Ryanair: Its Vulnerability and Exposure to the Macroeconomic Environment

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Ryanair: Its vulnerability and exposure to the macroeconomic environment

Business vulnerability is a measure of how susceptible an organization is to external events and the possible consequential impact on its business costs and profits. In this essay, I will assess the vulnerability of Ryanair and its degree of expose to macroeconomic shocks. I will also analyse Ryanair’s performance since 2000 in comparison to its rival BA, as well as their strategies in how effective they are in raising profits and minimizing their exposure.

Ryanair is a low cost Irish airline and one of the most profitable in the airline industry. However, it can be seen as vulnerable and exposed to macroeconomic shocks. To a degree this is due to Ireland’s
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4) They have even gone as far as planning to close down their check-in desks and the possibility of charging passengers to use the on-flight toilet facilities.

Source: Ryanair Annual Reports

Ryanair is one of the largest airlines in terms of passenger numbers (REF) and has continuously grown in size and value over time as shown above. The extent of such an expanding firm is conveyed over the last eight years as Ryanair’s profits have more than quadrupled. However, there have been drops in profits in 2004 and 2008. In 2004, the airline was hugely affected by the conflicts in Iraq, the renewed threat of terrorism and endless increasing oil prices. However, in this same period, Ryanair managed to launch new bases in Rome and Barcelona, launch 73 new routes, takeover their competitor Buzz for a knock-down price and carry more passengers than BA in the European market. The reason for the decrease in profits in 2008 was due to increases in fuel prices and significantly increased airport charges, particularly at their largest bases at Stansted and Dublin.

British Airways, a competitor to Ryanair, has reviewed its short-haul operations and is planning to spend a portion of its marketing budget promoting shorter haul flights. However, they believe that services such as in-flight refreshments and business class seats are expected by their
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