EasyJet expands fleet and ups dividend payout

EasyJet has flagged up its confidence in future growth by ordering more aircraft and announcing a higher dividend payout for shareholders. The airline has added 27 A320s to its existing Airbus orders and promised to pay a return of 40% on profits after tax this year, a rise from 33%.

The announcement comes weeks after easyJet's competitor, Ryanair, agreed a $10.4bn (£6.3bn) order with Boeing for 100 more jets.

The easyJet move could deliver a £10m bonus for Stelios Haji-Ioannou, the airline's founder and largest – if frequently disaffected – shareholder, who can expect the dividends on the shares he and his family own to rise to about £60m. EasyJet's profits are expected to be about £450m after tax.

Carolyn McCall, easyJet chief executive, said of the company: "Its proven strategy continues to deliver significant returns for shareholders, which is why we are increasing our payout ratio for the ordinary dividend to 40%. 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."

The additional planes, bought at "a substantial discount" to the list price of £1.3bn, will continue the replacement of older A319 models with bigger, more fuel-efficient A320s.

Under the plans, the overall Airbus order of 170 A320s is expected to cause easyJet's fleet to expand from 226 aircraft to 304 by 2019, but the budget airline stressed that it had the flexibility to cut or expand depending on economic conditions and opportunities.

The easyJet board has been criticised previously by Haji-Iaonnou, who claimed there were excessive aircraft orders, which risked adding too many jets to its fleet.

The chief operator of Airbus, John Leahy, said the repeat easyJet order was "as solid an endorsement as you can get".

Airbus claims the A320 has the lowest operating costs of any single-aisle aircraft.

The airline's valuation quadrupled between 2012 and 2014 but has dipped by 25% from its high in April. The final dividend will be announced when the airline reports its full-year results in November.

Shares in easyJet rose almost 2% to £13.62 during morning tradingon Thursday.