Jet2 tumbles as it warns over increasing costs

(Sharecast News) - Jet2 tumbled on Wednesday as it said full-year profits were set to rise but also warned it was facing material cost increases. The company said it expects pre-tax profits for the year to the end of March 2025 of between £560m and £570m, which is an 8% to 10% jump on the prior year.

However, it also cautioned that profits margins may come under pressure.

Chief executive Steve Heapy said: "We continue to believe that our Customers cherish their time away from our Rainy Island and want to be properly looked after throughout their holiday experience and we will continue to invest in our business to meet these expectations.

"However, we also recognise the current macro-economic conditions and the many demands placed on consumer discretionary incomes, which combined with the later booking profile and cost headwinds detailed, may mean profit margins in the year ahead come under some pressure."

The company said it continues to experience inflationary input cost pressures exceeding the headline CPI rate, in particular in the large cost areas of hotel accommodation, aircraft maintenance and general airport and Eurocontrol charges.

It also said wage costs would go up due to the changes made in last October's Budget, driven by increases to the National Living Wage and changes to both the Employer National Insurance threshold and headline rate.

At 0920 GMT, the shares were down 9.7% at 1,413.99p. The travel and airline sector more broadly were hit, with easyJet, IAG and Wizz Air also lower, along with Tui.