EasyJet says quarterly profit fell as fuel costs rose during Middle East conflict

British airline EasyJet said its profit before tax fell 70 percent in its third quarter as the Middle East conflict pushed up jet fuel prices and reduced consumer demand.

The no-frills carrier said profit before tax was £85 million, or $114 million, in the three months to the end of June, compared with the same period a year earlier. In an earnings statement, EasyJet said the quarter was affected by elevated fuel prices and lower consumer demand after the start of the Middle East conflict. It said fuel costs rose by £105 million compared with last year.

Chief executive Kenton Jarvis said the company had continued to manage the impact of the Middle East conflict. EasyJet said its full-year performance would depend on remaining bookings and fuel prices.

The airline is also at the centre of a takeover battle between two US private equity firms. EasyJet has backed a £5.7-billion takeover bid from Apollo, whose offer of £7.15 per share was above Castlelake's £6.90-per-share bid.

After the earnings update, EasyJet's share price rose more than five percent to £6.16 on London's FTSE 250 index, still below the takeover offers. Its shares had fallen by as much as 15 percent on Wednesday.

Victoria Scholar, head of investment at Interactive Investor, said Wednesday's fall was driven by concerns that Apollo's takeover offer could be threatened or delayed after the European Union said it was reviewing ownership rules intended to stop foreign investors taking control of airlines in the bloc. She said the shares were still sharply higher this year because of the takeover premium, suggesting investors still believed a deal would go through.

As foreign entities, Apollo and Castlelake must propose an ownership structure that meets UK and European rules requiring airlines to be majority owned and controlled by regional nationals. Jarvis said on an earnings call that the EU review of ownership rules was an ongoing process that could last two to three years. He said its timeline went well beyond Apollo's bid process and was not linked to it.

Under UK regulations, Apollo has until August 7 to make a firm offer or walk away, while Castlelake has until August 3.

EasyJet's losses had deepened by 27 percent in the first half of its financial year, to £377 million, as the US-Iran conflict pushed up fuel prices and disrupted travel plans.