First EasyJet dividend marks £99m profits rise
Low-cost airline easyJet celebrated a near-trebling in profits today by announcing plans for its first-ever dividend payment to shareholders.
New chief executive Carolyn McCall reported better-than-expected pre-tax profits of £154 million in the year to September 30 - an increase of £99.3 million.
Sales rose by 11.5% to £3 billion, with passenger numbers up 8% to 48.8 million.
The airline's strong results were achieved despite disruption resulting from the Icelandic volcano ash cloud that caused easyJet to cancel 7,314 flights, disrupting the travel plans of 960,000 passengers.
Founder Sir Stelios Haji-Ioannou, whose family controls around 38% of the shares, has long called for the firm's board to start paying a dividend.
He issued a statement today saying the company's maiden dividend in January 2012 was a good first step but he wants it to rise to more than twice the rate currently planned.
Sir Stelios also questioned the company's plans to buy another 24 planes, expanding its fleet to a total of 220 aircraft by September 2013.
But he welcomed plans to target business passengers, which he believed would help increase demand for flights throughout the year, making easyJet less reliant on seasonal tourism.
The airline today launched a new flexible fare targeted at business travellers that will give passengers flexibility to change their flight up to two hours before the scheduled departure time.
Despite the profits surge, it has been a difficult year for easyJet.
As well as the ash cloud, which cost £27.3 million in lost revenues, the airline's flights were disrupted by snow, which cost it £20.8 million.
It also had "operational difficulties" in the summer, including late-running flights and cancellations, a situation made worse by air traffic control strikes in several countries, costing it a further £49.8 million.
EasyJet said the problems were caused by not having the right numbers of staff in the right place at the right time and pledged it would not make the same mistakes next summer.
The airline has recruited more staff and introduced additional breaks in its schedule, in what Ms McCall described as a long-term fix.
EasyJet recently settled its long-running dispute with Sir Stelios, who owns the rights to the 'easy' brand name, that will allow the airline to retain its title.
Under the terms of the agreement, Sir Stelios has waived his automatic right to appoint himself easyJet chairman but will receive 0.25% of the company's annual revenue.
EasyJet's shares were down 4% today.
Analysts at Numis, maintaining their 'hold' verdict, said: "We believe the trading fundamentals and growth prospects are strong but we maintain a cautious stance until it is clear that Sir Stelios supports the strategy."
The wider airline sector has enjoyed a boost recently thanks to a recovery in premium traffic as the global economy picks up pace.
British Airways recently announced a return to half-year profits growth for the first time in two years and Ryanair reported a 17% increase in underlying net profits to 451.9 million euros (£393.4 million) for the six months to September 30.
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