Who would want to sell package holidays these days? Tour operators Thomas Cook and Tui are losing money. Customers are nervous about travelling to the EU after October 31, when the UK may leave the bloc without any clear travel arrangements. The weakening pound is buying less sangria than ever, fuel is only getting more expensive and staff wages are on the rise.
Step forward Philip Meeson, the former pilot whose Jet2 brand now operates a fleet of almost 100 aircraft and has quietly become the second-biggest UK leisure travel business by market share.
The former British air acrobatic champion likes to fly under the radar. He operates from an unassuming office in Leeds and despite floating the parent company, Dart Group, in 1991, has never courted publicity.
“He doesn’t see the need. He just wants to get on and deliver,” says one adviser. Meeson spends time with investors and analysts in the City but little with the reporters that make or break reputations there.
The numbers do his talking: Dart’s revenues for the year to March 31, 2019 rose 32 per cent to £3.14bn. Adjusted pre-tax profit was up 63 per cent to £180.1m, ahead of forecasts. Jet2 revenue was up 34 per cent to £2.96bn.
The competition is distracted. Monarch Airlines went bust in 2017. With £1.2bn debt, Thomas Cook tried to sell its airline — the only profitable part of its operation — before switching flight path with a proposed £900m bailout by its lenders and its largest shareholder, the Chinese conglomerate Fosun. The sale is paused, rather than cancelled.
By contrast, Dart had net cash of £291m at the end of its full year. These are advanced payments for holidays that will be taken next summer. It operates online, without expensive shops to maintain.
Mr Meeson bought a company called Channel Express in 1983. Its main job was flying fresh flowers from the Channel Islands to the UK. He expanded into postal services and other cargo and added a trucking arm.
This is called Fowler Welch and accounts for about 10 per cent of Dart’s turnover. In 2003 Jet2 carried its first passengers from Leeds Bradford airport to Amsterdam. In 2007 Jet2holidays was established.
Half the airline’s passengers are on a package holiday, allowing Jet2 to fill seats and capture more of its customers’ spending. Aircraft are 93 per cent full.
Mr Meeson picked Leeds Bradford as his base for a reason. His business hero is the late Sir Ken Morrison, who built a supermarket chain from a Bradford market stall. He aimed, like Sir Ken, to offer quality at affordable prices, he told a business audience in a rare public appearance.
As executive chairman and holder of more than a third of the stock, it is Mr Meeson who still pilots the group.
Jet2 operates from nine regional UK airports — Belfast International, Birmingham, East Midlands, Edinburgh, Glasgow, Leeds Bradford, London Stansted, Manchester and Newcastle. It flies to the traditional holiday centres around the Mediterranean as well as cities popular for weekend breaks and ski resorts.
It carried 12.8m passengers, up from 10.4m the year before, with a 27 per cent increase in the number of customers going on a Jet2holidays package holiday (3.2m versus 2.5m). Advanced sales were up almost a fifth on the year before at £1.73bn.
Dart handed £9.5m of its profit to its 11,000-plus staff under a new profit share scheme. It needs good customer service to ensure customers book again for the next year.
Analysts forecast a sunny outlook despite the turbulence of rising costs and political uncertainty. In-house broker Arden predicts revenue of £3.53bn and adjusted pre-tax profit of £150.9m, a forward price/earnings ratio of a modest 10.4.
At an average £669 a holiday, prices are lower than competitors’ and it has a “laser focus on customer experience” according to Becky Lane, at Jefferies. “We see Dart Group as the most defensive of the vertically operated peer group, with a lower price point and no retail footprint. Given this, we think there is a material opportunity for market share gain in the medium and long-term,” she wrote in a July note.
For Mr Meeson, the sky is the limit. After overtaking Thomas Cook in 2017, he aims to catch Tui, the Anglo-German group that takes more than 5m Brits on package holidays annually. In the results statement last month he asserted: “Our long-term ambition remains the same — to be the leading UK leisure travel business.”
This article has been amended to state that Thomas Cook is no longer selling its airline, but has paused the process ahead of a proposed recapitalisation.
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