Losses balloon at Easyjet despite seeing ‘no disruption’ to jet fuel supplies
Easyjet has played down fears that a jet fuel crisis caused by the Middle East will rip through its low-cost model, saying it has kept price rises to a minimum despite losses at the carrier ballooning to more than half a billion pounds.
The London-listed carrier told investors it was “not seeing any disruption” to jet fuel supply, despite ministers recently watering down sanctions on Russian oil in a bid to secure supply in the coming months.
Passengers were continuing to book summer holidays, the airline added, but at shorter notice than in previous years due to the uncertainty caused by the conflict. Forward bookings for the six months to April were down two per cent year-on-year, however, leaving the airline with “lower than normal visibility” for their long-term earnings, and overall bookings for the summer period behind where they were last year.
Kenton Jarvis, chief executive of Easyjet, said: “Despite conflict in the Middle East creating near‑term uncertainty, Easyjet is well placed to manage the current environment, supported by one of the strongest investment‑grade balance sheets in European aviation.”
Losses balloon at Easyjet
Losses at the airline, whose share price is down more than a quarter since the onset of the Iran war, ballooned from £394m to £552m in line with forecasts, despite a jump in the number of passengers and 22 per cent growth in its holidays arm.
The ready supply of jet fuel, known as kerosene, has been one of the more pronounced knock-on effects of the conflict in the Middle East. Many airlines warned that their ticket prices will have to rise as a result of prices for refined petroleum products more than doubling since the onset of the war, even though several have strict hedging rules in place.
The hedging strategy means much of Britain’s main carriers have a ready supply of fuel at pre-crisis prices that will take them through the summer unaffected, but most fear a sharp squeeze when those contracts expire in the coming months.
Ryanair boss Michael O’Leary said last week that he “wouldn’t be surprised” if carriers especially exposed to the conflict go bust later this year, and was “confident” Ryanair would shoulder the fallout without resorting to many price rises.
On Wednesday, the government relaxed its sanctions on Russian oil that had been refined in third-party countries to help alleviate the pressure the Strait of Hormuz’s closure has put on supply.