Jet2 swings to loss as flights remain suspended

Low-cost leisure airline and packaged holiday provider Jet2 said on Tuesday that as a result of the Covid-19 pandemic, it expected to report a group loss before foreign exchange and tax from continuing operations of between £375m and £385m for the 2021 financial year.

The AIM-traded firm said that would be a swing from group profit before hedge ineffectiveness, foreign exchange revaluation and taxation from continuing operations of £264.2m in 2020.

During the financial year ended 31 March, Jet2 said it took “swift and decisive” action to raise almost £1bn in liquidity from a diversified range of funding sources, to mitigate the impacts of the coronavirus crisis.

In addition, the business undertook a number of internal actions to reduce cash burn and preserve cash.

As a result, its liquidity position was “strong”, with the group's cash position as at 31 March comprising unaudited total cash of £1.38bn, and ‘own cash’, excluding advance customer deposits, of £1.06bn, making for an increase of 104% on the prior year end.

That was after returning over £1.3bn of customer deposits.

“The continuing successful rollout of vaccines in the UK and the increasing momentum in Europe are both encouraging,” the Jet2 board said in its statement.

“Additionally, on 9 April, we welcomed confirmation from the UK Government's Global Travel Task Force that international travel remained on track to reopen in mid-May.

“However, we were disappointed at the lack of clarity contained in the Task Force's report, in particular the as yet to be populated 'traffic light' framework for destinations, and full details and cost of the associated testing regime.”

That, the company said, meant the impact and duration of the proposed Covid-19 travel restrictions for summer remained difficult to determine, and due to that continued uncertainty, JEt2 had decided to extend the suspension of its flights and holidays from 17 May up to and including 23 June, by which time it was expecting more clarity.

“Both pre-pandemic and throughout the last 12 months, our airline Jet2 has demonstrated a high level of operational flexibility by responding rapidly to evolving market conditions generating cash in doing so, and we retain that flexibility to react quickly as travel restrictions change.”

Jet2 said that “unsurprisingly”, given the short-term uncertainty, customers were booking “significantly closer to departure” for summer.

“However, we continue to be encouraged by the volume of customer bookings for both winter 20021-2022 and for summer 2022, for which package holiday bookings are displaying a materially higher mix of the total.

“Based on this limited visibility, we are confident that once normality returns, our customers will be determined to enjoy the wonderful experience of a well-deserved Jet2 holiday and that Jet2.com and Jet2holidays will continue to have a thriving future, taking millions of UK holidaymakers annually, to the Mediterranean, the Canary Islands and to European leisure cities.”

At 0839 BST, shares in Jet2 were up 2.12% at 1,445p.