BUDGET airline EasyJet plans to double its dividend after its profits received a boost from an increase in demand from cost-conscious business travellers.
The news was welcomed by founder Sir Stelios Haji-Ioannou, but a spokesman for the airline’s largest shareholder said he was still concerned about the number of roles held by EasyJet chairman Sir Michael Rake.
Rake, who is also deputy chair at Barclays and chairman of BT, narrowly survived an attempt brought by Stelios to oust him from the board earlier this year and the issue is likely to raise its head again at the annual meeting in February.
EasyJet said it had seen a 6 per cent rise in business passenger numbers after signing up with travel management companies that organise flights on behalf of corporate customers. It has also agreed deals directly with a range of high street banks and in September it sealed a year-long agreement to offer low-cost fares to MPs, peers and staff at the Houses of Parliament.
The rise in business travellers helped push overall passenger numbers up 7.1 per cent to 58.4 million during the year to 30 September. It also received a late summer boost as holidaymakers delayed their plans until after the London Olympics.
However, the carrier warned that its fuel bill – which rose by £182 million during the year – could rise a further £30m in the year ahead, and it braced itself for a £70m jump in airport costs.
Despite rising costs, pre-tax profits soared 28 per cent to £317m on total revenues 11.6 per cent higher at £3.9 billion.
Revenues per seat were up 5.9 per cent at £58.51 as its load factor – a measure of how full its planes were – nudged up 1.4 percentage points to 88.7 per cent.
Chief executive Carolyn McCall said: “These results demonstrate that EasyJet is a structural winner in the European short-haul market against both legacy and low-cost competition.”
She said the airline had decided to change its dividend policy from this year to pay out one-third of profit after tax each year, up from the one-fifth pay-out introduced last year.
As a result, the board recommended a final dividend of 21.5p per share, up from the previous year’s 10.5p.
Analysts at Investec raised their pre-tax profit forecasts for the current year to £344m, up from £326m previously.
Luton-based EasyJet plans to increase flight capacity by around 3.5 per cent in the first half as it continues to pick up business while some embattled competitors scale back services.
Earlier this month, Spanish airline Iberia warned its staff that it was in a “fight for survival” as it unveiled plans to cut 4,500 jobs in an attempt to stem its losses.
Germany’s Lufthansa has also announced plans to shed 3,500 administrative posts but has ruled out compulsory redundancies among its cabin crew until the end of 2014 as part of the pay deal that removed the threat of more strikes over Christmas.
Disruption caused by industrial action and weather saw more than 4,000 EasyJet flights cancelled in 2011, but the group said investment in its operations control centre helped reduce cancellations to below 1,000 in the financial year just ended.
Espirito Santo analyst Gerald Khoo said: “Our current forecasts assume a relatively subdued 2013 for EasyJet, with cost headwinds from fuel, exchange rates, higher airport charges and a more normal level of operational disruption compared with a surprisingly benign 2012.”
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