Grey clouds on the horizon reported by Jet2 PLC (AIM:JET2) slammed its shares lower and dragged down the wider airline and travel sector on Thursday morning.
The owner of Jet2 Holidays - whose advertising theme has become a TikTok meme for travel disasters - warned that a trend for later booking had become "more pronounced" and that it was now expecting profits at the lower end of expectations.
Shares in the AIM-listed group plunged 14%, while FTSE 100 airline easyJet PLC (LSE:EZJ) flew 3.9% lower and British Airways owner IAG (LSE:IAG) dived 1.75%.
In the wider travel sector, On the Beach Group (LSE:OTB) fell 5.6%, Wizz Air Holdings PLC (AIM:WIZZ) dropped 1.7% and shares in Saga, Safestay and Whitbread all saw small falls.
Jet2 CEO Steve Heapy described it as a "difficult market" as the growing trend for customers to book holidays closer to departure left it with limited visibility on forward sales.
Panmure Liberum analysts said while average package holiday pricing continues to display a modest increase, "flight-only yields appear to have been discounted, funded by a reallocation of marketing spend".
While summer 2025 capacity was unchanged from the previous outlook, they noted that winter 2025/26 capacity had been trimmed to 5.6m seats from the 5.8m previously planned, though this is still 9% growth on last year.
"It appears to us that flight-only volumes and package holiday pricing are holding up, but at the expense of flight-only pricing and package holiday volume growth", with 8% summer capacity growth versus 2% volume growth to the end of August.
Analysts at Peel Hunt noted the group intends to maintain attractive pricing, "which is unlikely to help other market participants".
They added that they expect the consensus average EBIT of circa £488 million to fall 5-10% and be fairly flat compared to the £446.5 million seen last year.
Analysts at eToro summed up the update as showing that "Jet2 is feeling pressure on one side of its business while leaning on strength in another".
"We think the story is split: package holidays are holding up, but flight-only sales are under pressure, especially as Jet2 expands into southern UK airports where easyJet is already strong.
"With UK consumers squeezed by higher living costs and turning more price-sensitive, the key question is whether Jet2’s holiday packages can keep offsetting weaker seat-only sales.
"Packages remain popular thanks to convenience and value, and Jet2’s brand is well-regarded. But if flight-only yields keep sliding, margins could come under strain even as overall travel demand stays resilient."
** Update: Adds more details, comments **