easyJet (LSE:EZJ) shares are locked in a nosedive as the Middle East war continues. The FTSE 100 stock’s down 8% over the last five days, and a whopping 26% during the past month.
Does this provide an excellent dip-buying opportunity? Not a chance, is my own deeply bearish view. Here are just four reasons I’m avoiding the budget airline.
1. Route disruption
Perhaps the most obvious reason is the possibility of prolonged conflict in the Middle East. Airlines around the world have had to cancel and postpone flights as key tourism hubs come under fire.
easyJet itself has cancelled flights to Cyprus in recent weeks before resuming them. It’s also kicked plans to recommences flights to Tel Aviv into the long grass after earlier planning a March restart. The probability of a drawn-out war leaves the door open to further interruption.
2. Oil prices
The airline’s enormous European wingspan mean these disruptions will have a negligible impact on group profits. Still, this could be enough to send easyJet’s share price lower given how fragile investor sentiment is.
The impact of soaring oil prices, on the other hand, could be catastrophic on both counts. Brent continues to rise above $100 per barrel, which is catastrophic for airline margins (fuel costs account for around a third of easyJet’s total costs in a normal year).
A continued blockage of the Strait of Hormuz could keep driving crude skywards, which — although easyJet has hedged 62% of its fuel requirements for April-September — would still take a huge bite out of profits.
3. Ticket sales
Airlines have an option to pass these extra costs to customers. But their ability to effectively do this to protect margins is likely to be hugely limited.
Why? The surging oil price is also fanning wider inflationary pressures and impacting economic growth. In this climate, consumer spending on discretionary items like holidays is already in peril, even for budget airlines. Ticket price hikes could hammer already subdued revenues in this climate.
4. Competition
easyJet’s wiggle room on ticket prices is also constrained by the huge competition it faces. This is a long-term issue that discouraged me from purchasing airline shares long before the Middle East conflict began.
Ryanair is the FTSE firm’s fiercest rival, and other carriers like IAG have ramped up their own budget operations to raise the pressure. As a result, easyJet’s margin was below 5% in the last financial year (to September 2025) despite what was a pretty favourable period, and could clatter still lower.
Bottom line
On the plus side, easyJet’s share price is incredibly cheap today. At 363.5p, it trades on a forward price-to-earnings (P/E) ratio of 5.3 times. This could prevent the airline’s share price sinking any further. It could also help it spring higher if news around the Middle East conflict improves.
I think easyJet shares could be worth considering by more risk-tolerant investors. But I won’t be buying the FTSE 100 airline myself.
