Signs of a changing business model?
Consider that JET2 shares back in 2010 were worth 50p and recently they were valued at 650p. This indicates confidence in the company’s strategies and future profitability by no less than the financial markets.
30 new aircraft to be delivered over two years starting in September 2016 are not really that many. Consider that JET2 are leasing 4 aircraft this summer, which could be replaced by 4 of the new ones. Then JET2 have 18 x B733s that will have reached the ripe old age of 30 in the next 24 months, which could be replaced by the new aircraft, if a 30 year old aircraft is the bench mark for retirement from passenger carrying duties. The foregoing would already account for 22 of the new aircraft order. However JET2 are also leasing 10 x B738s from leasing companies, where the leasing agreements would be expiring during the next 24 months. The leasing companies would be delighted to be renewing these leases with JET2, who would be considered a good and financially reliable customer, but in view of the glut of second hand aircraft in the market, it may well be in the interest of JET2 to offer to purchase these aircaft or source others or replace some or all of them with the new order.
The Glasgow base is relatively easy for assessing the business model and policies being pursued by JET2, as it is medium sized and has a standard B738 fleet. The comparison of flying and fleet utilisation in winter 2016-2017 compared to winter 2014-2015 shows an increase of 300%. The percentage increase between 2015-2016 winter to 2016-2017 winter is over 100%. Summer increases are not that dramatic but nevertheless show healthy progress and what is more important is the better utilisation of the fleet. For example in the summer 2017 programme the only day in the week where there is spare capacity is on Tuesdays, at the moment anyway, where they are only using 5 of the 6 aircraft in the fleet. Shoulder months like April and parts of May and October are also becoming busier. The Glasgow base examples above could be used as the trend within the company, although the actual figures quoted would need to be used with caution for other bases and in any case have not been checked out independently.
It wouldn’t be surprising if the order of 30 new aircraft became 40 or more in the next 12 months or so....and/or other purchases are made like G-JZHG and G-JZHH from the leasing companies, who seem presently to be sitting on too many parked and unfruitful second hand assets.