Business World

Monday 1 May 2017

Easyjet losses widen on oil price shock

Easyjet is suffering the effects of an oil price bubble and December's snow and ice. Photo: PA
Easyjet is suffering the effects of an oil price bubble and December's snow and ice. Photo: PA

Low-cost airline easyJet said last month's snow chaos cost it £18m (€21m) and warned soaring fuel costs were expected to double half-year losses.

Shares in the carrier slumped 15pc as it cautioned pre-tax losses in its first half - traditionally a period when it makes losses - were now likely to be in the range of £140m to £160m compared with £78.7m a year earlier.

It is suffering the effects of an oil price bubble and December's snow and ice.

The cost of the weather disruption added to a £6m bill from air traffic control strikes across Spain and France, which together also saw easyJet suffer £7m in lost revenues.

The extreme weather shut airports across the UK and left holidaymaker plans in disarray in the run-up to Christmas.

More than 3,500 easyJet flights were cancelled, but the group said it handled the weather troubles "more proactively" than last winter by putting in place emergency hotel arrangements in advance.

These actions helped shave around 10pc of its costs bill.

But the group called for more investment from airports and said more needed to be done to limit strike woes.

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.

"The severe snow disruption of the past two years also highlights the need for airports to invest in the appropriate infrastructure to keep passengers moving."

Passenger numbers increased by 8.8pc and revenues rose 7.5pc in the quarter to December 31 despite the disruption and the carrier hopes to claw back a significant part of the weather and strike impact through cost savings and more sales as it increases capacity.

However, sales from extra charges fell by 2.7pc per seat as fewer passengers opted to check in baggage.

The group added that full-year expectations remained largely unchanged, with early signs pointing to robust revenues.

Analysts at Investec Securities said while the strikes and weather were expected to impact figures across the sector, easyJet's drop in ancillary revenues was a cause for concern.

"This is highly unusual - we can't remember the last time an airline saw unit ancillaries fall," they added in a note.

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