Easyjet soars above rival Ryanair

(MENAFN- AFP) British no-frills airline Easyjet on Tuesday announced soaring annual profits, in marked contrast to Irish rival Ryanair which recently shocked markets with another warning over its earnings.

Easyjet said net profit surged 56 percent to £398 million ($641 million, 474 million euros) in the year to September 30 compared with the group's performance in 2011/12 -- as increased demand for its flights across Europe offset higher costs.

It added in a statement that £308 million would be returned to shareholders via dividend payments, helping Easyjet's share price to rally on Tuesday.

"Easyjet stock soared after confirming profits that beat arch rival Ryanair," said Toby Morris, senior trader at CMC Markets.

"In stark contrast Ryanair have recently been forced to concede that their willing portrayal as the sector villain has to be addressed, vowing to cut extraneous fees and improve customer service after cutting its full year profit forecast."

Easyjet added that annual pre-tax profit jumped 50.9 percent to £478 million, in line with the airline's own raised forecast given last month.

Revenue rose 10.5 percent to £4.258 billion in the reporting period. Costs excluding jet fuel grew to £2.598 billion, while fuel charges climbed to £1.182 billion.

"As evidence of our continued confidence in the future prospects of the business, the board has recommended to return £308 million to shareholders through the combination of an ordinary and special dividend," Easyjet chief executive Carolyn McCall said in the earnings statement.

"We will continue to deliver our strategy of offering our customers low fares to great destinations with friendly service so that we can continue to win in a more competitive market. This means we are well placed to continue to deliver sustainable returns and growth for our shareholders," she added.

Easyjet shares jumped 6.85 percent to 1,342 pence in late trading on London's benchmark FTSE 100 index, which was down 0.58 percent at 6,684.77 points overall.

Easyjet had said in October that annual profits would be at the upper end of expectations, and cited keen demand for flights during July and August.

The carrier had revised higher its pre-tax profits forecast to between £470 million and £480 million. That compared with its prior July guidance of between £450 million and £480 million.

But earlier this month, Ryanair slashed its annual profits forecast for the second time since September owing to lower-priced fares, triggering a slump in the company's share price.

The Dublin-based carrier expects annual net profit of not more than 520 million euros ($703 million), which compares with a forecast at the lower end of a 570-600 million euros range given in September.

Ryanair is meanwhile seeking to soften its much-criticised public image of being a company that is lacking in good customer service.

Customers being hit by fines at the airport for failing to print their tickets and for carrying too much weight in their luggage are among some of the biggest grievances, even if Ryanair's policy is posted on its website.

Ryanair recently simplified its online booking process, and will launch a new homepage later this month, after customers regularly complained about the confusing and long pro