𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

EasyJet has announced the conflict in the Middle East cost it about £25 million in higher jet fuel prices last month.

The Luton-based airline said it expects to report a headline loss before tax of between £540 million and £560 million for the six months to the end of March.

Oil prices – which have a significant effect on the cost of jet fuel – soared in response to Iran’s stranglehold on tankers passing through the Strait of Hormuz.

The war has introduced “near-term uncertainty around fuel costs and customer demand”, easyJet reported.

Bookings are down two percentage points for the three months to the end of both June and September compared with a year ago.

The warning over bigger-than-expected first half losses saw shares in easyJet fall as much as 9% in early trading on Thursday, before settling about 4% lower.

Kenton Jarvis, easyJet chief executive, said: “Our H1 financial performance worsened year on year, impacted by the conflict in the Middle East and the competitive environment in some markets.

“Following our busiest Easter holiday period ever, the operational ramp up into peak summer continues as planned.

“EasyJet’s financial strength from our investment grade balance sheet and £4.7 billion of liquidity mean we are well placed to navigate current geopolitical challenges while remaining focused on our medium term targets.”

Asked about the impact on fares, Mr Jarvis said “pricing remains competitive” and demand for flights in the three months to the end of September will “very much depend on what the late summer market is like, and obviously what happens to the conflict in the next week or two”.

Concerns have been raised that airlines will be forced to cancel flights because of jet fuel shortages, but Mr Jarvis said all the airports it serves are “operating as normal”.

He went on: “We only ever in this industry have three to four weeks visibility (of jet fuel supplies), and that is the same as it was pre-crisis.

“We have visibility to the middle of May, and we have no concerns.

“What we’re seeing is airports and fuel suppliers working well to bring jet fuel to the airports.”

But the head of the world’s energy watchdog, the International Energy Agency, warned that Europe has “maybe six weeks or so (of) jet fuel left”.

Executive director Fatih Birol told the Associated Press there could be flight cancellations “soon” if oil supplies remain restricted by the Iran war.

EasyJet also recorded a £30 million net increase in legal provisions “across a number of historic cases”.

It declined to provide details of the cases.

Dan Coatsworth, head of markets at AJ Bell, said while the Middle East war is putting pressure on easyJet, it is “in good financial shape to withstand another period of disruption”.

He said the airline is “well-versed in dealing with setbacks given past experiences with air traffic control strikes and the stop-start pandemic backdrop”.

He added: “So much depends on what happens next with the Middle East crisis.

“A swift resolution could remove cost pressures and trigger a flurry of bookings.

“A prolonged crisis could see demand dwindle further and a succession of cancellations if fuel supplies run dry or are rationed in various parts of the world.”