Ryanair will begin paying regular dividends to investors for the first time as it capitalizes on higher prices and booming demand.
Europe’s largest airline said yesterday that it will pay its shareholders £350 million over the next 12 months through an interim and final dividend.
This will give chief executive Michael O’Leary a windfall of more than £13m.
Ryanair, which has so far only returned cash to investors through share buybacks or special dividends, also pledged to distribute around a quarter of its annual profits to shareholders each year from 2025.
Ryanair bosses said this move to scheduled dividends, as opposed to one-off payments, reflects the “maturity” of the business and its recovery after the Covid pandemic.
On top: Ryanair said it will give shareholders £350m over the next 12 months through an interim and final dividend
“It is a statement of our intent and a sign of our maturity as a company,” said Chief Financial Officer Neil Sorahan.
It came as Ryanair became the latest airline to report growing demand for flights as the industry recovers from Covid-19.
The airline carried a record 105 million passengers in the six months to the end of September despite raising prices. Passenger numbers are expected to reach 183.5 million throughout the year.
Revenue rose 30 per cent to £7.5bn in the first half of the year, while profits rose 59 per cent to £1.9bn.
The company now expects to make record annual profits of between £1.6bn and £1.8bn.
The update sent Ryanair shares up 4.9 percent in Dublin. London-listed rival Easyjet gained 1.2 percent, but British Airways owner IAG fell 0.8 percent.
‘We are pleased to report solid half-year results due to a very strong Easter [and] record summer traffic,” O’Leary said.
“We believe we are set for strong growth next year, both in terms of core traffic figures and underlying airfares during the peak period.”
Ryanair continues to capitalize on higher fares, with the average price of a Ryanair seat up 24 per cent on the previous year to £50.
Revenue from baggage add-ons, allocated seating and priority boarding soared 14 per cent to £2.1bn in the half, with passengers typically paying £20 each for these extras.
European regulators are currently scrutinizing the recent rise in airfares across Europe, which has led to skyrocketing profits for companies such as Ryanair, as well as Easyjet and IAG, which also owns Iberia and Aer Lingus.
However, Ryanair warned that its full-year targets “are largely dependent on the absence of unforeseen adverse events”, such as a further escalation of the war in Ukraine and Gaza.
It also faces a “significantly” higher fuel bill this year. In the first half, the bill rose by £500m or 29 per cent to £2.4bn.
Throughout the year, Ryanair expects to pay an additional £1.1bn for fuel.
Victoria Scholar, analyst at Interactive Investor, said: ‘It’s been a tough few years for airlines with the pandemic crippling international travel and cost inflation pressures.
“But airlines seem to be back in fashion after a particularly impressive performance in the summer.”