EasyJet raises ticket prices due to fuel crisis as company loses £550m
EasyJet is raising its plane ticket prices as a result of the ongoing fuel woes due to the Strait of Hormuz closure.
It comes in the same week that Ryanair has issued a similar warning to customers, saying the cost of seats on its aircraft could rise after the busy summer period.
For the first half of its financial year, easyJet has reported a worrying loss of £552 million ($742 million). It's a move further in to the red after a £394 million ($529 million) loss in the previous year.
Revenues actually increased by 12 percent to £3.9 billion ($5.2 billion), showing just how much the issues in the Middle East are impacting the budget airline.
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As a result, prices are on the up for the average Joe - you and me - booking a holiday with the company. Prices could also rise if a 'lunatic' baggage rule change comes in, the airlines has recently warned.
The increase comes as less people choose to book holidays with easyJet compared to last summer.
EasyJet chief executive, Kenton Jarvis, explained: "We continue to see positive late bookings since the conflict began, however overall bookings for the summer period are behind where they were at this point last year."
Fuel supply isn't the issue, easyJet says, but the price of fuel is. And that's being offset in the easiest way they know how - prices - labelling the move an 'active review of all discretionary costs'.
EasyJet statement in full
"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" Jarvis said.
“We delivered a strong operational performance in the first half, with positive demand driving a 90% load factor, up 2 ppts vs last year, and further improved customer satisfaction, alongside continued growth in our holidays business.
“easyJet is not seeing any disruption to fuel supply, we continue to operate normally and our customers should book with confidence, taking advantage of our great value fares.
“Our strategy is clear – through disciplined growth, accelerated upgauging, and continued expansion of easyJet holidays, we aim to bounce back from this year’s Middle East related setbacks, and then further progress towards our medium-term financial targets and deliver attractive shareholder returns as the operating environment normalises.“
Ryanair price warning
Irish airline Ryanair has said its summer holiday season is expected to go ahead as normal. But travelling with the airline after then could be about to get more expensive.
Company CEO Michael O'Leary has voiced concerns about the continued cost of jet fuel around the world, saying the business may have to respond to increased costs sooner rather than later.
As it stands, price increases of around five percent could come in for its flights in and out of the UK, Ireland, and mainland Europe.
If prices continue to be an issue, O'Leary warned 'airlines could start failing all over Europe'.
Topics: Travel, Easyjet, Money, World News
Tom Earnshaw