British low-cost airline EasyJet said on Thursday that its losses widened in the six months to the end of March, as the Iran war pushed up jet fuel costs and weakened booking visibility.
The conflict continues to disrupt global aviation, with European jet fuel prices rising by more than 80% since late February amid disruption to shipping through the Strait of Hormuz, a vital chokepoint for around one-fifth of global oil supplies.
Airlines across Europe have responded by raising fares, trimming costs, and warning of pressure on margins.
EasyJet reported a total loss after tax of £377 million ($506mn) for the first half of its financial year, up 27% from a year earlier. The airline said US-Iran tensions had also disrupted travel demand.
The airline said the Iran war had also disrupted travel demand and delayed bookings for the peak summer season.
Revenue jumped 12%to £3.95 billion (€4.63bn) as passenger numbers rose by 6% over the reporting period. The airline’s load factor, a measure of how full its planes are, improved to 90%, up 2% from a year earlier.
The group said strong growth in its holidays division helped support performance, with customer numbers at easyJet Holidays rising by 22% in the first half.
EasyJet said it had been affected by the Middle East conflict through “higher fuel costs and lower forward visibility”.
It confirmed an earlier estimate that the war had added £25mn (€29mn) to its fuel bill.
While the group saw no disruption to fuel supplies, the airline warned that the second half of its financial year “will be impacted by the conflict in the Middle East, with higher fuel costs and near‑term uncertainty around customer demand”.
“Overall bookings for the summer period are behind where they were at this point last year,” it added.
EasyJet said it is 72% hedged against fuel price rises over the next six months, offering some protection against further increases in oil prices.
The airline also reported a £32mn (€37mn) increase in legal provisions linked to a number of historic cases.
Chief executive Kenton Jarvis said that “despite conflict in the Middle East creating near‑term uncertainty, EasyJet is well placed to manage the current environment”.
He added in a call with journalists that minimum ticket prices would rise for the quieter winter season.
Following the update, shares in EasyJet rose by nearly 2%, but slipped into small losses by early afternoon.
“The picture remains challenging,” said Aarin Chiekrie, an equity analyst at Hargreaves Lansdown.
“Demand is taking a hit, with bookings for the second half tracking two percentage points below last year’s levels as sunseekers leave it later to lock in their travel plans,” he said.
“Even if the Middle East conflict is resolved in the near term, fuel prices are likely to remain elevated for some time,” he added.
Rival airline Ryanair said earlier this week that its annual net profit jumped by more than a third, but warned that the Iran war had clouded its outlook for the year ahead.