This post is a case study on JET2 (LON:JET2, traded on AIM), which is a UK-based package holidays provider.

As a business, I think of it like this. Brits will do nearly anything to get out of the dreary UK weather. Continental Europe is a short flight away; think Greece, Italy, Spain, and so on. Thus, there’s a long history of Brits taking holidays to Europe in both good and bad times. In other words, it’s discretionary spending, but surprisingly resilient.

It’s worth mentioning that airlines are an awful industry and have incinerated capital for nigh on a century now. It’s not hard to figure out why — ruthless competition, cyclicality, black swan risks at multiple points in the network (i.e., if you’re flying from A to B and bad shit happens in A or B you get killed), huge capital outlays and so on.

JET2’s business is selling package holidays. The idea is that by packaging together flights + lodgings + transportation + hand-holding they’ll have a stickier product with structurally higher margins and differentiation from flight-only offerings like, say, Ryanair. This is important since it’s really hard to beat Ryanair on price.

This has been surprisingly successful.

Since 1996 JET2 has increased their revenue from £69m to £7.2bn. This is primarily organic growth, which is particularly shocking. In other words, they just recycled their FCF back into the business, got solid ROIC, and grew the book. It’s worth looking at the COVID discontinuity. Here, many of their competitors with weaker balance sheets became distressed, and JET2 dramatically increased their share during the post COVID recovery. On most measures, for example repeat customers, trust, and quality they’re also the leading package tour operator in the UK.

Governance-wise, JET2 was led by founder Philip Meeson for much of its history, however Meeson has recently stepped aside. They’ve been fairly prudent with capital allocation, prioritizing reinvestment into the business (which has gone well), maintaining a strong balance sheet (a fine strategy in this industry), upgrading their fleet, and engaging in limited dividends/buybacks. Not American-style aggression, but sustained competency.

What’s interesting about JET2 in particular is that their earnings slides provide a surprisingly high level of analytical disclosure, allowing the analyst to granularly model the business. JET2 is a “legacy” position for me, meaning I analyzed it manually before CAPY was operational, ran it through CAPY, and decided to continue to hold it.

Here’s a little screenshot of one section of my (now old and outdated) model to give you an idea of how granular you can get:

Complexity aside, the state of play can be simply summarized as follows. First, JET2 is near to saturating Britain. They have “bases” (airports they serve) within driving distance of something like 90% of Britons. This is important as the high ROIC expansion phase of the company is coming to a close, and they’re maturing, which will likely mean capital allocation over the medium term will shift to capital return.

Second, JET2 has a materially aging legacy fleet requiring renewal. This means they need an enormous capital outlay over the next ~4 years to upgrade their fleet to A321neos. These planes have both more capacity and more fuel efficiency than their existing fleet, but will require a multibillion-dollar capex investment funded out of FCF, balance sheet reserves, and residual value on their existing fleet retirement. This is crucial to the investment case because the company remains cheap for a long time since an investor must accept delayed capital return until the fleet is modernized. In the meantime, delays in deliveries, price changes, or other disruptions can complicate the thesis. That being said A321neos are selling at >face value on the secondary market, so I consider their order book for new planes as a positive expectation asset despite the risk.

Third, we face the classic problems of airlines, plus some novel issues afflicting the package industry. Near-term, we have weak British macro combined with cost inflation in many of our destinations, leading to lower volumes and weaker margins. We also have the continued Ukraine war, fuel price spikes from an effective Hormuz closure, and other geopolitical risks. Thus in the near term we have a weakening operating biz making enormous capital outlays. We also have intense competition both from other package providers, and disintermediation risk from combinations like Ryanair + Booking.com, as well as increasingly AI trying to disintermediate the disintermediators (can one be double disrupted? A philosophical Q worth pondering once broke...) Certainly our demographics are bad, as younger travellers are more likely to self-plan a holiday rather than using our service.

