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Problems in Spain dent Thomas Cook profits
Thomas Cook’s third quarter profits were down £15 million to £443 million, leading the operator to warn that operating profits for the full year will be ‘at the lower end of expectations’.
Revenue during the three months to the end of June was up 10% to £2.48 billion, driven by rising demand for higher-margin destinations including Turkey and Egypt.
However, the operator said continued ‘aggressive pricing’ in the Spanish islands from its competitors, combined with higher prices demanded by hoteliers, had put a dent in its third quarter profits.
In an updated trading statement, chief executive Peter Fankhauser said: "Bookings for the summer are up 11% overall, fuelled by strong growth in our Group Airline, in line with the planned increase in capacity, particularly in Germany. This has helped to offset a slowdown in package holiday bookings in recent weeks with customers across our European markets delaying decisions about their summer holidays as they enjoy the record temperatures at home.
"It’s clear that we remain in a competitive environment, particularly in the UK where the growth in popularity of higher-margin destinations like Turkey and Egypt has not fully offset the continued pressure on margins to Spanish holidays. Based on our current view, we now expect growth in full year underlying operating profit to be at the lower end of market expectations.
"I am pleased by the strong strategic progress we have continued to make in the past few months, including the successful opening of our new Cook’s Club brand in Greece and the launch of our Expedia alliance for customers in the UK and Scandinavia. We are confident this will lead to further profitable growth over the medium term."
Thomas Cook has sold 79% of its summer 2018 programme from the UK, but prices are 3% lower overall.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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