Jet2 jumps as summer bookings gain momentum despite Middle East uncertainty

By Neeshita Beura

July 8 (Reuters) - British travel firm Jet2 on Wednesday signalled that holiday-goers were more willing to commit to travelling after holding off bookings during the Middle East war, with booked-to-date summer passengers up 7.1%, sending its shares soaring 16%.

The global aviation and leisure industry has grappled with higher costs and weak consumer confidence linked to the Iran war, although Jet2 said booking trends had improved in recent weeks as geopolitical uncertainty reduced.

Chief Executive Steve Heapy said demand had strengthened following the "calming of events in the Gulf", with customers delaying travel plans rather than abandoning them.

However, comments by U.S. President Donald Trump on Wednesday that June's interim accord aimed at securing peace with Iran was "over" could threaten that recovery.

Shares in the package holiday and airline company were up 9.2% at 0937 GMT, having earlier hit their highest level since January at 1,581 pence.

SUMMER TRENDS

Leeds-based Jet2 said on-sale capacity for the summer was running 7.7% ahead of last year, with the average load factor for the first four months tracking 1.2 percentage points higher, helped by targeted price cuts to draw in late bookers.

Heapy said bookings had recovered across Jet2's network - spanning 25 countries - but were strongest in areas near the conflict zone, including Turkey, Cyprus, eastern Greek islands, and parts of North Africa.

The UK's third-largest airline cushioned itself against fuel-price volatility, with 90% of its full-year jet fuel requirements hedged at an average price of $743 per metric ton. In April, Jet2 said it was 87% hedged for the summer, with jet fuel swaps at an average price of $707 per ton.

Jet2 also pointed to its new London Gatwick operations performing ahead of its initial expectations, supported by a stronger-than-expected package holiday mix.

HEATWAVE HAS NOT PRESSURED DEMAND

The group also said Europe's heatwave had yet to curb demand. Heapy added that intense humidity in the UK may even support bookings from customers seeking drier summers elsewhere.

Jet2 also launched a £250 million share buyback, even as pretax profit fell 7% to £551 million ($735.25 million) for the year ended March 31.

"Despite better momentum recently, in our view it will still remain a more challenging near-term earnings set-up given a competitive UK outbound leisure market, the impact from the Middle East, and immaturity at recent new bases, in particular Gatwick," JPMorgan analysts said in a note.

($1 = 0.7494 pounds)

(Reporting by Neeshita Beura in Bengaluru; additional reporting by Yadarisa Shabong and Yamini Kalia; Editing by Rashmi Aich and Louise Heavens)