- Share price jumps more than 5% as profits surge
- Analyst ups full-year profit projection by £27.5 million
- Fuel and wage cost hikes still a threat
Low-cost holidays and leisure airline Jet2 (JET2) saw half-year profits surge on strong demand and the company now anticipates beating current forecasts for the full-year.
Profit before foreign exchange revaluation and tax for the six months to 30 September 2022 hit £505 million on £3.57 billion revenue as demand from Brits booking holidays and overseas breaks came surging back from Covid. That profit represented a 44% jump on pre-Covid half-year profits while sales were up 730% on last year.
This time last year, Jet2 ran-up up losses of £195.1 million.
Jet2 has been making a rapid recovery from travel restrictions early in 2022 while what the company called ‘robust’ pricing and cost controls helped offset a £50 million charge stemming from widespread disruptions at airports over the summer.
The group, known for offering low-cost scheduled and charter flights to European holiday hotspots, added that winter demand is ‘encouraging’ ahead of its key post-Christmas booking period.
While little can be taken for granted in this most volatile of years, investors sent the Jet2 share price up more than 5% to 938p, with the company predicting that full-year profit before foreign exchange revaluation and taxation for the year ending to 31 March 2023 will beat current average market expectations.
£30 MILLION PROFITS BEAT
Analysts at Canaccord Genuity anticipate second half profit before tax losses of £184 million. ‘Going into winter, bookings are encouraging with robust pricing,’ the broker said. ‘With a £30 million first-half beat we lift full-year 2023 profit before tax to £321 million.’
That’s based on £5.04 billion revenue. Before today’s announcement, Canaccord had been predicting pre-tax profit of £293.5 million on £4.89 billion revenue.
But Jet2 warned that it still faces headwinds from broader economic trends, including rising input cost pressures for fuel, a strengthened US dollar, and wage increases.
‘This leads us to conclude that margins may come under some pressure, but encouragingly the strength of our recovery post Covid underlines our belief that customers truly cherish their weeks away in the sun and want to be properly looked after throughout their holiday experience,’ said executive chairman Philip Meeson in a statement.
