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UPDATE 2-Upper Crust owner says sales improving, cost cuts paying off

* Sees H2 cash usage to be between 250-270 mln pounds

* Weekly sales recover helped by Continental Europe

* Shares jump 11% (Adds analyst comment, cash burn details, background, updates shares)

Sept 23 (Reuters) - The owner of the Upper Crust and Caffe Ritazza snack chains said on Wednesday its sales had finally started to recover from coronavirus lockdowns and forecast a smaller than feared cash burn for the second half of its financial year.

Shares in SSP, whose chains sell food and drinks in airports and train stations in 36 countries, jumped 11%.

The company, which made about 37% of its 2019 revenues in continental Europe and around 30% in the UK and Ireland, said it still expected revenues to plunge 86%, or 1.3 billion pounds ($1.7 billion), in the six months to Sept. 30.

However, it added operating losses for the period would be in the middle of a 180-250 million pound range forecast in July and cut its prediction for cash burn to 250-270 million pounds from an earlier 340-440 million.

“We have seen some improvement in passenger demand since the start of the crisis ... with over one-third of our units now trading,” Chief Executive Officer Simon Smith said.

SSP, which said in July it might cut up to 5,000 jobs in Britain to reduce costs, did not give any update on the layoffs. It has been cutting investment to a minimum and stopping shareholder payouts to conserve cash.

Travel and leisure businesses have been among the worst hit by the pandemic as people cancelled business trips and holidays.

The UK sector is bracing for a further hit after Prime Minister Boris Johnson told people on Tuesday to work from home where possible and ordered restaurants and bars to close early to try to contain a surge in COVID-19 infections.

Stifel analyst Mark Irvine-Fortescue said that could stymie further recovery, but added: “SSP is an attractive way to play the recovery in air and rail traffic without the risks that go with investing directly in airlines.”

SSP said weekly sales had improved compared with the third quarter and were about 76% below last year following a stronger recovery in Continental Europe, although Britain, North America and the rest of the world remained weak.

$1 = 0.7884 pounds Reporting by Tanishaa Nadkar in Bengaluru; editing by Uttaresh.V and Mark Potter

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