Ryanair considers dividend; cuts passenger forecast
25.09.09
Ryanair could pay a one-off dividend or buy back shares, as a strong rise in profits this year will see its cash reserves boosted above their current €2.5bn, its chief executive said at its shareholders meeting yesterday. He also announced a small reduction in the airlines passenger forecast for the current financial year, but maintained profit guidence.
Europe's largest budget airline is still producing earnings growth, unlike rivals such as BA and Air France-KLM. However, it has been forced to slash fares to fill planes, as a global recession hits consumer demand, particularly for city breaks and discretionary short haul travel.
Chief Executive Michael O'Leary told the airline's AGM in Dublin yesterday that he expects average fares to fall by about 20% over the year to the end of March. He also cut Ryanair's full-year passenger target to 66 million from 67 million - largely due to capacity cuts at its main hubs Dublin and Stansted.
Despite the reduced passenger forecast, he said that he still expects full-year adjusted net profit to roughly double from last year, maintaining its forecast at the lower end of a €200 to €300 million range. Ryanair is therefore considering the possibility of using some of its €2.5 billion cash pile on a one-off dividend or share buyback, he said.
The dividend or share buyback would not be large, as Ryanair plans to retain much of its cash, partly to save resources as talks about more aircraft orders with Boeing and, ‘less intensively,’ with Airbus continue.
He also said Rynair was unlikely to launch a third bid for Aer Lingus, which has rejected two previous bids from the budget airline, its biggest shareholder. He said: ‘I can't foresee circumstances in which we would be interested in bidding again, but you never say never. I don't believe Aer Lingus has a future as a standalone independent airline.’
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