Trainline PLC (LON:TRN) (OTCMKTS:TNLIY) – a glimpse of light at the end of the tunnel but ticket sales under huge strain
Q1 2021 hedge fund letters, conferences and more
"The extent to which the pandemic completely derailed Trainline has become clear, as stay at home orders saw demand for rail transport evaporate. As daily commuters holed up at home for the long haul, ticket sales fell 79% pushing the company into a £100 million operating loss, compared to an operating profit last year of £2 million.
Trainline Launches Five Year Convertible Bonds
Trainline has pulled on all levers to survive the crash, including launching a £150 million five year convertible bond to increase its financial buffers. This will allow holders to convert their bonds into shares at a fixed price and has given the firm some much needed breathing space, while the economy recovers.
Although the rapid pace of vaccine roll outs has given the company a glimpse of light at the end of the tunnel, with a bounce back in sales in the first quarter of 2021, the overall direction of travel is far from clear. The working from home revolution has upended Trainline’s business model and many new habits are likely to stick. It’s not simply that the daily commute may never return, many ad hoc face to face business meetings are also likely to continue via video call.
Trainline has kept investing in new personalised and go-location technology to win market share amongst customers who are still travelling, which could help it maintain its dominance in the e-ticket space, with 70% of all digital fares sold by Trainline. The 2050 net-zero carbon ambitions the UK has pledged, could help the recovery, with the train seen as a much greener option than plane or car. However, business is going to take a long time to recover to anywhere near pre-pandemic levels and persuading travellers to take the train again, will require significant marketing spend.’
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
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