EasyJet says profits surge 70 percent, plans first dividend

16th November 2010, Comments 0 comments

British no-frills airline easyJet posted soaring annual profits Tuesday and unveiled plans for its first ever dividend, highlighting the aviation sector's recovery after the financial crisis.

EasyJet said profit after tax jumped to 121.3 million pounds (143 million euros, 194 million dollars) in the 12 months to September 30, up from 71.2 million pounds in 2008-09, as it flew more passengers.

Profits would have been higher had the airline not been hit by costs of 27.3 million pounds linked to the Icelandic volcanic ash cloud disruption, the airline said in an earnings statement.

EasyJet, which is 15 years old, said it would pay its first dividend in January 2012 and increase its fleet by 24 aircraft to 220 by 2013.

"EasyJet is strongly positioned to take advantage of the continuing profitable growth opportunities in European short-haul," recently-installed chief executive Carolyn McCall said in the earnings statement.

The company said it aimed to drive revenue via more business travellers, adding that it "now feels that the time is right to set in place a formula to trigger a dividend payment in years when the company is profitable."

McCall became chief executive earlier this year after months of boardroom turmoil at EasyJet. She stepped down as head of the Guardian Media Group, replacing Andy Harrison.

Prior to her appointment, top easyJet executives had clashed with the airline's founder Stelios Haji-Ioannou over the carrier's growth strategy.

Stelios, who is also easyJet's biggest shareholder, has long called for a dividend, saying the airline's rapid growth strategy was flawed.

The carrier's share price dropped 4.0 percent to 453 pence in London trade on Tuesday despite the strong profits and dividend announcement.

EasyJet last month settled a legal dispute with Stelios concerning use of the company's brand.

Stelios' company easyGroup IP Licensing (EGIP) had claimed that easyJet had breached the terms of a branding licence agreement, specifically by increasing its income from non-ticket revenues beyond an agreed 25 percent of total sales.

EasyJet's right to the brand will last for 50 years, with a minimum commitment from the airline lasting 10 years, in return for an annual royalty payment to Stelios of 0.25 percent of the group's revenue.

The payment is fixed at 3.9 million pounds and 4.95 million pounds for the first two years.

Stelios has meanwhile lost the right to appoint himself chairman of easyJet, while easyGroup no longer has representation on the easyJet board.

© 2010 AFP

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