EasyJet has announced cuts to its winter timetable as the high price of fuel eats into the no-frills airline's profits.
The company said yesterday that it would reduce its flights to and from London Stansted airport by 12 per cent and cut flights at "less profitable" times. The company said it was also considering shutting its base in Dortmund, Germany, and warned of further cuts to capacity. The profits warning caused easyJet's shares to fall by more than 10 per cent to 332.5p.
"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 opportunities," the company said in a statement.
Record oil and fuel costs have hurt airlines, forcing at least 24 carriers to fold in recent months. Ryanair, easyJet's larger budget rival, said last week that it was cutting about 250 flights from Stansted, in Essex.
easyJet warned that its full-year profits would be lower than expected and could fall by more than 40 per cent to £110m. The price of oil has added about £185m to its fuel bill for the year, squeezing margins.
The airline said it had offset about half of the increase through cost cuts and revenue growth but would still cut capacity growth by up to 6 per cent.
Andy Harrison, easyJet's chief executive, said the company's profit forecast was unlikely to be hit by fuel costs again because it had bought most of the fuel it needed to last till the end of the financial year in September.
Despite the economic slowdown, the company's revenue per seat increased 12 per cent to £46.36 in the third quarter. Passenger numbers jumped 16 per cent after the purchase of GB Airways in January.
Ancillary revenue from non-ticket sales rose 93 per cent to £7.45 a seat after the airline introduced a charge for checking in bags in October.
Mr Harrison predicted that supply and demand for air travel would drop next year as airlines cut flights or went bust and customers tightened their belts. "I'm pretty certain easyJet will win market share from airlines that cut back or disappear, while as economic pressures [on passengers] increase we should win market share from the legacy airlines," he said.Reuse content