EasyJet Hit Hard as Iran Conflict Drives Fuel Costs and Profits Down 70%

EasyJet’s profits took a nosedive this spring, dropping 70% as the airline grappled with skyrocketing fuel prices and last-minute bookings tied to the ongoing conflict in Iran. Between April and June, the low-cost carrier posted a pre-tax profit of just £85 million, compared to £286 million in the same period last year. The slide came as fuel costs surged by £105 million after hostilities in the Middle East sent energy prices soaring.

The profit plunge comes at a turbulent time for the airline, which is caught in a takeover tug-of-war between two U.S. investment firms. EasyJet’s board initially accepted a £5.5 billion offer from Castlelake, then switched gears to recommend a higher £5.7 billion bid from Apollo Global Management. But the deals are now clouded by a potential European Union review of airline ownership rules, which require 51% local control. Apollo hasn’t detailed how it plans to meet that threshold, while Castlelake has lined up EU citizens as co-investors.

Despite the grim numbers, EasyJet said customer confidence is ticking up as the peak summer season gets underway. CEO Kenton Jarvis noted that pricing has been attractive, driving strong late booking demand for flights and holidays. Still, the airline admitted passengers are hunting for bargains before committing to trips in advance. EasyJet’s shares rose over 5% early Thursday, recovering some ground after a 10% drop the day before on news of the EU ownership review. Analysts warn the bidding war itself could become a distraction, though some say it proves the market has long undervalued the airline’s growth potential.