Ryanair Group CEO Michael O’Leary has said the airline will not get rid of its US shares, which are currently valued around 30% higher than its ordinary shares in Ireland. The carrier is reviewing its post-Brexit policy of restricting shares held by non-EU nationals.
Ryanair doesn’t plan on removing US shares
As reported by the Irish Independent, O’Leary has dismissed the idea of ditching Ryanair’s American Depository Receipts (ADRs). He pointed to other companies—such as building firm CRH and gambling company Flutter—that quit the Irish Stock Exchange for the US and have since seen their share prices rise significantly.
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While ruling out the possibility of following those companies and moving to a US stock exchange, O’Leary said,
“When we first floated in 1997, the best thing we ever did was to have at least half the ownership in the US.”
Following the UK’s exit from the European Union (EU), Ryanair changed its share ownership policy to ensure it didn’t fall foul of EU ownership regulations. With UK nationals subsequently being classed as non-EU following Brexit, the airline had to ensure compliance with EU rules, which mandate that more than 50% of shares be held by EU nationals.
Consequently, the carrier imposed restrictions on shares held by non-EU nationals, removing their voting rights and participation in shareholder meetings, among other changes.
Ownership restrictions may go
At its annual general meeting (AGM) held in Dublin this week, Ryanair said it is reviewing whether it will retain its post-Brexit rule changes. The airline revealed that around 49% of its issued share capital is currently owned by EU nationals, and it expects this to reach 50% within the next 12 months.
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O’Leary said he was in favor of ditching ownership restrictions, although he said the airline “probably should be keeping the voting restriction” to comply with EU regulations. The likely upside of removing ownership restrictions is that share prices would rise closer to parity with its ADRs, which are priced around 30% higher.
O’Leary explained,
“If we were to remove the restriction on non-EU [investors] buying ordinaries, I think you’d see the ordinaries trade up to where the ADRs are currently valued and we would have a much higher premium.”
He added that ordinary shares are currently priced at a “meaningful discount” compared to the ADR’s because of the restrictions.
Fares lower this quarter and beyond
As first reported by Reuters, Ryanair expects average fares to be 5-9% lower for the three-month period ending in September. However, the airline has seen demand for fares rise in recent weeks with the end of the school summer holidays.
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O’Leary also said last month that fares are likely to be around 5% cheaper year-on-year for the upcoming Winter season ending in March 2025. Ryanair reported a 46% drop in quarterly profit for Q1 FY2025 and downgraded its full-year passenger guidance from 205 million to 200 million – however, this is off the back of a record $2 billion full-year profit for FY2024.