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Dart expects cost pressures

The holiday operator boosted capacity during the first half, but has warned of cost pressures in the second
Dart expects cost pressures

Capacity is a contentious issue in the European air travel sector. Days before Jet2holidays owner Dart Group (DTG) announced these half-year results, fellow airline Flybe (FLYB) announced it was up for sale following years of overexpansion. Dart increased capacity by 24 per cent during the six-month period to 9.47m available seats, and carried a quarter more passengers at 8.93m. So far, load factor has  kept up, rising 1.2 percentage points so that 94.4 per cent of seats were filled.

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But this rapid expansion could catch up with Dart in the second half of the financial year. Although operating profits rose by 68 per cent to £350m, "increased losses" are expected during the latter half as Dart shells out on new planes, marketing campaigns and more staff. Beyond that, management has also warned of higher fuel costs, climbing operating expenses and unpredictable consumer spending trends in the aftermath of Brexit – enough to send the shares down by a fifth on results day.

Analysts at Canaccord Genuity expect pre-tax profits of £178m during the year to March 2019 giving EPS of 97.7p, compared to £114m and 63p in FY2018.

DART GROUP (DTG)   
ORD PRICE:812pMARKET VALUE:£1.2bn
TOUCH:811-816p12-MONTH HIGH:1,052pLOW: 578p
DIVIDEND YIELD:1.1%PE RATIO:6
NET ASSET VALUE:580pNET CASH:£460m
Half-year to 30 SepTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20171.652161191.50
20182.253371862.80
% change+36+56+56+87
Ex-div:27 Dec   
Payment:04 Feb