Shares in easyJet fell after the budget airline revealed its profits will be much lower than the City has been expecting. The airline also announced some deep flight cuts this winter, especially at Stansted Airport. It blamed the soaring cost of fuel for the drop in profits, and said that it is cutting back on capacity for this winter in an attempt to reduce costs.
The Luton-based airline made an annual pre-tax figure of £191m last year. Analysts had been forecasting a fall to around £138m because of the higher bills facing easyJet and the rest of the industry, but the airline said today that it would be in the range £110m and £120m.
The company said in a statement the high price of oil had added around £185m to its fuel bill, which in turn had hit margins. It pointed out it had offset around half of its fuel bill increase through cost cuts, while capacity for this winter will be cut by between 4% and 6% to reduce unprofitable routes.
Announcing its third-quarter results, easyJet said that its revenue was up by 32% to £641m driven by strong ancillary performance and the strengthening Euro, as it continued to absorb this year's acquisition of GB Airways, while revenue per seat rose by 12% to £46.36 in the same period, on the back of hold baggage charges.
Despite industry fears that consumers would rein in their spending and cut down on holidays, easyJet's total passenger numbers have continued to increase - up 16% to 11.5m in the quarter - with particularly strong growth at Gatwick airport and on routes to France and Italy.
easyJet will cut capacity at Stansted by 12% over the 2008/09 winter. It will also implement a further raft of cost-cutting measures including reducing the number of flights during less profitable times and reallocating aircraft from less popular bases to busier areas. Overall capacity growth for winter 2008/09 has been reduced and is currently planned to be in the region of 4% - 6%.
The airline said in a statement: 'In the current environment, flexibility is vital and easyJet continues to review its schedule and may make further adjustments, both to eliminate unprofitable flying and to seize opportunities.' |
