19th May 2016 10:46
LONDON (Alliance News) - Thomas Cook Group PLC warned Thursday about its business outlook for the financial year to the end of September as it reported a decline in bookings for summer 2016 following the recent terrorist attacks in Turkey and Belgium.
The travel operator's warning came as an Egyptair passenger plane travelling from Paris to Cairo with 66 people on board crashed in the Mediterranean Sea. EgyptAir flight MS804 heading for Cairo left France's Charles de Gaulle airport on Wednesday night but disappeared mid-flight.
Shares in Thomas Cook were trading down 16% at 74.80 pence Thursday, the worst performer in the mid-cap FTSE 250 by some distance.
Thomas Cook said bookings for summer 2016 are down 5% year-on-year, but excluding Turkey are up by 6%, with growing sales to the Western Mediterranean and to long-haul destinations in line with increased demand to those locations.
Summer bookings to the Balearic Islands are up by 14%, and up by 23% and 29% to the Canary Islands and the US, respectively, although Thomas Cook said strong growth to alternative destinations is not yet fully offsetting the weak demand for Turkey.
Demand for holidays to Turkey has reduced dramatically for both Thomas Cook and its peers in the travel industry, following a string of terrorist attacks which have occurred in the country in the past year and against a background of mass migration by refugees attempting to escape the conflict in Syria and pass through Turkey on their way to Europe.
Terrorist attacks in Egypt and Tunisia last year also hit the travel industry, and excluding these countries in addition to Turkey, Thomas Cook's summer bookings are up by 13%.
As a result of the issues in Turkey, and a sharp decline in demand and bookings in Belgium following the terrorist attacks in Brussels in March, Thomas Cook now expects underlying earnings before interest and tax for the full year to be between GBP310 million and GBP335 million, which is at the lower end of analyst expectations.
Thomas Cook said the summer programme is 63% sold for the group as a whole, down from 65% at the same point last year, noting that summer bookings so far have on average been made almost two weeks later than last year as some customers delay bookings.
"As we look ahead to our busiest period, Thomas Cook is trading well to destinations other than Turkey, with particularly strong bookings to Spain and the USA. However demand for Turkey - our second largest market last year - remains significantly below last year's levels," Chief Executive Peter Fankhauser said in a statement.
On a brighter note, the winter programme is 10% sold so far, with bookings 16% higher than this time last year.
Also on Thursday, Thomas Cook said its pretax loss in the six months ended March 31, traditionally a weak period for travel operators, narrowed to GBP288 million from GBP303 million in the same period the year before, although revenue slipped to GBP2.67 billion from GBP2.74 billion.
Thomas Cook said revenue grew by 0.3% on a like-for-like basis, which excludes foreign exchange movements. The narrowed loss was also helped by lower finance costs and operating expenses.
"Despite the current market environment, I am confident that the actions we are taking to focus on customer excellence, strengthen our holiday offering, invest in omni-channel distribution, and bring our businesses closer together mean we're well positioned to meet our existing growth expectations to financial 2018, creating value for both customers and shareholders," Chief Executive Fankhauser said.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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