EasyJet reported a significant decline in profitability for the April-to-June period, with pre-tax earnings dropping to £85m from £286m in the corresponding quarter a year prior. The airline attributed the reduction primarily to increased fuel expenses of £105m, which arose following the outbreak of hostilities in the Middle East in late February that caused energy prices to spike substantially.
The earnings report coincided with an ongoing competition between two US investment firms to acquire the carrier. EasyJet’s board initially endorsed a £5.5bn offer from Castlelake but subsequently recommended a higher bid from Apollo Global Management valued at £5.7bn, translating to more than £7 per share. The potential transaction faces scrutiny from a prospective regulatory review by EU authorities regarding airline ownership structures, which has introduced uncertainty into the deal’s completion.
Despite the profit decline, airline management noted signs of improvement in customer demand, with bookings following a pattern of late-stage purchases occurring shortly before travel dates. The carrier’s chief executive indicated expectations for stronger booking activity during August and the remainder of the financial year, contingent upon fuel price stability and demand patterns. Average fares remained approximately 1% lower than the prior year despite substantial cost pressures.
Competitor Ryanair disclosed a 34% profit reduction to €538m for the same three-month period, attributing the decline to doubled jet fuel prices stemming from the regional conflict. Both carriers acknowledged ongoing volatility in fuel markets and shifting consumer booking behavior as key operational challenges.
EasyJet shares initially recovered more than 5% in early trading following the earnings announcement, partially offsetting an 11% decline from the previous day driven by reports of potential EU regulatory changes affecting foreign ownership of airlines.
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