Page last updated at 15:18 GMT, Tuesday, 17 November 2009

Easyjet sees profits drop by 50%

Easyjet plane
Easyjet's passenger numbers rose by 3.4%

Budget airline Easyjet has reported a big fall in full-year profits to the end of September, after the rising price of oil pushed up fuel costs.

Pre-tax profits were £54.7m ($92.2m), half of the £110.2m the airline made a year earlier.

This came despite a 13% rise in sales from £2.36bn a year ago to £2.67bn.

Easyjet said the results were "extremely resilient", adding it was one of the "very few" European airlines to make a profit in the past 12 months.

It was helped by a capacity reduction of about 6% among its main competitors, and increased market share in "valuable" markets such Paris, London Gatwick, Milan and Madrid.

Passenger numbers rose by 3.4% to 45.2 million.

'Fuel hedging'

"We are doing exceptionally well at the moment," Easyjet's chief executive Andy Harrison told the BBC.

Easyjet chief executive Andy Harrison: "It's simply down to efficiency"

The reason, he said, was because the airline offered "great value, the best prices and the most convenient airports".

Mr Harrison said the airline had been hit by its fuel hedging policy, in which it buys fuel at prices agreed in advance. Movements in the price of oil meant that the company had lost out in the year to September.

However, he said the airline should benefit to the tune of £100m in 2010 from its fuel-buying policy.

'Substantial improvement'

Mr Harrison said that passenger fares would be "flat or slightly down" in the year ahead.

The airline also warned of a "tough winter ahead", and said it would continue to focus on cutting costs and improving efficiency.

"Cost savings will grow. We also see a substantial improvement in our airport and ground handling costs because we have been able to negotiate better airport deals in the recessionary climate," said Mr Harrison.

These, together with the savings made on fuel hedging, mean the airline expects to make a "substantial profit improvement in 2010".

Richard Hunter at Hargreaves Lansdown stockbrokers said: "To see the words 'airline' and 'profits' in the same sentence is something of a rarity in the current environment, but Easyjet continues to capitalise on its no-frills offering.

"Perhaps most importantly, the guidance for 2010 after a tough winter this year was extremely upbeat and will give bulls of the stock market further reason for cheer."

Earlier this month, Easyjet's rival Ryanair reported a fourfold increase in half-year profits.

Pre-tax profits came in at 419.4m euros ($627.6m; £372.3m), up from 105.2m euros in the same period last year.

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