Low-cost carrier easyJet announced sharply lower profitability for the three-month period ending in June, with pre-tax earnings falling to £85m from £286m in the corresponding period of the prior year. The decline was primarily driven by a £105m increase in fuel expenses following the outbreak of hostilities in the Middle East in late February, which triggered significant increases in energy prices across global markets.
The results come amid an active acquisition process for the airline. EasyJet’s board has recommended a bid from Apollo Global Management valued at £5.7bn, or more than £7 per share, over a previously accepted offer from Castlelake worth £5.5bn. However, potential regulatory scrutiny from European Union authorities regarding airline ownership structures has created uncertainty around the transaction’s completion.
The airline noted that customer booking patterns have shifted, with passengers increasingly reserving flights closer to their departure dates rather than in advance. Management indicated that bookings have begun to stabilize and expressed expectations for stronger reservation activity during the peak summer season, with fares averaging approximately 1% lower than the prior year despite substantially elevated fuel costs. The company characterized its outlook for the remainder of the financial year as dependent on booking trends and continued fuel price volatility.
Ryanair, easyJet’s major competitor, reported a 34% profit reduction during the same period, attributing the decline to doubled jet fuel prices related to the regional conflict. The impact on Ryanair was limited to the portion of its fuel requirements that were not protected through hedging arrangements. Both carriers have navigated implementation of Europe’s new entry-exit system, with easyJet reporting that disruptions have been minimal following discretionary flexibility granted by EU authorities to airport operators through September.
Despite the earnings decline, easyJet’s share price increased more than 5% in early trading, partially recovering from an 11% drop the previous day triggered by reports of a potential EU review of airline ownership regulations that could affect the pending acquisition.
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