The ongoing conflict in Iran is taking a £200m toll on EasyJet's profits, with the FTSE 250 carrier reporting a staggering 70 per cent decrease from last year's £286m profit to just £85m for the three months ending June 2026. This downturn is largely attributed to surging energy prices and reduced travel demand, which has seen passenger volumes plummet by 100,000, settling at 25.8m for the quarter.
The airline's operational costs have been particularly impacted by a 13 per cent rise in fuel expenses per passenger, contributing an additional £100m to its overall expenditure. The company has secured 79 per cent of its fuel requirements through fixed-term contracts, but every $100 per metric tonne fluctuation in fuel price still translates to an extra £17m in costs. This highlights EasyJet's vulnerability to global energy market volatility, despite hedging strategies in place. The broader aviation sector has faced warnings of potential jet fuel shortages since the outbreak of war in the Middle East.
The conflict is also influencing booking behaviours, with fears surrounding the Iran war leading to a trend of customers making last-minute bookings. EasyJet reported an uptick in advanced bookings for later in the year, but these require more 'price stimulation,' suggesting a need for aggressive promotional pricing to secure sales amidst customer apprehension. The airline has seen an increase in in-flight sales, with pre-tax profit per seat rising by 14 per cent, somewhat offsetting the impact of fewer passengers.
The EU is reportedly planning a review aimed at protecting strategic autonomy and ensuring control of regional carriers remains within the bloc. This potential review casts doubt on a previously mooted takeover, including EasyJet's proposed £5.7bn deal with investment firm Apollo. The airline's stock has taken an 11 per cent hit in response to these developments.
EasyJet also announced that its Chief Operating Officer, David Morgan, will be retiring from his executive position. In a surprise move, he will return to the cockpit as an EasyJet pilot. Sophie Dekkers, the firm's Chief Commercial Officer, has been appointed to succeed Morgan as Chief Operating Officer and will oversee operational development focusing on productivity improvements and customer satisfaction.