Easyjet profits plunge amid high fuel costs

EasyJet’s profits have dropped by 50% to 54.7 million for the year to September, despite increases in passenger numbers, load factors and market share.

The airline blamed higher fuel costs for the drop in profits, with fuel costs for the year £86.1 million higher than last year.

However, a number of key indicators were positive. The airline managed to increase its market share of the overall European short- haul market, carrying 45.2m passengers during the year, 3.4% ahead. Load factors were up by 1.2% to 85.5%.

Overall capacity, measured in terms of seats flow, was 1.8% up. In the UK, capacity at Gatwick was increased by 12%, giving easyJet a 30% share of the airport. Elsewhere, it reduced capacity at weaker performing markets such as Luton and the UK regions.

In Europe, capacity was lifted in France, Italy and Spain by 30%, 78% and 16% respectively.

Business travel is an important part of easyJet’s business, with 15% of business passengers now originating through business orientated distribution channels. It added that business customers tend to book later, paying around 20% more than the average fare for their easyJet flights.

Its appeal to the corporate market, particularly in the UK, has been boosted by legacy competitors withdrawal from key business routes.

The website easyJet.com remains the airline’s primary distribution channel. Improvements in website presentation should also result in improved conversion rates for car hire and hotels, it said.

During the year the airline spent 47 million on advertising. Looking ahead, it said that 45% of its seats for the first half of 09/10 have already been booked, although it is concerned about yield dilution. On the other hand, fuel costs are expected to be £100m less, prompting it to predict that next years profits will be substantial.

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