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[Article] EasyJet plunges on fuel warning

08-06-2004 8:52pm

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Victor

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http://www.rte.ie/business/2004/0608/easyjet.html

EasyJet plunges on fuel warning

June 08, 2004 11:09
Shares in British budget airline EasyJet plunged by as much as 25% yesterday after the carrier warned that fierce competition and rising fuel prices would hit profits.

The profit alert stoked concerns that the success story of Europe's low-cost airlines might be unravelling as a price war that has also drawn in bigger, established carriers intensifies.

'While demand for low-cost travel remains strong, the forward pricing environment is exceptionally competitive,' EasyJet said in a trading update. 'Fuel prices continue to be a concern,' it added.

If fuel prices remained at recent levels, the increased cost would knock about £4m off the company's bottom line, it estimated.

The group said it expected pre-tax profits in the current financial year to at least exceed the figure of £52m posted last year, though this assumed a dip in oil prices, a reasonably strong sterling exchange rate against the dollar and a stable geopolitical environment.

This was well below market expectations, and the price of shares in EasyJet plunged by as much as 24% in morning trading. The shares closed down 18.6% at 163.5p. They fell another 2p in London this morning.

The sharp share price fall came less than one month after EasyJet lost a quarter of its stock market value in just one day after warning of cut-throat competition and reporting an interim loss.

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