- Company places near-$4 billion order with Airbus for 35 new aircraft
- UK’s number one package holidays operator after market share wins
- Share price has rallied almost 10% during the past week
After share price falls of nearly 40% this year, prospects may be starting to significantly improve for Jet2 (JET2:AIM), and it is putting money where its mouth is.
The airline and package holidays company has announced plans to commit almost $4 billion to further refresh its aircraft fleet, placing orders for 35 new planes from Airbus. There is also an option to double the deal to 71 aircraft at a value of $8 billion.
The new orders are a massive vote of confidence in the business and are designed to meet the ‘future anticipated growth’ that the company sees before it.
‘The order reflects our confidence that we have a much-loved product built on sector leading customer service which we can continue to grow and these aircraft will ensure our customers have a wonderfully comfortable and enjoyable experience as they travel with us,’ said executive chairman Philip Meeson.
Airbus A320neos ordered by Jet2
Meeson added that the new plane orders will provide certainty of supply well into the next decade.
HOLIDAY DEMAND REMAINS STRONG
Jet2’s display of optimism will give a lift to investors who have suffered significant blows since the Covid pandemic first emerged in February 2020, forcing major disruption on the global economy.
The year to 31 March 2021 saw Jet2 revenues plunge and profits wiped out, but there were significant signs of recovery in the 12 month period to March 2022. That trajectory is seen accelerating this year (to March 2023), with analysts at Canaccord Genuity forecasting a return to profit (£293.5 million on a pre-tax basis) on record revenues of circa £4.9 billion, thanks to anticipated market share wins.
In July 2022, Jet2 said reported that more than 35% of its summer 2022 bookings were from new customers. The company also said that average load factors (how many seats on planes were filled) were only 1.4 percentage points behind summer 2019 even though the company had expanded seat capacity by 14%.
It added that pricing at the time remained ‘robust,’ encouraging given the stiff inflationary pressures on households this year.
INVESTING TO GROW
The company has negotiated ‘significant discounts’ for its latest plane orders on base prices of the new generation A320neos. This planes agreement comes roughly a year after Jet2 placed orders for A321neo aircraft, which means the company now has 98 aircraft on firm order, which could eventually extend to up to as many as 146.
The new A320neos aircraft will be configured for 180 seats with a cabin featuring innovative lighting, new seating and 60% larger overhead baggage bins for added personal storage, according to Airbus.
Jet2 said it will retain flexibility ‘in determining the most favourable method of financing the aircraft, which will be through a combination of internal resources and debt’.
According to the company, Jet2holidays is the UK’s largest package holidays provider to many Mediterranean and Canary Islands leisure destinations, while Jet2.com is the UK’s third largest airline by number of passengers flown.
Jet2 shares stayed largely flat at 733p on the plane order, although the stock has risen almost 10% over the past week.
