Pre-Close Trading update

30th Sep 2009 07:00



30 September 2009

Thomas Cook Group

Pre-close trading update

Ahead of its close period in the run up to preliminary results for the year ending 30 September 2009, Thomas Cook is providing an update on the trading position we set out in our Interim Management Statement (IMS) on 13 August.

Overview

We are pleased with our performance since our August IMS. Summer trading is finishing strongly and winter trading has improved since the last update. We remain confident that the business will meet the Board's expectations for the current financial year and that we are well placed to achieve them for the 2010 financial year.

Manny Fontenla-Novoa, Group CEO said:

"Summer trading is finishing in line with expectations underpinned by a strong lates market and the popularity of the package holiday.  Through our flexibility we have managed capacity, and supported our pricing and margins.  We are encouraged by winter bookings which have improved since August. Consumers are still going on their holidays, but the trend towards later bookings continues. We are confident that we can manage capacity and supplier costs through the season as we have done for the summer. This reinforces our confidence of meeting the Board's expectations for the full year."

Summer 09

Our flexible capacity model is once again enabling us to manage our way through a difficult operating environment, demonstrating the resilience of the package holiday. We continue to experience the trend towards later bookings, yet despite this and the impact of swine flu, we are maintaining or improving average selling prices. We have achieved average departed load factors of 96% for the completed summer months of May to August, in line with last year. Overall, this performance demonstrates our success in predicting demand trends and balancing capacity accordingly.

 

S 09	Year on year variation %
	Average selling price	Cumulative bookings	Last 4 weeks  bookings	Planned  capacity
UK	+8	-10	-1	-10
Continental Europe	flat	-12	+3	-13
Northern Europe	+3	-3	+23	-3

1. All figures as at 19 September 2009 except those for the UK. UK figures are shown as at 5 September 2009 to illustrate underlying performance excluding the distorting impact on prior year figures of increased passenger numbers resulting from the collapse of XL on 11 September 2008. As at 19 September 2009, UK figures show asp +7%, cumulative bookings -11%, last 4 weeks bookings -14% and planned capacity -10%.

2. In Continental Europe, bookings represent all bookings including cars/overland. However capacity represents airline capacity only.

3. In Northern Europe, for comparability with peers, we now use April-September to define the summer season. On our previously reported May-October season, figures show asp +3%, cumulative bookings -5%, last 4 weeks bookings +17% and capacity -5%. 

 

 Segment highlights (S 09)

UK: Summer 09 trading is finishing strongly with our medium haul destinations of Turkey and 

Egypt performing particularly well. 

 

Continental Europe: Overall trading has improved over the summer. We have successfully negotiated rate reductions to stimulate demand without adversely affecting margins. In  Germany, our largest Central European region, cumulative bookings are down 12% ahead of capacity cuts, but trading in the last four weeks has been positive with bookings up 12% and average selling prices up 2%. 

 

North America: Following the refocusing of our business to independent travel, this division is performing well. The mainstream market, which now represents only 15% of our total passengers in the low-season summer period, is challenging due to over-capacity. We continue to manage our capacity to adapt for shifts in demand related to swine flu.

 

Winter 09/10 

Since our August IMS we have seen a strengthening in winter trading in our major markets. We continue to take advantage of our flexibility to manage capacity and underpin margins. Our summer experience gives us confidence that we can manage the continuing trend of later booking and bookings will trend towards capacity levels as the season progresses. 

 

W 09/10	Year on year variation %
	Average selling price	Cumulative bookings	Last 4 weeks bookings	Planned capacity
UK	+3	-11	-3	-9
Continental Europe	-8	-16	-12	-10
Northern Europe	+11	-21	-2	-8

1. All figures as at 19 September 2009 except those for the UK. UK figures are shown as at 5 September 2009 to illustrate underlying performance excluding the distorting impact on prior year figures of increased passenger numbers resulting from the collapse of XL on 11 September 2008. As at 19 September 2009, UK figures show asp +4%, cumulative bookings -13%, last 4 weeks bookings -17% and planned capacity -9%.

2. In Continental Europe, bookings represent all bookings including cars/overland. However capacity represents airline capacity only.

3. In Northern Europe, for comparability with peers, we now use October-March to define the winter season. On our previously reported November-April season, figures show asp +12%, cumulative bookings -25%, last 4 weeks bookings -4% and capacity -8%. 

.

  Segment highlights (W 09/10)

UK: We have actively managed our short haul capacity by cutting lower margin programmes, while demand for medium haul destinations remains strong and plays to our strengths.

Continental Europe: Germany, our largest market in the region, has seen positive trading over the last four weeks with bookings up 2%. Cumulative bookings are down 15%, not far behind capacity cuts of 13%.  Lower average selling prices reflect a shift in mix largely as a result of swine flu concerns 

and reduced supplier prices which we are able to pass on to customers. In our Continental Europe markets it is still early in the booking season.

Airlines Germany: Overall winter bookings down 6% are only just behind planned capacity cuts of 4%. Demand for continental flights has held up while intercontinental has been impacted by the later booking trend, with aggressive pricing from competitor airlines putting pressure on yields. 

Northern Europe: We are confident that we are experiencing a similar trend to Summer 09 of booking closer to departure and that bookings will trend towards planned capacity. In addition, price discipline is being maintained.

North America: It is still early in the Canadian winter season but conditions are challenging due to over-capacity and swine flu concerns, particularly in Mexico which is a key winter destination. However we are benefitting from the new mix of our business as mainstream now represents only a third of our winter passengers. 

Summer 10 

We are, as yet, only selling Summer 10 in the UK market. Following the later brochure launch, we are 11% sold. The later brochure launch gives us greater flexibility in our early price negotiations with suppliers, underpinning the attractive prices we are able to offer customers. Although it is very early in the season, both selling prices and margins are ahead of prior year. 

At this stage, we are not anticipating further significant capacity cuts in any of our key markets. However, we maintain flexibility to adapt to further changes in demand up until Spring 2010. We believe we can continue to underpin our prices through negotiating costs with suppliers.

Other developments

Arcandor

On 10 September 2009, 43.9% of Thomas Cook Group plc which was held by Arcandor and its subsidiaries was placed in the stock market at 240p per share by the Mandated Lead Arrangers. Upon completion of the placing, the Relationship Agreement between the Company and Arcandor was terminated.

 

The Board

Following the termination of the Relationship Agreement between Thomas Cook Group plc and Arcandor, Dr Karl-Gerhard Eick resigned as a Director and Chairman of the Board. Michael Beckett, previously Non-Executive Deputy Chairman and senior Independent Director, became Non-Executive Chairman.

On 18 September 2009, Thomas Cook announced that Hemjo Klein had resigned from the Board for personal reasons.

Enquiries

Thomas Cook Group plc
Jill Sherratt	Investor Relations Director		+44 (0)20 7557 6412
Kathryn Rhinds	Investor Relations Manager		+44 (0)20 7557 6414
Brunswick
Fiona Antcliffe			+44 (0)20 7404 5959
Nina Coad

ENDTSTUKOBRKARKUAR

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