Jet2 Holdings (LON:JET2): A Strategic Deep Dive into Untapped Growth and Attractive Valuation

Jet2 Holdings PLC (LON:JET2) has emerged as a standout performer in the UK leisure travel sector, delivering record financial results in FY2025 while trading at valuation multiples that starkly contrast with its operational momentum. According to the company's investor relations report, Jet2 achieved a 15% year-over-year revenue increase to £7.17 billion and a 12% rise in profit before taxation to £593.2 million, driven by a 12% growth in passenger numbers to 19.77 million. These figures underscore a business that is not only recovering from pandemic-era disruptions but accelerating its market share gains through strategic expansion and product diversification.

Strategic Catalysts: Expansion, Diversification, and Loyalty

Jet2's growth trajectory is underpinned by three key strategic initiatives. First, the company has aggressively expanded its UK footprint, launching bases at Bournemouth and London Luton airports in FY2025. These new hubs provide access to underserved regional markets and reduce reliance on congested London-centric routes, a critical advantage in an industry grappling with airport capacity constraints. Second, the company has shifted toward higher-margin package holidays, which now account for 33% of total passengers (6.58 million customers). This diversification into integrated travel services-combining flights, accommodation, and car rentals-has historically delivered superior profit margins compared to pure-play airlines.

Third, Jet2's customer loyalty metrics are a competitive differentiator. The company reported a 61% repeat booking rate and a net promoter score in the mid-60s, metrics that rival those of premium leisure brands. This loyalty base provides a stable revenue stream and reduces customer acquisition costs, a critical edge in a cyclical industry.

Valuation: A Mismatch Between Performance and Multiples

Despite these strengths, Jet2's valuation multiples remain compellingly low. As of September 2025, the stock trades at a 6.2x P/E ratio, 0.1x EV/Revenue, and 0.8x EV/EBITDA, figures that are far below the 17.41x EV/EBITDA average for the Consumer Discretionary sector and suggest the market is underappreciating the company's growth profile. Analysts' 2025E estimates, while not publicly disclosed without a subscription according to public comps, imply a slight upward re-rating to 1.05x EV/EBITDA and 0.11x EV/Revenue, still well below sector norms.

The disconnect between Jet2's financial performance and its valuation is particularly striking. For instance, the company's FY2025 operating profit of £446.5 million-up 4% year-over-year-translates to an EV/EBITDA multiple of just 0.8x, implying a market capitalization that assumes no future growth. This appears misaligned with Jet2's stated ambitions to expand its fleet by 10% annually over the next three years and increase package holiday offerings by 20%.

Risks and Mitigants

Critics may point to macroeconomic headwinds, such as rising fuel costs or consumer spending volatility, as risks to Jet2's margins. However, the company's hedging strategy-locking in 70% of its fuel costs for 2026-and its focus on high-margin leisure travel (which is less sensitive to economic downturns than business travel) provide a buffer. Additionally, Jet2's £2.02 billion in net cash offers financial flexibility to navigate uncertainties or fund strategic acquisitions.

Conclusion: A Compelling Case for Re-rating

Jet2's combination of robust financial performance, strategic momentum, and undervaluation creates a compelling investment thesis. The company's expansion into new bases, shift toward higher-margin products, and strong customer loyalty position it to outperform peers in a recovering leisure travel sector. With valuation multiples that fail to reflect its growth potential, Jet2 appears poised for a re-rating as the market recognizes its strategic execution and financial discipline.