24th Apr 2024 12:08
(Alliance News) - Jet2 PLC on Wednesday "spooked" investors as it highlighted "more competitive" pricing recently and tightened annual profit guidance.
Shares in the airline and package holiday company fell 5.9% to 1,399.60 pence each in London on Wednesday morning.
Jet2 said that for the financial year that ended March 31, it now expects to report pretax profit before foreign exchange revaluation in the range of GBP515 million to GBP520 million.
It would be an increase of around a third year-on-year and would be an outcome in line with current market expectations, Jet2 said, noting consensus of GBP519 million.
Its previous profit outlook range was GBP510 million and GBP525 million, so it has lifted the bottom end of its guidance but nudged lower the top end.
Looking to summer, Jet2 said seat capacity is 12% higher than it was for 2023.
"The season is 55% sold, with average load factors 1.0ppt ahead of summer 2023 at the same point. Forward bookings for package holiday customers are up by 13% and we are also seeing healthy demand from flight-only passengers for which bookings are currently up by over 18%. Consequently, the package holiday mix of total departing passengers is 74% and 1ppt below last year," Jet2 said.
"Booked to date pricing for summer 2024 across both our leisure travel products is showing a modest increase compared to the same period last year which is helping to mitigate previously announced increases in input costs."
However, Jet2 added that "pricing has been more competitive" recently, particularly for April and May getaways.
Jet2 said it is "well set" for a decent summer in 2024. It added it is over 90% hedged for fuel for the summer season, and over 80% hedged for the whole of the current financial year. It decided against providing profit guidance for the current year, however.
Russ Mould investment director at AJ Bell said while Jet2 looks "well positioned" ahead of its key summer trading period the travel operator "spooked investors as it warned of more competitive pricing."
"This could be a sign that the pricing power enjoyed by the sector, with people prepared to pay whatever it takes to get their week in the sun, is starting to ease," he suggested.
However, Mould thinks the company’s "customer-focused approach should continue to stand it in good stead and help it defend market share from rivals."
Analysts at Peel Hunt felt the message on pricing appears to be less positive than easyJet PLC's statement a week ago that revenue per seat was up slightly in the April to June quarter, and well ahead YoY in July to September.
"Although trading is good and tensions in the Middle East appear to have eased, which may see pricing firm again, we expect this to concern investors," the broker remarked.
By Jeremy Cutler, Alliance News reporter
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