EasyJet hikes dividend as it announces plans for bigger fleet

Two easyJet airplanes on the ground (Getty)

EasyJet has handed shareholders a 20 per cent hike in the dividend and splashed out on another big plane order to catch up with rival Ryanair and turn more of Europe’s airspace orange.

But the move still sparked off a war of words by Sir Stelios Haji-Ioannou, easyJet’s founder and, with family members, a 35 per cent shareholder in the carrier.

After the budget airline, headed by chief executive Carolyn McCall, said that it is buying 27 more Airbus A320s over the next four years, a spokesman for Sir Stelios said: “We’re keeping a very, very close eye on this and will hold the directors to account by all legal methods.

“This will be destructive of shareholder value. ”

The order will cost $2.5 billion (£1.53 billion) at list price, although easyJet said it had secured a “very substantial discount”.

It comes on top of the 100 A320neo jets which easyJet ordered last year. Previous plane orders have seen Sir Stelios sell hundreds of thousands of shares in protest. The latest purchase will take easyJet’s fleet up from 226 planes now to 304 by 2019.

The airline currently has a 22 per cent share of capacity at its top 20 European airports — or around 46 million seats — but reckons it has the chance to grow that to 41 per cent, or 86 million seats.

Yet even the higher dividend — easyJet said it would pay shareholders 40 per cent of after-tax profits for the year ending in September, rather than 33 per cent— didn’t placate Sir Stelios. Instead, his spokesman said that was as it should be.

“This is what we’ve been banging the drum for over the last six years — shareholders deserve a bigger pay out of the returns easyJet makes,” he said. “The airline is now a mature, cash-generating company, and investors deserve everything they get.”

In July, easyJet said that pre-tax profit this year was expected to rise by as much as 19 per cent to between £545 million and £570 million. Shares in the airline flew up 30.5p to 1328.5p.