HOLIDAY firm Jet2 has said full-year earnings will be better than expected after swinging to a first half profit, despite a hit of more than £50 million from airport chaos.
But it cautioned that profit margins may come under pressure given soaring costs, including for fuel and staff wages, as well as from the weaker pound.
Jet2, which currently operates from 10 bases across the UK including Belfast International Airport, reported pre-tax profits of £450.7 million for the six months to September 30, against losses of £205.8 million a year ago.
It said profits with currency impacts stripped out stood at £505 million against losses of £195.1 million.
The company said it was a “difficult return to normal operations”, with the costs of disruption at airports and staff shortages leaving it with delay and compensation costs of more than £50 million in the first half.
Its in-flight sales also suffered due to problems sourcing products amid supply chain disruption.
In spite of the sector-wide woes, the group said aircraft seat capacity rose 14 per cent against the summer before Covid struck, with demand for holidays ramping up after pandemic restrictions lifted.
It also revealed that the cost of its package holidays lifted by 5 per cent to £782 on average over the first half, affected by increases to offset rising inflation as well as holidaymakers choosing more expensive destinations (Jet2 is the UK’s third largest airline and leading tour operator to many leisure destinations across the Mediterranean and Canary Islands).
Executive chairman Philip Meeson said: “Strong customer demand, in particular for package holidays, plus a robust pricing environment and considered cost control, have underpinned a substantially improved financial performance compared to recent Covid impacted summer seasons, but also against pre-Covid Summer 2019.”
The market is holding up for the winter season, while resilient demand is also seeing a 5 per cent rise in seat capacity for summer next year – up around a fifth on summer 2019 before the pandemic struck.
Mr Meeson said: “With winter 2022/23 bookings encouraging and pricing remaining robust, but recognising that the important post-Christmas booking period is still to come, we are presently on track to exceed current average market expectations for group profit before foreign exchange revaluation and taxation for the year ending March 31 2023.”
He added: “However, the group faces input cost pressures including fuel, carbon, a strengthened US dollar and wage increases, plus investment to ensure our colleagues can thrive and have a balanced lifestyle, further underpinning our operational resilience.
“This leads us to conclude that margins may come under some pressure, but encouragingly the strength of our recovery post-Covid underlines our belief that customers truly cherish their weeks away in the sun.”