EasyJet underlines advantage over Ryanair as profit soars

LONDON Tue Nov 19, 2013 7:49am GMT

An Airbus A320 EasyJet passenger plane passes by the air traffic control tower as it prepares for take off at Orly Airport, near Paris, August 20, 2013. REUTERS/Charles Platiau

An Airbus A320 EasyJet passenger plane passes by the air traffic control tower as it prepares for take off at Orly Airport, near Paris, August 20, 2013.

Credit: Reuters/Charles Platiau

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LONDON (Reuters) - British budget airline easyJet (EZJ.L) underlined its growing advantage over struggling Irish rival Ryanair (RYA.I) on Tuesday, reporting annual profit at the top end of forecasts and returning cash to shareholders.

The Luton, southern England-based firm said on Tuesday it made a pretax profit of 478 million pounds for the year to the end of September, up 51 percent and at the upper end of its forecast for 470-480 million pounds profit, provided last month. Sales rose 10.5 percent to 4.26 billion pounds.

The airline also said it plans to return 175 million pounds to shareholders through a special dividend "as evidence of our continued confidence in the future prospects of the business" said Chief Executive Carolyn McCall.

The upbeat assessment is in contrast to that given by Ryanair, Europe's biggest budget airline, which this month cut its annual profit target for the second time in two months and admitted it needed to improve customer service.

Rival airlines have been struggling with high fuel costs and weak consumer confidence, sending some smaller carriers out of business while the likes of British Airways owner IAG (ICAG.L) and Air France-KLM (AIRF.PA) have cut routes, leaving gaps that low-cost airlines have been quick to exploit.

Over the last three years easyJet has added flights on routes where rivals have cut back, and introduced more flights between top business destinations. It has also added flexible ticketing to allow passengers to change their flight up to two hours before scheduled departure time, and allocated seating in an attempt to steal corporate customers.

EasyJet proposed a full year dividend of 33.5 pence a share, 55.6 percent up on last year, and a special dividend of 44.1 pence per share, making a total payout to investors of 308 million pounds.

It said forward bookings were in line with last year but that its first quarter would be impacted by tough year-on-year comparisons due to strong post-Olympics demand in the UK and travel restrictions to Egypt.

However, easyJet still expects to grow capacity, measured in seats flown, by 5 percent in the coming year.

(Reporting by Rhys Jones; editing by James Davey and Kate Holton)

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Comments (1)
Anechidna wrote:
At last Ryanair is discovering who is the most important component of their business. For years business has assumed that the investor/shareholder is the most important after senior management.

The truth and reality is it is the “CUSTOMER”. Revenue doesn’t fall out of the sky it has to be earned and the only place you get it legitimately is from customers. Any economic/business 101 course tells you this.

Ryanair will be smaller before it wins back business. Customers do not appreciate being treated like crap even if the price is low.

Nov 19, 2013 11:13am GMT  --  Report as abuse
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