Jet2 (LSE:JET2) is at the moment listed on the AIM (Different Funding Market). Additionally it is a constituent of the FTSE AIM 100, FTSE AIM UK 50, and FTSE AIM All-Share indexes. As such, it doesn’t qualify for inclusion within the FTSE 100 or FTSE 250. These require a Important Market itemizing.

Why isn’t Jet2 listed on the Important Market?

Jet2’s administration possible elected for an inventory on the AIM market due to lighter regulatory necessities, better flexibility, and simpler entry to capital.

Nonetheless, there was ongoing dialogue amongst market commentators and traders about the opportunity of Jet2 shifting from AIM to the FTSE Important Market. The truth is, Jet2 is regularly cited as the obvious AIM-listed firm to make the transition to the Important Market. That’s purely due to its substantial measurement.

As I write, the corporate is valued round £3.8bn. Than would put it on the cusp of FTSE 100 eligibility if it had been to record on the primary trade. It has additionally grown considerably over the previous decade, outperforming many friends on the inventory market. Within the course of, it has earned a powerful fame for customer support and reliability.

Shifting to the Important Market?

A transfer to the Important Market may carry a number of benefits for Jet2. These embody elevated visibility and credibility with traders. There are numerous institutional traders whose mandates limit them from investing in AIM-listed shares. Inclusion within the FTSE 100 or FTSE 250 indexes would improve the inventory’s visibility.

Furthermore, the UK itemizing guidelines had been up to date in 2024, making the Important Market extra enticing and decreasing a number of the earlier benefits of AIM for acquisitive firms. For instance, FTSE 100 firms can now make acquisitions with out holding a shareholder vote. Beforehand, this was one thing solely AIM firms may do.

No announcement

Regardless of the hypothesis and the obvious suitability of Jet2 for a Important Market itemizing, there was no official bulletins. And it’s price noting that the corporate’s comparatively meagre valuation relative to its web money place and earnings could go well with administration. In spite of everything, the valuation permits Jet2 to undertake extra share buybacks at a decrease price. It additionally has sufficient capital for its fleet transformation and growth programme.

The underside line

I spend money on Jet2 however not as a result of it might transfer to the Important Market. Nonetheless, I do imagine the inventory may surge if it did switch and obtain FTSE 100 inclusion at some stage. In spite of everything, it’s at the moment buying and selling round two occasions enterprise value-to-EBITDA — a reduction to business friends. Nonetheless, I do settle for that with finer margins than a few of its rivals, the inventory may come underneath strain if we see a sustained fall in journey demand, a rise in gas costs, or further employment prices.

Regardless of these considerations, I can say that Jet2 has turn into the most important inventory in my portfolio, surging round 40% from its backside in April. Whereas I’m tempted to purchase extra, it’s not wholesome to have an excessive amount of of 1 inventory.