EasyJet warns of wider losses due to higher fuel costs

(Sharecast News) - Low-cost airline easyJet on Thursday said it expected to post a wider first-half loss as the war on Iran and Lebanon sent fuel prices soaring.

The carrier now expects a headline pre-tax loss of £540m - 560m in the first six months of its financial year, compared with a £394m loss a year earlier.

Easyjet said it had incurred £25m in extra fuel costs last month due to the war, and another £30m in expenses from higher legal provisions.

The conflict in the Middle East has introduced near-term uncertainty around fuel costs and customer demand. As expected, the booking curve has shortened in recent weeks, resulting in lower-than-normal forward visibility.

EasyJet said it remained "well positioned" to manage the volatility caused by the war, which has seen airlines hike prices and ponder jet groundings.

"The group has net cash of £434m, liquidity of £4.7bn and owns 86% of its (Airbus) neo aircraft, providing both financial and operational flexibility," the company said in a trading statement.

"In line with the wider industry, we remain in close contact with our fuel suppliers and airports around fuel supply." The airline has hedged 70% of its needs for the rest of the financial year to September but noted that each $100 movement in the spot price jet of fuel per metric tonne was adding an extra £40m in costs for unhedged supply, with the price around $800 higher than before the war began.

Reporting by Frank Prenesti for Sharecast.com

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