Jet2 warns of rising costs while holidaymakers opt for last-minute bookings

Shares in Jet2 have tumbled by a 10th after the travel company warned it was facing higher hotel and flight costs and the delayed delivery of planes over the summer season.

The boss of the firm, which comprises airline Jet2.com and package holiday provider Jet2holidays, said profit margins in the year ahead may come under pressure.

This is partly because of above-inflation cost rises affecting key expenses including hotel accommodation, aircraft maintenance and general airport charges, it told investors.

It also cautioned over the delayed delivery of new planes which will see it incur additional costs to cover aircraft gaps over the peak summer period.

Jet2 has previously said it is facing an additional £25 million a year to cover increased employer national insurance contributions and a higher national minimum wage.

This comes on top of an extra £20 million in costs related to meeting sustainable aviation fuel requirements for planes.

Steve Heapy, Jet2’s chief executive, 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 is nonetheless expecting to report a pre-tax profit of between £560 million and £570 million for the year to the end of March, which would be up to a 10th higher than the previous year.

It also revealed that bookings for April, May and June are up about 7% compared with last year, with package holiday customers rising 4% and flight-only passengers soaring 19%..

This aligns with a continuing trend of consumers making bookings closer to the date of travel, with more people securing last-minute trips.

Recently expanding to London Luton and Bournemouth airports have helped drive growth and attract more bookings – although it said the new bases are expected to be loss-making in their first year of operation.

Jet2 said pricing remains competitive with both holidays and flights prices slightly higher.

Shares in the company were about 10.5% lower on Wednesday morning.