O'Leary cashes in as Ryanair profits soar

Ryanair boss Michael O’Leary will pocket nearly €20m after his budget airline swung back into profit today.

The chief executive, who owns 4% of shares in the airline, will receive the windfall as part of a €500m dividend for shareholders.

The Irish airline made pre-tax profits of €341m for the year to March 31, against a €180.5m a year earlier.

Mr O’Leary said the special dividend – the company’s first since it listed on the stock market in 1997 – will also mean a combined €10m payout for the 2% of airline staff who own shares.

But Mr O’Leary claimed he would have to pay €12m of his own slice in tax to the Irish government.

Mr O’Leary said the dividend was possible after talks with Boeing over new aircraft orders ended last December, and there was “nothing else to do” with the surplus cash.

Ryanair traffic grew 14% to 67 million passengers while fuel costs fell 29% to €894m thanks to lower oil prices.

The firm said it was “proud” of its performance and expected further double-digit growth in traffic and profit this year – barring any more disruption from Iceland’s volcanic ash cloud.

Mr O’Leary said the “unnecessary” closures of European airspace had left the firm with a bill of around €50m.

The airline added that it achieved the results despite a collapsing Irish tourism industry and attacked the country’s government for its introduction of a €10 tourist tax and cost increases of up to 40% at Dublin airport.

The firm opened 280 new routes and eight new bases last year, with destinations such as Faro in Portugal and Malaga in Spain already producing higher summer fares.

Passengers will however face higher baggage charges in the peak July and August months before prices drop again in September.

Customers will have to pay €20 for their first checked-in bag, up from €15, and €50 for their second bag – doubled from €25.

But Mr O’Leary denied this was “profiteering” and insisted it was a move to discourage passengers from carrying unnecessary amounts of baggage for short breaks.

He added the airline currently had no new charges to unveil.

The company’s ancillary revenues from sales of non-ticket items such as food and drink rose 11% to €664m last year and now account for 22% of overall sales.

Ryanair’s dividend payout contrasts with the public row over dividends at budget rival easyJet, where founder and major shareholder Sir Stelios Haji-Ioannou quit the board last month.

Sir Stelios disagrees with the airline’s strategy of “relentless growth” through the recession – believing that profit margins and dividends should be a higher priority – but the board is pressing on with plans to grow its aircraft fleet.

Mr O’Leary today stuck the boot in to Sir Stelios and suggested he bought shares in Ryanair instead.

He added he did not expect to retire for a further two or three years.