easyJet – dividends back on the schedule
- Record fourth quarter pre-tax profit, with full year PBT expected to be £440 – £460m
- Passenger growth up 8% in final quarter, with capacity up 9% and a load factor of 92%
- The group’s entered into conditional arrangements with Airbus to secure the delivery of a further 157 aircraft between FY29 – FY34 as well as 100 purchase rights, subject to shareholder approval
- Strong financial performance means the dividend is being reinstated, with a payout ratio of 10% of headline profit after tax this financial year, increasing to 20% the following year
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:
“easyJet’s put dividends back on the schedule as its recovery from the pandemic can finally be labelled mission complete. The level of the payout might be smaller than pre-pandemic, but this allows the group to ease back in and increases the chances of meaningful increases further down the line. The group’s very much thinking future-first with a huge new order of aircraft on the table too, as it looks to secure supply early to allow its capacity and high-calibre route network to remain best-in-class. Grasping the nettle is something easyJet’s very good at, allowing it to remain on the front foot. Of course, being gung-ho increases the risk of being stung but it’s still a preferable method in the highly competitive world of short haul air travel. Further information’s needed on how these planes will be funded, with less capital-intensive option of sale leasebacks potentially an option.
Looking more broadly, trends are favourable for easyJet. Consumers are continuing to prioritise travel and easyJet’s waiting with open arms to squeeze as much out of holidaymakers as possible, with a 14% increase in revenue from optional extras coming through in the final quarter. There are questions about how much fuel consumers have left in the tank though, although consumer confidence in the UK is moving in the right direction, this doesn’t necessarily translate to a continued flood of international travel. Escalating geopolitical tension also hasn’t dented investor sentiment, but as with any situation like this, that can change at short notice.”
