Jet2 plc

Good morning everyone and thank you for joining us. I'm Steve Heapy, Chief Executive Officer of Jet2 plc and I'm pleased to be taking you through our performance for the year-ended 31st of March 2026, together with the growth strategy that gives us confidence for the years ahead. I'm joined today by Gary Brown, our Chief Financial Officer, who will obviously talk you through the numbers. But before that, I will start with the key highlights and the strategic context. Gary will then take you through the financial results in more detail and I'll return to cover our growth plans, current trading and outlook before we open the line for questions. In simple terms, this has been another strong year for Jet2. We have grown passenger numbers, delivered record revenue, maintained a robust operating performance despite clear cost headwinds and continued to return meaningful capital to shareholders. Let me begin with the headline performance. We delivered another year of record passenger numbers and record revenue. Operating profit remained resilient, even after absorbing Gatwick startup investment costs and wider industry cost pressures, including incremental SAF premiums and increases in employment tax. The balance sheet remains a real pillar of strength for the business. We ended the year March 2026 with over 2 billion of net cash, giving us the flexibility to invest for growth, protect the customer proposition and deliver attractive shareholder value. During the year we flew over 20 million passengers, that's 5% more than last year with most of that growth delivered by our newer bases at London Luton and Bournemouth. We also returned £363 million to shareholders through share buybacks and dividends more than ever before and today We have launched a further £250 million share buyback programme which we plan to complete by 31st May 2027. That combination of growth, resilience, cash generation and disciplined capital allocation is of paramount importance. It shows that JET2 is not just growing for the sake of growth. We are growing in a way that is controlled, customer led and focused on long term shareholder value. I'll now hand over to Gary Brown, who will take you through the financial results. I'll then come back and talk about the strategy and outlook.

Thanks, Steve. Good morning, everyone. I'm Gary Brown. I'm Group CFO at Jet2, and I'm pleased to present our financial results for the year ended 31st of March, 2026. Starting with our key performance indicators on slide five. Overall, the group delivered a strong revenue and resilient operating profit performance this year with our KPIs illustrating how our flexible, fully integrated operating model is capable of adapting to changing consumer trends. The KPIs also demonstrate our clear focus on optimising profitability through a combination of volume, pricing and product mix. We've kept our focus on growing the business this year, particularly as we expand further into the south of England. Across all our UK bases, we added 8% more seat capacity, with our new bases at Bournemouth and Luton making up approximately half of that increase. Importantly, more people are choosing Jet2 than ever before, with over a million additional passengers this year. Demand for our flight-only product was strong again, with growth of 15% to 7.64 million passengers, demonstrating the strength and adaptability of our business model, particularly in a market where customers were booking closer to departure and seeking those last-minute deals. We've continually stressed that both our products are of vital importance and it's great to see customers recognising the clear value that our flight only offering brings. Friendly flight times, an industry leader for not cancelling flights and with the added benefit of our red team of customer helpers providing that outstanding customer first service. That said, we know customers still appreciate the convenience and flexibility offered by our package holiday product as customer volumes grew by 1% to a record 6.62 million. Package holiday pricing remained resilient, up 3%, of which around 1% came from more customers choosing 4- and 5-star hotels than last year, alongside the partial recovery of supplier-led cost inflation. Flight-only net ticket yield was down 7% as we chose to invest in price by reallocating marketing monies to support load factor and optimise overall profitability. Pleasingly, we also generated 4% more non-ticket revenue per passenger, primarily driven by higher in-flight spend per passenger, following the successful launch of a refreshed product range, together with continued strong onboard stock availability, both supported by our Retail Operations Centre. Turning to our financial performance on slide 6. We delivered record revenue this year, up 4.3% driven by the growth in passenger numbers, the combined yields and some mix, with package holidays representing approximately 80% of the overall revenue. Our underlying cost base, excluding London Gatwick startup investment, was well controlled and was up 4.5% and only slightly ahead of revenue growth. The main drivers of this growth were hotel accommodation, which makes up 45% of our cost base, was up just over 6.5%, reflecting supply-led inflation and more customers choosing four- and five-star hotels. Landing, handling, and third-party navigation costs, which are around 8.5% of our cost base, increased by 8.6%. The growth above flying activity reflected a 4% increase in rates across airport charges, handling fees and Eurocontrol flying fees. Offsetting this, fuel costs, which represent approximately 10% of our cost base, reduced by just over 1%, benefiting from lower fuel swap rates and unit cost efficiencies from our growing A321neo fleet. These benefits enabled us to mitigate an incremental 32 million of SAF premiums incurred this year, resulting from increased UK and EU SAF mandates. In addition, marketing costs fell by 9% as we chose