Thomas Cook in third profit warning
Tour operator Thomas Cook today warned on profits for the third time in a year after it was hit by the squeeze in consumer spending and turmoil in the Middle East and North Africa.
Shares in Europe's second biggest travel firm slumped by more than 25% after it said full-year profits will be some £60 million less than previously expected.
Its profit margins in the UK are under pressure as it keeps its prices competitive to attract cautious consumers despite rising oil costs which are making it more expensive to fly.
The unrest in North Africa and the Middle East was also having a greater impact on bookings to popular tourist destinations such as Tunisia, Egypt and Morocco than was previously estimated.
Operating profits are about £40 million lower than a year ago for the first three quarters of its financial year.
The company now expects full-year profits of around £320 million whereas previously the City had predicted a figure in the region of £380 million.
A "fundamental" review of its UK business is now under way, which will look at the mix of holidays it offers and cutting its airline fleet to reduce winter losses.
Last summer, the group, which also owns the Going Places brand, issued two profit warnings, blaming aircraft disruption and bargain-seeking customers waiting for last minute deals.
It today said that average UK selling prices for the summer are up 4% as customers opt for better value all-inclusive deals, such as packages that provide food.
Despite the "difficult trading conditions", bookings by UK customers are up by 1% for the key summer season.
The number of holidays Thomas Cook has left to sell is 5% lower than a year ago, but this is partly because it has reduced the number of packages to UK consumers by 1%.
Sonya Ghobrial, an analyst at Barclays Capital, said the "disappointing" performance was despite an easier comparative period the previous year, which was impacted by disruption from the Icelandic ash cloud.
"With limited potential for a major improvement in the UK economy next year, we expect little improvement in 2012," she added.
Shares in rival TUI Travel were down 6% on fears it would be hit by some of the same issues.
The Independent travel offers: Discover a world of inspiring destinations
- 1 Three-year-old boy shoots pregnant mother and father in New Mexico
- 2 Stephen Fry explains what he would say if he was 'confronted by God'
- 4 Gorillaz Phase 4: Cartoon supergroup is back as new artwork is unveiled
- 5 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Stephen Fry explains what he would say if he was 'confronted by God'
9 reasons Greece's experiment with the radical left is doomed to failure
The open loathing between Barack Obama and Benjamin Netanyahu just got worse
Have we reached 'peak food'? Shortages loom as global production rates slow
President Putin is a dangerous psychopath - reason is not going to work with him
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
£30000 - £40000 per annum: Recruitment Genius: This is a great opportunity for...
£21000 - £22000 per annum: Recruitment Genius: Located on the stunning Sandban...
£26 - 35k (DOE): Guru Careers: An Email Marketing Specialist is needed to join...
Negotiable: Recruitment Genius: This is a fantastic opportunity to join a is a...