed price) in bulk
■ New entrants do not have this kind of relationship so they will not receive
this deal
○ Huge marketing costs would be needed
● Threat of Competition: High
○ RA cost cutting business model reduces competition by:
■ Enormous econ of scale has reduced threat of entry and helped them gain
20% of EU market share-making it the largest low cost airline in EU
■ Allowed them to reduce the price of the avg fare significantly
■ Plans for the future include buying 175 more in next 5 years
○ Increase in the number of low cost airlines (Easy Jet, WOW)
○ RA has been able to drive out some competition with their large fleet size
○ Rivalry between LFAs and FSA or internal LFAs
8. Describe the Value Chain Internal Analysis (Vertical and Horizontal Integration)
9. Business Strategy (cost leadership or differentiated products or services) and approach
to the market – Sarah
10. Approach to innovation and new product development. Industry / life cycle position –
11. Participation in M&A and D and Alliances
Commission prohibits Ryanair’s proposed takeover of Aer Lingus
Ryanair wanted to overtake Ireland’s prime airline, Aer Lingus. The European Commission shut
this merger down immediately because Ryanair and Aer Lingus were the two largest airlines
operating from Ireland. As a result, the Commission explained that this merger would have
caused a monopoly over the airline industry and would have resulted in higher prices because of
the lack of competition. Commission Vice President, Joaquin Almunia, vetoed this merger
because Aer Lingus and Ryanair hold exclusive market share of 46 routes in Ireland. This wasn’t
the first time Ryanair tried this business ploy. They also tried merging in 2007 and 2009, but
these did not end in fruition as well.
Instead of Ryanair, British Airways owner International Airlines Group was given permission by
Ryanair to snatch up Aer Lingus. Irish government has given the green light for the 1.36 Euro
transaction as well. Currently, Ryanair controls 29.8% of Aer Lingus and doesn’t seem like they
want to let go of that. O’Leary states that the reason why he accepted the deal was because
Ryanair is able to make a small profit for its stockholders from this acquisition.
Ryanair is preparing takeover bid for Alitalia, says Michael O’Leary
The Irish airline giants are gearing up to snatch up Alitalia, a bankrupt Italian airline. This is only
the second acquisition by the airline giants. The Italian airline company was let go by the Italian
government after a decade of pumping up to 6 Billion Euros. The bid looked like it was going to
go through. However, due to a immense shortage in pilots and numerous flight cancellations,
Ryanair’s management withdrew its offer for Alitalia. Ryanair publicly disclosed that over
18,000 flights have been cancelled due to the shortage in pilots. This is estimated to have cost
$25 Million Euros because of refunds and related costs and an additional $25 Million Euros for
free flight vouchers for those affected.
Ryanair snaps up rival airline Buzz
Michael O’Leary has been very adamant about not participating in acquisitions. However, in
2013, Irish discount airline, Ryanair, shockingly bought out Buzz for 15.6 Million Euros. The
failing Dutch airline, Buzz, was going to be renovated with the same business model as Ryanair
and it was estimated to double its traffic. Because the acquisition was such a good offer, O’Leary
seized this opportunity to get rid of a competitor and gain another advantage to their rivals,
12. International Strategy (variations of product and services by country/region) – Sarah
13. Organization Design: Structure, Culture, and Control-Shaykhah
14. Corporate Governance (Board membership, Press releases)
Board Membership
Investor relations pg. 14
Press Releases
Always Getting Better Plan
Because of Ryanair’s bad publicity throughout the years, O’Leary pushed for a new strategic
plan label “Always Getting Better”. This plan has been in action since 2014 and looking to
continue to rise. To address customer concerns, Ryanair’s AGB plan includes a mixture of
environmental, service, digital, and ancillary initiatives that aim to increase customer satisfaction
experience. Their promise was that if they couldn’t get you a cheaper flight, the company would
refund the difference and add 5 Euros to your Ryanair account. Just in 2017, Ryanair was able to
guarantee the lowest average prices of 41 Euros. This was a 13% decrease compared to the year
before. The AGB’s promise is for more environmentally friendly initiatives like getting rid of
non-recyclable plastics in airplane operations. Additionally, the AGB promises for the best
on-time performance in the industry with an 88% OTP. In 2018, Ryanair has created a new
section on their website called “Try Somewhere New” that houses exclusive content about travel
guides and videos that are offered in 7 different languages worldwide. Another policy the
company has implemented is the “Simple Bag Policy” – allows 2 free cabin bags and increased
checked bag size for only 25 Euros. All of these programs helped to create a better brand image
that resonated greatly with Ryanair from 2014 – present based off the growth numbers YOY.
Their revenue percentage growth in 2015 – 2016 was 12.26 and 15.60 respectively.
Ryanair renewed its contract with Navitair, a transportation technology service provider. This
will lead to Ryanair being able to improve their technology and reservation solutions. Their
contract will run until 2025. This partnership with Navitair has been one of the huge drivers of
profits and growth. With a 13% traffic growth in just one fiscal year in 2017, Ryanair is
continuing to show success compared to their competitors. The company also boasts a 6%
increase in profit after tax to 1.31 Billion Euros.
15. Highlight any Black swan events and company repositioning. Brandon
Company repositioning
16. Financial Analysis (3-5-year review of Income Statement, Balance Sheet, Cash flow,
Returns). A Financial Model will be provided
1. I redid the financials, but I can’t get Ryanair’s Balance sheet to equal. Can somebody try
to see if they can fix it?
Income Statement:​ Megan
● Sales have been growing each year
● Profit Margin: Doing really well -20%-avg 17.25%
○ The airline industry on avg has a 4.7% PM
○ Illustrates that the company is in good financial health
○ Shows that the company has enough money to make investments into new
equipment over the next year
○ For the most part (despite the dip)-the profit margin remains on the uptrend and
well above industry norms-means they are in a proactive decision making mode
○ Creditable performance by a robust business model in a difficult trading
○ By itself it does not tell us a lot about the company but as a comparison it does
○ Shows improvement of profitability as well and operational efficiency
○ One of the most profitable airlines
○ Also recognizable is the low Irish tax rate-also a reason why their profit margins
are so high
■ Tax rate(over the last 4 years ranging from 9.45% to 11.77%
■ Extremely low by US standards where the average is typically 27%-35%
■ Ireland typically 12.5%- RA is averaging lower, possible tax relief?
● Revenue Growth Rate Vs NI Growth Rate
○ Lower revenue and NI growth due to trading difficult trading conditions caused
by a series of security event in Euro cities and sharp decline in sterling following
the Brexit referendum-despite this still a strong performance
○ Growing revenue driven by increased frequency of flights and new destinations
○ Growth is due to low-fares
● The airline’s strategy of cost reduction has been paying off-operating income has been
increasing exponentially
● Gross Profit Margin
○ Increasing every year-the higher=lots of money left over to invest
○ Shows the company is in good financial health
● Despite ryanair growing at an incredibly fast pace-it is still extremely profitable (growth
needs money)
Balance Sheet:
Cash Flow:
17. ​Conclusion (Team perspective of firm)-Shaykhah

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