EasyJet shareholders rewarded with £308m dividend handout as airline announces thumping 51% profits rise

  • Carrier's annual earnings soar 51 per cent to £478m
  • Allocated seating and fast-track security lure more passengers
  • EasyJet shrugs off turbulence hitting rivals such as Ryanair

By This Is Money Reporter

PUBLISHED: 05:08 EST, 19 November 2013 | UPDATED: 07:48 EST, 19 November 2013

Low-cost airline easyJet is to hand £308million worth of dividends to investors as it shares the spoils of a bumper profits haul.

The carrier's annual earnings soared 51 per cent after efforts to attract more business travellers paid off and it flew more than 60million passengers for the first time.

The Luton-based carrier hailed the success of recent initiatives, such as allocated seating and fast-track security, for boosting its popularity with more affluent, older fliers and business passengers.

Bumper profits: Chief executive Carolyn McCall has launched allocated seating and fast-track security to attract business travellers and older, richer fliers

Bumper profits: Chief executive Carolyn McCall has launched allocated seating and fast-track security to attract business travellers and older, richer fliers

Profits surged to a new high of £478million in the year to September 30, up from £317million.

EasyJet said it would hike its annual dividend by 55.8 per cent to 33.5p a share, a handout worth £133 million. On top of that, it is giving shareholders a £175million windfall through a special dividend payment of 44.1p a share.

Shares in easyJet jumped 6 per cent or 79.5p to 1,335.5p in early trading.

 

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Chief executive Carolyn McCall said easyJet was benefiting from its advantage in the European short-haul market as rivals have cut their operations in recent years.

It is also benefiting from moves to target business travellers and said its share of the market had increased by 4 per cent, with 10million corporate fliers a year.

 

Allocated seating is proving a hit with wealthier retired people, who had been put off by the boarding experience, added easyJet.

The profits rise comes despite Britain's best heatwave for years and sees easyJet shrug off turbulence hitting rivals such as Ryanair, which recently issued two profit warnings in as many months due to fare pressure, increased competition and Europe's continued economic problems.

But easyJet signalled a more difficult start to its new financial year as it comes up against tough comparisons from a year earlier when pent-up demand after the Olympics drove a leap in business. Bookings for the first half are so far flat on a year earlier, according to the firm.

Travel restrictions in Egypt will also impact on first-half trading, while easyJet said airport disruption was another challenge as strikes and a recent power outage at Gatwick has already seen 152 more flights cancelled year-on-year in October alone.

Costs will be another headache for the carrier, which is pencilling in a rise of up to £50million for its annual fuel bill, as well as higher airport charges and maintenance expenses.

EasyJet still expects to increase passenger numbers over the year ahead, with seats flown set to rise by around 3.5 per cent in the first half and 5 per cent in the full year - up from a 3.3 per cent increase in the year to September 30.

The number of those flown in the past year lifted 4 per cent to a new milestone of 60.8million.

Income shares watch: Easyjet's latest ordinary and special dividends add up to a £308million reward for shareholders. The shares yield 1.7 per cent.

Trading challenge: EasyJet signalled a more difficult start to its new financial year as it comes up against tough comparisons from a year earlier when pent-up demand after the Olympics drove a leap in business

Trading challenge: EasyJet signalled a more difficult start to its new financial year as it comes up against tough comparisons from a year earlier when pent-up demand after the Olympics drove a leap in business

View from the City

'EasyJet is maintaining cruising altitude with another set of fine numbers,' said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.

'A significant jump in profits, at the top end of expectations, was achieved through a number of measures. Additional revenue per seat, new airport openings, a tight rein on costs and a drive towards business customers all contributed to a healthy result.

'In addition, the company is positioning itself for further growth by securing future fleet requirements, whilst its confidence for future prospects was underlined by the announcement of both an increased and special dividend.

'Less positively, tough comparatives with the Olympic year and the situation in Egypt drag, competition is intensifying as evidenced by the recent Ryanair comments and costs per seat remain on an upward path due largely to higher charges at regulated airports.'

He added: 'Despite a 96 per cent increase in the share price over the last year, as compared to a 20 per cent hike for the wider FTSE 100, market consensus has recently strengthened even further and now comes in at a strong buy.'

James Hollins of Investec, which has a buy recommendation on the stock, said: 'The group continues to compete with a strong brand, product and price-point on key routes served by legacy network carriers that are delivering practically zero additional capacity.

'This should ensure further easyJet yield, earnings, free cash flow and dividend growth.'

Stock watch: EasyJet shares have taken off as it beats performance of rivals like Ryanair

Stock watch: EasyJet shares have taken off as it beats performance of rivals like Ryanair

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instead of sniping learn....we want value but are prepared to pay ....get a easyjetcard best value in the air!

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Ryan air could learn from this.

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I'm doubly glad to see this, firstly because I enjoy flying EasyJet, secondly because it shows that conceited and arrogant Michael O Leary that it's not the economy causing his airline problems, but the fact that his customers are fed up of being abused by him. Long may the profits of EasyJet rise whilst those at RuinAir fall.....

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Well done DM. Post a "profit" story but not a single word about the emergency landing of an easyJet AIRBUS last night.....and not a single word on the multi million £ sale of 150 Boeing aircraft to Emirates.......Support AIRBUS all the way......unless it doesn't conform

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Did anyone read anything in DM about the Belfast emergency that happened last night?No. Did anyone read in DM about the sale of 150 Boeing aircraft to Emirates? No.

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Its a good company and I used to own some shares but McCall does not have the manners to answer letters or emails.

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It's not his job. It's his job to take the big strategic decisions, to steer the ship over the coming decade ahead. I don't want him taking time to answer your letters; I want him to keep making the decisions that continue to deliver profit and return-on-capital to us shareholders, who employ him.

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Ok...ok...but you shareholders employ HER...!

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Great airline,great staff!!

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Of course they have made a huge profit, have you noticed how much their fares have gone up, even in the last year.

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Of course. Where do you think profits come from? I wnder how many shareholders actually use EasyJet. Most probably have their own planes.

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Beating O'Bleary at his own game!!

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Profit ain't a dirty word. Profit is the life-blood of any business. This is good news for all the shareholders, the owners, of this Company, who every day risk losing all of their money by having lent it to the Business in the form of ownership shares. Good news also for all of us with ISA's/pension funds which have used our money to hold shares in this Company. And good news for the employees because the Company has earned the profit to enable it to re-invest for the future; and their jobs and salaries should be safe.

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Have always provided a good service but their flights at 6 in the morning are a bit early since most people have quite a distance to travel beforehand or dose in uncomfortable plastic chairs at the airport.

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