Thomas Cook quarterly loss escalates

Thomas Cook quarterly loss escalates

Thomas Cook Group blamed “tougher trading conditions” and rising fuel costs for an escalation of quarterly winter losses.

The seasonal underlying loss from operations of £91 million for the three months to December compared to a loss of £37 million in the same period last year.

Ongoing disruption in the Middle East and North Africa also resulted in “significantly increasing” losses.

The group today confirmed the start of a formal sale of its 77.1% shareholding in Thomas Cook India after receiving “a number of unsolicited informal expressions of interest” from third parties to acquire the stake.

But chief executive Sam Weihagen said: “Both the business and the market are growing and Thomas Cook will only sell its stake if a compelling offer is received.”

The planned sell-off is in addition to the disposal of other non-core assets.

UK bookings are 1% down for summer than this time last year with mainstream bookings down 9% but ahead of capacity reductions of 11%.

The average selling price is up by 4% as discounts through Cook retail agencies reduced, in part by the introduction of improved yield management processes.

“We are focusing more on our differentiated product and our independent and specialist businesses are performing particularly well, with bookings up 18%,” Cook said.

The group today reported quarterly revenue up by 3% to £1,861 million, helped by the first contribution from its Co-operative Travel retail and Russian joint ventures at £68 million.

“We continue to focus hard on implementing our UK turnaround strategy and we are on track to deliver the planned £35 million benefit in the current financial year,” the company said.

“We have taken action to adjust capacities where appropriate and, for both the winter and summer seasons, in many markets, we have less left to sell than for the comparable period.”

Staff in 115 of its retail joint venture stores with the Co-operative are in consultation which is expected to conclude in March, with a further 22 outlets having already closed.

Weihagen said: "I have been encouraged by how our bookings have developed, particularly in the UK where our market share for both the winter and summer seasons remains broadly stable.

“As expected, the first quarter has been adversely impacted by the uncertain economic environment across Europe, input cost inflation and the ongoing disruption in MENA.

"We continue to work hard on restructuring the UK business and a full strategic review of the group is progressing well.”

Overall bookings from the UK are “broadly flat” for the summer, helped by a better performance from specialist and independent businesses.

Mainstream capacity has been “actively managed down” in a focus on margins. Summer bookings are currently ahead of capacity reductions resulting in less left to sell, Cook said.

“We continue to take costs out to help offset the reduction in capacity and our UK turnaround plan is key to that.”

Consultation with in-house airline staff has successfully concluded and the UK fleet will be cut by six aircraft for this summer.

Differentiated holiday bookings are up 7% and Cook said it is on track to reach a target of 25% of differentiated product bookings for mainstream for the summer.

System and process improvements were delivered ahead of the peak trading period to improve yield management.

“This has resulted in a more stable pricing environment, with reduced discounting and improved selling prices,” the company said.

Improvements across most of independent business areas has seen volumes “well up” at the Hotels4U and Medhotels bed banks.

Neilson is benefiting from a better ski season and Gold Medal is recovering under new management, Cook said.

Thomas Cook plunged into an annual loss last year after a series of profit warnings and the resignation of former chief executive Manny Fontenla-Novoa in August.

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