easyJet profits down 50%
17.11.09
easyJet has reported a 50% fall in full-year profits to the end of September, after the rising price of oil pushed up fuel costs. Pre-tax profits were £54.7m, down from the £110.2m the airline made a year earlier, despite a 12.9% rise in sales from £2.36bn a year ago to £2.67bn.
The budget airline said the results were ‘extremely resilient’, adding it was one of the ‘very few’ European airlines to make a profit in the last 12 months. It was helped by a capacity reduction of about 6% among its main competitors, and increased market share in ‘valuable’ markets such Paris, Gatwick, Milan and Madrid. Passenger numbers rose by 3.4% to 45.2 million.
easyJet reported it is on average making £4.51 per seat in baggage charges - up 62% on last year. It also made on average of another £5.26 per seat charging passengers for other ancillary revenues like in-flight food and drink, hire cars, airport parking and hotel accommodation.
The airline was hit in the period by its fuel hedging policy, in which it buys fuel at prices agreed in advance, as poorly timed hedging arrangements meant that easyJet did not benefit from the fall in oil prices. However, the airline should benefit to the tune of £100m in 2010 from its fuel-buying policy.
A spokesman said that passenger fares would be ‘flat or slightly down’ in the year ahead. The airline also warned of a ‘tough winter ahead’, and said it would continue to focus on cutting costs and improving efficiency. These, together with the savings made on fuel hedging, mean it expects to make a ‘substantial profit improvement in 2010’.
However, rising job losses means that the company is expected to generate less money per seat, as consumers spend less on the planes and shop agressively for flight bargains. Forward bookings remain at the same levels as last year.
Chief Executive Officer Andy Harrison also said today that the airline has short-listed candidates for the role of chief financial officer and expects to make an announcement in the coming months. Its previous CFO, Jeff Carr, announced his resignation in May after easyJet founder and director Stelios Haji-Ioannou refused to approve last year's annual accounts. He took up the role of finance director at bus and rail company FirstGroup.
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