Annual profits at On the Beach fell by 26% as a direct impact from the collapse of Thomas Cook.
Total one-off costs involved in organising alternative travel arrangements for customers caught up in the failure amounted to £25.6 million, net of a chargeback claim of £18.5 million.
A further £600,000 of exceptional operating costs came from “incremental operational costs of managing the process and the loss of monies held by Thomas Cook agents”.
The failure of Thomas Cook on September 23 impacted revenue by £7.1 million and pre-tax profits by £7.7 million.
However, adjusted group revenue for the year to September 30 increased by 41% and adjusted group profit before tax rose by 3% to £34.6 million, aided by a full year’s contribution from Classic Collection Holidays.
On the Beach chief executive Simon Cooper 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 with significant progress made against our strategic objectives while delivering a 3% increase in group adjusted profit before tax, in line with market expectations.
“Following the failure of Thomas Cook Group, all teams across our business responded exceptionally to ensure that customers were either re-booked or refunded in the shortest possible time while maintaining high quality customer care.
“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.”
He added: “The first quarter of our financial year has historically been the quietest trading period for the group.
“The failure of Thomas Cook Group 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 2019-20 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 FY20.
“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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