Ryanair is expected to announce within a matter of weeks that it is to take a listing on the London stock market, to add to its existing listings in Dublin and the NASDAQ market in New York.
The long-expected move to take a London listing was disclosed by the Ryanair managing director, Michael O'Leary, when he announced pre-tax profits of £37.1 million for the year to the end of March, ahead of market forecasts.
There was no indication, however, as to whether Ryanair will issue new shares to coincide with the London listing or whether any of the existing shareholders will sell shares to provide liquidity for British institutions who might want to invest in Ryanair.
Given Ryanair's balance sheet, it seems unlikely that the company itself will raise fresh equity, but there has been regular speculation that the Ryan family - which owns 33 per cent of the company - or Mr O'Leary, who owns 14 per cent, might take some profit from the strong rise in Ryanair shares since the company was floated a year ago.
Mr O'Leary said the airline is in discussions with 30 different airports in Europe about setting up services and expected to establish five or six new routes ex-Stansted next year. He declined to specify the new routes, but said the airline will probably begin services to one or two new European countries from Stansted. Ryanair currently has scheduled flights to airports in Norway, Sweden, France, Belgium and Italy. "We are confident we can continue our growth," he said.
Mr O'Leary said he was not "overly concerned" about the arrival of British Airway's Go low-cost airline. "Go will be good for the low-cost sector as it gives the low fare market the seal of approval from British Airways. But we don't see Go as a huge competitive threat - it is operating three routes this year, we are operating 23 routes. I am confident we can meet and beat any competition we are faced with."
Total passengers grew last year to more than four million, although the growth in operating expenses of 41 per cent was higher than the growth in revenue. This reflects higher depreciation and maintenance costs associated with the expansion of the fleet.
The pre-tax profits for the year of £37.1 million and after-tax profits of £28.3 million were marginally ahead of the best market forecasts. Earnings per share rose 16 per cent to 19.8p when account is taken of the 27 per cent increase in the number of shares in issue after the flotation.
However, this failed to affect the shares, with the price unchanged in Dublin on 520p and the ADR's in New York unchanged on $35. Passenger revenues increased 33 per cent to £160.8 million due to the 28 per cent increase in passenger volumes and an increase in the average fare per passenger during the year. Ancillary revenues rose by 37 per cent to £22.1 million, again reflecting the higher number of passengers, as well as income from the lease of aircraft to the Portugese airline, TAP.
Fuel costs rose by 59 per cent to £21.8 million, partly due to a 20 per cent increase in costs in local currency, the increase in the number of destinations, as well as the longer duration of flights to the Continent. Maintenance costs were up 77 per cent to £20.4 million, while marketing and distribution costs increased by 15 per cent, reflecting the increase in routes.
The reduction in travel agents' commission imposed by Ryanair during the year was partly offset by these higher costs. Mr O'Leary said that Ryanair's direct selling subsidiary is currently handling 38 per cent of its sales, with 62 per cent coming from travel agents. This split in sales is likely to remain roughly 40-60 for the foreseeable future, he added.
