The jet fuel price spike caused by the Middle East conflict has unexpectedly delivered a £400 million boost to Jet2's balance sheet, defying travel uncertainty and potentially catastrophic consequences for airlines. This boon is largely due to favourable fuel contracts that have shielded the company from the worst of the price hikes.
Notwithstanding warnings earlier this year that the UK was most exposed to a jet fuel crisis, resulting in frantic government efforts to ensure airline access to fuel and suspend airport capacity rules, Jet2 has managed to buck the trend. The carrier's revenue rose four per cent to £7.5 billion in the year ending March, although profit before tax slipped seven per cent to £551 million.
The key driver of growth has been the airline's robust booking momentum, with 19.9m seats sold for summer this year – a seven per cent increase from last year. However, it appears that holidaymakers are increasingly opting for last-minute bookings due to travel uncertainty stemming from the Iran war.
Jet2's cash inflow declined by 67 per cent to £77 million in the year ending March, largely owing to customers delaying their holiday bookings following the outbreak of conflict. Nevertheless, the company has already secured a significant increase in summer bookings and plans to unveil an expansive share buyback programme worth £250 million.