EasyJet aircraft taking off from the UK
EasyJet gave a positive outlook for 2024 / Image source: Adobe
  • EasyJet holidays profits grew 221%
  • Shares up 25% year-to-date
  • Dividend 4.5p per share payable in early 2024

Shares in EasyJet (EZJ) were up over 2% in morning trading to 413p as the budget airline said it had achieved ‘record’ pre-tax profit for the full year ending 30 September 2023.

The budget airline reported a full year 2023 headline pre-tax profit of £455 million – a £633 million year-on-year improvement.

Shareholders were also greeted with the news also that the budget airline was reinstating its dividend of 4.5p per share payable in early 2024.

Russ Mould investment director at AJ Bell said: ‘The return of EasyJet’s dividend represents the final tick in the box for its long-awaited recovery from the Covid-19 pandemic.

‘While the travel sector has seen strong demand in the past few years, intense cost pressures have been problematic for operators.

‘Many airlines got heavily into debt during the pandemic, and they’ve had to prioritise paying down borrowings before dishing out dividends to shareholders.

‘EasyJet did a £1.2 billion rights issue in 2021 to shore up its balance sheet and since then it has focused on reducing debt. It is now in a net cash position and feels comfortable restarting dividends for the first time since 2020, albeit only paying a nominal amount for now.’

Year-to-date easyJet shares have been a strong performer up 25%.

WHAT ABOUT NEXT YEAR?

EasyJet gave a positive outlook for 2024 with EasyJet holidays expected to grow by more than 35% and the budget airline said it was ‘on track’ to deliver disciplined growth of circa 9% in full year 2024.

The company expects an increase of 11% year-on-year for seats in the first half of 2024 of circa 42 million and the second half circa 59 million – an increase of 8% year-on-year.

There was however ‘one fly in the ointment’ – the ongoing Middle East conflict.

‘The geo-political uncertainty in the Middle East will impact growth in the first quarter, making it far harder for the group to reduce winter losses, a major focus for the business which historically saw losses soar during the quieter months.

‘Currently, forward bookings are ahead of where they were last year which shows just how robust this air travel boom really is, but a lot can change between now and the next travel peak over the Easter break. Fuel prices have spiked once again and the disruption to its primary hub, Gatwick, only adds to the airline’s list of worries.

‘Ultimately, while the results were solid, there’s a vast amount still to do if easyJet is going to deliver its fabled £1bn in profit by 2029 target,’ said Julie Palmer, partner at Begbies Traynor.

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DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.

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Issue Date: 28 Nov 2023