Irish airline Aer Lingus unveiled a maiden annual dividend on Friday which will be repeated over the next two years, shying away from the kind of special dividend Ryanair and easyJet have promised.
Aer Lingus, which has not made any dividend payment or other form of distribution to shareholders since its initial public offering in 2006, said it intends to declare an ordinary dividend of 3 euro cents per share, to be paid in July 2012.
This will make a total payout of approximately EUR€16 million (USD$21.04 million) this year, and the decision to pay a dividend is due to the airline turning around its fortunes and returning to profitability.
It said that it also expects to pay a final dividend of 3 euro cents per share in each of the next two years, subject to the group's financial position being maintained.
"The board believes that this dividend represents a reasonable proportion of profitability and will not be detrimental to Aer Lingus' financial strength," the group said in a statement.
Aer Lingus had said previously that it may offer a special dividend, following in the footsteps of rivals Ryanair, which in 2010 paid its first dividend since being floated 15 years ago, and has said it will likely approve a substantial dividend this year.
British low-cost airline easyJet said in November it would make its first ever dividend a bumper payout, paying a special dividend of 34.9 pence on top of an ordinary dividend of 10.5 pence, making a total payout of GBP£195 million.
Analysts said shareholders may be disappointed by the news, however the decision by Aer Lingus was against the backdrop of uncertainty.
"Ryanair and easyJet set a precedent that there might be some sort of special dividends here. There will probably be a little bit of disappointment that there isn't," Davy's analyst Stephen Furlong said.
"I'm assuming they adopted a more prudent approach," he said, noting the volatile operating environment for airlines as well as uncertainty surrounding the group's pension deficit and ownership.
Etihad Airways bought a 3 percent stake in the Irish airline on Tuesday, positioning itself as a potential buyer of the indebted Irish government's 25 percent stake in Aer Lingus which it plans to sell as part of its international bailout.
However analysts said Etihad would likely want to resolve uncertainty over whether Aer Lingus may eventually have to contribute to a pension deficit that rose to EUR€700 million at the end of 2011.
The proposed dividend payment is to be covered by existing distributable reserves, after the airline sought permission from shareholders to be allowed to reduce its non-distributable reserves by up to EUR€500 million.