21 Jan 2011

Easyjet shares down after warning of higher fuel costs

6:23 am on 21 January 2011

Shares in Easyjet slumped more than 16% on Thursday after the airline warned that higher fuel costs could double half-year losses.

Easyjet estimated that the loss from October last year to March this year would be between £140 - £160 million, compared with a loss of £78.7 million a year earlier.

The airline also said severe weather in December cost it £18 million, and air traffic control strike action in the final three months of 2010 cost £6 million. The BBC reports the revenue lost from both was £7 million.

Despite these factors, Easyjet said revenue in the final quarter of 2010 grew 7.5% to £654 million, while passenger numbers were up 8.8% to £11.9 million.

However, it said rising fuel costs would lead to bigger losses in the first-half of the financial year.

In a statement, the airline said:

"The current market price of jet fuel is $US897 per metric tonne compared to $US681 per metric tonne a year ago and therefore at current jet prices and dollar rates fuel costs are anticipated to be around £1.17 a seat higher than in the first half of last year."