Airline EasyJet has warned its annual profits could be as much as 42 per cent lower due to rising fuel costs.

Luton-based EasyJet also said it would cut capacity by 12 per cent at Stansted this winter and vowed to be "relentless" in addressing costs and efficiency.

It is faced with an increase of £185 million in its annual fuel bill, although it hopes to offset more than 50 per cent through revenues growth and cost savings.

That will leave the airline with pre-tax profits in the region of £110 million and £120 million for the year to the end of September, down on the £191 million of last year and 15 per cent lower than some City forecasts.

Capacity growth for the winter has been reduced and is now expected to be in the region of 4 per cent to 6 per cent, including the 12 per cent reduction at Stansted.

EasyJet, which operates 356 routes from 20 bases, will look to utilise "better value opportunities" such as Gatwick, where it is benefiting from the recent acquisition of GB Airways from British Airways.

It will also focus on France and Italy and in particular the expansion of its network at Milan Malpensa and Paris Charles de Gaulle.

EasyJet said it had the flexibility to scale back its operations further if conditions deteriorated.

It added: "In the current environment flexibility is vital and easyJet continues to review its schedule and may make further adjustments both to eliminate unprofitable flying and to seize any opportunities that may arise as capacity exits the market."