February 6, 2020 / 8:44 AM / 19 days ago

UPDATE 1-On The Beach Group sees summer growth despite Thomas Cook, 737 MAX capacity crunch

(Adds details on seat prices, background)

Feb 6 (Reuters) - On The Beach Group said on Thursday it expects strong sales growth during the summer, helped by higher marketing spends, as the holiday package provider taps into the market share opened up by the collapse of rival Thomas Cook.

On The Beach has flagged opportunities to gain additional market share after Thomas Cook's UK business and airline went insolvent, but that has also hurt capacity in the short term, driving up prices of holidays as ticket prices rise.

The company more than doubled its offline marketing spend in the four months to Jan. 31, helping it cushion any hit from the capacity crunch caused by Thomas Cook's liquidation, it said, adding delays in flights services after Boeing's 737 MAX crisis were also driving up seat prices..

On The Beach said it does not expect pricing to fully normalise in the current financial year. The company's shares were nearly 2% lower at 397.4 pence as of 0813 GMT.

However, the company also pointed to good demand for its new "Classic Package Holidays", with more than 2,300 agents signed by the end of January.

Liberum analysts said that while there are short-term challenges in the market, On The Beach's business model and growth across offline, long-haul and international categories should work in its favour. (Reporting by Pushkala Aripaka in Bengaluru; Editing by Shounak Dasgupta)

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