27th Mar 2014 09:04
LONDON (Alliance News) - UK travel operator Thomas Cook Group PLC Thursday said that winter trading was satisfactory, despite the number of bookings hit by the continued political unrest in Egypt, and said that customer booking for its Summer 2014 programme have shown an improving trend, with around 50% of holidays already sold.
Thomas Cook shares were one of the biggest decliners on the FTSE 250 at the open, down 1.1% at 179.40 pence per share.
The travel company said that trading has been satisfactory for the winter season, which is 93% sold and in line with the booking pattern at the same time last year, due to lower customer demand for winter holidays to Egypt .
Thomas Cook said that excluding Egypt, it achieved higher average selling prices and bookings, and gross margin were supported by improved yield management and cost efficiencies in the business.
In the UK, winter bookings are 2% higher than last year, excluding Egypt, although the company said average selling price were 3% lower than last year, hit by a higher proportion of one-week duration holidays and competitive pricing in certain destinations.
For Continental Europe, bookings were hit by Thomas Cook's decision to reduce capacity in France and Russia as it tries to return those businesses to profitability, while average selling prices improved by 4% due to strong performances in most source markets, including pricing improvements in Germany.
In northern Europe, bookings are 5% higher than last year, excluding Egypt, although average prices fell 2%, as a result of a lower share of long-haul business compared to last year, particularly to Thailand where capacity was reduced in response to customer demand.
The group said that bookings for Airlines Germany are in line with last year, at slightly higher prices, as capacity to Egypt was successfully redirected to other destinations.
Thomas Cook said that 50% of its Summer season programme has already been sold, 1% more than this time last year, with overall bookings 2% higher than last year, while average selling prices are below last year in some of its markets. It said that group underlying margin for the Summer season and the full year are expected to be above last year's levels.
Bookings for its UK business are 3% higher than last year, although its average selling prices fell 2%,mainly due to product mix and a higher proportion of shorter duration holidays.
The group said continental Europe continues to trade well with slightly higher average selling prices and an improved booking trend, with passenger volumes 1% higher than last year, driven by its German business.
It said that Airlines Germany bookings for its Summer season are 5% higher than last year, in line with increased capacity, mainly to short and medium haul destinations, although it said that average selling prices are 2% lower as a result. It said margins are expected to increase year-on-year due to improved efficiencies.
Thomas Cook said bookings at its higher-margin concept hotels are up 49% compared with the same time last year, and its hotel development programme remains well on track.
It said that compared with last year, it expects margins to improve more than average selling prices, reflecting enhanced yield management and the benefits of its cost out and profit improvement programme.
As part of the group's turnaround plan,Thomas Cook has been selling a string of assets, exiting low-value businesses as it continues to shrink the debt that it built up ahead of the recent economic downturn. One of its most recent disposals was of its UK luxury travel tour operating entity Elegant Resorts, which it sold to Al Tayyar, a travel group from Saudi Arabia, for GBP14.3 million.
Thomas Cook said that it has completed the delivery of its disposals target 18 months ahead of schedule.
Travel companies traditionally suffer losses over the winter period, making most of their money in the summer months when travel is much more active.
"Delivery of our strategy of sustained profitable growth remains on track and our trading, with increased summer bookings, is encouraging," the travel operator said in a statement.
Thomas Cook said it will give detail of further new product development and the second wave of its profit improvement plans when it releases its interim results on May 15.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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