Dart flies above the gloom as revenues increase

The group, which owns budget airline Jet2.com and is based at Leeds Bradford airport, said it flew fuller planes in the year to the end of March, helping underlying pre-tax profits lift almost 36 per cent to £25.9m.

Revenues rose 25 per cent to £543m, and the group hiked its final dividend by almost 11 per cent to 0.83p per share.

Jet2.com, which operates from airports across the north of England and Scotland, increased aviation revenues by 28 per cent, despite disruption from Iceland’s volcanic eruption in April and May last year, which forced it to cancel more than 400 flights.

The airline’s load factor – a key measure of how full its planes are – rose to 85 per cent from 80 per cent a year earlier.

Dart’s chairman and chief executive Philip Meeson said both the airline and its holiday business, Jet2holidays, are attracting customers despite the tough economy.

“Both products meet the demand for real value in these difficult and uncertain economic times,” he said. “Higher utility prices, the rising cost of food and fuel, and employment uncertainty, are all taking their toll on leisure spend.

“Both our seat-only and package holiday products are absolutely geared to meet the holiday needs of value-seeking customers.”

Dart’s aviation business, which also includes a passenger and freight charter division, contributed the bulk of the group’s earnings, almost doubling operating profits to £23.8m.

During the year Jet2.com flew 135 routes to 51 destinations. In March it opened its eighth base, at Glasgow, increasing its summer seat capacity by 26 per cent.

The group has also leased four new aircraft to bolster its fleet – two Boeing 757-200s and two Boeing 737-800s.

In January, political unrest in the Middle East and North Africa forced Dart to cancel flights to Tunisia and Sharm El Sheikh and Hurghada in Egypt.

Mr Meeson hailed the progress made by Jet2holidays, which carried almost 98,000 package holiday customers during the year. “We are now working to double that number for the current financial year,” he said.

Its packages include flights, transfers and accommodation, and the group now has more than 800 directly contracted hotels in Mediterranean resorts.

“There are major opportunities to cross-sell between our flight only and package holiday customers and we look forward to the continued growth of both,” said Mr Meeson.

Jet2.com has also been growing add-on revenues it earns from passengers, such as extra leg room, entertainment and commission on car hire.

Retail revenues per passenger grew from £21.12 to £25.39.

However, costs in the group’s aviation businesses were pushed up 25 per cent by higher fuel costs and the weakness of sterling, as well as business growth.

Dart’s logistics business, Fowler Welch, had a tough year after the costs of opening of a large new distribution hub near Manchester and weak trading in its container business drove operating profits down from £7.4m to £2.8m.

The 50,000 pallet Manchester distribution centre opened before Christmas, but was hit by higher than expected operating costs and “operational challenges”.

These have now been resolved and Mr Meeson said there are “very significant” opportunities for growth at this site.

Fowler Welch has also increased its work with Tesco after the success of a distribution site in the North East.

Its latest tie-up with the UK’s biggest supermarket is a new site in Devon to serve Tesco’s smaller stores in the South West.

Dart ended the year with net cash of £106.8m, more than double the £52.2m a year earlier.

“We hope to grow both our businesses in the year ahead, despite the continuing uncertain economic climate,” said Mr Meeson.

“Both businesses have started the year reasonably satisfactorily, although we expect these challenging economic conditions to continue to impact on yields in the aviation sector for the foreseeable future.”

Shares in the company edged down 0.5p to 87.5p.

Analysts at Charles Stanley said: “The group beat market expectations, reporting profit before tax of £25.9m, above our top of the range estimate of £25.2m.

“The outlook for growth remains favourable and... the company remains significantly undervalued.”

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