Ash chaos costs Thomas Cook £70m
Tour operator Thomas Cook today said it had taken a £70 million hit from the travel chaos unleashed by Iceland's volcanic eruption in April.
The company is joining other travel firms and airlines in seeking compensation for the "unprecedented" disruption from the ash cloud, which closed most of European air space for five days. TUI Travel and budget airline easyJet have already revealed combined costs of £160 million this week.
Thomas Cook added: "The group is working with the Government and relevant national and international bodies to put in place measures to ensure such a blanket ban is not needlessly imposed again."
Despite the temporary impact of the volcano on bookings, chief executive Manny Fontenla-Novoa said he was "pleased" with summer bookings so far with holidaymakers proving reluctant to give up their summer break.
The tour operator said UK summer holiday sales were showing "significant improvement", with bookings up 5% in the last four weeks and ahead of planned capacity.
Average selling prices have jumped 11% above last year in recent weeks and the firm expects prices to trend higher still as Thomas Cook gives away fewer holidays in the discounted "lates" market.
The tour operator - which has cut capacity to meet lower demand for holidays during the downturn - said underlying revenues were down 7% to £3.3 billion in the seasonally weaker six months to March 31.
The group's operating losses rose £17 million to £130 million due to capacity cuts as well as the impact of the weaker pound on flying and accommodation costs, although Thomas Cook partially offset this through measures such as driving better deals with suppliers.
Panmure Gordon analyst Simon French welcomed a £1.05 billion refinancing by the company but said its decision to hold dividend payments could disappoint investors.
He added: "Summer season sales are progressing in line with expectations although the group is achieving lower average selling price increases than TUI Travel."
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