Easyjet profits jump on rising passenger numbers

Media caption,
Easyjet CEO Carolyn McCall: 'Lots of opportunity for Easyjet to grow'

Budget airline Easyjet has seen profits almost triple on rising passenger numbers and cheaper fuel.

The carrier made profits of £154m in the 12 months to September, up from £55m a year earlier.

Passenger volumes rose 8% in the year to 49 million, helping to push its share of the European market up to 7.6% from 6.5% a year earlier. Fuel costs were down 9%.

The company also said it would pay its first dividend - but not until 2012.

The company's share price fell more than 4% in the wake of the results' release, but this came after a more than 33% rise over the past three months.

Europe strategy

Easyjet is benefiting from the continuing migration of passengers on continental Europe away from national carriers towards budget airlines - a pattern already well established in its home market Britain.

"We see clear opportunities for Easyjet to continue to take market share as charter traffic continues to decline, as weaker short-haul carriers retrench or fail and as new infrastructure capacity comes on stream," said Easyjet's new chief executive, Carolyn McCall, commenting on the full-year results.

She expects low-cost carriers like her company to make further headway in France, Switzerland, Italy, Netherlands and Portugal in the coming months, pushing budget airlines' share of these markets to around 50%.

In anticipation of this growth, the airline announced that it would buy another 24 planes by September 2013, representing a 12% increase in its fleet.

Easyjet's fuel bill fell to £13 per plane seat, down from £15.28 a year earlier.

However, other costs rose 5.2% to £36.15 per seat. Easyjet blamed most of the rise on the disruption caused by Icelandic volcanic ash and snow earlier this year.

Dividend tussle

The decision to start paying a dividend was welcomed by Easyjet's founder and biggest shareholder, Sir Stelios Haji-Ioannou, who has been critical of the company's previous zero dividend policy.

However, Sir Stelios said he wanted the company to pay out 50% of earnings from 2012, rather than the 20% announced by the company.

Now a 37% minority shareholder, the Easyjet founder recently ended a row with the airline over whether it could continue to use his "Easy" brand.

The dispute had gone to the High Court, with Sir Stelios claiming the company was making too much money from peripheral businesses such as car hire, which was cannibalising his own brands.

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