£3m profits hit but Dart Group aims for growth

DART Group, the parent company of budget airline Jet2.com, said it is well placed to improve its financial performance despite a £3m hit from volcanic ash, after annual profits slid by a third.

The Leeds Bradford airport-based group also revealed it is looking at consolidation opportunities to expand its rapidly-growing Fowler Welch-Coolchain distribution business.

The group was forced to trim schedules for Jet2.com during the year to the end of March as demand for flights slumped amid the recession.

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It cut seat capacity by seven per cent, axing unpopular routes and focusing on 'far sun' destinations such as Cyprus, Egypt and the Canary Islands.

Chairman and chief executive Philip Meeson said while this helped mitigate lower demand, which was especially weak during off peak and winter months, underlying profits before tax were down 9.7m at 19.1m. Turnover dipped slightly to 434m and Mr Meeson said it was a "reasonably satisfactory" year, given the tough aviation market.

The airline was dealt another blow in April and May when ash clouds from a volcano in Iceland grounded more than 400 flights. Despite the 3m toll on the new financial year's profits, Mr Meeson said he plans to grow Jet2.com this year with emphasis on leisure destinations.

"With the contribution of passengers from Jet2holidays alongside our other income streams, we feel optimistic that, provided we are flexible, continue to innovate and to offer really great value fares, our aviation business will prosper," he said.

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"In the current trading environment, both businesses have started the year reasonably satisfactorily, despite the disruption caused by the volcanic ash. With increasing demand for our distribution services and a carefully tailored airline flying programme, we are reasonably well placed to deliver improved financial performance in this financial year."

Jet2.com grew the amount of extra revenue it earns per passenger from 14.93 to 21.12, through charging for excess hold baggage, online seat assignment and extra leg room.

During the year it also flew 750 charter flights for customers ranging from pilgrims to orchestras.

Fowler Welch-Coolchain, which transports chilled food for supermarkets, had an "encouraging year".

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The group bought a 500,000 sq ft warehouse in Manchester, which it hopes will significantly expand its presence in the North West.

It already supplies the full range of products sold by Tesco express convenience stores in the North East via its Tyne and Wear warehouse.

It bought Felixstowe-based Bawdsey Haulage in September for a "relatively small sum" and is now looking at further acquisitions after ending the year with net cash of 52.2m. Mr Meeson said Fowler Welch-Coolchain is well placed to exploit "further opportunities as a result of ongoing consolidation within its sector".

Dart increased its final dividend by 5.6 per cent to 0.75p a share.

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Analyst Chris Thomas at Arden Partners said although the cash position was boosted by this summer's forward bookings, he thinks Dart will still have significant net cash even at its seasonal low around November.

He said Dart's was "a creditable performance given market conditions that have seen many airlines making losses".

"By any measure, Dart remains very significantly undervalued," he said.