Jet2 plc
Interim Results for the half year ended 30 September 2024
Another record performance with full year outlook upgraded
| Group financial highlights (unaudited) | HY25 | HY24 | % change |
| Revenue | £5,085.4m | £4,407.4m | 15% |
| Operating profit | £701.5m | £617.0m | 14% |
| Profit before FX revaluation and taxation* | £772.4m | £664.6m | 16% |
| Profit before taxation | £791.4m | £660.5m | 20% |
| Profit for the period after taxation | £592.9m | £496.0m | 20% |
| Basic earnings per share | 279.3p | 231.0p | 21% |
| Interim dividend per share | 4.4p | 4.0p | 10% |
| · | Further strong progress made against our growth strategy as the Group delivered another record performance in terms of passenger numbers, revenues and profitability. |
| · | Strong financial performance as Group operating profit increased 14% to £701.5m and Group profit before foreign exchange revaluation and taxation* increased 16% to £772.4m. |
| · | Total cash and money market deposits increased 12% to £3,596.4m (2023: £3,214.6m). Own Cash* (excluding customer deposits) increased 9% to £2,318.3m (2023: £2,121.2m), providing a solid foundation for the increasing gross capital expenditure in new aircraft fleet over the coming years. |
| · | Ten new Airbus A321neo aircraft received and in service. Investment continues in infrastructure and technology to improve our Customer First product proposition and support our growth ambitions. |
| · | Winter 2024/25 on sale seat capacity is currently 14% higher than Winter 2023/24 at 5.11m seats. The closer to departure, later booking profile experienced during Summer 2024 has continued. Average pricing to date is displaying a modest increase for our package holiday product, with flight-only slightly ahead. |
| · | With a material amount of the Winter 2024/25 season still to sell, we are currently on track to deliver Group profit before FX revaluation and taxation for the year ending 31 March 2025 ahead of market expectations‡, assuming no material extraneous events in the remainder of the financial year. |
| · | Summer 2025, on sale capacity of 18.74m seats is approximately 9% higher than Summer 2024, including our new UK bases at Bournemouth and London Luton airports. Bookings and pricing at this very early stage are in line with management expectations. |
Steve Heapy, Jet2 plc Chief Executive Officer, commented:
“We are delighted to have delivered another record financial performance during the first half of the year. This result continues to demonstrate that our end-to-end package holidays and scheduled holiday flights, underpinned by our Customer First approach, remain popular and resilient products.
I would also like to thank our amazing Colleagues who have helped deliver this result and who are ambassadors of our People, Service, Profits guiding principles and who continue to deliver award winning, sector leading customer service on a daily basis.
Even in difficult economic times, the annual overseas holiday remains a highly valued and eagerly anticipated experience, often taking precedence over other discretionary spend. As a result, we are confident that our proven business model – anchored to delivering a fantastic customer service with a well-established, trusted holiday brand – offers customers a compelling value proposition. With our extensive product range, appealing flight times and truly variable duration holidays, customers have plenty of choice and flexibility to be able to tailor their holiday plans to meet their individual budgets.”
| * | Further information on the calculation of this measure can be found in Note 3. |
| ‡ | Based on Company compiled consensus, the Board believes the current average market expectations for Group profit before FX revaluation and taxation for the year ending 31 March 2025 to be £541m. |
Analyst and Investor call
The management team will host an investor and analyst conference call at 9.00am UK time, on Thursday, 21st November 2024. For dial-in details for the conference call, please contact Burson Buchanan in advance to register: Jet2@buchanan.uk.com
STRATEGIC AND OPERATIONAL UPDATE
Results for the half year
We are very pleased to report another record financial performance as the business delivered a 14% increase in Group operating profit to £701.5m (2023: £617.0m) and a 16% increase in Group profit before foreign exchange revaluation and taxation to £772.4m (2023: £664.6m). This result underlines the popularity, flexibility, resilience and continuing momentum of our Customer First product offering. Consequently, basic earnings per share increased 21% to 279.3p (2023: 231.0p).
For the reporting period, seat capacity increased by 13% to 14.85m (2023: 13.20m), with Jet2.com flying 13.34m passenger sectors (2023: 11.97m). Passenger demand was characterised by a higher proportion than usual booking much closer to their departure date, meaning pricing for both our package holiday and flight-only leisure travel products needed to remain consistently attractive.
Our higher absolute margin per passenger package holiday customers increased by 8% to 4.67m (2023: 4.31m) reinforcing Jet2holidays’ position as the UK’s leading tour operator and representing 69.2% of the total mix of flown passengers (2023: 70.8%). Average package holiday pricing remained resilient, growing by 6% to £904 (2023: £855) as supply-led inflationary increases were passed on.
