EasyJet Posts 28 Percent Increase in Pre-Tax Profit
EasyJet shares are one of the winners in today’s session on the London Stock Exchange after the company announced a profit surge in its fiscal full-year.
As of 8.35 GMT shares in easyJet have climbed by 4.52 percent to £6.8200 and continue their rally pushed by eager investors keen to jump in on the stock.
For its fiscal year ended 30 September the airline registered pre-tax profit of £317 million or 27.9 percent higher compared to last year. Despite a £182 million increase in unit fuel costs, the airline carrier managed to increase its margins by 1 percent to 8.2 percent and boosted earnings per share to £0.625 from £0.525.
What excited investors the most was the announcement that easyJet intends to double its dividend from £0.105 to £0.215 a share, effectively returning a total of £85 million pounds to its shareholders.
“These results demonstrate that easyJet is a structural winner in the European short-haul market against both legacy and low cost competition. The strength of easyJet’s business model and strategy coupled with the hard work and dedication of the easyJet team has delivered record profits as well as a significant increase in returns for shareholders during the year.” said chief executive Carolyn McCall in the full-year financial results statement.
Passenger numbers went up 7.1 percent to 58.4 million with load factors, the measure that determines how full airplanes are, up 1.4 percentage points to 88.7 percent.
!m[Swedish SAS Manages to Avert Bankruptcy yet Analysts Remains Sceptical](/uploads/story/853/thumbs/pic1_inline.png)The Financial Times reported that the financial results came from higher revenue per seat, which was a result of late bookings following the Olympics. Another positive factor was the surge in flights from the UK to sunnier destinations such as Malaga in Spain and Faro in Portugal. As part of its strategy to appeal to corporate fliers, the airline carrier also increased the number of flights between top business destinations.
**SAS Dodges Bankruptcy**
Despite missing the Sunday midnight deadline, yesterday SAS managed to convince all eight unions representing the airline’s flight crew to agree on wage cuts of up to 15 percent in order to secure a line of credit for the Swedish company.
“This is the result of very hard work and a strong sense of responsibility by union representatives, first and foremost,” CEO Rickard Gustafson said in Copenhagen. “This is a big day for SAS. Now we have laid a foundation which we will continue to work on.”
SAS now expects to receive a $519 million (£326 million) credit facility from its banks and shareholder governments Sweden, Norway and Denmark. According to the Wall Street Journal, the Danish union CAU, which represented cabin-crew members, held out the longest in the negotiations but in the end was convinced by the airline operator’s management on the necessity of cuts in order to remain an ongoing concern.
The Financial Times quotes analysts who appear to be sceptical of SAS’s victory on Monday. “A default is clearly in nobody’s interest. But it is hard to see it [SAS] suddenly being able to compete with Ryanair.” opined one Danish analyst, as quoted by the FT.
The most important thing for the airline now is to convince lenders it is creditworthy and retain its existing customers, who might have considered alternatives following the fiasco of the last two weeks.
Shares in SAS have risen by 32.41 percent to SKr7.15 after Monday’s announcement of the agreement between the airline carrier and labour unions.
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