EasyJet (LSE:EZJ) shares are closed as the war in the Middle East continues. I FTSE 100 the stock has fallen 8% over the past five days, and peaked 26% over the past month.
Does this present an excellent opportunity to buy the dip? It is not an opportunity, it is my deep bearish opinion. Here are just four reasons why I avoid budget airlines.
1. Route disruption
Perhaps the most obvious reason is the possibility of protracted conflicts in the Middle East. Airlines around the world have had to cancel and postpone flights as key tourist destinations come under threat.
easyJet itself canceled flights to Cyprus in the past weeks before resuming them. It also made plans to restart flights to Tel Aviv in the long grass after planning to resume in March. The possibility of a protracted war leaves the door open for further disruption.
2. Oil prices
The size of the European airline industry means that this disruption will have a negative impact on the club’s profitability. Still, this could be enough to send easyJet’s share price lower given how fragile investor sentiment is.
The impact of rising oil prices, on the other hand, could be disastrous for both figures. Brent continues to rise above $100 per barrel, which is disastrous for the airline’s curves (fuel costs make up about a third of easyJet’s total costs in a typical year).
The continued blockade of the Strait of Hormuz may continue to skyrocket, which – although easyJet blocked 62% of its fuel needs in April-September – will still take a huge profit.
3. Ticket sales
Airlines have the option of passing these additional costs on to customers. But their ability to do this effectively to protect margins is likely to be severely limited.
Why? Rising oil prices also increase inflationary pressures and impact economic growth. In this situation, consumer spending on select items such as vacations is already at risk, even for budget airlines. An increase in ticket prices may lead to reduced revenue in this climate.
4. Competition
easyJet’s room to maneuver in ticket prices is also limited by the huge competition it faces. This is a long-term problem that discouraged me from buying airline stocks long before the Middle East conflict started.
Ryanair is a fierce competitor of the FTSE firm, and other carriers like it AG they have combined their budget activities to increase the pressure. As a result, easyJet’s margin was less than 5% in the last financial year (to September 2025) despite a very good period, and it still couldn’t scream.
Bottom line
On the other hand, easyJet’s share price is incredibly cheap today. At 363.5p, it trades at 5.3 times forward earnings (P/E). This would prevent the airline’s share price from sinking further. It may also help us to grow more if the news surrounding the conflict in the Middle East improves.
I think easyJet shares would be worth considering for risk tolerant investors. But I wouldn’t buy an FTSE 100 airline myself.