Pleasingly, appetite for our shorter lead time flight-only product also increased by 18% to 4.11m passengers (2023: 3.49m). While Flight-only ticket yield per passenger sector declined by 1% to £130.81 (2023: £131.71†), total margin gained from the strong late demand more than offset this slight price decrease.
As is typical for the Group, losses are to be expected in the second half of the financial year, as we continue to invest in:
| · | additional aircraft to support seat capacity growth of approximately 9% for Summer 2025; |
| · | marketing to ensure we optimise our pre-Summer 2025 forward booking position; |
| · | Sustainable Aviation Fuel (SAF) in line with the UK and EU Governments’ mandates of a minimum 2% blend in the jet fuel supply from 1 January 2025; |
| · | retaining sufficient operational colleagues through the winter months to ensure appropriate resilience ahead of Summer 2025; and |
| · | attracting new colleagues in readiness for further expansion of our exciting package holiday and flight-only offerings, including at our new UK bases at Bournemouth and London Luton airports where operations commence in February and April 2025 respectively. |
In addition, the final quarter will not benefit from last year’s early Easter, making the prior year comparatives more challenging.
† The prior year Flight-only ticket yield per passenger sector and Non-ticket revenue per passenger sector have been restated. Further information on this can be found in Note 4.
Interim Dividend
In view of the half year financial performance, the current full year outlook, its continued confidence in the Group’s prospects and in line with its capital allocation principles, the Board has resolved to pay an interim dividend of 4.4p per share (2023: 4.0p). The dividend will be paid on 7 February 2025 to shareholders on the register at 3 January 2025, with the ex-dividend date being 2 January 2025.
Operational Highlights
Our Commitment to Sustainability
In May 2024, the Group updated its Sustainability Strategy, with a series of bold, clear and pragmatic actions throughout our business (In the Air; On the Ground; and In Resort) on our path to net zero by 2050. We recently submitted our plans to the Science Based Targets initiative (SBTi) for external review and validation, demonstrating our commitment to deliver a 35% carbon intensity reduction by 2035. We were also pleased to receive ISO 14001 accreditation recently, meaning that Jet2‘s approach to sustainability has been certified to the internationally recognised standard for environmental management.
During 2024, Jet2.com used a 1% blend of SAF at London Stansted, Bristol and Malaga airports, purchasing approximately 1,200 tonnes almost a year ahead of the UK and EU Governments’ SAF mandates due to be introduced from January 2025. In addition, we continued to support our hotel partners on their journey towards becoming independently certified as sustainable – we now proudly offer over 1,200 hotels as part of our Certified Sustainable Hotels collection, giving our Customers the ability to make more sustainable accommodation choices.
More detailed information on the Group’s Sustainability Strategy can be found at www.jet2plc.com/sustainability.
Aircraft Fleet
In June 2024, we exercised the remaining 36 purchase rights of our A321neo aircraft order with Airbus. Consequently, the Group now has 146 firm ordered A321neo aircraft with CFM engines delivering through to 2035, of which 10 have been received to date in line with our delivery schedule. In addition, we have secured a further 9 new A321neo leased aircraft from third party lessors delivering between November 2024 and mid-2026. The Group currently expects to receive a combined total of 14 aircraft across its owned and leased fleets by December 2025.
The final 6 of our Boeing 757-200 aircraft will leave the fleet during Winter 2024/25 as Jet2.com continues to retire older, less efficient aircraft. The new A321neo aircraft benefit from approximately 20% more seats than our average fleet size and superior fuel efficiency (and resultant reduced carbon emissions per seat), which will play an important part in enabling us to achieve our Jet2 Net Zero 2050 pledge. In addition, the aircraft is also much quieter, having a noise footprint approximately 50% smaller than older models in its class.
This significant long-term investment ensures certainty of aircraft supply well into the next decade, underpinning our growth and fleet modernisation ambitions.
Award-winning customer service
Jet2holidays is the UK’s largest tour operator and is ATOL-licenced for over 7 million customers, representing over 21% of total ATOL licences issued at 1 October 2024. The bedrock of this large operation are our amazing Colleagues, who consistently deliver our market leading customer experience and are reflective of our People, Service, Profits guiding principles.
The importance of a seamless disruption-free holiday experience for our Customers cannot be under-estimated, which is why any flight cancellations remain limited to exceptional circumstances. This industry-leading approach resulted in a cancellation rate of 0.07% during the period across our operation of over 75,000 flights.
