Thomas Cook hit by swine flu as it scraps 2010 forecast

Thomas Cook says it will not hit 2010 operating profit target in challenging market

Thomas Cook has said it expects to suffer a £20m hit this year from a worse-than-expected impact from swine flu, and warned it would miss its 2010 operating profit target.

While the tour operator said sales for summer 2009 "continues to be robust", the update sent its shares tumbling by 11p, or 4.8 per cent, to 219p – the FTSE 100's biggest faller of the day.

For the three months to 30 June, Thomas Cook said swine flu would cost it £12.6m, including repatriation and compensation costs, as well as lost margin for having to switch customers to alternative destinations, such as Jamaica, Cuba and Egypt, given that it had sold 70 per cent of its 120,000 available holidays to Mexico.

But Manny Fontenla-Novoa, the CEO of Thomas Cook, said this would rise to £20m for the full-year, and that the scale of the pandemic was more significant than expected. "What has taken us by surprise [is that] we thought it would be a typical outbreak that would be contained. This one is different because it is continuing, and we have never had to deal with a pandemic."

On Wednesday, Thomas Cook's big rival TUI Travel said it had taken a £7m hit from swine flu in its last full-quarter.

Thomas Cook, which is 53 per cent owned by the struggling German retail group Arcandor, blamed tough global conditions for it axing its £480m operating profit target in its 2010 financial year, which it made in November 2007 after its merger with rival MyTravel. The group said: "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. However, given our flexible business model, we are well placed to achieve the market's expectations." Mr Fontenla-Novoa said the market reality is now radically different to 2007, citing economic conditions, a markedly different oil price, and the fact that the pound was far stronger against the euro and dollar.

For the nine months to 30 June, Thomas Cook's revenues jumped by 11 per cent to £5.85bn. Over the period, the group's loss from operations, before swine flu and exceptional items, was £49.5m, a 43.4 per cent improvement on the previous year.

However, Thomas Cook said in the UK it had grown average selling prices by 8 per cent for summer 2009. Its cumulative bookings for the season are down by 11 per cent, which was bang in line with its reduction in capacity. Mr Fontenla-Novoa said: "Trading for the summer 2009 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."

The tour operator said that UK customers were continuing to book their holidays late, but that its departed load factors were similar to last year's levels, averaging 96 per cent.

Similarly to TUI, Thomas Cook said the later booking trend had so far taken its toll on its winter 2009/10 sales. Its cumulative bookings for UK customers are down by 13 per cent, compared with a 6 per cent reduction in capacity. However, in northern Europe, bookings are down by a much deeper 27 per cent, against a 7 per cent reduction in capacity. For the three months to June 2009, Thomas Cook delivered a profit from operations, before exceptional items and swine flu, of £61.4m, a 39.5 per cent improvement on the previous year.

Mr Fontenla-Novoa said: "Looking beyond the current year, we are preparing for continued tough market conditions." But he said the group had positioned itself to deliver further EBIT and margin growth. Mr Fontenla-Novoa said that Arcandor's banks were exploring their options for selling the massive 53 per cent stake in Thomas Cook. This could result in a share placing or a sale to a rival, such as the German group Rewe.

News
The slice of Prince Charles and Princess Diana's wedding cake and the original box from 29 July 1981
newsPiece of Charles and Diana's wedding cake sold at auction in US
News
James Argent from Towie is missing, police say
newsTV star had been reported missing
Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind the scenes to watch the latest series
PROMOTED VIDEO
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
News
Winchester College Football (universally known as Winkies) is designed to make athletic skill all but irrelevant
Life...arcane public school games explained
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
News
i100(and it's got nothing to do with the Great British Bake Off)
News
Angelina Jolie with her father Jon Voight
peopleAsked whether he was upset not to be invited, he responded by saying he was busy with the Emmy Awards
News
Bill Kerr has died aged 92
peopleBill Kerr appeared in Hancock’s Half Hour and later worked alongside Spike Milligan and Peter Sellers
News
news It's not just the world that's a mess at the moment...
Sport
footballPremiership preview: All the talking points ahead of this weekend's matches
News
Keira Knightley poses topless for a special September The Photographer's issue of Interview Magazine, out now
people
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
News
i100
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
Life and Style
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Scientist (SQL,Data mining, data modelling, PHD, AI)

£50000 - £80000 per annum + benefits+bonus+package: Harrington Starr: Data Sci...

SAS Business Analyst - Credit Risk - Retail Banking

£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

Project Manager - Pensions

£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

KYC Analyst, Birmingham - £200-£250 p/d

£200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone