11th Feb 2015 08:23
LONDON (Alliance News) - Travel operator Thomas Cook Group PLC Wednesday said it cut its first quarter operating loss by more than 40% on the year before, as it continued to cut out costs across the business, but cited pricing and competitive pressures, and tough trading in continental Europe.
Thomas cook reported a seasonal loss before interest and taxes of GBP73 million for the three months to end-December, smaller than the GBP122 million loss it reported a year earlier. Its pretax loss for the quarter was GBP115 million, down from last year's GBP161 million loss.
The group said its UK business and German Airline business grew both revenue and operating profits during the quarter.
Revenue fell to GBP1.52 billion in the quarter, from GBP1.65 billion last year, but grew by 1.6% on a like-for-like basis, supported by its concept Hotels, city breaks and other new product sales, as well as a strong end to the summer season in Airlines Germany, where passenger volumes rose.
"While trading conditions continue to be tough, particularly in Continental Europe and Northern Europe, we nevertheless expect to deliver further growth in the 2015 financial year, consistent with our expectations at our recent full year results," the company said in a statement.
The group said tough trading conditions, particularly in Continental Europe have hit prices, partially offsetting the positive effects of further cost savings and the benefits of lower fuel costs.
"Underlying gross margin of 21.6% is 30 basis points lower than the prior year comparative. This reflects pricing pressures caused by overcapacity in the airline market creating high levels of competition, especially in Continental Europe," the travel operator said.
Thomas Cook said that 85% of its Winter season holiday programme has been sold, but average selling prices are down 2%. It said 41% of its Summer 15 season is currently sold, but cited stronger trading in the UK against tougher trading conditions in continental Europe and parts of northern Europe. The group did say that it has seen a "significant" improvement from those tougher European markets in recent weeks.
"The trading environment in many of our markets continues to be tough, but we believe the measures we are taking to improve our businesses will continue to strengthen our competitive position," said Chief Executive Peter Fankhauser in a statement.
In a separate statement, Thomas Cook announced a tender offer for its EUR400 million 6.75% guaranteed notes due 2015, stating the the purpose is to "manage pro-actively its upcoming debt redemption". It said it will purchase the notes at a price of 101.85 per cent.
Thomas Cook shares were down 4.2% at 127.57 pence Wednesday morning.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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