Dart Group, which owns the airline, yesterday told shareholders it would not be paying a dividend "given both the current economic climate and trading performance for the year".

In its preliminary results, the group, which is based at Leeds Bradford International airport, said turnover for the year ended March 31 was up 23 per cent to £429m, after its expansion of scheduled flights.

It said profit before tax was £11.8m compared to a £3.6m loss a year ago. However, the group said if hedging was taken into account, profit before tax actually fell to £3.9m from £14.1m the previous year. For the aviation business, operating profit before adjustment was just £300,000, compared to £13m the previous year. Debt grew from £14.1m to £17.2m.

In a statement Philip Meeson, chairman and chief executive, said: "This significant growth was partly at the expense of profitability as Jet2.com expanded its route network from 114 to 133 routes."

Mr Meeson said Jet2.com added 19 new routes during the year to March 31, and saw passenger volumes increase by 32 per cent to 4 million. Jet2.com said it now flies 130 routes, but analysts said the airline has decreased its capacity for the current season by about 29 per cent.

"The big expansion has not really brought the benefits that were planned," said one analyst.

"It's self evident that they have cut capacity quite significantly this year and that some of the things they did last year did not work out.

"Overall capacity in the current season is down about 29 per cent but within that they have added some new routes. They pruned some existing areas quite heavily. We are in a back to basics mode."

Mr Meeson said Dart has hedged its exposure to soaring oil prices for the current financial year, meaning it will not suffer from huge rises in aviation fuel which have dogged other airlines. Analysts said this was a "very sensible move" given the wildly fluctuating price of oil.

"In the aviation business, the cost of fuel has become a significant issue," said Mr Meeson. "We have sought to delay the impact through hedging strategies and to mitigate these cost increases by developing additional retail revenues.

"With our expected fuel requirements fully hedged for the current year and with a more focused flying programme, we are well placed to improve financial performance in this financial year."

Despite its overall contraction, this summer the airline is flying to 36 destinations from Leeds Bradford, compared to 28 last summer. It also flies from Belfast, Blackpool, Edinburgh, Manchester and Newcastle.

"Whilst summer 2008 trading remains very encouraging, the board has concluded that it is not appropriate to pay a final dividend given both the current economic climate and trading performance for the year," said Mr Meeson.

He added the group is increasingly focusing on its Jet2holidays.com business, and more than 34,000 people flew with the tour operator since launching in February 2007. He said its logistics operation, Fowler Welch-Coolchain, had a successful year and saw revenues increase by 10 per cent.

An aviation analyst said: "It's as positive as one could hope for in this environment but it reflects that last year was a very tough year because of a combination of intensifying competition and rapid expansion."

Tony Hallwood, Leeds Bradford International Airport commercial and aviation development director, said: "The great news is Jet2.com are growing their business from Leeds Bradford.

"We are seeing demand decline at other airports around the UK, but Leeds is still performing very well."



Getting away from it all

The top five most popular summer destinations for Jet2 are:

Malaga in Spain

Alicante in Spain

Majorca in Spain

Paris in France

Faro in Portugal