Jet2 tumbles as it warns over increasing costs

(Sharecast News) - Jet2 tumbled on Wednesday as it said full-year profits were set to rise but also warned it was facing material cost increases.

The company said it expects pre-tax profits for the year to the end of March 2025 of between �560m and �570m, which is an 8% to 10% jump on the prior year.

However, it also cautioned that profits margins may come under pressure.

Chief executive Steve Heapy said: "We continue to believe that our Customers cherish their time away from our Rainy Island and want to be properly looked after throughout their holiday experience and we will continue to invest in our business to meet these expectations.

"However, we also recognise 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."

The company said it continues to experience inflationary input cost pressures exceeding the headline CPI rate, in particular in the large cost areas of hotel accommodation, aircraft maintenance and general airport and Eurocontrol charges.

It also said wage costs would go up due to the changes made in last October's Budget, driven by increases to the National Living Wage and changes to both the Employer National Insurance threshold and headline rate.

At 0920 GMT, the shares were down 9.7% at 1,413.99p. The travel and airline sector more broadly were hit, with easyJet, IAG and Wizz Air also lower, along with Tui.

AJ Bell head of investment analysis Laith Khalaf said: "Travel stocks have enjoyed a real time in the sun over recent years but there is recent evidence that the good times might be on their way out - with Jet2 the latest name to disappoint the market.

"While the company boosted profit guidance for the 12 months to the end of March, the shares were in a tailspin as investors turned their attention to warnings of cost pressures in the year ahead.

"The company says it sees the risk of pressure on margins as households' ability to spend whatever it takes for a week in the sun begins to ebb away. Add in delayed delivery of new planes and the impact of Budget changes and it's no surprise Jet2 is feeling gloomier."