LONDON (AFP) -- British budget airline easyJet said on Tuesday that rising jet fuel costs were a factor in a 14-percent drop in annual net profit to 71.2 million pounds (80 million euros, 120 million dollars).

But the low-cost carrier asserted that it was one of the few European airlines to turn a profit amid a deep recession which has slashed demand for air travel.
Sales climbed by 13 percent to 2.667 billion pounds thanks to a reduction in competitors' capacity, the strength of easyJet's own network and strong ancillary revenue such as in-flight food sales.
Pre-tax profit dived 65 percent to 43.7 million pounds in the 12 months to September 30, compared with the previous 2007/2008 financial year, easyJet said in a results statement.
Fuel costs jumped by 86.1 million pounds in the reporting period, while the group's interest income fell by 30.5 million pounds.
Passenger numbers rose 3.4 percent to 45.2 million people during the 2009/2010 fiscal year. Half of the group's passengers now originate from outside Britain.
Chief Executive Andy Harrison forecast a “tough winter ahead” but said that profits would markedly improve in the current fiscal year which started on October 1.
“This is an extremely resilient performance making easyJet the best performing European airline based on our robust yields,” Harrison said in comments accompanying the earnings release.
“We are one of the very few European airlines to make a profit during the last 12 recessionary months.
“This is a tribute to the strength of our business model and the quality of our people and our network. We offer the best prices to the most convenient airports.”
The group also lifted its cost-savings target, as a result of the renegotiation of technical maintenance contracts and airport costs.
EasyJet now expected to deliver 190 million pounds of cost savings by the end of the 2012 financial year. That compared with the previous target of 125 million pounds by the end of 2011.
“We see a tough winter ahead. We are focusing our efforts on further cost savings and efficiency improvements together with optimizing route profitability and aircraft allocation,” Harrison added.
“We shall also benefit as our fuel hedges adjust to market prices. Putting all this together, at current fuel prices and exchange rates, we expect easyJet to make substantial profit improvement in 2010.”
Airlines seek to protect themselves against volatile oil prices by hedging, or taking a defensive position on futures markets. Jet fuel, or kerosene, is refined from crude oil.