“The economic outlook in Europe remains uncertain and the
higher market price of fuel will inevitably put pressure on margins in the
short-term,” Chief Executive Carolyn McCall said on Thursday.
The budget carrier said the rising cost of jet fuel could
increase first-half pretax losses to around £160 million, almost double the
£78.7 million ($125.8 million) loss it posted in the same period last year.
Shares in easyJet were 12.6 percent down at a four-month low
of 397.8 pence by 1025 GMT, valuing the business at around £1.7 billion ($2.72
billion).
“Guidance for the second quarter of 2011 is somewhat
cautious, indicating total revenue per seat down a couple of percentage
points,” said RBS analyst Andrew Lobbenberg.
“The significant recent run-up in fuel prices means that the
company now anticipates fuel costs being 1.17 pounds a seat higher in the
first-half of 2011 than in the first half of 2010.”
The airline, based in Luton, southern England, which is
hedged on 78 percent of its fuel needs for the first-half, said the current
market price of jet fuel — $897 a metric ton — was around a third more than at
this time last year.
“As with all airlines, the higher market price of fuel will
put pressure on margins in the short term,” said Davy Stockbrokers analyst
Joshua Goldman.
The low-cost carrier, which earlier this month confirmed an
order for 15 Airbus A320 aircraft, said second-half sales looked “robust” and
that its full-year forecasts were “broadly unchanged,” assuming no more
disruption and excluding the additional fuel costs.
EasyJet said revenue in its first quarter — the final three
months of 2010 — rose 7.5 percent to 654 million pounds as passenger numbers
rose 8.8 percent to 11.9 million on the first-quarter last year.
But ancillary revenues — such as the cost of checking in
bags — fell 2.7 percent year-on-year and the company flagged Continental
European revenue performance being softer than in Britain.
EasyJet, which was affected by air traffic controllers (ATC)
strikes in France during the quarter, was also hit as runways around Europe
closed for several days in the run up to Christmas when northern Europe’s big
freeze hit the travel plans of thousands.
“In the quarter, disruption from ATC strike action and
severe weather cost £6 million and £18 million respectively and in addition led
to lost contribution of £7 million,” said McCall.
EasyJet took a smaller hit from the weather than rival
carriers because it is based mainly at London’s Gatwick and Luton airports
which were less seriously affected than Heathrow, where one of its two runways
closed for several days.
British Airways has said it would take a £50 million hit
from the disruption.
The airline had £98 million of costs in 2010 related to
various disruptions, including the volcanic ash cloud which swept across
Europe.
