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Ryanair Holdings plc, together with its subsidiaries, provides scheduled-passenger airline services in Ireland, the United Kingdom, Italy, Spain, Germany, and other European countries. It is also involved in the provision of various ancillary services, such as non-flight scheduled and Internet-related services; in-flight sale of beverages, food, duty-free, and merchandise; and marketing of car hire and accommodation services, and travel insurance through its website and mobile app. In addition, the company offers aircraft and passenger handling, ticketing, and maintenance and repair services; and markets car parking, fast-track, airport transfers, attractions, and activities on its website and mobile app, as well as sells gift vouchers. As of June 30, 2022, it had a principal fleet of approximately 483 Boeing 737 aircrafts and 29 Airbus A320 aircrafts; and offered approximately 3,000 short-haul flights per day serving approximately 225 airports. Ryanair Holdings plc was founded in 1985 and is headquartered in Swords, Ireland.
Ryanair Holdings plc and its subsidiaries stand as a prominent provider of scheduled passenger airline services across various European nations, including Ireland, the United Kingdom, Italy, Spain, and Germany. Beyond its fundamental airline operations, the company delves into a myriad of ancillary services, offering non-flight scheduled and Internet-related services, in-flight sales of beverages, food, duty-free items, and merchandise. Additionally, it facilitates the marketing of car hire, accommodation services, and travel insurance through its digital platforms – its website and mobile app.
 
Moreover, Ryanair extends its reach by offering a comprehensive suite of services that encompasses aircraft and passenger handling, ticketing, and essential maintenance and repair services. The company also endorses a variety of airport-based services and travel extras like car parking, fast-track, airport transfers, and local attractions and activities, all accessible via its online platforms. Gift vouchers are also available for purchase.
 
As of June 30, 2022, Ryanair showcased a robust principal fleet, comprising approximately 483 Boeing 737 aircraft and 29 Airbus A320 aircraft. The airline facilitates roughly 3,000 short-haul flights daily, connecting around 225 airports and steadfastly serving its vast customer base. Established in 1985, Ryanair Holdings plc proudly anchors its headquarters in Swords, Ireland, persevering as a pivotal player in the European airline industry.


== Valuation ==
== Valuation ==
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Ryan Air's annual free cash flows from the past 10 years<ref><nowiki>https://www.macrotrends.net/stocks/charts/RYAAY/ryanair-holdings/free-cash-flow</nowiki></ref>:
Ryan Air's annual free cash flows from the past 10 years<ref><nowiki>https://www.macrotrends.net/stocks/charts/RYAAY/ryanair-holdings/free-cash-flow</nowiki></ref>:
{| class="wikitable"
{| class="wikitable"
|Year
!Year
|Annual Free Cashflow (£ Mn)
!Annual Free Cashflow (£ Mn)
|-
|-
|2023
|2023
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Projected cash flow values for the next 10 years, based on an earnings growth prediction rate of 12.3%<ref>[https://simplywall.st/stocks/ie/transportation/ise-rya/ryanair-holdings-shares/future#:~:text=Ryanair%20Holdings%20is%20forecasted%20to,be%2025.3%25%20in%203%20years. https://simplywall.st/stocks/ie/transportation/ise-rya/ryanair-holdings-shares/future#:~:text=Ryanair%20Holdings%20is%20forecasted%20to,be%2025.3%25%20in%203%20years.]</ref>:
Projected cash flow values for the next 10 years, based on an earnings growth prediction rate of 12.3%<ref>[https://simplywall.st/stocks/ie/transportation/ise-rya/ryanair-holdings-shares/future#:~:text=Ryanair%20Holdings%20is%20forecasted%20to,be%2025.3%25%20in%203%20years. https://simplywall.st/stocks/ie/transportation/ise-rya/ryanair-holdings-shares/future#:~:text=Ryanair%20Holdings%20is%20forecasted%20to,be%2025.3%25%20in%203%20years.]</ref>:
{| class="wikitable"
{| class="wikitable"
|Year
!Year
|Projected cash flow (£Mn)
!Projected cash flow (£Mn)
|-
|-
|2024
|2024
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''Beta value = 1.45''<ref>https://finance.yahoo.com/quote/RYAAY/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAA-QsnB5Z3NE6_hbXttVYrUnEYFEWtxrdExBHRP0wG2Rwy_Q5T0mlSLNPF2WwFhQbDYfevMryfNXYe8P_oYpm8Xt7ytyiQCF8KpRHed-kXXUK8BorxHOIxb-yyG92X5Dx2IfOOw3sPZlEWgKeH5FetsTHRtMu9XR-g5kdP4aoX-1</ref>
''Beta value = 1.45''<ref>https://finance.yahoo.com/quote/RYAAY/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAA-QsnB5Z3NE6_hbXttVYrUnEYFEWtxrdExBHRP0wG2Rwy_Q5T0mlSLNPF2WwFhQbDYfevMryfNXYe8P_oYpm8Xt7ytyiQCF8KpRHed-kXXUK8BorxHOIxb-yyG92X5Dx2IfOOw3sPZlEWgKeH5FetsTHRtMu9XR-g5kdP4aoX-1</ref>


