Turbulent times as Michael Rake quits easyJet, Ryanair raises profit forecast

After a bumper Q4 at the end of last year, Ryanair has raised its profit forecast for the full year; meanwhile, Sir Michael Rake has quit as chairman of easyJet.

by Michael Northcott
Last Updated: 19 Aug 2013

The low-cost airlines have been bemoaning market conditions in recent years, but yet again Ryanair has ‘bucked the trend’, reporting £15.4m profit after tax in the three months to December – that’s an increase of 21% compared with the same period the previous year.

The company is now predicting 540m euros of profit for the year, much higher than the 490m euros were expected.
The figures come just a couple of days after the chairman of easyJet, Michael Rake, announced he is stepping down from his post after three years in the job. He insists that he had only planned on staying there for three years and that now is the right time to leave.

But it hasn’t been a bed of roses for Rake in recent years. Stelios, who is opposed to the planned expansion of easyJet (and who is a 37% shareholder in the company), has tried several times to get Rake ousted from his job. 

Rake is deputy chairman at Barclays and also chairman of BT Group, and last year, Stelios attempted to push him out on the grounds that he was ‘too busy’ in his role at Barclays to devote enough time to easyJet. Nonetheless, shareholders voted to keep him in post.

Furthermore, Stelios dumped a portion of his shares in the company last week, and threatened to sell even more if the airline places an order for any more planes. The risk to the carrier is that Stelios dumping shares will reduce the value of stock for other investors.

Commenting on his departure, Rake said: ‘easyJet has by any definition enjoyed a period of success and profitable growth in the last three years. As this takes the airline to the threshold of entry to the FTSE 100 it is the right time for me to stand down.

‘The airline is now well positioned to continue to deliver profitable growth and returns for all its shareholders.’

Traditionally, easyJet makes a loss in its H1 (the winter season) and then a decent profit in its H2. And last week, easyJet announced a 9% rise in revenues for the final quarter of 2012, meaning it now expects to make a smaller H1 loss than it had previously predicted.

So now all it needs is a new chairmain: what is the betting that Stelios wouldn't mind a crack at the job? 

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