Jet2's share price drop is unjustified according to the analysts at Deutsche Bank and largely the fault of rival Ryanair’s weakening yield outlook for this summer, in our view.
But, unlike the low-cost carriers, Deutsche Bank says Jet2 is primarily a tour operator with 70% of seats sold as part of a package holiday.
This lowers earnings risk in a softer yield environment as package holidays are typically booked 6 months before departure whereas low-cost carriers' peak booking is nearer 6 weeks.
Deutsche Bank adds that 25% of the cost of a package holiday is the flight, meaning customers should be less price-sensitive to the aviation component.
Jet2’s summer is also less exposed to flight-only than winter.
'Buy' with a 2,240p target is the bank’s view.