EasyJet Faces Profit Pressure from Iran Conflict and Rising Fuel Prices
Budget airline EasyJet has issued a warning that the ongoing conflict in Iran is adversely affecting its bookings and driving up fuel prices, which will negatively impact its profits. The airline reported that fuel costs have increased by £25 million in the past month alone due to the situation.
EasyJet anticipates reporting a pre-tax loss between £540 million and £560 million for the six months ending in March, a significant increase from the £394 million loss recorded in the first half of the 2024-25 financial year. The airline typically generates most of its revenue during the second half of the year, which includes the peak summer travel season.
Despite these challenges, EasyJet remains confident in its fuel supply, having hedged 70% of its fuel requirements for the remainder of the financial year through September. However, the company noted that every $100 (£74) increase in the spot price of jet fuel per metric tonne results in an additional £40 million in costs for its unhedged fuel supply. Currently, the spot price is approximately $800 higher than before the conflict began.
CEO Comments on Demand and Operational Outlook
EasyJet's Chief Executive, Kenton Jarvis, stated that short-term demand remains strong, but customers are booking flights later than usual due to economic uncertainty.
“We have visibility to the middle of May and we have no concerns.”
Jarvis emphasized that fuel supplies are stable and dismissed speculation about potential flight cancellations later in the summer should the Strait of Hormuz remain closed, describing such talk as purely speculative.
He further commented on the company's performance and market conditions:
“We have visibility to the middle of May and we have no concerns.”
“We saw continued positive demand but our financial performance worsened year on year, impacted by the conflict in the Middle East and the competitive environment in some markets. Following our busiest Easter holiday period ever, the operational ramp up into peak summer continues as planned.”
Booking Trends and Market Shifts
Jarvis acknowledged that customers are hesitant to plan far in advance, resulting in a shortened booking window as travelers wait until closer to departure to make reservations.
“There is a general shortening of the booking window as people wait till close to the point of departure to book.”
He also noted a relatively strong late booking market initially observed in March.
“We’re also seeing a relatively strong late market initially in March.”
Regarding regional travel patterns, Jarvis mentioned a shift in demand within the Mediterranean region:
“After an initial drop in places like Egypt, Turkey and Cyprus, after the drone in Akrotiri, we’ve actually seen that coming back a bit. If there is any shift, it’s a little bit away from the eastern Med and a little bit towards the western Med.”
Market Reaction
Following the announcement, EasyJet shares declined by 3% in early trading.
