EasyJet has reported a 70 per cent fall in pre-tax profits after higher fuel costs and weaker booking trends weighed on its latest financial results.
The budget airline said pre-tax profits fell to £85million in the three months to June 30, down from £286million during the same period last year.
EasyJet said the decline was driven primarily by an additional £105million in fuel costs after the conflict in Iran pushed energy prices higher, while reduced passenger bookings linked to the Middle East crisis also affected performance.
The results come just two weeks after the Luton-based airline reached an agreement in principle to be acquired by American private equity firm Apollo in a £5.7billion deal, equivalent to £7.15 per share.
The agreement followed a competitive bidding process after Apollo submitted a higher offer than rival US investment firm Castlelake.
Castlelake had previously tabled a £5.5billion bid for EasyJet.
The airline had agreed in principle to Castlelake’s proposal before Apollo returned with its improved offer. Apollo’s £7.15 per share bid secured a higher valuation for shareholders than Castlelake’s proposal.
Passenger numbers edged down by 0.4 per cent during the quarter to 25.8 million.
‘We have continued to manage the impact of the Middle East conflict’: EasyJet profits plunge 70 per cent
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GETTYEasyJet also reported a decline in its load factor, which measures the proportion of seats filled on flights. The airline said customers have increasingly been booking trips closer to their departure dates.
While strong last-minute demand helped support performance, it was not enough to offset softer forward bookings following the conflict in Iran and concerns over fuel prices.
Looking ahead to the peak summer season, EasyJet said strong late booking demand has continued. The airline added that “bookings beyond the month of departure also beginning to improve, albeit still needing some price stimulation.”
EasyJet warned that its full-year performance will depend on remaining bookings and continued volatility in fuel prices.
Chief executive Kenton Jarvis said: “We have continued to manage the impact of the Middle East conflict, and its effect on fuel prices and booking trends, during the quarter.
The Strait of Hormuz is one of the most important shipping routes in the world, especially for oil exports | GETTY
“Pricing has been attractive, driving strong late booking demand for our flights and holidays.”
Mr Jarvis also said there were encouraging signs as the key summer trading period begins.
He said: “As consumer confidence increases, we are seeing the load factor gap close for peak summer and an extension of the booking curve as customers continue to prioritise travel.”
The airline said improving booking trends beyond the month of departure suggest customer confidence is beginning to recover despite the challenging trading environment.
EasyJet said it will continue to monitor fuel price movements and booking patterns as it heads into the remainder of its financial year.