Interim Management Statement

11 August 2010

Thomas Cook Group plc

Interim Management Statement

Highlights

·; Summer trading is broadly in line with capacity expectations and booked load factors in most of our segments are ahead or in line with last year, although we are seeing softness in the UK market which is impacting margins.

·; Total financial impact from Icelandic volcanic ash disruption is now estimated at £81.9m (original estimate was £60-80m), of which £28.8m is lost margin.

·; Excluding the impact of lost margin resulting from volcanic ash, underlying third quarter profits would have been up 10% (2009 restated: £49.7m).

·; Focus on operating cash flow has delivered a cumulative £157m inflow, up £195m on the prior year.

·; Following the re-financing, the business is in a strong financial position with c. £800m of borrowing headroom as at the end of June.

Manny Fontenla-Novoa, Group CEO said:

"Third quarter profits were up 10% on the comparable period, if we exclude the lost margin impact from the Icelandic volcanic ash disruption, and operating cash flow performance continues to be excellent, with a £157m nine month cumulative inflow, up £195m on the prior year.

"We always expected this year to be challenging given the uncertain economic environment and the impact of the weak sterling on our UK business. In anticipation, we cut winter capacity, chose not to increase overall summer capacity, and have continued to address our cost base. These actions and our flexible business model have demonstrated our resilience in weathering the tough trading environment.

"As we enter the final quarter, it is apparent that trading in the UK business is softer than expected and, at current rates, the recent weakening of the euro will have an adverse impact on translation of our euro-based earnings. As a result, we now anticipate underlying operating profits for the full year (excluding the impact of the volcanic ash cloud) to be at the lower end of market expectations."

Group financial performance

In the three months ended 30 June 2010, revenue was down 9% (8% at constant currency), largely reflecting the remaining planned winter capacity reductions, as well as the lost revenue associated with the volcanic ash cloud. Underlying profit from operations1 fell to £25.8m (2009 restated: £49.7m), after £28.8m lost contribution as a result of the volcanic ash. Excluding this impact, underlying profit from operations was up 10% reflecting our continued focus on cost initiatives in accommodation purchasing, airline operations and general overheads. These more than offset the reduced capacity and the foreign exchange impact of weaker sterling on flying and accommodation costs.

As previously reported, trading in April 2010 was severely disrupted by the closure of airspace over much of Europe. Whilst the majority of the operating impact, and consequential financial loss, occurred in April, there were further closures of airspace, albeit on a much smaller scale. As a result, we now calculate the financial impact of the volcanic ash cloud in the period ended 30 June 2010 to be £81.9m, of which £28.8m relates to lost contribution. This compares to our original estimate of £60-80m.

Cumulatively, revenue in the nine months ended 30 June 2010 was down 7% (8% at constant currency), and the underlying loss from operations was £104.4m (2009 restated: loss of £63.4m), of which £28.8m relates to lost margin as a result of volcanic ash.

Underlying net finance charges in the nine months to June 2010 were £85.6m, £5.6m lower (2009 restated: £91.2m). The reduction year on year continues to reflect lower effective interest rates and our continued focus on cash management.

In the three months to June 2010, the Group incurred exceptional operating items of £75.1m (2009: £31.6m), of which £53.1m related to the direct costs associated with the volcanic ash cloud disruption. In addition to exceptional operating items in the quarter, the Group also wrote off £18.2m of unamortised set-up and other fees associated with the previous banking facility. Losses on IAS 39 hedging re-measurement in the three month period amounted to £9.1m (2009 restated: gain of £19.1m).

Group financial position

Despite the impact of the volcanic ash cloud, the Group has continued to deliver strong cash flow performance. In the nine months to June 2010, the operating cash inflow was £157m, an improvement of £195m on the prior year period. Net debt at 30 June 2010 was £789m, a £163m reduction since the half year. As previously referred to, there will be two aircraft coming on balance sheet in the final quarter which were previously on operating leases. The associated debt recognised in respect of these two aircraft will be around £60m.

As previously reported, the Group successfully refinanced in May 2010, providing a simpler framework, longer and varied maturities and greater flexibility and funding. The new arrangements, which in total amount to c. £1,700m, comprise a £1,050m banking facility and c. £650m of bonds. In addition, there is a £200m bonding facility. As at 30 June 2010, headroom under these new borrowing facilities was c. £800m.

Our summer programme is now well sold, with the booked load factor in most of our segments ahead of or in line with that achieved at this time last year. Bookings have improved following the weakness we saw in some of our markets in June as a result of the World Cup and exceptionally warm weather in our source markets. The Group departed load factor of 92.9% demonstrates good utilisation of our aircraft.

Note: Figures as at 7 / 8 August. In Central and West/East Europe, bookings represent all bookings including cars/overland, however capacity represents airline seat capacity only. Northern Europe summer season is April-September and therefore cumulative bookings are impacted by cancellations as a result of the volcanic ash cloud.

UK: The fine summer weather enjoyed over much of the UK and the uncertain economic environment have meant that bookings have been softer, which has resulted in lower margins. However, as a result of our conservative approach to capacity management, the summer programme is 85% sold, in line with last year.

