Stelios attacks easyJet after profits warning

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The Independent Online

The easyJet founder Sir Stelios Haji-Ioannou launched a fresh broadside against the no-frills airline yesterday after the carrier took a £24m hit from weather disruptions in December and warned that its half-year losses were set to double.

The budget airline said air traffic control strikes in the three months to the end of December cost it £6m, while the disruption caused by the cold spell cost £18m.

Sir Stelios, who is still the airline's the largest shareholder with a 38 per cent stake, said the "business is too seasonal for its own good".

"It should not blame the weather every year," he added, and again questioned the wisdom of expanding the fleet after easyJet ordered $1.1bn of new Airbus aircraft a fortnight ago. "I wonder where the latest 15 additional Airbuses ordered earlier this month will be deployed next winter without losing even more money?"

Although easyJet booked a 7.5 per cent rise in total revenues to £654m, it warned investors that the high cost of aviation fuel was expected to dent its bottom line earnings and lead to a first-half loss of between £140m and £160m, compared with a pre-tax loss of £78.7m in the same period last year.

The Luton-based carrier, which has hedged 78 per cent of its first-half and 70 per cent of its full-year fuel requirements, said the current price of jet fuel at $897 (£564) per metric tonne was significantly higher than last year, when it stood at $681 per metric tonne.

The warning came as the US investor Jim Rogers said oil prices could rise above $200 per barrel.

EasyJet said the high prices and the prevailing strength of the US dollar meant that fuel costs for the first half were expected to rise by about £1.17 per seat above the levels seen last year.

The easyJet chief executive, Carolyn McCall, called yesterday for better regulation and greater investment in infrastructure following the disruption caused by harsh winter weather over the past two years.

"EasyJet will always support its passengers when external events impact their journey, but we call on governments to provide sensible legislation for airport regulation and air-traffic control," she added.

"The severe snow disruption of the past two years also highlights the need for airports to invest in the appropriate infrastructure to keep passengers moving."

The update led to a sell-off in the airline's shares, with easyJet closing 16 per cent, or 73.8p, lower at 382p.

Despite the disruptions and the high fuel costs, easyJet managed to record an 8.8 per cent rise in passenger numbers, which totalled 11.9 million during the quarter. Fifty-nine per cent of passengers came from outside the UK, the airline reported, while revenue per seat remained flat at £47.48.

In the City, analysts at Charles Stanley Securities said the update was "disappointing". "Expectations are being nudged down," they said. "[Nevertheless], the trends don't look favourable and easyJet will have to run very hard to keep up."