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Ryanair CEO Michael O'Leary Alamy Stock Photo

From a share price dive to €2bn in profits: how Ryanair found itself flying high again

The Irish airline is enjoying a post-pandemic lift-off, writes Paul O’Donoghue.

Just over a year ago, Ryanair was (seemingly) in the doldrums.

It had weathered the Covid storm, coming out the other side of the pandemic only to be faced with the effects of Russia’s invasion of Ukraine.

The knock-on impacts of the war, particularly the surge in energy prices, hit companies across the travel industry, with Ryanair no exception. The firm’s share price nearly halved between February and September 2022.

Fast forward a little over 12 months and the mood music around the airline could hardly be more different.

Last week it reported net profits of €2.2bn for the first half of its 2023 financial year, although full year profits are forecast to possibly dip slightly under €2bn due to a loss-making winter period.

Traffic is up. Average fares are up – bad, maybe, for the consumer, but good for Ryanair. And someone check on Michael O’Leary! The Ryanair boss declared 20 years ago that the airline would never pay a dividend “as long as I live and breathe”.

Thankfully for Ryanair investors, O’Leary is still with us and has helped grow the company enough over the last two decades to make a liar of his past self.

On top of the strong set of numbers published during the week, Ryanair also announced it will pay a €400m dividend to investors in 2024. O’Leary, who remains the airline’s largest shareholder with just under 4% of its stock, will net almost €16m.

The firm plans to make this a regular habit, committing to an annual dividend of 25% of its net profits.

Using its balance sheet to pay out a dividend, rather than using it purely for growth, as he preferred in the past, indicates how confident O’Leary is in Ryanair’s ability to keep generating cash.

Investors are happy. At the time of writing, Ryanair’s share price had surged nearly 20% in the last week since publishing its 2023 half-year stats.

So how has it all gone so right for Ryanair, when it seemed so recently that it was going so wrong?

For those looking closely, Ryanair’s situation was never quite as dire as the 2022 dip in its share price might have suggested.

The company was obviously put under immense strain during Covid, with the pandemic putting a halt to a massive chunk of international travel.

But Ryanair positioned itself well to re-emerge from pandemic restrictions.

Unlike many airlines, which fired much of their staff following the virus outbreak, Ryanair hung onto most of its workers.

This let the company quickly scale back up when society started to reopen, putting it in the perfect position to capitalise on the pent-up demand for international travel.

The company was in a strong position due to a significant war chest of about €4bn, which gave it plenty of financial firepower.

Optimism about the resumption of travel was reflected in the share price, which doubled from its Covid-era low of €9 in May 2020 to €18 by early 2022.

Then Russia invaded Ukraine, causing the aforementioned steady decline in its share price again.

As well as worries over energy prices and the knock-on impact rising fuel costs would have on Ryanair’s bottom line, there were concerns interest rate hikes aimed at curbing inflation could damage growth.

But again, despite investor gloom, Ryanair was still in a good position.

In an investor presentation in September 2022, when its share price was at a low point of €10.50, Ryanair highlighted that it was targeting 166m passengers in 2023 – above the 149m it carried in 2019, pre-Covid.

It had also hedged a large chunk of its fuel, helping to insulate it somewhat from energy price spikes. The company also owns most of its aircraft rather than leasing them, protecting it from interest rate rises.

But all this growth has a price. Earlier this year non-governmental organisation Transport & Environment named Ryanair as Europe’s most polluting airline.

This came with several caveats highlighted by Ryanair, including the fact that at the time, long-haul airlines such as Lufthansa and Air France were not yet back to pre-Covid levels of flying.

The airline also argued that it had relatively low emissions per passenger, with the gross figure, as such, being misleading.

However, just this January the airline was forced to change the information on its website following an intervention from the Netherlands Authority for Consumers and Markets.

It warned that flying remains “highly polluting” and forced Ryanair to add a message to its website stating that carbon offsetting, where airline customers can pay towards green projects, does not make flying itself more sustainable.

