The owner of Jet2 and Jet2holidays is investigating state support options after drawing down a £100 million revolving credit facility to counter the coronavirus downturn.
Dart Group, which suspended flying in mid-March due to extensive European travel restrictions, is seeking whether it is eligible for the government’s Covid Corporate Finance Facility.
The company said it also remains in “constructive discussions” with existing liquidity providers “who recognise the strength of our business model”.
However, a staff pay cut of up to 30% is being introduced for six months until September 30 and no bonuses for the past financial year will be paid despite a rise in profits of almost 50%.
This is in addition to 80% of UK staff being furloughed under the government’s Coronovirus Job Retention Scheme. Similar schemes are also in place for many overseas staff.
Despite holidays and flights being on sale from June 17, the group disclosed that it faces a £109 million exceptional charge relating to “ineffectiveness on a proportion of FY21 fuel and foreign currency hedges in the FY20 results” due to operations being suspended for an indeterminate period.
The company said in a trading update today: “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.”
Dart added: “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 [job retention] 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 six-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 £100 million 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.”
Despite “considerable uncertainty”, customers are still making bookings for late summer 2020 and winter 2020-21, with “encouraging numbers” choosing to rebook rather than cancel.
Summer 2021 bookings to date were described as being “very promising” despite being early in the cycle.
The group expects to report a pre-exceptional profit of between £265 million and £270 million before foreign exchange revaluation and taxation for the financial year ending March 31 – up 49% year-on-year despite the suspension of flying in the middle of last month.
The improved annual performance came as the leisure travel business achieved overall flown passenger growth of 14% to 14.6 million and a 19% rise in package holiday customers to 3.8 million, representing 52% of the overall mix of passengers flown, an increase of 3 percentage points.
