HomeAir LineRyanair and Easyjet put pressure on IAG to recover the dividend

Ryanair and Easyjet put pressure on IAG to recover the dividend

Low-cost companies remunerate their shareholders this month and a future announcement from Lufthansa in the same regard is expected.

The CEO of IAG, Luis Gallego. Pablo Monge Fernandez

IAG’s key meeting with the market. On the 29th it presents its 2023 results and there are at least two unknowns in the air: if it resumes the distribution of dividends after the pandemic, and if a new president for Iberia will be named. At the group’s London headquarters there is absolute silence on the matter. But in the case of shareholder remuneration, the pressure from rivals is maximum. And regarding the position of first executive of Iberia, different sources are betting on internal promotion and give the names of Marco Sansavini, current president of Vueling, and Carolina Martinoli, director of People, Corporate Affairs and Sustainability of IAG, as candidates with more force.

Ryanair, Easyjet and Jet2 have restored the payment of part of their profits to participants, while Lufthansa has lifted any type of debt-related veto to do so. In the US, Southwest and Delta already compete on dividends.

In the presentation of the results of the first semester, the CEO of IAG, Luis Gallego, warned that the sector was “still far from the performance prior to the pandemic”, despite the fact that the 1,260 million operating profit already marked a historical record for holding company. It was early to turn on the tap.

A quarter later, IAG declared a profit of 2,151 million as of September 30 after a summer without equal for Iberia or Vueling. It is the good result expected for the entire year that places the focus on the group’s ability to reward its investors again.

At the recent Capital Markets Day, IAG indicated that it has the return of a stable dividend among its priorities, but put debt repayment and the need to guarantee compliance with its investment plan. That November 21 confirmed that the absence of a perspective on the dividend has automatic punishment in the Stock Market (the fall was 4.3%).

The company led by Gallego required the help of its shareholders in October 2020, through a capital increase, for 2,741 million. In favor of an imminent return of the dividend, the repayment in the third quarter of 2,000 million pounds (2,340 million euros) of British Airways debt, guaranteed by the UK Export Finance, and the 1,010 million with ICO backing amortized from in advance by Iberia and Vueling. The banks had the power to veto the dividend at IAG.

Between 2016 and 2019, the group delivered 4.1 billion between ordinary dividends, extraordinary payments and share repurchases. It was 0.4 euros per share in 2016, 1 euro in 2017, the figure rose to 1.1 euros in 2018, and just before the pandemic 1.3 euros per share were distributed.

The low costin front

Ryanair opens fire on the 28th with the delivery of 0.175 euros per share, but plans to total 400 million (0.35 euros per share) this year. The low cost, which until 2020 opted to buy its own paper for amortization, takes the step in view of a good first half of its 2023-2024 fiscal year (it earned 2,180 million, 59% more). By 2025 it aims to deliver 25% of the net profit.

Easyjet once again rewards its shareholders, the day after tomorrow, with 4.5 pence per share, after a profit of 324 million pounds (378 million euros) in its 2022-2023 fiscal year. The British company has committed, as a starting point, to achieving 20% ​​of pay out (part of the profit that is dedicated to the dividend).

Another that has made a move has been the Norwegian company Norwegian. After four years of restructuring, the board approved on December 21 a dividend of 0.25 crowns (240 million crowns or 21.2 million euros in total) against 2022 profit, and the board anticipated last week that will propose a figure of 0.60 crowns (580 million crowns) charged to 2023. Both deliveries are subject to approval by creditors.

And before all of them, the British Jet 2 also approved in September 2023 the payment of 8 pence per share against the result of its 2023 fiscal year (135.4 pence of profit per share).

The market awaits news from Lufthansa, which has managed to lift the ban on payment to its shareholders that was established to receive help from the Economic Stabilization Fund (ESF) during the pandemic. Its intention is to restore a pay out from 20% to 40%. And Air France-KLM concluded the third quarter with the payment of 90 million to the State, within the framework of the return of public aid received in April 2021, which is considered a dividend payment by accounting regulations.

The passage is marked on the other side of the Atlantic

In the United States, Southwest and Delta have taken the initiative and are positioning themselves as pioneers in the recovery of dividends in the airline sector. The first has delivered 428 million dollars (397 million euros) to its investors in 2023, and the second, which has paid debts of 10,000 million dollars (9,285 million euros) in the last two years, has recovered its quarterly dividend . Delta’s first payment, in July, was $0.1 per share, with the same amount repeated in December. Its total effort in 2023 was $131 million.

American Airlines has a weaker last quarter than 2022 (net profit fell 97%, to $19 million), despite ending last year with a 547% increase in profit, to $822 million. millions of dollars. The company based mainly in Dallas Fort Worth (Texas) celebrates its Investor Day on March 4 and is expected to be able to set a strategy on the destination of the profits.

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Source: Cincodias



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