EXCLUSIVE: Dire market conditions outlined by Thomas Cook

An internal memo from Thomas Cook has revealed that trading conditions in the industry are at their worst level for 15 years and the operator still has 300,000 holidays left to sell.

The document, sent to staff and leaked to TravelMole, paints a stark picture of life for tour operators as millions of people desert them in favour of no-frills flights. It was sent out just days before Tapstry Holidays ceased trading, a victim of the booking slump (see separate story).

Thomas Cook chief executive Manny Fontenla-Novoa claimed it was outperforming the market but admitted it had cut prices to attract holidaymakers.

“When I’ve spoken with my counterparts at our competitors, some have said that they believe these to be the worst trading conditions they’ve experienced in 15 years,” he said.

“Our performance still hangs in the balance. Yes, we’re outperforming the market, but it’s a terrible market. The fact is we are still way below where we need to be.

“Our planes are flying full but that does not mean we’re getting the margin we need from each seat. Despite the growth, we’re still achieving £20 less per passenger than this time last year.”

In a rallying call to staff, Fontenla-Novoa praised them for their efforts in recent weeks and said their dedication would be needed over the coming months.

“You have reacted as you always do in difficult times and risen to the challenge and for that I thank you,” he said. “By increasing our focus across all parts of the business, I am pleased to report that our performance has improved significantly. In the last two weeks our market share has grown, volumes are up ten per cent, our margin is £20 per person better than it was and we are regularly achieving our target of 98 per cent or more load factor.

“Your efforts over the past two weeks have been nothing short of fantastic…we still have more than 300,000 holidays left to sell over the next three critical trading months and you can all make a difference.”

A spokeswoman for Thomas Cook said: “Our policy is to be open and honest with our employees. It is vital that members of the team are updated on market conditions. Thomas Cook is proud to be outperforming the market, which has been notoriously difficult, and credits its success to the commitment and passion of its people.”

The news comes as KarstadtQuelle, the German department store group that jointly owns Thomas Cook, has announced plans to acquire the other 50% share owned by Lufthansa (see separate story).

Report by Jeremy Skidmore (www.jeremyskidmore.com)