Easyjet praises Ryanair makeover as it posts record annual profits and hikes dividend

Budget airline Easyjet posted record annual profits for the fourth year in a row, proposed a rise in its dividend of more than a third - and praised rival Ryanair's new customer-friendly image for giving it a lift.

The Luton-based carrier said pre-tax profit in the year to 30 September rose 21.5% to £581m on a 6.3% lift in revenue to £4.5bn.

Chief executive Carolyn McCall welcomed Ryanair's decision to ditch its brash image, saying it was helping to lift demand across the industry.

McCall said Ryanair's former image had a negative knock-on effect for other budget airlines. “I don’t think its move with customer service is a bad thing," she said.

Seats flown increased by 5.1% to 71.5m, load factors gained 1.3 percentage points to 90.6% and passenger numbers rose by 6.6% to 64.8m.

The group said it was recommending an increased ordinary dividend to shareholders of £180m or 45.4p a share, up 35.5% against a year ago, based on its enhanced ordinary dividend policy of paying out 40% of annual profit after tax.

But Easyjet forecast revenue per seat at constant currency for the first half of the financial year would be flat to very slightly up on the prior year due to investment in expanding its network.

The group expects to grow capacity, measured in seats flown, by around 3.5% in the first half of the year and by around 5% for the full year. It said forward bookings for the first half of the 2015 financial year were slightly ahead of the prior year.

Easyjet is increasing operations at London Gatwick, driven by its purchase of take-off and landing slots from regional airline Flybe, by around 10% in the first half of the year.

McCall said: "Easyjet has continued to execute its strategy, delivering another strong performance and enabling Easyjet to deliver record profits for the fourth year in a row. We are also proposing to increase the proportion of our profits after tax paid in dividends from one third to 40%, reflecting our confidence."