EasyJet's losses soar after fuel price spike
Published 11/05/2011 | 08:00
Budget airline easyJet has reported a near-doubling in losses as the company battled higher fuel prices and challenging consumer conditions.
Pre-tax losses increased 94% to £153m in the six months to March 31 after the latest surge in the price of jet fuel cost it an extra £43m and it absorbed an increase in air passenger duty.
Passenger numbers increased 12% to 23.9m despite the disruption from the snow in December, which caused the widespread cancellation of flights.
Total revenues per seat fell by 2.1% as the group struggled to pass on the combination of rising fuel prices and increased air passenger duty in the weak consumer environment.
EasyJet flies to 22 destinations from Belfast International and recently announced a route to Manchester from the airport. It has also shunted a Luton route to Belfast International from George Best Belfast City.
Chief executive Carolyn McCall said: "The past six months has been tough with sharply rising fuel costs combined with cautious behaviour by consumers and an adverse impact from taxes on passengers."
She warned that although easyJet has absorbed the rise in passenger duty it may put up its prices if fuel costs remain high.
If other airlines reduced the number of flights it would allow prices to rise, she said.
The group said it had made strong progress over the half-year and its performance in the UK was robust after strong growth at Gatwick, Manchester and Edinburgh airports.
Ancillary revenues from services such as checking in luggage returned to growth in the company's second quarter, it added.
Bookings for the summer season are in line with last year, with revenues per seat slightly higher than a year ago, it added.
EasyJet has increased the frequency of flights on key routes such as London to Amsterdam and Paris to Toulouse as part of its strategy to appeal more to business customers.
Shares were up 5% after the losses came in under analysts' forecasts of £160m.
Numis analyst Wyn Ellis said he expects the City to downgrade its full-year profits forecasts following the update.
He added: "We remain cautious on the trading outlook for the summer given the pressure on the consumer and fuel concerns."