Thursday 29 September 2016

Ryanair's O'Leary now a billionaire as stock options gain

Published 13/09/2015 | 02:30

Michael O'Leary - now a billionaire
Michael O'Leary - now a billionaire

Michael O'Leary's decision to change Ryanair's focus to become more consumer- and business flyer-friendly has seen the value of his stock options and shares soar, pushing his personal wealth passed the €1bn mark last Friday. This makes him the country's 12th billionaire, based on the Sunday Independent Rich List rankings.

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O'Leary was awarded five million stock options last December, which are already showing a €26m paper profit after nine months. His 51.4 million shares are now worth €705m, having doubled in value over the last year as investors realised the sheer growth potential that the low-cost carrier could achieve by targeting families, business flyers and less price-sensitive travellers.

Following two profit warnings in late 2013, Ryanair has been overhauling its business model, cutting or stamping out unpopular charges and permitting passengers to take a second, small item of carry-on baggage on flights.

Ryanair's 'Always Getting Better' strategy has seen it introduce easier online booking, a new app, more mainstream airports and special family- and business-friendly fares.

O'Leary's wealth has also been boosted by a regular divestment programme, which has seen him sell around €246m in shares over the last 15 years. In 2000, he owned around 10pc of the company, which would be worth about €1.85bn at current prices. O'Leary has also received pay and dividends of close to €52m since taking charge.

Last week, the airline revealed that it was upgrading its profit forecasts by a staggering 25pc as the result of the huge influx of new customers converted by its friendlier approach.

The low-cost carrier, which is marking its 30th anniversary, said it expected net profit would be between €1.18bn and €1.23bn for its full financial year ending March 31, 2016. The airline had expected to make profits of €940m-€970m, but indicated that it had been surprised by a spike in passenger traffic and increase in revenues.

"We have clearly benefited from favourable industry trends this summer including bad weather in northern Europe, stronger sterling encouraging more UK families to holiday in the Med, reasonably flat capacity across the EU industry and lower prices for our unhedged oil," O'Leary said.

"Being the airline industry, we do not expect these favourable conditions will persist, and we would urge shareholders and analysts to avoid irrational exuberance," he warned, as shares hit record highs.

The Mullingar-based aviation magnate has diversified his wealth, building up a blue-chip portfolio of UK commercial properties.

Sunday Indo Business

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