EasyJet is hoping it has turned a corner, with the airline telling investors the ‘future for the company is bright’ after scoring a 34 per cent jump in annual profits.
The airline reported a headline pre-tax profit of £610million for the 12 months to 30 September, up from £455million the previous year, citing strong package holiday demand and growth in ancillary revenues.
Operating profits came in at £597million for the year, down slightly on the £625.6million forecast by analysts, as easyJet faced headwinds from ongoing turmoil in the Middle East.
But the London-listed group’s revenue rose by 14 per cent to £9.3billion, while pre-tax profit per seat jumped 24 per cent to £6.08.
Ancillary revenue increased by 22 per cent to just shy of £3.6billion over the full year, up from around £3billion in 2023 ‘as airline capacity and pricing increased alongside the continued growth of easyJet holidays’.
In the final quarter, the group’s ancillary revenue, for things like seat selections and food, reached £851million, up from £786million by the end of the quarter a year ago.
Boost: EasyJet’s ancillary revenue in its fourth quarter reached £851m
Richard Hunter, head of markets at Interactive Investor, said: ‘The group also continues to see the benefit of ancillary revenues, which include the likes of customer payments for personally allocated seats, baggage and food.
‘Now accounting for 30 per cent of seat revenues, customers are clearly still readily prepared to pay for these extras, while also adding another string to the group’s revenue bow.’
At 89.7million, EasyJet carried 7 per cent more passengers in the most recent 12-month period.
Trading was also boosted by strong demand for EasyJet Holidays, with the division seeing pre-tax profits swell to £190million, up 56 per cent from a year earlier. This was driven by a 36 per cent increase in customer numbers.
Outgoing chief executive Johan Lundgren, who will be replaced by chief financial officer Kenton Jarvis on 1 January, said: ‘This strong performance… reflects the effectiveness and execution of our strategy as well as continued popularity of our flights and holidays.
‘It also represents a significant step towards our goal of sustainably generating over £1billion annual profit before tax.
‘It has been a privilege to lead easyJet for the past seven years. I am extremely proud of all that has been achieved, which is a result of the hard work of the entire team.
‘I am pleased to be leaving a strong EasyJet, the future for the company is bright and I look forward to seeing Kenton delivering his ambitious plans, generating positive shareholder returns while making low-cost travel easy for millions of customers.’
EasyJet’s board is recommending dividend payments totalling £92million are made to shareholders, up from £34million last year.
Jarvis said: ‘The outlook for EasyJet is positive and travel remains a firm priority with consumers who value our low fares, unrivalled network and friendly service.
‘The airline will continue to grow, particularly on popular longer leisure routes like north Africa and the Canaries, and we plan to take 25 per cent more customers away on package holidays, as EasyJet Holidays continues to thrive.
EasyJet said its airline business reduced winter losses by £40million through ‘a combination of productivity and utilisation benefits.’
It received 16 new A320neo aircraft in the year, raising the average number of seats on its planes from 179 to 181, resulting in cost efficiencies of around £25million.
EasyJet said it expects to reduce winter losses again in 2024/25, with a ‘significant improvement’ in the three months to the end of December.
EasyJet shares rose 1.96 per cent or 10.60p to 551.00p on Wednesday, having risen over 36 per cent in the last year.
John Moore, senior investment manager at RBC Brewin Dolphin, said: ‘EasyJet is beginning to soar after a challenging few years.
‘The difficult decisions made during the pandemic – as well as the handling of other issues since – are beginning to pay off.
‘EasyJet is putting the turbulence of recent years firmly behind it and looks to have a positive outlook ahead.’
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