Vueling blames fuel prices for net loss of €23 million in 1Q11

Vueling has reported a net loss of €23 million in the first quarter of 2011 (1Q11), noting that while first quarter are often lower due to the seasonal nature of the airline business, the results in 1Q11 have been affected by a 41% rise in the price of fuel.

The airline also noted that the first quarter of 2010 included part of the Easter week holiday period, which in 2011 fell fully in the second quarter of the year.

Vueling had not planned any increase in its fleet and therefore in capacity for the first quarter of the year, but notes that the high fuel prices (41% up on the previous year) made it necessary to reduce selectively the number of flights operated without affecting the service so as to optimise the profitability of the routes.

Vueling achieved a turnover of €127 million in the months from January to March 2011. The number of flights operated fell by 5% as the increase in the price of fuel made it necessary to reduce frequencies so as to optimise the profitability of the operations. The concentration of the Easter period falling in April, when last year it fell in March, affected the unit revenue per available seat kilometre, which fell by 4.6%. As a result of both effects, revenue fell by 10% compared with the same period of last year.

The price of fuel has risen to $968 per ton, 41% higher than the first quarter of 2010, when the price was $686 per ton. The reduction in the number of flights and the company’s hedging policy reduced this increase in fuel costs to 20%. Other costs remained stable due to the cost contention programme which the company has been continuously implementing.

Vueling reports that its financial structure continues to be very sound, with a net cash position of €206 million.

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