Ryanair cut passenger forecast; considers dividend
25.09.09
Ryanair could pay shareholders a one-off dividend, as a strong rise in profits this year will see its cash reserves boosted above their current €2.5bn, its chief executive said at a shareholders meeting yesterday. He also announced a small reduction in the airlines passenger forecast for the current financial year.
Europe's largest budget airline is still producing earnings growth unlike rivals such as British Airways and Air France-KLM. However, it has been forced to slash fares to fill aircraft as a global recession hits consumer demand, particularly for city breaks, its previous focus.
Chief Executive Michael O'Leary told the airline's annual meeting in Dublin yesterday that he expects average fares to fall by about 20 percent over the full year to the end of March. He also cut Ryanair's full-year traffic target to 66 million passengers from 67 million - largely due to capacity cuts at its main hubs Dublin and Stansted.
Despite the reduced passenger forecast, he still expects full-year adjusted net profit to roughly double from last year, maintaining his forecast at the lower end of a €200 to €300 million range. Ryanair is therefore considering the possibility of spending some of its €2.5 billion cash pile on a one-off dividend or share buybacks, he said.
The dividend would not be large, as Ryanair plans to retain much of its cash, partly to save resources as talks about more aircraft orders with Boeing and, ‘less intensively,’ with Airbus continue.
He also said he was unlikely to launch a third bid for former Irish state carrier Aer Lingus, which is fighting for survival due to falling demand, but has rejected two previous bids from Ryanair, its biggest shareholder. He said: ‘I can't foresee circumstances in which we would be interested in bidding again, but you never say never. I don't believe Aer Lingus has a future as a standalone independent airline.’
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