2007/082006/072005/062004/052003/042002/03Key Documents

Jet2 plc Company Reports

Chairman's Statement

I am pleased to report the Group’s trading performance for the year ended 31 March 2017.

Profit before taxation reduced by 14% to £90.1m (2016: £104.2m). This result includes considerable investment to launch our two new Jet2.com operating bases at Birmingham and London Stansted Airports and also includes a £10.9m charge for foreign exchange revaluation losses (2016: £1.3m). Before accounting for these revaluation losses, underlying profit before taxation reduced by 4% to £101.0m (2016: £105.5m). Basic earnings per share fell by 14% to 51.80p (2016: 60.22p).

In consideration of these results, the Board is recommending a final dividend of 3.897p per share (2016: 3.100p), which will bring the total proposed dividend to 5.272p per share for the year (2016: 4.000p), an increase of 32%. This final dividend is subject to shareholders’ approval at the Company’s Annual General Meeting on 7 September 2017 and will be payable on 27 October 2017 to shareholders on the register at the close of business on 22 September 2017.

The profit performance in the year primarily reflects the continuing investment in, and success of, the Group’s Leisure Travel business, which combines both Jet2.com, our leisure airline and Jet2holidays, our Package Holidays provider.

Jet2.com flew a total of 7.10m passengers (one-way passenger sectors) (2016: 6.07m), to and from popular sun, city and ski destinations during the year, an increase of 17%. Demand for our Real Package Holidays™ continued to grow as Jet2holidays took 1.73m customers on Package Holidays (2016: 1.22m), an increase of 42%, representing 49% of overall flown passengers (2016: 40%). Our important flight-only product was enjoyed by 3.64m passengers in the year (2016: 3.63m). Average airline ticket yields at £86.65 (2016: £91.11) and average load factors at 91.5% (2016: 92.5%) were respectively 5% and one percentage point lower than those achieved in the prior year. The average price of a Package Holiday was £617 (2016: £616). As a result, revenue in our Leisure Travel business increased by 24% to £1,565.8m (2016: £1,261.4m).

In July and September 2016, we were delighted to announce Birmingham and London Stansted Airports as our 8th and 9th UK operating bases. Operations at both commenced on 30 March 2017, providing customers with a combined 58 new routes to Mediterranean and Canary Island holiday destinations. We believe both bases have great potential for our holiday business, further strengthening our position in the Midlands and enabling us to serve, for the first time, customers in North & East London and the East of England.

Our Distribution & Logistics business, Fowler Welch, achieved revenue growth of 14% to £163.5m (2016: £144.0m), primarily due to new contracts which commenced during the year. However, operating profit fell by £0.9m to £4.5m (2016: £5.4m) as operating margins were impacted by very competitive market conditions, particularly in the ambient sector, and a £0.4m bad debt write-off relating to a customer who went into administration.

The Group generated increased net cash from operating activities of £331.1m (2016: £243.9m). Total capital expenditure of £473.9m (2016: £213.5m) included the purchase of new and mid-life Boeing 737-800NG aircraft and pre-delivery payments, which have been substantially financed, for further new aircraft deliveries. We also invested in a new engineering facility at Manchester Airport, added a fourth flight simulator to our training centre in Bradford and continued to invest in the longterm maintenance of our aircraft fleet, whilst at Fowler Welch we completed the extension to our Teynham distribution centre.

As at 31 March 2017, the Group’s cash and money market deposit balances had increased by £277.0m (2016: £109.2m) to £689.0m (2016: £412.0m) which included advance payments from Leisure Travel customers of £553.9m (2016: £385.8m) in respect of their future holidays and flights. Net cash (stated after borrowings) was £168.5m (2016: £321.1m).

I am also very pleased to announce that from the financial year starting 1 April 2018, the Group will implement a Discretionary Colleague Profit Sharing Scheme. This Scheme is intended to reward those colleagues who do not already participate in a performance related bonus or commission scheme and who have been continuously employed for at least 12 months. The profit share will be calculated at the rate of 5% of profit before taxation, excluding foreign currency revaluations and other exceptional items, for the respective Leisure Travel or Distribution & Logistics businesses, and will be paid in proportion to each colleague’s basic salary. The first payment will be made in July 2019 following the audit of the financial results for the year ending 31 March 2019.

Leisure Travel

We take people on holiday! Our leading UK Leisure Travel business specialises in scheduled holiday flights by our award-winning leisure airline, Jet2.com, to destinations in the Mediterranean, the Canary Islands and to European Leisure Cities and the provision of ATOL licensed Package Holidays by our tour operator Jet2holidays.

In summer 2016, Jet2.com operated 63 aircraft from our then seven Northern UK airport bases to 63 destinations, serving 440 holiday resorts, including the addition of three new destinations: Girona in Spain, Naples and Berlin. With the commencement of operations from Birmingham and London Stansted Airports and the addition of two new destinations, Costa de Almeria in Spain and Halkidiki in Greece, the aircraft fleet has increased to 75 for summer 2017, with a commensurate increase in pilots, engineers and cabin crew.

Whether taking a holiday flight with Jet2.com, or end-to-end Real Package Holidays™ with Jet2holidays, we recognise that this is one of the most important family experiences of the year. Our core principles therefore are to be family friendly, offer value for money and give great service, so each of our customers “has a lovely holiday”.

Passengers travel on Jet2.com operated aircraft, ensuring that we carefully control the quality of the flight experience. Our passenger numbers allow us to serve many of our destinations daily and others several times a week during the spring, summer and autumn months, enabling us to offer a great choice of variable duration holidays at affordable prices, whilst optimising load factors which are consistently above 90%.

