The travel company, which also warned of the delayed delivery of new planes, said it expects the consumer environment to remain challenging in the near term
Shares in Jet2 have fallen by 10% as the travel titan flagged up surging hotel and flight expenses, alongside a delay in the delivery of new aircraft for the summer period.
The boss of the company, which operates both airline Jet2.com and holiday package provider Jet2holidays, has hinted that profit margins might take a hit in the coming year. The squeeze on profits is partly due to costs soaring above inflation, hitting essential outlays such as hotel stays, plane upkeep, and general airport fees, the firm informed its shareholders.
It also sounded the alarm over the postponed arrival of new jets, which means it will incur extra costs over the summer period. Jet2 had previously disclosed it’s bracing for an extra £25m annual bill to cover increased employer national insurance contributions and a raised national minimum wage.
This comes on top of an extra £20m in costs related to meeting sustainable aviation fuel requirements for planes. Steve Heapy, the chief executive of Jet2, stated: “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.”
Despite the challenges, the firm is forecasting a pre-tax profit in the ballpark of £560m to £570m for the year ending March, marking up to a 10% increase on the previous year. The company also shared that bookings for April through June have seen a 7% uptick compared to last year, with package holiday customers growing by 4% and flight-only passengers skyrocketing by 19%.
This mirrors an ongoing consumer trend of booking trips closer to the departure date, leading to a surge in last-minute travel plans. The recent expansion to London Luton and Bournemouth airports has fuelled growth and boosted bookings, although the new hubs are projected to operate at a loss in their first year.
Jet2 noted that pricing remains competitive, with both holiday and flight prices experiencing a slight hike. However, shares in the company dipped by around 10.5% on Wednesday morning.
