Aer Lingus likely to reject O'Leary's dividend demand
Published 15/09/2011 | 05:00
AER Lingus is likely to reject a demand by Ryanair boss Michael O'Leary that it use its huge cash pile to pay a special dividend to shareholders.
Mr O'Leary has sent a letter to the airline demanding a number of commitments, including the one-off payout and a promise not to shore up the employee pension fund.
Speaking to the Irish Independent yesterday, Aer Lingus chairman Colm Barrington said he had been travelling and hadn't yet had an opportunity to read the letter.
In the letter, Mr O'Leary outlined a range of promises he would like to see from Aer Lingus.
For example, he insists that Aer Lingus "discharge its fiduciary responsibility" and circulate in public the findings of a recently completed internal report prepared by Deloitte McCann Fitzgerald. That investigation examined why a 2008 leave-and-return scheme at Aer Lingus ultimately fell foul of the Revenue Commissioners, costing the airline €30m more than had been anticipated.
Mr Barrington said yesterday he would examine the letter and respond in due course. But he said the airline's position -- it has previously resisted calls by Ryanair for a special dividend payment and the publication of the report -- hadn't changed.
At the Aer Lingus AGM in May, Ryanair called on Aer Lingus to pay a special €30m to shareholders. Mr Barrington replied then that it would be "dangerous" to Aer Lingus and its shareholders to pay a dividend in current circumstances.
Ryanair, which owns almost 30pc of Aer Lingus, has previously taken unsuccessful legal action to force the airline to pay a dividend. At the end of June, Aer Lingus had net cash of €357m.
Ryanair's latest dividend proposal would see about 20c per share returned to shareholders. Two years ago, Mr O'Leary said he expected Aer Lingus to run out of cash within 24 months.
Pressed last month as to whether Aer Lingus would release the contents of the report, chief executive Christoph Mueller said it wouldn't be circulated, although he acknowledged that shareholders would be interested in the findings.