EasyJet has warned of a “tough winter ahead” as it unveiled a 65 percent slump in annual pre-tax profits.
The Luton-based carrier citied a fall in demand due to rising unemployment coupled with poorly-timed fuel hedging for its profits falling to £43.7m in the 12 months to September 30 from £123.1m last year.
EasyJet, which buys about two-thirds of its fuel through hedging, ended up paying US$951 per metric tonne of jet fuel when the market price was just US$595. Fuel costs subsequently soared by £98.5 million.
However resilient sales kept the airline in the red. Revenues rose 12.9 percent to £2.6 billion, saying performance was “extremely resilient” during tough trading.
It flew 45.2 million passengers during the year, bucking the trend of falling passenger numbers across the global industry by capitalising on weak competitors in markets such as Italy and Spain.
The airline also confirmed that it will expand by 7.5% annually until 2015, following a much publicised boardroom spat sparked by its founder Stelios Haji-Ioannou concerning over expansion fears.
It said in a statement: “EasyJet continued its strategy of carefully targeting growth in markets from which weaker competitors are retreating in this period of recession. Thus easyJet is building strong, defendable market positions that will ensure it is well positioned for profitable growth once the European economy improves.”
EasyJet is focusing on higher performing routes, closing 28 while launching 70. It aims to increase its share of the European short-haul market from 7% to 10% over the next five years.
Like its arch rival Ryanair, EasyJet has stayed in profit this year by following the low-cost model – keeping planes in the air for as long as possible, packing jets with passengers who pay comparatively low prices, bolstering profits by paying for add-ons such as baggage check-in, food and hotel hire, as well as flying to lesser-known airports.