Tuesday, 15 November 2011

EasyJet pays maiden dividend after profit soars


EasyJet said on Tuesday it would pay a special dividend of 34.9 pence on top of an ordinary dividend of 10.5 pence, making a total payout of 195 million pounds. Stelios Haji-Ioannou, easyJet's founder and largest shareholder with 112.55 million shares, according to Reuters data, will get 51 million pounds. The company's shares were down 2.6 percent at 356.5 pence at 1110 GMT. The carrier had said in September it would return around 190 million pounds after "a robust" second half. The payout comes after Haji-Ioannou criticised plans to buy new aircraft. Sources close to Haji-Ioannou said he was still concerned about capital expenditure, which fell 1 percent to 478 million pounds, and may pile more pressure on the airline's board. The Luton, southern England-based company reported an underlying pretax profit of 248 million pounds, at the upper end of forecasts, on revenue 16 percent higher at 3.45 billion in the year to September. The rise was led by an 11.8 percent increase in passenger traffic -- with one million more people using easyJet for business travel -- and a 1.3 percent fall in underlying costs per seat. Looking ahead, industry body IATA expects airlines to suffer over the next year due to waning consumer confidence, sluggish international trade and high fuel prices. EasyJet chief executive Carolyn McCall echoed that caution. "The macroeconomic environment remains challenging for all airlines as weak consumer confidence across Europe slows the rate at which higher fuel prices and increased taxation can be passed onto passengers," she said. "Against this backdrop easyJet is taking a cautious approach to capacity deployment ... capacity in the first half of the year is planned to be flat, with growth of around 4 percent for the full year." Analysts have been calling for airlines to cut capacity to ease fierce price competition in Europe and improve paper-thin margins. EasyJet had been expected to report a full-year profit of 206-254 million pounds, with the average at 243 million, according to a Thomson Reuters I/B/E/S poll. "The results are just ahead of our and consensus expectations and we would expect the cautiously confident outlook commentary to comfortably sustain 2012 consensus forecasts (213 million pounds)," said RBS analyst Andrew Lobbenberg, who holds a 'buy' rating on the stock. EasyJet's larger European peers have struggled to overcome high oil prices and sluggish demand. German group Lufthansa (LHAG.DE) and Air France-KLM (AIRF.PA) have cut profit forecasts this year after results were battered by high fuel costs and slashed plans to expand capacity next year. EasyJet said around 45 percent of its winter seats had already been sold, adding first-half passenger revenue was expected to grow by mid-single digits. The airline's fuel costs rose a quarter to 917 million pounds during its 2010/11 year. At current fuel prices and exchange rates easyJet said it expected its fuel bill to rise around 220 million pounds in its 2011/12 year.