Jet2's Meeson heads for departure lounge

Low-cost carrier Jet2 (JET2) delivered a decent set of results that were in line with analysts’ expectations – revenue of £5bn was not only a massive step-up from the £1.2bn recorded in the pandemic-disrupted prior year, but also more than 40 per cent higher than its pre-pandemic peak. Operating profit was more than a third higher than pre-Covid levels.

The company’s bet on a bounceback in demand by retaining staff and ordering more planes to win a greater share of a disrupted market has paid off – passenger numbers tripled last year and the number flying through its package holiday arm quadrupled – around 65 per cent of passengers carried were on package deals.

Load factors – the percentage of available seating capacity that has been filled – also increased to 90.5 per cent despite a 156 per cent jump in capacity. Capacity will grow by a further 7.5 per cent this summer, although average load factors are running about 1 per cent below last summer’s peak. 

The bigger news was that executive chair Philip Meeson, who transformed the business from a small cargo operator he bought 40 years ago into the UK’s third-biggest passenger airline, is to hand over day-to-day activities to management. Meeson, a former RAF pilot who retains an 18.3 per cent stake, has been a combative figure at times but his entrepreneurial acumen can’t be doubted.

The combination of his departure and a lack of guidance around short-term prospects sent the company’s shares down 12 per cent. Although demand robustness is a concern, Jet2 is at the cheaper end of the market and over the medium term should continue to gain share from more expensive rivals. And at just over 7-times forecast earnings, Jet2's shares are also in low-cost territory. Maintain buy.

Last IC View: Buy, 924p, 24 Nov 2022