EasyJet reported a substantial 70% decline in its third-quarter profit before tax, falling to £85 million from £286 million a year earlier, largely attributed to the ongoing Middle East conflict. This geopolitical situation led to a significant 17% increase in fuel costs, reaching £732 million, and a noticeable weakening of booking demand, especially for forward bookings.
Despite the profit plunge, the airline's group revenue saw a modest 2% rise to £2.98 billion. However, revenue per available seat kilometre decreased by 3%. Passenger numbers remained largely flat at 25.8 million, even with a 1% increase in seat capacity, leading to a 1.3 percentage point drop in the load factor to 88.9%. EasyJet's holidays business showed more resilience, with profit before tax only slipping 2% to £84 million.
Chief Executive Kenton Jarvis acknowledged the company's efforts to manage the impact of increased fuel prices and shifting booking trends. He noted that strong late-booking demand, driven by "attractive pricing," partially offset the initial weakness. For the full year, EasyJet anticipates a 3% growth in seat capacity. However, fourth-quarter ticket yields are currently flat, and the load factor is two percentage points behind last year, with the final outcome dependent on summer bookings and volatile fuel prices. EasyJet also stated that customer numbers grew 8% and, excluding currency movements, profit increased 7% in the holidays business.
Earlier in the year, financial analysts had flagged fuel costs as a major risk, particularly as hedging protections expired. Duncan Ferris, an investment writer at Freetrade, pointed out EasyJet's exposure with a 72% hedge at $726, while the spot price was around $1,350. The airline had previously reported a first-half loss of £552 million, largely in line with earlier warnings. EasyJet leadership has emphasized a strategy of disciplined growth, accelerated upgrading, and expansion of EasyJet Holidays to recover from these setbacks. They also plan to raise minimum ticket prices by £2-£3 for the winter season and renew hedges further out to mitigate volatility.
The Middle East conflict has also reportedly added an estimated £25 million to the airline's fuel bill and, along with US-Iran tensions, disrupted travel demand and delayed bookings for the peak summer season. Booking patterns have shifted, with consumers booking closer to departure dates and opting for destinations nearer to home. In-month bookings, however, remained strong year-on-year. EasyJet is 72% hedged against fuel price rises for the next six months, providing some protection, but analysts like Aarin Chiekrie of Hargreaves Lansdown still described the picture as "challenging," with overall summer bookings lagging behind previous year's levels.