to invest marketing monies into pricing to attract later bookings in a competitive marketplace. This helped support our average load factor and optimise our overall profitability. We also absorbed an additional £18 million of costs from changes to the National Living Wage and Employer National Insurance. In addition to our underlying cost base, we incurred £11 million of start-up investment costs ahead of the operational launch of our new base at Gatwick in late March. After these factors, pleasingly, our operating profit margin remained resilient at 5.9%, whilst our basic earnings per share was stable at 211.2 pence. Our return on capital employed remained healthy at 14.4% despite continuing to invest in growing our A321 neo fleet which are obviously long term cash generating assets. Moving to slide 7 and our cash generation, as you can see we continue to deliver significant operating and free cash flows giving us the capacity to invest in value accretive opportunities as appropriate. Our 2026 operating cash flow of £900 million was slightly lower than the prior year as customers delayed their bookings in response to the conflict in the Middle East. We spent £391 million on capital expenditure as we invested in our A321neo fleet and also completed construction of our second maintenance hangar at Manchester airport last summer which has increased our overall in-house maintenance capacity by some 50%. As a result, our free cash flow was £495 million, meaning we have generated £2.6 billion of free cash flow since the end of the Covid pandemic, which gives us confidence in our ability to support our strategic capital allocation priorities moving forward. Our Jolko financing increased by £238 million to support the deliveries of our A321 Neo fleet, whilst borrowing repayments were lower this year at £248 million, driven by the one-off early repayment of the convertible bond last year. Importantly, the cash generation also supported shareholder returns, with 22.1 million shares repurchased during the year through two share buyback programmes, the second of which completed in early May 2026. Look into our balance sheet on slide 8. We have one of the most robust balance sheets in the sector, with access to ample liquidity, which we believe is important in a fast-moving, capital-intensive industry such as ours. We took delivery of 10 A321neo aircraft this year, 6 from our long-term aircraft order with Airbus and 4 on 12-year operating leases to fill near-term gaps in the delivery profile. Our cost of debt remains low, helped by our decision to repay four of our Boeing aircraft loans early, these loans being more expensive than the financing currently available to us in the Jolco market. We also returned £363 million to shareholders this year, primarily through the two share buyback programmes, plus dividends. Overall we remain in a strong cash position with total cash up 4% year on year of which £1.2 billion is our own cash excluding customer advances plus our £500 million revolving credit facility which remains undrawn. We also took the opportunity to extend this facility by year to October 2030 with an option to extend for a further year if appropriate. Finally, onto our medium term targets on slide 9. We first talked through these principles at our interim results last November. Whilst we don't expect to meet these targets overnight, we believe they provide a very good indication of how our capital allocation is expected to evolve over the coming years. We believe a target of two times net debt to EBITDA on an own cash basis strikes the right balance between adequately protecting the business and using a sensible level of leverage to support returns. We currently have plenty of headroom against that target, but as we finance a higher proportion of our new aircraft deliveries, we anticipate moving to two times over the next three to five years. We also believe holding own cash of between 600 million and 700 million at our year end, which is the low point in the cash cycle, together with an undrawn revolving credit facility of £500 million gives us the right level of headroom to deal with any unexpected events. As at today we don't expect this target to increase as the business grows and believe it remains the right level for us. We are firmly committed to our Airbus delivery pipeline with a further 124 aircraft scheduled for delivery by 2035 and on that basis our capital expenditure will average towards £900 million over the next four years. We intend to fund our A321 NEO deliveries mainly through Jolco financing, particularly in the short to medium term, as we look to take advantage of the competitive rates currently available. Across the full order, we plan to finance approximately 50% of the deliveries, very much in line with our business philosophy of owning a healthy proportion of these valuable cash generating capital assets, which we intend to fly through to end of life. Our capital allocation principles remain consistent. Capital control to invest in and maximise the returns of the existing business in an ever-changing consumer landscape, keeping our balance sheet in good shape, and shareholder returns subject to ongoing satisfactory financial performance. As Steve highlighted earlier, in total we return £363 million to shareholders this year and approximately 15% of the current market capitalisation. In part, this has helped support basic earnings per share growth of over 120% since 2019, together with an increase in profit after tax of some 190% over the same period. And as you've heard, we've announced a new share buyback programme today which will see us return a further £250 million to shareholders by the end of May 2027, in addition to our usual dividend payments. A further sign of our confidence in the medium term outlook and underlying our disciplined approach to capital allocation. I'll now hand back to Steve who will take you through the remainder of the presentation.

