Shareholders in London Southend Airport operator Stobart Group are unlikely to get a dividend for at least another two years, according to the company.
Bosses at the business scrapped its dividend on Thursday and said they will use the money to expand operations and hit its target of five million customers passing through the airport by 2023.
Shares dropped 4.7% as a result, down 5.8p at 117.2p.
Over time we’d like to return the dividend but it needs to be at the right time. The strategy is to grow the airport to five million passengers. At that point we will look at itWarwick Brady, Stobart Group
Chief executive Warwick Brady told the PA news agency: “We can deliver far more value to shareholders from investment and believe the share price should go up. The dividend is important but we’re going to take that cash to grow first.
“Over time we’d like to return the dividend but it needs to be at the right time. The strategy is to grow the airport to five million passengers. At that point we will look at it.”
The company has paid out £42.4 million in dividends over the past two years.
The decision came as Mr Brady revealed that passenger numbers in the six months to August 31 jumped 42% compared with a year earlier, to 1.19 million, with aviation revenues up 26% to £26.4 million.
Total revenue during the period, including its energy generation business, hit £93.1 million, up 34%, although losses for the period extended by 19.4% to £20.9 million due to writedowns to “goodwill” on its rail engineering division.
On an underlying basis, which excludes one-off costs, pre-tax profits for the period were £12.1 million.
Mr Brady said the airport benefited from strikes by British Airways pilots earlier this year, with more people heading to his airport to fly on other airlines.
He also said he expects to see expansion from the launch at the airport of Flybe, in which Stobart holds a 30% stake, as it rebrands to become Virgin Connect.
He added: “EasyJet’s maturing, Ryanair has just started at the airport along with Wizz Air. They are three of the highest-growth airlines in Europe, so we’re confident they can help us grow.”
Asked whether the recent Extinction Rebellion protests had hit the airport or affected passenger habits, Mr Brady said they had not.
“We did have the Extinction Rebellion at the airport but only seven people turned up,” he said.
“Despite that, it’s an important issue for airports and airlines. The industry is taking it very seriously. Our partners have got the newest fleet in the world.
“We don’t think (the conversation on climate change) will ever stop the capacity growth in London, but we need to all look at how we expand in socially responsible ways.”