On The Beach Group PLC (LON:OTB) jumped after saying it is resilient to the current coronavirus crisis thanks to its asset-light model and cost-cutting measures.
Following a stress test assuming there would be no bookings until September, the firm said it would end the half-year to June 2021 “with only a limited drawdown of its facilities and significant headroom”.
READ: On The Beach target price slashed by house broker Peel Hunt over coronavirus woes
“This headroom would allow the group to take advantage of the multitude of opportunities that these market conditions would present,” it commented.
The online travel agent said it is now spending less than £2mln each month, though it is still investing in its future strategy.
The group’s chief executive offered to forego his salary, the board have cut theirs by 20% and the interim dividend for the year to September will not be declared.
The beach-focused online platform said under normal conditions underlying operating cost would be 8% of sales, most of which is marketing spend.
“If demand falls away completely then the fixed cost base will drop to circa 3% of aspirational sales,” the firm said.
It also operates through fully ringfenced customer trust account in which customer funds are held until the point of travel, therefore trading does not rely on cash received for forward bookings.
Shares jumped 25% to 250.5p on Wednesday morning.