London: British low-cost carrier easyJet announced a significant 70% decrease in its pretax profit for the fiscal third quarter, attributing the decline to rising fuel prices driven by the Middle East conflict and a subsequent drop in booking demand.
According to Anadolu Agency, easyJet's trading update revealed that headline profit before tax fell to £85 million ($115 million) for the three months ending June 30, in stark contrast to £286 million recorded during the same period last year. Fuel costs surged by £105 million ($140.3 million) to reach £732 million, with fuel costs per available seat kilometer increasing by 13%. The rise in fuel expenses was primarily due to higher prices for the portion of fuel not hedged, with prices hitting approximately $1,800 per metric ton in April.
Despite the challenges, the airline reported a 2% increase in group revenue, amounting to nearly £3 billion. While passenger revenue saw a 1% decline to £1.74 billion, airline ancillary revenue rose by 3% to £753 million, and revenue from easyJet holidays increased by 14% to £489 million. The airline transported 25.8 million passengers in the quarter, a slight decrease from 25.9 million the previous year. Although the number of seats flown rose by 1% to 29 million, the load factor experienced a 1.3 percentage point drop to 88.9%.
EasyJet holidays contributed £84 million in pretax profit, slightly under the £86 million from the previous year. Excluding foreign exchange fluctuations, the unit's profit witnessed a 7% growth, with customer numbers increasing by 8%. CEO Kenton Jarvis highlighted that attractive pricing continued to drive strong last-minute demand, with a narrowing gap in summer load factors as consumer confidence improved.
The airline indicated that its full-year results would be contingent on remaining bookings and fluctuating fuel prices. EasyJet anticipates a 6% growth in available seat-kilometer capacity and a 3% increase in seat capacity for the 2026 financial year.
The announcement of these results coincides with easyJet facing takeover interest from multiple parties. US private equity firm Apollo Global Management proposed an offer of £7.15 per share, valuing the airline at approximately £5.7 billion. EasyJet's board showed a preference for recommending Apollo's proposal over Castlelake's offer of £6.90 per share, which valued the airline at around £5.5 billion. Apollo has been given a deadline until August 7 to either finalize the offer or withdraw.