EasyJet profits hit by huge rise in fuel costs
Budget airline EasyJet today braced investors for lower profits after warning of a potential £45 million hike in fuel costs.
Chief executive Andy Harrison said the recent "unprecedented" rise in fuel costs would impact on second half profits if maintained.
Crude oil prices have reached a series of record highs in the past month, hitting a record near $112 a barrel this week. The rise is more than 20 dollars in the past month alone.
Luton-based EasyJet said forward prices for fuel had risen from $840 per tonne to $1,000 per tonne since February 7. If prices remain at this level it will add £45 million to its second half costs from April 1.
Mr Harrison said: "First half results will be in line with our expectations, however it is pretty obvious that if the recent significant rise in the fuel price is maintained then our second half profits will be lower than we had previously expected."
Oil prices have eased slightly to around 108 US dollars a barrel after reaching Monday's $111.80 high. They have spiked in recent weeks amid fears over global economic uncertainty, with investors switching funds from currencies and equities to commodities such as oil.
No-frills airline EasyJet said it was unlikely to be able to combat the rising cost of oil through "revenue improvements and cost actions".
The airline, which carries around 37 million passengers a year - today said February load factors were up 1.8% year on year to 84.8%. It also said 27% of summer seats had been sold, slightly ahead of this time last year.
EasyJet earned profits of £201.9 million during the year to September 30 2007, and last month predicted a 20% profits hike for this year.
The carrier's warning over oil costs follows a similar one from low-cost rival Ryanair last month. The Irish carrier said a "perfect storm" of higher oil prices and weaker consumer demand could see profits could fall in the year to March 2009.
Shares in EasyJet opened 7% down today.