EasyJet joins Ryanair. Airlines report profit declines
Profit for British airline EasyJet fell in the third quarter of the fiscal year by 70% on an annual basis and amounted to £85 million compared with £286 million in the same period last year.
According to the report, the decline was driven by high fuel prices, weakening consumer demand following the escalation of the Middle East conflict, and market concerns about potential disruptions to raw material supplies.
Nonetheless, profit still exceeded forecasts from Bloomberg analysts, which were around £80 million.
The company stressed that the ongoing summer season brings optimistic prospects, although consumers are increasingly booking closer to departure dates, prompting the carrier to stimulate demand by offering lower ticket prices.
“During this quarter we still managed the effects of the Middle East conflict and its impact on fuel prices and booking trends,” said Kenton Jarvis, EasyJet chief executive.
“Attractive prices have driven strong demand for last‑minute bookings of our flights and holidays, and our relentless focus on execution has yielded excellent operational results and even higher customer satisfaction,” he added.
Fuel costs incurred by the carrier rose by 13%, or £105 million year‑on‑year.
The statement noted that fuel costs remain a significant challenge for the company, and its final financial results will depend on the development of the energy market. In the last quarter, uncertainty remains due to price volatility.
We recently reported that the profit of Irish airline Ryanair fell by 34% for similar reasons.
More on this was covered in the article: Cheap flights are a thing of the past? Ryanair’s profit fell 34%! Blamed on fuel and ticket prices.
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EasyJet shares rebound from discount
EasyJet shares were at 618.6 GBX on Thursday, 23 July, up by 5.71%.
At the close on Wednesday, the share price fell by almost 12% after Reuters reported that the European Union is considering a review of airline ownership rules to prevent foreign investors from gaining actual control of carriers.
This could complicate the EasyJet takeover process, which is currently being pursued by two U.S. private‑equity firms, Castlelake and Apollo Global Management.
Castlelake submitted four takeover proposals before finally agreeing to a fifth offer of £690 per share.
The offer was outbid by Apollo, which presented a higher proposal of £715 per share and received preliminary backing from EasyJet’s board.
Foreign media report that Castlelake may make a final decision before 3 August, while Apollo’s response is expected four days later.
Chart. EasyJet share price
Source: TradingView.
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Sources: EasyJet, Bloomberg, Reuters.
