How Jet2 went from plucky challenger to air travel giant
Tariffs and geo-political tension cannot halt the relentless rise of leisure travel group Jet2, which has grown from a plucky challenger into an industry giant in two decades.
The world was a different place when Jet2.com opened for business in late 2002, selling 12,000 seats online within its first 24 hours, as it sought to show the big players how customer service should be done. In the last financial year, Jet2’s passenger numbers soared by 12 per cent to 19.77m while revenue jumped 15 per cent to a colossal £7.17bn.
Jet2 is certainly no minnow, as Richard Hunter, Head of Markets at interactive investor, observed as the latest results were published.
Its £3.8 billion market cap makes it the largest company on AIM.
“If it were to switch to a full listing, it would immediately become the third largest FTSE250 company and indeed currently has a larger value than the FTSE100’s Berkeley Group,’’ Mr Hunter said:
"Inevitably, the outlook is not all plain sailing but the company is aware of the potential challenges to come,’’ he added. “Customers are increasingly leaving the booking of their holidays until the last moment, which impacts the group’s visibility of earnings. In addition, the peak months of July, August and September are largely yet to come, while the Winter season remains difficult to predict at the current moment in time.
Investing in airline shares generally has never been for the faint hearted.
"The ferocity of competition and economic pressure remain as potential headwinds, as do some of the other issues which have historically blighted the sector, such as virus outbreaks, industrial action, volcanic dust clouds and higher fuel costs,’’ Mr Hunter said. “The pandemic then added another level of issues, while current macroeconomic and geopolitical concerns add to a potentially dangerous mix, underlying some of the potential hazards of investing in the airline sector.”
But there is no sign of Jet2 running out of steam, with its share price reaching a record level last month and above its pre-pandemic highs.
"It is not unusual for investors to have something of a soft spot for the airline sector despite its occasional travails, and the market consensus of these shares as a buy reflects that overriding optimism,’’ said Mr Hunter.
This positive market response will be music to the ears of bosses at Jet2, who increased seat capacity by 13 per cent to 22.29m in the last financial year, and said they have successfully adapted to the growing trend of customers booking closer to their departure date.
Steve Heapy, the CEO, told me Jet2 had continued to invest in new aircraft over the last financial year and the group confirmed that bookings for summer 2025 continue to be made closer to departure. Mr Heapy said people seemed to be holding back before committing to a purchase and “we are seeing the demand coming later”.
The new terminal extension at Leeds Bradford Airport has been warmly welcomed by Jet2. All the airport needs now is a truly integrated public transport system which would turbo charge Jet2’s growth and provide an environmental and economic boost for the whole county.
Greg Wright is the deputy business editor of The Yorkshire Post