UPDATE: easy Jet raises guidance but warns on fuel

22nd Sep 2011 12:25

No-frills airline easyJet has raised full-year profits guidance, paving the way for a bumper special dividend, but it warned its 2012 fuel bill will increase by around £220m compared to the prior year. The introduction of the Emissions Trading Scheme and higher costs at regulated airports in Spain, Italy and the UK are also expected to negatively affect cost performance, the group said. The group's expectation for profit before tax for the year ending 30 September 2011 is now between £240m and £250m compared with its previous expectation of £200m to £230m, and a market consensus forecast of £219.6m.Net cash flow from operations improved in the second half of the airline's financial year and net cash at the year end is expected to be between £50m and £100m with gearing of approximately 30%. Chief executive Carolyn McCall said: "easyJet's strong operational and record financial performance this year reflects the successful implementation of our strategy. Despite an increasingly difficult environment for airlines, the strength of easyJet's performance means that it is able to return approximately £190m to shareholders demonstrating the resilience of the model, and that it is well-positioned to continue its success across Europe." The firm expects to show a year-on-year increase in total revenue per seat at constant currency for the year of around 3%, thanks to growth of 6% for the second half of the year on the back of particular strength on city routes used by business and short break leisure travellers. A third of seats in the first quarter of the year ending 30 September 2012 are now booked, a similar level to the prior year, and total revenue per seat continues to show improvement versus the prior year albeit at a lower rate of growth than the strong fourth quarter of the financial year. Based on its previously stated intention to pay a full-year dividend that is five times covered by earnings, the board is set to recommend a full-year dividend of 9p, at a cost of £40m to the company, but a one-off special dividend is also in the works. The board said it expects to recommend a one-off return of capital of £150m, equating to a special dividend of 35p, bumping up the full-year pay-out to 44p per share. Commenting on the trading update after its release analysts at Investec have indicated that, "There are headwinds for FY'12, as with all Euro airlines (fuel, ETS), but easyJet is delivering the strongest performance within the peer group and remains our top sector pick."NR