EasyJet losses double to £153m

By Rob Davies for the Daily Mail
Updated: 02:56 EDT, 11 May 2011

EasyJet brushed aside the dual impact of high fuel prices and rising aviation taxes, as its shares headed for the skies despite a near doubling of pretax losses in the first half.

Caution: EasyJet is taking a 'conservative' approach to fleet size

The no-frills carrier dived £153m into the red compared to £79m last year, as chief executive Carolyn McCall spent her first few months in the cockpit trying to shake off the drag from surging oil prices.

Higher fuel costs shaved £43m off earnings, while McCall blamed aviation taxes for a further £21m impact.

But shares in the carrier climbed 10.2p to level out at 357p as the former boss of Guardian Media Group charted a careful course through the economic headwinds.

She said easyJet would be taking a 'conservative and cautious approach to fleet size', rather than building on its flotilla of 204 aircraft.

Predecessor Andy Harrison drew fierce criticism from airline founder and major shareholder Sir Stelios Haji-Ioannou for buying aircraft without rewarding shareholders with a dividend.

The Cypriot businessman welcomed McCall's promise of caution, but put early pressure on her to give investors a £600m special dividend after the firm's financial year end.

'Why not do that, like Ryanair,' he said.

'The summer looks good and that could pave the way for it after the annual meeting in February,' he added.

The tycoon suggested a one-off payout of around £1 per share, a level that would net him and his family a £150m windfall for their combined 38% stake.

Sir Stelios also praised McCall for getting a grip on crew shortages which caused punctuality issues that at one time saw its planes take off on time less often than those of Air Zimbabwe.

Despite fears about the health of eurozone economies, the airline has added 11% more seats in anticipation of rising demand from Europe, with non-UK customers now contributing 59% of revenues.

The extra seats contributed to a 2.1% decline in revenue per seat, but McCall said the airline was keeping capacity flexible and might even add routes abandoned by struggling rivals.

She also pointed to easyJet's relatively young and energy efficient fleet of planes as reason to be optimistic that the airline can resist high fuel costs better than rivals.

McCall has instigated a plan of trying to lure business travellers and insisted the stratagem was already working. She said easyJet's share of the business travel market in Europe had risen from 5.3% to 6%.