Struggling Thomas Cook sees losses increase
Wednesday 08 February 2012
The struggle at tour operator Thomas Cook was laid bare today as the beleaguered company revealed heavier losses - but offered some hope with robust summer bookings.
Thomas Cook, which came close to collapse in November after dire trading forced it to turn to its banks for more help, reported pre-tax losses of £151.7 million in the three months to December 31, compared with £99.3 million the previous year.
But the UK's second biggest travel company said cumulative bookings for summer holidays were 1% lower than a year ago, which was ahead of rival owner of Thomson Holidays, TUI Travel, which reported a 7% dip.
Thomas Cook shares opened 12% higher today.
Chief executive Sam Weihagen said: "We are fighting back. We're taking the necessary steps to rebuild confidence and margins."
Thomas Cook's share price has plunged 91% in the last year as it issued a number of profit warnings and saw the exit of its chief executive, Manny Fontenla-Novoa.
The 170-year-old group, which has 1,300 shops, said it was progressing with its turnaround plan for the UK business, which includes focusing on fewer and better quality hotels and a drive for more online bookings.
The company plans to sell £200 million of assets over the next 18 months as part of plans to take a chunk out of its debt mountain, which rose by 11% to £891 million in the year.
The group today announced plans to sell its majority stake in Thomas Cook India and has received a number of informal expressions of interest, which include European businesses as well Indian companies.
It also said it will lose six aircraft from its fleet this summer.
The first-quarter losses were driven by tougher trading conditions and rising fuel costs, Thomas Cook added, as revenues actually increased 3% to £1.9 billion.
Winter bookings at the firm are 4% lower than a year ago and with the season closing in April, are currently 76% booked.
However, the group said it did not intend to slash prices to boost winter bookings towards the end of the season.
Mr Weihagen confirmed that figures reported last month showing a 33% drop in bookings in the first two weeks of January were correct but were "taken out of context".
The outlook for the summer is better with bookings down 1% as low demand for its mainstream holidays is offset by a surge in bookings for its specialist and independent businesses, such as Hotels4U and Medhotels.
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