UK airline EasyJet has spurred hopes of a lucrative reward to shareholders, giving an increased forecast for upcoming full-year earnings in the latest indication of the success of its low-cost model.
EasyJet's cheap fares have helped it and rival Ryanair weather an increasingly competitive European short-haul market, while traditional airlines have struggled to compete.
The trend has been highlighted by a recent two-week strike by pilots at Air France, part of Air France-KLM, over issues relating to a new discount airline, which helped propel some customers to rivals such as EasyJet.
The company, whose closed 6.4% higher in London trade, said it expected to report a pre-tax profit in the range of £575-580m - as much as 6% more than guidance given in July.
The raised forecast put EasyJet, Europe's second-largest low-cost carrier behind Ryanair, on track to make its largest-ever ordinary dividend payout.
It had said in September that it planned to reward shareholders with 40% of pretax profit, above the previous one-third distribution.
Last year the company announced a £175m special dividend at the time of its full-year results, having previously said annual profit would be at the top end of guidance.
That was in addition to its regular full-year dividend of 33.5 pence per share, up 56%, for a total payout of £308m.
The higher than expected results for the 12 months to September were helped by a £5m boost to revenue from the Air France strike as customers switched to EasyJet's planes.
Earnings were also helped by strong demand for short-haul European travel at the end of the summer, meaning revenue per seat on a constant-currency basis would be 1.5% higher than last year in its fiscal fourth quarter.
In recent years Luton-based EasyJet has added flights on routes where rivals have cut back and introduced more flights between top business destinations.
It said profit would also be lifted by lower than expected unit fuel costs and favourable exchange rate movements in the six months to the end of September.
Unit fuel costs would be £2m lower than was expected in July, when up to a £5m adverse impact was expected. At current rates, EasyJet said it expected the fuel bill for its next financial year to be about £50m lower than this year, though adverse currency moves over the same period could have a £20m adverse impact.
EasyJet's previous guidance for pretax profit was in a range of £545-570m, announced at the time of its third-quarter results in July.
