Ryanair Unveils EUR 800 Million Share Buyback Program

On Thursday, Ryanair Holdings PLC (LSE:0RYA) unveiled plans to initiate a new share buyback program valued at EUR 800 million. This announcement comes as the company experiences stronger traffic and faces delays in capital expenditure due to issues with Boeing Co delivery schedules, which have partially countered the impact of reduced airfares. Following the completion of its existing EUR 700 million buyback plan by the end of August, Ryanair will proceed with this new buyback initiative, bringing the total buybacks for the current financial year to EUR 1.5 billion. 

Impact of Delivery Delays 

Ryanair's decision to increase its share buyback program is attributed to improved cash flows resulting from robust traffic growth and delays in Boeing aircraft deliveries. These delays have pushed back planned capital expenditures, leading to a temporary boost in cash flow. The company plans to propose an increase in its annual buyback authority at its upcoming annual general meeting (AGM), scheduled for September 12. The proposal aims to raise the buyback authority from 10% to 15% of issued share capital. 

Future Aircraft Deliveries 

Ryanair is set to experience a two-year period with no new aircraft deliveries from mid-2025 to mid-2027. This hiatus in aircraft acquisitions is expected to provide a short-term boost to cash flow due to reduced capital expenditure on aircraft. The company anticipates using this opportunity to extend shareholder returns, which have amounted to EUR 8 billion over the past 15 years, including dividends, with more than 30% of shares repurchased during this period. 

Recent Financial Performance 

In July, Ryanair reported a nearly 50% decline in quarterly profit, with revenue seeing a slight drop due to lower ticket prices despite an increase in passenger numbers. For the three months ending June 30, the company recorded a pretax profit of EUR 400.8 million, down 46% from EUR 740.7 million in the previous year. Operating revenue was EUR 3.63 billion, a decrease of 0.6% from EUR 3.65 billion. While ancillary revenue, such as from onboard sales, increased by 10% to EUR 1.30 billion, scheduled revenue from ticket sales fell by 5.9% to EUR 2.33 billion. 

Pricing Outlook 

Despite strong demand in the second quarter, Ryanair's CEO, Michael O'Leary, indicated that pricing remains softer than anticipated. The company now expects second-quarter airfares to be considerably lower compared to the previous summer, reflecting ongoing challenges in fare levels.