News
Jessica Fino 12 Feb 2019 11:49am

Ryanair told to replace KPMG as auditor

Royal London Asset Management has suggested that Ryanair replace its long-running auditor KPMG

The asset manager said in an interview that the Big Four firm has audited the budget airline for too long to be able provide an “effective independent oversight”.

The firm was appointed as auditor at Ryanair in 1985. Under the EU audit rotation regulations, the airline will be required to change auditors in 2024.

However, the asset manager said Ryanair should re-tender the contract sooner. It also suggested it improves the oversight of the board and introduces stronger governance standards.

In its annual report published last week, the Irish airline said its audit committee has evaluated the work completed by the external auditor and the fees paid and was satisfied with its “effectiveness, objectivity and their independence”.

Royal London, which according to Insurance Asset Risk holds 366,285 shares in the company, said last week it had “longstanding concerns” about governance at Ryanair, which has been compounded by “operational issues and ongoing labour unrest”.

“We would like to see the new chairman undertake a comprehensive board review with a view to putting in stronger governance standards to support the growth plans of the business,” it added.

Ashley Hamilton Claxton, head of responsible investment at Royal London, also criticised news that Ryanair CEO Michael O’Leary could receive a £90m bonus.

“Asking shareholders to pay directors more than €100m for achieving a marginal improvement over its share price high in August 2017 is ludicrous,” she said.

“Many of the reasons for the company’s recent poor performance – such as labour issues, strikes and logistical problems – have been within management’s control, so this eye-watering payout for rectifying these issues and achieving a share price recovery simply adds insult to injury.”

The airline posted a €20m (£17.5m) loss during the third quarter, while revenues rose to €1.5bn.

KPMG and Ryanair have been contacted for comment.

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