Airline|

easyJet reports record full-year profits

easyJet PlaneeasyJet has reported record profits for the year ending 30 September, despite a higher fuel bill.  Pre-tax profits rose 28% to £317 million on the back of a 7% increase in passengers to 58 million.  Seats were also 10% less empty and late summer bookings from post-Olympic Games holidaymakers also gave profits a boost.

Total revenues were up 11.6% to £3.9 billion, while the airline’s fuel bill jumped £182 million and could increase another £30 million in the next year.  The carrier is also preparing for a £70 million hike in airport fees.  Revenues per seat rose 5.9% to £58.51, and load factor slightly increased 1.4% to 88.7%.

easyJet has announced that new flights will start from Manchester to Moscow in the spring, while it has been granted rights by the CAA for a new route between Gatwick and Moscow.  Another aircraft at Manchester Airport will bring new services to Thessaloniki and Prague as well.

Carolyn McCall, the chief executive, said that the airline is in a unique position for growth against rivals like British Airways that have been established longer.  The carrier is gaining traction in the business travel market after introducing allocated seating and getting on booking systems for travel management firms that serve corporations.  The new seating option removes the barrier between business and leisure travellers, and has been popular with families and older people who wish to sit together.  Their main goal is to get it right and to take market share from legacy airlines.  The company’s results show that easyJet is a structural winner in the short-haul market in Europe, despite competition from both budget and traditional airlines.

The confidence of the carrier’s board has increased, which means they will be paying a higher dividend worth about £32 million for founder Sir Stelios Haji-Ioannou.  A spokesman for the founder said that he is very pleased, and the board seems to have listened to him by cancelling plane orders and rewarding shareholders.  The higher dividend comes as easyJet shares rose 3% to put it just outside the FTSE100.

Meanwhile, pilots’ union Balpa has claimed easyJet made a record profit due to casual labour.  General secretary Jim McAuslan says that the parody is that more pilots are at the bottom and hired on casual and zero-hour contracts via employment agencies and other middlemen.  These pilots have no job security and huge personal debts because they have to pay for their own training as well.

However, easyJet says that they recognise the union, unlike other budget airlines.  The total £1,600 per month payments quoted by Balpa are wrong, as their cadets are earning about double that.  McCall says they are talking to the union now.  They have been very clear that they have tried to arrange a pay and lifestyle deal with them, including contracts for permanent workers.  They are discussing how to provide permanent contracts for a majority of their pilots, which will mean their cadets get permanent positions after two years.

On another note, McCall also said she will put pressure on the Davies Commission about airport capacity, urging them to consider expansion at Luton Airport, where the airline is based.  easyJet, she added, believes the airport has more potential as a key airport in London, as it’s very accessible to home counties and north London.

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