Ryanair shares soar after €1bn dividend plan revealed
O'Leary hints at returning cash to investors in the future
RYANAIR'S share price spiked yesterday as it announced plans to return €1bn to shareholders through a combination of dividends and share buy-backs.
The airline plans to repurchase at lease €400m worth of shares by March 2014 as well as pay out up to €600m through either further buy-backs or a special dividend. The second part of the payout is subject to recent fuel and profitability trends continuing.
The carrier also announced an improvement on its growth projections. It now aims to carry 110 million passengers annually by March 2019, up from a previous target of 100 million. This increases its projected growth rate from 5pc to 7pc.
This should further cement its place as the world's biggest international airline.
In response, the share price climbed 1.2pc yesterday to close at €7.06, paring gains of more than 3pc earlier in the day.
The company has already returned €1.53bn to shareholders since 2008 through €538m share buy-backs and two special dividends totalling €992m.
Boss Michael O'Leary ruled out an annual dividend on Tuesday because the "mom and pop" institutional investors that this attracts are unsuited to the bumpy, cyclical nature of the aviation industry, but said it would probably pay out a dividend and buy back shares in alternate years going forward.
After closing a massive 175 aircraft order with Boeing this week, the airline has also indicated it is considering a single-aisle jet order of up to 200 planes, swelling its fleet to more than 500.
European manufacturer Airbus is in the running with its A320neo but Ryanair also has a team evaluating a model from rival American manufacturer Boeing.
Boeing's model has an advantage because it offers nine more seats, Mr O'Leary said on Wednesday at the Paris Air Show.
"Being able to offer 189 seats rather than 180 is pretty compelling," he said, adding that the capacity difference is equivalent to $1m a year.
Ryanair will continue to push Boeing to develop a narrow-body with 199 seats, which Mr O'Leary said would be a sweet spot because regulations require one flight attendant per 50 passengers. The carrier wants to seal terms including price by the end of this year.