First dividend brought forward as Ryanair flies back to black

Published on Tuesday 1 June 2010 19:33

AIRLINE Ryanair will bring forward its first dividend since flotation in 1997 after swinging back to a full-year profit – in a move that will net boss Michael O'Leary 20 million (£16.7m).

The chief executive, who owns 4 per cent of shares in the Irish carrier, will receive the windfall as part of a 500m dividend for shareholders.

Previously, Europe's biggest low-cost airline said it would end its no-dividend policy around 2013, when it would scale back growth, though some analysts suspected that such a move was designed to put pressure on Boeing over aircraft order talks.

Ryanair – which has a track record of striking great fleet bargains at the bottom of industry cycles – pulled out of talks with Boeing on an order for 200 aircraft last year after several warnings over future growth.

However, the airline said yesterday that it expected to generate up to 1 billion of surplus cash by the end of 2013, of which it proposed to pay 500m in a one-off dividend in October and possibly a further 500m later as a dividend or share buyback.

That was after it unveiled pre-tax profits of 341m in the year to 31 March, against losses of 180.5m a year ago.

Michael Cawley, deputy chief executive of Ryanair, said of the dividend: "It's probably come a little bit sooner than others would have expected, but notwithstanding that, it's here for real now."

O'Leary kept the door ajar for a future deal with Boeing or its rival Airbus.

He said dividends would not become a regular feature. O'Leary added: "Before anybody asks silly questions, like what our dividend policy will be going forward, there isn't going to be another one for at least a number of years."

The prospect of the cash pay-out, rising profits and a cap on costs caused by volcanic ash – put at no more than 50m – helped boost Ryanair's shares. They ended the day up 7.5 per cent at 3.53.

The dividend pay-out contrasts with the public row over dividends at budget rival EasyJet, which saw founder and major shareholder Sir Stelios Haji-Ioannou quit the board last month. He disagrees with EasyJet's "relentless growth" through the recession – believing profit margins and dividends should be a higher priority – but the board is pressing on with plans to grow its aircraft fleet.

Ryanair's move also stoked the ongoing rivalry between the two airline bosses. Stelios yesterday thanked O'Leary for proposing the dividend – a moved that appeared to support his stance.

Stelios said: "I never thought the day would come so quickly when I would be able to say: 'Thank you, Michael'." O'Leary suggested Stelios should buy shares in Ryanair.

Ryanair said profits should rise by 10-15 per cent this year.