Dart on target despite industry hurdles

The Leeds-based group, which runs the Jet2.com airline, was forced to cancel flights to Tunisia and Egypt when a wave of unrest began sweeping across the Maghreb in December.

Despite this Dart said its pre-tax profits for the year to the end of March 31 will be in line with market hopes.

Shares in Dart closed the day down 0.6p at 84.25p.

“Cash flow generation from operations remains strong and during the period the group has continued to invest in further growth,” said the group.

“Notwithstanding the cancellation of North African flying, higher fuel costs and continued consumer uncertainty, the board currently believes the group will trade in line with market expectations in the current financial year.”

Finance director Andrew Merrick said: “We stopped flying to Egypt and Tunisia as a result (of the turmoil). It’s not a huge part of our programme but it’s a helpful part.”

He declined to quantify the impact of the cancelled flights, but said it will be nowhere near the cost of last year’s Icelandic volcano eruption. The ash cloud, which blanketed much of northern Europe a year ago, wiped £3m from the group’s profits as it was forced to cancel more than 400 flights.

Dart said forward booking levels for Jet2.com for this summer remain “satisfactory”, supported by continued growth at its holidays business.

“We think it will be a reasonably challenging summer,” said Mr Merrick. “Clearly, the economic situation is not improving particularly and I do not see it improving much this summer.

“(But) we’re still seeing people book their main holiday.”

While fuel prices have soared in recent months, he added the group has hedged much of its fuel requirement for this summer. Higher fuel prices will also not have much impact on its Fowler Welch-Coolchain business, which transports chilled goods for retailers, because of a fuel multiplier built into contracts. This means customers bear the brunt of increased fuel costs.

Dart ended the financial year with net cash of about £50m. Mr Merrick said this gives the group capacity to invest, but it has no plans for acquisitions.

“We have no immediate plans for material capital expenditure,” he said.

Last year the group bought a 50,000-pallet distribution centre in Heywood near Manchester, which is continuing to attract new volumes. Mr Merrick said investment plans will continue to expand Fowler Welch-Coolchain.

“Heywood gives us extra capacity for growth,” he said. “We are looking to grow that site. It’s a combination of people being frustrated through their existing supplier, plus we are seeing a bit of consolidation in the market towards bigger players.”

Last month it opened its eighth UK base at Glasgow airport, from where it will serve nine sun destinations. Jet2.com is increasingly competing with Irish carrier Ryanair at its Leeds Bradford airport headquarters. Ryanair opened a base there a year ago, and last year said it would grow at Leeds Bradford despite cutting winter capacity by 16 per cent elsewhere, thanks to the airport slashing charges in return for guaranteed passenger numbers.

Despite this Jet2.com saw record numbers of passengers there last summer.

More than 1.1m passengers flew with Jet2.com from Leeds Bradford to 41 sun and city destinations. This summer it expects to create 145 new jobs.

Chairman and chief executive Philip Meeson believes the group’s performance is being boosted by a combination of tailored flight schedules to in-demand destinations at convenient times, plus popularity with passengers and growing add-on revenues.

Revenue per passenger grew to £25.93 in the six months to the end of September from £20.70, boosted by add-on services such as video screens, extra leg room and pre-ordered meals.

Company that blossomed

Dart Group traces its roots back to the early 1970s when Art Carpenter formed Carpenter’s Air Services to fly flowers from Guernsey to the UK using cargo aircraft.

Later becoming Express Air Freight, in 1978 it bought Handley Page Dart Herald aircraft to run its own flights between Bournemouth and the Channel Islands.

In 1983 Philip Meeson acquired the businesses.

In 1991 it joined the official list of the London Stock Exchange as Dart Group Plc and in 2003 moved to Leeds Bradford airport and launched Jet2.com.