Just to quantify how much difference fuel costs make to an airline’s bottom line, Easyjet said today that the price of a metric tonne of jet fuel has risen from $681 to $897 in the last year. When you’re spending a third of your costs on fuel, that’s going to sting. In fact, it works out at an additional cost of £1.17 per seat, relative to the first half of last year – which the company will need to either absorb into its own costs, or pass on to its customers.
The snow clearly didn’t help, either. EasyJet said it had endured 30 consecutive days during late November and early December when at least one of the airports it operates from were closed. That cost it £18m, while an air traffic controllers’ strike in Europe added another £6m to the bill. (Management is presumably currently thanking its lucky stars that at least it doesn’t run flights from Heathrow, the airport most heavily beset by snow disruption).
There was some good news: passenger numbers were actually up on last year, rising 8.8% to 11.9m - despite all the cancellations, and despite the fact that fewer than two-thirds of its planes left on time during the first quarter.
This pushed revenues up 7.5%, to £654m. And it’s probably true that Easyjet’s in a stronger position than most; it has, after all, just re-started its dividend and put in an order for 33 brand new Airbus A320s. But investors have been spooked this morning by Easyjet’s admission that demand had slowed in continental Europe, and that revenue from additional charges had come in lower than expected. That’s not the kind of problem that melts away with the snow…