Budget airline easyJet said yesterday that soaring fuel costs caused half-year losses to more than double and added that rocketing oil prices would put many carriers out of business.
EasyJet said it would survive where others failed because its low-cost model would see it through the fuel-price woes.
The group reported underlying pre-tax losses of £41.4million for the six months to March 31, excluding recent acquisition GB Airways, against a deficit of £17.1million the year before, with earnings hit by a £67million fuel bill increase.
EasyJet, which tends to make losses in the quieter first half of the year, said forward bookings for the summer were slightly ahead of last year.
Its 300-plus routes to 83 airports include Aberdeen-Luton and Inverness to Luton, Gatwick and Bristol.
Passenger numbers across its network were up 13% in April to 3.6million, compared with a year earlier, while the load factor – a measure of how well an airline fills its planes – dropped 3% to 80.1% because of the impact of Easter being in March.
EasyJet said it would do all it could to try to minimise the impact of the fuel-price pressures, although it said its second-half fuel bill would be at least £45million higher and rise by £2.5million for each $10 increase per tonne.
Chief executive Andy Harrison added: “The price of jet fuel has risen 35% over the last three months and is now 80% higher than last year.
“Nobody knows how much of this increase is driven by short-term financial speculation and how much is a longer term sustainable increase.
“What is certain is that, if these fuel increases are maintained, many of our weaker competitors will disappear or downsize and easyJet will emerge even stronger, reflecting the combination of our business model, our cost advantage, our new fuel-efficient fleet and the strength of our network.”
EasyJet said initiatives such as its checked-in baggage charge and a new “speedy boarding” option was helping to counter rising costs, contributing to a 24% rise in first-half turnover to £892.2million.
The acquisition of GB Airways resulted in the group incurring £9.1million in integration costs in the period.
Collins Stewart analyst Andrew Fitchie said that while easyJet’s trading update suggested it had enjoyed a reasonable start to the year, it also highlighted the uncertainty caused by volatile oil prices. He said easyJet was also at risk from a consumer spending downturn if the economy slowed significantly, adding: “We believe this represents a further risk to the airlines and low-cost carriers in particular.”
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