EasyJet profits rise 82% as share issue planned

EasyJet, the UK-based low-cost airline, reported a sharp rise in full-year profits on Monday and announced plans for a share issue to fund its expansion.

The company said pre-tax profits for the 12 months to the end of September jumped 82 per cent to £40.1m ($57m), from £22.1m last year and said it was well positioned to take advantage of the crisis facing most of its full-service rivals.

Turnover rose 35 per cent to £356.9m as the number of passengers grew by 26 per cent to 7.1m, reflecting the carrier’s rapid expansion over the year. The results were ahead of expectations, with analysts anticipating profits around £35m.

But investors reacted cautiously to plans by the airline to raise further funds, while chairman Stelios Haji-Ioannou and his family sell down part of their stake, sending the shares down 11-1/2p to 351-1/2p in early morning trade in London.

EasyJet plans to issue 26m new shares to raise further funds, while Mr Haji-Ioannou is looking to cut his family’s stake in the airline from about 70 per cent to just over 60 per cent.

Mr Haji-Ioannou said the carrier was well-placed to take advantage of the turmoil facing most of the major network carriers since the September 11 attacks and predicted a major restructuring would take place in Europe.

“Fourteen national airlines is about eight too many . . . I believe that Easyjet is well-placed to take advantage of the changing market conditions and the continued strong sentiment towards the low-cost airlines,” he said.

As the major airlines cut routes and jobs in reaction to the fall-off in demand, EasJet said it would stick to its plans for rapid growth and planned to add 10 new aircraft next year to its fleet of 26 737s, as three older jets are returned to lessors.

The carrier plans to take a further 15 jets from Boeing by May 2004 and said it was considering whether to take advantage of the plunge in new and second-hand aircraft values to pick up more aircraft.