Jet2 confirmed a late booking trend for summer holidays and highlighted cost concerns as it warned that future profit margins may come under pressure.
The UK’s largest tour operating group raised profit projections by up to 10% to between £560-£570 million for the year to March but warned of “cost headwinds” in the year ahead.
The company confirmed that summer capacity was 8.5% up on last year at 18.6 million seats, with new bases at Bournemouth and Luton airports contributing more than 700,000 seats.
However, Jet2 warned that it faced “material cost increases” due to increased employer National Insurance and the National Living Wage, resulting in a previously announced £25 million hit.
The government’s mandated increase to 2% of sustainable aviation fuel (SAF) will also result in more than £20 million of incremental costs, “owing to the significant price differential between SAF and conventional jet fuel”.
Jet2 also warned in a trading statement that it faces delays to the delivery of 14 new Airbus A321neos due this summer to increase the fleet to 23.
“Unfortunately, a number of these aircraft will be delayed from their agreed delivery dates and consequently we expect to incur additional operational costs to cover aircraft gaps in the peak summer flying programme,” the company disclosed.
“Nevertheless, we remain very pleased that the A321neo aircraft are already demonstrating their strategic value in terms of operating economics, reduced emissions and customer experience.”
Separately, the group continues to experience “inflationary input cost pressures” exceeding the headline CPI [inflation] rate, “in particular in the large cost areas of hotel accommodation, aircraft maintenance and general airport and Eurocontrol charges”.
The company added: “To date we are continuing to see a later booking profile. For the combined departure months of April, May and June, total forward bookings are up by approximately 7% with overall average load factor for our existing bases broadly flat.
“Bookings for our two new bases are encouraging, although the average load factor at London Luton is materially lower than that of existing bases due to it only going on sale when operations were announced in November 2024.
“For the same departure months, package holiday customers have increased by 4%, while flight-only passengers have grown by 19%. Pricing remains keen with our package holiday product displaying a modest average increase and flight‐only slightly positive.”
Winter 2024-25 on sale capacity at 5.1 million seats is 14% higher year-on-year “with the closer to departure, later booking profile experienced during summer 2024 having continued.
“Season to date booked average load factor is down by 2.2 percentage points, with the month of March and the later timing of Easter year-on-year contributing 1.3 percentage points of this decrease. Overall pricing for the season has remained competitive.”
Chief executive Steve Heapy said: “We are very pleased with how the 2025 financial year is ending and our expected 8%-10% profit growth, and given the limited forward visibility we are satisfied with early bookings for summer 2025.
“We continue to believe that our customers cherish their time away from our rainy island and want to be properly looked after throughout their holiday experience and we will continue to invest in our business to meet these expectations.
“However, we also recognise the current macro-economic conditions and the many demands placed on consumer discretionary incomes, which combined with the later booking profile and cost headwinds detailed, may mean profit margins in the year ahead come under some pressure.
“Nevertheless, our customer first focus remains unwavering and as a much trusted holiday provider with an end-to-end customer care approach, we remain confident customers will continue to travel with us to the sun spots of the Mediterranean, the Canary Islands and to European leisure cities for many years to come.”
The group is due to provide a further update in April and issue preliminary results for the year ending March 31 on July 9, which will include a fuller outlook for the “all-important” summer 2025 trading period.