8th Apr 2020 12:13
(Alliance News) - Holiday firm On the Beach PLC on Wednesday withdrew its full-year guidance and ruled out an interim dividend due to the Covid-19 outbreak.
The company did say it has trimmed expenses, meaning monthly costs are now GBP2 million.
On the Beach explained that unlike other online travel agents, it does not rely on forward bookings to trade, meaning the negative impact from issuing refunds will be limited.
"Notwithstanding the advantages of the OTB model, the group took early action in February to manage risk and conserve cash. In this environment of limited demand and therefore limited revenue, the group's marketing costs have reduced to almost nil and the group has taken further actions to limit other non-essential costs," the company added.
"In light of the current market uncertainties, OTB is suspending full year guidance until such time that the overall impact of Covid-19 on the group becomes clearer. The board also announces that it will not be declaring an interim dividend in the current financial year to September 30, 2020."
In addition, the company's Chief Executive Officer Simon Cooper is forgoing his salary and the rest of the board have taken a 20% cut in pay and fees.
The holiday firm outlined that it conducted "theoretical stress tests", as it bids to predict just how much it will be hurt by the Covid-19-related lockdowns.
The forecast assumes no bookings are made until September and accounts for any airline being taken off sale by the company due to concerns over its "financial viability".
"In the above scenario, the group would end the first half of financial 2021 with only a limited drawdown of its facilities and significant headroom," the company said.
CEO Cooper added: "The travel industry is prone to shocks: global recessions, natural disasters, terrorist attacks, and major airline failures to name a few. A closure of airspace was deemed inconceivable during contingency planning for a no-deal Brexit, but we now find ourselves in a position where airspace may be closed for a number of months due to the spread of Covid-19, and the travel industry needs to brace itself for a potentially prolonged period of significantly reduced, or even zero revenue."
Shares in the company were 22% higher at 244.21 pence each in London on Wednesday at midday, though it remains down more than half so far this year.
By Eric Cunha; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
On The Beach