EasyJet Warns of Profit Hit as Iran War Drives Up Fuel Costs and Delays Bookings
Budget airline EasyJet has issued a profit warning, citing the significant impact of the ongoing Iran war on both fuel prices and passenger booking behaviors. The carrier reported that rising oil prices increased its fuel costs by £25 million in the last month alone. Consequently, EasyJet expects its pre-tax loss for the six months ending in March to widen to between £540 million and £560 million, a substantial increase from the £394 million loss recorded in the same period of the previous year. Although the airline has hedged 70% of its fuel needs for the remainder of the financial year, each $100 increase in spot jet fuel prices adds £40 million in costs for unhedged supply. CEO Kenton Jarvis noted that while demand remains strong, economic uncertainty is causing customers to shorten their booking windows, waiting until closer to departure dates to purchase tickets. Despite fears of potential flight cancellations due to fuel shortages, Jarvis dismissed such concerns as speculation, confirming normal fuel supplies. The conflict has also shifted some travel demand from the Eastern Mediterranean to the Western Mediterranean. Following the announcement, EasyJet shares fell by 3% in early trading.
Wire timeline
EasyJet Warns of Profit Hit as Iran War Drives Up Fuel Costs and Delays Bookings
Budget airline EasyJet has issued a profit warning, citing the significant impact of the ongoing Iran war on both fuel prices and passenger booking behaviors. The carrier reported that rising oil prices increased its fuel costs by £25 million in the last month alone. Consequently, EasyJet expects its pre-tax loss for the six months ending in March to widen to between £540 million and £560 million, a substantial increase from the £394 million loss recorded in the same period of the previous year. Although the airline has hedged 70% of its fuel needs for the remainder of the financial year, each $100 increase in spot jet fuel prices adds £40 million in costs for unhedged supply. CEO Kenton Jarvis noted that while demand remains strong, economic uncertainty is causing customers to shorten their booking windows, waiting until closer to departure dates to purchase tickets. Despite fears of potential flight cancellations due to fuel shortages, Jarvis dismissed such concerns as speculation, confirming normal fuel supplies. The conflict has also shifted some travel demand from the Eastern Mediterranean to the Western Mediterranean. Following the announcement, EasyJet shares fell by 3% in early trading.
The Guardian