For those passengers who have arranged their own accommodation, our flights offer competitive fares, convenient flight times, allocated seating and a 22kg baggage allowance. At check-in, we aim to deliver a speedy and friendly experience with customer helpers on hand to assist, whilst on board, our cabin crew and pilots are intent on ensuring that the holiday starts and finishes with a relaxed and pleasant flight.

Our Real Package Holidays™ give us the opportunity to deliver a memorable experience to which we add value through innovation and customer service - the delivery of great service is at the heart of Jet2.com and Jet2holidays brand values. To underpin these values, we deliver a company-wide engagement programme called ‘Take Me There’, to ensure that every colleague in the business has received training on the importance of delivering service excellence at every point in our customers’ journey.

Over 41% of our Package Holidays were sold on an all-inclusive basis offering a ‘Defined Price’ for the whole holiday experience, including flights, transfers, meals, alcohol for the adults and ice lollies for the kids. This is a resilient, great value offering for families on a tight budget and is particularly attractive for times of economic uncertainty.

Over the last 10 years, we have carefully developed relationships with over 2,900 hotels. We often place substantial deposits to secure a dependable and competitive room offering in the most attractive hotels, always ensuring that we are satisfying our customers’ need for choice and quality. Encompassing a wide range of great value 2 to 5-star accommodation, catering for young & old and families alike, many hotels have adjacent water parks and other great attractions included in the package, adding enjoyment and interest to the overall holiday experience. And in June 2017, we launched Jet2Villas, so our customers can now enjoy the freedom of a great value Villa Holiday wrapped up in one package, with Jet2.com flights, accommodation and car hire all included.

In summer 2017, over 450 customer helpers will be employed in our holiday resorts to look after our customers, backed up by 24-hour helplines to give practical assistance in all eventualities. Together with our airport-to-hotel transfer services, everything is organised to make our customers’ holidays easy and carefree. Our Resort Flight Check-In® service, introduced at many hotels in summer 2016, has proven to be extremely popular and has been expanded to over 180 hotels for summer 2017. This service allows Jet2holidays customers to check-in their baggage for their return flight at their hotel, letting them enjoy their final day, bag and hassle free.

Having built a strong brand and reputation in the North of the UK for providing Package Holidays you can trust®, we are committed to achieving the same reputation for providing wonderful holidays from our new bases at Birmingham and London Stansted Airports. Sustained levels of investment in product, brand and customer service excellence, plus the delivery of an attractive end-to-end product, which has proved its resilience over a number of years, gives us the greatest opportunity to retain and attract customers. We therefore believe we have a great future in the UK Leisure Travel marketplace.

Distribution & Logistics

Our distribution business, Fowler Welch, is one of the UK’s leading providers of food supply chain services, serving retailers, processors, growers and importers through its distribution network. A full range of added value services is provided, including the packing of fruits, storage and case-level picking and an award-winning national distribution network.

The business operates from nine prime UK distribution sites, with major temperature-controlled operations in the key produce growing and importing areas of Spalding in Lincolnshire; Teynham and Paddock Wood in Kent and Hilsea near Portsmouth.

Further regional distribution sites are located at Nuneaton near Coventry, Washington, Tyne and Wear and at Newton Abbott, Devon. Ambient (non-temperature-controlled) consolidation and distribution services are provided at Heywood near Bury, Greater Manchester and Desborough, Northamptonshire.

During the first half of the year, the business completed a 50,000 square foot extension to its Teynham facility. This demand-led capacity increase enabled the expansion of Fowler Welch’s joint venture fruit ripening and packing business, Integrated Service Solutions (ISS), and builds capacity for further revenue opportunities at the site which serves local Kent growers, and is located close to the port of Dover and the Channel Tunnel, main arteries for fruit and produce imported into the UK.

In June 2016, a transport and distribution solution for Dairy Crest Limited based at Nuneaton in the Midlands, a new region for the business, was introduced to the network. Following a seamless implementation, which included the transfer of Dairy Crest colleagues and fleet to Fowler Welch, the business contributed positively in the year. This operation provides an important additional revenue stream and adds to the geographical reach of our significant chilled distribution services.

Fowler Welch has a strong and experienced management team and a skilled workforce that prides itself on high standards of customer service, price competitiveness and an ability to provide flexible and innovative solutions, critical qualities in a sector where both supplier and retailer supply chains are perpetually evolving to meet consumers’ ever-changing shopping habits.

We are therefore pleased that several of the business initiatives laid in place by management are now coming to fruition and we remain encouraged by the many opportunities still available. We believe there is a bright, interesting and profitable future ahead for Fowler Welch.


Both our Leisure Travel and Distribution & Logistics businesses have made satisfactory starts to the new financial year. Given visibility on current forward bookings and the recent successful launch of our new operating bases at Birmingham and London Stansted Airports, the Board expects to meet current market expectations of underlying profit before taxation for the year ending 31 March 2018.

Looking further ahead, there remains considerable uncertainty around “Brexit” negotiations and the effect these could have, both on our freedom to fly and on our customers’ ability to travel to our leisure destinations. This is unsettling; however, we believe that the UK Government recognises the importance of aviation services, and similarly, European countries appreciate the value that British tourists bring to their respective economies. Therefore, for the long-term, we remain confident in the resilience of our Leisure Travel business and we are encouraged by the increasing proportion of customers choosing our great value, Real Package Holidays™, which are not easily replicated by non-specialists, and have proven particularly popular in challenging economic times.

Philip Meeson
Executive Chairman

13 July 2017