EasyJet looks to summer as losses soar to £153m

The company reported yesterday that pre-tax losses in the six months to 31 March soared to 153 million, from 79m the year before.

It said higher fuel costs accounted for 43m of the deficit, while increased passenger taxation cost it a further 21m. The carrier was also hit by December's bad weather and the difficult consumer environment. But EasyJet, which like many of its peers usually reports a loss during the winter season, grew passenger numbers and revenue and said the loss was "in line with expectations".

Chief executive Carolyn McCall said: "The past six months have been tough, with sharply rising fuel costs combined with cautious behaviour by consumers and an adverse impact from taxes on passengers."

But she said the company had rebuilt its management team and made "strong progress" in implementing a strategy to target business travellers.

EasyJet plans to roll out a business traveller proposition in the second half of the year, and said it had put the "building blocks" in place, increasing flights to commercial hubs at business-friendly times.

"Our operation is now robust and we are well-placed to successfully deliver our summer flying programme," McCall said.

"Our cash-generation remains strong and these results show that the steps we are taking are already having a positive effect."

The airline said passenger numbers grew by 11.6 per cent to 23.9 million, with 59 per cent of those now originating outside the UK, compared to 54 per cent a year before.

It has been building capacity in Britain, and said Edinburgh was one of its growth areas, with capacity in the capital up 15 per cent.

The company used its half-year results to hit out at proposed changes to UK air passenger duty (APD), saying it would "inevitably" reduce the number of short-haul flights, affecting airline and airport jobs and impacting the tourist economy.

It said: "The proposal will increase the extent to which short-haul travel is overtaxed relative to its CO2 emissions, and will further bias the tax in favour of long-haul premium travel."

Analyst Andrew Lobbenberg at Royal Bank of Scotland said the results were "decent news in the near term", with EasyJet now on track to make full-year pre-tax profits of around 165m.

But he warned that the 2012 financial year looked more challenging, as the airline's hedge protection on fuel prices rolls off.

He said: "To avoid a radical reduction in profitability in 2012, EasyJet will need a rapid drop in the oil price, or a notably sharp increase in unit revenues."