Jet2 is having to keep summer prices “attractive” due to a late booking trend as the UK’s largest holiday group reported a 33% jump in annual profits.
Pre-tax profits for the year to March 31 came in at £520 million against £390 million in the previous 12 months as revenue rose by almost a quarter to £6.2 billion.
Passenger carryings were up by 9% to 17.72 million, with higher-margin package holidaymakers rising by 15% to 6.08 million.
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Chief executive Steve Heapy cited the company’s proactive approach to enable it to navigate wildfires in Rhodes, floods in Skiathos, the technical failure of the Nats air traffic control system together with a record number of air traffic control strikes across Europe and “mitigate the impact on our customers”.
Underlying “future confidence”, the group is exercising remaining 36 Airbus aircraft purchase rights and now has a delivery stream of 146 firm orders for A321neos through to 2035.
Capacity for this summer is 12.3% higher than last year at 17.16 million seats, with package holiday bookings up 7% to represent 7% of the total.
“Passengers are currently booking much closer to departure and therefore pricing for flight-only and package holiday products must remain attractive,” Heapy said.
“Summer 2024 pricing to date is showing a modest increase, helping to offset in part previously announced input cost increases.”
He added: “As ever, we remain mindful of there 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 holidays is a resilient and popular product which remains high on the priority list for our customers, even during uncertain economic times.”
The group described year-to-date business as being in line with expectations.
Heapy added: “Given late booking profile and the peak summer months of July, August and September not yet complete, plus the majority of winter 2024-25 seat capacity still to sell, it remains premature, as it always is at this time of the year, to provide definitive guidance as to the group profitability for the financial year ending 31 March 2025.”
Heapy highlighted how 9% of package holidays customers book via the company’s contact centre.
“Sales through travel agents remains an important distribution channel for the business, and our package holidays can be booked through all major independent travel agent chains, homeworker companies and independent agents,” he added.
“Technology and how customers interact with it is perpetually evolving and our websites and mobile app are continuously developed and refined to ensure that the search and booking experience is as effortless and efficient as possible.”
Executive chairman Robin Terrell said: “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, whilst ensuring we maintain financial stability and flexibility.
“With this in mind, and demonstrating our confidence in our future growth plans, we recently exercised the remaining 36 purchase rights of our Airbus aircraft order originally announced in late 2021, meaning we now have a firm delivery stream of 146 A321neo aircraft through to 2035.
“This valuable long-term order provides favourable operating cost efficiencies and enables us to confidently plan for the long-term as we continue to expand our footprint and the range of new and exciting destinations, ensuring we can continue to delight our Customers for years to come.”
Responding to the full-year results, Julie Palmer, partner at corporate restructuring firm Begbies Traynor, said: “Jet2 has shown why confidence has slowly but surely returned to the aviation industry, as it announced a significant dividend increase.
“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.
“There is a slight concern that momentum could stall, following this morning’s guidance that passengers are currently booking much closer to their departure date. Management will need to ensure pricing remains competitive.
“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.”