EasyJet’s quarterly profit plunges 70% on higher fuel costs

Middle East conflict adds $140.3M to fuel bill as passenger numbers, load factor decline

British low-cost carrier easyJet said Thursday that its pretax profit plunged 70% in its fiscal third quarter as the conflict in the Middle East drove fuel prices higher and weakened booking demand. Headline profit before tax fell to £85 million ($115 million) in the three months ended June 30, compared with £286 million in the same period last year, according to the airline’s trading update. Reported pretax profit also stood at £85 million. Fuel costs increased by £105 million ($140.3 million) year-on-year to £732 million, while fuel costs per available seat kilometer climbed 13%. The company said the increase was primarily caused by higher prices for the portion of its fuel consumption that was not hedged, with prices peaking at about $1,800 per metric ton in April. Group revenue rose 2% to nearly £3 billion. Passenger revenue declined 1% to £1.74 billion, while airline ancillary revenue increased 3% to £753 million and revenue from easyJet holidays climbed 14% to £489 million. The airline carried 25.8 million passengers during the quarter, broadly unchanged from 25.9 million a year earlier. The number of seats flown rose 1% to 29 million, but the load factor dropped 1.3 percentage points to 88.9%. EasyJet holidays generated £84 million in pretax profit, slightly below £86 million a year earlier. Excluding foreign exchange movements, the unit’s profit increased 7%, while customer numbers grew 8%. CEO Kenton Jarvis said attractive pricing continued to support strong last-minute demand, while the gap in summer load factors narrowed as consumer confidence improved. EasyJet said its full-year results would depend on remaining bookings and volatile fuel prices. It expects available seat-kilometer capacity to grow about 6% and seat capacity to increase around 3% in the 2026 financial year. The results come as easyJet faces competing takeover interest. US private equity firm Apollo Global Management has proposed paying £7.15 per share, valuing the airline at about £5.7 billion. EasyJet’s board said it was inclined to recommend Apollo’s proposal, which surpassed Castlelake’s £6.90-per-share offer, valuing the airline at about £5.5 billion. Apollo has until Aug. 7 to announce a firm offer or withdraw.