Thank you Gary. I'll now pick up with our growth strategy and the outlook. Our long term strategy remains unchanged and very clear to be the UK's leading and best leisure travel business. That's not just a strap line, it guides how we make decisions every day. We focus on customer driven flight schedules to popular leisure destinations across the Mediterranean, the Canary Islands and European leisure cities. We retain control of our seat supply. We build long term hotel partnerships and we stay absolutely focused on our customer first approach. That proposition continues to resonate strongly with customers. We are a which recommended provider in seven categories. Our net promoter scores are in the mid 60s and our customer satisfaction remains very high at 92%. Additionally, our flight cancellation rates is industry leading at just 0.06%. We are also continuing to invest for sustainable long term growth. We will have 31 Airbus A321neo aircraft in the fleet for summer 2026 and our second engineering hangar at Manchester is now fully operational, increasing our in-house maintenance capacity by 50%. And, of course, none of this happens without our colleagues. They remain central to everything we do. We continue to attract, develop and retain talented people who will deliver our award-winning customer service day in, day out, with 78% of colleagues saying they're proud to work for Jet2. In order to deliver that strategy, we focus on four key levers which underpin our profitable multi-year growth agenda. First, fleet investment. We have committed orders for 155 Airbus A321neo aircraft through to 2035. That gives us certainty of supply, meaningful unit cost efficiencies and a strong platform for responsible, profitable growth. Secondly, accelerating growth in the south of England. We have launched three new bases in the last 18 months and a significant opportunity to build our presence in a market where Jet2 remains under-penetrated compared with our more mature bases. We continue investing to deepen brand awareness and understanding to capture this fantastic opportunity. Third, continuing to do what we do best, delivering VIP customer service that drives loyalty, retention and advocacy, and it helps bring new customers to the Jet2 brand. and fourth, enhancing our marketing capability through data and technology. Working with Adobe, we're building a more advanced marketing platform to create a much more personalized booking experience and improve efficiency through a lower cost of acquisition. All of these levers are supported by our strong liquidity position and our disciplined approach to capital allocation. The Airbus A321neo aircraft is central to our growth and cost efficiencies plan. By securing these aircraft during the Covid period, we benefited from highly attractive commercial terms ahead of the inflationary environment that followed. For summer 2026 we will operate 31 A321neo aircraft out of a total fleet of 139 aircraft, with the fleet expected to grow to around 162 aircraft by 2032, supported by flexibility around the retirement of our Boeing 737-800s. This means that the fleet size could be higher or lower than this number depending on the economic environment etc. This aircraft brings very clear benefits 232 seats, which is 23% more seats than the Boeing 737-800 20% more fuel efficient on a per seat basis and around 50% quieter which makes it a very attractive aircraft. That translates into an overall cost saving of around £10 per seat versus the Boeing 737-800. By 2030 we expect the NEO fleet to deliver annual cost efficiencies of around £190 million helping offset the incremental cost headwinds from UK and EU SAF mandates Rising Carbon Costs and Inefficient UK and European Airspace Management Turning now to Gatwick and the south of England. Our launch at Gatwick is a major strategic milestone. It is a once in a generation opportunity to accelerate our growth and establish a strong foothold in the south of England. Gatwick is the UK's leading departure airport for beach, holidays and city leisure breaks and is a perfect fit for Jet2 and our customer base. It gives us access to a catchment of more than 50 million people within 60 minutes by road or rail and it is a natural fit for Jet 2 given its strength in beach holidays and city leisure breaks. For summer 26 we currently have six aircraft in operation at Gatwick operating 79 flights a week to 29 popular leisure destinations across Europe with a further aircraft plan for summer 2027. The early performance has been pleasing. Forward bookings show a higher package holiday mix than we initially expected and average lodge factor is in line with our other London bases despite going on sale later in the booking cycle. More broadly, we believe there is a compelling opportunity to increase our market share across the south of England through our bases at Bournemouth, Bristol, Luton, Stansted and Gatwick. Our household penetration in this region is currently less than 5% compared with over 13% across our established bases in the Midlands, the north of England, Scotland and Northern Ireland. Yet the UK population is split broadly 50-50 between these two areas. That shows the scale of the opportunity. We know the model works. We've built a market leading position in our established bases by developing and protecting the brand, delivering outstanding customer service and creating loyal customers who choose to travel with us year after year. Our task now is to replicate that success in the south. Brand awareness in the south of England is also significantly below that of our established markets. We want to change this with targeted, personalised customer activity, greater media weighting and a disciplined regional focus. By continuing to grow our presence in the south of England, while maintaining the strength of our established base network, we see a clear opportunity to further enhance Jet2's position as the UK's leading leisure travel brand. Customer choice is another important part of our advantage. Our fully integrated model allows us to offer customers exceptional choice and the flexibility to create the holiday that is right for them. We offer an extensive network of flights and hotels across Europe and North Africa, serving popular beach destinations and city leisure breaks. We continue to broaden the programme with destinations and holiday experiences that reflect changing customer preferences and emerging travel trends. North