Trainline shares (TRN.L) have been steadily gaining on Thursday despite the company posting a £43m ($56m) loss due to COVID-19.
Shares were up 4.2% on Thursday, hitting a weekly high.
The independent digital rail and coach ticketing platform cited the impact of the pandemic on its rail passenger numbers and virus containment measures across the UK and continental Europe.
“COVID-19 continues to cause significant disruption to the rail and coach industry as regional and national lockdowns are put in place across Europe,” said Clare Gilmartin, chief executive officer of Trainline in a company statement on Thursday. “However, we have taken quick and decisive steps to scale back our cash outflows and ensure we have sufficient long-term liquidity.
The business said it had a significant liquidity headroom of £162m “and proven ability to take mitigating actions to scale back monthly cash outflows where necessary.”
The share price picked up speed on Thursday as its latest results reflected “relief that the company had begun to stem the losses resulting from COVID-19,” said Russ Mould, AJ Bell investment director, in a note on Thursday.
“The rail journey booking site had barely got out of the station as a public company before the pandemic hit and the resulting travel restrictions have dealt a devastating blow to the business – more recently it revealed it would lose the person at the controls as [CEO] Clare Gilmartin announced her decision to step down in February 2021 for family reasons. So news that the company had managed to narrow losses in the first half of its financial year, compared with the previous six-month period, helped steady an equity story which had been in danger of being entirely derailed.”
Mould added that the narrowing of losses was achieved by taking significant costs out of the business – including marketing spend.
“The company is not out of the woods yet, warning of a risk of a covenant breach alongside these numbers and with renewed lockdown conditions likely to put passenger numbers under yet more pressure,” he said.
Trainline said it is “well placed” to take advantage of its digital innovator status when lockdowns lift and market conditions improve.
"We see no change to the long-term structural tailwinds for Trainline, said Gilmartin. “Rail is a large market with significant government investment planned over the next decade, growing environmental awareness of its benefits compared to air or car, and considerable runway for train tickets to shift online and to mobile."
Mould said that remains to be proven as familiar questions over the company’s barriers to entry may re-emerge.
“Can a few useful online tools and features really make it stand out if National Rail Enquiries or other third parties start to encroach more on its territory?” he asked.
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