EasyJet cuts first-half losses despite higher fuel costs

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EasyJet is expecting to bring its first-half losses down from the level predicted at the beginning of the year, despite a sharp increase in fuel prices.

For the six months to 31 March 2012 the UK budget carrier is forecasting a pre-tax loss of £110-120 million ($175-190 million).

It made a first-half loss of £153 million last year and, in January, had been expecting to turn in similar losses of £140-160 million for this year's interim.

But EasyJet says it has achieved "excellent" operational performance and "rigorous" cost control, and benefited from "exceptionally low levels of disruption" - all of which have contributed to reduced losses despite a £100 million hike in fuel expenditure over the first six months.

Revenue per seat will be higher than predicted, increasing by 10%, while the carrier has kept cost per seat - excluding fuel - to a 1.5% rise. It expects to hold this cost increase to 2% for the full year if there is no significant disruption to operations, notably from the Olympic Games in London.

Costs related to disruption fell by £18 million over the winter period, it says.

"In a difficult environment for all airlines, improvements in revenue management combined with marketing and website initiatives have enabled EasyJet to take advantage as weaker competitors have left the market over the last couple of months," the carrier states.

But EasyJet has not changed its second-half forecast, owing to the impact of higher fuel costs and exchange-rate considerations.