Shares in easyJet rose nearly 6 per cent yesterday after an Air France strike helped pack out its planes and propelled the budget airline to a City upgrade that will see it hit record profit for the fourth year in a row.
Last month, Air France pilots went on strike for a fortnight in a dispute over contracts which saw about half of the airline’s flights cancelled.
Many of the 150,000 passengers booked on the French airline switched to easyJet’s routes, helping the FTSE 100 airline pocket an extra £5m-worth of fares.
That, combined with what easyJet’s chief executive Carolyn McCall said was a “strong finish to the year”, saw the board tell the City yesterday that pre-tax profit for the year to October would be between £575m and £580m, sharply higher than an earlier forecast of £545m to £570m. That means easyJet’s annual profit will be at least 20 per cent higher than last year’s £478m.
The forecast also comes weeks after the airline sweetened its dividend policy: it will now pay 40 per cent of post-tax profits in dividends, up from 33 per cent – meaning EasyJet will hand its shareholders its largest-ever ordinary pay-out.
Shares in the airline rose 81.58p to 1452.6p on the news, although they had fallen by about a quarter since reaching a record peak in April.
Ms McCall glossed over the positive impact of the Air France strike – which cost that carrier almost £300m – simply saying easyJet had “continued to execute its strategy, delivering another strong performance in the second half of the year.”
The airline also gave investors good news about the coming year, saying hedging meant its fuel bill for the next financial year would be about £50m lower and that more than a quarter of seats for flights taking off between October and March had already been sold, slightly more than at the same time last year.
The carrier has pushed hard to lure business travellers to its planes, offering allocated seats, flexible tickets and higher frequencies on key routes – a move which rival Ryanair is now aping.
EasyJet’s success at doing so was boosted by that strike at Air France, as well as industrial action at Germany’s Lufthansa.