The parent company of Jet2.com and Jet2holidays expects half-year operating profits to rise by at least 60% after an “exceptional summer season”.
Following the update, the company’s share price embarked on a roller-coaster ride: opening at £4.95, before falling as low as £4.40. It recovered to close at £4.71 on Monday.
Paul Scott, small caps editor at Stockopedia, said the lukewarm reception to the “rip-roaring trading update” could be down to external uncertainty.
“The market seems to be pricing in expectations of higher fuel prices, a large element of airline costs, which is probably why these shares have stopped rising, and if anything now seem to be drifting down,” he said.
“So the big question is whether we should be regarding this year as a bit of a one-off good year, and therefore factor in a fall in future earnings for valuation purposes?”
Healthy summer
The improved performance comes after upbeat updates from the likes of Tui Group, Thomas Cook and Saga – adding weight to the view that travel companies enjoyed a healthy summer.
Jet2holidays took 936,000 customers on holiday during the summer – an increase of 21%.
The number of passengers flying on the company’s airline dropped by 1.9% to 4.62m following a reduction in seat capacity.
However, load factor rose from 91.8% to 94.1%.
Analysts at Arden Partners said the company was benefiting from both internal business decisions and helpful external conditions.
“While the strategy of growing Jet2holidays to create a more vertically integrated business has clearly contributed to this strong performance, market conditions have also been very benign, with good demand (stimulated in part by the weakness in the euro), which has outstripped industry capacity increases and with a favourable cost environment for airlines from lower fuel prices,” analyst Chris Thomas said.
Dart Group will announce its interim results for the six months up to the end of September on November 19.
