19th Mar 2009 07:00
19 March 2009
Thomas Cook Group
Trading Update
Ahead of its Annual General Meeting at 13.30 today, Thomas Cook is providing an update on our trading position as set out in our Interim Management Statement on 12 February. Despite the challenging trading environment we are pleased the business performance has strengthened since our IMS, reinforcing our confidence in meeting the Board's expectations for the year.
Winter 08/09
The clear trend towards later bookings continues. Despite the distorting impact of a later Easter, bookings have improved significantly in the last four weeks, particularly in our Continental and Northern European segments. Average selling prices are up year on year and load factors on departed flights remain at least at last years' levels.
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Year on year pro forma variation %
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|||
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Average selling price
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Cumulative bookings
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Last 4 weeks bookings
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Planned
capacity
|
|
UK
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+7
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-5
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+9
|
-5
|
|
Continental Europe
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+4
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-9
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+16
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-6
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Northern Europe
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+1
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-3
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+40
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-2
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North America
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+1
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-13
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-22
|
-14
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Total
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+4
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-7
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+12
|
-5
|
Note: Figures as at 14/15 March 2009. In Continental Europe, bookings represent all bookings including cars/overland. However, capacity represents airlines seat capacity only. All figures for Continental Europe exclude JetTours.
Summer 09
Although cumulative bookings remain behind the prior year they have continued to strengthen over the last four weeks. Renegotiating terms with hoteliers has enabled us to remain competitively priced and stimulate demand, and we remain confident bookings will continue to trend towards our planned capacity. Cumulative average selling prices are ahead of last year in all markets, apart from North America where it is still very early in what is their off-peak season.
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Year on year variation %
|
|||
|
|
Average selling price
|
Cumulative bookings
|
Last 4 weeks bookings
|
Planned
capacity
|
|
UK
|
+9
|
-11
|
-6
|
-11
|
|
Continental Europe
|
+2
|
-18
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-11
|
-11
|
|
Northern Europe
|
+6
|
-20
|
-6
|
-6
|
|
North America
|
-1
|
-31
|
-47
|
-23
|
|
Total
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+5
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-16
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-10
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-11
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Note: Figures as at 14/15 March 2009. In Continental Europe, bookings represent all bookings including cars/overland. However, capacity represents airlines seat capacity only. All figures for Continental Europe exclude JetTours.
Operating review
UK
Winter: The UK is performing strongly and departed load factors remain high (98.4% in February). Bookings for the winter season are in line with capacity reductions, with average selling prices 7% ahead cumulatively and 13% ahead in the last four weeks. We continue to focus on medium haul destinations to take advantage of strong Easter demand (in conjunction with its later occurrence this year) and the high selling prices we achieve in those markets.
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UK haul mix W 08/09
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Year on year pro forma variation %
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|
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Left to Sell
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Planned
capacity
|
|
Short haul
|
-45
|
-29
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Medium haul
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+17
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+2
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Long haul
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-54
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-21
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UK total
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-1
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-5
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Note: Figures as at 14/15 March 2009.
Summer: Summer trading in the UK has been robust. Cumulative bookings are tracking in line with capacity reductions of 11%, and we have now sold 52% of our capacity, in line with the prior year. Having successfully focused on selling the months on either side of the July/August peak, we now have 14% less left to sell than last year in these shoulder months. Given that mix we are pleased to have driven average selling prices up 9% overall.
Demand for our All Inclusive product is strong, accounting for 40% of summer bookings to date (+9% year on year) with bookings up 49% year on year in the last four weeks. Demand for medium haul, which now represents 69% of our total summer charter programme, is good, and particularly strong to Turkey where we are the market leader.
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UK haul mix S 09
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Year on year pro forma variation %
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|
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Left to sell
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Planned
capacity
|
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Short haul
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-32
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-31
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Medium haul
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-4
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-3
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Long haul
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-17
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-9
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UK total
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-12
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-11
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Note: Figures as at 14/15 March 2009.
Continental Europe
Winter: Current winter trading in our Continental Europe markets has improved further, with bookings now down 9%. The later booking trend is pronounced, as evidenced in the 16% year on year improvement in bookings in the last four weeks. Average selling prices are 4% higher year on year.
In Germany, our largest market in Continental Europe, bookings over the last six weeks have been encouraging following a tough January trading period. Our flexible capacity model has allowed us to take advantage of strong pockets of demand with bookings in the last four weeks up 6%. Cumulative bookings are down 11%, in line with expectations, and with cumulative average selling prices up 4% we're confident of a strong outcome for winter overall.
