EasyJet on Tuesday reported full year pre-tax profit of £478 million ($769 million), a 50.9 percent increase from the same period last year and said it would return £175 million to shareholders in the form of a special dividend.
The company proposed a full-year dividend of 33.5 pence a share, up 55.8 percent on last year, and a special dividend of 44.1 pence per share.
Shares of the airline were trading up 4 percent after markets opened on Tuesday.
EasyJet Chief Executive Carolyn McCall said the results reflected easyJet's "continued structural advantage in the European short-haul market against both the legacy and low cost competition."
EasyJet is Europe's second-largest budget airline behind rival Ryanair. Since McCall took the reins in 2010, easyJet has introduced more flights between key business destinations and unveiled allocated seating which has proved popular with customers.
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In its earning statement, the group said it had seen a strong revenue performance across the U.K., Switzerland, Germany, France, Italy and Portugal this year, signaling that a recovery in European economies had encouraged consumers to spend on holidays and flights.
Its success comes as a number of large, longer-haul airlines in Europe such as Lufthansa, Air France and British Airways struggle to compete with low cost carriers like easyJet and RyanAir.
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In terms of outlook, easyJet said it expected that large "legacy carriers" would continue to cut capacity from their "unprofitable" short-haul operations but that there would be increased competition from the new low-cost carriers looking to expand. It expects to grow capacity, measured in seats flown, by around 3.5 percent in the first half of the year and by 5 percent for the full year
"Whilst the benign capacity environment is unlikely to continue in the short term, there will continue to be retrenchment by less efficient airlines and therefore opportunities for easyJet to continue to take profitable share in its core markets," the group said on Tuesday.
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In May, the budget airline operator reported a pretax loss of 61 million pounds ($93 million) for the six months to the end of March, down from 112 million pounds a year ago. The loss was at the lower end of its guidance of £60-65 million and better than analysts polled by Reuters who forecast fa loss of £64.5 million.
In July, the airline secured its future fleet requirements with Airbus through to 2022, ordering 35 current generation A320 aircraft for delivery between 2015 and 2017 and 100 new generation A320neo aircraft which are planned for delivery from 2017 to 2022.