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The Jet2 (LSE:JET2) share price has staged a remarkable comeback since hitting 52-week lows in April 2025. This has been driven by several factors including continued operational strength, improving market conditions, and strategic capital allocation. Let’s take a closer look.
Why I was so bullish
Before we get the reasons behind the resurgence, it’s important to note why I’ve been so bullish on Jet2. My first article on the stock was on 7 February, and I said “I can’t remember a more attractive valuation”. Of course, my optimism wasn’t rewarded at first. The stock drifted downwards for a month and then slumped after Trump’s trade policy shocked global stocks. However, April presented some incredible buying opportunities. In fact, the stock is up 63% from the bottom.
Here’s why it surged
Before we get to the catalysts, it’s important to recognise how cheap Jet2 became. At one point, the company’s market cap sat just £200m above the net cash position. This infers that the market valued this highly cash generative business at just six months of net income.
One of the catalysts for the share price revival was Jet2’s late April trading update, which delivered a dose of optimism to the market. The company confirmed that pre-tax profit for the year to March 2025 would come in at £565m–£570m, a 9% year-on-year increase and at the upper end of previous guidance.
This was a clear signal of operational strength, especially after a period of market anxiety earlier in the year, when concerns over profit margins and consumer demand had driven the shares down sharply. The April update led to a 16% jump in Jet2’s share price on the day of its release.
Best in class
Operationally, Jet2 continues to outperform. The group is expanding capacity by 8.3% for summer 2025, with 18.6m seats on offer, partly driven by new bases at Bournemouth and London Luton. Another positive trend is jet fuel prices. Since 2 April, jet fuel prices have fallen almost 20%. That’s incredibly significant for operators, even those with hedging strategies like Jet2.
I’d also argue that there’s been increased recognition of Jet2’s strategic positioning and prudent operational development. The fleet overhaul programme seemingly won’t negatively impact the strong balance sheet, while the early repayment of convertible bonds and share buybacks has been well-received.
What’s more, the valuation remain attractive. Jet2’s forward price-to-earnings ratio stands at 9.7 times for 2025, falling to 8.1 times by 2027, with more than half of its market capitalisation covered by net cash (own cash and deposits). The enterprise value to EBITDA multiple is just 2.45 times for 2025, dropping further in subsequent years. Moreover, the dividend could rise, given the low payout ratio, but management’s preference for reinvestment and buybacks supports long-term growth.
There are risks to the investment thesis here. The company’s margins are a little thinner than other parts of the market and that makes it more vulnerable to change. It’s also less diversified than the likes of International Consolidated Airlines (IAG), focusing purely on leisure travel and without business/first class margins.
Personally, I’d buy more but this is already my largest holding.
