Jet2 has signalled towards upcoming cost increases in its latest trading update, leading to shares falling by 11% earlier today.

The airline and holiday firm said that following fiscal announcements and Government regulation, it is set to see its costs increase by £25m as a result of the changes to employer national insurance rates and the national living wage.

It also expects to incur over £20m in incremental costs, as a result of the increase to 2% of sustainable aviation fuel in the aircraft fuel mix.

Furthermore, Jet2 added that it "continues to experience inflationary put cost pressures" that exceed the inflation rate, in particular in the areas of hotel accommodation, aircraft maintenance and general airport and Eurocontrol charges.

Despite these changes, the firm said that assuming there are "no material extraneous events" until the end of March, it expects to report a profit of between £560m and £570m, which is between an 8% to 10% increase year-on-year.

Jet2’s winter on sale capacity increased by 14% annually to 5.1 million seats, with an increase in the trend of later bookings continuing from summer 2024.

For summer 2025, on sale capacity is up 8.5% year-on-year, with its new bases at Bournemouth and London Luton airports contributing around 4% to this growth.

However, while these airports are set to add "considerable value well into the future", they are expected to be "modestly loss making in their first year of operation".

Jte2 will provide a further update in April and expects to announce its full year results to March 2025 on 9 July.

Chief executive officer at Jet2, Steve Heapy, stated: "We are very pleased with how the 2025 financial year is ending and our expected 8-10% profit growth, and given the limited forward visibility we are satisfied with early bookings for summer 2025.

"However, we also recognise the current macroeconomic conditions and the many demands placed on consumer discretionary incomes, which combined with the later booking profile and cost headwinds detailed, may mean profit margins in the year ahead come under some pressure.

"Nevertheless, our customer first focus remains unwavering and as a much trusted holiday provider with an end-to-end customer care approach, we remain confident customers will continue to travel with us to the sun spots of the Mediterranean, the Canary Islands and to European leisure cities for many years to come."

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