JET2’s parent company Dart Group announced a fall in half year profits after it made a £17m exceptional provision to cover payouts to passengers who have suffered delays due to technical reasons.
The provision was made after The Supreme Court rejected an appeal by Jet 2 over a compensation case relating to a man from Stockport who was refused compensation following a 27 hour delay on a flight from Malaga.
Experts believe the case could herald a flood of complaints from other passengers.
Leeds-based Dart said that after this exceptional item, pre-tax profits fell eight per cent to £71.7m in the six months to September 30.
Without the item, underlying pre-tax profit rose 14 per cent to £88.7m.
Group revenue increased 15 per cent to £902.2m.
Dart’s chairman Philip Meeson said: “The increase in underlying group operating profit reflects improved trading in our leisure travel business in the later summer months, which was in contrast to the challenging market conditions experienced earlier in the season.”
However he warned that increased losses are to be expected in the second half of the year following investment in the group’s growing leisure travel business, which flies passengers to popular destinations in the Mediterranean, the Canary Islands and major European cities.
He said that winter booking are in line with expectations and the group should meet full year profit forecasts.
The group spent £25.5m on investment in the long-term maintenance of its aircraft fleet.
A further four aircraft will come on stream in readiness for next summer.
In the leisure travel division, flight-only passenger numbers rose by eight per cent to 3.07 million and Jet2holidays took 770,000 customers on holiday, up 21 per cent on last year.
“This growth is a reflection of the popularity of both our flight-only and package holiday products with package holiday customers now making up 33 per cent of all passengers,” said Mr Meeson.
The group’s leisure airline, Jet2.com, flew 4.6 million passengers, an increase of 12 per cent on the same period last year.
Overall net ticket yield of £79.99 was down 1.6 per cent as early season demand was slower than expected, particularly to Canary Islands and Eastern Mediterranean destinations.
Retail revenue, or non-ticket revenue, per passenger increased by five per cent to £34.04 following a focus on pre-departure and in-flight sales.
The average price of a package holiday rose by three per cent.
As a result, leisure travel revenue grew by 16 per cent to £824.1m and underlying operating profit grew 10.6 per cent to £87.8m.
Over the summer the leisure travel business operated 54 aircraft from its eight Northern UK bases - Leeds Bradford, Manchester, Newcastle, Blackpool, East Midlands, Edinburgh, Glasgow and Belfast International airports.
“We will continue to develop our customer-focused flying programme into summer 2015, which will also include the addition of four new destinations - Antalya in Turkey, Enfidha in Tunisia, Kefalonia in Greece, and Malta,” said Mr Meeson.
Dart’s Fowler Welch distribution and logistics arm reported a slight revenue reduction of £100,000 to £78.1m while like-for-like operating profit of £2.1m was in line with the previous half year, at an operating margin of 2.7 per cent.
Overall operating profit fell 11 per cent to £1.6m as a result of expected start up losses at a new joint venture operation.
Dart said that margins are encouraging in this business and with volumes now committed for the remainder of the current year.