EasyJet pays first divi in 10 years

Christmas has come early to easyJet shareholders. Which should give Sir Stelios something to smile about.

by Emma Haslett
Last Updated: 20 Jan 2011
easyJet shareholders have something to celebrate this morning: the airline today revealed plans to pay out its first-ever dividend by the end of 2012. The announcement came in the wake of record pre-tax profits, which have almost trebled to £154m, up by £99.3m in the year to September 30, despite disruption from bad weather, striking air traffic controllers and the Icelandic volcano. After a long-running feud between the airline and its founder, Sir Stelios Haji-Ioannou, was finally resolved last month, things could well be looking up for the airline. Although something tells us Sir Stelios will still have a few bones to pick.

The figures are certainly encouraging: passenger numbers have gone up by almost 8% to 48.8m, boosting profit margins by 4.7%. That was also helped by falling fuel costs, which were down from £15.28 per seat in 2009 to £13 this year. easyJet’s share of the European market was also up, from 6.5% last year to 7.6% this year. In fact, recently-instated CEO Carolyn McCall says she expects low-cost airlines in general to make further gains in the European market, growing their share in France, Switzerland, Italy, the Netherlands and Portugal to about 50%. To make way for that, the airline says it’s planning to expand its fleet by 12%, buying 24 new planes.

But, despite falling fuel prices, it could still have done without a raft of incremental costs putting a dampener on profits. Snow, which grounded flights at the beginning of the year, cost it £20.8m and forced it to pay out another £49.8m in compensation. That pesky volcano, which led easyJet to cancel 7,314 flights, disrupting 960,000 passengers, cost it another £27.3m. And striking air traffic controllers, who caused chaos over Europe during the summer, didn’t do much to help costs either.

That divi announcement is sure to bring a smile to the face of Sir Stelios, though. The outspoken Cypriot has reportedly been keen for the airline to start paying its shareholders for some time. After easyJet hammered out a deal with its founder over how it gets to use the branding back in October (reported to be worth £65m to Sir Stelios – not bad), McCall admitted that he was still unhappy with its strategy, preferring them to provide an incentive to shareholders, rather than expand its fleet. But today, she maintained that the company will wait until its divi is covered by at least five times profits before it begins to payout. So shareholders are going to have to wait until 2012 – whether Stelios likes it or not.

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