EasyJet warned investors today that it expects its profits to slide by as much as 43 per cent as it struggles to cope with record high prices for aviation fuel.

The low-cost airline has managed to offset over 50 per cent of the expected increase in its fuel bill, but says pre-tax profits are set to fall to between £110 million and £120 million for the year to the end of September, compared with £191 million last year.

The airline, which published a third-quarter interim management statement today, said that its costs had increased by about £185 million, due to aviation fuel reaching $1,280 per metric tonne in the second half of the financial year.

In line with rivals Ryanair and British Airways, easyJet will cut between 4 and 6 per cent of its capacity this winter, in a bid to reduce costs, and said that it has the flexibility to scale back further. Stansted airport will face capacity cuts of 12 per cent this winter.

Third-quarter revenue was up 32 per cent to £641 million as the airline absorbed the acquisition of GB Airways. Ancillary revenue, made up from sales of extras such as hotel rooms, hire cars, drinks and pre-boarding tickets, climbed 32 per cent. Revenue per seat was up 12 per cent in the same period.

Passenger numbers also increased by 16 per cent in the quarter to 11.5 million. The majority of the growth was focused around London Gatwick, France, Italy and Spain.

Non-UK passengers using easyJet increased by 25 per cent in the quarter, as continental Europeans took advantage of the airline's expansion into new territories.

“EasyJet’s Q3 trading update was broadly reassuring for the current year and showed strong growth in volumes and revenues ... We view the move to cut capacity growth this winter as sensible,” Gerald Khoo, analyst at Credit Suisse, said in a note.

The airline, which is in legal dispute with airport operator BAA over charges at Gatwick, said it would continue to be "relentless" in reducing costs and increasing efficiency.

Times Recommends

• Lenders face huge hit on mortgage fraud
• Mortgage rescue fund at the ready
• Zoom airline collapses and halts all flights