UK Markets closed

On The Beach expects fresh hit to capacity as Europe tightens restrictions

LaToya Harding
·Contributor
·2-min read
People sunbathe at the Bogatell beach in Barcelona
On The Beach said the reopening of airspace in early July was “short-lived” and that the impact on consumer confidence led to significant reductions in seat capacity over the winter. Photo: JOSEP LAGO/AFP via Getty Images

Holiday package provider On The Beach (OTB.L) warned of more turbulence ahead and a continued hit to its capacity as coronavirus restrictions tighten across Europe.

The company said the reopening of airspace in early July was “short-lived” and that the impact on consumer confidence led to significant reductions in seat capacity over the winter.

It added: “The position has now been further exacerbated by a four week ban on international leisure travel which began on 5 November.”

Nationwide lockdowns in Britain, France and Germany have led to airlines cutting their flights for autumn, including the world's largest travel company TUI (TUI.L) already reducing capacity for the winter season.

Cancellation rates at the FTSE 250 (^FTMC) travel retailer were in excess of 90% across summer 2020, significantly above its forecasts at half-year. The group expects it to continue at these levels over the winter.

On The Beach said it “continues to work hard to refund all customers in cash and in full” where their holidays are cancelled. It has refunded £160m ($121m) in cash since 15 March (£70m hotels and transfers, and £90m for flights).

Meanwhile booking volumes in its third and fourth quarters slumped 75% and 54% respectively year-on-year.

The company recorded exceptional costs of £10m in the second-half, and expects it to total £45m for the year.

Simon Cooper, chief executive, said this was” the most challenging time to have ever faced the travel industry.”

“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,” he said.

READ MORE: Ryanair cancels flights to Denmark, slams government's new rules

It comes as airlines and travel companies were dealt another blow on the weekend as the UK announced it would ban foreign entry from Denmark amid widespread outbreaks of COVID-19 in the country’s mink farms.

All non-British national or resident travellers who have been in or transited through Denmark in the last 14 days will be denied entry into Britain.

The government also said its expanding the self-isolation rules for Denmark, it also removed the country from the government’s list of travel corridors on Friday.

Watch: What you can and can't do now England is in second lockdown