Budget airline EasyJet said today its annual profits rose 9 per cent as strong demand, rising fares and cost cuts offset higher fuel prices.
EasyJet, Europe's second-largest low-cost carrier, said trading conditions remained tough but that further cost cuts and more revenue from non-ticket products would lead to a similar increase in earnings in the current fiscal year.
EasyJet said pretax profit for the year to the end of September 2005 was £68 million ($117 million), up from £62 million a year earlier. The result was higher than market forecasts and beat the company's own earlier forecast.
EasyJet's fuel costs per seat jumped 47 per cent in the period after oil prices rose to records, but this was partly offset by growing passenger numbers, reduced non-fuel costs and a 17 per cent increase in ancillary revenue such as food and car hire sales.
Fuel remains the airline's biggest challenge. EasyJet has 50 per cent of its fuel hedged at $590 to $660 per tonne in the first half of the current year and 25 per cent in the second half.
Larger rival Ryanair has also staved off record fuel bills with cost cuts, more passengers and higher ticket prices but also warned earlier this month it expected yields - or average fares - to fall in the winter.
FL Group, the owner of airline Icelandair, increased its stake in EasyJet last month to 16.2 per cent, raising speculation it may be planning a takeover.