Why Jet2 and easyJet offer the industry reasons to be cheerful
Gary NoakesWe have double figure inflation, soaring energy bills, rising mortgage rates and food banks are overwhelmed, yet somehow package holiday operators are still reporting healthy demand.
Two operators this week have seemed to defy the gloomy economic picture, proving consumers who have money are willing to spend it, especially if they have foregone their holiday in the last couple of years.
Both Jet2holidays and easyJet holidays have this week given their verdict on the past months, including peaks. Jet2’s trading statement covered the year to 31 March, while easyJet’s was for the six months to the same date.
EasyJet’s update included a line about its package holiday subsidiary, easyJet Holidays, which looks to be in an excellent position for summer 2023, being a very healthy 80% sold already. Revenue from package sales between October and March reached £175 million, compared with only £55 million in the same period in 2021/22.
The operator said: “We’re perfectly positioned to capitalise on strong UK demand for this summer, which is why we’ve further upgraded our growth expectations for the second time this year.”
EasyJet holidays, currently licensed for 1.5 million packages, has upgraded growth expectations to around 60% year on year having previously estimated it would expand by 50%.
Given that scenario, easyJet can look forward to a decent contribution from its package holiday brand. In the year ended 30 September 2022 easyJet Holidays made a pre-tax profit of £38 million compared with a £12 million loss the previous year. On current form, it is set to easily exceed 2021/22, meaning it will constitute a healthy slice of easyJet Plc’s expected £260 million profits this year.
Jet2’s position also looks positive from a package point of view. It has sold 60% of its packages and seats for the current summer, having increased seat capacity year on year by 7%. This is roughly where it should expect to be at this time of year.
In terms of forward package sales, just over three-quarters of Jet2 bookings to date have been from package customers, five percentage points higher than last summer at the same point. The operator also said load factors on its summer 2023 flights were just ahead of last summer.
Jet2 now expects a group profit for the year ended 31 March 2023 of £387-£392 million, a rosier forecast than the one it gave in January when it predicted £370-£385 million. Like easyJet, Jet2 has upgraded its profits forecast for the second time. The company is generous to its staff, so hopefully they can look forward to another bonus.
Jet2 promises a clearer picture at its next update in July. It will then reveal its full year results and give a “fuller” summer trading outlook. Despite all the UK’s economic woes, it looks like that outlook could be very sunny indeed.
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Gary Noakes
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