Thomas Cook reports positive progress in half-year results

Thomas Cook reports positive progress in half-year results

Thomas Cook, rocked by ongoing criticism of its handling of the deaths of two children in a Corfu villa in 2006, today reported reduced half year winter losses of £220 million.

Shares in Europe’s second largest travel group partially recovered from a drop of 3.2p on Monday to rise 0.6% to 157p on Tuesday despite growing consumer calls for a boycott of the company.

A Facebook group called Boycott Thomas Cook had been endorsed by almost 5,500 people by this morning with a sister page calling for chief executive Peter Fankhauser to resign.

The backlash came in the wake of the inquest hearing into the deaths of Robert and Christianne Shepherd which reached a verdict that they had been unlawfully killed because of an incorrectly maintained gas boiler, and accused the travel group of breaching its duty of care.

Cook agreed on Monday to make a £1.5 million donation to the children’s charity Unicef to reflect the amount of compensation it received from Greek hotel operator, Louis Group.

Fankhauser also issued a belated apology to the family.

The company’s results for the six months to March 31 show operating losses trimmed by 22% from £286 million a year earlier based on turnover up by 1.2% or £37 million to £2.7 billion. Seasonal losses in the UK were reduced by £25 million to £131 million.

Bookings of own-brand hotel bookings for winter 2014/15 increased by 30%, and bookings to date for summer 2015 are up by 33%.

Cook reported that its summer programme is 62% sold, a 2% improvement on last year with average selling prices at similar levels. UK summer sales are 3% up with 69% of capacity sold.

“The peak summer departure months of July and August are particularly well sold at good margins, which should better enable us to maintain improved prices and margins in the ‘lates’ market,” Cook said.

“Although total average selling prices are 1% lower than last year, within the product mix, charter risk pricing has improved by 3%.

Package bookings on in the UK grew by 12% in the first half, while conversion increased by 20%, “reflecting improved site efficiency”.  Bookings via mobile and tablet devices grew by 65% in the first half of the year.

Group-wide summer bookings were described as “encouraging” with its UK business and airlines in Germany continuing to trade “particularly well”.

Chinese conglomerate and Club Med owner Fosun took an initial 4.8% stake in Cook in March for £92 million as part of a strategic partnership

Cook revealed that it is finalising the model for a joint hotel investment platform with Fosun, which will invest in own-brand hotels in key holiday destinations, with 30 identified.

“Our discussions with Club Med, a subsidiary of Fosun, have also progressed well, and we are currently evaluating in detail collaboration opportunities between the two companies in all common source markets, building on the existing partnership in France, where Thomas Cook is Club Med's largest third party distributor,” the company said.

Additional cost savings of £60 million were achieved through a restructuring of Cook’s UK business in the six months.

“This takes the cumulative total of cost out and profit improvement to £460 million at the end of the first half, and we are fully confident of exceeding our target for the full year of £500 million,” the group said.

Fankhauser said: "Overall the group has made positive progress during the first half.  Thanks to the actions we have taken, both profits and like-for-like revenues have grown, and debt has been further reduced.

“We have formed a promising strategic partnership with Fosun, a leading Chinese investment group, under which we are developing further growth opportunities, both within and beyond our traditional European travel markets.

“In addition we have signed a new, significantly larger financing facility, giving us improved financial flexibility and liquidity for the future.

“Our performance in the first half provides a solid foundation for the full year and beyond.

“I am confident that we can continue to make Thomas Cook a stronger and more profitable holiday company, as we continue to implement our clear strategy for profitable growth, and move towards the resumption of dividend payments in respect of full year 2016 earnings."

As part of management changes, Reto Wilhelm, managing director of eastern and western European businesses, will assume responsibility for the implementation of the Fosun joint venture.

Magnus Wikner will combine his current responsibility for Nordics business with Russia.

UK product and yield director, Stefanie Berk, will lead the central and eastern European businesses.


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