But despite the scale of the airline’s emissions and the fact that these are rising as traffic expands, the unfortunate truth is that until climate change impacts Ryanair’s finances, the issue is not something which is on the radar of most investors.

The main concern around the Irish company’s short-haul model is that some observers don’t see as much room to increase air fares for shorter flights compared to longer ones.

But that’s an industry issue affecting many airlines, not just Ryanair. The analyst reaction to Ryanair’s half-year results bordered on euphoric, with most now expecting the company to kick on growing traffic, its bottom line and its stock price.

Increasing the company’s value further to €21 per share for a month, or full year profits to 2.2bn, will trigger a bonus of around €100m for O’Leary. It will also signal how far Ryanair will have come from its recent dark days.

The airline industry is difficult and subject to shocks. It’s a key reason why O’Leary has been eager in the past to distance Ryanair from the prospect of regular dividends – who knows what tomorrow could bring and when Ryanair will need its cash. As Covid and Russia demonstrated so recently, there is a very real basis to these concerns.

But with the exception of Covid, traffic has been increasing steadily. More people continue to fly with the airline.

If regulators were to take a firmer stance on transport emissions, it could perhaps cause some problems and cause backers to take notice. But for now, the numbers are going up, and for investors that’s what matters.

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    Mute Ed Kavanagh
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    Nov 30th 2011, 2:23 PM

    Probably because its would be hard for him to do this without looking like a lying moron…

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    Mute green badger
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    Nov 30th 2011, 3:12 PM

    Why do we have to wait for him to tell us the “state of the nation”?……..we already know the “state” of the nation……ITS IN A RIGHT F***KIN STATE!!!!!!!

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    Mute Paddy Murray
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    Nov 30th 2011, 2:39 PM

    State of the nation is right. It was bad enough before they got their hands on it. After next week we will be lucky to still be a nation.
    A budget that takes 2 days is sure sign of the division in the government. Labour are trying to regain ground on broken promise’s so they have to have their day.
    Would people still vote for FG/lab again in such high numbers. Me don’t think so.

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    Mute Yosser Hughes
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    Nov 30th 2011, 3:46 PM

    Who would people vote for ?? Do you think FF again ?

    15
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    Mute Unitedpeople Ireland
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    Nov 30th 2011, 4:12 PM

    The new Irish Democratic Party?

    http://www.irishdemocraticparty.ie/

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    Mute Gary Keegan
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    Nov 30th 2011, 4:57 PM

    Why does it have to be a party? Really. Can we not elect the right person for the job, give them a short term contract and if they work out great we renew it if not, Next.
    Seriously, I don’t want any of these f*ckers in charge. The word Politician now just means lying scum. As long as they are alright to hell with everyone else.

    31
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    Mute Lou Brennan
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    Nov 30th 2011, 2:26 PM

    Enda the road more like. Hope he dresses appropriately in his Ebaneezza nightgown. Cant wait to be filled with inspiration and the spirit of togetherness. No doubt he will have a few christmas surprises up his sleeve like having to cancel Santa from coming this year or cutting the school leaving age to 10. Still isn’t he a great man trying to bring Ireland back from the brink. It’s not him that will be having nightmares though will it.

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    Mute Paul Kealy
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    Nov 30th 2011, 2:46 PM

    Gobshite, I would prefer to chew glass than hear that clowns lying drivel. The sheep will be disappointed though, Europe’s George Bush still has a 66% approval rating!!

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    Mute You know
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    Nov 30th 2011, 3:09 PM

    Same circus, different clowns.

    48
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    Mute Brian Merriman
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    Nov 30th 2011, 4:21 PM

    An ignorant headline the morning after his Mother was buried.

    32
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    Mute Philip Kennedy
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    Nov 30th 2011, 4:01 PM

    why are we blaming enda and fg labour for the cuts we are all facing? They didn’t cause the problem but are doing what they can to fix it. Direct your criticism where its deserved, ff.

