Thomas Cook cuts profits forecast due to long, hot summer

The heatwave across Europe is behind the profit warning

Thomas Cook issues profit warning (Getty Images)

Thomas Cook has cut its full-year profits forecast by one-eighth “following unprecedented months of hot weather”.

The giant tour operator’s latest trading update anticipates full-year underlying profits to be £280m, down from £320m predicted in July.

Peter Fankhauser, chief executive of Thomas Cook, said: “Summer 2018 has seen a return to popularity of destinations such as Turkey and Tunisia. However, it has also been marked by a prolonged period of hot weather across Europe.

“Many customers spent June and July enjoying the sunshine at home and put off booking their holidays abroad, leading to even tougher competition and higher than usual levels of discounting in the 'lates' market of August and September.”

Mr Fankhauser summed up the firm’s recent trading performance as “clearly disappointing”, but said Thomas Cook is making “good strategic progress”.

Last month two Thomas Cook customers died while on holiday in Hurghada on Egypt’s Red Sea coast. John and Susan Cooper passed away within hours of each other at the Steigenberger Aqua Magic Hotel.

In the wake of the tragedy, the firm evacuated more than 300 customers from the hotel. It sent in independent investigators who found “a high level of e-coli and staphylococcus bacteria” in the food.

The Egyptian authorities have concluded that the couple died as a result of e-coli, but investigations in the UK are continuing.

Mrs Cooper worked for a Thomas Cook travel agency in Burnley.

In a conference call, Mr Fankhauser said the event had a "huge impact" on the firm but stressed that the financial effect was not clear. He stressed that the earnings update was unrelated to the tragedy.

Mr Fankhauser also said that hotel price inflation had eased in Spain, which had benefited from a surge in bookings due to concerns about the eastern Mediterranean.

“Prices in Spain cannot keep on going up, and up, and up without having an effect on volumes,” he said.

Bookings in Mallorca had decreased by 7 per cent this summer, he said.