Struggling Thomas Cook given boost by rainy weather and ad campaign
Friday 11 May 2012
Britons eager to escape the UK's dismal weather gave a boost to struggling holiday firm Thomas Cook's turnaround today.
The 170-year-old company, which came close to collapse last year, said the wettest April on record and an advertising campaign featuring a rock cover of Louis Armstrong's Wonderful World led to an improvement in recent bookings.
UK bookings for the summer were down 1 per cent on the previous year, slightly better than the 2 per cent decline it reported in March, while a reduction in capacity meant it had 19% fewer holidays to sell than a year ago.
Meanwhile, a sale or leaseback deal on 17 aircraft was expected raise £182.9 million to help strengthen its finances.
The group's underlying losses for the six months to March 31 widened by 58 per cent to £262.7 million, reflecting difficult trading conditions in most of its markets, particularly the impact of the Arab spring on bookings to the Middle East and North Africa and poor trading in Canada.
In the UK, losses widened 9 per cent to £173.6 million, including £14.9 million losses from the Co-operative business it bought in October.
Separately, it expects to take a £70 million charge from its restructuring and the amendment of a deal with its lenders, which saw it ask for an additional £200 million from its banks.
Chief executive Sam Weihagen said: "Today's announcement demonstrates the progress which we continue to make to strengthen the group's financial position, with the aircraft disposals providing substantial additional liquidity.
"As expected, the first half seasonal losses have widened however, summer bookings have improved in recent weeks."
The latest development comes after the group agreed a £1.4 billion deal with lenders, including Royal Bank of Scotland and Barclays, to extend the maturity of its bank loans to 2015.
In the UK, average selling prices of mainstream holidays were up 4 per cent and it saw 11 per cent growth in specialist holiday bookings.
But it warned that this year will continue to be challenging and while summer bookings were encouraging, its performance will be dependent on the important late bookings market.
The group, which has 1,300 shops, is selling assets as part of plans to take a chunk out of its debt mountain, which rose 27 per cent to £1.4 billion over the past year, reflecting higher seasonal losses and the reduction in capacity.
The group has issued a number of profit warnings in the last year and also saw the exit of former chief executive Manny Fontenla-Novoa.
It has since unveiled a turnaround plan for the UK business, which includes focusing on fewer and better-quality hotels and a drive for more online bookings.
Shares were down 3 per cent today and have slumped 90 per cent since the start of last year.
Simon French, an analyst at Panmure Gordon, said: "All operating segments of the business saw a deterioration in first-half performance, suggesting the group's problems are wider-spread than simply France and the UK."
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