EasyJet earnings collapse 70% as jet fuel prices spike amid Iran conflict

EasyJet, the low‑cost carrier, reported a 70 % drop in profits, citing soaring fuel costs and a shift toward last‑minute bookings triggered by the Iran conflict, a matter of weeks after completing a £5.7 bn takeover.

The airline posted a pre‑tax profit of £85 million for the three months to June, down from £286 million a year earlier. Fuel expenses rose by £105 million after hostilities in the Middle East flared in late February, sending energy prices soaring.

The news coincides with a bidding war between two US private‑equity groups for EasyJet. The board initially favoured Castlelake’s £5.5 bn proposal but subsequently endorsed Apollo Global Management’s £5.7 bn offer, equivalent to over £7 per share. Nevertheless, a prospective EU ownership review threatens to jeopardise the transaction.

EasyJet noted that overall booking activity was improving, yet passengers continued to favour last‑minute reservations.

The airline warned that its remaining financial‑year performance hinges on “critical bookings and the ongoing volatility of fuel prices”.

Rival low‑cost carrier Ryanair reported a 34 % profit decline to €538 million (£457 million) for the quarter ending June, also attributing the fall to a near‑doubling of jet‑fuel prices linked to the Iran conflict. The hike impacted the roughly 20 % of the fleet’s fuel requirements that were not hedged against price swings.

Amid lingering uncertainty over its ownership, EasyJet said consumer confidence was rebounding during the peak summer travel period.

Chief Executive Kenton Jarvis commented, “Pricing has remained attractive, stimulating strong demand for late‑booked flights and holiday packages.”

He added, however, that passengers are still looking for attractive deals before the month of departure to encourage earlier bookings.

An unnamed EU official told Reuters on Wednesday that a forthcoming ownership review is intended to “protect strategic autonomy” and keep control of regional carriers within Europe.

EU regulations require 51 % local ownership. Castlelake has identified EU citizens as co‑investors, whereas Apollo has yet to outline how it will satisfy the requirement.

Analysts have cautioned that the takeover contest between US private‑equity groups could become a “distraction” for EasyJet.

Garry White, chief investment commentator at Raymond James, observed that the bidding war underscores EasyJet’s long‑standing view that the market has been undervaluing the airline and its growth potential.

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