September 22, 2011 / 1:20 PM / in 6 years

Easyjet warns ETS to erode 2012 profits, India rebels

<p>An EasyJet aircraft takes off from Pablo Ruiz Picasso Airport in Malaga, southern Spain, August 29, 2009. REUTERS/Jon Nazca</p>

LONDON, Sept 22 - Low-cost European airline Easyjet (EZJ.L) on Thursday warned investors that its full-year 2012 profits will be hit by carbon permit costs as the aviation sector is forced to join the EU’s emissions trading scheme from January.

The operator raised its pre-tax profit view for financial 2011, which ends on September 30, to 240-250 million pounds from 200-230 million pounds, but said higher fuel prices, unfavourable exchange rates, increasing airport fees and the cost of EU carbon permits will affect the firm’s 2012 bottom line.

Thomson Reuters Point Carbon estimate the total 2012 cost for all airlines to comply with the ETS at around 1.1 billion euros based on a price of 12 euros per CO2 permit.

Easyjet’s UK fleet faces a shortfall of nearly 1 million permits, the analysts predicted, but the costs are largely expected to be passed on to customers.

Easyjet did not report any carbon hedging figures, but said it has hedged 73 percent of its fuel requirements for the next financial year, locking in a rate of $956/metric tonne, and 27 percent of its 2013 needs at $1006/MT.


The airline sector is scheduled to join the EU ETS from January 1, when around 4,000 operators will face emission limits for any flights into or out of the 27-nation bloc.

But the plan has come under fire from foreign carriers backed by governments including the U.S., Canada, China, Russia and India.

India will next week host a meeting in Delhi of more than a dozen nations opposed to the scheme, and will issue a joint declaration against it, Indian news website reported on Thursday.

And in early October the European Court of Justice will give its initial opinion on a case brought by U.S. airlines that alleges the EU plan is illegal.

Reporting by Michael Szabo

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