Easyjet shares sink as it warns of widening losses

Shares in Easyjet have slumped more than 16% after the budget airline warned that higher fuel costs could double half-year losses.

It estimated that the loss from October last year to March this year would be between £140m and £160m, compared with a loss of £78.7m a year earlier.

The airline also said severe weather in December cost it £18m, while air traffic control strike action in the final three months of 2010 cost £6m.

The revenue lost from both was £7m.

Despite these factors, Easyjet said revenue in the final quarter of 2010 grew 7.5% to £654m, while passenger numbers were up 8.8% to 11.9 million.

However, it said rising fuel costs would lead to bigger losses in the first-half of the airline's financial year.

"The current market price of jet fuel is $897 a metric tonne compared to $681 a metric tonne a year ago and therefore at current jet prices and dollar rates fuel costs are anticipated to be around £1.17 a seat higher than in the first half of last year," the carrier said.

Like most northern-hemisphere airlines, Easyjet makes most of its profit during the summer holiday season.

Easyjet also said that it gained market share across Europe.

"Against a difficult economic backdrop aggravated by severe weather and air traffic control strike action, Easyjet was able to deliver a solid trading performance and grow total revenue whilst improving its position in mainland Europe," said the airline's chief executive, Carolyn McCall.

She also called on the government "to provide sensible legislation for airport regulation and air traffic control".

The severe weather highlighted the need for airports to invest in infrastructure to keep passengers moving, she added.