Thomas Cook has warned its end of year results will be ‘at the lower end of market expectations’ even excluding losses due to the ash crisis.
The operator blamed ‘softer than expected’ bookings in the UK as a result of good weather and the uncertain economic climate and said the recent weakening of the euro would have adverse impact on euro-based earnings.
But it reported its summer programme is 85% sold, in line with this time last year.
TUI issued a similar warning on Tuesday.
Thomas Cook said in the three months ending June 30 revenue was down nine per cent and underlying profit fell to £25.8m.
But without the losses as a result of the volcanic ash, third quarter profits would have been up 10% on the same period last year, now restated at £49.7 million.
The operator now estimates the total financial impact from the Icelandic volcanic ash disruption at £81.9m, up from its original estimate of £60m-£80m, of which £28.8m is lost margin.
It said cumulative average selling prices are three per cent ahead of last year though this was not as high as hoped due to weak bookings during the World Cup period of May and June.
Group CEO Manny Fontenla-Novoa said: “We always expected this year to be challenging given the uncertain economic environment and the impact of the weak sterling on our UK business. In anticipation, we cut winter capacity, chose not to increase overall summer capacity, and have continued to address our cost base.
“As we enter the final quarter, it is apparent that trading in the UK business is softer than expected and, at current rates, the recent weakening of the euro will have an adverse impact on translation of our euro-based earnings.
“As a result, we now anticipate underlying operating profits for the full year (excluding the impact of the volcanic ash cloud) to be at the lower end of market expectations.”
by Debbie Ward
