Airline set for bond market return in summer
The airline successfully borrowed €850m, via its debut bond issue, last June at a fixed low interest rate of just under 1.9%, over a seven-year term. At the time, management said the strong demand from prospective debt buyers was such that it might issue a second bond in 2015.
Speaking at the company’s latest quarterly results update yesterday, chief executive Michael O’Leary said the airline is looking at the option and could raise the additional funds after it issues its full-year financial results in July.
Mr O’Leary said that although Ryanair does not need to raise a lot of debt, doing a similar sized and scaled bond issue to last year’s “makes sense” at current low costs.
Ryanair is also set to return nearly €1bn to shareholders this year; firstly via a previously announced €520m special dividend (to be paid at the end of this month) and then via a €400m share buyback programme, set to be executed over the coming six months.
While Ryanair will not benefit too much from lower oil prices in the short-term (it is 90% hedged for fuel, for its current financial year at $95 per barrel and $92 per barrel for 2016), the airline has taken advantage of the recent price declines to extend its fuel hedging into 2017, with 35% hedged, at around $68 per barrel, for that fiscal year.
Mr O’Leary also suggested that Ryanair will likely be able to expand out of Cyprus to other eastern Mediterranean destinations using its existing Irish air operators’ certificate, rather than having to apply for a separate Cypriot one. The airline had hoped to buy Cyprus Airways, which recently closed over state aid breaches.
