Jet2 approaches the end of its financial year this week as Britain's biggest tour operator, surpassing rivals amid a tumultuous few years for the travel sector.
The effective overnight shutdown of the travel industry caused by Covid-19 in 2020, in addition to subsequent spiralling costs and airport disruption a year later, have left some operators struggling to recover their pre-pandemic strength.
But Jet2 enters a new financial year stronger than it has ever been, with much of the groundwork achieved during the heights of the 2020 lockdowns, according to chief executive Steve Heapy.
Tour company boss: CEO of Jet2 Steve Heapy
Jet2 was quick to cancel flights and refund customers in cash at the outset of the pandemic, distancing itself from some competitors that would go on to face the fury of consumers and regulators for refund refusals and delays.
The group also opted to remain fully staffed, while topping up furlough payments for the lowest-earning employees and instituting temporary pay cuts for high earners.
For his part, Heapy took only 70 per cent of his salary in 2020.
Jet2 shelved most flights immediately and, where pandemic travel did occur, Heapy says it worked to ensure the experience was 'as normal as possible', while keeping hold of a fully-staffed remote call centre to deal with customer concerns.
'That really did a lot of good because we've had rafts of customers leaving their previous booking method and coming to us,' he says.
'People can handle good news and they can handle bad news, but the killer is uncertainty.'
But the most significant pandemic move taken by Jet2 was opting to secure cash early via two share issues, a convertible bond offering and the sale of a subsidiary, which together raised around £1billion.
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Heapy says: 'We went into the pandemic with about £1billion in cash. That's a lot of money, but we didn't know how long the pandemic would last or how bad it would be.
'So [raising capital] helped us look after our colleagues, customers and supply partners by paying them all on time and in full.
'Importantly, it allowed us to invest while a lot of companies just battened down the hatches. They didn't spend any money and they stopped.
'And we launched in Bristol, a brand-new base, as other airlines pulled aircraft out.'
Expansion: Jet2 operates from 10 UK bases and will have 119 aircraft by this summer
Plane to see: How Jet2's fleet will look this summer after it acquires new aircraft
Jet2 also made a significant investment in its fleet, ordering a total of 246 brand new Airbus A321s.
'People probably saw that and thought 'wow, that was ballsy', says Heapy.
'But if you try to order aircraft with Boeing or Airbus now [because of supply chain issues] the earliest you'll probably get them is 2029.
'And the Airbus A321 in the greenest aircraft in its class, it will lower CO2 emissions with better fuel and fuel burn. So it's a real investment in the future.'
The impact of the pandemic investment has been to see minimal staff turnover in addition to strong customer retention and acquisition.
Jet2 is now Britain's largest tour operator, licenced to carry 5.85million customers, surpassing Tui's 5.33million and dwarfing third place On the Beach Travel's 1.86million, according to February Civil Aviation Authority data.
Jet2 is also now the 3rd largest UK-registered airline and is on course to have 119 aircraft by this summer, with its number of available seats up 7 per cent year-on-year to 15.2million.
The group was able to upgrade profit forecasts in January after earnings bounced back to £505million in the six months to September 2022 from a £195.1million loss the previous year, despite widespread travel disruption due to staff shortages last summer.
|UK tour operators||Passenger volume licence|
|On the Beach Travel||1.86m|
|British Airways Holidays||1.29m|
|Source: CAA, February|
Heapy says: 'We were better prepared [than rivals] for last summer because we went into it fully-staffed.
'But we got let down by our supply partners in the form of airports, onboard caterers, aircraft cleaners, ground handlers - none of them were recruiting up to the levels required and therefore failed to provide service.
As a result of disruption the that spread across multiple airlines and airports in the UK and abroad this summer, Jet2 forked out compensation to customers totalling over £50million.
But, Heapy says: 'We were pretty much the only company not to cancel flights due to resource shortages.
'Most of the companies were thoroughly unprepared for the summer and the bounce back.'
A silver lining, Heapy adds, is that summer 2023 'won't be as bad' because the travel industry will have 'learned some lessons'.
He says: 'A lot of companies quite rightly got ripped apart by the press, stakeholders and regulators. They won't make that mistake again.
'A lot of companies don't invest well - I think almost every company doesn't seem to invest in customer service.
'But you mess someone's holiday up at your peril. Holidays are a very big purchase for people on the average salary in the UK.'
Heapy adds: 'But it is a fact that for some roles there is less labour available, particularly for skilled roles. A lot of people left the workplace not to come back during the pandemic for whatever reason. But Brexit has also deprived us of a huge amount of resources.'
Jet2 shares are up by around 170 per cent from their March 2020 lows in the wake of the UK's first lockdown at 1,288p.
They remain around 30 per cent below their pre-pandemic peak and analysts believe there is more upside to come.
Analysts at Peel Hunt have given the group a 'buy rating' with a target price of 1,700p, while UBS have targeted 1,420p within the 12 months since Jet2's interim results.
Major rival Tui has seen contrasting fortunes recently, with shares crashing more than 50 per cent in March after a €1.8billion (£1.6billion) discounted rights issue to help pay off its debts.
But, despite posting a loss of around £140million for the three months to 31 December, Tui joined other operators in toasting a cautious return to normal trade amid restriction-free travel. It flew 1million more customers during the quarter than a year prior, nearing 2019 levels, as revenues soared to £3.35billion from £2.1billion.
But the travel sector still faces inflationary and consumer pressures, with Jet2 warning in January of macroeconomic headwinds ahead.
Prices have been rising, and will likely need to rise further, but Heapy believes customers are prepared to pay more even as they face a cost-of-living crisis.
He says: 'It's no secret that prices have gone up since the pandemic and that's because almost every element of the supply chain has seen inflation. We've seen inflation for fuel, hotels, transfer companies, and from governments via taxation.
'Every part of the supply chain has seen inflation and obviously the price of a holiday has too, but that doesn't seem to put customers off.
'They're still booking and they're still very keen to get away. They see a holiday as an essential purchase, rather than a discretionary one.
'I think the fallout of the pandemic probably highlights that people do need a break.'
The group operates 10 UK bases and flies to 21 countries
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