Ryanair said it will redistribute profits to shareholders if it cannot secure a better deal with Boeing for orders of 200 new aircraft between 2013 and 2016.
Chief Executive Michael O’Leary said that if the group could not invest
profitably, then it was better off returning the money to shareholders.
It believes Boeing should pass on some of its ‘enormous’ savings from
suppliers and more efficient manufacturing.
O’Leary also took the opportunity of Ryanair’s half yearly results
statement to attack ‘stupid’ taxation in the UK and Ireland, which, he
believes, has contributed to declining passenger numbers. He said the
group would be switching its winter capacity from ‘high tax’ areas of
Britain and Ireland to low or no tax areas, such as Belgium, Holland,
Italy and Spain.
Ryanair’s profits for the six months to 30 September were given a boost
by a 42% cut in fuel costs, and rose 80% to €387m. Revenues were down 2%
to €1.8bn. A 17% decline in fares was offset by a 15% rise in passenger
numbers to 36.4m. O’Leary also said that profits had been supported by
‘rigorous’ cost discipline. This has meant pay freezes for some of its
work force.
Average fares are likely to dip by another 20%, meaning the group will
be loss-making in the final two quarters of the year. However, it left
its full year guidance unchanged, saying it would be between €200m and
€300m, but was likely to be at the lower end of this range.
The group expects to be a beneficiary of the demise of some of its
rivals. SkyEurope, Solvakia’s Seagle Air and Italy’s MyAir have already
left the market.
The shares were down 5.44% to €2.79 in early trading. They reached as
high as €3.76 in June of this year, but have now been steadily declining
since mid-September. The company trades on 14.2x earnings, which is
ambitious for an airline in the current economic environment. The group
has cash on the balance sheet and is in reasonable shape relative to its
competition, but it is difficult to see a significant rise in the shares
in the short-term.
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Ryanair issues threat to Boeing
Cherry Reynard, 02/11/09 08:48
Ryanair said it will redistribute profits to shareholders if it cannot secure a better deal with Boeing for orders of 200 new aircraft between 2013 and 2016.
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Chief Executive Michael O’Leary said that if the group could not invest profitably, then it was better off returning the money to shareholders. It believes Boeing should pass on some of its ‘enormous’ savings from suppliers and more efficient manufacturing.
O’Leary also took the opportunity of Ryanair’s half yearly results statement to attack ‘stupid’ taxation in the UK and Ireland, which, he believes, has contributed to declining passenger numbers. He said the group would be switching its winter capacity from ‘high tax’ areas of Britain and Ireland to low or no tax areas, such as Belgium, Holland, Italy and Spain.
Ryanair’s profits for the six months to 30 September were given a boost by a 42% cut in fuel costs, and rose 80% to €387m. Revenues were down 2% to €1.8bn. A 17% decline in fares was offset by a 15% rise in passenger numbers to 36.4m. O’Leary also said that profits had been supported by ‘rigorous’ cost discipline. This has meant pay freezes for some of its work force.
Average fares are likely to dip by another 20%, meaning the group will be loss-making in the final two quarters of the year. However, it left its full year guidance unchanged, saying it would be between €200m and €300m, but was likely to be at the lower end of this range.
The group expects to be a beneficiary of the demise of some of its rivals. SkyEurope, Solvakia’s Seagle Air and Italy’s MyAir have already left the market.
The shares were down 5.44% to €2.79 in early trading. They reached as high as €3.76 in June of this year, but have now been steadily declining since mid-September. The company trades on 14.2x earnings, which is ambitious for an airline in the current economic environment. The group has cash on the balance sheet and is in reasonable shape relative to its competition, but it is difficult to see a significant rise in the shares in the short-term.
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