Ryanair starts €800 million buyback as plane purchases slow

Ryanair Holdings Plc is embarking on a fresh €800 million ($873 million) stock buyback as the airline benefits from a stronger cash position amid robust travel demand and aircraft delivery delays that have allowed it to conserve funds.

The Irish discount carrier said it now expects to complete its current €700 million share buyback by the end of this month, according to a regulatory filing. Ryanair will ask shareholders at its next annual general meeting in September to back an increase in the buyback size to as much as 15% of issued share capital, from previously 10%, it said. 

Ryanair is heading into a two-year period without new aircraft deliveries, meaning it will have more financial resources at its disposal. “This creates the capacity to extend shareholder returns,” the airline said, which estimated that it has handed out about €8 billion, including dividends, in the last 15 years. 

Ryanair is turning the delivery delays of Boeing Co. aircraft into a windfall for shareholders. The company has long lamented the shortfall with new aircraft as its US supplier struggles with output. Boeing’s woes were further exacerbated this year with an additional slowdown in production as the planemaker seeks to improve manufacturing quality.

The airline said in November that it would pay out a dividend of €400 million, with plans to hand over about a quarter of annual profit to shareholders. Still, the company has lost some momentum in recent months as passengers curtail their travel budgets, and Ryanair said last month that fares in the crucial summer travel period will be “materially lower.”

Ryanair expects to receive 50 Boeing 737 Max aircraft before the middle of next year, while cautioning that deliveries could slip. The company has said it will be about 20 planes short of its contracted deliveries this summer.

On Thursday, the company said it’s seen “strong traffic growth,” though Ryanair didn’t specify the period in question. The stock, which has lost about 23% in value this year, rose as much as 3.9% after the announcement.

“Given recent stock weakness, it is an excellent use of their capital,” Peel Hunt analyst Alexander Paterson said.