EasyJet has announced that the ongoing conflict in the Middle East cost the airline approximately £25 million in higher jet fuel prices in March. The Luton-based airline expects to report a headline loss before tax of between £540 million and £560 million for the six months ending March 31, 2024. The surge in oil prices, driven by Iran's control over tanker traffic through the Strait of Hormuz, has significantly impacted jet fuel costs, creating "near-term uncertainty around fuel costs and customer demand," according to EasyJet.
Bookings for the three months ending in June and September are down two percentage points compared to the same period last year. The airline's shares fell as much as 9% in early trading on Thursday before settling about 4% lower. Kenton Jarvis, EasyJet's chief executive, attributed the financial performance decline to the Middle East conflict and competitive market conditions.
Despite the challenges, EasyJet reported a 22% increase in customer numbers for the first half of the year. The airline has hedged 70% of its fuel for the summer, its busiest period, to mitigate some of the cost volatility. However, every $100 shift in jet fuel prices equates to around £40 million in additional costs for the company. The airline also faces £30 million in legal provisions related to historic cases.
Jarvis emphasized that EasyJet's financial strength, including an investment-grade balance sheet and £4.7 billion in liquidity, positions the company to navigate current geopolitical challenges while maintaining focus on medium-term targets.