Shares in Jet2 owner Dart Group (DTG) fell 3.4% to 591p after it incurred a £109m exceptional charge as a result of the coronavirus pandemic’s impact on oil prices.

In a trading update ahead of its full year results to 31 March, Dart said it is taking the hit now in relation to ineffectiveness of a proportion of its fuel and currency hedges for its financial year to 2021.

OIL DEMAND PLUNGE

Plunging oil prices, which turned negative at the start of the week, have rendered the fuel hedging by airlines ineffective, with airlines having already agreed to pay prices which are now far higher than the current oil price.

In addition, the firm hasn’t given profit guidance for 2021 with the impact and duration of the coronavirus pandemic difficult to determine, and has also scrapped its final dividend this year.

Dart said it has significantly reduced its costs and cash outflows and drawn down a £100m revolving credit facility.

READ MORE ABOUT DART GROUP HERE

Despite significant cash balances, some of which is customer cash, Dart is also considering putting in place additional financing facilities. As at 18 March, the company said it had £1.5bn cash on the balance sheet.

BIG PROFITS JUMP EXPECTED

But the firm at least appears to be going into the crisis in a strong position, with pre-tax profit for the year to 31 March 2020 expected to be between £256m to £270m, a 49% increase on the previous year.

Flown passengers totalled 14.6m, up 14%, while package holiday customers were up 19% to 3.8m.

Meanwhile, the company said its distribution and logistics business Fowler Welch, while only a small contributor to the group’s overall revenue and profit, ‘continues to perform strongly’ as it provides ‘much needed and valuable distribution services’ to the UK food industry supply chain.

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Issue Date: 24 Apr 2020