EasyJet warns of deeper first-half loss as Middle East war drives up fuel costs

EasyJet has warned that the ongoing conflict in the Middle East cost the budget airline approximately £25 million in additional jet fuel costs in March, driving its expected first-half loss to between £540 million and £560 million. The Luton-based carrier reported that oil prices, which directly affect jet fuel costs, surged in response to Iran's control over tanker traffic through the Strait of Hormuz. The airline's shares dropped as much as 9 percent in early trading on Thursday before recovering to about 3 percent lower, reflecting investor concern over the financial impact of geopolitical instability on the carrier. Chief executive Kenton Jarvis said the airline was well positioned to manage the uncertainty despite the challenging conditions. He stated that easyJet has fuel supply visibility through mid-May with no concerns about availability, while the airline has hedged 70 percent of its summer fuel at lower locked-in prices. In comparison, Ryanair acknowledged it has supply guarantees only to mid-May and cannot rule out risks if the Hormuz Strait closure extends into May or June. Despite the cost pressures, easyJet's load factor rose 2 percentage points to 90 percent during the winter period, though forward bookings for the three months through September are down 2 percentage points compared to last year. The airline emphasized its financial strength, noting it has £4.7 billion in liquidity and an investment grade balance sheet, positioning it to navigate the current geopolitical challenges. Demand for Mediterranean destinations including Cyprus, Turkey and Egypt has returned after an initial reduction following the Iranian attack on Britain's Akrotiri base in Cyprus, with the western Mediterranean proving particularly popular. The carrier also revealed a £30 million net increase in legal provisions for historical cases, though it declined to provide specifics. EasyJet will publish its full first-half earnings on May 21, following what it described as its busiest Easter holiday period ever.