Fuel costs keep easyJet in the red

LOW-COST airline easyJet has said that its first-half losses have widened because of higher fuel costs. But the decline in the amount it earns from each customer - because of fierce price competition from the likes of Ryanair and bmi - appears to have halted.

The no-frills carrier, which is expanding aggressively in Europe, said average air fares were flat in the period despite stiff competition, but high fuel costs meant annual profits would be lower than last year.

EasyJet said it recorded a pre-tax loss before goodwill of £22m for the six months to the end of March, compared with a loss of £19m previously. The result was in line with market expectations.

But chief executive Ray Webster said it saw no change in trading conditions despite concerns about a spending downturn in Britain. He added that the carrier was 'mindful' of fears of a drop in consumer confidence.

Total revenue per passenger in the period rose 1%, in line with guidance given in March. The timing of the busy Easter holiday break buoyed the results. High oil prices cost the airline an additional £18m in fuel. Fuel makes up 18% of easyJet's cost base.

While passenger numbers continue to rise, budget airlines face concerns about falling fare yields - the average revenue per passenger carried - amid stiff competition.

Webster said two weeks ago he planned to step down earlier than scheduled, while the airline's founder and major shareholder Stelios Haji-Ioannou will rejoin the board.