Although cumulative average selling prices are 3% ahead of last year they are not up as much as previously anticipated due to weaker booking trends in May and June. Whilst bookings have improved since the end of the World Cup, price increases have not been sufficient to compensate for weaker bookings.

Our Independent businesses, whose statistics are not included in the table above are, on the whole, trading well. Bookings in Hotels4U are up around 65% and in Gold Medal are up 23% year on year.

Central Europe (Germany, Austria and Switzerland): Cumulative bookings are now 3% ahead of last year. Although cumulative prices are down 3%, reflecting the decision to pass through some of the lower flight and accommodation costs to customers, margins are stable. The segment has made some modest increases in its airline seat capacity in response to demand.

West/East Europe (France, Belgium, the Netherlands, Eastern Europe): Pricing remains 1% down on last year supported by lower input costs. Cumulative bookings are 2% lower than last year; we have utilised our flexibility and adjusted airline seat capacity accordingly. Overall, the programme is 81% sold, up 1% point compared with the same time last year. Bookings are ahead 6% in France and 5% in the Netherlands, but the Belgian market remains challenging.

Northern Europe: Northern Europe is 89% sold. Having got off to a slow start to the season, sales in the last four weeks are up 29%, giving us confidence that bookings will trend to capacity. Denmark remains challenging due to the economic backdrop, but we are seeing some improvement in bookings. Average selling prices for the region remain ahead of last year, up 5%.

North America: Mainstream bookings are well ahead of prior year (against a weaker comparator due to the impact of swine flu last year) and are in line with capacity, but prices remain under pressure due to continued market overcapacity. Independent bookings, which account for the majority of summer bookings, are stable and prices are holding up well.

Airlines Germany: Summer bookings are up 4% year on year, ahead of capacity and aided by a rebound in demand for intercontinental flights. Yields, down 4% overall, reflect lower fuel prices partially offset by the higher proportion of long haul flights. Booked load factor at 78% is 1% higher than last year.

Winter 10/11

It remains early in the season for winter 10/11 bookings but initial trends are encouraging. Bookings in both the UK and in Northern Europe are progressing well, with the programme now 23% sold in the UK and 31% sold in Northern Europe; levels in line with last year.

Hedging

We are now almost fully hedged for the current financial year and continue to hedge for future seasons in line with our previously stated hedging policy.

As at 6 August2010

Strategic progress

We have continued to make progress on a number of our key strategic drivers. We will fully update the market on our strategic progress as part of the year end results announcement, but below are some highlights of the period.

Acquisitions

During the period we announced the acquisition of Öger Tours, a leading German tour operator specialising in package holidays to Turkey. We expect to acquire Öger Tours for approximately €30 million, based on cash consideration to be settled at closing and average net debt and similar liabilities over the last 12 months. Additionally, other businesses owned by the seller have agreed to provide Thomas Cook with agency and accommodation services in Turkey worth €2.5 million at no cost. It is anticipated that the transaction will generate significant synergies, in excess of €8 million per annum, and we expect to realise these benefits in the second full year of ownership.

In the year ending 31 October 2009, Öger Tours carried more than 400,000 passengers and reported gross revenues of €256m and operating profit of €3.3m. Through the acquisition, Thomas Cook will strengthen its position as the second largest travel group in Germany and further increase its strong presence in Turkey, a strategically important destination for the entire Group. We expect to complete the acquisition in September following anti trust clearance.

Independent travel

Plans for the Online Travel Agency are now well underway and we expect the organisation to be largely in place for the commencement of the next financial year on 1st October 2010. Bookings of independent and mainstream products over the internet have risen by 11% year on year.

Cost savings

The airline synergies programme remains on track to deliver the £17m incremental synergies in the current financial year. Accommodation savings are being achieved across the Group and in the UK we are forecasting rate reductions of 5-7.5% for summer 10. We continue to target sustainable reductions in accommodation and in-destination service costs going forward and now have the appropriate organisation in place to achieve this.

Enquiries

Conference call for investors and analysts

A conference call for investors and analysts will take place today at 8am (UK time). Dial-in details for the call are as follows:

Dial-in number +44 (0) 1452 541 076

Password 91802274

Replay dial-in +44 (0) 1452 55 00 00

Access number 91802274#

The replay will be available until 25 August 2010.  Group Income Statement

All revenue and results arose from continuing operations.

Notes to financial information

1. Basis of preparation

The information included in this report has been prepared using accounting policies consistent with those set out in the Group's Annual Report 2009 except for new or amended standards and interpretations adopted in the current period and other changes set out in the notes to the unaudited results for the six months ended 31 March 2010. The adoption of these new standards and other changes have resulted in restatements of the prior period results.

The financial information contained in this report does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 September 2009 were approved by the Board of Directors on 29 November 2009 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 (2) or (3) of the Companies Act 2006.

2. Margin impact of the volcanic ash cloud

The table below illustrates management's estimate of the impact on results from the disruption caused by the volcanic ash cloud. The resultant closure of airspace meant c.190,000 passengers were unable to take their holiday, c.180,000 were stranded in resort and over 1,000 flights were cancelled.

3. Separately disclosed items