On the positive side as I’ve argued, we’re well positioned and taking/maintaining share within package holidays, have a strong balance sheet and competent management. Most importantly, it’s just astoundingly cheap. I can’t even easily use EV/X as a ratio because EV is currently negative. Instead, I must use the £2bn market cap which is covered by cash and assets entirely. The “free” opco has done a casual ~£1.5bn in earnings and ~£2.5bn in FCF since COVID. Not a great business, but not a bad one either, and at a fantastic price.

So what’s the error theory here? I suggest foremost is delayed gratification. To buy JET2 we must underwrite typical airline risk, add package risk, add disruption risk, add near-term macro headwinds, add fuel cost headwinds, add cost headwinds, add execution risks on the A321neos, and suggest it all works out eventually in a few years. Normally I’d run at this point, but when we have billions in cash sitting on our balance sheet, a fairly acyclical asset as airlines go, and the recent track record of expanding share and surviving COVID, my view is that we’re robust enough to hang tight in this environment. Many of the secular negative trends (British macro, fuel prices, geopolitics) should show mean regression at some duration which is favorable to us. Disruption is real but slow. In the meantime, we’re making massive amounts of FCF and running a fairly solid OpCo that trades for free, with prudent capital allocation and return. We trade at <0.33x P/Rev with ~6-8% full-cycle FCF margins. That works out to something like a 20% FCF yield with a strong balance sheet and roughly GDP-level growth. You can see this is likely too cheap. The problem is that the market sees the path to getting there as too torturous to underwrite, the stock trades on the AIM and isn’t widely discussed, and there isn’t any definable short-term catalyst suggesting numbers inflect next print. So one must be patient here. To me, the medium-term attractor state here is modestly improving FCF margins relative to the competition due to scale and a modernized fleet, a normalization of input cost pressures and British macro, and eventual scaled FCF margins of ~7%, GDP-ish growth and enhanced capital return with likely a mixture of dividends and buybacks. I suspect an EV/FCF multiple of something like 8x (lower than e.g., Ryanair and structurally low due to poor business quality) which leaves us at something like £600m in 2029 FCF / ~£5bn EV for the OpCo or ~£7bn once we add back tangible book. This gets us to ~£35/share. We assume the re-rate happens once FCF flows to the firm rather than to fleet capex — around 2029-2030 — which from current levels works out to a ~20-25% annualized IRR. (My research notes, not investment advice.)

All in all, JET2 is not the best stock I’ll ever own, and also probably not the stupidest. There’s no question it’s cheap, it’s clear it’s well positioned in its niche, but getting from cheapness to a £35 stock might take a while, limiting IRR. The path might be chaotic. I probably won’t lose all of my money because they own so much stuff.

So of course I was curious what the model would think, and why. So, I go and input ‘Run JET2’, wait for 6 hours and come back to read my output. The model must reason over many different calls, and so I have it write a series of technical artifacts and narratives in the interim so that it can preserve and enhance state over many context windows. At the end, I have it stitch the final artifacts together into two deliverables, (1) A ‘Consolidated report’ which I can fairly comfortably read and describes both the modeling process and its fruit, and (2) a ‘model .xlsx’ file which is a configurable Excel-based version of its internal Python-based model. This lets me play with any assumptions I’d like. I review these deliverables when doing my HITL, then I feed my HITL audit back into the matrix and get new versions of the final output values or modified final deliverables as desired.

So, let’s see what CAPY thinks. Here are the headline outputs and what struck me.

