Budget airline easyJet (EZJ) on Tuesday celebrated a return to profit in its full-year results and reinstated its dividend for the first time in four years.
The airline made £432 million profit in the financial year that ended September 30 from a loss of £208 million the year before. A surge in customers flying with easyJet helped to offset the hit from higher fuel costs.
This change of fortune reflects the ongoing post-pandemic travel boom that has surprised even seasoned observers of the travel sector. Despite extreme heat and floods in Europe, flights to the continent have been in high demand and prices have followed.
EasyJet shares have been in and out of favour in the last decade, with Brexit and the coronavirus era taking its toll. The Luton-based company cut thousands of jobs in 2020 and was ejected from the FTSE 100.
Passenger numbers totalled 82.8 million during the period with an 89% load factor, a measure of airline capacity. This reflects a 19% increase from 69.7 million passengers in financial 2022 with a load factor of 86%.
The budget airline also reinstated dividends at 4.5p 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.
EasyJet shares are up 26% in the year to date but are still significantly below pre-pandemic levels. They rose nearly 3% on Tuesday morning to £4.17.
Rival Ryanair also reported strong rise in first-half profits earlier this month.
Looking ahead, easyJet said the 2024 financial year has begun positively, having recorded strong year-on-year profit growth in the month of October. It also said revenue per seat on early bookings for the second to fourth quarters is ahead of last year.
Chief executive officer Johan Lundgren cited recent consumer research showing that Britons plan to spend more money on travel than last year.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown praised the group’s focus on cost and convenience, as well as “measured expansion at high calibre airports”. Still, she says that recession and geopolitical risks remain.
