Easyjet losses widen as airline takes a £25m hit on soaring fuel costs amid Iran war
Easyjet expects to make a hefty loss in its first half as war in the Middle East added £25million to its fuel bill in March.
The airline expects a loss before tax of between £540million and £560million for the six months to April, against a £394million loss by the end of the same period a year ago.
It said the conflict in the Middle East had 'introduced near-term uncertainty' around fuel prices and customer demand.
Oil prices have risen sharply since the start of the war in Iran, with ships largely unable to pass through the Strait of Hormuz, where around a fifth of the world’s supply flows through.
Jet fuel prices have doubled in the month since the conflict began and Easyjet said it had to buy nearly 18 per cent of its fuel in March, when prices had soared.
Easyjet said that for the second half of the year, every $100 shift in jet fuel prices equated to around £40million in additional costs.
But it had hedged 70 per cent of its fuel for the coming summer, its busiest period of the year.
Problematic: Jet fuel prices have doubled in the month since the conflict began
The company said it had seen 'war-related softness' in Egypt, Turkey and Cyprus since the conflict started.
But it added that there was also 'strong late demand for domestics, cities and the Western Mediterranean.'
The airline said customer numbers rose 22 per cent in the first six months of the year.
The group said it was also on the hook for £30million in legal provisions amid 'historic' cases.
Kenton Jarvis, Easyjet's chief executive, said there had been 'continued positive demand' in the first half of the year but financial performed 'worsened year on year, impacted by the conflict'.
'easyJet’s financial strength from our investment grade balance sheet and £4.7billion of liquidity mean we are well placed to navigate current geopolitical challenges while remaining focused on our medium term targets.'
Easyjet shares fell 1.53 per cent or 6.00p to 385.00p on Thursday morning, haven fallen nearly 20 per cent in the past year.
Gerald Khoo, an analyst at Panmure Liberum, said Easyjet could be forced to reduce its prices to ramp up demand, adding that along with other factors, such as the war, the airline's annual profit could fall 70 per cent.
Airlines have been among the worst hit by the US-Israeli war with Iran, with Easyjet’s rival Wizz Air issuing a profit warning last month.
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