Low cost carrier easyJet has reached an agreement with Airbus to deliver 157 new aircraft as it reported profit before tax for 2023 of up to £460 million.

Announcing financial results for the year to September 30, the airline said record profits in the fourth quarter of 2023 has enabled it to set ambitious medium-term targets.

These include 5% capacity growth to 2028 and group profit before tax per seat of £7 to £10 and for its holidays division more than £250 million.

In the year ended on September 30, easyJet reported its holidays division as continuing to outperform expectations as it hit £120 million profit before tax.

The new aircraft order with Airbus includes 157 firms orders between 2029 and 2034 and purchase right for a further 100 subject to shareholder approval.

The airline has an existing order of 158 aircraft for delivery by 2029 and the conversion of 35 A320nes to A321 noes. In total 315 aircraft are now on order for delivery by 2034.

Guidance for the first quarter of 2024 included capacity 15% up year-on-year, loads factors in-line with expectations and costs per set, excluding fuel to be “slightly reduced”.

Positive trading saw easyJet resume shareholder dividend payments payable early next year of 10% of profits after tax for 2023 rising to 20% in 2024.

Johan Lundgren, chief executive of easyJet, said: “We have delivered a record summer with strong demand for easyJet’s flights and holidays with customers choosing us for our network, value and service.

“This performance has demonstrated that our strategy is achieving results and so today we have set out an ambitious roadmap to serve more customers and deliver attractive shareholder returns, underpinned by a continued focus on costs and operational excellence.

“Our new medium-term targets provide the building blocks to deliver a PBT greater than £1 billion. This will be driven by reducing winter losses, up gauging our fleet and growing easyJet holidays.

“As part of our commitment to shareholder returns, the Board intends to reinstate dividends commencing with the FY23 results.

“We have also reached a proposed agreement with Airbus for an additional 157 aircraft order and a further 100 purchase rights.

“This will enable easyJet’s fleet modernisation and growth to continue beyond 2028 while providing substantial benefits including cost efficiencies and sustainability improvements.”

John Choong, senior equity analyst at InvestingReviews.co.uk, said: “easyJet may be clear for take-off after its latest numbers continue to climb to new heights.

“Revenues hit a record high, while load factors are now back to their pre-pandemic levels and capacity just slightly off target as travel demand shows no signs of cooling.

“The operator also managed to achieve a sumptuous pre-tax profit of £660 million, higher than the £450 million City analysts were expecting.

“This was thanks to the airline’s strong fuel-hedging strategy, which gave some protection against higher fuel costs.

“Although the outlook remains mildly turbulent, investors may find some relief in the fact that the company has already secured 73% of its fuel for the first half of its new financial year at a lower rate than today’s price.

“But perhaps more importantly, easyJet’s packaged holidays business continues to impress from end to end as is expected to rake in an impressive £120 million.

“With its Holidays being more profitable, this leaves room for higher earnings potential next year and should see its shares flying even higher soon, as the firm upgraded its medium-term targets with the ambition to deliver over £1 billion in pre-tax profits.”