EasyJet reports sharp Q3 profit drop despite stronger summer demand

EasyJet reported a 70% year-on-year decline in fiscal third-quarter profit on Thursday.

The airline said disruption from the Iran war had increased costs during the quarter.

However, it added that consumer confidence was strengthening as the peak summer travel period approached.

Quarterly earnings came in at £85 million.

That was sharply lower than the £286 million reported a year earlier.

The decline highlights the financial pressure caused by disruption linked to the five-month-old Middle East conflict.

Despite the fall in profit, EasyJet reported a rise in group revenue.

Revenue increased 2% year-on-year to £2.98 billion.

The growth was supported by higher revenue from holidays and ancillary services.

The airline also reported growth in capacity during the quarter.

Available seat kilometres (ASK) capacity increased 3% year-on-year.

The number of seats rose 1% over the same period.

EasyJet carried 25.8 million passengers during the quarter.

Its load factor stood at 88.9%.

This was 1 percentage point lower than the same period a year earlier.

Revenue per ASK declined 3% year-on-year.

However, EasyJet said this represented a 1 percentage point improvement compared with the booked position reported in May.

Higher fuel costs add to pressure

EasyJet said headline cost per ASK, excluding fuel, increased 3% during the quarter.

The increase was in line with the airline’s previous guidance.

Fuel costs also increased significantly.

Fuel cost per ASK rose 13% year-on-year.

In absolute terms, the increase added £105 million to costs compared with the previous year.

The higher cost base came as the airline dealt with disruption during the quarter.

Despite the pressure, EasyJet said demand remained resilient, particularly among passengers making bookings close to their departure dates.

The airline reported strong demand for late bookings made during the month of departure throughout the quarter.

It also said it was 68% sold for the fourth quarter.

EasyJet sees stronger late bookings

EasyJet said booked fourth-quarter ticket yield was currently flat.

Its load factor was 2 percentage points below the prior year.

The airline said this represented an improvement from the 3 percentage point gap reported at the time of its half-year results in May.

EasyJet said strong late bookings continued during the quarter.

It also reported signs of improvement in bookings made beyond the month of departure.

However, the airline acknowledged that some price stimulation was still required to support demand.

The company also said early bookings for the first quarter of fiscal 2027 were showing encouraging ticket yields.

These yields were up by a mid-single-digit percentage.

Capacity growth expected to normalize

For the full year, EasyJet expects ASK capacity to increase by around 6%.

The airline expects seats to grow by around 3%.

EasyJet holidays customers are expected to increase by low double digits.

The forecast is based on a current customer base of 3.1 million.

The company said its holidays business continued to take market share in a competitive environment.

EasyJet also expects capacity growth to normalize during the first half of fiscal 2027.

The airline said the early booking trends for the period were encouraging.

Focus remains on long-term profit target

EasyJet has backed US investment firm Apollo’s £5.7 billion takeover offer.

The offer was supported over rival approaches from Castlelake.

The airline said it remained focused on execution as it works toward further progress on its medium-term financial objectives.

EasyJet continues to target more than £1 billion in pre-tax profit over the medium term.

The company said it remained focused on achieving that target as market conditions normalize.

The latest results showed the continued impact of higher costs and weaker profitability.

At the same time, EasyJet pointed to improving consumer confidence, strong late bookings and better forward ticket yields as signs of resilience ahead of the peak summer period.