EasyJet hit by fuel costs, summer bookings up

By John Bowker

LONDON (Reuters) - British budget airline easyJet (EZJ.L: Quote, Profile, Research) said rising fuel costs sent first-half losses up threefold to 57.5 million pounds ($112.9 million), but that summer bookings were ahead of last year.

The company, Europe's fourth biggest airline, reiterated an earlier warning that record fuel costs would erode full-year profit if they continued to rise, but that demand from its passengers remained strong.

"We are seeing no sign in reduction in discretionary air travel ... Maybe people are choosing airlines more selectively, but we are seeing no fall off in weekend breaks, no change in bookings," Chief Executive Andy Harrison told reporters on Wednesday.

He said the Luton-based airline was run more efficiently than many of its rivals, which he predicted would fail to survive in the current high cost environment and should not hope to be rescued by easyJet.

"It's hard to understand why we would want to buy weak airlines with old aircraft. We'd be happy to wave goodbye," Harrison said.

Shares in easyJet, which have halved during the year to date, were up 1.7 percent by 0836 GMT at 303 pence, valuing it at 1.3 billion pounds ($2.55 billion).

However, Collins Stewart analyst Andrew Fitchie said the airline was not immune to an economic downturn.

"Consensus is only currently modelling the impact of increased fuel costs; a material economic slowdown is not being discounted and we believe this represents a further risk to the airlines and low cost carriers in particular," he said in a 'sell' note.