easyJet to pay bumper special dividend

Cut-price airline easyJet, which has been under pressure from its founder and major shareholder, Sir Stelios Haji-Ioannou, to up its dividend pay-outs to 50% of earnings, is to pay a special dividend of 34.9p per share on top of a final dividend for the year of 10.5p.

The company is sitting on a pile of cash after a highly cash generative year which saw revenue leap from £2.97bn last year to £3.45bn, leading to a 60.8% rise in reported profit before tax of £248m (2010: £154m). Last year's profit figures were hit by £27m of cost relating to the volcanic ash cloud and a £7m loss on disposal of A321 aircraft in 2010.

The year saw strong operating cash generation of £424m, resulting in net cash of £100m as at 30 September 2011. Cash and cash equivalents at the end of the year stood at £1.1bn, up from £912m the year before. The special dividend payment will wipe out £150m of that cash pile.

Try 6 free issues of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

Revenue per seat was up 4.1% to £55.27 per seat, while earnings per share were also flying high, with an 85% leap to 52.5p per share.

The firm, which saw a £100m hike in fuel costs over the year, said the strong performance is due to firm control of costs, effective yield management, the strength of easyJet's network and its focus on customers.

The firm added that it expects to maintain capacity levels for the first half of this financial year, as a result of turbulence in the Eurozone, but will increase by 4% over the full year.

Forward bookings are in line with the prior year, easyJet revealed. With around 45% of winter seats now booked, first half total revenue per seat at constant currency is expected to be up by mid-single digits in percentage terms.

Cost per seat excluding fuel and currency impact is expected to grow by 2% to 3% for the full year and by 4% in the first half of the year, assuming normal levels of disruption, driven by price increases at regulated airports and investments in new revenue streams.

At current fuel and exchange rates easyJet's fuel bill is anticipated to increase by £220m in fiscal 2012 compared to fiscal 2011.

NR