MARKET REPORT: Jet2 profits hit £500m as airline recovery takes off

Shares in Jet2 turned back to profit as the tour operator welcomed a strong recovery in its package tours.

Formerly known as Dart Group, Jet2 made a profit of £505 million in the six months to September, compared to a loss of £195.1 million a year earlier.

The profit came despite the low-cost airline doling out more than £50 million to compensate customers for summer travel disruptions at UK airports. Revenue also increased by 730 per cent to £3.56 billion during the period, while passenger numbers increased by 632 per cent to 11.2 million.

Unlike other airlines, the company is well prepared for the increase in bookings, with more than 8,000 employees remaining employed during the pandemic.

And with a steady stream of winter bookings already in the pipeline, earnings for the year will exceed market expectations.

Sophie Lund-Yates, principal equity analyst at Hargreaves Lansdown, said: “Jet2’s turnaround from losses to gains can only be described as impressive, reflecting huge revenue increases as the industry recovers from tight lockdown restrictions.” Jet2 was up 2.9 percent, or 26p, to 917.8p.

There was also a boost for the wider aviation and travel sector.

IAG, which owns British Airways, rose 1.6 percent, or 2.12 pence, to 134.4 pence, while budget airlines Wizz Air added 2.5 percent, or 53 pence, to 2,175 pence and Easyjet added 1.9 percent, or 7.5 pence won to 394.1 pence.

Travel giant Tui rose 4.6 percent, or 6.5 pence, to 147.5 pence and On The Beach, the package tour group, rose 7 percent, or 7.2 pence, to 110 pence.

The FTSE 100 rose just 1.36 points to 7466.6 and the FTSE 250 rose 0.2 percent, or 39.84 points, to 19,540.34.

Stock watch – Michelmersh

Michelmersh soared after the brickmaker snapped up a rival for £6.25 million.

The AIM-listed company bought Fabspeed, which specializes in making chimneys, arches and canopies, as trading remained strong in the last quarter and its supply chain and energy costs were kept in check.

It now expects sales and earnings to be above market expectations.

Other good news: it launched a share buyback program worth up to £3 million. Shares rose 12.1 percent, or 9.5 pence, to 88 pence.

Mining stocks also held up despite China’s Covid infections hitting new highs, with Anglo American rising 1.2 percent or 37.5 pence to 3228.5 pence, Antofagasta rising 0.9 percent or 11.5 pence to 1360.5 pence and Glencore with 1.1 percent. or 5.7p, up to 536p.

Testing, certification and inspection company Intertek was another gainer after its July-October revenue jumped 5.6 percent to £1.08 billion.

It said China’s lockdown restrictions had a significant impact on its business between March and June.

But since July, the country has been operating normally and things have recovered quickly.

It increased by 4.6 percent, or 176p, to 4036p.

The landlord who provides housing for the homeless recovered just a day after a fight broke out over his financial stability.

Home Reit said a report by US short-seller Viceroy Research was “inaccurate and misleading” regarding questions about its business model and ability to collect rent.

Shares, which plunged nearly 20 percent on Wednesday, rose 4.5 percent, or 2.8 pence, to 65 pence.

There was some calm for the wider property sector, with warehouse giant Segro gaining 2.6 per cent or 21.2 pence to close at 837.2 pence and Hammerson, the owner of the Birmingham Bullring shopping center, gaining 4.6 per cent or 1.11 pence added to 25:42

At the same time, storage unit supplier Safestore welcomed an increase in turnover and the opening of eight branches across Europe.

Sales rose 5.5 per cent to £53.5 million between August and October. Shares rose 1.5 percent, or 13.5 pence, to 937.5 pence.

Elsewhere, small car dealer Motorpoint fell 1.3 percent, or 2 pence, to 156 pence after warning its focus on investment in technology, development and marketing would hurt earnings.

The group invested £3.5 million in the company for the six months to September. This increased the market share to 3.7 percent, compared to 2.9 percent a year earlier.

That generated a record turnover of £786.7 million in the first half, but also negatively impacted the company’s profit, which fell 77.8 percent to £3 million.