EasyJet has raised its profit estimates after a strike by Air France pilots brought in an extra £5m of bookings for the budget airline.
In a trading update, easyJet forecast pre-tax profit of between £575m and £580m for the year to 30 September. It had previously guided investors to expect profit between £535m and £570m.
The company said a strike last month by Air France pilots resulted in passengers switching to its flights, increasing revenue by £5m. Passenger numbers rose 7.5% to 6.14 million in September, while fuel costs were £2m lower than expected in the second half of the year.
The airline’s shares closed up more than 6% to £14.59 and were the biggest gainers in the FTSE 100 index.
EasyJet’s chief executive, Carolyn McCall, said: “We finished the year strongly. EasyJet has continued to execute its strategy, delivering another strong performance in the second half of the year. This has enabled easyJet to deliver record profits for the fourth year in a row.”
The two-week strike by Air France pilots could have cost the French carrier as much as €400m (£315m) in cancelled bookings – a third more than the company had previously said – a source close to the company told Reuters on Friday.
The pilots called off their strike last weekend despite continued deadlock with managers over the development of the firm’s low-cost operations, Transavia, which they fear could erode pay and conditions.
Air France plans to announce a revised estimate of the losses incurred on 8 October.
EasyJet now plans to pay out 40% of profits to shareholders, up from 33% – its biggest dividend payment.
The news should help placate easyJet’s founder, Sir Stelios Haji-Ioannou, whose family owns about 35% of shares and has called for higher dividends instead of the company buying extra planes. He believes easyJet should pay out closer to half its profits to shareholders.
EasyJet has flourished in recent years by moving away from the typical image of budget airlines by, for example, moving to allocated seating for all passengers two years ago.
It claims to have an advantage over Ryanair, its main budget rival, because it flies to main airports in cities, attracting more business passengers. At the same time its low-cost business model lets it undercut big carriers such as British Airways.
Ryanair has admitted that easyJet has pulled ahead of it on service and is trying to woo passengers back with a customer charm offensive. It has also launched its own offer to business travellers – a “business plus” fare that includes flexible tickets, more check-in baggage, priority boarding and premium seats in the first five rows for quick boarding.
It said business passengers already make up more than a quarter of its customers and that the new fares, starting at €69.99 (or £59.99 for UK customers), were designed to get more of their business.
