easyJet profit down 50 percent
17.11.09
easyJet has reported a 50 percent fall in full-year profits to the end of September today, after the rising price of oil pushed up fuel costs. Pre-tax profits were £54.7m, down from the £110.2m a year earlier, despite a 12.9 percent rise in sales to £2.67bn.
The budget airline said the results were ‘extremely resilient’, adding it was one of the ‘very few’ European airlines to make a profit in the last 12 months. It was helped by a capacity reduction of about 6 percent among its main competitors, and increased market share in ‘valuable’ markets including Paris, Gatwick, Milan and Madrid. Passenger numbers rose by 3.4 percent to 45.2 million.
easyJet was hit in the period by its fuel hedging policy, as poorly timed hedging arrangements meant that it did not benefit from the fall in oil prices. However, the airline should benefit to the tune of £100m in 2010 from its fuel-buying policy compared to the year just reported.
The ariline reported it made an average of £4.51 per seat in baggage charges on top of passenger fares - up 62 percent on last year. It also made on average of another £5.26 per seat from other ancillary revenues such as in-flight food and drink, hire cars, airport parking and hotels.
An easyJet spokesman said that passenger fares would be ‘flat or slightly down’ in the year ahead. He also warned of a ‘tough winter ahead’, and said it would continue to focus on cutting costs and improving efficiency. These, together with the savings made on fuel hedging, mean it expects to make a ‘substantial profit improvement in 2010’.
However, rising job losses mean that the airline is expected to generate less money per seat, as consumers spend less on the planes and shop agressively for flight bargains. Forward bookings remain at the same levels as last year.
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