Easyjet profits plunge 70% as Middle East conflict drives up fuel costs

EasyJet PLC ( LSE:EZJ ) reported a 70% fall in third-quarter profit as the Middle East conflict pushed up fuel costs and weakened booking demand.

The low-cost airline, which has also been busy fielding takeover offers in recent weeks, posted headline profit before tax of £85 million for the three months to June, down from £286 million a year earlier.

Group revenue rose 2% to £2.98 billion, but fuel costs jumped 17% to £732 million.

Revenue per available seat kilometre declined 3%, while passenger numbers were broadly flat at 25.8 million despite a 1% increase in seat capacity, with the load factor falling by 1.3 percentage points to 88.9%.

Weaker bookings were seen following the outbreak of the conflict, which the company said were only partly offset by strong demand from customers booking close to departure.

Fuel costs increased by £105 million as prices for its unhedged requirements peaked at around $1,800 per metric tonne in April.

The holidays business proved more resilient, with profit before tax slipping 2% to £84 million as customer numbers grew 8%. Excluding currency movements, profit increased 7%.

Chief executive Kenton Jarvis said easyJet had continued to manage the conflict's impact on fuel prices and booking trends, while the strong late booking demand has been driven by "attractive pricing".

For the full year, the airline expects seat capacity to grow 3%. Fourth-quarter ticket yields are currently flat, while the load factor is two percentage points behind last year.

The final outcome remains dependent on summer bookings and volatile fuel prices.