Jet2 owner Dart Group expects £109m charge

Leeds-based Dart Group, owner of and Jet2holidays, said on Friday it expects an exceptional charge of £109 million due to its operations “currently being suspended for an indeterminate period of time.”

In a trading update, Dart Group said: “Although and Jet2holidays are currently on sale from 17 June 2020 in readiness for when our holiday flights can resume, due to operations currently being suspended for an indeterminate period of time, the board estimates that the group will record a net exceptional charge of approximately £109m relating to ineffectiveness on a proportion of FY21 fuel and foreign currency hedges in the FY20 results.”

Dart Group added: “… the board expects to report pre-exceptional group profit before foreign exchange revaluation and taxation for the financial year ended 31 March 2020 of between £265m – £270m, an increase of approximately 49% on the prior year …

“The impact and duration of Covid-19 remains difficult to determine, and the board has no clarity as to how this will affect group profit before foreign exchange revaluation and taxation for the financial year ending 31 March 2021.

“In response, we have already taken many actions to underpin the stability of our business and preserve cash.

“With our aircraft fleet currently grounded, approximately 80% of our UK colleagues have been put on temporary leave of absence (furloughed) in order to make full use of the grants available under the UK Government’s Coronavirus Job Retention Scheme.

“Similar schemes are also currently in place for many of our overseas colleagues.

“From 17 June 2020, we are on sale with a reduced flying programme and as a consequence have cancelled all 12 summer-only third-party leased aircraft.

“In addition, non-critical capital expenditure has been deferred, recruitment and discretionary spending has been frozen, and contractors have been terminated.

“Furthermore, we have also had positive discussions with many of our suppliers to reduce our monthly outgoings.

“Despite the Scheme, our monthly salary bill remains a substantial proportion of our overall costs and therefore, with huge reluctance and after much thought, we have asked all colleagues (including Directors) to take a pay cut of up to 30% for the 6-month period from 1 April 2020 until 30 September 2020.

“Additionally, performance related bonuses earned for the financial year ended 31 March 2020 plus the Discretionary Colleague Profit Share Scheme, will not be paid.

“Finally, the board deems it inappropriate to recommend a final dividend for the year ended 31 March 2020 while making use of the Scheme.

“We have prudently fully drawn down our Revolving Credit Facility of £100m and have also begun the process to confirm our eligibility and access to the Covid Corporate Financing Facility, launched by the Bank of England.

“In addition, we remain in ongoing constructive discussions with our existing liquidity providers, who recognise the strength of our business model.

“Positively, and despite the considerable uncertainty, we are seeing customers still making bookings for late summer 20 and winter 20/21, with encouraging numbers choosing to rebook rather than cancel.

“In addition, and though very early, summer 21 bookings to date are very promising.   

“Our Distribution & Logistics business, Fowler Welch, continues to perform strongly, providing much needed and valuable distribution services to the UK food industry supply chain.

“The health and wellbeing of our colleagues and customers has always been of paramount importance. 

“We are therefore proud of the extensive repatriation programme we conducted to bring our valued customers safely home, and how so many of our colleagues have responded quickly and positively to the new ways of remote working.

“We remain confident that once normality returns, our Customers will be determined to enjoy the wonderful experience of a well-deserved Jet2 holiday and that and Jet2holidays will continue to have a thriving future, taking millions of UK holidaymakers annually, to the Mediterranean, the Canary Islands and to European Leisure Cities.”