Building on our high trust ratings on Which?, TripAdvisor and Trustpilot and our recognition as the leading airline and holiday company on the UK Customer Satisfaction Index (UKCSI), our Customer First approach has continued to be acknowledged as we were awarded European Airline of the Year at the recent Airline Economics Aviation 100 Awards. Furthermore, our repeat customer booking rate for package holidays of 60% and consistently high overall net promoter scores, in the 60s for Jet2.com and Jet2holidays products respectively, are clear indicators that Customers truly appreciate the quality of our product and our award-winning VIP customer service.
New UK Bases
Meticulous preparation ahead of the start of our operations from Liverpool John Lennon Airport resulted in a seamless launch on 28 March 2024, with over 215,000 passengers having departed from Liverpool to their holiday destinations so far! Pleasingly, the strong customer demand from the wider Merseyside region has been followed by very positive feedback for our Real Package Holidays from Jet2holidays®, and leisure flights with Jet2.com. We are delighted to have a fifth aircraft based at Liverpool for Summer 2025, which will allow us to grow our capacity to 720,000 seats.
In addition, we were delighted to be able to announce further expansion of our footprint in the South of England at Bournemouth and London Luton airports where operations will commence from 4 February 2025 and 1 April 2025 respectively. With a combined total of over 700,000 seats on sale for Summer 2025, we are looking forward to our first day of flying from both bases when we can begin delighting customers with our multi-award-winning leisure flights and ATOL protected package holidays, just as we do for millions of other satisfied customers across the UK every single year.
New Destinations
In October 2024, in response to strong demand from UK holidaymakers looking to explore a new city or enjoy a festive getaway this winter, we launched two brand-new and exciting Jet2CityBreaks destinations, Bratislava and Malmo. We have also commenced flying to Morocco, offering year-round sun-drenched holidays, city breaks and flights to Marrakech and Agadir.
In addition, we have expanded our Italian offering for Summer 2025 with flights on sale to Salerno and the Amalfi Coast – one of the most iconic destinations in the world.
Inflight Retail Operations Centre (ROC)
Having successfully launched the ROC, our inflight aviation supply and logistics hub during Winter 2023/24, operations were ramped up significantly for Summer 2024, with the Centre efficiently supplying inflight bar carts for over 220 flights per day at its peak. This operation, which is the first of its kind in the UK aviation industry, sets new standards for Customer First service, efficiency and security and has been integral to Jet2.com‘s average on-board stock availability improving to over 98% and materially ahead of the levels achieved in previous years. This performance helped generate a very healthy 14% improvement in inflight retail spend per passenger as compared to the prior year.
Given its success, the Group has commenced the second phase of this initiative, combining leading-edge automation with customer data intelligence, in order to create an improved, bespoke onboard retail experience which in time will further optimise our inflight revenue potential.
Outlook
Winter 2024/25 on sale seat capacity is currently 14% higher than Winter 2023/24 at 5.11m seats. The closer to departure, later booking profile experienced during Summer 2024 has continued, with November’s booked to date average load factor up by 1.1ppts and season to date average load factor down by 1.3ppts. Average pricing to date is displaying a modest increase for our package holiday product, with flight-only slightly ahead.
Although there is a significant proportion of the Winter season still to sell, we are currently on track to deliver Group profit before FX revaluation and taxation for the year ending 31 March 2025 ahead of market expectations ‡, assuming no material extraneous events in the remainder of the financial year.
Looking ahead to Summer 2025, on sale capacity of 18.74m seats is approximately 9% higher than Summer 2024 including our new UK bases at Bournemouth and London Luton airports. Bookings and pricing at this very early stage are in line with management expectations.
Recent improvements in the macro-economic environment including falling inflation should help ease some cost base pressures. In addition, we are approximately 70% hedged for Summer 2025 for both foreign exchange (USD and Euro) and jet fuel and 100% hedged for calendar year 2025 carbon emissions allowances, locking in a healthy proportion of cost certainty. As ever, we continue to be mindful of the potential indirect impacts of ongoing geo-political challenges and the financial impact of the recent UK budget, in particular in the area of employment costs, which we estimate will increase our labour costs by approximately £25m per year, plus any wider consumer implications.
Steve Heapy, Jet2 plc Chief Executive Officer, commented:
“Even in difficult economic times, the annual overseas holiday remains a highly valued and eagerly anticipated experience, often taking precedence over other discretionary spend. As a result, we are confident that our proven business model – anchored to delivering a fantastic customer service with a well-established, trusted holiday brand – offers customers a compelling value proposition. With our extensive product range, appealing flight times and truly variable duration holidays, customers have plenty of choice and flexibility to be able to tailor their holiday plans to meet their individual budgets.”