12th Oct 2023 13:05
(Alliance News) - easyJet PLC on Thursday forged an optimistic flight path for the business, even putting dividends back on the table, though it does face short-term turbulence in the form of rising interest rates.
Swiss bank UBS believes its full-year outturn may have disappointed some onlookers, however.
easyJet shares fell 3.7% to 420.80 pence each in London on Thursday afternoon.
In a trading update for the financial year that ended September 30, the Luton Airport-based budget airline didn't comment on the fire in a car park at the airport north of London that resulted in hundreds of cancelled flights on Tuesday and Wednesday.
It said headline pretax profit for the recent year will be between GBP440 million and GBP460 million. This would be a swing from a loss of GBP178 million in financial 2022 and a loss of GBP208 million in financial 2021 in the wake of the Covid-19 pandemic.
The annual result is thanks to headline profit of GBP650 million to GBP670 million in the fourth quarter of the recent financial year and profit of GBP850 million to GBP870 million in the second half as a whole.
Analysts at UBS commented: "The FY23 guidance is at the midpoint of consensus, but we think buyside investors might have expected better performance for FY23.
"However, restoration of dividend, net cash position, outlook and medium-term targets are likely supportive for the shares."
Buy-side analysts work for hedge funds and money managers. Sell-side refers to those such as brokerages and investment banks.
easyJet outlined an "ambitious roadmap to serve more customers and deliver attractive shareholder returns".
"Our new medium-term targets provide the building blocks to deliver a PBT greater than GBP1 billion. This will be driven by reducing winter losses, up-gauging our fleet and growing easyJet holidays," Chief Executive Officer Johan Lundgren said. "As part of our commitment to shareholder returns, the board intends to reinstate dividends commencing with the FY23 results."
easyJet last paid a dividend for financial 2019. It was 43.9 pence per share, which had represented a 25% cut from financial 2018.
Hargreaves Lansdown analyst Sophie Lund-Yates commented: "easyJet's put dividends back on the schedule as its recovery from the pandemic can finally be labelled mission complete. The level of the payout might be smaller than pre-pandemic, but this allows the group to ease back in and increases the chances of meaningful increases further down the line."
easyJet also Thursday said it has agreed to buy 157 more aircraft from Leiden, Netherlands-based manufacturer Airbus SE, as well as a further 100 purchase rights.
RBC Brewin Dolphin analyst John Moore commented: "easyJet's trading statement presents a largely positive picture, following a busy summer season, and the purchase of aircraft shows confidence in the long-term future. However, in the short term, headwinds in the form of the cost of living and higher interest rates are likely to continue to impact people's holiday plans as we look towards the end of the year. To get through the short-term turbulence easyJet must remain focused on tight financial metrics and re-enforcing brand reputation which is a difficult balancing act as customer ire at flight schedule changes shows only too well."
By Eric Cunha, Alliance News news editor
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