More online focus as Thomas Cook claims ‘robust’ current trading
Wednesday, 14 May, 2009
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Thomas Cook is seeing “robust” sales for this summer despite a later booking pattern and the impact of holiday cancellations due to swine flu.
Delivering results for the traditional winter loss-making six months to the end of March, which saw a 20% increase in pre-tax losses by almost £50 million to £280 million, the company described underlying performance from the UK for this summer as being strong.
“Summer trading in the UK has been robust with average selling prices up nine per cent,” Thomas Cook said.
“Cumulative bookings are down 12% and trending towards our planned capacity reductions of 10%.
“Our concentration on selling capacity in the shoulder months early (May/June and September/October) has left us in a strong position in the lates market with 64% of capacity sold and seven per cent less left to sell.”
The interim results statement continued: “Underlying performance, excluding Mexico, has been strong.
“Bookings in the last three weeks are down 10% year on year and average selling prices are up 15%.
“Cancellations, excluding Mexico, are in line with prior year levels. While our exposure to Mexico in the UK is less than two per cent of capacity for the full season, bookings in the last three weeks have been heavily distorted by the immediate impact of cancellations resulting from the swine flu incident.
“As a result, total bookings, including Mexico, in the last three weeks are down 15% and average selling prices up 2%.”
The company reported a continuing rise in demand for all-inclusive holidays which now account for 41% of summer bookings to date, up from 30% last year.
“We also continue to benefit from our focus on medium haul, which now represents 69% of our total summer charter programme,” the statement added.
“The demand for destinations outside the euro-zone continues to grow and at 39% of all holidays is up eight per cent year on year, with Turkey up 28% year on year and Egypt up 20%.”
The group said control of distribution and, in particular, growth of sales through the internet continues to be a “key cornerstone” of its future strategy at a time when it experienced a “weaker” performance from its retail business.
The proportion of passengers who booked on the internet was 34.7% in the half year, an increase of 37.7%.
The proportion of passengers who booked through in-house distribution channels (owned websites, shops and call centres) grew by 4.1% to 66.3%.
Group chief executive Manny Fontenla-Novoa said: "We delivered a strong performance during the first half, which is the off-peak season in all our markets except Canada, with improvements in seasonal operating loss of 16%.
"Our focus on mainstream holidays, and in particular medium haul, combined with the flexibility in our business model and our ability to deal with changes in demand patterns has benefited us. These results demonstrate not only this, but also the strengths of our cost discipline, brands, products and people.
"We finished the winter season well, with bookings in line with capacity and an average tour operator departed load factor of 98%.
“Despite the tough economic conditions, current trading for the summer ‘09 season is robust with selling prices up and margins in line with our expectations.
“Customers continue to book nearer to departure, however, load factors remain strong with bookings trending towards our capacity levels.
"We remain confident that we are on track to meet our full year expectations.
“Our confidence is underpinned by our proven ability to manage capacity and costs as well as driving synergy improvements and implementing contingency measures as appropriate. As a result, we are increasing our interim dividend by 15%."
by Phil Davies
Phil Davies
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