22nd Mar 2016 13:45
LONDON (Alliance News) - Thomas Cook Group PLC on Tuesday said the travel industry is still taking a hit from the string of terrorist attacks which have rocked the sector over the past year, as customers are postponing booking summer holidays to "consider their options".
Thomas Cook coincidentally released its trading statement as the news of another terrorist attack, this time in Belgian capital Brussels, emerged on Tuesday morning, sending the shares of travel companies and airlines plummeting.
Shares in Thomas Cook were trading down 5.3% at 87.60 pence on Tuesday afternoon, one of the worst performers in the FTSE 250. In the FTSE 100, the fallers were dominated by travel and tourism-related stocks, with British Airways-owner International Consolidated Airlines Group SA, hotel operator InterContinental Hotels Group PLC, cruise operator Carnival PLC and TUI AG, Thomas Cook's larger travel operator rival, all lower.
Thus far, reports have claimed at least 31 people have been reported dead in a series of bomb attacks in Brussels, including at the Zaventem airport and at a metro station.
Over the past year, Thomas Cook and its peers have been having to alter their holiday programmes and cancel flights to certain locations as a result of terrorist attacks in Turkey, Tunisia, Egypt and Paris.
In February, the travel company noted a sharp decline in bookings to Turkey following the suicide attack in Istanbul which killed 12 people, and against a background of mass migration to the country by refugees attempting to escape the conflict in Syria. It did say, however, that it was seeing "clear signs of recovery" in customer demand.
The February warning came after a tough 2015 for the travel industry. Thomas Cook and its peers were forced to cancel holidays and flights to Tunisia after the terrorist attack last June in which a gunman opened fire on a beach in Sousse, killing 38 people. In September, Thomas Cook said its summer holiday sales still met expectations despite the attack, as it saw a significant increase of customers travelling to Egypt instead.
However, in October, the travel industry suffered a further blow after a Russian passenger jet exploded from a terrorist bomb shortly after taking off from the popular holiday resort of Sharm el Sheikh in Egypt, killing all 224 people on board. Once again, travel companies were forced to cancel flights and holidays to the Egyptian resort, taking a bite out of sales and sapping the appetite of some to travel at all.
Earlier this month, Thomas Cook revealed that it has extended the cancellation of all bookings to Sharm el-Sheikh up to and including October 31.
Despite these incidents - and the terrorist attack in Paris in November where gunmen and suicide bombers killed 129 civilians across the French capital - travel companies have remained relatively optimistic, transferring capacity and changing holiday programmes from trouble spots to other destinations.
On Tuesday, Thomas Cook said the winter 2015/16 holiday season is closing as expected with 90% of the programme sold, although that is 2% lower than this time last year. Summer bookings, which are 40% sold so far, are also 2.0% lower than this time last year as customers postpone their holiday decisions, leading to a later booking pattern.
Thomas Cook warned market conditions remain challenging, as consumer confidence is affected by continued disruption in certain key destinations. However, it said the company has benefited from rebalancing capacity to destinations such as Spain, the Canary Islands and the Balearic Islands, from Turkey, Tunisia and Egypt.
Long-haul destinations such as the US and Cuba have also seen an increase in sales.
"Thomas Cook continues to operate in a volatile market environment. We know that customers want a summer holiday, but we can see that some are leaving it later to book this year as they consider their options," Chief Executive Peter Fankhauser said in a statement.
"Against this backdrop I remain confident that we are doing all the right things as a business. It's clear also that customers value packaged travel more than ever and feel safer in our hands," he added.
Thomas Cook maintained its previous guidance for the year ending September 30, but highlighted that this is dependent on "seeing a sustained recovery" in customer confidence through the summer season.
Thomas Cook's full-year guidance is for earnings before interest and tax of GBP350.0 million, which is GBP40.0 higher than achieved in financial 2015.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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