The biggest danger facing the airline industry is the global oil price, easyJet warned today, after it released strong passenger numbers.
The no-frills carrier said the passenger load factor, or proportion of seats sold per flight, was 84.6% in February compared with 82.8% for the same month last year. Passenger numbers, driven by the airline's acquisition of more jets, rose by nearly a quarter to 3.2 million.
Its upbeat numbers came a day after British Airways issued a profit warning on the back of spiralling fuel costs. However, it said passenger numbers on its most lucrative routes, particularly transatlantic business class, were still strong.
An easyJet spokesman said the airline was suffering no knock-on effects from recent indicators of a weak UK economy, such as falling house prices and a slowdown in household income growth.
"Currently we are not seeing any impact. Demand is holding up. The issue for us is the price of oil," he said. Like the rest of the airline industry, easyJet has minimal protection next year against a global oil price of more than $100 (£49.63) a barrel. Hedging, or betting on the future price of oil, is no longer an option because airlines are unwilling to peg their fuel costs at $100 a barrel - one analyst said today that BA's profits will be wiped out next year if oil moves to $120. EasyJet has hedged 40% of its fuel needs until September at $75 a barrel, but thereafter it will have to buy most of its fuel at market prices.
Andrew Lobbenberg, analyst at ABN Amro who has the shares on a "buy" rating, said easyJet's figures were good news given the prevailing economic conditions, but the market remained uncertain about its performance in the summer - a key trading period for easyJet and Ryanair.
"The performance is good. People are still travelling and forward bookings also look OK. We think easyJet's trading will remain solid, but the debate is certainly whether this demand strength will continue into the summer."
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