Ryanair is to hand its shareholders regular payouts for the first time after soaring air fares put the airline on track to make record profits.
The budget carrier said it expected to notch up profits of between €1.85bn (£1.6bn) and €2.05bn in the financial year to the end of March, far outstripping its previous highest profit of €1.45bn in 2018.
Ryanair has been helped by a 24% rise in average air fares to about €58 in the six months to the end of September, as the post-pandemic boom in demand for international travel helped Europe’s largest airline. A strong Easter, record summer traffic and the growth in air fares offset higher fuel costs.
The Irish airline’s profits reached €2.18bn over the six months, 59% better than its previous record for the period, set last year. It expects “modest losses” over the winter season, when airlines typically struggle to make a profit.
The company plans to pay out regular dividends for the first time, kicking off with an interim payment of €200m in February and a final dividend of €200m in September next year. After this, Ryanair plans to hand back about a quarter of its annual profits to shareholders each year.
The airline has paid special dividends before, but never committed to regular payouts.
Its chief executive, Michael O’Leary, noted that shareholders had invested €400m during the pandemic, in September 2020, allowing the firm to borrow €850m through a low-interest bond. He said now was the “opportune time to declare an ordinary dividend policy”.
The news sent Ryanair shares up more than 5% on Monday.
Ryanair flew 105 million passengers during the first half of its financial year, 11% higher than last year. The airline has accelerated rapidly out of the pandemic – which devastated the international travel industry as lockdowns limited travel – despite the cost of living crisis, which has forced many consumers to cut back on household spending.
“I think the consumer is going to continue spending,” said the chief financial officer, Neil Sorahan.
O’Leary said Ryanair’s annual financial performance “remains highly dependent on the absence of any unforeseen adverse events – for example such as Ukraine or Gaza – between now and the end of March”.
Victoria Scholar, the head of investment at Interactive Investor, said: “Ryanair has been able to pass on additional cost pressures to consumers through higher airfares with ticket prices likely to continue to go up next year.”
Despite its bumper performance, the summer has not been without incident for Ryanair. The airline was forced to defend its fees after an elderly couple were charged £110 after they downloaded the wrong boarding passes, while it had to cancel 350 flights because of the air traffic control systems failure in the UK.
In September, O’Leary was hit in the face with two cream pies by environmental activists.
