Jet2 profits disappear over the horizon

Sales and profits destroyed by COVID-19

Jet2 engine with logo

The Investors Chronicle reports that whilst the skies are almost empty, it is no surprise Jet2 saw its sales and earnings plunge in the six months to 30 September. However, investors have continued backing the airline and package holiday operator, which has become a major player in Madeira. The share price has recovered to around 70% of its pre-pandemic level, no mean achievement when there is no certainty over when leisure travel will return to its previous levels. 

Despite some limited travel resuming this summer, Jet2 saw sales plummet almost 90% in its first half, to just £300m. It registered operating and pre-tax losses of £111m and £119m respectively and cancelled interim dividends. The company used the government furlough schemes as much as possible and cut non-essential spending in an effort to preserve its cash position, and raised £172m through a share issue in May as well as selling its distribution and logistics business for £98m in June.  

Despite the rough year, the company is optimistic about 2021. Seat capacity for summer next year is similar to 2019 levels and a planned expansion to Bristol airport is going ahead as reported here. Analysts are hoping for a recovery next year analysts forecasts have the group returning healthy dividends in 2022.  

“We anticipate winter 20/21 seat capacity will be approximately 50% less than winter 19/20…[and] we expect forward bookings to continue to display a pronounced shorter lead time than in previous years”. 

Executive chairman Philip Meeson said the company was looking at tough operating conditions in the short term.

Jet2 is in a comfortable net cash position excluding its large lease liabilities – these account for 57% of its gross debt – common within the airline sector.

COVID-19 in Madeira: updates can be found on a previous post

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