EasyJet PLC (LSE:EZJ) shares fell 2.8% to 380p as it revealed that first-half losses are likely to widen due to the war in Iran ramping up jet fuel costs, with booking patterns also becoming more uncertain in recent weeks.
The budget airline said it would report a headline pre-tax loss of £540 million to £560 million for the six months to March, up from the headline loss of £394 million a year ago.
Passenger demand was said to have remained resilient, with planes 90% full on average and easyJet holidays customer numbers rising 22%.
Revenues were supported by a modest increase in ticket prices in the second quarter.
But profits were hit by around £25 million in additional fuel costs in March as oil prices surged, alongside a £30 million increase in legal provisions for "a number of historic cases".
Chief executive Kenton Jarvis said despite the encouraging demand trends, "our H1 financial performance worsened year on year, impacted by the conflict in the Middle East and the competitive environment in some markets".
The airline revealed that booking patterns have become more uncertain in recent weeks, with customers waiting longer to book and weaker demand for destinations such as Egypt, Turkey and Cyprus.
But Jarvis said the strong balance sheet and £4.7 billion of liquidity mean easyJet is "well placed to navigate current geopolitical challenges while remaining focused on our medium term targets", though fuel price volatility will continue to weigh on costs in the months ahead.
Broker Panmure Liberum said the war in the Middle East was not just leading to higher fuel costs, but also having "a larger and more persistent adverse impact on forward bookings".
Analysts noted that while late demand was strong in March, "there is reduced visibility from later bookings", with bookings for the second half of the year currently around 2 percentage points lower than last year, with a "mixed picture" on yields.
"Given the uncertain environment, we have made significant cuts to our forecasts to reflect weaker unit revenue assumptions this year. We expect demand to be resilient, but it may require price stimulation in the short term."
** UPDATE: Adds share price and broker comments **