Airlines are now reaching the point where they can report earnings that reflect life after Covid, with travellers having had the chance to receive the vaccine and boosters.
However, as one headwind passes another arrived in the form of airport disruption with a lack of staff causing chaos to flight schedules and the whole travelling experience.
AJ Bell investment director Russ Mould said: “Against this backdrop Jet2 has done remarkably well, with profits well ahead of pre-Covid days thanks to pent-up demand for travel, greater capacity to fly customers abroad and a greater percentage of sales coming from higher margin package holding customers. It has also needed to run fewer promotions which has saved a few quid on marketing costs and helped to avoid big margin dilution.
“Despite having to shell out significant compensation payments from the mid-summer disruption to air travel, Jet2 can’t really grumble about its latest financial performance. However, it won’t be plain sailing from here.
“While winter bookings have held up well, airlines traditionally see a lot of bookings after Christmas and early in the New Year. By then, people will have enjoyed the festivities and suddenly face the prospect of going back to work and there being quite a while until Spring arrives and with it, longer hours of sunshine and hopefully brighter weather.
“It’s natural to want to book a summer holiday while Winter is still upon us as it gives people something to look forward to. The big unknown is whether foreign holidays are going to be affordable for a lot of people while the cost of living remains high. On top of this demand uncertainty, Jet2 faces a profit margin squeeze from factors including higher wage and fuel costs.
“All airlines will be in the same situation so the challenge for Jet2 is to try and stand above the crowd and make sure it is the one chosen by consumers looking to travel. It looks well placed thanks to its range of all-inclusive holidays which are ideal for someone wanting to go abroad but know exactly what the get-away will cost them beyond simply buying a ticket and accommodation.”
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