Fuel costs pour oil on EasyJet problems

EasyJet plummeted more than 13 per cent following a grim update in which it revealed the impact of an oil price bubble and also laid bare its hit from December's snow and strike action by European air traffic controllers.

The low-cost airline said last month's snow chaos cost it 18m, while the strikes in Spain and France added another 6m, in addition to 7m in lost profits caused by the impact on passenger demand.

It hopes to claw back a significant part of the weather and strike impact through cost savings and more sales as it increases capacity.

But easyJet cautioned a 32 per cent surge in fuel costs was expected to lead to pre-tax losses in its first half – traditionally a loss-making period – of between 140m to 160m compared with 78.7m a year earlier.

Airline experts also raised the alarm over signs the industry's lucrative revenues stream from extra charges may be slowing.

EasyJet reported a 2.7 per cent fall in extra charges per seat in the quarter to December 31 as fewer passengers paid for checked-in baggage.

Analysts at Investec Securities said it was cause for concern: "This is highly unusual – we can't remember the last time an airline saw unit ancillaries fall."

The pre-Christmas quarter was a tough one for easyJet as the extreme weather and strikes saw more than 3,500 easyJet flights cancelled.