Investors disembark Jet2 shares after annual results
There's plenty to like about these results from the country's third-largest airline, but its share price is heading south. ii's head of markets explains why.
9th July 2025 08:21
by Richard Hunter from interactive investor
Jet2 Ordinary Shares (LSE:JET2) has brushed off concerns from earlier this year, leaving its shares clear for takeoff once more.
The group had previously warned that the cost of living crisis could affect bookings, while higher costs could hamper earnings. However, and as has been the case with many of its rivals, it is becoming increasingly clear that many customers are ring-fencing family getaway expenditure in their household budgets, regardless of the economic backdrop.
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In addition, Jet2 has hailed what it describes as a year of record passenger numbers, revenue and profitability. Passenger numbers grew by 12% to 19.77 million, underpinned by a rise of 8% in package holidays and 18% in flight-only deals. Seat capacity was bolstered by 13% to 22.29 million to reflect the strong demand. As such, revenues spiked by 15% to £7.17 billion, leading to pre-tax profit of £593.2 million, an increase of 12% and ahead of the expected £579 million.
This boost led to a 22% reduction of total debt and a net cash position of £2.02 billion, a 17% increase from the corresponding period. In turn, the dividend was increased although the projected yield of 0.9% remains pedestrian, while the previously announced £250 million share buyback programme is now 35% complete. The improved financial position has also enabled the purchase of seven new aircraft and continuing investment in its digital business.
Contrary to popular belief, Jet2 is no minnow. It is the third-largest airline in the UK behind British Airways and easyJet (LSE:EZJ), ahead of TUI and Virgin Atlantic. The company has opted to remain on AIM rather than seeking a full listing, and its £3.8 billion market cap makes it the largest company on its chosen index. 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 Holdings (The) (LSE:BKG).
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Inevitably, the outlook is not all plain sailing but the company is aware of the potential challenges to come. 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.
In addition, 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. 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.
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Even so, Jet2 has been on a tear, with the share price reaching a record level last month and above its pre-pandemic highs. The price has dipped slightly since in view of increasing tensions in, but not limited to, the Middle East and at the open today on some profit taking given the recent run.
However, this has done little to upset the direction of travel, with the shares ahead by 38% over the last year, as compared to a gain of just 1% for the wider FTSE AIM 100, and by 126% over the last three years. 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.
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