Thomas Cook Group profit up 30%

The merged Thomas Cook/MyTravel organisation saw pre-tax profits rise by 30% to 284.3 million euros in the year ending October 2007.

Financial data released today show that the merger of the two companies has led to the closure of 144 travel agencies, leaving 812 mainly Thomas Cook branded shops in the UK.

This comes the day after rival TUI Travel UK said it was to shut 100 agency branches.

The UK and Ireland brand strategy sees Thomas Cook retained as the leading operating brand followed by Airtours in the mass market, Direct Holidays and specialist brands such as Thomas Cook Signature, CruiseThomasCook, Cresta, Tradewinds, Nielsen and Club 18-30.

The combined group expects to make improved savings of at least 200 million euros by 2008-09 – 60 million euros more than first expected and up to a year ahead of schedule.

The group said it it had not seen any effect on its trading from current and forecast economic conditions.

“We believe this can primarily be attributed to the high priority that European consumers place on their major foreign holidays and our ability, through our asset-light model, to effectively manage the balance between supply and demand,” the group said.

“By managing the number of holidays to be sold, we believe we are in a position to benefit from higher average selling prices and are less exposed to any future change in demand.”

Thomas Cook has set a target of raising revenue from independent travel from 2.2 billion euros in 2005-06 to 3.3 billion euros in 2009-10. It expects overall group revenue to grow to 13 billion euros by that time, up from 11.7 billion euros.

It predicts a EBITDA of more than 800 million euros based on profit from operations of more than 620 million euros in 2009-10.

Revenue from financial services is due to rise from 215 million euros to 370 million euros in the period.

The group said current trading for this winter and summer 2008 continued to be strong with demand ahead of capacity.

Bookings in the UK are 5% down for winter year-on-year but capacity has been cut by 7% resulting in higher selling prices and margins. Long haul capacity for this winter has been cut by 12% with the axing of loss-making routes, with short haul capacity reduced by 21%.

The company reported “robust” post-Christmas demand for summer holidays, with UK trading continuing well with strong sales to Turkey and Egypt, key medium haul destinations.

Overall bookings are 2% behind the equivalent period last year but the combined flying programme is being adjusted to exit unprofitable areas and optimise yield management, the group said. Total capacity is currently 9% lower than last summer.

Capacity in long haul is down by 9% largely due to increased aircraft seat pitch. Airtours former route to Chinas has been abandoned and other long haul routes have been dropped.

“As a result of the capacity reductions, particularly in short haul and long haul, we expect to have considerably fewer holidays left to sell in the lates market, which we expect will improve profitability,” Thomas Cook said, adding that average selling prices are running at 2% ahead of last year.

Chief executive Manny Fontenla-Novoa said: “The integration of Thomas Cook AG and MyTravel Group to form Thomas Cook Group has been very successful and is now largely complete.

“I am delighted with our first set of results, which show a healthy increase in profit from operations.

“Our company has a great brand and heritage and we have laid a firm foundation for the future by integrating the two businesses quickly and effectively. We now have a clear strategy for growing the business and I look forward to the future with confidence.”

by Phil Davies