Ryanair chiefs accept a pay freeze as profit soars to €1.2bn
Ryanair's senior and middle management have agreed to a 12-month pay freeze as it tries to keep a lid on costs amid a more competitive European landscape fuelled by cheap oil.
Chief executive Michael O'Leary said Ryanair had managed to push unit costs 2pc lower during its financial year that ended in March, despite significant expansion. He said the airline is targeting a 1pc drop in unit costs in the current financial year.
He said will be achieved by lower cost aircraft purchases due to is euro-dollar hedging rate, a five-year pay deal inked with pilots and cabin crew, negotiating more airport incentives, and also the pay freeze.
Speaking to the Irish Independent, Ryanair's chief marketing officer, Kenny Jacobs, confirmed that the pay freeze extended to all senior executives. It won't, however, affect bonuses, he said. "It's good, prudent, common sense," he added.
Ryanair yesterday reported record results for its financial year that ended in March, with profits jumping 43pc to €1.24bn, and revenue climbing 16pc to €6.53bn. It carried 106 million passengers in the financial year, 18pc up on the previous year.
It expects to make a €1.4bn profit in the current financial year, with the performance tempered by more intense fares competition in Europe, coupled with the impact of terrorist attacks. Other issues include the fact that next Easter does not fall until the start of the airline's 2018 financial year.
Still, Mr O'Leary said Ryanair continues to generate a significant amount of cash. He said the airline will probably be debt free by 2022 or 2023, and at that stage will have 550 aircraft compared to 380 by the end of next March. It will take delivery of 52 planes this year.
He said that at the end of this calendar year, the board will decide whether to begin another share buyback programme.
However, he said it remains important to have a hefty cash buffer to allow it to make opportunistic aircraft purchases, and that it "frightens away the competition" from having a fares war with it.
"I see it very important that we keep that cash away from shareholders, of whom I am one of the larger ones, because shareholders tend to misuse the cash when we return it to them," he said. "So if there's surplus cash, we'll continue to engage in share buybacks, which I hope in the longer term will prove to be a better return to shareholders rather than just dripping out dividends to them."
He also said that Ryanair is almost certain to exercise existing options to buy 100 Boeing 737 Max aircraft, which he described as a "game changer" jet for the airline.