Jet2 FY preview: Where next for the Jet2 share price?

Josh Warner
By :  ,  Market Analyst

When will Jet2 release annual earnings?

Jet2 is scheduled to publish annual results covering the 12 months to the end of March 2022 on the morning of Thursday July 7.

 

Jet2 FY earnings consensus

Jet2 is forecast to report a surge in sales to £1.29 billion from just £395 million when the pandemic was plaguing the industry last year. However, it will remain deep in the red and Jet2 has warned its annual loss before tax and foreign exchange revaluation will be between £378 million and £383 million compared to the £373.8 million loss seen the year before thanks to the hangover from Covid-19.

 

Jet2 FY earnings preview

Markets are eagerly awaiting to find out this summer is panning out ahead of full year earnings out from low-cost airline Jet2. The company said summer bookings were 14% ahead of pre-pandemic levels and revealed package holidays were proving particularly popular when it released its last update in April - although a lot has changed since then. 

The key job this week is to demonstrate that the pandemic is now behind it and that it has been able to capitalise on this rebound in demand. Although evidence suggests people are eagerly making up for lost time during lockdown by taking a holiday this year, the airline industry has been plagued by a shortage of labour and has been forced to downsize their summer schedules to minimise the number of last-minute cancellations that have caused chaos at airports in recent weeks and months. Airlines and airports were forced to lay-off thousands of workers when Covid-19 decimated demand for international travel but are struggling to entice them back now that they have found more stable work elsewhere. Some airline bosses have also cited Brexit as exacerbating the recruitment process.

Jet2 said in April that it was well prepared for this summer and said it was less exposed to the lack of staff at airports that is having a knock-on effect on many airlines. The company employs relatively more staff at its key bases and is therefore less reliant on third parties.

We have worked hard to plan recovery for Summer 2022, investing well ahead of the season to ensure we have adequate resources to operate with our normal levels of customer care,’ said Jet2 in April.

The fact it has hedged 95% of its fuel for this summer means it has also minimised its exposure the rising fuel costs for the peak season this year, with around 65% hedged for the upcoming winter season. Its own cash balance sits at over £1 billion and also installs some confidence Jet2 can weather any storm.

Jet2 is expected to fully recover in the new financial year. Analysts currently anticipate that revenue will soar to over £4.4 billion in the 12 months to the end of March 2023. That would be some 24% higher than before the pandemic hit. Meanwhile, analysts believe Jet2 will also see profits surpass what was being delivered before the Covid-19 crisis erupted.

Confidence remains high that demand will grow at a rapid rate this year and next, but investors will be watching out for any signs that it has dropped-off in recent weeks as consumers tighten their belts and the cost-of-living crisis bites. This summer may be safe, but the outlook for the winter season and next year could be tested.

 

Where next for the Jet2 share price?

Jet2 shares closed at a 19-month low of 906p last week and this continues to be tested after shedding over one-third in value since February. If the downtrend continues, we may see the stock temporarily slip to as low as 870p but it must close above 906p to avoid setting a new low. Any move below here could see the stock swiftly unravel toward 730p. The ultimate floor should be considered at 620p, as below here opens the door toward pandemic-induced lows seen in 2020.

Notably, trading volumes have increased markedly whilst the stock has lost ground over the last 5 trading days, with the average volume at time over 56% above the 100-day average. That suggests the stock could come under further pressure. However, that is countered by the bullish divergence from the RSI, which has managed to find higher ground during the past three weeks despite the stock continuing to slide, suggesting the downtrend is losing momentum and that a reversal could be on the cards.

The volatile nature of Jet2 shares also means the stock could swiftly rebound if it can start to find higher ground. The first major upside target is to recapture the 1,000p mark and then 1,071p. From there, it can look to recover back above all three moving averages and then to 1,219p. A more significant move would be a breach above the 1,331p level of resistance seen throughout the second half of 2021 and April 2022. Notably, the nine brokers that cover Jet2 an average Strong Buy rating on the stock and a target price of 1,613p – over 76% above the current share price.

Can the Jet2 share price rebound from 19 month lows?

 

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