The demise of budget airline Monarch last year weighed on On the Beach Group PLC’s (LON:OTB) half-year results.
In the six months ended March 3, the online travel agent reported a 19% rise in revenue to £45.3mln (H1 17: £38.1mln), while profit before tax jumped 9% to £10.8mln (H1 17: £9.9mln).
£1.1mln hit from Monarch failure
But the numbers were slightly below what City analysts had initially pencilled in, largely because of the impact of Monarch’s failure last September.
On The Beach took a £1.1mln hit in the period from lost bookings, as the airline’s collapse reduced capacity on short-haul European routes, with the higher fares putting people off travelling.
Adjusting for the Monarch impact and accelerated international investment, management still expects to meet full-year expectations.
Numis analyst Richard Stuber said he still liked the company, but the higher-than-expected one-off costs meant he was trimming his estimates.
“We remain comfortable with fundamental performance, but are therefore cutting our revenue forecast by 5% (implying +20% in 2H) and profit before tax by 4% in FY18,” he wrote in a note to clients.
‘Solid’ first half, says boss
“On the Beach has delivered a solid performance in H1, with strong booking and share growth supported by some modest and tactical discounting. Booking growth strengthened towards the end of the period and has continued into H2,” said founder and chief executive Simon Cooper.
“As referenced in our AGM update in February, the flight capacity constriction following Monarch's collapse has driven an increase in seat prices and a corresponding reduction in bookings.
“The position regarding flight capacity continues to recover as incremental capacity has been scheduled which alleviates this constriction.”
OTB shares were down 11.7% in early deals to 573.9p.