Jet2 swung back into profit with a strong summer performance after preparing well in advance for a return to international travel in the wake of the pandemic.
The group achieved a pre-tax profit of £450.7 million in the six months to September 30 against a loss of £205.8 million in the same period last year.
However, operations were directly impacted by the broader disruption seen across the aviation sector and its supply chains in mid-summer, which has resulted in “significant delay and compensation costs” of more than £50 million.
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Seat capacity increased 14% against pre-pandemic summer 2019, with “buoyant customer demand” resulting in the business achieving an average load factor of 90.7%.
The mix of higher margin package holiday customers was 65.9%, up 13.1 percentage points against summer 2019.
The average price of a Jet2holidays package increased 5% year-on-year to £782 “reflecting inflationary increases in costs and favourable pricing driven by destination mix and robust consumer demand”.
The company said it was on track to exceed current average market expectations for group profit before foreign exchange revaluation and taxation for the year ending March 31, 2023.
But it added: “Looking ahead, the group faces input cost pressures including fuel, carbon, a strengthened US dollar and wage increases, plus investment to ensure our colleagues can thrive and have a balanced lifestyle, further underpinning our operational resilience.
“This leads us to conclude that margins may come under some pressure.”
Jet2 insisted it had “the right product for tougher times” with variable duration holidays and a wide ranging product portfolio.
This “will provide customers with plenty of choice and flexibility to be able to tailor their holiday plans to meet their individual budgets.
“As a result, we remain confident that our customers’ eagerness to take their much valued and anticipated holidays.”
Executive chairman Philip Meeson said the half-year profit came “despite a difficult return to normal operations, primarily due to the lack of planning and preparedness of many airports and associated suppliers”.
He said: “The business made considerable investment well ahead of summer 2022, retaining over 8,000 loyal colleagues throughout the pandemic and significantly topping up the Coronavirus Job Retention Scheme funding on a sliding scale basis up to 100% of salary for the lowest paid, recruiting and training seasonal colleagues in good time, making substantial marketing investments, plus early and meaningful salary increases for all colleagues.
“This left us very well prepared for our summer operation and also enabled Jet2.com to earn the accolade of being the only UK airline not to cancel a flight during July and August 2022, according to leading travel intelligence company, OAG.”
Meeson added: “Despite our colleagues working incredibly hard and consistently going the extra mile to take our customers on their long-awaited holidays, unfortunately some customers still faced frustrating delays as our operations were directly impacted by the broader disruption seen across the aviation sector and its supply chains as was widely reported in the media.
“Regrettably, this resulted in Jet2 incurring delay, compensation and customer expenses reimbursement costs in excess of £50 million under UK (EU) Regulation 261/2004 (“EU261/2004″) which was materially higher than in summer 2019.
“In addition, our in-flight retail financial performance was weaker than expected, due to product supply chain issues early in the summer season, plus poor onboard product availability caused by resource constraints at our third party inflight retail provider.”
Looking forward to winter, he said: “As is typical for the business, losses are to be expected in the second half of the financial year, as we continue to invest in additional aircraft; marketing to ensure we optimise our pre-summer 2023 forward booking position; retaining increasing numbers of colleagues through the winter months to ensure maximum operational resilience ahead of next summer; and attracting new colleagues in readiness for further expansion of our exciting package holiday and flight-only offerings for summer 2023, in line with our planned growth targets.”
He described winter 2022-23 bookings as encouraging with “robust” pricing.
“But recognising that the important post-Christmas booking period is still to come, we are presently on track to exceed current average market expectations for group profit before FX revaluation and taxation for the year ending 31 March 2023,” he added.
Current seat capacity for summer 2023 is about 5% higher than this year and 20% up on summer 2019 with bookings “at this very early stage encouraging, average load factors broadly in line with summer 2019 at the same point and pricing strong”.
“The strength of our recovery post Covid reinforces our view that we have a great future in the leisure travel industry,” Meeson said.
“Our long-term ambition remains to be the UK’s leading and best leisure travel business.”
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