Thomas Lyons 
Ryanair chief Michael O’Leary is back in the cockpit at the airline after the company announced near record profits and a share price increase of over a third since the start of the year. Ryanair’s latest financial year saw after-tax profits of well over €1.4bn. While this figure did not quite reach pre-pandemic heights, it was close enough to suggest that sales and profits would soon be flying even higher.
Despite facing the worst inflation crisis since the 1970s and European customers experiencing their worst financial squeeze for over a decade, Ryanair’s impressive performance has been driven by hot summer demand, more flights, and higher airfares. The airline has predicted that passenger numbers will increase 10% to 185m, likely delivering a double-digit percentage increase in profits. Ryanair is also tipped, all going well, to break through the €2bn annual profits barrier some time over the next few years.
In 2019, Mr O’Leary and his employer struck a first version of an eye-catching contract. The rebound in Ryanair’s fortunes means Mr O’Leary is back on course to secure a potential bonus of almost €100m in the coming years, under the options plan, should he deliver on profits and share-price targets. Under the original 2019 accord, which was due to lapse in 2024, Mr O’Leary was due to be granted the option of buying 10m shares at €11.12 each, if annual profit rises to €2bn or if the share price rises to €21 for 28 days. Under the new agreement, the profits target was increased to €2.2bn, while Mr O’Leary committed to stay longer, until the summer of 2028.
The terms of the original 2019 contract had caused a bit of turbulence at the time. That’s because so-called proxy advisors to institutional shareholders are vigilant should the pay and shares-based incentives of CEOs and other executives of listed companies become “misaligned”. Back in 2019, Ryanair shareholders approved, by a big majority, the incentive plan that could, in time, pay out almost €100m to the CEO, but not before some institutional shareholders were advised to vote it down. In December, Ryanair and Mr O’Leary agreed on revised terms.
Stan McCarthy, the Ryanair chairman, had said in December that the latest iteration of the contract involved “extensive engagement with large shareholders and proxy advisors”, possibly a hint that the voices of some shareholders in 2019 had been taken on board. Ryanair shares were trading this week at €16.60. The airline’s rebound is in no little way marked by the 3% uptick in the shares in the past week, the 12% gain in the past month, and their 36% ascent since the start of the year, which brings the airline close to an €18.9bn valuation on stock markets.
Regarding the annual pay packet, Mr O’Leary is famously not among the best-paid of his stock market peers. He was paid €500,000 last year which, with a €480,000 bonus, brought his total cash pay to €980,000. That’s up from the €250,000 he got in 2021 when no bonus was paid during the covid crisis. The company had said last year that “for fiscal year 2021, as part of the group’s response to the covid-19 crisis, the group CEO volunteered a further 50% cut to his base pay to €250,000 [from €500,000] and also volunteered that zero bonus would be paid in relation to fiscal year 2021”.
Mr O’Leary has been a director at the airline for 35 years and has held the top job since 1994, subsequently leading the company to a stock market debut. The new contract means the 62-year-old is now due to be at the airline beyond the age he qualifies for the State’s free bus and train pass. The airline’s recovery has almost erased memories of the late 2017 fiasco when Mr O’Leary faced a huge crisis over its pilots. The crisis forced the airline to cancel flights, but did little to dent its profits.
This week’s results also marked another milestone: Ryanair revealed it held €560m in cash, albeit because of delivery delays to existing plane orders. That showed the airline had made a good start to meet the enormous bill it faces for the 300 fuel-efficient Boeing Max-10 planes, including firm orders and options. It wants to take delivery of the planes starting in early 2027 through to 2033. Investors will be watching closely. Share prices tend to move in anticipation of ground-breaking corporate events, and the size of the order for the Boeing Max-10 planes is, by any measure, a significant corporate event. And Mr O’Leary could well be on the flight.
