Cheadle-based On The Beach has reported a 26% fall in annual profit after incurring significant costs following the liquidation of Thomas Cook.
Pre-tax profit for the year through September declined to £19.4m, down from £26.1m on-year. Revenue rose 41% to £140.4m, but the company incurred significant costs when Thomas Cook went under in September.
“There was a one-off exceptional cost associated with helping customers to organise alternative travel arrangements and lost margin on cancelled bookings,” On The Beach said.
“The adjustment of £7.1m to revenue represents the lost revenue associated with providing refunds and the costs associated with organising alternative travel arrangements for customers. This totalled £25.6m and is stated net of a chargeback claim of £18.5m.”
Chief Executive Simon Cooper added: “In what has been a difficult general economic climate with the prolonged uncertainty regarding Brexit and the related currency impacts, I am pleased with the group’s performance.
“The failure of Thomas Cook has led to a material shift in market dynamics as it had a 20% share of beach holiday passengers and approximately 20% of the seat capacity to beach holiday destinations.
“This has created a significant short-term lack of seat capacity as well as an unprecedented opportunity in the medium-term to gain share.
“Search demand has therefore been strong throughout the period following the failure albeit the loss of seat capacity has led to a supply-demand imbalance with a significant increase in flight pricing, particularly for winter 19/20 departures and for travel to Eastern Mediterranean destinations.
“The board strongly believes the correct course of action to ensure that On the Beach is best-positioned to capture market share, is to focus on price competitiveness and to increase the visibility of all of the group’s brands, with the expectation that seat supply will normalise during the 2020 financial year.
“Whilst the consumer environment will continue to be challenging, we remain confident in the ability of our resilient and flexible business model to significantly increase our market share in the medium term.”
The online travel retailer is headquartered in Cheadle, while its digital team is based in the centre of Manchester.