Africa is a good example. Our programmes in Egypt and Tunisia build on the success of Morocco and give customers access to an even wider range of high quality holiday destinations at great value for money. Across the business our product range now includes over 5,500 2-5 star hotels and more than 3,750 villas across 850 resorts. We are also expanding experiential travel through our partnership with Musement and our new EuroCamp partnership will add 66 quality holiday parks across France, Italy, Croatia and Spain. The breadth of that choice reinforces our position as the UK's leading leisure travel business and supports our long-term growth ambitions. The market backdrop also remains supportive. Around a third of surveyed holidaymakers expect to take more overseas holidays over the next 12 months and that interest in package holidays remains ahead of the levels seen at the end of 2025. Independent analysis from Mintel supports this positive outlook showing growing interest in beach holidays alongside an increase in the number of package holidays taken by UK residents in recent years. Jet2 is exceptionally well placed to benefit from those trends. We have one of the strongest and most trusted brands in UK leisure travel with the highest brand awareness in the sector. That helps keep us front of mind when customers are planning their well-earned getaways. But the real differentiator is service. We continue to lead the industry on customer satisfaction, loyalty and repeat bookings because our customer service is consistent from start to finish. From the moment customers book, through the airport with support from our RED team, on board with our cabin crew and in resort with our RED team of customer helpers. Customers tell us that they value that satisfaction scores are over 90%, repeat booking rates are very strong at 61% for Jet2 holidays and 55% for Jet2.com and our industry leading net promoter score of 65 is 45 points higher than the European airline average. That gives us confidence in the strength of our brands, our competitive position and our ability to deliver sustainable long-term growth. And great customer service breeds loyalty. We are focused on driving customer loyalty, building consumer advocacy and reinforcing our position as the first choice of company for holiday customers across the UK. 43% of our direct bookings came from customers who have travelled with us more than six times and these bookings have increased at a 23% compound annual growth rate over the last three years. We build that loyalty through relevant communication, tailored content and above all else the consistent delivery of VIP customer service. As customers come back more often, we deepen those relationships with exclusive benefits and recognition, helping to convert first-time bookers into loyal customers who choose us first and recommend us to others. That matters commercially because loyal customers have a higher lifetime value, book more frequently and reduce acquisition costs. We're also using data and technology to deepen those customer relationships. Data and technology will help us go further. Our marketing customer database now stands at 11.2 million customers and over half have previously booked or travelled with us in the last 25 months. Our MyJet 2 members have increased by 45% over the past 12 months to more than 9 million. Every additional recognised and permissioned member gives us deeper customer insights and a richer data asset, enabling improved personalisation, stronger loyalty and better repeat booking performance. Working with Adobe, we are using that data to deliver more personalized marketing, improve efficiency, and strengthen customer engagement. Over time, that creates further opportunities in media and partnerships while helping us attract and retain customers more efficiently. Turning to current trading, bookings to date for summer 2026 are encouraging. As you would expect, the conflict in the Middle East has influenced customer booking behaviour, with some customers choosing to book even closer to departure than usual, or choosing a destination different from their originally intended destination. However, demand for our products remains resilient. The combined booked average load factor for the first four months of the year is currently 1.2 percentage points ahead of the prior year. As we said in our April trading update, we are continuing to invest in load factor through attractive pricing to take advantage of strong late booking momentum. Gatwick is also performing well. The package holiday mix is stronger than expected and we now plan to operate seven aircraft at the base in summer 2027 as we continue to execute our strategic growth plans in the south of England. Importantly, we also have a high degree of cost certainty, having hedged 90% of our full year jet fuel requirement at an average price of $743 per tonne, along with 85% of our FX requirements. Stepping back, Jet2 is a business with strong fundamentals, a clearly differentiated business model, a compelling product proposition, strong customer loyalty and a brand built on trusted award-winning VIP customer first service. As usual we will issue a further update on peak summer trading at our AGM which this year will be held in Leeds on the 3rd of September. Let me close by bringing this together. We remain confident in Jet2's ability to deliver sustained profitable growth through our differentiated fully integrated business model. We have the right fleet to support our long term growth plans with the A321neo unlocking significant cost efficiencies and giving us a strong platform for growth. We have a clear opportunity to expand in the under-penetrated south of England, including through Gatwick, where early performance is encouraging. We have a customer proposition that is trusted, differentiated and consistently well rated by customers, underpinned by our award-winning VIP service. We are building deeper customer relationships through loyalty, data and technology, which should support better retention, more efficient marketing and a higher lifetime value. And we have a strong balance sheet that allows us to invest in strategic opportunities whilst continuing to return capital to shareholders. That is why we believe JET2 has a clear competitive advantage and a strong platform for long-term, sustainable and profitable growth. Thank you for listening. Gary and I will now be pleased to take your questions.