Thomas Cook profits hit by '˜difficult' year for travel
Travel giant Thomas Cook laid bare the impact of a 'difficult year for tourism' as it posted a fall in profits after being hit by European terror attacks and political instability in Turkey.
The group said underlying profits dropped to £308 million in the year to 30 September, from £310m a year earlier, as it was forced to switch from popular sun-seeker destination Turkey, while demand in Belgium was knocked by the Brussels terrorist atrocity.
But the pound’s tumble against the euro since the Brexit vote and moves to shift from Turkey to alternative destinations helped limit the blow, as Thomas Cook said underlying profits tumbled 41 per cent on a like-for-like basis and with the currency boost stripped out.
Bottom-line pre-tax profits were 47 per cent lower on a like-for-like basis, at £42m.
Chief executive Peter Fankhauser, said: “In what’s been a difficult year for tourism, I’m pleased with the progress that we’ve made at Thomas Cook.
“The early actions we took to shift our holiday programme into the western Mediterranean and long-haul, together with the benefits of a stronger euro, helped us to maintain revenue at group level.”
He said the group remains cautious over the year ahead, adding: “We’ve had an encouraging start to bookings for summer 2017 in our key markets, but it is early days.”
Thomas Cook said current winter bookings are 2 per cent higher than a year earlier, or 5 per cent ahead with the impact of Turkey stripped out. In the UK, bookings are also 2 per cent higher or 4 per cent up excluding Turkey, with average selling prices up 1 per cent.
Early-bird demand has already driven bookings higher across the group for next summer, with UK bookings up 2 per cent thanks to strong demand for holidays in Spain, Greece, Bulgaria, Mexico and the Caribbean.
It is also taking steps to turn around trading in its German airline arm Condor, which it hopes will bear fruit in the second half of the current financial year.
Geopolitical turmoil has been an ongoing concern for travel firms like Thomas Cook, which last year suffered from major cancellations in the wake of the deadly terrorist attacks in Tunisia, Egypt and Paris.
Thomas Cook lowered its full-year earnings guidance to around £300m when it released third-quarter figures back in July, having previously projected profits of between £310m and £335m.
The company is now investing in a new raft of own-brand hotels to “attract a new generation who might have thought a package holiday wasn’t for them”.
It recently announced it will open 14 sites across countries including Croatia, Spain, Italy and Cyprus over the next two years.
Thomas Cook cheered investors by resuming its dividend after a five-year break, despite falling annual profits. Subject to shareholder approval, the firm will pay out 0.5p a share on 5 April.
Fankhauser said aside from the boost from the weaker pound, he had yet to see “any noticeable impact” from the Brexit hit on trading.
He also made a plea ahead of the Autumn Statement for the UK government to cut air passenger duty (APD) on flights for UK passengers.
He said: “APD is by far the highest in Europe and among the highest in the world. If the government wants to help families, they should make it cheaper for them to enjoy a hard-earned holiday.”