Ryanair (RYA.I), which cited rates that increased 24% during the summer and are likely to stay high for years due to restricted capacity, said on Monday that it expects to earn a record annual profit and would pay investors a regular dividend for the first time.
At 08:50 GMT, shares of Europe’s largest airline based on passenger volume, the low-cost pioneer, were up 6%.
Ryanair significantly surpassed its previous record of 1.45 billion euros in 2018, predicting an after-tax profit for the year ending in March of between 1.85 billion and 2.05 billion euros.
Group Chief Executive Michael O’Leary stated in a video presentation, “We think we are set for strong growth next year, both in terms of headline traffic numbers… and underlying air fares during the peak period.”
To capitalize on the travel boom that followed the COVID-19 lockdowns, Ryanair has been expanding its capacity significantly quicker than other competitors. From July to September of this year, the airline carried 25% more passengers than it did in 2019.
Eurocontrol, the organization that oversees European airspace, reports that total capacity in Europe decreased by 7% during the same time compared to 2019 levels.
O’Leary stated that poor output by airplane manufacturers will limit capacity until 2030, while issues with Pratt & Whitney engines will probably restrict the ability deployed by competitors that operate Airbus planes next summer.
Ryanair said that it would return around 25% of its after-tax profit as an ordinary dividend in the following years, in addition to paying its first regular dividend of 400 million euros in the year of its debut.
Chief Financial Officer Neil Sorahan described the dividend policy as a “strong vote of confidence in the company” in an interview.
In the first half of its financial year, which ended at the end of September, Ryanair made 2.18 billion euros, 59% more than in the same period the previous year.
According to Sorahan, Ryanair’s third quarter is showing “relatively good” results, with fares “mid-teens” percent higher than those of the previous year. Although there isn’t much hope for the last quarter ending in March, he noted that decreasing inflation in Europe is encouraging.
Although Sorahan stated that things were getting better, Ryanair is worried that up to 10 of the 57 Boeing 737 MAX planes that are scheduled to be delivered to the airline by next summer may not arrive until next winter.
“Right now, we’re having weekly conversations with Boeing. It’s a somewhat flexible circumstance. Even if there is still work to be done, things are beginning to improve, “explained Sorahan.
