Jet2’s operating losses go up due to customer anxiety
UK low-cost carrier Jet2 registered a 53 per cent increase in operating loss as a result of the Covid-19 air travel restrictions and consequent customer anxiety.
In its half year results, the airline’s losses went up to £170.4m, compared with £111.2m registered in 2020, while the group’s loss before foreign exchange revaluation and taxation increased 49 per cent to £195.1m.
“Although the UK Government’s decision to allow quarantine-free travel to amber list destinations for those fully vaccinated from 19 July 2021 was a welcome step in the right direction, the limited number of green destinations and fragile consumer confidence arising from the three-weekly government traffic light reviews undertaken throughout the period, meant that customer bookings were significantly closer to departure than normal,” the company’s chairman Philip Meeson.
“Basic earnings per share decreased to 76.2p (2020: (56.9p)) and in consideration of the continuing focus on liquidity given the still uncertain climate, the Board does not recommend the payment of an interim dividend (2020: nil).”
According to Richard Finch, analyst at Edison Group, altered booking behaviour, competitive pricing the traffic light system created a “perfect storm” for Jet2.
“To mitigate the risk of destinations switching between red and amber lists as part of the government’s three-weekly reviews, the group saw a shift to very short lead times in bookings,” he said. “This largely drove a decrease of 25 per cent in average flight-only ticket yield per passenger.”
Despite significant losses, the company’s revenue went up 43 per cent to £429.6m as a result of an increase in non-ticket retail revenue per passenger and higher revenues per passenger from advanced seat assignment.
In August, the company decided to acquire 36 new A321Neo aircraft from Airbus, despite suffering a £370m loss because of the pandemic.
The aircraft, which will be delivered starting from 2023, were at the centre of tight negotiations between the manufacturer and the airline, which managed to obtain a “significant” price reduction below the list price of $4.9bn, Morning Wire previously reported.
Jet2 said that it was making the purchase in order “to meet the future anticipated growth of its Leisure Travel business and to refresh its existing aircraft fleet”.