The outspoken chief executive of Ryanair, Michael O'Leary, is set for a €20m (£16.7m) windfall this autumn when the budget airline pays its first-ever dividend to shareholders.
Mr O'Leary, who has been in the top job since 2004 and owns 4 per cent of the budget airline's shares, confirmed yesterday that Ryanair will pay a one-off special dividend of $500m, or €0.34 per share, in October as the company slows its spending on new aircraft.
The announcement came alongside annual results showing profits up by 204 per cent to $319m, helped by lower fuel costs. Revenues were up by 2 per cent at €2.99bn as fares dropped by 13 per cent.
Cut-price airlines have withstood the recession better than their premium rivals, and Ryanair's passenger numbers shot up by 14 per cent to 66.5 million in the year to 31 March. The group's handling costs also fell by 9 per cent as airports fought hard to retain business in the face of cutbacks by non-budget carriers.
"We can be proud of delivering a 200 per cent increase in profits and traffic growth during a global recession when many of our competitors have announced losses or cutbacks, while more have gone bankrupt," Mr O'Leary said.
The payment of a dividend for the first time follows the collapse of negotiations to buy 200 new Boeing aircraft at the end of last year, and signals a move away from the high-capital expenditure, high-growth approach Ryanair has pursued since it was first floated in 1997.
With capital expenditure expected to fall sharply from last year's €1.2bn, Ryanair expects to generate €1bn in surplus cash by the end of 2013. Assuming it does not change its plans on purchasing new aircraft, the Irish company expects that a second tranche of €500m will be available for return to shareholders, either through a shares buy-back or one-off dividend.
Ryanair's last financial year, which ended in March 2009, saw the group record its first loss of €169m after it was caught out by its hedging strategy and fuel costs ballooned by 59 per cent to €1.26bn.
In the year to March 2010, however, fuel costs came down by 29 per cent. And, excluding fuel, costs were down by 3 per cent over the year as a whole. Mr O'Leary's outlook for the coming year is upbeat. Despite fuel costs expected to rise by €300m, Ryanair is set for another 11 per cent rise in passengers numbers – taking the total up to 73.5 million – and profits up by between 10 and 15 per cent.
Ryanair also yesterday added its voice to criticism of the European regulations which left airlines responsible for looking after passengers even if disruptions are caused by natural disasters.
The issue came to a head with the blanket closure of European air space because of the volcanic ash cloud in April. Ryanair yesterday put an estimated cost of €50m on the ash cloud crisis, which saw 9,400 of the carrier's flights cancelled and 1.5 million passengers lost. And Mr O'Leary called for the rules to be changed.
"EU261 is a manifestly unfair disproportionate and discriminatory regulation which requires airlines to reimburse expenses of disrupted passengers even in force majeure cases," he said. "We believe that airlines should not be exposed to such unlimited liability when the cause of these cancellations were clearly beyond the airlines control."Reuse content