British low-cost airline Easyjet doubled its dividend after annual results showed it took business from fading European rivals and customers bought more cheap flights for late summer holidays.
Annual results showed the airline took business from fading European rivals
Competitors are struggling to deal with high fuel costs, weak consumer confidence and the eurozone crisis. Some ceased operations this year, leaving gaps in the market that low-cost airlines have been quick to exploit.
IAG’s Spanish carrier Iberia said this month it would axe almost a quarter of its workforce and rationalise its network. Germany’s Lufthansa said it would deepen cost cuts to counter the rising fuel prices and limited market growth.
“Set against the difficulties which the industry has been facing, typified by the recent Iberia announcement, Easyjet has managed to shoot the lights out,” said Richard Hunter, head of equities at stockbroker Hargreaves Lansdown.
Shares in Easyjet, which have risen by 80 per cent this year compared to a 17 per cent rise for the FTSE 250, were up 6.3 per cent at 694.25 pence by 1053 GMT, valuing the airline at around £2.75 billion (€3.4 billion).
Europe’s second-largest budget airline after Ryanair reported pre-tax profit up 28 per cent at £317 million for the year to the end of September, at the upper end of its guidance.
The company based in Luton, southern England, announced a full-year dividend of 21.5 pence, up from 10.5 pence last year.
Profits have doubled since Carolyn McCall took over as chief executive in July 2010.
Easyjet said it benefited from sun-starved Britons taking last-minute holidays to Malaga and Alicante in Spain and Faro in Portugal to flee wet weather at home and from Londoners getting away after the Olympics.
It added flights between top business destinations and introduced flexible tickets and allocated seating in an attempt to steal corporate customers from legacy carriers such as IAG’s British Airways.
The airline is in talks with plane-makers Airbus, Boeing and Bombardier over the purchase of more fuel-efficient jets and plans to increase seat capacity by up to five per cent a year over the coming five years.
Easyjet, which will fly between London, Manchester and Moscow from next year, said revenues increased 11.6 per cent to £3.85 billion, while its fuel bill rose £182 million to £1.15 billion. The carrier expects fuel costs to be around £30 million higher in 2012/13.