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Published on Wednesday, November 27, 2019

On the Beach profits dented by Thomas Cook collapse

On the Beach has taken a £25.6 million hit due to the failure of Thomas Cook but said in the medium term the collapse would bring an 'unprecedented opportunity' to boost its market share.

The company reported a 26% fall in annual pre-tax profits to £19.4 million as a result of the costs associated with organising alternative travel arrangements for customers.

"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," said On the Beach chief executive Simon Cooper.

"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."

He said despite the Thomas Cook's collapse and a 'difficult general economic climate with the prolonged uncertainty regarding Brexit' the group had made 'significant progress' against its strategic objectives while delivering a 3% increase in group adjusted profit before tax, in line with market expectations.

"We have made significant progress against our strategic objectives in the year with the launch of Classic Package Holidays, the expansion of our long haul offering and the International segment delivering strong second half revenue growth and a full year revenue after marketing break-even performance for the first time.

"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."

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