    29
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    Mute Martin O Donnell
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    Nov 30th 2011, 4:14 PM

    wrong…this will be their budget…they were around when things were going wrong…they had the numbers to block bills but did they no sir they did SFA….fg/lab will make things worse…bunch of lying MFs

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    Mute Paul Kealy
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    Nov 30th 2011, 5:27 PM

    Philip…another sheep hehehe

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    Mute Glyn Carragher
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    Nov 30th 2011, 7:26 PM

    Philip with all due respect you are right, FF did a huge amount to cause the problems were are in at the moment, however I think that what is getting peoples backs up is the fact that FG and labour are just “having their turn at power” and are NOT doing anything to fix the disastrous social issues which are crippling the rest of us.

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    Mute Kerry Blake
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    Nov 30th 2011, 2:24 PM

    Is it not Howlin who is kicking off the 2 day budget gig?

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    Mute Réada Quinn
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    Nov 30th 2011, 3:01 PM

    That’s what the Blueshirts do. Send out the cannon fodder first

    47
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    Mute Tony Skillington
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    Nov 30th 2011, 4:40 PM

    Talk about keepin his head below the parapet wall…before the Toy Show would be apt…a muppet before the other muppet!

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    Mute Dermot Fitzgerald
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    Nov 30th 2011, 5:55 PM

    People berated Cowen for not addressing the nation and people now give out about Enda for addressing the nation. It’s just give out about anybody who tries to do something, or sort the problems. Get yer head out of the sand people.

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    Mute Tony Skillington
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    Nov 30th 2011, 6:46 PM

    You’re right Dermot when you say Cowen was useless for communicating with us the people…but I wonder was that better than sitting before us spouting lie after lie? I remember Endas speech the day they took their seats in the Dail…very noble, very gracious but totally disingenuous…the old adage comes to mind…better to remain silent and let people think you’re a fool rather than open your mouth and remove all doubt! Let him give his big speech..but for the love of Christ..be truthful..even if it’s unpalatable…we’ll have more respect for him in the long run!

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    Mute Lucy Lannin
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    Nov 30th 2011, 5:53 PM

    Enda will convince us that Irish people can deal with everything except Prosperity.

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    Mute Martin Mc Cormack
    Favourite Martin Mc Cormack
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    Nov 30th 2011, 11:02 PM

    And snow

    5
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    Mute David Higgins
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    Nov 30th 2011, 10:09 PM

    Enda’s mother has just died. I can understand why he isn’t capable of making a state of the nation address this week.

    I always felt that one before the budget wouldn’t make sense as people still wouldn’t know what exactly was in the budget. AFTER the budget makes much more sense as it’s a chance to give justification for the measures introduced.

    Have sympathy people, which one of you would go on TV after your mother had died?

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    Mute Martin Mc Cormack
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    Nov 30th 2011, 11:01 PM

    I generally would, but they did allow TV cameras into the church for the funeral

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    Mute Bernadette Dunne
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    Dec 1st 2011, 1:56 AM

    Did he not go to the Dinner on Saturday in the Aras AFTER his mum passed away that morning sympathy maybe but RESPECT NO

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    Mute Dan
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    Nov 30th 2011, 8:49 PM

    At this stage Enda Kenny is completely incapable of telling the truth. I don’t know if it is possible to have less respect for this man but i’m sure he’s going to put it to the test. FF brought this country to its knee’s before heading off into a nice luxury retirement. And now FG and their spineless lapdog labour are going to finish us off. Over 2 days instead of 1 as well!!!

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    Mute Norman Hunter
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    Nov 30th 2011, 9:37 PM

    your right kenny is spineless no need to listen to him tell us how hard things will be.we know whereas kenny on 200 + thousand and expenses does n’t.all politicans are amoral scumbags

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    Mute Barry Lynch
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    Nov 30th 2011, 9:35 PM

    If he was being honest it would be something like this: http://www.youtube.com/watch?v=2uQ30Iafg8k

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