Package holiday company On The Beach has taken a £25.6m hit from the collapse of Thomas Cook, as the cost of getting stranded holidaymakers home weighed on the firm.
The company maintained that the failure of one of its biggest rivals would ultimately help it in the long run, despite profits falling more than a quarter as a result of the charge.
On The Beach added that it has already clawed back about £18.5m of that charge from insurance and credit card companies. This leaves it £7.1m down from Thomas Cook’s collapse when operating costs are excluded.
Profit before tax was £19.4m for the year ending 30 September, a 26 per cent fall on last year.
Revenue was £140.4m, up 35 per cent year-on-year, while group cash at the end of the year was £54.8m.
Why it’s interesting
On The Beach hopes to jump into the considerable gap in the market left by the demise of Thomas Cook, but the significant one-off charge was the price it had to pay first.
The travel agent assembled and sold Thomas Cook holidays to its customers, which accounted for about 15 per cent of its business.
Most of the financial hit was associated with refunding pre-booked holidays and getting stranded customers home, as part of the wider repatriation of 150,000 Brits that was sparked by the 178-year-old travel company’s sudden demise.
Thomas Cook went bust on 23 September, leaving £3bn worth of debt and 800,000 prospective travellers who had paid for holidays in the future.
But On The Beach said the demise of the competitor will offer an “unprecedented opportunity” to boost its market share in the long run.
It reported strong search demand from holidaymakers since September, but added added the sudden loss of availability had pushed up flight prices for the winter season.
It comes as the aviation industry starts counting its losses from the collapse, with Gatwick airport yesterday predicting it would lose about 600,000 customers for the financial year as a direct result of the failure.
What On The Beach said
Simon Cooper, chief executive, said: “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 Group has led to a material shift in market dynamics as it had a 20 per cent share of beach holiday passengers and approximately 20 per cent 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.”