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Ryanair is putting plans for future share buybacks on hold due to uncertainty surrounding the UK’s proposed exit from the European Union (EU).
Europe’s biggest discount carrier completed a €750m program this month, but doubts over how a so-called Brexit will play out have forced to hold back on further announcements.
“It makes very little sense to us at the moment until we get some certainty,” chief executive officer Michael O’Leary said in an interview on Monday.
The likelihood of a no-deal situation “is rising,” the carrier cautioned in a statement, adding that it’s hoping for a 21-month transition period to be agreed between the EU and UK. If not, Ryanair will restrict the voting rights of all non-EU shareholders - including those in the UK - to ensure the airline remains in compliance with a rule that EU airlines must be more than 50% owned by EU investors.
“We may well want to hold back and use a share buyback in the spring of next year if there looks like there is going to be a hard Brexit,” O’Leary said. Currently, on the day after a hard Brexit, Ryanair’s non-EU shareholding would be around 55%, above the 50% threshold, he said.
The shares rose 3.8% to €11.95 as of 8:04 am in Dublin.
O’Leary was speaking after Dublin-based Ryanair reported its first decline in first-half earnings for five years amid rising fuel prices, various industrial action and staff shortages.
The carrier gave a particularly gloomy outlook for the wider sector.
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