EasyJet said higher fuel prices and uncertain economic conditions would make 2011 a tough year, after the British low-cost airline took a 31 million pound hit from the big freeze and strikes late last year.
"The economic outlook in Europe remains uncertain and the higher market price of fuel will inevitably put pressure on margins in the short-term," Chief Executive Carolyn McCall said on Thursday.
Shares in easyJet, which had risen a fifth in value in the past year, were down 10.5 percent at 407 pence by 0830 GMT, valuing the business at around 1.7 billion pounds ($2.72 billion).
"Guidance for the second quarter of 2011 is somewhat cautious, indicating total revenue per seat down a couple of percentage points," said RBS analyst Andrew Lobbenberg.
"The significant recent run-up in fuel prices means that the company now anticipates fuel costs being 1.17 pounds a seat higher in the first-half of 2011 than in the first half of 2010, implying guidance of a pretax loss of 140-160 million pounds in the first half."
The current market price of jet fuel is $897 a metric tonne compared with $681 a metric tonne a year ago, the airline said.
EasyJet said revenue in its first quarter — the final three months of 2010 — rose 7.5 percent to 654 million pounds as passenger numbers rose 8.8 percent to 11.9 million on the first-quarter last year.
But ancillary revenues — such as the cost of checking in bags — fell 2.7 percent year-on-year and the company flagged Continental European revenue performance being softer than Britain.
BIG FREEZE HIT
EasyJet, which was affected by air traffic controllers (ATC) strikes in France during the quarter, was also hit as runways around Europe closed for several days in the run up to Christmas when northern Europe's big freeze hit the travel plans of thousands.
"In the quarter, disruption from ATC strike action and severe weather cost 6 million pounds and 18 million pounds respectively and in addition led to lost contribution of 7 million pounds," said McCall.
EasyJet took a smaller hit from the weather than rival carriers because it is based mainly at London's Gatwick and Luton airports which were less seriously affected than Heathrow, where one of its two runways closed for several days.
British Airways has said it would take a 50 million pound hit from the disruption.
"The severe snow disruption of the past two years highlights the need for airports to invest in the appropriate infrastructure to keep passengers moving," said McCall.
The airline was hit by 98 million pounds of costs in 2010 related to various disruptions, including the volcanic ash cloud which swept across Europe.
The low-cost carrier, which earlier this month confirmed an order for 15 Airbus A320 aircraft, said it made market share gains at London's Gatwick, Paris Orly and Charles de Gaulle and Geneva airports during the quarter.
