July 25, 2008

Easyjet Offsets Rising Fuel Bill

LOW-cost airline easyJet said today it had offset more than 50% of an anticipated Pounds 185 million rise in its annual fuel bill.

In a trading update, the Luton-based operator forecast pre-tax profits of up to Pounds 120m for the year to the end of September, with revenues and cost-saving measures helping it to cope with soaring oil prices.

It said third quarter passenger numbers were up by 16 per cent amid continued strong growth at Gatwick and mainland Europe, but added capacity growth would be reduced this winter as it adapts to current trading conditions.

EasyJet, which made underlying profits of Pounds 191.3m last year, has thinned the amount of flying it does at less profitable times, while it will reallocate capacity from weaker performing bases towards better value opportunities such as Gatwick, France and Italy.

At Stansted, capacity will be reduced by 12 per cent and the company has announced the future of its base at Dortmund in Germany is under review.

Overall, capacity growth for the winter has been reduced and is expected to be in the region of 4 per cent to 6 per cent.

The company said: "In the current environment flexibility is vital and easyJet continues to review its schedule and may make further adjustments both to eliminate unprofitable flying and to seize any opportunities that may arise as capacity exits the market."

Last week, fellow low-cost operator Ryanair said it planned a 14 per cent reduction in the number of weekly flights for winter 2008/ 09 at Stansted. It blamed rising fuel costs and the cost of using the Essex airport.

EasyJet, which operates 356 routes from 20 bases, said it was pleased with its overall performance, with revenues per seat up by 12 per cent to Pounds 46.36 in the three months to June 30. It recently bolstered its business with the acquisition of Gatwick- based GB Airways, a former subsidiary of British Airways.

The company said: "London, especially Gatwick, continues to perform well with particular strength on the former GB Airways sectors and on routes to France and Italy. Overall, the UK regional bases are delivering good results particularly at Newcastle and in our Scottish bases."

It described the company's performance at its Madrid and Belfast bases as challenging, with the latter impacted by increased capacity in the market.

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