Soaring fuel prices see easyJet's losses double

Budget airline easyJet said today that soaring fuel costs caused half-year losses to more than double as it warned that the rocketing cost of crude oil would put many players out of business.

But the no-frills carrier said it would survive where others failed as it insisted its low-cost business model could see the group through the fuel price woes.

The group reported underlying pre-tax losses of £41.4m in the six months to 31 March, excluding recent acquisition GB Airways, against £17.1m the year before, with earnings hit by a £67m hike in its fuel bill.

EasyJet, which tends to make a loss in the quieter first half of the year, offered hope that its underlying business model remained strong, with news that forward bookings for the summer were "slightly" ahead of last year.

Passenger numbers were up 13 per cent in April to 3.6 million, while its load factor - the measure of how well an airline fills its seats - dropped 3 per cent to 80.1 per cent due to the impact of Easter being in March.

It said it would do all it could to try to minimise the impact of the fuel price pressures, although it said the second-half fuel bill would be at least £45m higher and rise by £2.5 m for each $10 increase per tonne.

EasyJet chief executive Andy Harrison said: "Oil remains the biggest challenge and uncertainty. The price of jet fuel has risen 35 per cent over the last three months and is now 80 per cent higher than last year.

"Nobody knows how much of this increase is driven by short-term financial speculation and how much is a longer term sustainable increase.

"What is certain is that, if these fuel increases are maintained, many of our weaker competitors will disappear or downsize and easyJet will emerge even stronger, reflecting the combination of our business model, our cost advantage, our new fuel-efficient fleet and the strength of our network."

EasyJet said initiatives such as the checked-in baggage charge and a new "speedy boarding" option was helping counter rising costs, contributing to a 24 per cent rise in interim revenues to £892.2m.

With 75 per cent of passengers travelling with checked-in baggage, it said the new charge had largely driven an 83 per cent increase in ancillary revenues.

EasyJet hailed its newly acquired GB Airways operation - a former British Airways subsidiary which was bought earlier this year - as a "major success", making it the number one airline at Gatwick Airport with around 29 per cent of all departing flights.

The acquisition saw easyJet incur £9.1m in integration costs in the first half, but the firm said the division was now fully integrated and was expected to deliver £20m in cost savings.

EasyJet shares rose today on the company's bullish outlook despite the fuel price troubles.