Headline output (CAPY used £14.28/share as the model price on 17 February 2026; when I was originally working on this, on 19 May 2026, the stock had traded around £10.50-£10.75):

How and why CAPY values it where it does: CAPY models JET2 as a 20-year DCF anchored on decomposed drivers — seat capacity, load factor, package mix, package and flight-only pricing, accommodation cost per customer, flight-ops cost per seat — not aggregate revenue and margin assumptions. The base case: revenue growth fading from ~7% near-term to ~4% by year 10 to ~3% terminal (UK nominal GDP); EBIT margins dipping from 6.2% to 5.5-5.8% over the next two years as Gatwick startup costs, SAF mandates, and NI increases bite; then recovering to 6.5-7.0% by years 5-10 as Gatwick reaches profitability, A321neo savings materialize, and operating leverage kicks in on a larger revenue base. The vertically integrated model (Jet2holidays selling only Jet2.com flights) is treated as a structural moat — NPS 64-66, 59% customer retention, and 80% direct bookings support a 50-60% pass-through of accommodation cost inflation. Economic ROIC lands at 12.1% after capitalizing the brand asset, in line with the European leisure travel industry anchor.

The scenario overlay is where the ±£40 spread in IVPS comes from. Mediterranean accommodation cost inflation is the dominant downside — CAPY’s most important standalone finding, confirmed as structural rather than cyclical via the Balearic moratorium, Barcelona STR ban, and Greek luxury pipeline. With 45% of the cost base inflating at 5-7%/yr and only partial pass-through, the standalone inflation scenario at 21% probability drives IVPS to £10.61. Gatwick accelerated profitability (FY28 instead of FY29) is the largest upside at 17%. A Thomas Cook-style competitor exit gets to the right-tail valuations of £55-69 at low probability. The 36.8% probability of loss is dominated by inflation paths; the 2.3% combination of inflation + Airbus delivery delays gets to a £1.82/share worst case. The 15.5% expected IRR is lower than the 59% margin of safety would suggest because value realization is back-loaded — the FY27-FY30 capex peak (~£950m/yr to fund the A321neo transition) absorbs cash, with capital return picking up only as that cycle completes around 2029-2030.

Scenarios driving E[IVPS]:

Note that since this report was generated, the Strait of Hormuz has been closed off and on and fuel prices have increased, pressuring margins and FCF. The stock has traded down to ~£10.50-£10.75/share.

Broadly speaking, I think CAPY did an excellent job here. It correctly understands the business, the capex cycle, the margin pressures, and the industry. Its breadth is dramatically better than mine, as its granularity. Five minutes after writing this I’ll forget “SAF” or “Gatwick Base” ever existed. Reading the CAPY report gives me a solid feel for the business — less incisive than human commentary, but more comprehensive and getting the details right.

More importantly, CAPY independently preserved almost all of the key points in my qualitative thesis — cheapness, execution risk, near-term headwinds, capex cycle, high discount rate — but quantified them over a 20-year DCF in a way that’s very difficult to do at this level of granularity for a human. It models JET2 in decomposed causal variables (seat capacity, load factor, package mix, accommodation cost) rather than topline aggregates. That convergence gives me increased confidence in my mental model.

Where CAPY and I think differently is worth flagging. CAPY is narrowly quantitative and fine-grained. I tend to think like a person, seeing the big picture and looking for pivot points. These are complementary — CAPY handles quantitative precision and audit trail I can’t produce by hand; I keep the qualitative shape of the business and the regime-level intuitions CAPY isn’t yet good at modeling.

Two specific places I think CAPY is off on JET2. First, it probably overestimates downside risk. The combination of net cash (~£2bn), the A321neo order book (above face value on the secondary market), the base network (>90% UK driving-distance coverage), and the brand (NPS, retention, direct bookings) likely insulates most outcomes from permanent capital loss — even when CAPY’s left tail stacks multiple negative factors to produce an apparent £1.82/share OpCo impairment, the actual asset base would defend more than that. Second, several of CAPY’s bad-and-good scenarios are modeled as on/off switches when they should be regimes with regression characteristics. Mediterranean accommodation inflation isn’t a binary that hits or doesn’t — it’s a regime that runs hot for a stretch, generates supply response over time (or doesn’t), and partially mean-reverts. The current scenario architecture flattens that. This is ex-model for now and a place I expect v2 to do better.

