Package holiday firm On The Beach has insisted the demise of Thomas Cook will boost trading despite seeing annual profits plunge after taking a hit from the firm’s collapse.
On The Beach posted a 26% fall in annual pre-tax profits to £19.4 million after booking a £7.7 million charge from the collapse of rival Thomas Cook.
Around 15% of the company’s customers booked Thomas Cook flights annually, and On The Beach was forced to rebook affected customers on to alternative flights.
But On the Beach said the demise of the competitor will offer an “unprecedented opportunity” to boost its market share.
It said it had already seen strong search demand from holidaymakers since the Thomas Cook collapse in September, though it added the sudden loss of availability had pushed up flight prices for this winter and in eastern Mediterranean destinations.
On The Beach said with the Thomas Cook impact stripped out, underlying pre-tax profits lifted 3% to £34.6 million over the 12 months to September 30.
Simon Cooper, chief executive of On the Beach, 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 TCG (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.”
The group said it will continue to focus on being competitive on price and get its brand out there, while it also expects the cut to flight availability to recover during the new financial year.
The results come after On The Beach warned on profits earlier in the year as political uncertainty dented the value of the pound and consumer confidence.
Shares in the company plunged in August after the alert, but have since recovered as investors have eyed a growth opportunity on the back of the collapse of Thomas Cook.
Mr Cooper said: “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.”