No-frills airline Easyjet ( [url=https://www.proactiveinvestors.co.uk/chart.asp?EZJ new=true]LSE: EZJ[/url] ) slumped 12% this morning after warning that persistently high jet fuel prices could impact profits in the second half of its financial year.
The FTSE 250 constituent said that revenues continued to perform well with a 1.8% increase in its load factor in February 2008 to 84.8% compared to one year earlier. Looking ahead to the peak summer period, the percentage of seats sold are 'slightly ahead' of last year.
However, Easyjet warned that forward jet fuel prices for summer 2008 had risen from US$840/tonne in February to over US$1000/tonne now. Easyjet has 40% of its fuel consumption hedged at $750/tonne, but admitted that if jet fuel prices remained at the $1,000 per tonne region, second half profits would be hit.
Andy Harrison, Chief Executive of Easyjet commented:
"First half results will be in line with our expectations, however it is pretty obvious that if the recent significant rise in the fuel price is maintained then our second half profits will be lower than we had previously expected.
"Of course the price of fuel will hit all airlines and we remain convinced that the combination of our new fuel efficient aircraft fleet, together with the proven strength of the easyJet business model will mean that we shall emerge as winners in a high oil price environment."