easyJet says losses double, but sees profit ahead
Low-cost airline easyJet said on Wednesday that net losses doubled in the first half of its financial year because of high fuel costs and the late timing of the Easter holiday break.
Net losses ballooned to 85.9 million pounds in the six months to the end of March, compared with a loss of 43.3 million pounds in the same period of the previous fiscal year.
Sales rose by 15.8 percent to 1.032 billion pounds in the reporting period, the company added in a results statement.
"The reduction in our first-half profit margin was driven by an increase... in our unit fuel costs, which will unwind as our fuel hedging policies adjust to lower market prices," said easyJet Chief Executive Andy Harrison.
"The movement of Easter into the second half of the year also depressed our first half margins."
Airlines seek to protect themselves against volatile oil prices by hedging -- or taking a defensive position on futures markets. However, this means that the effect of slumping crude prices has not yet filtered through.
World oil prices have tumbled from record peaks since July 2008 as the sharp global economic downturn has dented demand for energy. Jet fuel, or kerosene, is refined from crude.
easyJet added on Wednesday that it expected to be profitable for its 2008-2009 financial year which runs until the end of September.
"While we remain cautious about the consumer economy, at current fuel prices and exchange rates, easyJet expects to be profitable for the full year," the airline said in the earnings release.
It added: "The revenue environment remains uncertain due to rising unemployment across Europe and the impact on UK consumers of the strengthened euro.
"It's too early to assess any potential impact on easyJet?s business from the recent outbreak of swine flu but naturally the board is closely monitoring developments.
"In this difficult trading environment easyJet's network remains well positioned against the competition and is clearly benefiting as a flight to value by business passengers is offsetting some of the weakness in discretionary leisure travel."
First-half revenues were meanwhile boosted by the 103.5-million-pound acquisition of GB Airways, which was completed in January 2008.