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Business

EasyJet's full-year profits down 64.5%, but forecasts improvement in 2010

Text by News Wires

Latest update : 2009-11-17

British low-cost company EasyJet has posted a 49.2 million euro pretax profit for 2009 compared to last year's 137.65 million profit. The group explains it is due to high fuel costs and underlines the number of passengers up 3.4 percent.

REUTERS - British low-cost airline easyJet reported a 64.5 percent fall in full-year profit, hit by rising fuel costs and lower interest income, but said it expected profit to be substantially higher in 2010.

The carrier on Tuesday posted an underlying pretax profit of 43.7 million pounds ($73.6 million) on revenue up 12.9 percent at 2.66 billion pounds for the year end-September.

EasyJet said the reduction in profit was driven by a fuel cost increase of 86.1 million pounds and interest income, which was 30.5 million pounds lower.

"The issue with our profits is to do with the way in which our fuel hedging works; we average fuel prices which means that there is a delay between the drop in market prices and the benefit to easyjet so we'll see a 100 million pound improvement to our profits in 2010," Chief Executive Andy Harrison told BBC Radio on Tuesday.

Shares in easyJet, which have risen 16 percent in the last three months, were 0.4 percent higher at 392.4 pence in early trade, valuing the airline at around 1.6 billion pounds.

The airline said passenger numbers rose 3.4 percent to 45.2 million and that its load factor improved by 1.4 percentage points to 85.5 percent.

It added that forward bookings were "broadly in line" with last year.

"The general assumption is that last year was the bottom of the cycle, which was certainly the case in fuel price terms but may turn out not to have been the case in demand terms," said Astaire analyst Douglas McNeill.

The carrier said it sees a tough winter ahead but that at current fuel prices and exchange rates, it expects to make a substantial profit improvement in 2010.

The global recession has battered the airline industry as consumers cut back on trips abroad and lucrative business class travellers fly less.

Full service airlines such as BA, which last week agreed to merge with Spain's Iberia, has seen its profits dented by growing competition from low-cost carriers and faces potential labour strikes this Christmas.

Earlier this month Irish rival Ryanair posted an 80 percent rise in first-half profit but said it would be willing to curb growth in its quest to cut costs further.

The International Air Transport Association recently said it expected airlines to lose $11 billion this year.

easyJet said it had removed 19 expensive aircraft from the fleet to cut costs and expected to deliver cost savings of around 175 million pounds over the next 11-years.

Date created : 2009-11-17

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