Sunday 18 November 2018

Ryanair races through €750m share buyback as results loom

Ryanair boss Michael O’Leary
Ryanair boss Michael O’Leary
John Mulligan

John Mulligan

Ryanair is almost halfway through the €750m share buyback programme that it launched in February, according to figures compiled by the Irish Independent.

The carrier, which releases full-year results next Monday, launched the buyback in February, indicating it would acquire a maximum of €750m worth of shares for cancellation. The programme is due to be completed by November.

So far, it has bought €352m worth of its own shares under the buyback, based on the average price paid per share in each transaction.

While the buyback will improve the earnings per share figure from the carrier, it has not provided any boost to the share price.

The first transaction under the programme saw Ryanair buy almost 256,000 shares on February 6 at an average price of €15.93 a share.

The share price edged higher in the following weeks, with the highest average price per share paid by Ryanair hitting €16.49 on March 20, and €16.45 on April 10.

Since then, the shares have steadily declined.

On April 25, Ryanair bought more than 629,000 shares at an average price of €15.57 per share. Last week, it paid an average of €15.62 a share to buy almost 561,000 shares for cancellation.

The share buyback programme is being handled for Ryanair by Citigroup and Davy Stockbrokers.

Ryanair has returned more than €6bn to shareholders over the past decade via share buybacks and special dividends.

In the past three years - excluding the current programme - it's returned more than €2bn through buybacks.

One of the biggest beneficiaries of the special dividends has been CEO Michael O'Leary, the largest individual shareholder in the airline.

Ryanair is expected to deliver full-year profits that may be at the upper end of its own €1.4bn to €1.45bn guidance.

Davy Stockbrokers currently has a net profit of €1.42bn pencilled in for the carrier.

But following its decision to recognise unions and give pay increases to pilots, Ryanair's labour costs are likely to have risen by €100m over a full year, while its fuel bill could rise by more than €300m for a full year.

Davy is predicting that Ryanair will generate a net profit in the current financial year, which ends next March, of €1.31bn, compared to a consensus figure of €1.41bn.

The broker has said that Ryanair is likely to carry 138 million passengers in the current financial year, compared to the 130.3 million that it carried in the last financial year.

Investors will be looking for updates on a number of key issues at Ryanair, including its progress with Austria-based Laudamotion.

Ryanair announced in March that it will buy up to 75pc of the leisure carrier that was born from the ashes of low-cost airline Niki.

Niki was founded by Formula 1 racing legend Niki Lauda, but had been fully acquired by now defunct Air Berlin in 2011.

Mr Lauda is chairman of Laudamotion, with Ryanair having pledged €50m in working capital for the airline. It's also paying €50m for the 75pc stake.

Laudamotion has culled six routes from its summer schedule because it couldn't secure enough jets to operate the routes.

It said a leasing company hadn't been able to provide the required aircraft.

Irish Independent

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