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easyJet’s profit plunged by 70 percent in the quarter, expensive fuels are to blame!

British low-cost airline easyJet’s pre-tax profit fell by 70 percent year-on-year to 85 million pounds in the third financial quarter. Higher fuel prices and weaker demand caused by the war in the Middle East were to blame. The company, which is being targeted for takeover by Apollo Global and Castlelake, reported this on its website today.

easyJet Faces Surging Costs and Geopolitical Headwinds Amid High-Stakes Takeover Battle

Fuel costs increased by 105 million pounds year-on-year. The company stated that fuel expenses for the three months to the end of June remain unpredictable due to price volatility. Passengers are booking flights only shortly before the departure date, forcing the company to support demand with lower ticket prices. Airlines around the world have faced higher costs and a decline in demand in recent months as a result of the US-Israeli war with Iran.

Rival airline Ryanair previously announced that its profit in the first financial quarter fell by 34 percent due to higher costs. easyJet found itself at the center of a competitive battle between two American investment companies. Castlelake submitted a takeover bid to the British company for the first time in May. easyJet’s board rejected its four proposals before fundamentally agreeing to a fifth offer at 690 pence per share. Subsequently, Apollo Global Management entered the game with a higher bid, which easyJet’s management supported.

EU Regulatory Threat Looming Over US Takeover Bids for easyJet as Crucial Deadlines Approach

It is not yet clear whether Castlelake will raise its offer again or withdraw from the intention before the deadline, which is August 3. Apollo must respond to the development of the situation by August 7. easyJet shares fell nearly 12 percent on Wednesday following a Reuters report that the European Union is preparing a revision of airline ownership rules to prevent foreign investors from gaining effective control over carriers. This could complicate the acquisition of easyJet by American companies.

Following Britain’s exit from the European Union, easyJet created a subsidiary, easyJet Europe, registered in Vienna. CEO Kenton Jarvis told Reuters today that the company intends to consult with EU regulators as soon as it receives an official offer from one of the suitors for the takeover.