It may be one of the most valuable airlines in the world but Ryanair’s Dublin-listed ordinary shares continue to trade at a significant discount to its US-listed American Depository Receipts (ADRs). It is an interesting quirk of the airline’s market profile and one the airline is now taking steps to rectify.
Typically, Michael O’Leary had plenty to say about it at the airline’s AGM on Thursday. Speaking to shareholders, he said the New York-listed shares were insulated somewhat from the negative press the airline receives in Europe.
“In Ryanair,” he said, “there’s always some news flow. We’re fighting some union or some minister or I’m calling some minister an idiot or they’re calling me an idiot.”
That might have something to do with it. In general, however, European companies’ ADRs – US trading certificates in foreign companies – typically trade at a premium to the ordinary shares. But in Ryanair, which is subject to European Union rules stipulating that airlines are not allowed to have more than 49.9 per cent of their shares in the hands of investors outside of the union, this is particularly pronounced. The gap is about 30 per cent at the moment.
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It has been something of an issue for the airline since Brexit when the airline’s UK shareholders became non-EU nationals, sinking the share of the company held by European citizens from about 54 per cent to under 40 per cent. Ryanair’s board took steps to keep within the rules, treating the shares – both ordinary shares and ADRs – as restricted, meaning their holders could not vote at the airline’s annual meetings and also restricting non-EU nationals from buying ordinary shares in the carrier.
But with the group on track to return to majority European ownership after its next share buyback, O’Leary said on Thursday the board is now reviewing these restrictions. If it makes changes, the chief executive said he thinks the gap between the ordinary shares and the US-listed ADRs would narrow.
“I would be certainly in favour removing the ownership restriction,” he told reporters on Thursday. “I think we probably should be keeping the voting restriction, because at least that would ensure that we maintain EU control.”
In the meantime, with Ryanair’s ordinary shares down close to 20 per cent in 2024, shareholders will be hoping O’Leary can keep a lid on the “negative news flow”.
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