Summer: With the later booking trend continuing in Continental Europe, cumulative bookings are down 18%, but encouragingly average selling prices are up 2%. Eastern European markets are suffering from the weakness of local currencies but account for only a small proportion of the division overall. Given the inherent flexibility in our Continental European business model, where we have least fixed capacity, we remain positive about our ability to manage capacity and maintain profitability.
In Germany, productive negotiations with hoteliers have helped to stimulate improving demand. Cumulative bookings are down 18% year on year, but in the last four weeks are down only 10%. Average selling prices are up 2% cumulatively.
Northern Europe
Winter: Winter trading in Northern Europe remains robust, with bookings now down only 3%. Bookings over the last four weeks have been extremely strong, up 40% year on year with average selling prices up 12%. Cumulative average selling prices are up 1% despite a mix-shift away from long haul destinations, particularly Thailand, and the subsequent capacity shift towards the Canaries. Departed load factors are in line with last year's levels (99.2% in February.)
Summer: Performance in Northern Europe is steadily improving as the trend towards later bookings persists. Cumulative bookings are down 20% year on year, but down only 6% over the last four weeks. Cumulative average selling prices are up 6% but in the last four weeks are up 11%. The weak economic conditions in Denmark remain challenging, but in Sweden, our largest Nordic market, bookings and average selling prices are strong to date.
North America
Winter: Our market-leading Independent business is performing in line with expectations and crucially, post the acquisition of TriWest, has reduced the exposure of our North American business to the highly competitive charter market. The peak winter season of the North American charter market continues to suffer from significant over-capacity. Despite this, our bookings are currently broadly in line with capacity reductions (-13%) and the clear later booking pattern we are seeing, as well as increased end-of-season capacity reductions, give us confidence in meeting our winter forecasts. Average selling prices are up 1%.
Summer: It is still early in the summer booking season for North America. Given that the summer is not the main holiday season in Canada, the absolute numbers of bookings at this stage are not significant, and the year on year variances are a consequence of the later booking behaviour seen throughout the winter. We retain the ability to reduce capacity further if necessary, and with our reduced exposure to the charter market, and tight cost control, we remain confident of delivering a satisfactory full year performance.
Airlines Germany
Winter: As we previously noted, the exit from city routes and reduced domestic feeder flying continues to drive significantly higher yields and increased efficiency. The booked load factor is now just 1% behind the prior year, partly reflecting a move to later bookings and Easter falling later in the year.
Summer: While still early in the booking cycle for Airlines Germany, we continue to benefit from our route rationalisation. Capacity on tour operator flying is currently expected to be 4% below the prior year but we retain flexibility to amend this further. The booked load factor is 4% below the prior year, reflecting the trend to later booking.
Hedging
Hedging for the remainder of the current financial year is now complete and we continue to hedge for future seasons in line with our hedging policy.
The Group's Euro exposure is 99% hedged for Winter 08/09, 98% for Summer 09 and 69% hedged for Winter 09/10. Similarly, the Group's Dollar exposure is 97% hedged for Winter 08/09, 91% for Summer 09 and 55% hedged for Winter 09/10.
Fuel is 100% hedged for Winter 08/09 and 97.5% hedged for Summer 09.
Interim management appointment
The Board announces that Juergen Bueser, Chief Financial Officer, is on a temporary leave of absence due to ill health. As a consequence, Ludger Heuberg, who previously held the role of Chief Financial Officer from June 2007 to June 2008, and who is currently Chief Executive Officer, Group Operations, and a member of the Group Executive Board, has been appointed Acting Chief Financial Officer with immediate effect, in addition to his existing role.
The Board looks forward to welcoming Juergen back fit and well in due course.
Enquiries
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Thomas Cook Group plc |
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Jill Sherratt |
Investor Relations Director |
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John Woodman |
Investor Relations Manager |
+44 (0)20 7557 6413 |
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Brunswick |
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Nina Coad |
+44 (0)20 7404 5959 |
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Conference call for investors and analysts A conference call for investors and analysts will take place at 08.00 GMT today, Thursday 19th March 2009. Dial-in details for the call are as follows:
Dial-in number: +44 (0) 1452 541 076 Password: Thomas Cook Group
A recording of the call will be available immediately after the call has ended today until 25th March 2009. Dial-in details for the recording are as follows:
Replay dial-in number: +44 (0) 1452 55 00 00 Replay access number: 91089673#
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