EasyJet, the low-cost airline, revealed the full extent of soaring fuel costs today when it reported that its first half pre-tax losses had trebled to £57 million, compared with £17.1 million in the previous year.

However, the Luton-based airline, which traditionally makes its money in the second half of the year, claimed that its underlying business was strong and that it would survive the rout in the airline sector which has already claimed more than half a dozen carriers.

"The cost of fuel is going to grab the headlines today but aside from that we have achieved a good set of results. We are not even seeing a small dint in the sales of tickets — whether for short breaks or for summer holidays," Andy Harrison, the chief executive of easyJet, said.

The airline has already taken 40 per cent of its second half bookings, slightly ahead of last year.

Mr Harrison said: "What is certain is that if these fuel increases are maintained many of our weaker competitors will disappear or downsize and easyJet will emerge even stronger reflecting the combination of our business model, our cost advantage, our new fuel efficient fleet and the strength of our network."

Mr Harrison refused to say which airlines were most vulnerable but pointed to Italy, where the state-owned loss-making airline Alitalia is in protracted sale negotiations, and Spain.

He said that there were 70 small airlines in Europe that accounted for 50 per cent of short-haul traffic. "Most of these airlines are flying planes that are more than 15 years old. They were uneconomic when oil was $70 a barrel, they are certainly uneconomic at $120 a barrel," he said.

"Fuel prices are 80 per cent higher than a year ago. If that is sustained then some of these airlines will disappear that is inevitable and that will mean that fares will inevitably rise through competitive factors," Mr Harrison predicted.

Every $1 a barrel increase in the price of oil represents a £2.5 million hit to easyJet's profits.

Shares in easyJet climbed just over 4 per cent to 310p, as the market absorbed the results which looked stronger than traffic statistics released by the transatlantic carrier British Airways yesterday.

The budget airline, which bought British Airways franchisee GB Airways at the end of last year, said that fuel costs were £67 million higher in the six months to 31 March 2008, as the jet fuel price climbed 80 per cent.

The first-half losses also included £9.1 million of one-off costs associated with the acquisition of GB Airways, which is expected to deliver £20 million of synergies by the end of the year.

Despite the soaring cost of fuel easyJet has managed to hold the increase in its fuel costs down to 24 per cent per seat, but it was still forced to issue a profits warning in March.

Passenger numbers at the airline have risen by 15 per cent to 18.9 million in the first six months, after the company integrated the GB Airways routes and opened new bases in Italy and France. Revenues have climbed by 24 per cent to £892.2 million, helped in part by the successful introduction of charges for checked-in bags and charges for priority boarding.

Load factors of 81 per cent are in line with the previous year.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: "These are clearly turbulent times for easyJet, with the rising cost of oil severely impacting on profits. That said, underlying trading remains reassuring, with the volume of passengers traveling holding up and forward bookings marginally improving over this time last year."

Reacting to the results, ABN Amro said that the underlying business, excluding fuel, was trading well. Analysts at ABN said that easyJet has a strong business but is heading into tough trading. It has retained its hold recommendation on the shares.

Separately, easyJet said that it carried 3.55 million passengers in April, 13.4 per cent up year-on-year. The load factor, meanwhile, declined by 3 percentage points to 80.1 percent, which reflected the early timing of the Easter holiday.

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