EasyJet has warned that rising fuel costs and weaker demand due to the Iran conflict will push its first-half losses higher, and that summer fares are likely to rise. The budget airline said fuel costs had increased by £25m in the last month alone, and it now expects a pre-tax loss of £540-560m for the six months to March, up from £394m a year earlier.
The carrier typically makes most of its profit in the second half, which includes the summer peak. Chief executive Kenton Jarvis said demand remained strong in the short term, but customers were booking later due to economic uncertainty. He noted a 'general shortening of the booking window as people wait till close to the point of departure to book'.
EasyJet has hedged 70% of its fuel needs for the rest of the financial year to September, but each $100 movement in the spot price of jet fuel per metric tonne adds £40m in costs for unhedged supply. The price is currently about $800 higher than before the conflict started.
Jarvis dismissed speculation about possible flight cancellations, saying the airline has 'visibility to the middle of May and we have no concerns'. He added that after an initial drop in bookings to Egypt, Turkey and Cyprus following a drone incident in Akrotiri, demand had recovered somewhat, with a slight shift from the eastern Mediterranean to the western Mediterranean.
