Commitments and contingencies Commitments

In March 2013, the Group entered into a contract with Boeing (the ―2013 Boeing Contract‖) whereby the Group agree to purchase 175 Boeing 737-800 ―next-generation‖ aircraft over a five year period from calendar 2014 to 2018.

In April 2014, the Company agreed to purchase an additional 5 Boeing 737-800 ―next-generation‖ aircraft for delivery in fiscal year 2016 on the same terms and conditions as the 2013 Boeing Contract bringing the total ―firm‖ new deliveries to 180 aircraft.

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The table below details the firm aircraft delivery schedule at March 31, 2014 and March 31, 2013 for the Company pursuant to the 2013 Boeing contracts.

Aircraft Delivered at March 31, 2014 Firm Aircraft Deliveries Fiscal 2014/ 2015 Firm Aircraft Deliveries Post Fiscal 2014/2015 Total “Firm” Aircraft Basic price per aircraft (U.S.$ million) Firm Aircraft Deliveries Fiscal 2013- 2014 at March 31, 2013 2013 Contract ... 0 11 164 175 78.0 - Total ... 0 11 164 175 -

The ―Basic Price‖ (equivalent to a standard list price for an aircraft of this type) for each aircraft governed by the 2013 Boeing contract will be increased by (a) an estimated U.S.$2.9 million per aircraft for certain ―buyer furnished‖ equipment the Company has asked Boeing to purchase and install on each of the aircraft, and (b) an ―Escalation Factor‖ designed to increase the Basic Price, as defined in the purchase agreement, of any individual aircraft by applying a formula which reflects increases in the published U.S. Employment Cost and Producer Price indices between the time the Basic Price was set and the period of 18 to 24 months prior to the delivery of such aircraft.

Boeing has granted Ryanair certain price concessions with regard to the Boeing 737-800 ―next generation‖ aircraft as part of the Boeing 2013 Contract. These take the form of credit memoranda to the Company for the amount of such concessions, which the Company may apply toward the purchase of goods and services from Boeing or toward certain payments, other than advance payments, in respect of the purchase of the aircraft under the various Boeing contracts.

Boeing and CFMI (the manufacturer of the engines to be fitted on the purchased aircraft) have also agreed to give the Company certain allowances in addition to providing other goods and services to the Company on concessionary terms. These credit memoranda and allowances will effectively reduce the price of each aircraft to the Company. As a result, the effective price of each aircraft (the purchase price of the new aircraft net of discounts received from Boeing) will be significantly below the Basic Price mentioned above. At March 31, 2014, the total potential commitment to acquire all 175 ―firm‖ aircraft, not taking such increases and decreases into account, will be approximately U.S. $13.8 billion. At March 31, 2013, the total potential commitment was U.S. $13.8 billion to acquire all 175 ―firm‖ aircraft.

Operating leases

The Company financed 76 of the Boeing 737-800 aircraft delivered between December 2003 and March 2014 under seven-year, sale-and-leaseback arrangements with a number of international leasing companies, pursuant to which each lessor purchased an aircraft and leased it to Ryanair under an operating lease. Between October 2010 and December 2012, 17 operating lease aircraft were returned to the lessor at the agreed maturity date of the lease. At March 31, 2014 Ryanair had 51 operating lease aircraft in the fleet. As a result, Ryanair operates, but does not own, these aircraft. Ryanair has no right or obligation to acquire these aircraft at the end of the relevant lease terms. 18 of these leases are denominated in euro and require Ryanair to make fixed rental payments over the term of the leases. 33 remaining operating leases are U.S. dollar- denominated which require Ryanair to make fixed rental payments. The Company has an option to extend the initial period of seven years on 34 of the 51 remaining operating lease aircraft as at March 31, 2014, on pre- determined terms. This includes 3 operating lease arrangements which are due to mature during the year ended March 31, 2015 but have been extended for a further 7 years. The following table sets out the total future minimum payments of leasing 51 aircraft (2013: 59 aircraft; 2012: 59 aircraft), ignoring movement in interest rates, foreign currency and hedging arrangements, at March 31, 2014, 2013 and 2012, respectively:

197 At March 31, 2014 2013 2012 Minimum payments Present value of Minimum payments Minimum payments Present value of Minimum payments Minimum payments Present value of minimum payments €M €M €M €M €M €M

Due within one year ... 118.7 112.7 107.2 98.4 116.9 106.4 Due between one and five

years ... 292.1 246.5 342.4 258.0 328.0 232.5 Due after five years ... 61.9 44.4 94.5 53.3 160.9 87.4 Total ... 472.7 403.6 544.1 409.7 605.8 426.3

Finance leases

The Company financed 30 Boeing 737-800 aircraft delivered between March 2005 and March 2014 with 13-year euro-denominated Japanese Operating Leases with Call Options (―JOLCOs‖). These structures are accounted for as finance leases and are initially recorded at fair value in the Company‘s balance sheet. Under each of these contracts, Ryanair has a call option to purchase the aircraft at a pre-determined price after a period of 10.5 years, which it may exercise.

