Ryanair Holdings plc

Case Solution

Mark T. Bradshaw
Harvard Business School ()

Examine the valuation of an Irish airline that reported its first net profit drop in 2004 and saw its share price drop 30% on the news. Ryanair is a low-cost airline based in Dublin, Ireland, operating more than 200 routes in 20 countries. The company has directly challenged Europe’s largest airlines and built a more than 20-year track record of incredibly strong passenger growth as airfares have been gradually reduced. It is not uncommon for one-way tickets (excluding tax) to be sold on the Ryanair website for less than one euro. After building a profitable business in the troubled aviation industry, industry analysts and Ryanair itself compared the airline to its US counterpart Southwest Airlines, and the common stocks have caught the attention of investors in Europe and abroad. . Ryanair’s valuation is problematic due to general uncertainty in the industry (i.e. fuel costs, labor costs, macroeconomic factors, etc.) and is compounded by the company’s stated goal of reducing airfare every year. .

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