| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 753.32 | -39 |
| Intrinsic value (DCF) | 2772.28 | 124 |
| Graham-Dodd Method | 16.08 | -99 |
| Graham Formula | 47.08 | -96 |
Jet2 plc (LSE: JET2) is a leading UK-based leisure travel company specializing in package holidays, scheduled flights, and non-ticket retail services. Operating primarily in the Mediterranean, Canary Islands, and European leisure cities, Jet2 combines its airline operations (Jet2.com) with in-house tour operator services (Jet2holidays) to offer seamless travel experiences. Founded in 1971 and headquartered in Leeds, the company rebranded from Dart Group PLC in 2020 to reflect its core focus on leisure travel. With a market cap of £3.76 billion, Jet2 serves cost-conscious British holidaymakers through a vertically integrated model that controls flights, accommodations, and ancillary services. The company benefits from the cyclical recovery in post-pandemic travel demand, capitalizing on the UK’s strong outbound tourism market. Its asset-light approach, coupled with a reputation for customer service, positions it as a key player in the competitive European leisure travel sector.
Jet2 plc presents a compelling investment case as a beneficiary of resilient UK leisure travel demand, with a vertically integrated model driving margins. The company reported robust FY2024 revenue of £6.26 billion and net income of £399 million, supported by strong operating cash flow (£1.09 billion). However, its high beta (1.76) reflects sensitivity to economic downturns and fuel price volatility. A dividend yield of ~3.5% (15.1p/share) adds income appeal. Risks include exposure to discretionary consumer spending, intense competition from low-cost carriers, and geopolitical disruptions in European destinations. The balance sheet is healthy (£1.44 billion cash vs. £1.46 billion debt), but capex commitments (£408 million) for fleet expansion could pressure liquidity. Investors should weigh its cyclical exposure against its market leadership in UK package holidays.
Jet2’s competitive advantage stems from its dual role as both an airline (Jet2.com) and tour operator (Jet2holidays), allowing it to capture margin across the travel value chain. Unlike pure-play airlines, its package holiday business (55% of revenue) provides sticky customer relationships and higher average revenue per user (ARPU) through add-ons like transfers and excursions. The company’s focus on secondary UK airports (e.g., Leeds Bradford, Manchester) reduces direct competition with Ryanair and easyJet at major hubs. Its customer service reputation—ranked highest for UK tour operators by Which?—differentiates it from budget rivals. However, Jet2 faces pricing pressure from ultra-low-cost carriers (ULCCs) and lacks the global scale of TUI’s diversified tourism empire. Its seasonal reliance on summer travel (70% of earnings) contrasts with year-round operators like British Airways. Fleet flexibility (mix of owned/leased aircraft) helps manage capacity, but fuel hedging is less comprehensive than larger peers. The company’s niche in ‘friendly’ regional service and all-inclusive packages shields it somewhat from OTAs but requires continuous brand investment.