EasyJet reports losses of €63.3m

RYANAIR rival EasyJet made after-tax losses of €63.3 million in the last six months as Europe’s biggest low-cost airline struggled to match its Irish counterpart in the earnings stakes.

Ryanair is expected to post after-tax profits close to €84 million over the same period, according to Davy Stockbrokers, as its pushes up passenger numbers within striking distance of 24 million this year.

The EasyJet swing to losses came as sales rose 92% to £373 million following the acquisition of Go Fly Ltd., the company said in a Regulatory News Service statement.

Luton, England-based EasyJet usually reports a loss in the first half and generates most profit in the summer holiday period. Ryanair posts profits on all periods.

EasyJet and rival full-service carriers such as British Airways Plc have been reducing prices to counter a slump in travel during the war in Iraq and amid a decline in global economies.

“This month and next month are going to perform well,” said Chief Executive Ray Webster. “Beyond that, it’s quite difficult to tell.”

Average yields, or revenue per passenger, will benefit as EasyJet slows its growth rate in the second half, he said.

EasyJet doesn’t hedge fuel, or set fuel prices with suppliers in advance.

This reduced earnings in the first half, when the price of Brent crude oil rose to more than $34 a barrel from as low as $17.68 a barrel in the year-ago period.

Brent crude cost about $23.50 a barrel today.

“We continue to believe in EasyJet’s business model and that these disappointing results are mainly due to excessive capacity growth, immaturity of the Go network and an unhedged fuel position,” said Andrew Light, an analyst at Citigroup’s Smith Barney unit who rates the stock ‘outperform’.

Unlike Ryanair, EasyJet competes with the traditional airlines at hub airports including BAA Plc’s London Gatwick and Aeroports de Paris’s Charles de Gaulle and Orly serving the French capital.

The no-frills airline has also been trying to attract corporate travellers.

“The business market continues to grow for us although the overall market is diminishing,” said Webster. “We are appealing to a broader base of customers now.”

The airline won 7,300 takeoff and landing slots at Orly in March after they became available following the collapse of Air Lib, formerly France’s number two airline.

It is expected KLM Royal Dutch Airlines NV will report its loss trebled in the latest quarter as passengers stayed away because of the spread of a deadly virus in Asia, the carrier’s second-biggest market.

KLM are expected to report that the net loss in the three months ended March 31 has widened to €314 million ($356 million) from €108 million in last year’s fourth quarter.

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