British low-cost airline easyJet reported a 64.5 percent fall in full-year profit, hit by rising fuel costs and lower interest income, but said it expected profit to be substantially higher in 2010.
The carrier posted Tuesday an underlying pretax profit of GBP43.7 million pounds (USD$73.6 million) on revenue up 12.9 percent at GBP2.66 billion for the year end-September.
EasyJet said the reduction in profit was driven by a fuel cost increase of GBP86.1 million and interest income, which was GBP30.5 million lower.
"The issue with our profits is to do with the way in which our fuel hedging works; we average fuel prices which means that there is a delay between the drop in market prices and the benefit to easyJet so we'll see a GBP100 million improvement to our profits in 2010," CEO Andy Harrison told BBC Radio Tuesday.
The airline said passenger numbers rose 3.4 percent to 45.2 million and that its load factor improved by 1.4 percentage points to 85.5 percent.
It added that forward bookings were "broadly in line" with last year.
"The general assumption is that last year was the bottom of the cycle, which was certainly the case in fuel price terms but may turn out not to have been the case in demand terms," said Astaire analyst Douglas McNeill.
The carrier said it sees a tough winter ahead but that at current fuel prices and exchange rates, it expects to make a substantial profit improvement in 2010.
The global recession has battered the airline industry as consumers cut back on trips abroad and lucrative business class travelers fly less.
Full service airlines such as British Airways, which last week agreed to merge with Spain's Iberia, has seen its profits dented by growing competition from low-cost carriers and faces potential union strikes this holiday season.
Earlier this month Irish rival Ryanair posted an 80 percent rise in first-half profit but said it would be willing to curb growth in its quest to cut costs further.
EasyJet said it had removed 19 expensive aircraft from the fleet to cut costs and expected to deliver cost savings of around GBP175 million over the next 11 years.
