Jet2 share price jumped nine per cent to 1,486p on Wednesday’s market open after annual accounts showed a £388m balance sheet boost from rising jet fuel prices and the group unveiled a new £250m share buyback. Shareholders got an immediate lift, even as the numbers showed the gain came from derivatives rather than ticket sales.
Steve Heapy and £388m
£388m of extra income came primarily from favourable fair value movements in jet fuel derivatives at the balance sheet date as market pricing increased following the escalation of conflict in the Middle East. Jet2 also said customers were delaying their holiday bookings following the start of the conflict, a sign that the revenue line was being shaped by booking timing as well as demand.
Steve Heapy said: “We took more customers on holiday than ever before, delivered record revenue and achieved a resilient operating profit performance even after absorbing Gatwick start-up investment and wider industry cost pressures.” That sits alongside the company’s own note on “strong booking momentum”, which helps explain why the market focused on the cash return even though part of the windfall was accounting-driven.
£250m buyback and cash
£250m is the size of the new buyback, and Jet2 said it reflects strong liquidity, confidence in the medium-term outlook and a disciplined approach to capital allocation. For shareholders, that turns some of the balance-sheet gain into a direct return rather than leaving it sitting on paper.
£77m was Jet2’s cash inflow in the year to the end of March, down 67 per cent, so the buyback lands against a tighter cash-generation backdrop. The company also said it now operates within a 90-minute drive of more than 90 per cent of the UK’s population after opening a six-aircraft operation at Gatwick in March.
£551m profit and 24m seats
£551m was Jet2’s profit before tax in the year to the end of March, down seven per cent even as revenue rose four per cent to £7.5bn. The company lifted seat capacity by eight per cent to 24m and carried 20.8m passengers, so the gap between higher traffic and lower profit points to cost pressure and start-up spending rather than weak demand.
Richard Hunter said Jet2 is the third largest airline in the UK behind British Airways and easyJet, ahead of TUI and Virgin Atlantic, and that its £6.2bn market cap makes it the second-largest company on AIM. The open question for investors is how much of the share price can keep riding on fuel-derivative gains and how much will depend on the underlying operating result.
