Readers will be aware that hundreds of flights out of the UK are being cancelled as staff scarcity puts pressure on airports and the travel industry.

Suggesting that investors buy holidays group On the Beach (OTB) in this climate might sound mad, yet Shares believes this is a fundamentally sound and financially robust business with good prospects longer term.

If you’re ever likely to invest in this business, now is the time to do it. The company is trading at its lowest valuation since listing seven years ago and customer demand is surging back to pre-pandemic levels.

Before the pandemic, this was a £1 billion business with near-70% gross margins, mid-teens operating margins with a potentially long growth runway ahead of it. According to Statista, UK holidaymakers will spend around £7.3 billion on package holidays this year, rising to £9 billion by 2026.

Numis and Peel Hunt believe the shares could be trading at 400p to 500p within 12 to 18 months. The analyst consensus view is a return to profit at £7.8 million for the year to September 2022, rising to £24.2 million in 2023 and £28.5 million in 2024.

Yes, the holidays market is about as easy to read as ancient Aramaic right now. On The Beach management were cautious about prospects for this summer at half-year results in May, with inflation putting the squeeze on consumer budgets. That said, airport chaos suggests the holiday industry is supply constrained and demand remains robust.

On The Beach says there is no shortage of seats on planes given that airlines are expecting capacity expansion of 10% to 15% this year. Numis says relaxed Spanish restrictions are supportive of deals being snapped up last minute this summer.

While the longer-term growth story looks attractive for investors and the shares are cheap on seven times 2023 forecast earnings, immediate prospects remain laced with uncertainty.

The lack of clarity is likely to make the stock volatile over the next few months. This will not suit all investors, and those of a more cautious nature might choose to avoid the implied risk that comes with investing in On The Beach at present.

For those willing to accept the near-term hazards, On The Beach has real scope of outsized returns if the recovery go well.

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