EasyJet warning despite £248m profits


Budget airline easyJet revealed a rise in profits today but warned it will become harder to pass higher fuel prices on to passengers.

The group reported a 31.5% increase in underlying profits to £248 million in the year to September 30, which was at the upper end of expectations, after a sharp rise in the number of business passengers.

It said around 45% of winter seats are already booked - about the same level as last year - but warned that weak consumer confidence across Europe will slow the rate at which higher costs can be passed on to passengers.

The group also announced it will trial allocated seating on selected routes in the spring, following a similar move by rival Ryanair.

The record profits for the group came after it offset a £100 million increase in its fuel bill by focusing on cost controls and improved customer satisfaction levels. Its on-time performance improved by 13 percentage points to 79%.

But the group warned the macro-economic environment remains challenging, while it is facing higher costs, including increased taxation and a £220 million rise in its fuel costs.

As a result it is taking a "cautious approach" to expanding its fleet, which will lead to unchanged capacity in the first half of its financial year and growth of around 4% for the year as a whole.

It expects first-half passenger revenues to increase by "mid-single digits", helped by higher bag charges and other ancillary revenues.

The group announced payments to shareholders of £195 million, which is about £5 million more than previously expected amid pressure from its founder Sir Stelios Haji-Ioannou, who along with his family is a major shareholder.

The Luton-based airline has been expanding its appeal to business customers, which tend to provide higher profits, by flying more to business routes and offering flexible fares.

Passengers travelling on business routes increased by one million to 9.5 million in the year.

Total revenues rose 16% to £3.5 billion while revenues per seat were up 3.4% to £55.27, helped by a rise in ancillary revenues.

Douglas McNeill, an analyst at Charles Stanley Securities, said Carolyn McCall's first full year in charge had been a good one.

But he added: "Cost inflation looks to be greater than we had thought and pricing isn't strong enough to compensate - the upshot is that our full-year 2012 forecasts may have to be reduced."