Business Weekly - Cambridge, UK

Luton based budget airline easyJet seems to have detected a silver lining in the clouds swirling around the aviation industry – and the market clearly shares its optimism.

The carrier’s pre-tax losses more than tripled to £57.5m for the six months ended  March 31 from £17.1m the year before, although the figure was in line with expectations following a March profits warning and includes £9.1m of one-off costs associated with the integration of GB Airways.

Rocketing fuel prices are blitzing margins but the share price still headed skywards to 307p, a modest 3.19 per cent but creditable in the circumstances. easyJet says it is strongly placed if the fuel price issue drives weaker competitors to the wall.

Total revenue rose 24 per cent to £892.2m while load factors remained at 81 per cent. Passenger numbers were up 15 per cent to 18.9m while forward bookings for the summer are ahead of last year.

CEO Andy Harrison said oil remained the biggest challenge and uncertainty. "The price of jet fuel has risen 35 per cent over the last three months and is now 80 per cent 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."

The company said that the dramatic increase in fuel costs could not be fully offset in the current financial year and although it is 40 percent hedged in H2 at $750 per tonne, with a fuel price of over $1,000 per tonne, fuel costs in the second half would increase by around £45 million.

Harrison said that easyJet continued to grow in size and strength, notably in mainland Europe and especially in Italy and France.

easyJet carried 3.55 million passengers in April, 13.4 per cent up year-on-year.

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