RECORD passenger numbers saw turnover and profit soar at holiday firm Jet2 amid challenging times for UK consumers who are still navigating the cost of living crisis but prepared to book last-minute getaways.
The Leeds-based airline and package holiday specialist booked a 43% rise in pre-tax profits to £529.5 million for the year to March 31 as passenger numbers rose by 9% to hit a record 17.7 million. It reported revenue of £6.26 billion for the year, up 24% from £5.03bn in 2022/23.
The group announced a final dividend of 10.7p per share, an increase of 34%.
Jet2 formula a success as leisure group's profits soar
Jet2’s solid performance came as it revealed prices of its holidays increased by an average of 11% to £830 as it sought to recoup soaring inflation and it warned holidaymakers can expect to see further “modest” increases over the summer months.
Robin Terrell, overseeing his first set of full-year results since succeeding Philip Meeson as chairman in September 2023, acknowledged that it had been a “challenging year for UK consumers with rising inflation and elevated interest rates putting pressure on disposable income levels”.
However, he noted: “Against this backdrop we made further progress on our growth strategy, delivering record passenger numbers, revenues and profitability, and strengthening our balance sheet to underpin future growth and provide financial resilience and flexibility.
“I am extremely pleased with how our leisure travel business has performed in the two years since the pandemic. Not only have we capitalised on the growth opportunities presented, with the business having nearly doubled its pre-Covid revenue, we have also remained true to our values of carefully investing to secure our long-term growth aspirations.”
Jet2, which has 11 bases including Edinburgh and Glasgow north of the Border, took delivery of a further six new Airbus A321neo aircraft during the year, bringing the total to seven. It recently exercised its remaining purchase rights with Airbus and now has firm orders in place for an additional 139 A321neo aircraft.
Jet2 profits soar despite external challenges
The group opened its newest base at Liverpool’s John Lennon Airport in March this year and operations from its 12th UK base at Bournemouth Airport are set to begin from February 2025.
Mr Terrell noted that the business taken on over 5,000 new staff and expanded its apprenticeship programme to “include over 150 individuals who we hope, in time, will become the bedrock of our future business”.
Jet2 said it recently updated its sustainability strategy, “with a series of bold, clear and pragmatic actions on route to net zero by 2050, outlining an emissions reduction pathway which will bring our 2035 carbon intensity in line with the science-based targets initiative (SBTi) guidance”.
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“Importantly, the strategy focuses on existing technologies and tangible actions that can be taken currently, with a commitment to understanding and investing in emerging technologies as appropriate,” Mr Terrell added.
Steve Heapy, Jet2 group’s chief executive, added that while more people were booking last-minute getaways, the results underlined the “popularity, resilience and flexibility of our holiday products and also our leading brand position, despite the continuing inflationary pressures”.
He also noted that higher margin per passenger package holiday customers grew 15% to 6.08 million, compared with 5.29 million in 2023. Summer 2024 on-sale seat capacity is currently 12.3% higher than at 17.16 million seats, Mr Heapy said.
“Passengers are currently booking much closer to departure and therefore pricing for our flight-only and package holiday products must remain attractive,” he pointed out. “Summer 2024 pricing to date for both products is showing a modest increase, helping to offset in part previously announced input cost increases.
“As ever, we remain mindful of the current macro-economic and geo-political environments and how these may influence future consumer spending patterns. However, we continue to believe that the end-to-end package holiday is a resilient and popular product which remains high on the priority list for our customers, even during uncertain economic times.”
Mr Heapy said that while trading is currently in line with the group’s expectations, given the late booking profile and the peak summer months of July, August and September not yet complete, and with the majority of winter 2024/2025 seat capacity still to sell, “it remains premature, as is always the case at this time of year, to provide definitive guidance as to group profitability for the financial year ending March 31, 2025.”
Analyst Julie Palmer, partner at Begbies Traynor, said Jet2 has shown why confidence has “slowly but surely returned to the aviation industry”, noting: “Like many of its peers, the leisure travel brand has had to contend with cancellations in recent weeks, but the numbers it reported for its full year are encouraging – record passenger numbers and revenues contributing to profits leaping 40%. It is no wonder that Jet2 has chosen to reward shareholders.”
However, she cautioned: “There is a slight concern that momentum could stall, following guidance that passengers are currently booking much closer to their departure date. Management will need to ensure pricing remains competitive.
Jet2 new holiday destination from Glasgow and Edinburgh airports
“Of course, Jet2 is at an advantage in being primarily a tour operator, with the majority of its seats sold as part of a package holiday. This means it is less exposed to fluctuations in aviation pricing and better able to withstand headwinds compared to some of its peers.
“Promisingly for the entire market, Jet2 appears confident about the future with the decision to exercise rights on its Airbus orders, giving them a steady supply of aircraft until 2035. If Jet2 and other airlines are able to get through a busy summer period relatively untouched by travel disruption, the share price might have the capacity to soar higher yet.”
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