Ryanair Holdings plc – Annual report – 31 March 2025
Industry: transport
RISK FACTORS (extract)
Risks Related to the Company (extract)
Brexit’s effect on Ryanair’s business. The UK’s exit from the European Union on January 31, 2020 has had a significant impact on the UK and the EU. The UK and the EU announced on December 24, 2020 that they had signed a Trade and Cooperation Agreement (the “EU–UK TCA”). The EU–UK TCA covers a wide range of topics, including trade in goods and in services, digital trade, intellectual property, public procurement, aviation and road transport, energy, fisheries, social security coordination, law enforcement and judicial cooperation in criminal matters, and thematic cooperation and participation in EU programs.
The current and future arrangements between the EU and the UK, including the EU–UK TCA, could directly impact Ryanair’s business in a number of ways. They include, inter alia, the status of the UK in relation to the EU’s open air transport market, freedom of movement between the UK and the EU, and employment, social security, tax and customs rules between the UK and the EU. Adverse changes to any of these arrangements could potentially materially impact on Ryanair’s financial condition and results of operations in the UK or other markets Ryanair serves.
As a result of the EU–UK TCA, flights between the UK and the EU can be offered by any of the Company’s airline subsidiaries. UK domestic flights and flights between the UK and non-EU destinations can, however, only be offered by the Company’s UK subsidiary, Ryanair UK Limited (“Ryanair UK”), which received an Air Operator Certificate and Operating License (“UK AOC”) from the UK Civil Aviation Authority (“UK CAA”) in December 2018.
Ryanair is exposed to Brexit-related risks and uncertainties, as approximately 22% of revenue in fiscal year 2025 came from operations in the UK, although this was offset somewhat by approximately 15% of Ryanair’s non-fuel costs in fiscal year 2025 which were related to operations in the UK.
Brexit could present Ryanair with a number of other potential regulatory challenges. Brexit could lead to potentially divergent laws and regulations as the UK continues to determine which EU laws (including, but not limited to, in respect of aviation safety and security, consumer rights, data protection, public health and the environment) that it initially replicated on its exit from the EU to ultimately amend or abolish. It also requires special efforts to ensure Ryanair’s continuing compliance with EU Regulation No. 1008/2008, which requires that air carriers registered in an EU member state be majority-owned and effectively controlled by EU nationals. The Board of Directors has taken action to ensure continuing compliance with EU Regulation No. 1008/2008 after December 31, 2020, i.e., the date following which UK holders of the Company’s shares are no longer treated as EU nationals for the purposes of EU Regulation No. 1008/2008. For additional information, please see “–Risks Related to Ownership of the Company’s Ordinary Shares or ADRs”.
Brexit has caused, and may continue to cause, both significant volatility in global stock markets and currency exchange rate fluctuations, as well as create significant uncertainty among UK businesses and investors, mainly due to the resulting legal and regulatory uncertainty, including potentially divergent treaties, laws and regulations applicable to the provision of air transportation services. In particular, to March 31, 2025, the pound sterling had lost approximately 13% and 8% of its value against the U.S. Dollar and the euro respectively since the Brexit referendum in 2016. Further, the Bank of England and other observers have warned of a significant probability of a Brexit-related recession in the UK, which may be further impacted by the long-term negative economic effects of the Covid-19 pandemic, Russia’s invasion of Ukraine, increased interest rates and inflation. The Company earns a significant portion of its revenues in pounds sterling, and any significant decline in the value of the pound sterling and/or recession in the UK would materially impact its financial condition and results of operations. For additional information, please see “–Currency fluctuations affect the Company’s results”.
Currency fluctuations affect the Company’s results. Although the Company is headquartered in Ireland, a significant portion of its operations are conducted in the UK. Consequently, the Group has significant operating revenues and operating expenses, as well as assets and liabilities, denominated in UK pounds sterling. In addition, fuel, aircraft, insurance, aircraft leases and some maintenance obligations are denominated in U.S. dollars. Ryanair’s operations and financial performance can therefore be significantly affected by fluctuations in the values of the UK pound sterling and the U.S. dollar. Ryanair is particularly vulnerable to direct exchange rate risks between the euro and the U.S. dollar because a significant portion of its operating costs are incurred in U.S. dollars and substantially none of its revenues are denominated in U.S. dollars.
