Easyjet lifts payout ratio, buys 27 new Airbus A320s

17th Sep 2014 09:40

Budget airline Easyjet has decided to increase its payout ratio and said it will return 40% of its profits to shareholders this year.Previously, the company's policy was for its ordinary dividend to equal one third of profit after tax.Management took the decision "in light of the continued strong financial performance of easyJet and confidence in the future".Chief executive Carolyn McCall said that Easyjet's "proven strategy continues to deliver significant returns for shareholders which is why we are increasing our payout ratio for the ordinary dividend to 40%".Meanwhile, Easyjet also announced that it has reached a discounted deal with Airbus to exercise existing purchase rights over 27 current-generation A320 aircraft.The group said they were acquired at a "very substantial price discount from the list price" of $76m each, or $2.06bn in total.The plans deliver a cost per seat improvement of 7-8% compared with the current generation A319 aircraft, the company said.The new A320s mean that Easyjet will have a fleet of 304 aircraft by 2019, from 226 currently."We are bringing new aircraft into the fleet as we continue to see a significant number of new profitable opportunities in our core markets in the near term and in order to maintain our cost advantage," McCall said.However, the deal may irk Easyjet's founder and its biggest shareholder, Stelios Haji-Ioannou, who opposes the airline’s strategy of increasing seat capacity, branding such purchases a "vanity exercise".