Jet2 shares lose altitude on half-year loss

Shares at Jet2 plc (LON:JET2) slumped more than 6% on Thursday lunchtime after the airline posted its half-year results, with the coronavirus pandemic driving a £111 million loss in the sixth months leading up to September.

The firm reported a group operating loss of £111.2 million for the half-year period, in stark comparison to the £361.5 million profit it made during 2019 before the travel and tourism industries were decimated by global lockdown measures.

Jet2 was forced to ground its entire fleet in March when the UK government implemented the first wave of travel restrictions. The airline was able to resume operations in July, but lingering concerns about the safety of flying during a pandemic meant only 0.99 million passengers flew during the half-year period – plummeting from last year’s 10.07 million.

A reduced summer flights programme allowed Jet2 to concentrate on the most lucrative routes, and the firm insisted that its ‘quick to market, flexible operating model’ helped it to withstand the rife uncertainty amongst the industry.

Nevertheless, the damage has been clear to see. The average load factor (how many seats a plane fills) was just 69%, compared to 93.1% in 2019, a fall which Jet2 blamed on “uncertainty created by the several changes in UK government quarantine guidance”.

For the approaching winter season, Jet2 said it expects to fly about 50% of last year’s seat capacity, while investors battle with the implications of the firm’s basic earnings-per-share free falling from 185.5p to just 56.9p since last September.

However, the airliner was keen to emphasize that its total post-tax profit was still solidly in the green at £278.6 million.

Jet2’s executive chairman Philip Meeson said that the pandemic had caused “unprecedented operational and financial challenges”, but added that the group had benefited from a “strong and carefully-managed balance sheet” and its “considered but swift response to the pandemic”.

“As is typical for the business, further losses are to be expected in the second half of the financial year, as we ready ourselves operationally for the proposed summer 21 flying programme.

“In addition, the ability to fly in the short term remains uncertain, as UK government guidance currently restricts international travel except in limited circumstances, until at least 3 December 2020”.

Jet2’s shares were down 6.72% to 1290.00p at BST 12:38 on Thursday, following a turbulent year which saw prices hit an annual nadir of just 305.80p in March.

The airline’s performance has picked up in recent months – up 108.91% over the past 3 months alone – but questions remain on the impact of the UK’s current second lockdown as an extension is considered and Christmas holiday plans look to be under threat.