On the Beach awaits cash from airlines as 90% of holidays cancelled

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On the Beach Group PLC (LON:OTB) said cancellation rates have been much worse than expected in the final months of its financial year but that it has remained at breakeven at an underlying level.

Booking volumes were down 53% in the final three months of the online travel agent’s financial year to September 30, after falling 75% in the third quarter to end-June.

Full-year profit before tax will be hit by exceptional costs and brand amortisation, with an expected £45mln cost from the expectation that cancelled holidays will continue over the winter, with cancellation rates in excess of 90% across summer 2020, well above the board’s assumption at the half-year.

Total customer refunds of £160mln have been made in cash since March 15, of which £90mln is for flights though only £79mln has been received from airlines for cancelled flights so far, with £11mln still awaited despite the company refunding flight costs in advance of receipt “in order to protect the brand and generate customer goodwill”.

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.”

But as of November 6 the group had cash in the bank of £44mln, having raised £65mln net from a share placing in May, and has access to an as-yet-undrawn £75mln credit facility.

In the event of revenues falling completely to zero, the company would have a cash burn of roughly £2mln per month.

The shares were up 3% to 274p mid-morning on Monday.

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