EasyJet shares lifted by hopes of big payout

 
Marion Dakers
SHARES in EasyJet flew to the top of the FTSE 100 risers yesterday after analysts raised hopes for a special dividend and further earnings growth.

Citigroup upgraded the blue-chip newcomer to a “buy” rating yesterday, flagging up its forecast of 30 per cent earnings per share growth this year and expansion of up to seven per cent in subsequent years.

EasyJet, which paid its maiden dividend in November 2011, is generating enough money to pay out nine per cent of free cash flow to shareholders through to 2019, raising the prospect of a special dividend, Citi analyst Andrew Light said.

“We would not expect a special dividend to be paid, however, before EasyJet has decided on its next aircraft order,” he added.

The firm remains in talks about a possible plane order for delivery after 2018, a plan that has been aggressively opposed by founder and shareholder Sir Stelios Haji-Ioannou.

Analysts at Citi and Morgan Stanley have this week cheered the growth potential at European low cost leaders EasyJet and Ryanair.

Citi expects the market to grow one per cent a year, with the two biggest firms picking up between three and five per cent passenger growth each.

Shares in EasyJet, which have risen more than 30 per cent since the start of the year, closed up 6.65 per cent yesterday.