Easyjet dividend as profits hit £121m
New CEO targets business class flyers in bid to boost margins
Low-cost carrier easyJet is to pay its first ever dividend in 2012 after it notched up a 70pc rise in profits last year, and it will increasingly focus on business customers in its effort to boost margins.
The airline said that net profit in the 12 months to the end of September climbed to £121.3m (€142.4m) from £71.2m the previous year, ahead of analyst expectations.
They had been pencilling in a net profit of £114m. Revenue at the group rose 11.5pc to £2.97bn for the year while its underlying pre-tax margin rose 4.7 percentage points to 6.3pc.
Speaking to analysts yesterday, new chief executive Carolyn McCall, who joined the airline back in July from Guardian Media, said the decision to pay a dividend in light of the group's potential for "strong cash generation" was a "sign of confidence" by the board in easyJet's future.
Management want to "turn Europe orange" and she said the airline would increasingly focus on opportunities in mainland Europe and also develop products to lure more business travellers.
About 18pc of the carrier's passengers travel for business purposes, but she said no specific innovations or marketing had been developed to target such customers.
EasyJet, however, has been beset by deep operational issues that have crimped its ability to offer reliable services.
Ms McCall told investors that the airline hadn't had enough crew in the right place at the right time and that repositioning of aircraft had led to inefficient use of crew hours. These issues are now being addressed. EasyJet will also begin publishing its on-time performance statistics again from January.
Ryanair has constantly used easyJet's decision not to publish its performance statistics to bash its rival in advertising.
However, the Irish airline was forced to apologise to easyJet founder Stelios Haji-Ioannou during the summer after it suggested in ads that he was responsible for making the decision not to publish the statistics.
Ms McCall said that easyJet had come to a "sensible and pragmatic" agreement with Mr Haji-Ioannou regarding a dispute over the 'Easy' brand that threatened to force the airline to change its name.
EasyJet will pay a royalty to the founder in a 50-year deal. He's also been putting pressure on the board to return cash to shareholders.
Ms McCall said easyJet would expand its seat capacity through the addition of 24 aircraft by 2013 to bring the total to 220.
Revenue per seat will be flat in the first half of the current financial year.
Shares in the airline fell almost 6pc in London to £4.49.