Analysis: Numbers suggest Cook and Tui are closer than expected

Analysis: Numbers suggest Cook and Tui are closer than expected

Thomas Cook defied the expectations of many yesterday, and possibly the hopes of a few, with a set of trading figures suggesting the company is performing broadly in line with the UK market and not trailing in its wake.

The UK number two reported cumulative UK bookings for this summer 9% down year on year in the mainstream market - matching the latest industry figures from analyst GfK Ascent and just two percentage points behind the trading performance of Tui Travel, revealed Tuesday.

Tui had done Cook few favours on Tuesday with a set of quarterly results that seemed to emphasise the companies’ contrasting positions.

Group chief executive Peter Long reported: “We have outperformed the UK market in January.” Indeed, with summer 2012 bookings flat year on year in January against a market down 14% in the first four weeks of the month, Long was in a position to add: “This outperformance reflects the trust customers place in our brands.”

Yet despite everything, Thomas Cook’s UK bookings were just 1% down - thanks to an 18% improvement in its specialist and independent businesses – and the group’s mainstream bookings outstripped capacity following a further reduction on last summer to -11%.

At the same time Cook reported a 4% improvement in average selling price on the same period last year, suggesting: “Discounts through our retail chain have been reduced.”

Cook's UK trading figures for this winter also appeared better than anticipated, with cumulative bookings to early February down 11% year on year against a 9% cut in capacity following an additional percentage point reduction since early December. GfK Ascent confirmed overall bookings for the winter to date down 10%.

As a result of the capacity cuts, Cook reported it had half as many holidays left to sell for the current season as this time last year.

An average selling price for the winter - down 1% on a year ago - was attributed to a sharp reduction in long-haul capacity. All in all, the figures flew in the face of media reports that Cook’s UK bookings were down by one third in early January.

The stories originated from a report in the Financial Times on January 23 which claimed: “Thomas Cook is reeling from a slump.” The figures were not substantiated, though never denied, but the BBC and every other news outlet repeated them under headlines such as: “Thomas Cook summer package bookings dive.”

Tui Travel suffered no such trial by media. For it, the news continues to be almost wholly good despite an increase in underlying loss for the quarter to December. Group revenue was up 5% year on year and the UK mainstream division led the way in delivering the numbers.

The company reported cumulative UK bookings for summer 2012 down 7%, against a 9% reduction in capacity and an 8% year-on-year rise in average selling prices. That rise covers the cost inflation and an “increase in differentiated content” - customers paying more for what they want and can’t get elsewhere.

The group’s winter trading was in line with the market, with cumulative bookings 10% down year on year to January 29. Tui’s average winter selling price was down 5% on a year ago, rather more of a decline than at Thomas Cook. However, the company reported: “Strong demand in the lates booking period.”

Tui’s differentiated product comprised 62% of winter sales to date compared with 50% this time last year.

Thomas Cook cannot point to such improvement yet, but acting chief executive Sam Weihagen must have enjoyed telling shareholders: “Today you find us doing well despite the difficulties we went through.”


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