Jet2 PLC (AIM:JET2) shares fell over 5% on Wednesday morning despite reporting stronger demand for summer travel than last year.
A warning that pricing had become more competitive in recent month appeared to hit sentiment following the update, which highlighted summer package holiday and flight-only bookings were up 13% and 18% respectively.
“While Jet2 looks well positioned ahead of its key summer trading period, the travel operator spooked investors as it warned of more competitive pricing,” AJ Bell’s Russ Mould noted.
“This could be a sign that the pricing power enjoyed by the sector, with people prepared to pay whatever it takes to get their week in the sun, is starting to ease.”
Liberum added it saw "downside risk to consensus estimates" on the pricing warning, which Jet2 highlighted had come particularly in April and May.
Stifel said they thought price competition reflected less supply constraint in the early season, alongside Easter timing that helped March but hindered April.
Jet2's update also said pre-tax profit for the year to 31 March 2024 is set to come in roughly 33% higher at £515-520 million, the mid-point of previous guidance.
City analyst expectations are for £519 million, with Jet2 adding cash on hand sat at £1.3 billion when excluding ring-fenced customer deposits.
The airline’s capacity is 12.3% higher than a year ago at 17.1 million seats, with the summer season 55% sold so far, leaving load factors 1% ahead of this time last year.
Alongside this, Jet2 said pricing had seen a “modest increase”, easing cost pressures, while over 80% of fuel was already bought for the year, shielding against shocks from the likes of tensions in the Middle East.
“Operationally, we are well set for a successful summer 2024 season with the required number of aircraft to support our flying programme and sufficient, fully trained resources to operate,” Jet2 said.
Shares in Jet2, which had risen 40% over the past six months to almost a three-year high, fell 5.2% to 1,409p.