- Higher passenger numbers and seat prices drive revenue growth
- Company to pay out 10 per cent of post-tax profits
EasyJet (EZJ) said it would begin returning cash to shareholders again after a “record summer” moved the group firmly back into profitability.
The company expects to make a headline pre-tax profit of £450mn in the year to 30 September, compared with a loss of £178mn in the same period last year.
An 8 per cent growth in passenger numbers and a 9 per cent increase in revenue per seat, coupled with a strong performance from its holidays arm, meant full-year revenue increased by 42 per cent to £8.2bn, the company said in a pre-close trading update.
As a result, it will begin distributing payments to shareholders once it announces its annual results. It intends to pay out 10 per cent of after-tax profits from its 2023 financial year, rising to 20 per cent in 2024.
It also set new medium-term targets, having already hit current goals. It wants to make a group pre-tax profit of between £7-£10 per seat, which it intends to achieve by reducing losses in the winter season, more than doubling the pre-tax profit generated by the holidays business to £250mn and through making savings by operating a more efficient fleet.
The company placed a new order with Airbus for 158 of its A320neo family of jets, for delivery between 2029-34, with an option to add another 100 planes. The order, which requires shareholder approval, is worth $19.9bn (£16.2bn) at list prices, but the actual price paid "would be substantially lower because of certain price concessions granted by Airbus", easyJet said.
EasyJet’s share price slipped by 5 per cent in early trading. UBS analysts said that although profit expectations were in line with consensus forecasts, “we think buyside investors might have expected better performance” for the year.
Analysts also queried the sustainability of demand given the capacity increases planned by most low-cost carriers.
“EasyJet has made some smart moves, successfully expanding its slot portfolio to include high-density capacity routes such as Spain and Greece, capitalising on the growing preference for value holidays,” said Olly Anibaba, an analyst at Third Bridge.
“However, our experts believe competition is going to intensify as other airlines look to expand their network to popular leisure destinations.”
