But the surge in bookings came at the expense of profits as it cuts fares to sustain demand.

Easyjet reported a 32% rise in the number of passengers it carried last month, at a time when rival airlines were suffering from a marked slowdown.

Two of Europe's largest airlines, KLM and British Airways, reported falls in March traffic as the war in Iraq and the spread of the deadly Sars virus posed a new threat to travel.

Reaping rewards

Easyjet said it had aggressively cut costs to help ease the impact of its lower fares.

Easyjet can generate a strong consumer response despite a difficult market environment Easyjet

But it said losses for the first six months of the year would be made worse by the timing of Easter and fall of more than 10% in its average fare.

It added that the benefits of its cost savings, including the closure of its call centre at London's Stansted airport, would not be felt until next year.

"Although current forward bookings are robust, the overall profile of the last quarter's revenue, and hence the full year's outcome, will not become apparent for at least several months," the group said.

Budget hit

Easyjet added that it had tested consumer confidence for travel with a one-week sale at the end of March.

"The sale confirmed Easyjet can generate a strong consumer response despite a difficult market environment," said the airline.

The knock-down fares from budget airlines such as Easyjet and Ryanair have proved another thorn in the side of full-service operators.

Easyjet said its load factor - the number of passengers carried as a proportion of available seats - had risen to 85.8% in March from 85% the month before.