''Assumed market return premium = 6% (government data)''  
''Assumed market return premium = 6% (government data)''
 
 


WACC = [risk-free rate] + [beta value * assumed market return premium]
WACC = [risk-free rate] + [beta value * assumed market return premium]
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Present value of cash flow = { predicted cash flow }  /  { (1 + WACC)^(number of years) }
Present value of cash flow = { predicted cash flow }  /  { (1 + WACC)^(number of years) }
{| class="wikitable"
{| class="wikitable"
|Year
!Year
|Present value of predicted cash flow (£Mn)
!Present value of predicted cash flow (£Mn)
|-
|-
|2024
|2024

Revision as of 13:04, 11 October 2023

Ryanair
Ryanair.svg
IATA ICAO Callsign
FR RYR RYANAIR
Founded28 November 1984; 39 years ago (1984-11-28)[1]
Commenced operations8 July 1985; 38 years ago (1985-07-08)
Operating bases
List of bases
SubsidiariesRyanair DAC
Malta Air
Buzz
Lauda Europe
Ryanair UK
Fleet size563
Destinations222
Traded as
HeadquartersSwords, Dublin, Ireland
Key people
RevenueIncrease €10.775 billion (2023)
Net incomeIncrease €1.314 billion (2023)
Total assetsIncrease €16.406 billion (2023)
Total equityIncrease €5.643 billion (2023)
Employees19,000 (2022)[11]
Website

Ryanair Holdings plc and its subsidiaries stand as a prominent provider of scheduled passenger airline services across various European nations, including Ireland, the United Kingdom, Italy, Spain, and Germany. Beyond its fundamental airline operations, the company delves into a myriad of ancillary services, offering non-flight scheduled and Internet-related services, in-flight sales of beverages, food, duty-free items, and merchandise. Additionally, it facilitates the marketing of car hire, accommodation services, and travel insurance through its digital platforms – its website and mobile app.

Moreover, Ryanair extends its reach by offering a comprehensive suite of services that encompasses aircraft and passenger handling, ticketing, and essential maintenance and repair services. The company also endorses a variety of airport-based services and travel extras like car parking, fast-track, airport transfers, and local attractions and activities, all accessible via its online platforms. Gift vouchers are also available for purchase.

As of June 30, 2022, Ryanair showcased a robust principal fleet, comprising approximately 483 Boeing 737 aircraft and 29 Airbus A320 aircraft. The airline facilitates roughly 3,000 short-haul flights daily, connecting around 225 airports and steadfastly serving its vast customer base. Established in 1985, Ryanair Holdings plc proudly anchors its headquarters in Swords, Ireland, persevering as a pivotal player in the European airline industry.

