EasyJet profits plunge 70% as fuel costs rise amid Iran conflict
EasyJet has reported a sharp fall in quarterly profits after higher fuel costs and later passenger bookings hit the airline during the period affected by the conflict in Iran. The low-cost carrier said pre-tax profit dropped 70% to £85m in the three months from April to June, down from £286m a year earlier. It said the increase in fuel costs and the change in booking patterns were both linked to the conflict and the resulting rise in energy prices.
Sponsored
The airline said fuel costs rose by £105m after hostilities in the Middle East pushed energy prices higher in late February. It also said customers were continuing to book closer to departure, even though bookings had started to improve. EasyJet said its outlook for the rest of the financial year depended on "important remaining bookings" and on fuel prices, which it described as volatile.
The figures come at a sensitive time for the carrier, which has also been the subject of takeover interest from two US investment firms. Its board originally accepted a £5.5bn bid from Castlelake before recommending a higher offer from Apollo Global Management worth £5.7bn, or more than £7 a share. The company said a possible European Union review of airline ownership rules had created uncertainty around the deal.
The profit warning underlines how quickly geopolitical shocks can feed into aviation costs. Airlines are heavily exposed to fuel prices, and even where some of that exposure is hedged, sudden moves in energy markets can still affect earnings. The report also shows how consumer behaviour can shift during periods of uncertainty, with passengers delaying bookings until closer to travel dates.
Sponsored
A separate report from Ryanair added to the picture of pressure across the low-cost airline sector. Ryanair said its profit fell 34% to €538m in the three months to the end of June, after jet fuel prices doubled amid the same conflict. The airline said the increase affected the 20% of fuel for its fleet that was not hedged against price changes.
What remains unclear is how long fuel prices will stay elevated and whether late-booking demand will continue into the rest of the summer season. EasyJet said consumer confidence was improving during the peak holiday period, but it also warned that its performance would depend on remaining bookings and market conditions. Investors will also be watching whether ownership concerns and wider airline regulation affect the planned takeover process.
Sponsored
