Ryanair may chart divi course after 80% leap

Nick Goodway
2 Nov 2009

Michael O'Leary, the colourful boss of Ryanair, could be in line to pick up more than £5 million a year if the budget airline ends its rapid growth strategy and starts paying dividends for the first time.

Despite announcing an 80% rise in first-half profits today O'Leary warned that Ryanair will make a loss in the second half and must now consider “changing course” and “managing the airline over the next three years to maximise cash for distribution to shareholders”.

He set an ultimatum for aircraft maker Boeing to agree new, better terms by the end of next month for the 200 aircraft Ryanair has on order between 2013 and 2016.

“I'm warning them that if they don't get off their backsides and reach a deal we will cancel orders and change course,” O'Leary said. “I would still prefer to grow the business but Boeing are being unbelievably slow. In the current tough market they must play their part in passing on savings to us. If we cannot invest our surplus cash efficiently in new aircraft, then we should distribute it to shareholders.”

He said dividends could start in 2012 but declined to speculate how much the company could pay out each year.

O'Leary owns 60 million Ryanair shares and if the company were to pay a dividend of 10 euro cents a share he would receive a cheque for at least €6 million (£5.4 million). That is more than 10 times the amount he received in pay last year when he collected €536,000. “Obviously I would be one of the biggest beneficiaries if we start paying dividends because I own 5% of the company,” O'Leary admitted.

“We have more than €2.5 billion in the bank and are the only major European airline to remain profitable.”

Revenues fell 2% in the past six months as a 15% increase in passengers was wiped out by a 17% fall in average fares. After-tax profits rose from €215 million to €387 million.

While full-year profits are likely to halve in the year to next March from €481 million to little more than €200 million, O'Leary is confident that his strategy through the recession will ensure that Ryanair returns to “substantial profit growth as Europe emerges from this economic downturn”.