Thomas Cook today reported a solid start to 2017 trading but sound a note of caution over the political and economic outlook.
Summer trading from the UK is “broadly in line” with last year against a more competitive market for holidays to the Spanish islands.
Chief executive Peter Fankhauser said: “We remain cautious about the rest of the year, given the uncertain political and economic outlook.
“It’s still relatively early in the selling cycle for summer holidays, but based on current trading, and supported by further financial benefits from implementing our strategy, we expect our full year operating results to be in line with current market expectations.”
His comments came as Europe’s second largest travel group reported that underlying losses of £49 million in the three months to December 31, 2016, improved by £1 million over the same period the previous year as revenue rose to £1.6 billion from £1.4 billion.
Online bookings for the quarter from the UK increased by more than 20% year-on-year.
The overall summer 2017 programme is 31% sold, with bookings 9% up while winter 2016-17 is 82% sold, in line with expectations.
Summer bookings from the UK are up by 1% with a 2% improvement in selling prices.
Continued reductions in bookings to Turkey have been “more than offset” by strong demand for Greece.
“We have also grown bookings significantly to a number of smaller European destinations including Cyprus, Bulgaria, Croatia and Portugal, and we have seen a strengthening of demand for Egypt and Morocco,” the company said.
“Following strong growth in 2016, demand for the Spanish Islands, including the Balearics and the Canaries, has now levelled off.
“However, a combination of hotel price inflation and increased air capacity has intensified competition for the Spanish islands.
“In this context, and consistent with our strategy, we have taken a deliberate decision to focus on higher margin, quality holidays, rather than chase volume growth. As a result, overall UK charter risk bookings are slightly behind last year’s levels, while pricing is up 9%.”
Fankhauser said: “We have delivered a solid performance for the first three months in line with our expectations, against a backdrop of continued uncertainty.
“Our businesses in the UK and Northern Europe continued last summer’s strong performance into the first quarter, while our tour operating business in Continental Europe also improved.
“This helped to offset the pressures that Condor is experiencing in the German airline market. We have taken measures to address Condor’s challenges and expect to start to see the benefits come through in the second half, as we set out in November.
“In preparation for the summer season, we have expanded our holiday offering to Greece and a number of smaller destinations across Europe, and I’m pleased that this early action is paying off.
“Bookings to Greece are currently up by over 40%, while demand for destinations such as Cyprus, Bulgaria, Portugal and Croatia is also strong. These positive trends are making up for continued weak demand for Turkey.
“We remain focused on giving customers the very best holiday experience with Thomas Cook, both through the quality of the hotels and the customer care we provide.
“The results can be seen in further improvement in Net Promoter Score, our measure of customer satisfaction, which was up 8 points during the first quarter.
“We have a number of exciting new customer initiatives coming this summer. These include the further roll-out of our successful 24-hour satisfaction promise to cover 80% of our customers, and the launch of a brand new mobile in-flight entertainment system.
“We are also making good progress on our own-brand hotel portfolio, with ten new hotels set to open for the summer, including our second Casa Cook in Kos, enabling us to offer more unique holidays and further strengthening our growing hotels business.”