Ryanair executives have hinted the airline may adopt a policy of a “modest regular dividend” in coming years, supported by share buy-backs and special payouts when it is holding excess cash, according to analysts who attended a company investor day on Tuesday in Dublin.
The airline also highlighted how it has ample growth opportunities over the next decade as it increases its fleet from 558 planes to 800, which is forecast to see the number of passengers it carries annually double from 150 million a year before the pandemic to 300 million by 2034.
Ryanair has yet to lay out a clear future dividend policy as its debt reduces in the coming years.
AllianceBernstein analyst Alex Irving said in a report on Wednesday, however, on Ryanair’s capital markets day that “management indicated returns skewed towards a ‘modest regular dividend’, likely tied to a payout ratio, but supported by buy-backs and special dividends in times of excess liquidity”.
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Mr Irving said the case for payouts “will be undeniable in 2025″ when Ryanair enters a one to two year period of no aircraft deliveries and its capital expenditure slumps.
Ryanair announced in May that it will buy up to 300 Boeing 737 Max 10 aircraft, the largest model made by the aircraft manufacture in that range. The size of the deal – priced at more than $40 billion (€37.3 billion) based on the jets’ listed price but estimated to have been agreed at a deep discount – means it is subject to shareholder approval at its annual general meeting on September 14th.
The airline highlighted at its capital markets day that the order makes the carrier one of the few that can deliver meaningful growth to airports in Europe and that cashflows over the next few years will fund a modest and sustainable dividend policy, while also allowing for cash accumulation in advance of the delivery of the first Max 10 in 2027, according to Goodbody Stockbrokers analyst Mark Simpson.
Ryanair returned more than €6.8 billion to investors through share buy-backs, a special distribution and special dividends between 2008 and 2020 but payouts have been on hold since then as the carrier grappled with the pandemic and, more recently, focused on paying down debt. It has never paid a regular dividend.
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While their growth rates naturally moderate from the high-single to low double-digit percentage rates of a decade ago, the carrier and its markets remain in growth mode, said Mr Irving.
“The company even sees its top 10 markets as needing [greater than] 500 additional planes by the mid-2030s, yet its own fleet will grow by [more than] 250 planes,” he said. “Only two airlines – Ryanair and Wizz – are growing meaningfully in intra-Europe and will have their pick of the growth opportunities.”
Davy analyst Stephen Furlong said Ryanair was also confident it can meet its staffing and operational needs as it continues to growth.
