O'Leary to get €40m in Ryanair bonanza
We don't have any other use for the money, says air chief
Published 02/06/2010 | 05:00
RYANAIR boss Michael O'Leary is set for a €40m bonanza after the airline decided it would give its first cash payout to shareholders in its 25-year history.
Mr O'Leary, who owns around 4pc of Ryanair, unveiled plans for the first €500m cash dividend yesterday as the airline reported a 290pc increase in pre-tax profits for the year.
The outspoken chief executive said the company had a simple reason for the decision.
"Frankly, we don't have any other use for the money," Mr O'Leary said.
It is understood that only 140 of Ryanair's 7,000 workers own shares in the airline.
They are likely to receive about €10m between them -- an average of €71,000 each.
But the bulk of the staff will have to make do with watching from the sidelines.
Overall, the airline will pay as much as €1bn in cash to its shareholders over the next three years.
The first €500m special dividend is due this October and the same amount is likely to be paid by 2013.
Mr O'Leary will be in line for an initial €20m this autumn with a further €20m in 2013.
Thousands of small Ryanair shareholders will receive 34c for every share that they own in the carrier.
Billionaire Ryanair chairman David Bonderman (67) will pocket about €4.8m in October. The American financier owns 14.1m shares in the airline.
Members of the Ryan family, which founded the airline, will receive some money from the dividend payout, although their stake has been significantly reduced in recent years.
However, the taxman will be the biggest gainer as Mr O'Leary and other Irish-based shareholders will be liable for income tax worth about half of the total windfall.
Ryanair is paying the money to shareholders because it is unlikely to order any new aircraft in the near future after talks with manufacturer Boeing collapsed late last year.
This has left Ryanair holding a large amount of cash for which it doesn't have any immediate use. As of the end of March, the company had a staggering €2.8bn in cash -- €400,000 per each employee. Of that cash, €535m was added in the last year alone.
Ryanair will continue growing this year, despite the recession, Mr O'Leary said.
Passenger numbers are expected to rise 11pc to 73.5 million, enabling it to surpass Air-France KLM as the world's biggest passenger carrier.
"The deeper the recession gets, the better it will be for Ryanair's business," Mr O'Leary said, adding: "Austerity is good for our model."
Ryanair's deputy chief executive, Michael Cawley, also said yesterday that there were no immediate plans to lift the two-year-old pay freeze at the airline, despite plans to return the €1bn to shareholders. He added that it would be another year before the pay freeze was even reviewed, let alone lifted.
"We've created almost 2,500 new jobs in the past two years and that makes us unique in our business," he said. "It also makes us unique in that we didn't have any redundancies and pay cuts."
Mr Cawley said management would "hopefully" examine the pay freeze next year.
Outspoken Mr O'Leary is the single largest individual shareholder in the company. This time last year, he sold about five million shares worth €19m in the airline, leaving him with about 60m shares, which are currently worth €212m.
He was paid just over €1m last year after taking a voluntary 10pc cut in his basic pay.
Mr O'Leary (49) who's married to one-time banker Anita Farrell, lives at Gigginstown House in Mullingar with their three children.
He has spent chunks of his estimated €400m-plus fortune buying racehorses and prize Aberdeen Angus cattle.
He and a cohort of non-executive directors will be among those that will share in the windfall, although former EU Commissioner Charlie McCreevy is unlikely to benefit.
Mr McCreevy is joining the Ryanair board as a non-executive director -- an appointment that will have to be approved by shareholders at the company's annual general meeting this September.