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Ryanair plans regular dividend for first time as it forecasts record annual profit

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Ryanair forecast a record annual profit and outlined plans to pay a regular dividend for the first time as the airline cashed in on its busiest-ever summer and a rise in airfares.

Europe’s largest airline by passenger numbers on Monday forecast a full-year profit after tax of between €1.85bn and €2.05bn for its financial year ending in March, which would beat a record set in 2018.

The airline became the latest to report booming profits over the summer as the industry rebounded from the impact of the Covid-19 pandemic thanks to strong demand for travel and high ticket prices.

Ryanair underlined its recovery by announcing plans to pay shareholders a regular dividend for the first time, starting with €400mn over the next year. It pledged to then return about 25 per cent of the prior-year profit after tax to shareholders.

The airline paid out more than €6bn to shareholders between 2008 and 2020, but only through buybacks or special dividends.

Chief financial officer Neil Sorahan said the switch to regular payouts reflected the “maturity” of Ryanair’s business, following years of high capital spending before the pandemic as it built its dominant position in the European market.

As carriers across Europe report record profits, the biggest question facing the industry is how long the boom times can continue, and whether demand for travel will remain strong into next year.

Sorahan said Christmas looked “strong” and the airline was “pleased” with early sales for summer 2024.

But Ryanair cautioned that its financial guidance was “highly dependent on the absence of any unforeseen adverse events, for example such as Ukraine or Gaza”.

The airline said it faced a “significantly” higher fuel bill — up €1.3bn this financial year — meaning it was unlikely to replicate last year’s “bumper” fiscal third quarter.

Ryanair added that it also faced higher environmental EU charges from January and delivery delays for new aircraft from Boeing.

Ryanair carried 105.4mn passengers between April and September, a record for the summer season.

Profit after tax — the airline’s preferred measure — for the period rose 59 per cent compared with the previous year to €2.18bn, as average airfares rose by nearly a quarter.

Airlines have been able to raise fares in Europe as strong demand for leisure travel has come amid a capacity crunch, and the industry still has fewer planes in the air than before the pandemic after retiring many jets during the coronavirus crisis.

Airbus and Boeing have suffered from delays in producing new aircraft, while some airlines have also had to take their existing jets out of service because of a product recall from engine maker Pratt & Whitney.

Sorahan said he expected airfares to stay high into next summer because of the imbalance between demand and supply in the industry. “Capacity is going to remain constrained for some time to come . . . I think it leads to higher fares for the next while and potentially into next summer,” he said.