Market analyst: Thomas Cook has made progress, but not enough
A market analyst said some in the financial community will be disappointed that Thomas Cook Group (TCG) has not met its cost-cutting targets, despite today’s announcement that its winter losses for the first quarter were down more than 40%.
Ken Odeluga of online trading platform cityindex.co.uk said that, on the whole, it wasn’t possible to glean a great deal about Thomas Cook’s progress in Q1 on its long-standing turnaround plan, in which it aims to cut costs by 10% by 2018. However, he said there were ‘promising signs’.
"The quarterly loss was more than 40% narrower compared to the same period a year ago, suggesting genuine momentum in the rationalisation programme, and dare I say it, there also seems to be a distinctly more optimistic tone in Thomas Cook’s comments and statements about current performance and the medium-term outlook," said Odeluga.
"Most importantly, TCG sees itself as on track to grow this year even in the face of punishing trading conditions that are afflicting all tourism and leisure companies that derive the bulk of their business from mainland Europe.
"Additionally, the UK business has remained robust and TCG cites ‘a significant increase in bookings’ for winter and summer.
"This does have to be balanced against Thomas Cook’s clear warning not to expect it to beat some of the strong comparative performances it achieved in Continental and Northern Europe last year, even if ‘significant improvement’ has been seen in the same regions in recent weeks.
"Overall, the first quarter still seems to represent a waypoint rather than the destination for Thomas Cook. On the one hand, there are reassurances that progress has continued, rather than ground having been lost, on the other, the cost base evidently has not yet been re-calibrated closely enough to current operating conditions, as per target.
"This will disappoint some of the financial community that had begun to voice concerns about the slowing rate of TCG’s transformation in the latter part of the Harriet Green era."
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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