easyJet has posted a stark 70% decline in pre-tax profits to £85 million for the period between April and June, highlighting the devastating impact of soaring fuel costs on Britain's favourite budget airline. The sharp rise in energy prices, exacerbated by the ongoing conflict in Iran, has left easyJet facing an additional £105 million in fuel expenses.
The crisis comes as two US investment firms engage in a high-stakes bidding war for control of easyJet, with Apollo Global Management offering £5.7 billion – a sum that eclipses Castlelake's earlier £5.5 billion bid, which had been accepted by the airline's board.
The proposed takeover deals are now facing scrutiny from the European Union, which requires a 51% local ownership stake to ensure control of regional airlines remains within Europe. While Castlelake has indicated EU citizens as co-investors, Apollo has yet to clarify how it plans to meet these stringent requirements – sparking uncertainty over easyJet's future ownership.
Despite the profit downturn, easyJet reports a welcome improvement in customer bookings, driven by attractive pricing that is encouraging passengers to book their trips closer to departure. Chief Executive Kenton Jarvis noted: “Pricing has been attractive, driving strong late booking demand for our flights and holidays.” However, the airline also acknowledges that passengers are increasingly seeking good deals to incentivise earlier bookings.
This is not an isolated issue; rival budget carrier Ryanair reported a 34% drop in profits to £457 million for the three months ending June, citing a doubling of jet fuel prices due to the Iran conflict. easyJet's shares saw a more than 5% rise in early trading on Thursday, partially recovering from a 10% dip the previous day following reports of the potential EU review of ownership rules.