Shares in easyJet jumped more than 8 per cent in London trading after a strike at rival Air France 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 its flights cancelled.
Many of the 150,000 passengers who were booked on the French airline switched to easyJet’s routes, helping the FTSE 100 carrier to pocket an extra £5 million of fares.
That, combined with what easyJet chief executive Carolyn McCall, pictured, said was a “strong finish to the year”, saw its board tell the City today that pre-tax profit for the year to October would be between £575 million and £580 million, sharply higher than an earlier forecast of £545 million to £570 million.
It means easyJet’s annual profit will be at least 20 per cent higher than last year’s £478 million. The improved forecast also comes just weeks after the budget carrier announced a hike in its dividend policy — it will now pay 40 per cent of post-tax profits in dividends, rather than the earlier 33 per cent — meaning that easyJet will be handing its shareholders their largest-ever ordinary payout.
Shares in the airline rose 111p to 1482p on the news, although easyJet’s stock had fallen by around a quarter since it reached a record peak in April.
McCall brushed over the positive impact of the Air France strike — which cost that carrier almost £300 million — simply saying easyJet had “continued to execute its strategy, delivering another strong performance in the second half of the year”.
The orange airline also gave investors good news about next year, saying hedging meant its fuel bill for the next financial year will be about £50 million lower and revealing more than a quarter of seats for flights taking off between October and March have already been sold, slightly more than in the same period 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 that rival Ryanair is now aping.
EasyJet’s success at doing so was boosted by the strike at Air France as well as industrial action at Germany’s national carrier, Lufthansa.Reuse content