Key facts
- Easyjet reported a £200 million profit hit due to the Iran war.
- The airline's profit for the three months to June was £85 million, a 70% decrease from the prior year.
- Passenger volume declined by 100,000 to 25.8 million.
- Fuel costs per passenger rose by 13%, contributing an additional £100 million in expenses.
- The company's chief executive cited the Middle East conflict's impact on fuel prices and booking trends.
Easyjet has announced a £200 million reduction in profit, attributing the decline to soaring energy costs and decreased travel demand exacerbated by the ongoing Iran war. The budget airline's profit for the three months ending June stood at £85 million, a significant 70% drop compared to the £286 million recorded in the same period last year. Passenger volume also saw a decrease of 100,000, falling to 25.8 million.
The airline experienced a 13% increase in fuel cost per passenger, resulting in a year-on-year rise of £100 million in expenses. Despite previous reassurances, Easyjet acknowledged warnings of a jet fuel shortage since the conflict began in the Middle East. The company stated that 79% of its fuel needs are secured through fixed-term contracts, but each $100 per metric tonne fluctuation in fuel price incurs an additional £17 million in costs.
Chief executive Kenton Jarvis commented that the Middle East conflict has influenced fuel prices and booking patterns, leading to more last-minute reservations that require "price stimulation." Despite the overall dip in passenger numbers, Easyjet reported an increase in revenue from in-flight sales, with pre-tax profit per seat rising by 14%.
Separately, Easyjet's stock experienced an 11% slide on Wednesday following reports of a potential European Union probe into its mooted takeover. The EU is reportedly reviewing the situation to "protect strategic autonomy" and ensure regional carriers remain within the bloc. This review casts doubt on Easyjet's previously agreed terms with investment firm Apollo for a £5.7 billion deal, after initially being "minded to accept" a bid from private equity firm Castlelake.
In executive changes, chief operating officer David Morgan has announced his retirement from the role, opting to return to the cockpit as an Easyjet pilot. Sophie Dekkers, the firm's chief commercial officer, will take over as chief operating officer, tasked with overseeing operational development and productivity improvements.