Jet2 plc, the Leisure Travel group announced its preliminary results for the year ended 31 March 2023.
The rebound in consumer confidence to travel helped underpin a significantly improved financial performance as Group profit before FX revaluation and taxation increased to £390.8m† (2022: £376.2m loss†) which was 48% higher than the pre-Covid financial year ended 31 March 2020 reporting period.
Jet2.com flew a total of 16.22m (2022: 4.85m) single sector passengers, an increase of 234%, with higher margin package holiday customers representing 64.9% of overall flown passengers (2022: 51.3%) which was also 13.2 ppts higher than 2020.
Average load factor achieved was 90.5% (2022: 69.2%) on a 156% increase in seat capacity to 17.93m (2022: 7.01m), underlining the popularity of our leisure travel products.
Despite having absorbed delay and associated compensation costs in excess of £50.0m as a direct impact of the broader disruption seen across the aviation sector and its supply chains in mid-summer 2022, Group operating profit increased by 222% to £394.0m (2022: £323.9m loss).
Total cash balances at the year-end of £2,624.7m (2022: £2,228.5m) increased 18%. ‘Own Cash’† which excludes advance customer deposits, increased by 4% to £1,127.1m (2022: £1,083.8m). In view of the positive financial performance and in keeping with its previous principle of paying a moderate dividend, the Board has resolved to pay a final dividend of 8.0p per share (2022: nil).
In March 2023, the Group took delivery of the first of its 98 firm ordered Airbus A321/A320neo aircraft, which could eventually extend up to 146 aircraft. In April 2023, the Group announced an equity investment in a new SAF production plant to be constructed in the North West of England – one of the first such deals in UK aviation.
On sale seat capacity for Summer 2023 is currently 7.5% higher than Summer 2022 at 15.29m seats. Although average load factors are currently 0.8ppts behind Summer 2022 at the same point, positively the mix of higher margin Package Holiday customers represents over 73% of total departing passengers at present, which is over 5ppts higher than Summer 2022.
Chairman’s statement (excerpt)
“The conclusion of the Covid-19 pandemic and the unprecedented challenges faced by everyone during it, unleashed an enormous surge of pent-up demand for those experiences that consumers had truly missed in the preceding two years. One of the most important of these experiences was the opportunity to enjoy a much deserved, rejuvenating and relaxing overseas holiday.
And I am pleased to say, that despite a difficult return to normal operations, primarily due to the lack of planning and preparedness of many airports and associated suppliers, our UK Leisure Travel Business – which encompasses Jet2holidays, our acclaimed ATOL licensed package holidays provider, and Jet2.com, our award-winning airline – responded determinedly to provide our Customers with their eagerly anticipated Real Package Holidays from Jet2holidays.
Results for the financial year
The resumption of international travel in early 2022 resulted in the Group’s financial performance for the year ended 31 March 2023 exceeding our pre-pandemic performance for the year ended 31 March 2020. The positive progress reflects the decisions made in late 2021 to retain over 8,000 loyal Colleagues throughout the pandemic, recruiting and training in good time for Summer 2022, making early and substantial marketing investments and giving meaningful salary increases to all Colleagues. It also demonstrates the robust and sustainable nature of our business model. For the reporting period, seat capacity increased 13% against 2020 and buoyant customer demand resulted in the business achieving an average load factor of 90.5% (2020: 92.2%). Higher margin Package Holiday customers grew by 40% to 5.29m (2020: 3.77m) and were a materially higher mix of totaldeparting passengers at 64.9% (2020: 51.7%), with Flight-Only passengers reducing by 19% to 5.69m (2020: 7.06m).
Despite being very well prepared for our summer operations, plus the exceptional dedication of our Colleagues who consistently went above and beyond to ensure our Customers could finally embark on their long-awaited holidays, regrettably some Customers experienced frustrating delays. These hold ups were a direct consequence of the widespread disruption experienced throughout the aviation sector, including but not limited to ground handling suppliers’ poor customer service, long queues for airport security checks and bottlenecks in baggage handling areas, all of which led to extreme levels of airport congestion. Consequently, delay and associated compensation costs under Regulation EU261 UK, exceeded £50.0m.
Despite these challenges, we were very proud that Jet2.com earned the accolade of being the only UK airline not to cancel a flight during July and August 2022, according to leading travel intelligence company, OAG – we were determined that our Customers should enjoy their well-deserved holidays! Similarly, the financial performance of our in-flight retail operation was weaker than expected during early Summer 2022. This was largely attributable to inadequate onboard product availability caused by resource limitations at our third-party in-flight retail provider. However, despite having absorbed these substantial disruption costs, I am pleased to report that Group profit before FX revaluation and taxation increased to £390.8m† (2022: £376.2m loss†) which was also 48% higher than the financial year ended 31 March 2020, the last pre-Covid reporting period. After accounting for net FX revaluation losses of £19.8m (2022: £12.6m), total profit before taxation was £371.0m (2022: £388.8m loss).