Although the Company engages in foreign currency hedging transactions between the euro and the U.S. dollar and, from time to time, between the euro and the UK pound sterling, hedging activities are not expected to eliminate currency risks. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”
Risks Related to Ownership of the Company’s Ordinary Shares or ADSs
EU rules impose restrictions on the ownership of Ryanair Holdings’ Ordinary Shares by Non-EU nationals. EU Regulation No. 1008/2008 requires that, in order to obtain and retain an operating license, an EU air carrier must be majority-owned and effectively controlled by EU nationals. The Board of Directors of Ryanair Holdings is given certain powers under Ryanair Holdings’ articles of association (the “Articles”) to take action to ensure that the number of Ordinary Shares (including Ordinary Shares in the form of ADSs) held in Ryanair Holdings by non-EU nationals (“Affected Shares”) does not reach a level that could jeopardize the Company’s entitlement to continue to hold or enjoy the benefit of any license, permit, consent, or privilege which it holds or enjoys and which enables it to carry on business as an air carrier. The Directors, from time to time, set a “Permitted Maximum” on the number of the Company’s Ordinary Shares and ADSs that may be owned by non-EU nationals at such level as they believe will comply with EU law. The Permitted Maximum is currently set at 49.9%. This maximum level refers to Affected Shares (i.e., Ordinary Shares and ADSs held by or on behalf of non-EU nationals) that are not subject to any restrictions under Article 41 of the Articles. Following the Company’s decision to treat as “Restricted Shares” (within the meaning of the Articles) and disapply voting rights in respect of all Affected Shares from January 1, 2021, the Permitted Maximum is not currently a relevant constraint.
The Board of Directors may, under certain circumstances, deprive holders of Restricted Shares of their rights to attend, vote at, or speak at general meetings, and/or require such holders to dispose of their Restricted Shares to an EU national within 21 days (or such longer period as the Directors may consider reasonable). The Directors are also given the power to transfer such Restricted Shares themselves if a holder fails to comply. In 2002, the Company implemented measures to restrict the ability of non-EU nationals to purchase Ordinary Shares, which remained in effect until March 7, 2025. There can be no assurance that such restrictions will not be reintroduced. Additionally, these foreign ownership restrictions could result in Ryanair’s exclusion from certain stock tracking indices. Any such exclusion may adversely affect the market price of the Ordinary Shares and ADSs. Since April 2012, the Company has had the necessary authorities in place to repurchase ADSs as part of its general authority to repurchase issued share capital in the Company.
As a result of Brexit, with effect from January 1, 2021, UK nationals ceased to qualify as EU nationals. Consequently, as of that date and until March 7, 2025, the 2002 ban on the purchase of Ordinary Shares by non-EU nationals applied to UK nationals. In addition, in accordance with the resolutions passed by the Board of the Company on March 8, 2019, all Ordinary Shares and ADSs held by or on behalf of non-EU nationals (including UK nationals) are, as of January 1, 2021, treated as “Restricted Shares”. Restricted Share Notices were issued to the registered holder(s) of each Restricted Share specifying that the holder(s) of such shares shall not be entitled to attend, speak at or vote at any general meeting of the Company for so long as those shares are treated as Restricted Shares pursuant to Article 41(J)(i) of the Articles. UK nationals were not required to dispose of Ordinary Shares which they purchased prior to January 1, 2021. These resolutions will remain in place until the Board determines that the ownership and control of the Company is no longer such that there is any risk to the airline licenses held by the Company’s subsidiaries pursuant to EU Regulation No. 1008/2008.
On September 2, 2024 the Company’s Board announced that it would review the ban on the purchase of Ordinary Shares by non-EU nationals and the voting restrictions on non-EU national holders of Ordinary Shares and ADSs with a view to potentially varying the Company’s approach in a manner that continues to ensure compliance with EU Regulation 1008/2008. The Company engaged with shareholders and regulators as part of this review. The Company announced on March 7, 2025 that the review had been completed and that the Board had resolved that it is in the best interest of the Company and shareholders as a whole to: 1) discontinue the purchase restrictions with immediate effect; 2) continue to apply the voting restrictions in respect of all Ordinary Shares and ADSs held by or on behalf of non-EU nationals (including UK nationals); 3) update the market as appropriate on the proportion of the Company’s issued share capital held by EU nationals; and 4) if required, reintroduce the purchase restrictions at an appropriate time to ensure that the proportion of the Company’s issued share capital held by EU nationals is at least 20%. See “Item 10. Additional Information—Limitations on Share Ownership by Non-EU Nationals” for a detailed discussion of restrictions on share ownership.
Holders of Ordinary Shares are currently unable to convert those shares into American Depositary Shares (ADSs).
Holders of Ordinary Shares can sell their shares and purchase existing ADSs (which are evidenced by American Depositary Receipts (ADRs)). However, since June 2001 Ryanair has not allowed deposit of Ordinary Shares with the depositary (BNY) for the issuance of new ADSs so as to ensure that its ADS program does not grow to a level that could jeopardize EU airline licenses held by the Company’s subsidiaries (the Ryanair Holdings ADS program currently accounts for over 40% of the Company’s issued share capital and is the largest amongst EU airlines). Following the Company’s decision on March 7, 2025 to lift purchase restrictions on non-EU nationals in respect of Ordinary Shares, both EU and non-EU nationals who wish to withdraw the Ordinary Shares underlying their ADSs can do so by surrendering their ADSs to the depositary and withdrawing the Ordinary Shares represented thereby. Once withdrawn, holders will not be able to deposit their Ordinary Shares with the depositary for the issuance of new ADSs. There can be no assurance that the Company will ever allow the deposit of Ordinary Shares with the depositary for the issuance of new ADSs. See also “— EU rules impose restrictions on the ownership of Ryanair Holdings’ Ordinary Shares by Non-EU nationals”.
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