- Profit guidance raised for the second time in three months
- Canaccord lifts new financial year EPS forecast by 27%
- Airline sector has enjoyed strong rally over past six months
Low-cost airline Jet2 (JET2:AIM) has seen its share price double over the past six months as demand from passengers to fly has soared. Momentum looks good as the company has once again issued a strong update, lifting profit guidance for the second time in three months.
In January the company said it would beat full-year market forecasts of £317 million with an estimate between £370 million and £385 million.
That guidance has now been upgraded to a range of £387 million to £392 million, covering the 12 months to the end of 31 March 2023. Jet2 will announce its full-year results on 6 July.
MORE SEATS AVAILABLE TO MEET DEMAND
Given strong demand, Jet2 has increased its fleet capacity, meaning there are now approximately one million extra seats available for travel in summer 2023 versus last year.
‘Forward bookings to date remain encouraging, with the mix of package holiday customers representing just over 75% of total departing passengers and five percentage points higher than summer 2022 at the same point. In addition, average load factors for summer 2023 are currently 0.7 percentage points ahead of summer 2022,’ said Jet2. Load factor is a term to describe the percentage of available seating capacity that has already been filled with passengers.
CONSUMERS PRIORITISING HOLIDAYS
Russ Mould, investment director at AJ Bell, says: ‘The bleaker it gets at home the more desperate people seem to be to jet away. Perhaps it’s no surprise people will do everything they can to afford a week in the sun to escape the literal and metaphorical clouds at home.
‘And with Britons racing to book holidays it is a natural progression to see Jet2 upgrade its profit outlook.
‘As evidenced by its market share gains in recent times, Jet2 is being rewarded for good customer service and for treating travellers with a measure of respect which was conspicuous by its absence at some other operators during the pandemic.
CANACCORD UPBEAT
Canaccord Genuity analysts Damian Brewer has increased his earnings per share forecast for the financial year to March 2024 by 27% to 147.6p.
He says: ‘We lift forecasts as the outlook climbs and probability of profit delivery rises. Jet2 bookings have strengthened, and average load factors are now slightly ahead of Winter 2018/19 (at the same point) on 24% more seat capacity and achieved pricing and margins looking “significantly higher”.
‘We think summer 2022 proved Jet2’s commitment to delivering holidays for customers (rather than the cancellations seen with competitors). We anticipate that the confidence and loyalty built will pay back in 2023’s tougher market as Jet2 takes market share with its focus on all-inclusive holidays with customer-first service.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The editor of this article (Daniel Coatsworth) owns shares in AJ Bell.
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