UK’s Jet2 says cost of living crisis lifts demand for package holidays

Jet2 (JET2.L) has seen a pick-up in demand for package holidays as Britons seek certainty on spending in a cost of living crisis, the travel company said on Thursday, as it met annual profit forecasts.

Philip Meeson, who built Jet2 into Britain’s biggest seller of package holidays, will step down as executive chairman and leave the board later this year, the company also said.

British aerobatics champion Meeson bought the firm in 1983 when it was a freight carrier flying flowers to Britain from the Channel Islands and transformed it into an airline flying leisure passengers from 2003.

The Leeds-based company overtook former package holiday market leader TUI last year, and said it was confident of future demand despite the pressure on disposable incomes from high inflation and rising interest rates.

“The end-to-end package holiday is a resilient and popular product, particularly during difficult economic times,” Jet2 said.

For this summer, customers who bought packages rather than just flights represented 73 per cent of its departing passengers, up 5 percentage points on the same period last year, it said.

Despite rising costs, margins per booked passenger were “satisfactory”, said the group, which in light of its positive financial performance decided to restart its final dividend after a pandemic hiatus, paying out 8 pence per share.

For the 12 months to the end of March, Jet2 posted pretax profit before foreign exchange revaluation of 390.8 million pounds ($497 million), within its guidance range of 387-392 million pounds.

Jet2 said it was too early to forecast profit for the 2023-2024 year, adding that Meeson, who owns 18 per cent of the company according to Refinitiv data, would become non-executive chair later this year and remain until a successor is found.

Shares in Jet2, which before Thursday had surged 30 per cent this year, traded down 12 per cent in early deals, which analysts said could be down to speculation that Meeson’s departure could result in a placement of stock.

“There’s nothing in the report which should cause concern,” Goodbody analyst Mark Simpson said.

($1 = 0.7865 pounds)