Appendix — Partial CAPY v1 Output for JET2

The compact summary above distills the material below. What follows is much of the Equity Research Report generated by CAPY v1, the full driver schedule, derived financial outputs, and the scenario specifications — included for any reader who wants to see the underlying work. I have not included the full consolidated report, which contains some sensitive methodological information, the fully configurable .xlsx file, or the ~50 individual artifacts that are the building blocks for the final deliverables. One note before the raw output: some terms, especially cash/equity-bridge adjustments, are model-defined and not identical to company-reported accounting definitions.

Jet2 plc (JET2.L)

Equity Research Report

Date: 3 March 2026 Intrinsic Value Per Share: £24.07 Expected Value Per Share: £22.73 Expected 1-Year Return (IRR): 15.5%

PART A: Company Analysis

A.1 Executive Summary

Jet2 plc is the UK’s leading vertically integrated leisure travel group, combining the country’s largest tour operator (Jet2holidays) with its third-largest airline (Jet2.com). The company is meaningfully undervalued by the market, using CAPY’s run-date price of £14.28 against our expected value of £22.73, representing a 59% margin of safety. The expected one-year return of 15.5% exceeds our 15% hurdle rate, driven primarily by the market’s apparent failure to price the long-term earnings power of Jet2’s differentiated, vertically integrated model and the material upside optionality from the Gatwick base expansion and potential competitive consolidation.

Key Catalysts: - Gatwick base launch (March 2026) accessing 15 million catchment population in Southern England, with potential to reach profitability ahead of the FY29 management timeline - A321neo fleet transition delivering ~£10/seat cost savings, 23% more seats per aircraft, and 20% fuel reduction over the next decade - Ongoing share buyback programme (£250m completed plus a further £100m announced) providing ongoing EPS accretion at current valuation - Structural shift toward higher-margin package holidays (66.5% of passengers and rising)

Key Risks: - Structural Mediterranean accommodation cost inflation (45% of cost base, running at 5-7% annually) compressing margins if not passed through to customers - Airbus delivery delays compressing capacity growth below the 4.4% CAGR guided by management - UK consumer weakness given 100% domestic demand exposure and discretionary spending classification - Competitive intensity from easyJet holidays and TUI at overlapping bases, particularly Gatwick

The investment case rests on Jet2’s demonstrated ability to generate premium returns (12% economic ROIC) while executing a well-funded capacity expansion. The Gatwick launch represents a clear near-term catalyst, while the A321neo fleet transition provides a multi-year tailwind to unit economics. The primary risk is that structural accommodation cost inflation erodes margins faster than pricing power can compensate. At the current price, the market appears to be pricing in the near-term margin headwinds without adequately reflecting the long-term earnings trajectory.

A.2 Business Model & Competitive Position

Jet2 plc operates through two interlinked brands that form a vertically integrated leisure travel platform. Jet2holidays is the UK’s largest ATOL holder by authorized passengers, with capacity for over 7 million ATOL-protected package holiday customers across Mediterranean, Canary Island, and European leisure city destinations. Jet2.com is the UK’s third-largest airline by passengers, operating exclusively as the transport backbone for the package holiday business while also selling flight-only seats. The integration is the moat: Jet2holidays uses only Jet2.com flights, ensuring quality control across the entire customer journey from airport check-in through to resort arrival.

In FY25, the company generated £7,173.5 million in revenue, composed of package holidays (£5,772.9m, 80.5%), flight-only tickets (£780.1m, 10.9%), non-ticket ancillary revenue (£505.4m, 7.0%), and other leisure travel revenue (£115.1m, 1.6%). The structural shift toward package holidays has been pronounced: 66.5% of passengers took packages in FY25, up from 49.5% pre-pandemic, generating over 80% of group revenue at materially higher margins per customer than flight-only seats.

The business is highly seasonal. The first half (April–September, encompassing the summer season) generates virtually all annual operating profit, with the second half producing operating losses as winter costs are borne against lower capacity utilisation. This seasonality is structural and inherent to Mediterranean leisure travel, not a sign of operational weakness.

