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On The Beach profits at breakeven; 90% of summer bookings cancelled
9th Nov 2020 08:01
(Sharecast News) - On The Beach said on Monday that adjusted pre-tax profit for the year is at breakeven levels, with cancellation rates over the summer well above what it had been expecting, as the package holiday company insisted its balance sheet was strong.
In an update ahead of its full-year results next month, OTB noted the reopening of airspace in early July, which meant customers were once again able to enjoy international beach holidays, but said this was short-lived.
"The subsequent impact on consumer confidence has led to significant reductions in seat capacity over the winter," it said. "This position has now been further exacerbated by a four week ban on international leisure travel which began on 5 November."
The group said that due to Covid-related travel restrictions and low levels of consumer confidence, trading was varied through the third and fourth quarters, with booking volumes down 75% and 53% on the year, respectively.
"Due to strong cost control, adjusted profit before tax for the year (which excludes exceptional costs and brand amortisation) is at breakeven levels. Cancellation rates have been in excess of 90% across summer 2020, well above our assumption at the half year," it said.
This is expected to continue over the winter and has led to further exceptional costs of £10m in the second half, meaning that full-year costs are now expected to be £45m.
The company said that since 15 March, it has made total customer refunds of £160m - £70m for hotels and transfers and £90m for flights - and has received £79m from airlines for cancelled flights. It is still awaiting refunds of £11m for cancelled flights.
As at 6 November, the group had cash of £44m, excluding customer prepayments which are held in a ring-fenced trust account. It also had access to a £75m credit facility which is undrawn.
Chief executive Simon Cooper said: "It is clear now that the full impact of Covid-19 will be every bit as extreme as any of us could have mapped out at the beginning of the year. Following the overwhelming support we received from our shareholders in May, combined with our ring-fencing of customer prepayments, we are in a strong and debt-free financial position.
"The board is confident about the group's long term strategy and we will continue to look at the increasing number of exciting opportunities to grow our market share both in the UK and internationally."
In an update ahead of its full-year results next month, OTB noted the reopening of airspace in early July, which meant customers were once again able to enjoy international beach holidays, but said this was short-lived.
"The subsequent impact on consumer confidence has led to significant reductions in seat capacity over the winter," it said. "This position has now been further exacerbated by a four week ban on international leisure travel which began on 5 November."
The group said that due to Covid-related travel restrictions and low levels of consumer confidence, trading was varied through the third and fourth quarters, with booking volumes down 75% and 53% on the year, respectively.
"Due to strong cost control, adjusted profit before tax for the year (which excludes exceptional costs and brand amortisation) is at breakeven levels. Cancellation rates have been in excess of 90% across summer 2020, well above our assumption at the half year," it said.
This is expected to continue over the winter and has led to further exceptional costs of £10m in the second half, meaning that full-year costs are now expected to be £45m.
The company said that since 15 March, it has made total customer refunds of £160m - £70m for hotels and transfers and £90m for flights - and has received £79m from airlines for cancelled flights. It is still awaiting refunds of £11m for cancelled flights.
As at 6 November, the group had cash of £44m, excluding customer prepayments which are held in a ring-fenced trust account. It also had access to a £75m credit facility which is undrawn.
Chief executive Simon Cooper said: "It is clear now that the full impact of Covid-19 will be every bit as extreme as any of us could have mapped out at the beginning of the year. Following the overwhelming support we received from our shareholders in May, combined with our ring-fencing of customer prepayments, we are in a strong and debt-free financial position.
"The board is confident about the group's long term strategy and we will continue to look at the increasing number of exciting opportunities to grow our market share both in the UK and internationally."