Ryanair soars back to full-year profit, unveils 1st cash dividend, faces euro50 million ash loss

By Shawn Pogatchnik, AP
Tuesday, June 1, 2010

Ryanair soars back into profit, pays 1st dividend

DUBLIN — European budget airline Ryanair announced a return to robust full-year profits Tuesday and unveiled its first-ever cash dividend to shareholders, underlining its ability to fight the headwinds of recession.

The Dublin-based carrier said it recorded a net profit of euro305.3 million ($375.7 million) for the 12 months ending March 31. That reversed last year’s net loss of euro169.2 million, when Ryanair suffered an exceptional euro222.5 million writeoff on its 30 percent stake in its struggling Irish rival, Aer Lingus.

And Ryanair underscored its exceptionally strong cash reserves by announcing its first dividend since becoming a publicly listed company in 1997.

Ryanair said it would pay shareholders about euro500 million, or euro0.34 per share, in October and envisioned a similar payment by 2013.

Chief financial officer Howard Millar said the airline was making the payout because of Ryanair’s previously announced shelving of plans to negotiate a new 200-plane order with Boeing, its sole supplier of aircraft. He said this would mean much lower capital spending for the next three years.

The airline said its cash reserves already have risen by euro535 million over the past year to euro2.8 billion. Millar said the postponement of new aircraft orders could fuel an additional euro1 billion in savings through 2013.

Ryanair said its passenger numbers rose 14 percent to 66.5 million, but its income rose just 2 percent to euro2.99 billion, reflecting its hefty discounting of airfares to keep its planes full.

The airline also recorded another exceptional writeoff of euro13.5 million because of continued falls in the share value of Aer Lingus, the formerly state-owned airline that Ryanair has been trying to acquire since 2006. The Irish government, which remains Aer Lingus’ second-largest shareholder, opposes a Ryanair takeover on competition grounds.

Ryanair turned an operating profit excluding exceptional items of euro402 million, compared to euro144.2 million a year earlier, in part because its fuel costs fell 29 percent to euro894 million.

In the current year, Ryanair said it expected traffic to grow 11 percent and profits to rise more than 10 percent, even though it expects fuel costs to rise about euro300 million.

Chief executive Michael O’Leary said Ryanair also expected to lose euro50 million from extensive flight disruptions caused by volcanic ash eruptions in Iceland. The threat forced European air safety officials to cancel 9,400 Ryanair flights, stranding 1.5 million customers in April and May. Many are seeking compensation for their hotel and meal bills from Ryanair.

But unlike the recession-battered airline industry as a whole, Ryanair keeps growing.

The airline said its fleet has grown to 232 over the past year with the delivery of 51 more Boeing 737-800s from previous orders. It opened 284 new routes and eight new European bases to reach 940 routes and 42 bases.

Ryanair shares rose 0.9 percent to euro3.41, bucking a broadly negative market on the Irish Stock Exchange.

Associated Press Writer Bob Barr in London contributed to this report.

(This version CORRECTS RAISES Ryanair to pay dividend for first time; UPDATES with Ryanair’s volcano-related losses, shares rise, and its annual growth in fleet and bases; corrects passengers to 66.5 million sted 58.6 million (2009 figure); RECASTS headlines; ADDS byline and contributor line.)

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