United Kingdom
United States
Asia Pacific
Swine flu costs Cook’s £12.6m
Tuesday, 13 Aug, 2009
0
Thomas Cook has reduced losses by more than 43% to £49.5 million for the nine months to June.
The loss from operations comes before exceptional items and the impact of swine flu, which was described by group CEO Manny Fontenla-Novoa as “more significant” than anticipated.
The company estimates that the impact of swine flu in the period ended June 30, caused by the global governmental advice not to travel to Mexico, was £12.6 million. The worst hit areas were the UK and its airlines in Germany.
The exceptional items amounted to £107.3 million, up from £71.8 million the nine months earlier.
These were attributed to costs incurred in completing the MyTravel/Thomas Cook merger integration, the cost of integrating other businesses acquired since the merger and other restructuring measures.
The group recorded a profit from operations – before exceptional items and swine flu – of £61.4 million in the three months to June, an improvement of 39.5% on the same period in 2008.
“Despite the challenging economic and trading conditions, particularly in the UK, the strength of our brand and products as well as our cost and capacity management have underpinned the group’s resilience,” the company’s interim management statement said. “As a result, the board remains confident that the business will meet its expectations for the current financial year.”
But Thomas Cook admitted that it was now “not realistic” to allow it to achieve a group operating profit of £480 million in 2010 as originally projected in November 2007 following the merger with MyTravel.
“Although up to now we have continued to regard this aspirational target as relevant, the prevailing economic environment means that it is not realistic to think that market conditions could recover sufficiently to allow this target to be achieved in 2010,” the company said.
“However, given our flexible business model we are well placed to achieve the market’s expectations.”
Cumulative bookings for this summer from the UK are down in line with capacity.
“Despite the continued trend towards later bookings we have an 86% load factor with 9% less left to sell than at this point last year,” the company said.
“We have maintained strong average selling prices, up 8% versus last year.
“We have more left to sell in long haul than at the same time last year as a result of the shift in demand from Cancun, following the outbreak of swine flu, but overall we have less left to sell than prior year.”
A shift towards higher-margin holidays has seen all-inclusives now accounting for 41% of summer capacity against 30% last summer and four and five star packages for 42%, up from 40%.
“Our strategy to focus on medium haul destinations has ensured that we are well placed to take advantage of the strong demand we continue to see for those destinations.
“The underlying performance of the UK segment has been robust in the context of weaker sterling and tough economic conditions, particularly in Ireland where trading has been extremely challenging.
“We have taken measures to reduce our cost base in Ireland and across the segment to support margins.”
Later booking patterns have continued into the winter 2009-2010 season with levels in the UK and Northern Europe down year on year.
“We remain confident that our planned capacity reductions are broadly in line with expected demand, as supported by our performance in the summer season where, despite a slow start, we are trending closely in line with capacity cuts,” the company said.
“This is further underpinned by the booked load factors for the first month of the winter season, down only 3% and 4% year on year for the UK and Nordics respectively.”
Thomas Cook said it retained “considerable flexibility” to further adjust capacity if necessary in a “potentially challenging” season.
Despite a later brochure launch for summer 2010 in the UK, the company is already 6% sold with average selling prices ahead of the previous year.
Fontenla-Novoa said: “Our strong performance in the year to date builds on our interim results and underpins our confidence that we can achieve our expectations for the full year.
“Trading for the Summer 09 season continues to be robust. In all major markets prices are flat or ahead of last year and cumulative bookings have continued to build towards our planned capacity levels.
“In addition, departed load factors have remained in line with last year’s at 96%, and percentage-sold positions are approaching last year’s levels.
“This has been achieved despite the later booking trends and the impact of swine flu, which has been more significant than we anticipated.
“Looking beyond the current year, we are preparing for continued tough market conditions.
“However, as a result of our flexible capacity model and the continuous streamlining of our business to achieve an efficient cost base, we have positioned ourselves to deliver further EBIT and margin growth."
by Phil Davies
Phil Davies
Tony from Gatto’s Pizza on Columbus’s Unique Pizza Trail
Sophia Hyder Hock on Global Social Inclusion in Tourism
Sustainable Tourism: Don Welsh on Community Values and Global Collaboration
Jane Cunningham: Enhancing European Engagement in Tourism
Kristin Dunne: Navigating Destination Strategy
Revolutionizing Mobile Connectivity: Boris Bijlstra on HUBBY eSIM
Capturing Glasgow’s Vibrancy: An Interview with Susan Deighan, Chief Executive of Glasgow Life
Lebua Hotel & Resorts: Rajan Khurana on Hospitality and Bangkok’s Charms
Sustainable Tourism and Growth: Insights from Chiravadee Khunsub from Tourism Authority of Thailand
Revolutionizing Travel: SmartSIM USA’s Dale Takio Unveils the Power of E Sims
TravelMole Interview with Hishan Singhawansa, Deputy CEO of Cinnamon Hotels & Resorts, Sri Lanka
Unveiling the Essence of Magari Tours: A Dive into Authentic Italian Experiences
EU airports bring back 100ml liquid rule
CLIA: Anti-cruise demos could cause itinerary changes in Europe
Co-pilot faints, easyJet flight issues ‘red alert’
Dozens fall ill in P&O Cruises ship outbreak
Woman dies after getting ‘entangled’ in baggage carousel