EasyJet Profits Plummet as Apollo Negotiates £5.7 Billion Takeover

EasyJet reported a 70% drop in pre-tax profits for the quarter ending June 30, with earnings falling to £85 million from £286 million a year earlier. The airline attributed the slump to £105 million in increased fuel costs and lower booking demand resulting from the Iran war. Fuel prices surged as Iran-backed Houthis claimed to attack two Saudi Arabian oil tankers in the Red Sea, pushing Brent crude toward $100 per barrel.

EasyJet shares previously slumped nearly 11% amid reports that the European Union is reviewing foreign ownership rules for airlines. Despite these headwinds, the company noted that strong late summer bookings and increased market share for its holidays arm helped mitigate losses. CEO Kenton Jarvis is currently seeking to extend flexibility for the European entry-exit system through October to prevent border queues during school holidays.

The financial downturn coincides with a bidding war for the carrier. EasyJet has reached an agreement in principle for a £5.7 billion takeover by Apollo Global Management, which outbid a £5.5 billion offer from Castlelake, L.P. Apollo has until August 7 to submit a firm bid.