(Reuters) – Britain’s Jet2 said on Wednesday that profit margins were likely to come under pressure this year as high inflation is increasing costs and causing consumers to rein in their spending on holidays. Its shares tumbled about 10%.
The company, which offers scheduled flights and package holidays, said visibility for demand ahead was “limited”, although seats sold for the summer season were 8.5% higher than last year.
Jet2’s warning comes after Europe’s largest travel operator TUI this month reported tepid growth in bookings for the summer, also sending its shares sliding.
Jet2 said inflationary pressures have raised the costs of aircraft maintenance and other operational charges.
It also expects to incur costs due to likely delays in getting possession of new Airbus A321neo aircraft, and will suffer a 45 million pound hit from higher employer pension costs and fuel costs.
“The current macro-economic conditions and the many demands placed on consumer discretionary incomes, which combined with the later booking profile and cost headwinds detailed, may mean profit margins in the year ahead come under some pressure,” CEO Steve Heapy said in a statement.
The British company estimated profit for the year to March 2025 to rise 8%-10% to between 560 million and 570 million pounds ($707 million-$719 million).
RBC Capital Markets analysts said in a note to clients that “about 2-3% consensus pretax profit downgrades for 2025/26 are possible given some of the headwinds flagged”.
(Reporting by Shashwat Awasthi; Editing by Sonia Cheema and Edwina Gibbs)