Valuation

Discounted Cash Flow Analysis

Historical Cash Flows:

Ryan Air's annual free cash flows from the past 10 years[12]:

Year Annual Free Cashflow (£ Mn)
2023 2 063.22
2022 1 010.68
2021 (-3 072.54)
2020 831.96
2019 545.19
2018 892.85
2017 523.90
2016 1 133.79
2015 1 143.06
2014 722.26
2013 918.44
2012 1 006.38
2011 (- 146.75)
2010 52.45
2009 36.00
Projected Cash Flows:

Projected cash flow values for the next 10 years, based on an earnings growth prediction rate of 12.3%[13]:

Year Projected cash flow (£Mn)
2024 2 317.00
2025 2 601.99
2026 2 922.03
2027 3 281.44
2028 3 685.06
2029 4 138.32
2030 4 647.33
2031 5 218.96
2032 5 860.89
2033 6 581.78
Determining a Discount Rate:

A WACC value was calculated as follows:

UK 10 Year Government Bond Yield = 4.43% (government data)

Beta value = 1.45[14]

Assumed market return premium = 6% (government data)

WACC = [risk-free rate] + [beta value * assumed market return premium]

WACC = [4.43%] + [1.45 * 6%]

WACC = 13.13%

Present value of predicted future cash flows:

The present value of each predicted cash flow (over the next 10 years), after the discount rate had been applied as follows:

Present value of cash flow = { predicted cash flow }  /  { (1 + WACC)^(number of years) }

Year Present value of predicted cash flow (£Mn)
2024 2 048.08
2025 2 033.06
2026 2 018.14
2027 2 003.33
2028 1 988.64
2029 1 974.05
2030 1 959.56
2031 1 945.19
2032 1 930.92
2033 1 916.75
Net present / intrinsic value of Ryan Air:

The net present value was calculated by summing the present values of predicted cash flows over the next 10 years:

Net present value = £19 817.71 Mn (£19.82 Bn)

Comparison with present market cap of Ryan Air:

Given that the net present value (£19.82 Bn) calculated from the DCF analysis is less than the current market cap of Ryan Air (£18.98 Bn - as of October 2023[15]) - it is possible that Ryan Air is potentially undervalued, calling for a sensitivity analysis to be carried out.

References and notes

  1. ↑ Aldous, Richard (2013). Tony Ryan: Ireland's Aviator. Gill & Macmillan Ltd. p. 80. ISBN 978-0-7171-5781-5.
  2. ↑ "Ryanair to relaunch at Billund Airport with 26 destinations". The Local. 5 May 2021.
  3. ↑ 3.0 3.1 3.2
  4. ↑
  5. ↑
  6. ↑ "Ryanair to start flying from Arlanda this autumn". The Local. 6 May 2021.
  7. ↑
  8. ↑
  9. ↑
  10. ↑
  11. ↑
  12. ↑ https://www.macrotrends.net/stocks/charts/RYAAY/ryanair-holdings/free-cash-flow
  13. ↑ https://simplywall.st/stocks/ie/transportation/ise-rya/ryanair-holdings-shares/future#:~:text=Ryanair%20Holdings%20is%20forecasted%20to,be%2025.3%25%20in%203%20years.
  14. ↑ https://finance.yahoo.com/quote/RYAAY/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAA-QsnB5Z3NE6_hbXttVYrUnEYFEWtxrdExBHRP0wG2Rwy_Q5T0mlSLNPF2WwFhQbDYfevMryfNXYe8P_oYpm8Xt7ytyiQCF8KpRHed-kXXUK8BorxHOIxb-yyG92X5Dx2IfOOw3sPZlEWgKeH5FetsTHRtMu9XR-g5kdP4aoX-1
  15. ↑ https://companiesmarketcap.com/ryanair/marketcap/#:~:text=Market%20cap%3A%20%2422.31%20Billion,cap%20according%20to%20our%20data.
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