Thomas Cook hopes ‘rigorous’ focus on cost will help offset market challenges
Thomas Cook’s summer 2019 programme is 75% sold, slightly ahead of the same period last year.
In a trading update on Friday, alongside its announcement about a proposed rescue deal with Fosun, the travel giant said overall tour operator bookings are down 9%.
It said this was ‘largely consistent with reductions in risk capacity to help support pricing, which is up 2%’.
"While bookings in recent weeks have seen a marked improvement, reflecting the annualisation of the Summer 2018 heatwave, margins remain weak due to continued intense competition with high levels of promotional activity across all businesses," it said.
Airline bookings are down 3% overall, with pricing up 2%.
Excluding capacity reductions to the in-house tour operator, airline bookings are up 11%, which it said reflects higher sales to third-party tour operators, particularly in Germany, and seat only in all markets.
"Looking forward, it is clear that the trends experienced in the first half of the year have continued into the second half, reflecting an uncertain consumer environment particularly in the UK, leading to intense competition," said the update.
"As a result, the Group expects underlying EBIT in the second half to be behind the same period last year."
Thomas Cook said it was helping to counteract the challenges with a ‘rigorous focus on cost’ but remaining fully focused on delivering a stronger holiday offering to customers through ‘high quality, higher-margin hotels, underpinned by a digital focus and market-leading innovation’.
Thomas Cook’s proposed rescue deal would see £750 million of ‘new money’ injected into the company but leaving Fosun with a ‘significant’ controlling stake in Cook’s tour operating business and a ‘significant’ minority interest in its airline.
News of the plans sent the company’s share price tumbling to its lowest ever level.
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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