City's eyes on Thomas Cook after share slump

City's eyes on Thomas Cook after share slump

The City will be watching Thomas Cook’s performance on the London Stock Exchange today to see if it can rebound from a shares slump which slashed millions off its market valuation.  

Shares in Thomas Cook slumped 28% after warning that full-year profits will be about £60 million lower than expected as a result of the squeeze in consumer spending and turmoil in the Middle East and North Africa.

Shares fell 34.9p to 87.9p, its lowest price since at least 2007, while rival Tui Travel dropped 16.5p to 204.7p, a fall of 7%.

Thomas Cook lost more than a quarter of its market value after issuing a third profits warning and was the worst performer on the FTSE 250.

“It is not the downgrade but the scale of the miss that is the surprise,” KBC Peel Hunt analyst Nick Batram said. 

Last summer the group issued two profit warnings, blaming aircraft disruption following the Icelandic ash cloud and bargain-seeking consumers waiting for last minute deals. 

Sonya Ghobrial, of Barclays Capital, said the “disappointing” performance was despite an easier comparative period the previous year, which was impacted by disruption from the volcanic ash cloud.

Attention will now turn to Thomas Cook’s UK business and the impact of the “fundamental review” announced alongside yesterday’s profits warning. No details have yet emerged but the company admitted that the effectiveness of its UK business model would come under scrutiny.

Meanwhile, Thomas Cook Airlines signed long term lease agreements with Air Lease Corporation for six new Airbus A321-200s.

Two of the aircraft will be delivered in 2013, with four in the spring of 2014.

ALC executive vice president Marc Baer said: “We are delighted to include Thomas Cook as a key member of our growing customer base.

“Our management team has a long-standing relationship with the group and we are happy to support the renewal of their single-aisle fleet including A321-200s with sharklets. This decision will benefit Thomas Cook for years to come.”


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