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Ryanair boss Michael O'Leary in line for £100m payday

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Ryanair
Ryanair

Michael O’Leary is in sight of landing a €100m (£85m) payday despite Ryanair racking up huge losses during the pandemic.

The airline’s chief executive is entitled to a bonus of 10m shares if the company’s stock hits €21 between 2021 and 2024.

Analysts are now pencilling it in as a target price after bookings surged last week as border restrictions are relaxed across Europe.

Ryanair shares have almost doubled since the pandemic hit in March 2020 and are now hovering near all-time highs.

This is despite the airline racking up €1.1bn in losses over the last 15 months. Last week, Mr O’Leary said: “Covid-19 continued to wreak havoc on our business”.

Johannes Braun, an analyst at Stifel, has put a €21-a-share target price on Ryanair shares. Counterparts from Morgan Stanley and Berenberg say the shares are currently worth €20 despite the airline being in a loss-making position.

The City was buoyed by Ryanair’s first quarter announcement, which disclosed a “surge” in late summer bookings.

Mr O‘Leary said the airline had seen a “strong rebound in pent-up travel demand”.

Andrew Lobbenberg, an analyst at HSBC, said: “Passengers are booking flights to travel again, and Ryanair’s passenger volumes are accelerating.

“We remain of the view that Ryanair’s business model is stronger today than it was pre-pandemic: the key strategic weaknesses pre-pandemic of challenging relations with labour and aircraft suppliers have now inflected to be clear strengths for Ryanair.”

Berenberg’s Adrian Yanoshik upgraded his valuation. He said: “The airline offers the quickest return to pre-tax profitability.”

Mr O’Leary’s pay packet sparked controversy when it was announced in February 2019. The bonus is triggered if annual profits double to €2bn “and/or” the share price reaches €21 for a 28-day period between Apr 1, 2021 and Mar 31, 2024.

Royal London, one of Ryanair’s smaller institutional investors at the time, said the award was “wholly inappropriate”.

The payday would surpass that of Jeff Fairburn, the former chief executive of Persimmon, who quit after receiving £75m linked to the housebuilder’s share price.

Last week, the boss of Wizz Air, which has modelled itself on Ryanair and is plotting to overtake its Irish rival in years to come, received support from shareholders for a bonus plan worth £100m. József Váradi’s payout, which was opposed by a third of investors, will pay out if the airline’s share price increases by two-and-a-half times.

Ryanair did not comment on the airline’s bonus plan. In 2018, Mr O’Leary said: “My view of shareholders voting against my pay package is: if you don’t like it, don’t vote against it - sell your shares.”

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