Ryanair unveils record full-year profit outlook and maiden regular dividend

Investing.com -- London-listed shares in Ryanair (LON:0RYA) surged on Monday after the low-cost carrier delivered a record annual profit forecast and outlined plans for its first-ever ordinary dividend.

In its first-half financial update, the airline said it now expects to report post-tax income of between €1.85 billion to €2.05 billion (€1 = $1.0749) during its 2024 fiscal year, assuming "modest losses" over the winter trading period.

It would be Ryanair's highest profit after tax ever, topping the prior record of €1.45B set in 2018. The firm cited a projected "mid teens percentage" uptick in third-quarter average fares due to expected capacity constraints in Europe this winter and the impact of engine repairs hitting competitor fleets.

"Management is indicating that bookings are currently 'robust' for late October mid-terms and into peak Christmas, both in terms of traffic volume and fares," analysts at Morgan Stanley said in a note.

However, Ryanair noted that visibility for its fourth quarter -- typically its weakest -- is "very limited." The annual guidance remains dependent on "the absence of any unforeseen adverse events (for example such as Ukraine or Gaza) between now and the end of [March] 2024," it added.

For April to September, 105.4 million passengers used Europe's largest airline, an increase of 11% and a new summer season record. The traffic spike helped push profit after-tax during the six months up by 59% to €2.18B.

Ryanair said that it would now launch a maiden regular dividend of €400M, with payouts coming in €200M batches in February and following the group's annual meeting next September. From the 2025 fiscal year onwards, it said it would aim to pay a regular dividend of approximately 25% of prior year post-tax earnings, adjusted for "non-recurring gains or losses."

"Additionally, the Board, taking into account prevailing market conditions and ensuring that the Group retains a prudent level of cash to fund debt and [capital expenditure] requirements will retain the flexibility to consider, when or if appropriate, the return of surplus cash to shareholders through special dividends and/or share buybacks," Ryanair Chief Executive Officer Michael O'Leary said in a statement.