Easyjet's profits hit by Iraq
Lower profits than predicted at low cost airline Easyjet
LONDON, England -- The British budget airline Easyjet has blamed the Iraq war and fierce competition for a fall in annual pre-tax profits.
The full-year pre-tax figure came in at £52 million ($88 million), a 28 percent fall in comparison to the same period last year.
The share price fell 0.6 percent to 275-1/4 pence in early morning trading -- one of the strugglers in a slightly firmer London market -- after analysts had been expecting a profit of £55 million ($93 million).
Easyjet's stock has risen more than 25 percent since the start of October.
The airline said the results for the first half of its financial year were hit by the war in Iraq and one-off costs such as the integration of rival budget carrier Go, which it bought in May 2002.
But Go helped boost the number of passengers Easyjet carried by 69 percent to £932 million for the year ending September.
Easyjet has also had to cut fares in the face of strong competition from other budget airlines and the big international carriers such as British Airways.
Prices dropped by an average 6.7 percent, but a bumper summer season helped boost yields.
The no-frills airline is predicting a better performance in the future thanks to a 20 percent increase in capacity and falling costs. Chief Executive Ray Webster said: "Although there remains a degree of uncertainty, the economic environment is improving and is substantially better than this time last year."
The airliner is planning to expand its operations in Germany next year, saying it will begin flights out of Berlin's Schonefeld Airport in May.
Webster said there were no plans to drop routes to deal with seasonal changes, when sales fall during the winter and autumn months.
As well as terrorism threats and a weak economic environment, the budget airline sector has had a bumpy ride recently.
Easyjet's main rival Ryanair is under investigation for allegedly receiving state aid to fly into Belgium. The European Commission is set to rule later this month but Ryanair denies the allegations.