Budget airline easyJet has seen its shares tumble after the group warned that soaring fuel costs are expected to double half-year losses.
EasyJet plummeted more than 13% following a grim update in which it revealed the impact of an oil price bubble and also laid bare its hit from December’s snow and strike action by European air traffic controllers.
The low-cost airline said last month’s snow chaos cost it £18 million, while the strikes in Spain and France added another £6 million, in addition to £7 million in lost profits caused by the impact on passenger demand.
It hopes to claw back a significant part of the weather and strike impact through cost savings and more sales as it increases capacity.
But easyJet cautioned a 32% surge in fuel costs is expected to lead to pre-tax losses in its first half – traditionally a loss-making period – of between £140 million to £160 million compared with £78.7 million a year earlier.
Airline experts also raised the alarm over signs the industry’s lucrative revenues stream from extra charges may be slowing. EasyJet reported a 2.7% fall in extra charges per seat in the quarter to December 31 as fewer passengers paid for checked-in baggage.
Analysts at Investec Securities said it was cause for concern: “This is highly unusual – we can’t remember the last time an airline saw unit ancillaries fall.”
The pre-Christmas quarter was a tough one for easyJet as the extreme weather and strikes saw more than 3,500 easyJet flights cancelled, with at least one of its airports closed every day in December.
Carolyn McCall, chief executive of easyJet, said: “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.”
Passenger numbers increased by 8.8% and revenues rose 7.5% in the quarter to December 31 despite the disruption.