The soaring oil price will drive “weaker” rivals out of business, easyJet claimed this morning, despite seeing its own losses treble over the last six months.
With oil hitting a new record of $122 a barrel yesterday, and Goldman Sachs forecasting it could hit $200 a barrel this year, easyJet predicted carnage in the airline industry.
“If the oil price stays high we will see a number of weaker airlines disappear over the next 12 to 24 months,” chief executive Andrew Harrison predicted.
The budget airline reported a 15% jump in passenger numbers for the six months to March 31, with revenue growing 24% to £892.2m. But its pre-tax losses spiralled to £57.5m, triple the loss it made a year ago. The loss, which was expected following the firm’s profit warning in March, was primarily caused by dearer jet fuel, which costs 80% more than a year ago.
Every $10 increase in the cost of a barrel of oil cuts around £2.5m off easyJet’s profits. Harrison claims the company’s relatively young fleet – its 157 planes are three years old on average – give it an edge.
“A quarter of Europe’s short-haul aircraft are at least 15 years old, so they burn 20% more fuel than our planes,” he said.
Rival airline Aer Lingus yesterday blamed fuel costs for an increase in its baggage charges. From tomorrow, it will cost £12 to check in a bag at the airport.
Read moreSoaring oil price could drive ‘weaker airlines’ out of business