Shares of Leeds-based Jet2 plc fell as much as 10% after it published a trading update saying it expects an increase in profit for the year to March 31, 2025 — but warned that inflationary input cost pressures and later bookings may mean profit margins in the year ahead come under some pressure.
The firm said: “Assuming no material extraneous events in the remainder of the financial year, and given the prevailing trends, the board expects to report a group profit before foreign exchange revaluation and taxation for the year ending 31 March 2025 of between £560m and £570m, an 8% to 10% increase on the prior year.
“This range excludes gains from asset disposals, including the ongoing sale of our recently retired Boeing 757-200 fleet, details of which will be provided in our April post-close trading update.”
However Jet2 CEO Steve Heapy warned: “We are very pleased with how the 2025 financial year is ending and our expected 8% – 10% profit growth, and given the limited forward visibility we are satisfied with early bookings for Summer 2025 …
“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.”
The company added: ” … the group continues to experience inflationary input cost pressures exceeding the headline CPI rate, in particular in the large cost areas of hotel accommodation, aircraft maintenance and general airport and Eurocontrol charges.
“Helping to mitigate these headwinds in part, we are approximately 85% 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 at beneficial year-on-year rates.
“Additionally, we expect to take delivery of a further 14 new owned and leased CFM powered Airbus A321neo aircraft, increasing the A321neo fleet to 23 by the end of Summer 2025. Unfortunately, a number of these aircraft will be delayed from their agreed delivery dates and consequently we expect to incur additional operational costs to cover aircraft gaps in the peak summer flying programme.
“Nevertheless, we remain very pleased that the A321neo aircraft are already demonstrating their strategic value in terms of operating economics, reduced emissions and customer experience.
“Like many businesses, we are facing other material cost increases imposed by recent fiscal announcements and Government regulation.
“The largest of these is the expected increase in wage costs driven by a combination of: increases to the National Living Wage which ripples through to several pay levels as we maintain appropriate wage differentials; plus the changes to both the Employer National Insurance threshold and headline rate.
“As previously announced, combined these will total approximately £25m of full year incremental costs. In addition, the mandated increase to 2% of Sustainable Aviation Fuel (SAF) in the aircraft fuel mix will result in over £20m of incremental costs, owing to the significant price differential between SAF and conventional jet fuel …”