Ryanair chairman David Bonderman has told shareholders that the airline’s management has scrapped all plans to launch a trans-atlantic service, in favour of continuing its growth surge in Europe.
Asked by a shareholder at Ryanair’s AGM yesterday about the current status of its much-mooted Europe-North America strategy, Mr Bonderman, a renowned American businessman and philanthropist, said there is no strategy, adding “we have no intention in flying transatlantic”.
The same question touched on whether the airline’ strategy had changed now it has sold its near 30% shareholding in Aer Lingus to IAG.
Chief executive Michael O’Leary said the long-haul aspect was the least enticing part of Ryanair’s ultimately failed takeover bids for Aer Lingus.
He said that the thinking had been to boost competition at primary airports around Europe, but noted that Ryanair is now doing that independently.
Ryanair yesterday, as expected, announced its intention to distribute the €398m it received for its Aer Lingus stake directly to shareholders by way of a so-called ‘B’ share programme.
Along with previous share buybacks and special dividends, it means Ryanair will have returned €800m to investors this year, alone, and more than €3.3bn since 2008.
The return of the Aer Lingus proceeds will require formal shareholder approval, at an EGM to be held later this year, but it is intended for the payout to conclude before the end of the year.
Shareholders will get 29.4c for each share they currently own and then Ryanair will consolidate its equity by issuing shareholders with 39 shares for every 40 they hold in order to keep its share price stable.
Irish-based investors will also, pending approval from the Revenue Commissioners, be allowed to pay capital gains tax, rather than income tax, on the windfall. Irish shareholders currently make up around 8% of Ryanair’s shareholder base.
Speaking after yesterday’s EGM, Ryanair chief financial officer Neil Sorahan said the latest shareholder return needs to be viewed as a one-off, wholly linked to the Aer Lingus sale, and not as part of a formal trend of windfall payments, which he said would be the wrong message to send to the market.
He said management is not committing itself to a regular dividend policy, but won’t rule in or out more windfall payments. Further significant profit generation would probably lead to further re-distribution of cash to investors, but Mr Sorahan said the airline is “probably done for this year”.
The airline’s financial year runs to the end of next March and it has already upped its full-year after-tax profit guidance by 25% to €1.2bn.
Mr Sorahan also said that the company could look to the bond markets again next year, after raising around €1.7bn in the past year, in order to raise further funds for fleet expansion.
Earlier this year, Ryanair suggested that availability of suitable long-haul jets was the only thing hampering a transatlantic service, but quickly poured cold water on suggestions that it was ready to talk to Boeing about future orders and was eyeing up 14 US cities for a long-haul push in the early 2020s.
Total European domination has, seemingly, overtaken that ambition in the last few months, however.
The airline is targeting 160m passengers, across its European network, by 2024 and that is its main focus at present.
In particular, the company is looking to build its presence in Germany, the country with the lowest low-fares carrier penetration in Europe. Ryanair wants to grow its current 5% market share in Germany to between 15% and 20% within the next five years.
Meanwhile, the airline’s chief marketing manager, Kenny Jacobs, yesterday said that talks regarding Ryanair providing feeder/connector flights to IAG/Aer Lingus’ long haul services and those of other airlines are ongoing and “positive”.
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