Jet2’s competitive moat is built on service differentiation in what is otherwise a commoditised industry. While most UK airlines compete on price, Jet2 competes on experience. The company has achieved a Net Promoter Score of 64–66, comparable to world-class consumer brands, alongside a 59% customer retention rate across both brands. Its flight cancellation rate of 0.05% is the lowest in the industry, and it has held the Which? Recommended Provider designation for 10 consecutive years — the only tour operator in the UK Customer Satisfaction Index top 25.

The company’s structural advantages extend beyond brand perception. Its network of 14 UK bases covers over 90% of the UK population within a 90-minute drive. The myJet2 loyalty programme has 8.4 million members (growing 62% year-on-year), and the marketable customer database exceeds 11 million. Approximately 80% of bookings are made directly, significantly reducing commission costs versus peers reliant on third-party distribution. The “Nothing beats a Jet2holiday” campaign achieved 80 billion global TikTok views in 2025, driving a 12% year-on-year increase in spontaneous brand awareness among 18–34-year-olds.

The fleet strategy provides guaranteed growth capacity. Jet2 has secured deliveries of 132 Airbus A321neo aircraft over the next 10 years, providing approximately 4.4% compound annual seat capacity growth. The A321neo carries 23% more passengers per aircraft, reduces fuel consumption by 20%, cuts noise by 50%, and delivers approximately £10/seat in operating cost savings compared to the legacy Boeing 737-800 fleet. The company operates proprietary infrastructure including dual maintenance hangars at Manchester, an automated Retail Operations Centre, and in-house training via Jet2FlightPath.

Management quality is a distinguishing factor. CEO Steve Heapy has been the architect of the “People, Service, Profits” philosophy, with a track record that includes capitalising on Thomas Cook’s collapse in 2019, navigating COVID-19 with a customer-first refund approach, and securing the Airbus fleet order during the pandemic at favourable terms. CFO Gary Brown has articulated a clear capital allocation framework: invest in business resilience, maintain a liquidity buffer (£600–700m year-end cash plus £500m revolving credit facility), enforce leverage discipline (below 2x net debt/EBITDA on own-cash basis), and return excess cash to shareholders. The board completed a £250 million share buyback and announced an additional £100 million programme, reflecting conviction that shares are undervalued at approximately 10x trailing earnings.

A.3 Capital Efficiency & Returns

Jet2’s capital efficiency profile requires careful interpretation due to the structural characteristics of its business model. GAAP invested capital at 31 March 2025 was £1,611.8 million, comprising property, plant and equipment of £1,453.1m (primarily aircraft fleet), right-of-use assets of £679.6m, and minimal intangible assets of £26.8m, offset by deeply negative working capital of approximately -£1,705m resulting from £2,121.9m in deferred revenue from advance customer deposits.

On a GAAP basis, the company generates a return on invested capital of 20.8% (NOPAT £334.9m / IC £1,611.8m). However, this overstates economic returns because it excludes the substantial brand asset that underpins the business’s competitive position. When this analysis capitalises the company’s marketing expenditure (£286.0m × 4.0 B2C multiplier = £1,144.0m) as a proxy brand asset, economic invested capital rises to £2,763.8m, producing an economic ROIC of 12.1%. This aligns closely with the industry anchor of 12%, confirming that once the brand asset is properly recognised, Jet2’s returns are consistent with a well-run European leisure travel operator rather than an outlier.

Capital allocation over the forecast period is weighted heavily toward fleet investment. Management has guided average capital expenditure of approximately £950 million per annum from FY27 to FY30, with approximately 50% financed through the Jolco market. This investment peak, which will see annual CapEx exceed £1 billion in FY28–FY29, will absorb significant free cash flow and may constrain further share buybacks in the medium term. The company targets 65% unencumbered aircraft by 2030. The net cash position stands at £2,085m, providing exceptional counter-cyclical flexibility.

