Just over a year ago, Ryanair was (seemingly) in the doldrums.

It had weathered the Covid storm, coming out the other side of the pandemic only to be faced with the effects of Russia’s invasion of Ukraine.

The knock-on impacts of the war, particularly the surge in energy prices, hit companies across the travel industry, with Ryanair no exception. The firm’s share price nearly halved between February and September 2022.

Fast forward a little over 12 months and the mood music around the airline could hardly be more different.

Last week it reported net profits of €2.2bn for the first half of its 2023 financial year, although full year profits are forecast to possibly dip slightly under €2bn due to a loss-making winter period.

Traffic is up. Average fares are up – bad, maybe, for the consumer, but good for Ryanair. And someone check on Michael O’Leary! The Ryanair boss declared 20 years ago that the airline would never pay a dividend “as long as I live and breathe”.

Thankfully for Ryanair investors, O’Leary is still with us and has helped grow the company enough over the last two decades to make a liar of his past self.

On top of the strong set of numbers published during the week, Ryanair also announced it will pay a €400m dividend to investors in 2024. O’Leary, who remains the airline’s largest shareholder with just under 4% of its stock, will net almost €16m.

The firm plans to make this a regular habit, committing to an annual dividend of 25% of its net profits.

Using its balance sheet to pay out a dividend, rather than using it purely for growth, as he preferred in the past, indicates how confident O’Leary is in Ryanair’s ability to keep generating cash.

Investors are happy. At the time of writing, Ryanair’s share price had surged nearly 20% in the last week since publishing its 2023 half-year stats.

So how has it all gone so right for Ryanair, when it seemed so recently that it was going so wrong?

For those looking closely, Ryanair’s situation was never quite as dire as the 2022 dip in its share price might have suggested.

The company was obviously put under immense strain during Covid, with the pandemic putting a halt to a massive chunk of international travel.

But Ryanair positioned itself well to re-emerge from pandemic restrictions.

Unlike many airlines, which fired much of their staff following the virus outbreak, Ryanair hung onto most of its workers.

This let the company quickly scale back up when society started to reopen, putting it in the perfect position to capitalise on the pent-up demand for international travel.

The company was in a strong position due to a significant war chest of about €4bn, which gave it plenty of financial firepower.

Optimism about the resumption of travel was reflected in the share price, which doubled from its Covid-era low of €9 in May 2020 to €18 by early 2022.

Then Russia invaded Ukraine, causing the aforementioned steady decline in its share price again.

As well as worries over energy prices and the knock-on impact rising fuel costs would have on Ryanair’s bottom line, there were concerns interest rate hikes aimed at curbing inflation could damage growth.

But again, despite investor gloom, Ryanair was still in a good position.

In an investor presentation in September 2022, when its share price was at a low point of €10.50, Ryanair highlighted that it was targeting 166m passengers in 2023 – above the 149m it carried in 2019, pre-Covid.

It had also hedged a large chunk of its fuel, helping to insulate it somewhat from energy price spikes. The company also owns most of its aircraft rather than leasing them, protecting it from interest rate rises.

But all this growth has a price. Earlier this year non-governmental organisation Transport & Environment named Ryanair as Europe’s most polluting airline.

This came with several caveats highlighted by Ryanair, including the fact that at the time, long-haul airlines such as Lufthansa and Air France were not yet back to pre-Covid levels of flying.

The airline also argued that it had relatively low emissions per passenger, with the gross figure, as such, being misleading.

However, just this January the airline was forced to change the information on its website following an intervention from the Netherlands Authority for Consumers and Markets.

It warned that flying remains “highly polluting” and forced Ryanair to add a message to its website stating that carbon offsetting, where airline customers can pay towards green projects, does not make flying itself more sustainable.

But despite the scale of the airline’s emissions and the fact that these are rising as traffic expands, the unfortunate truth is that until climate change impacts Ryanair’s finances, the issue is not something which is on the radar of most investors.

The main concern around the Irish company’s short-haul model is that some observers don’t see as much room to increase air fares for shorter flights compared to longer ones.

But that’s an industry issue affecting many airlines, not just Ryanair. The analyst reaction to Ryanair’s half-year results bordered on euphoric, with most now expecting the company to kick on growing traffic, its bottom line and its stock price.

Increasing the company’s value further to €21 per share for a month, or full year profits to 2.2bn, will trigger a bonus of around €100m for O’Leary. It will also signal how far Ryanair will have come from its recent dark days.

The airline industry is difficult and subject to shocks. It’s a key reason why O’Leary has been eager in the past to distance Ryanair from the prospect of regular dividends – who knows what tomorrow could bring and when Ryanair will need its cash. As Covid and Russia demonstrated so recently, there is a very real basis to these concerns.

But with the exception of Covid, traffic has been increasing steadily. More people continue to fly with the airline.

If regulators were to take a firmer stance on transport emissions, it could perhaps cause some problems and cause backers to take notice. But for now, the numbers are going up, and for investors that’s what matters.