Low-cost carrier easyJet disclosed a substantial decline in profitability for the quarter ending in June, with pre-tax earnings falling to £85m from £286m in the corresponding period the previous year. The airline attributed the significant contraction primarily to a £105m increase in fuel expenses following the outbreak of hostilities in the Middle East in late February, which triggered a sharp rise in energy prices across global markets.
The financial results emerged as easyJet remains the subject of competing acquisition offers from two US investment firms. The airline’s board had initially backed a bid from Castlelake valued at £5.5bn but subsequently recommended a higher proposal from Apollo Global Management worth £5.7bn, representing more than £7 per share. The proposed transaction faces potential complications from a European Union review of airline ownership regulations designed to ensure continued regional control within Europe.
Management noted that customer booking patterns had shifted, with passengers increasingly delaying purchases until closer to their travel dates, though overall demand showed signs of stabilization. Chief Executive Kenton Jarvis indicated that pricing remained competitive, with average fares approximately 1% lower than the prior year despite the substantial fuel cost increases. The company projected that booking momentum would strengthen during August as the peak summer travel season progressed.
Rivalry in the budget aviation sector showed similar pressure, with competitor Ryanair reporting a 34% profit decline for the same quarter, also attributable to doubled jet fuel prices resulting from Middle East developments. Ryanair noted that only 20% of its fuel consumption lacked price hedging protections, exposing the airline to market volatility. The airline indicated that consumer confidence was improving heading into the busy summer period.
Regarding operational challenges, easyJet reported minimal disruption from Europe’s newly implemented entry-exit system during the early summer weeks, as some airports suspended biometric checks under temporary EU flexibility measures. The company called for extension of these accommodations beyond the current September deadline to address anticipated busy periods in October.
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