The following table sets out the total future minimum payments of leasing 30 aircraft (2013: 30 aircraft; 2012: 30 aircraft) under JOLCOs at March 31, 2014, 2013 and 2012, respectively:

At March 31, 2014 2013 2012 Minimum payments Present value of Minimum payments Minimum payments Present value of Minimum payments Minimum payments Present value of minimum payments €M €M €M €M €M €M

Due within one year ... 78.1 73.5 58.1 53.4 63.2 51.0 Due between one and five

years ... 408.6 250.0 359.1 260.9 318.9 243.6 Due after five years ... 248.4 83.9 365.7 146.5 484.0 217.2 Total minimum lease

payments ... 735.1 407.4 782.9 460.8 866.1 511.8 Less amounts allocated to

future financing costs ... (18.2) - (20.3) - (60.1) - Present value of minimum

lease payments ... 716.9 407.4 762.6 460.8 806.0 511.8 Commitments resulting from the use of derivative financial instruments by the Company are described in Notes 5 and 11 to the consolidated financial statements.

Contingencies

The Company is engaged in litigation arising in the ordinary course of its business. Management does not believe that any such litigation will individually or in aggregate have a material adverse effect on the financial condition of the Company. Should the Company be unsuccessful in these litigation actions, management believes the possible liabilities then arising cannot be determined but are not expected to materially adversely affect the Company‘s results of operations or financial position.

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In February 2004, the European Commission ruled that Ryanair had received illegal state aid from the Walloon regional government in connection with its establishment of a low cost base at Brussels (Charleroi). Ryanair advised the regional government that it believed no money was repayable as the cost of establishing the base exceeded the amount determined to be illegal state aid. Ryanair also appealed the decision of the European Commission to the European Court of First Instance (―CFI‖), requesting that the Court annul the decision on the basis that Ryanair‘s agreement at Brussels (Charleroi) was consistent with agreements at similar privately owned airports and therefore did not constitute illegal state aid. The Company placed €4.0 million in an escrow account pending the outcome of this appeal. In December 2008, the CFI annulled the Commission‘s decision against Charleroi Airport and Ryanair was repaid the €4 million that the Commission had claimed was illegal state aid. A further action taken by the Belgian government for €2.3 million has also been withdrawn.

Ryanair is facing similar legal challenges with respect to agreements with certain other airports. In January 2010, the European Commission concluded the Bratislava state aid investigation with a finding that Ryanair‘s agreement with Bratislava airport involved no aid. In July 2012 the European Commission found that Ryanair‘s arrangement with Tampere airport contained no aid. In February 2014 the European Commission reached the same conclusion in respect of Marseille, Aarhus and Berlin (Schönefeld) investigations. On July 23, 2014 the European Commission announced a ‗no state aid‘ decision in respect of Dusseldorf (Weeze) airport, as well as findings of state aid to Ryanair in its arrangements with Pau, Nimes and Angouleme airports, ordering Ryanair to repay a total of approximately €9.7m of alleged aid. Ryanair will appeal these ‗aid‘ decisions to the EU General Court where proceedings are expected to take between 2 and 4 years. The remaining fourteen investigations involving Ryanair and Lübeck, Alghero, Frankfurt (Hahn), Zweibrücken, Altenburg, Klagenfurt, (Stockholm) Vasteras, Paris (Beauvais), La Rochelle, Carcassonne, Cagliari, Brussels (Charleroi), Girona and Reus airports are ongoing and Ryanair currently expects that they will conclude mid to late 2014, with any European Commission decisions appealable to the EU General Court.

State aid complaints by Lufthansa about Ryanair‘s cost base at Frankfurt (Hahn) have been rejected by German courts, as have similar complaints by Air Berlin in relation to Ryanair‘s arrangement with Lubeck airport, but following a German Supreme Court ruling on a procedural issue in early 2011, these cases will be re-heard by lower courts. In addition, Ryanair has been involved in legal challenges including allegations of state aid at Alghero, Berlin (Schönefeld) and Marseille airports. The Alghero case (initiated by Air One) was dismissed in its entirety in April 2011. The Berlin (Schönefeld) case (initiated by Germania) was discontinued following the European Commission‘s finding in February 2014 that Ryanair‘s arrangement with the airport contained no state aid. The Marseille case was withdrawn by the plaintiffs (subsidiaries of Air France) in May 2011.

The Company has also entered into a series of interest rate swaps to hedge against fluctuations in interest rates for certain floating-rate financing arrangements. Cash deposits have been set aside as collateral for the counterparty‘s exposure to risk of fluctuations on long-term derivative and other financing arrangements with Ryanair (restricted cash) (see Note 9 to the consolidated financial statements for further details). Additional numerical information on these swaps and on other derivatives held by the Company is set out in Notes 5 and 11 to the consolidated financial statements.

199 24 Note to cash flow statement

At March 31,

2014 2013 2012

€M €M €M

Net debt at beginning of year ... 60.7 (109.6) (708.8) Increase/(decrease) in cash and cash equivalents in year ... 489.2 (1,467.4) 680.0 (Decrease)/increase in financial assets > 3 months ... (795.1) 1,521.2 (97.2) Decrease in restricted cash ... (11.4) (10.4) (7.8) Net cash flow from decrease in debt ... 414.7 126.9 24.2 Movement in net funds resulting from cash flows ... 97.4 170.3 599.2 Net funds/(debt) at end of year ... 158.1 60.7 (109.6) Analysed as:

Cash and cash equivalents, financial assets and restricted cash ... 3,241.7 3,559.0 3,515.6 Total borrowings* ... (3,083.6) (3,498.3) (3,625.2) Net funds/(debt) ... 158.1 60.7 (109.6) *includes both current and non-current maturities of debt.