Low-cost carrier easyJet reported a significant decline in profitability for the quarter ending in June, with pre-tax profits dropping to £85m from £286m in the equivalent period last year. The company attributed the downturn 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 markets.
The airline faces multiple challenges beyond fuel costs. Customer booking patterns have shifted, with passengers delaying reservations until closer to their travel dates rather than booking in advance. However, management indicated that bookings have begun to stabilize and expressed optimism that demand would strengthen as the summer season progressed into August. Despite the profit decline, easyJet maintained pricing that was approximately 1% lower on average compared to the same period the previous year.
The profit announcement came amid an active takeover process involving two American investment firms. EasyJet’s board initially accepted an offer from Castlelake valued at £5.5bn but subsequently recommended a higher bid from Apollo Global Management at £5.7bn. The proposed acquisitions face potential complications from a forthcoming European Union review of airline ownership regulations, which could require stricter adherence to local ownership requirements. An EU official indicated the review aimed to protect strategic autonomy within the European aviation sector.
Operationally, easyJet avoided the disruptions many had anticipated from Europe’s new entry-exit system during the early summer weeks. Several airports, including those in Greece, suspended biometric checks under temporary flexibility granted by regulators until September. The airline’s chief executive emphasized that the EU regulatory review process would extend well beyond any anticipated completion of the takeover bid, noting that initial proposals were not expected until late in the year at earliest.
Competitor Ryanair similarly reported pressure from elevated fuel costs, with profits declining 34% during the same period. Industry analysts noted that the takeover competition for easyJet, while highlighting the company’s undervalued market position, risked becoming a distraction from operational management.
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