28th Nov 2023 16:09
(Alliance News) - easyJet PLC on Tuesday announced largely positive results and it returned to the dividend list, as promised.
easyJet shares shot up 4.6% to 423.56 pence each in London on Tuesday afternoon.
The Luton Airport-based low-cost airline said it swung to a pretax profit of GBP432 million in the financial year that ended September 30 from a loss of GBP208 million the year before.
This was driven by a 42% jump in revenue to GBP8.17 billion from GBP5.77 billion a year ago. easyJet credited a "record" performance in the summer, which it attributed to its recent initiatives, which helped to offset the hit from higher fuel costs and external operating challenges.
In particular, the airline cited "pricing strength, increased flown capacity, improved load factors and the continued growth of easyJet holidays".
interactive investor analyst Richard Hunter commented: "Te holidays business is certainly worth watching, having only relatively recently begun from a standing start. For the year, the unit recorded pre-tax profits of GBP122 million, a 221% increase from the previous period, while customer numbers jumped by 77% to 1.9 million. The group has long identified that this part of the business is very much in line with the times, with cost-conscious consumers searching for value packages. easyJet also has high hopes for the unit's longer-term contribution to overall profits, and in the forthcoming year estimates further growth in excess of 35% as the group ramps up the offering."
The budget airline also reinstated dividends at 4.5 pence per share. It had last paid a dividend for financial 2019 of 43.9p per share, which had represented a 25% cut from financial 2018. The amount for financial 2023 represents 10% of profit after tax, which it expects to increase to 20% in financial 2024.
Hargreaves Lansdown analyst Sophie Lund-Yates commented: "Investors are being rewarded for their patience following a bumpy few years with the reinstating of the dividend. The starting point means there's plenty of room for growth, but will allow easyJet to dip its toe before diving in, which is the right move in such an uncertain environment."
Lund-Yates noted there are some matters on easyJet's flightpath which could hurt it.
"easyJet is adamant that households will continue to prioritise travel in the new financial year. There are early indications that's true, but that could change at short notice if the UK folds into recession. The conflict in the Middle East also has the potential to dent performance and will need monitoring closely. The good news for easyJet is that its problems are all outside of its control, which tells the market that its proposition is about as good as it can be- and is waiting to take-off once conditions allow," the analyst added.
By Eric Cunha, Alliance News news editor
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