The chief executive of North West holiday business On The Beach will give up his entire Salary for the rest of the year in a bid to help his firm through the coronavirus crisis.
Simon Cooper said the Cheadle firm took early action back in February to manage risk and conserve cash – and that due to its operations as an asset-light model, it is “well placed” to deal with Covid-19.
Other measures taken by the Manchester firm to protect its future include the board having voluntarily agreed to a 20% in salary and fees, alongside all bonuses being cancelled.
The group’s marketing costs have reduced to “almost nil”, he said, adding that monthly cash costs are now less than £2m across the group.
Mr Cooper said: “OTB was created with an asset light model to ensure its survival in the inconceivable Market Conditions in which we now find ourselves.
“Against the backdrop of the impossible market conditions in which we find ourselves, the resilience of OTB’s asset-light and flexible business model becomes clear.
As a technology company, we are also well placed to facilitate remote working for all of our staff. I am hugely proud of the efforts of everyone at OTB and would like to praise the dedication of my colleagues who have been working around the clock to provide the very best level of support for our customers.
“Whilst the coming months will continue to present a huge challenge, I look forward to the multitude of opportunities which lie ahead.”
As well as the cuts, the group has forged an agreement to extend its £50m revolving credit facility until December 2023
Mr 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.”
He said that unlike the majority of larger tour operators, online travel agents and airlines, all OTB customer funds are held in a ring-fenced trust account, adding: “The benefits of using a trust account structure as opposed to the use of customer funds for working capital, become obvious, for consumer protection, for the financial stability of the business, and ultimately for the protection of the taxpayer.
“It would appear obvious that, as an industry, we need to reflect on financial protection and on how we can make our industry robust enough to withstand future shocks.
“In the days leading up to the closure of airspace, we were able to put a detailed plan in place to ensure that we are best placed to deliver operational and customer service excellence throughout this difficult time.”
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