Thursday 23 November 2017

O'Leary lambasts Aer Lingus as shareholders back Boeing deal

'I'm not obsessed' with a 'pensions deficit with wings' as Ryanair chief defends strategy

Sarah McCabe

Sarah McCabe

MICHAEL O'Leary lambasted Aer Lingus management on its handling of Ryanair's takeover bid in Dublin yesterday.

"Again Aer Lingus demonstrate their unmatched ability to destroy shareholder value," he said, adding that Aer Lingus shareholders must be "very upset" to hear that the airline had spent €40m defending Ryanair's original bid of €2.80 a share, when its share price now stood at around half that.

The airline boss was speaking at an extraordinary general meeting (EGM) held to gain approval for Ryanair's purchase of 175 Boeing aircraft.

Shareholders at the EGM approved Ryanair's massive aircraft order by a 100pc vote, which the carrier said will result in a significant period of growth and see its passengers increase from 80 million to 100 million a year.

The airline boss added that the airline was looking at another share buy-back scheme later this year on top of the €180m share buy-back programme it recently completed, as well as the special dividend it has committed to by 2015.

However, Mr O'Leary ruled out paying a dividend every year, on the basis that providing an annual revenue stream attracted pension funds and other "mom and pop" investors, who were not the right type of investor for the bumpy, cyclical business of aviation.

"At some stage in aviation there will be a crisis, whether it's terrorism or whatever," he said. "Shareholders who are in it for the long term are prepared for that." He said the airline would instead probably pay out a dividend every second year, and buy back shares in alternate years.

Turning back to Aer Lingus, Mr O'Leary said Ryanair had not had a single bid for its stake in Aer Lingus since it was approached by financial institutions last year and that "if anyone comes along and makes us a reasonable offer, the board will consider it".

In a prolonged bout of criticism against his rival, he dismissed Aer Lingus as "a pensions deficit with wings".

Mr O'Leary also condemned the UK Competition Commission, saying his airline would pursue any decision against it "until the end".

The UK's Competition Commission decided last month that Ryanair's 29.8pc stake in Aer Lingus gives it the ability to influence commercial policy and strategy. The authority is expected to order Ryanair to reduce its stake.

Waste

Mr O'Leary said this was "unlikely", but that his airline was committed to pursuing any negative ruling through all stages of the courts. Whatever the Competition Authority ultimately decided would be "a further waste of shareholder funds".

The airline boss was questioned, both by journalists and shareholders, on whether Ryanair shareholders were unhappy with the prolonged pursuit of Aer Lingus, which has now been running since 2006.

He denied he was "obsessed" with Aer Lingus and said Ryanair shareholders were "very happy". "Shares are close to an all-time high; we've just completed a full-year results roadshow, and I think, generally speaking, shareholders were very happy with the Ryanair strategy."

He added that Aer Lingus management had already accepted it needed to find a partner in the long-term.

He said that the price of the Boeing order was not dissimilar, though slightly higher, to what the airline paid for its last batch of planes, "and it's generally accepted that last time around we got one of the best priced aircraft deals in the history of Boeing".

New statistics show Ryanair carried more international passengers than EasyJet and British Airways combined last year. But Mr O'Leary said the airline would not be involved in cross-Atlantic travel until there was a surplus of long-haul aircraft on the market.

Irish Independent

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