Covid-19 vaccines shares boost put O'Leary back on path for potential €100m Ryanair incentive       

Ryanair chief executive Michael O'Leary.

Michael O’Leary is back on the flight path for a potential shares incentive payout of up to €100m in the coming years after a remarkable turnaround in the fortunes of Covid-battered Ryanair stock in the past few weeks, as investors bet that a trio of new vaccines will transform the prospects of Europe’s largest budget airline.

The shares incentive was part of a new contract to keep group CEO O’Leary at the airline but sparked considerable controversy when voted on last year because investors do not normally like companies awarding their chief executives large share-based incentives.

The award gave Mr O’Leary 10 million share options at a strike price of €11.12 which he could exercise if Ryanair’s after-tax annual profit exceeded €2bn up to 2024 and/or the airline shares topped €21 between April 2021 and March 2024, for a period of 28 days.

However, the prospects of Ryanair shares getting anywhere near €21 even by early 2024 seemed utterly remote just a few weeks ago but before the first of the pharma groups unveiled startling good results of Phase 3 trials for their potential Covid vaccines.

At the onset of the crisis in March, Ryanair shares had sunk to just above €8 and had only somewhat recovered to trade at close to €11.70 at the end of October, but apparently falling well short of any chance of reaching the €21 target price even in a few years' time.

Its shares have since climbed to over €15.40 to value the airline at over €17.3bn after Pfizer-BioNTech, Moderna, and AstraZeneca on successive Mondays through November announced promising news for their vaccine shots.

In response to the Covid crisis, Ryanair will cut altogether or run a curtailed schedule through the winter after Christmas into Dublin, Cork, and Shannon, as well as into the regional airports.

Along with other airlines, Ryanair had strongly criticised the Irish and other European governments over their air travel restrictions and financial bailout offered to some airlines during the Covid crisis.

Mr O’Leary’s shares incentive was part of a new contract under which he agreed to stay at the airline until the summer of 2024.

The airline said at the time the CEO had agreed to a 50% cut in his base pay to €500,000, and to a 50% cut to his maximum annual bonus to €500,000. 

Ryanair had also stressed that Mr O'Leary does not receive pension benefits.

Amid the Covid crisis, in March this year, he agreed to a further pay cut to €250,000.

Shareholders only voted by a narrow margin to approve the incentive plan in 2019.   

The vaccines have the potential to turn around the fortunes of Europe's airlines.

On Sunday, it emerged that Britain had secured 2 million doses of Moderna's vaccine candidate, in addition to the 5 million doses it secured from the US company. 

The British government said it now has access to enough doses of Moderna’s vaccine candidate for around 3.5 million people, and overall, it has access to 357 million doses of vaccines from seven developers. 

Britain has also ordered 40 million doses of a vaccine developed by Germany’s BioNTech and Pfizer of the US. 

The UK regulator is set to approve the BioNTech-Pfizer vaccine this week, and deliveries will begin within hours of the authorisation, the Financial Times reported on Saturday.

Britain has also secured 100 million doses of the vaccine developed by AstraZeneca and Oxford University and has targeted a rollout to begin before Christmas.

Shares in AstraZeneca rose only slightly on Friday but continued to trade below levels of early November, as questions emerged about the way it announced the results of its phase 3 trial earlier in the week. 

- Additional reporting Reuters