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Ryanair to initiate regular dividends after 40 years as profits soar

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2023-11-07

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Nearly 40 years after its inception, Europe's mega low-cost airline, Ryanair, is set to pay its shareholders a regular, first-time ordinary dividend and has announced plans to continue doing so annually, depending on market conditions.

This decision comes on the heels of Europe's largest airline reporting record-breaking revenues and profits for the six months leading up to September, with forecasts pointing toward similarly impressive figures for the full 2023-24 financial year.

Despite carrying a record number of passengers during the same period, exceeding 100 million, Ryanair's 24% increase in airfares played a significant role in achieving this remarkable outcome.

While the airline has paid special one-off dividends in previous years, it has never committed to regular returns, unlike more conventional companies.

Since its launch on November 28, 1984, Ryanair has been synonymous with low-cost air travel, emphasizing accessibility over investor returns. The airline's growth strategy involved acquiring struggling competitors like Lauda and Buzz while aggressively maintaining low operational costs by avoiding expensive major airports and seeking cost savings in pilot and crew compensation.

Ryanair also gained notoriety for its numerous additional fees, including charges for extra baggage, larger seats, cancellations, and in-flight refreshments. It pioneered dynamic fare pricing, now a common practice in the airline industry, inspiring a wave of imitators, such as easyJet in the UK, Jetstar in Australia (a subsidiary of Qantas), Scoot in Singapore, and Wizz in Europe.

CEO Michael O'Leary, originally founded by the Ryan family of Ireland, has been a staunch advocate of the airline's unconventional business model and competitive approach. Since the end of the pandemic, Ryanair's revenue and earnings, like those of other airlines, have seen a significant uptick. In Australasia, Qantas, Air New Zealand, and Virgin Australia (after emerging from administration and relaunching) have experienced similar rebounds.

Ryanair recently announced that, as a result of its record first-half profit for the six months ending in September and record passenger numbers during the European summer, shareholders will receive two dividends in 2024: an interim dividend in February and a final dividend in September, totaling around 400 million euros for the first year (2 times 200 million euros).

Starting in the 2025 financial year, Ryanair will establish a payout ratio of 25% of profits to be distributed as ordinary dividends, marking a more conventional approach for a business that began and has operated as an unconventional operation.

In terms of financial performance, Ryanair's attributable profit surged to 2.18 billion euros in the six months ending on September 30, up from 1.26 billion euros in the previous year. Total operating revenue also expanded, reaching 8.58 billion euros compared to 6.62 billion euros.

This impressive financial turnaround can be attributed to an 11% increase in passenger numbers, reaching 105 million for the half-year, driven by robust figures during Easter and a particularly warm European summer. Furthermore, a remarkable 24% surge in average airfares, totaling 58 euros, contributed to this success.

As a result of these positive developments, Ryanair's shares rose by 5.33% at the end of the day.

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