11 February 2010

Thomas Cook posts wider operating loss after reining in capacity

Thomas Cook has made a larger first quarter operating loss than the previous year because it had cut capacity but said it expected cost-cutting and summer holiday sales to right the ship.

Releasing its figures for the three months to December 31, the operator said its summer programme was focused on medium haul destinations which made the company more money.

Chief executive Manny Fontenla-Novoa said: "The full year results are underpinned by our strong summer programme weighted towards higher margin, medium haul destinations. As a result of this and our cost reduction plans, we are confident that the group will perform in line with board expectations."

He added: "In recent weeks, bookings for the summer 10 season have improved significantly, marking a positive response to our current marketing campaigns and highlighting the resilience of the summer holiday."

The operating loss for the period before exceptional items was £41.3 million, £13.9 million higher than the previous year. Revenue fell 5.6% to £1.7 billion from £1.8 billion the year before.

Said Fontenla-Novoa: ""Recent bookings for both winter and summer have recovered well following the disruption caused by poor weather conditions across Europe and particularly in the UK. We are underpinning our margins by reducing input costs across all our markets."

The operator reported that its winter programme is now 77% sold - a similar figure to last year - and average selling prices were up 6% with an 8% increase in the last four weeks. It added that booking trends were towards planned capacity.

Added Fontenla-Novoa: "We have continued to rebalance capacity towards higher margin, medium haul destinations which now represent 82% of our winter programme. The proportion of customers opting for our more profitable all-inclusive holidays is up 11% and demand for 4 star and 5 star has also increased."

By Dinah Hatch