Jet2 Warns on Profit as Ryanair Fuels Airline Fare War

(Bloomberg) --

Jet2 Plc warned that airline price wars will extend well into 2022, hurting margins as discounters led by Ryanair Holdings Plc add capacity and put pressure on smaller carriers. 

The U.K. package holiday and leisure airline slid the most in eight months after saying it expects further losses in the second half of its financial year. The impact of lower ticket prices is being exacerbated by rising costs for staff, fuel and carbon offsets, according to a statement Thursday. Average fares for flight-only customers were down 25% in the first half ended Sept. 30 because of “aggressive price competition.” 

Ryanair, Europe’s biggest discount carrier, has sought to rapidly build back networks and grow market share as Covid-19 restrictions ease, keeping ticket prices low to fill up planes. The Irish airline said this month it expected to post “somewhere between a small loss and break-even” in the financial year ending March as it pressures weaker competitors.

Carriers are bringing back too much capacity to the market, led by Ryanair and smaller rival Wizz Air Holdings Plc., wrote analysts at Exane BNP Paribas in a report Nov. 17. With higher fuel prices and rising inflation, airline margins will be under pressure in 2022, they wrote.

Jet2 shares slid 8% as of 1:26 p.m. in London, after declining 9.4% earlier, the most intraday since March 22. Wizz, which on Thursday added 13 new routes from Rome’s Fiumicino airport, was off 0.5%. Ryanair slipped 0.4% in Dublin.

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