Ryanair shelves plans for low-cost transatlantic flights

Ryanair has shelved plans to launch a low-cost transatlantic carrier as it cannot get the aircraft it needs to operate such a service.

Chief executive, Michael O’Leary, has said several times that the airline was exploring the possibility of a launching a transatlantic business through a separate company, on condition that it could get the necessary craft.

However, chairman David Bonderman, indicated at yesterday's annual general meeting (agm) in Dublin that a transatlantic operation is now off the agenda.

After the meeting, chief marketing officer, Kenny Jacobs, said that Ryanair could not get the long-haul craft it would need as current demand means that manufacturers such as Boeing and Airbus cannot supply them.

"That is the main problem, they are still not cheap," Mr Jacobs said. "So we said let's just focus on the business that we have. That business is going great, we are leaders on short-haul in Europe, we don't need to do transatlantic."

He added that the airline has always made it clear that launching a transatlantic business would hinge on the availability of suitable craft.

When he last spoke publicly about the proposal, Mr O’Leary pointed out that it would take at least five years for manufacturers to work through demand from middle eastern and Asian airlines.

Ryanair plans to distribute the €398 million from the sale of its stake in rival Aer Lingus to shareholders.

Chief finance officer, Neil Sorahan, said on Thursday that the airline will distribute the money via a B-share scheme, under which investors will receive 29.4 cent a-share, a total of €398 million.

Subsequent to issuing the B-shares, Ryanair will consolidate its equity by issuing investors with 39 shares for every 40 that they hold. Mr Sorahan said that this should ensure that the share price remains stable after the exercise is complete.

Speaking at the company’s agm Mr O’Leary noted that if the company gets the Revenue’s agreement, Irish shareholders - who own 8 per cent of the company - would pay capital gains rather than income tax on the distibution.

Mr Sorahan pointed out that there were a number of reasons for using the scheme. Specificially, the company wants to highlight the fact that it is a once-off distribution resulting from the sale of the Aer Lingus stake.

“We will have given back €1.3 billion to shareholders since January,” he said. “If an expectation gets out there that Ryanair is good for €1.3 billion a-year, that’s the wrong message to send.”

Ryanair plans to send out circulars giving full details of the scheme to shareholders in coming weeks. It hopes to complete the programme, which will require it to call an extraordinary general meeting, before December.

Its board voted last July to accept a €2.55 a-share offer for its 29.8 per cent Aer Lingus stake from International Consolidated Airlines Group (IAG), owner of British Airways, Iberia and Vueling.

The vote signalled the end of of its own long-running battle to take full control of Aer Lingus, which met opposition from the Government and competition regulators.

Ryanair lifted its full-year profit forecast 25 per cent this month as a wet August spurred a booking surge, leading to higher-than-expected fares.

That has helped fuel a 47 per cent share-price gain and brought Ryanair closer to catching Southwest Airlines by market value.