Beach holiday boost helping EasyJet to recover from drop after terror attacks

British budget airline EasyJet said strong demand for beach holidays was making up for a drop in travelling in the wake of recent terrorist attacks in Europe, and raised its dividend in a sign of its confidence.

Europe’s second largest low-cost carrier is facing an increasingly competitive market as larger rival Ryanair and others add capacity and low fuel prices help all airlines to cut fares.

However, the company said it remained confident about future growth, announcing plans to increase its dividend pay-out ratio by a quarter to 50% of post-tax income, subject to approval at its annual shareholder meeting. 

For the 12 months to the end of September, EasyJet expects to post pre-tax profits in line with analyst estimates of £721m (€915m), despite reporting a £24m loss in the first-half, swinging into the red after making a £7m profit in the period last year.

Attacks in Paris in November and in Brussels in March hit demand for flights, prompting the airline to cut prices to encourage bookings and weighing on the results. 

Other European airlines including Ryanair, British Airways-owner IAG, Lufthansa, and Air France-KLM have warned recently about the impact on tourism from the attacks.

EasyJet’s first-half results also suffered from cancelled flights to the Egyptian resort of Sharm el-Sheikh over security concerns and air traffic control strikes in France.

Elsewhere, Emirates Group boosted full-year profit 50% as the world’s biggest international airline expanded its wide-body jet fleet to syphon more long-haul travellers through Dubai and benefited from a decision not to hedge against fuel-price fluctuations. 

Net income for the 12 months to the end of March rose to 8.2bn dirhams (€2bn), Emirates said yesterday.

Revenue fell 3%, declining for the first time since 2010, according to data compiled by Bloomberg. 

The dollar hurt revenue by 6bn dirhams, while the company saved 9bn dirhams as oil prices slid, chairman and CEO Sheikh Ahmed bin Saeed Al Maktoum said.

“The strong dollar against major currencies will continue to be a challenge,” Sheikh Ahmed said. Emirates Airline’s profit increased 56% to 7.1bn dirhams as revenue fell 4%.

Some 51.9m passengers flew with the company, an increase of 8%.

Reuters and Bloomberg


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