Up, Up and Away with Jet2 Holidays

Holidays are precious, and when you find a nice hotel or villa, in a resort you like, with the amenities you enjoy, you are likely to return for what I like to think of as a “plug-in and play vacation”

With that in mind, I am returning to Jet2 Holidays JET2 LN as my stock of the week.

Leeds-based and London-listed Jet2 has become an important player in the UK’s travel and transport sector, combining a growing airline business with a highly successful package holiday operation.

The group operates two core brands: Jet2holidays, now the UK’s largest tour operator, and Jet2.com, the country’s third-largest airline by number of passengers flown, a fact that’s underappreciated in my opinion.

Though perhaps that’s because 80% of group revenue comes via the package holiday business.

Jet2holidays’ role is not just to fill seats; it is the engine that drives Jet2’s capital‑light, cash generative strategy. A business model that packages flights, hotels, resort transfers, and ancillaries into a product, which is solid direct to consumers, who pay deposits well ahead of departure (positive for cash flow).
Jet2 uses its buying power to negotiate attractive terms with hoteliers and other suppliers.

Both sides of the business are growing

More than two‑thirds of its passengers now take an end -to-end Jet2 holiday rather than a flight‑only, validating the model. Although flight-only passenger numbers also rose by +15.0%, I note.

Earnings for the year to 31 March 2026, released on July 8, showed that Jet2 flew a record 20.83 million passengers in the period, with revenue reaching £7.48 billion, up +4.0% year-on-year. While an operating profit of £439.6 million showed margin resilience in the face of cost headwinds from higher employment taxes, fuel costs and its investment at the firm’s new London Gatwick base.

Despite rising costs, the group returned £363.0 million to shareholders via dividends and buybacks in FY26, and it has generated £2.6 billion of cumulative free cash flow since the pandemic.

The company ended March 2026 with net cash of around £2.0 billion, plus an undrawn £500.0 million revolving credit facility. Balance sheet strength, which gives Jet2 optionality about its future growth, pricing strategy and shareholder returns.

Management has cautioned that fuel costs may continue to rise in the second half of this year, as long as the war with Iran remains unresolved. Yet, they remained confident enough to propose a fresh £250.0 million share buyback and raise the dividend by +2.0% to 12.40p per share.

Performance

Jet2’s stock price performance has been mixed year to date; the stock is up by just +3.99%, but if we look over 6 months, we find it up by just over +19.0%, and in the last three months, it’s rallied by an impressive +32.13%. The shares have comfortably outperformed rival Ryan Air, and until mid-May, they outperformed EasyJet as well (though recent bid interest saw its stock jump appreciably).

 

 

For all the good news, however, Jet2’s shares remain well below their June 2025 peak of £19.63. That said, ongoing M&A in the sector could help to close that gap.

Pros

The contested takeover battle for sector peer EasyJet is ongoing, with 6 bids from two rival private equity groups having been submitted. M&A activity is supportive of and helps to revalue airlines and travel stocks. It’s not unreasonable to assume that others may be casting a slide rule over the challenger in the sector, by which I mean Jet2. Bookings for summer 2026 at Jet2 are up +7.10%. The new hub at Gatwick should allow further growth and improved operational efficiency.

Cons

Margins could remain under pressure if oil prices remain elevated. (Though, as both the US and Iran pause their recent rounds of retaliatory strikes, oil prices have dropped sharply)

Jet2 relies on consumer spending, and the UK economy and labour markets are fragile; any significant downturn in either, or both, could negatively affect Jet2’s trading. It’s not impossible that Andy Burnham could impose new taxes on air travel to try and fund spending pledges made elsewhere.

Technical outlook

The stock is toward the top end of its recent uptrend, triggered after the appearance of a hammer candle in the weekly chart in late April, under which the market is said to be beating out a bottom.

The near-term high is £15.81, which was posted in early July as the firm reported earnings.
There is support around £14.05, and below that, the lower edge of the gap (daily chart) can be found at £13.56, a gap which preceded the recent high and earnings release.

The 10-week MA line has crossed up and through the 50-week MA line, suggesting rising price momentum. However, to make further meaningful gains, £15.81 needs to be tested and taken out.

Fundamental outlook

Jet2’s fundamentals look pretty good. The stock trades on a trailing PE of 7.00, a forward PE ratio of 11.70, and its 5-year earnings growth rate is around +21.60%, whilst revenues have grown by just under +15.0% in that period, a solid rather than earthshattering performance.

However, given the proximity to the pandemic and the fact that we have three wars in that period, two of which are still ongoing. Delivering any growth was a challenge.

Average package holiday prices rose by +3.0% when compared to 2025, and non-ticket revenue per passenger was up by +4.0% to £26.56. That doesn’t sound like a lot until you multiply that by 20.80 million passengers carried in 2026

2026 also saw 7.64 million flight-only passengers, up +15.0%, though ticket-only yields were lower by +7.0% compared to the prior year. And that perhaps will be the way of things in future higher volumes and somewhat lower margins.