The Wall Street Journal
By Robert Wall
Updated Nov. 18, 2014 5:14 a.m. ET
LONDON—EasyJet PLC said
falling fuel costs and improved bookings should underpin its business in
the months ahead after reporting a 22% rise in full-year profit. The
British budget airline benefited from flying more business travelers and
strikes at rival carriers.
EasyJet, Europe’s second
biggest discount carrier, still disappointed some investors by not
declaring a special dividend despite the more generous payout policy it
announced earlier this year. The stock was down nearly 2% in early
trading, the leading loser among FTSE 100 shares in London.
“Our performance
demonstrates our continued focus on cost and progress against every
strategic revenue priority,” Chief Executive Carolyn McCall said.
But the time wasn’t yet ripe for an extra payout to shareholders, Ms. McCall said on Tuesday.
The airline has exceeded a
target of holding £4 million ($6.3 million) of cash per aircraft, but
at £4.4 million, the extra margin isn’t enough to warrant a special
dividend, she said.
Some analysts do expect
the airline to pay out more cash all the same. A special dividend of
£250 million is on the cards, said Nomura’s James Hollins.
EasyJet said it does
propose to pay an ordinary dividend of 45.4 pence per share. The carrier
earlier this year said it would pay shareholders 40% of after-tax
profit for the year rather than 33%.
The British carrier said
on Tuesday that pretax profit for the year ended Sept. 30 rose to £581
million, slightly ahead of management’s forecast of profit of as much as
£580 million.
Net profit rose to £450
million on a 6.3% rise in revenue to £4.5 billion, as easyJet picked up
passengers from Air France which had to cancel flights in September
because of a strike by pilots. Industrial action has also disrupted
flights at Deutsche Lufthansa AG this year.
Europe’s two biggest
discount airlines, easyJet and its larger rival Ryanair Holdings PLC,
have continued to enjoy strong bookings as they take business from
network carriers like Air France and Lufthansa and target higher-paying
business passengers. Ryanair this month raised its full-year profit
forecast for its financial year ending in March.
For the current year,
easyJet said capacity should grow 5% with forward bookings for the
weaker winter season running ahead of last year’s pace.
Revenue per seat in first
half of the year will be flat or slightly higher compared to the year
prior on a constant currency basis, the airline said.
Fuel costs could fall as
much as £70 million, countering a projected 2% rise in unit costs,
excluding swings in fuel prices and exchange rates.
The budget carrier said
it has been testing a frequent-flier program on 15,000 passengers
offering increased booking flexibility and price guarantees.
The program will gradually be expanded, Ms. McCall said.
Luton-based easyJet said
back in September said it would purchase additional Airbus Group NV A320
single-aisle jets to support growth in the coming years.
- Source: http://online.wsj.com
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