Company-reported net cash, after borrowings and lease liabilities, was £2,085.2m at 30 September 2025. CAPY separately applies a more conservative equity-bridge cash adjustment in the model; where shown in the driver schedule, that should be read as a model adjustment rather than the company’s reported net cash.

A.4 Market Context & Growth Ceiling

The UK outbound travel market is one of Europe’s largest. In 2019, UK residents made 93.1m overseas visits, including 58.7m holiday visits, and spent £62.3bn abroad. Jet2’s core addressable market is a narrower subset: short- and mid-haul leisure travel, especially Mediterranean and Canary Islands package holidays. Jet2’s ATOL authorization covers over 7m package holiday customers, roughly 20% of total UK ATOL-authorized passengers.

With 14 bases covering over 90% of the UK population, Jet2 reaches approximately 61 million people. Actual penetration is approximately 30% of the addressable population as customers, leaving significant headroom, particularly in Southern England where the Gatwick launch adds 15 million catchment population.

Growth constraints are real but manageable. Airport slot capacity imposes physical limits, though Gatwick’s potential second runway (circa 2030+) would represent a step-change. The Airbus delivery pipeline provides approximately 4.4% compound annual growth in seat capacity, but delivery delays would directly cap growth. Mediterranean hotel accommodation supply grows at approximately 2–3% annually, with Jet2 competing against TUI, easyJet holidays, and online agents for allocation. At approximately 20% of ATOL-authorized passengers, market share above 25% would face competitive resistance.

Revenue growth is expected to fade from approximately 7% near-term to 4% by year 10, converging to 3% terminally — consistent with UK nominal GDP growth. EBIT margins are expected to dip from 6.2% in FY25 to 5.5–5.8% over the next two years as Gatwick start-up losses (£10–15m in FY26, larger in FY27 due to ACMI aircraft costs), SAF mandates, and employer NI increases are absorbed. Recovery to 6.5–7.0% is anticipated by years 5–10 as Gatwick reaches profitability, A321neo fleet savings materialise, and operating leverage is achieved on a larger revenue base.

From a governance perspective, Jet2 benefits from clean governance: KPMG has issued unqualified audit opinions for FY23–FY25 with no emphasis-of-matter items, there are no related party conflicts beyond the systematic de-risking by the Meeson family, and short interest stands at just 1.03% and declining.

A.5 Research Findings

The research phase investigated seven specific questions, with findings that materially updated several base case assumptions while broadly confirming the overall investment thesis.

The most significant discovery was that Mediterranean accommodation cost inflation is structural, not cyclical. Evidence from multiple destinations — including the Balearic moratorium on new hotel construction, Greece’s luxury-biased development pipeline, and Barcelona’s short-term rental ban — confirms that supply constraints are regulatory and persistent. Hotel rate inflation of 5–7% is running across key destinations, and this is the largest single risk to Jet2’s margin profile given accommodation comprises 45% of the cost base. This finding drove the most material downward adjustment to the base case valuation.

Research also confirmed that Airbus delivery slippage is a base rate risk, with chronic 3–8% annual delivery shortfalls representing an ongoing headwind rather than a tail event. Seat capacity projections were reduced by approximately 2–3% cumulatively to reflect this evidence, with Jet2’s use of CFM LEAP engines (rather than the troubled Pratt & Whitney GTF) providing partial insulation. ACMI (wet-lease) substitution costs, which rose 46% in the first half of FY26, were also revised upward.

On the positive side, research confirmed Jet2’s pricing power. Brand loyalty indicators (NPS mid-60s, 62% repeat booking rate, 80% direct bookings) support the ability to pass through approximately 50–60% of accommodation cost inflation to customers. Terminal package holiday pricing was revised upward from £689 to £710, partially offsetting the accommodation headwind. Research on the SAF mandate trajectory confirmed that the A321neo fleet transition delivers near-term cost savings (approximately £10/seat) but that these savings are progressively offset from year 5 onwards as Sustainable Aviation Fuel mandates escalate from 2% in 2025 to 10% by 2030 at a 2–5x cost premium.

