EasyJet UK: airline to buy new planes and resume dividend payments to shareholders as profit booms after ‘record summer’

EasyJet has announced plans to order new aircraft and resume dividend payments to shareholders after a “record summer”. The airline said it expects its profit before tax between July and September to be between £650m and £670m.

The increase in the airline’s profits has been driven by an eight per cent increase in passenger numbers and a nine per cent rise in fares compared to last year. EasyJet’s chief executive Johan Lundgren said its positive performance shows “that our strategy is achieving results” and so it is setting out an “ambitious roadmap to serve more customers and deliver attractive shareholder returns.”

EasyJet said its profit before tax for the year to the end of September is expected to be between £440m and £460m. The company is proposing to resume paying dividends to shareholders early next year at a rate of 10 per cent of annual profit after tax, which is expected to rise to 20 per cent for the following year.

The airline has also placed firm orders with Airbus for 157 new aircraft, which is subject to the approval of the airline’s shareholders. Lundgren said the new aircraft “will enable easyJet’s fleet modernisation and growth to continue beyond 2028”.

In July the airline posted a record pretax profit of £203m for its third quarter, above analysts’ forecasts. However, its positive performance comes after the airline has been struggling in recent years after the pandemic. In 2021 the airline’s stock plunged by 70 per cent to around 400p while new rivals creeped in including Wizz Air and Ryanair. In 2020 easyJet founder Stelios Haji-Ioannou said the company risked insolvency - but at the same time his family accepted a £60m dividend.

The airline was also affected over the August bank holiday when dozens of flights were either delayed or cancelled due to the failure of National Air Traffic Services (NATS). Lundgren said NATS had “let down customers” while Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown,  said the “extent of the damage to the bottom line here” will be “important to understand but shouldn’t be seen as a long-term indicator of the group’s health”.

In a statement today (Thursday 12 October) Lundgren said easyJet’s “medium-term targets provide the building blocks to deliver a PBT (profit before tax) greater than £1 billion” which will be “driven by reducing winter losses, upgauging our fleet and growing easyJet Holidays.” He said as part of easyJet’s “commitment to shareholder returns” the board “intends to reinstate dividends commencing with the FY23 results.”

He added: “We have also reached a proposed agreement with Airbus for an additional 157 aircraft order and a further 100 purchase rights. This will enable easyJet’s fleet modernisation and growth to continue beyond 2028 while providing substantial benefits including cost efficiencies and sustainability improvements.”