Dart ‘cautiously optimistic’ over profits as Jet2 continues to soar

The company said summer trading in its leisure travel businesses had been satisfactory, despite the fine weather which could have encouraged more people to stay at home.

Earlier this month, Philip Meeson, Jet2.com’s founder and chief executive, revealed that the company was bringing its call centre operations in South Africa to Leeds. It is also investing £9m in a new training academy for pilots and crew in Bradford.

The company’s leisure airline, Jet2.com, flew 4.1m passengers in the six months to 30 September 2013, an increase of 13 per cent over the same period last year.

According to the company, this expansion was supported by the continued growth of Jet2holidays.

A trading statement issued yesterday said: “The business also achieved increases in ticket yields and load factors, though more recently yields, and therefore operating margins, have come under pressure.”

The company’s package holidays business, Jet2holidays, had a successful summer and continues to meet its passenger growth targets, the Dart Group said.

During the first six months of the year, Jet2holidays took 634,866 passengers on holiday, an increase of 103 per cent over the same period in 2012.

The company said that its distribution and logistics business, Fowler Welch, had also continued to make good operational progress in the first six months of the year.

However, profitability was affected by the varied profile of volumes handled during late July, August and September, the company added.

The trading statement said: “The strategy of the business remains consistent; continuing to focus on growing its revenue pipeline and delivering operational efficiency improvements in a sector that continues to experience tight margins.”

The Dart Group’s leisure travel operations are becoming “increasingly seasonal” as it grows the business.

“This will result in the group’s profit before tax for the first half of the year being approximately 37 per cent ahead of the same period in the previous year, with increased losses expected in the second half,’’ Dart Group said.

“As a result, and with the important winter booking period still to come, the board remains cautiously optimistic in relation to profit growth for the financial year ending March 31 2014.”

Chris Thomas, an analyst from Arden Partners, said: “Dart’s strategy to grow the holiday business to create a more integrated holiday and airline business has been highly successful, and we see considerable scope for further progress with this strategy over the next few years.

“However, in the short term, the shares are likely to respond to the reduced expectations for distribution and the more challenging conditions... and we are moving our recommendation from Buy to Add to reflect the current uncertainty over the outlook.”

In light of the lower profitability within the distribution operation, Arden Partners is reducing its full year PBT (profit before tax) estimate from £43.8m to £41.8m.

Earlier this month, Mr Meeson told the Yorkshire Post: “This year is set to be another successful year for us.

“Across our eight UK bases we are expecting to fly 5.5m passengers to and from 61 destinations. These further developments clearly demonstrate our commitment to giving people the best possible service and great value flights and holidays to the Mediterranean, Canaries and top European cities.”

The group plans to announce its interim results on November 21.