Holiday firm Jet2 has seen first-half losses widen and warned it is set to remain in the red at the full year as it comes under pressure from rising costs and an industry price war.
The group saw its shares drop 7% as it gave a gloomy outlook for the second half, blaming “aggressive” price competition in the market and rising costs for fuel, carbon offsetting and staff wages.
Low-cost carrier Ryanair said earlier this month it would slash prices to fill seats over the winter, despite also suffering half-year losses, in a move that has sparked a price battle in the sector.
Jet2 said: “The travel industry continues to be subject to a range of cost pressures, most notably in relation to fuel and carbon costs.
“Additionally, we expect the competitive pricing environment being experienced for winter 21/22 to continue.
“We will also make necessary investments in our own operations in the remainder of this financial year, including the increasing cost of retaining and attracting colleagues in readiness for our flying programme expansion in the summer 22 season, plus marketing spend to drive customer bookings.
“As a result, and as is typical for the business, further losses are to be expected in the second half.”
Jet2 posted pre-tax losses of £205.8 million for the six months to September 30, against losses of £68.7 million a year earlier, as it said the traffic light travel restrictions impacted bookings among cautious holidaymakers.
It upped its flight programme in the first half as pandemic travel restrictions eased, with seat capacity increasing by 86% to 2.68 million.
But its average load factor – a measure of how well it fills its planes – fell to 57.3% from 69% a year ago as travellers remained anxious over sudden traffic light changes for destinations, meaning lengthy quarantine periods.
The constant traffic light reviews led to more last-minute bookings and lower ticket prices, it said.
But since the traffic light system was scrapped on October 4, with only a red list remaining, and testing rules eased for fully vaccinated passengers, Jet2 said bookings had been “markedly stronger”.
The group added that despite the second half caution, it continues to be “optimistic” over a recovery to normal operations and customer numbers next summer.