The discount rate of 11.2% was confirmed unchanged. No material risk factors were discovered that were not already assessable from the base source documents. All valuation changes were attributable to growth-investment model refinements rather than discount rate adjustments.

A.6 Risk Assessment

Systematic Risks

Jet2’s systematic risk profile reflects the tension between above-average operating leverage and an exceptionally strong balance sheet. The company’s fixed fleet costs (approximately 140 aircraft, growing to 161 by 2032), airport slot commitments, and growing staff costs create significant operating leverage: a 10% revenue decline would produce approximately 30–40% EBIT decline given the cost structure. This is compounded by 100% exposure to UK consumer spending, with holidays classified as discretionary expenditure. Flight-only yield declined 7% in the first half of FY26, reflecting competitive pricing dynamics and a late booking trend (11% of bookings within one month of departure) that indicates price sensitivity in the lower-value segment.

These risks are substantially offset by zero net financial leverage. The company’s £2,085 million net cash position means there is no leverage amplification of equity risk. During COVID-19, Jet2 entered the crisis with £500 million in cash and survived without a government bailout; today’s balance sheet is four times stronger. The 59% customer retention rate and 8.4 million loyalty members provide demand visibility that reduces effective cyclicality compared to a pure airline operation.

Our risk assessment positions Jet2 above the S&P 500 median archetype (it is more cyclical, smaller, and has higher operating leverage) but below the global median (its net cash position and brand loyalty provide meaningful risk reduction versus a typical small-cap growth company). European low-cost carrier peers show observed betas of 0.9–1.4; Jet2’s hybrid model sits within this range but with lower volatility than a pure airline given the package holiday demand cushion.

Idiosyncratic Risks

The company-specific risk profile is dominated by four factors. First, Gatwick execution risk: the new base introduces £10–15m in FY26 start-up costs, with larger losses in FY27 from ACMI aircraft costs and late on-sale timing, and profitability not expected until FY29. Six aircraft at a new base represent meaningful short-term margin dilution. Second, competitive response: easyJet is expanding its package holiday offering, particularly at overlapping bases (Gatwick, Luton), while TUI maintains its presence. Third, SAF mandate escalation: mandatory sustainable aviation fuel blending is adding £17m+ annually with costs rising as mandated blend percentages increase. Fourth, fleet delivery timing: any Airbus delivery delays directly compress capacity growth and extend reliance on more expensive ACMI substitution.

Risk-Return Assessment

The 36.8% probability of loss within one year reflects the meaningful downside scenarios — particularly the combination of structural accommodation inflation and delivery delays, which produces a worst-case valuation of £1.82 per share (2.3% probability). However, this tail risk is compensated by upside optionality: the combination of Gatwick acceleration and competitor exit scenarios produces valuations of £55–69 per share. The expected return of 15.5% marginally exceeds the hurdle rate, with the investment thesis requiring neither the best nor worst cases to materialise — the base case alone implies a 26.5% return if the market partially re-rates toward fundamental value.

The overall risk characterisation is that Jet2 is a well-managed cyclical business with structural competitive advantages, temporarily entering an investment-heavy period (FY27–FY30 CapEx peak) that will constrain near-term free cash flow but fund the next decade of growth. The risk is adequately compensated in the expected return, but position sizing should reflect the wide distribution of outcomes.

Appendix B: Growth-Investment Model Driver Schedule

Derived Financial Outputs:

Appendix C: Full Scenario Specifications

Feasible State Summary (10 of 16 states):

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Disclaimer: CAPY Research publishes experimental, model-generated valuation research and general market commentary for informational and educational purposes only. It is not investment advice, not a recommendation to buy or sell any security, and not a price target. Outputs such as e[IVPS] and e[IRR] are experimental estimates produced by a software model and reviewed by a human; they are not forecasts of actual returns and should not be relied upon for any investment decision. The author or affiliated parties may hold positions in securities discussed. Do your own research and consult a licensed financial advisor before investing.