New Aircraft Order
In October 2022 we were pleased to announce that we were entering into a further agreement with Airbus to purchase another 35 new firm ordered Airbus A321/A320neo aircraft with the ability for this to extend up to 71 aircraft. Combined with existing orders, this brings the total number of firm ordered Airbus A321/A320neo aircraft for the Group to 98, which could eventually extend up to 146 aircraft. Critically, this agreement ensures certainty of supply well into the next decade.
The Group was delighted to take delivery of the first of these aircraft in March 2023. With a spacious cabin capacity for 232 passengers and operational advantages through reduced fuel consumption and resultant carbon emissions per seat, plus a much lower noise footprint against previous generation single aisle aircraft models, these aircraft will enable Jet2.com and Jet2holidays to grow more sustainably. We are certain that the introduction of the A321/A320neo aircraft will ensure that our Customers continue to have a wonderfully comfortable and enjoyable experience for many years to come.
Investment in Sustainable Aviation Fuel
As a socially and environmentally responsible airline and tour operator, we take our environmental impact seriously. We firmly believe that Sustainable Aviation Fuel (“SAF”) is currently one of the most effective solutions for reducing carbon emissions and is key to achieving net-zero status by 2050. Consequently, in April 2023, the Group announced an equity investment in a new SAF production plant to be constructed in the North West of England – one of the first such deals in UK aviation. The Fulcrum NorthPoint facility, being developed by Fulcrum BioEnergy Ltd, will operate as a Waste-to-Fuels plant, and is anticipated to commence SAF production by 2027. Once operational, Jet2.com will receive a significant volume of SAF from the plant and expects to achieve net emissions reductions totalling approximately 400,000 tonnes of CO2 over the 15-year period of the agreement.
New Training Facility
In February 2023, we were pleased to announce a new Airbus A321 flight simulator and training centre at Cheadle, near Manchester Airport. The new centre builds on the success of the Company’s first training centre near Bradford, which opened in 2014. This bespoke facility will provide a centre of excellence for existing and new pilots, engineers, cabin crew and ground operations Colleagues. The three-storey building will house full and fixed-base flight simulators, cabin crew trainer units, engineering training devices to enact real-life scenarios, high-tech computer based training rooms, fully equipped classrooms and briefing rooms. The centre enables Jet2.com to underpin its growth ambitions by training thousands of Colleagues each and every year.
New UK Base
Finally in May 2023, we were delighted to announce the launch of our highly acclaimed flights and holidays from Liverpool John Lennon Airport. This development marks a significant milestone as it becomes our eleventh UK base and is aligned with our long-term strategy to sustainably grow our successful business. Recognising the significant demand from both consumers and independent travel agents across Liverpool, Merseyside and the wider region, we are looking forward to commencing operations from March 2024. Between now and then, our focus is on meticulous preparation to ensure a seamless launch, so that from day one we can provide Customers with the same award-winning service which has delighted millions of others across the UK for so many years!
Outlook
On sale seat capacity for Summer 2023 is currently 7.5% higher than Summer 2022 at 15.29m seats. Although average load factors are currently 0.8ppts behind Summer 2022 at the same point, positively the mix of higher margin Package Holiday customers represents over 73% of total departing passengers at present, which is over 5ppts higher than Summer 2022.
Despite the Group facing various input cost pressures such as fuel, carbon taxes, a strengthened US dollar and wage increases, as well as investment to support the well-being and work-life balance of our Colleagues, pricing to date for both our package holidays and flight-only products has been robust and consequently margins per booked passenger satisfactory.
Looking forward, although we continue to believe that the end-to-end package holiday is a resilient and popular product, particularly during difficult economic times and our ability to offer truly variable duration holidays enables our Customers to tailor their holiday plans to suit their individual budgets, we are cognisant of how quickly the macro-economic environment is evolving and how this may affect consumers’ future spending.
On that basis, and with the peak summer months of July, August and September not yet complete plus the majority of Winter 2023/2024 seat capacity still to sell, it remains premature as is always the case at this time of year, to provide definitive guidance as to Group profitability for the financial year ending 31 March 2024.
For the long term our strategy remains consistent – To be the UK’s Leading and Best Leisure Travel Business – with ‘People, Service, Profits’ serving as our guiding principles. Put simply, our Customers want to be looked after throughout their eagerly anticipated holiday experience by a happy, well paid and motivated team of Jet2 Colleagues who continue to deliver outstanding service, thereby generating sustainable long-term profitability – in short, Nothing Beats a Jet2holiday”.
Tatiana is the news coordinator for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). Her role includes monitoring the hundreds of news sources of TravelDailyNews Media Network and skimming the most important according to our strategy.
She holds a Bachelor's degree in Communication & Mass Media from Panteion University of Political & Social Studies of Athens and she has been editor and editor-in-chief in various economic magazines and newspapers.
