Jet2 parent warns of emerging headwinds
Jet2’s parent company is sticking with its long term plan to grow its flight-only and package holiday business despite growing cost pressures and Brexit uncertainty.
Sharing its results for the half year to September 30, it said summer 2018 had ‘proven to be a particularly strong season’~for its leisure travel business, but it was less positive about the rest of the year and also next summer.
It expects higher losses in the second half of the year as it continues to invest in additional aircraft and marketing, together with the rising cost of retaining staff ahead of further expansion across all of its bases in summer 2019.
"Looking ahead, significant cost pressures such as fuel and other operating charges, plus the necessary continued investment in our products and operations including that required to retain and attract colleagues, are emerging headwinds," said executive chairman Philip Meeson.
"This, coupled with the overall uncertain UK economic outlook particularly related to Brexit and how it may impact on consumer spending, means we remain unclear how demand will develop in the medium term.
"However, our strategy for the long term remains consistent – to grow both our flight-only and package holiday products. On the assumption that the UK Government secures a pragmatic and balanced Brexit agreement with the EU, the outlook remains bright and we continue to have confidence in the resilience of both our leisure travel and distribution & logistics businesses."
During the six-month period, Jet2.com flew a total of 8.93 million flight-only and package holiday passengers (one-way passenger sectors), a rise of 25% and slightly ahead of the 24% seat capacity increase.
Average load factors improved by 1.2 percentage points to 94.4%, which included ‘encouraging performances’ from its two new operating bases at London Stansted and Birmingham.
Average flight-only ticket yield per passenger sector was £88 – 17% up on the ‘challenging market’ in summer 2017.
The average package price grew by 7% to £689.
Leisure travel revenue overall grew by 38% to £2,158.2 million at an operating profit margin of 16%, higher than the 13% in 2017.
Operating profit grew 69% to £347.8 million.
Overall, Dart Group’s operating profit rose by 68% to £350 million.
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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