Thomas Cook issues a second profit warning in two months

‘The heatwave across northern Europe meant customers delayed booking’ – Peter Fankhauser, CEO

East coast: bookings for the Eastern Mediterranean, such as Alanya in Turkey, are up for 2019 (Simon Calder)

The tour operator ended Tuesday with a market capitalisation of under £750m. At the start of the year Thomas Cook was worth over £2.5bn..

Thomas Cook says its final underlying profits to the end of September 2018 would be £30m lower than it predicted in its pre-close statement two months ago.

On revenue of £9.6bn, profits are £250m which is £58m lower than in 2017 on a like-for-like basis. No dividend will be paid.

The firm’s chief executive, Peter Fankhauser, called it a “disappointing end to a year which started well”, and said: “The heatwave across northern Europe from May meant customers delayed booking.”

As a result, prices for the key months of July, August and September – when tour operators make money – were lower than expected, especially in Spain.

“The UK was particularly hard hit with very high levels of promotional activity coming on top of an already competitive market for holidays to Spain,” said Mr Fankhauser.

“While I’m not happy with the financial results, we see tangible evidence that our strategy is working,”

The company is pinning its hopes on selling more sophisticated and differentiated holidays than the standard Mediterranean offering.

Cook’s Club, which launched this summer, “has the potential to attract a whole new segment to our business”.

Thomas Cook also closed down its Club 18-30 operation last month.

The heatwave has also affected winter holiday sales. Bookings for the current winter are 3 per cent down on last year, “largely reflecting knock-on effects from the hot summer weather and poor demand for the Canary Islands”.

The company said: “Demand is strong for Turkey, Egypt and Tunisia as customers seek alternatives to high hotel prices in the Canaries.”

Mr Fankhauser told The Independent: “We are more cautious in our approach in terms of committed airline capacity.”

For summer 2019, the firm is reducing its commitment to aircraft seats, and instead buying capacity on third-party airlines such as easyJet as needed – known as dynamic packaging.

On Brexit, the chief executive said: “We are confident that our customers travel plans will be largely unaffected even in the event of no deal.

“It is too early to tell if it’s affecting demand. We are selling more into the eastern Mediterranean [non-EU countries such as Turkey and Egypt].

“We don’t have any signs that customers are losing confidence. In the UK, we are ahead in our bookings for next summer.

“We are confident that our customers are still wanting to travel abroad with us.”