Thomas Cook Group: Quarterly revenues hold steady as operational loss widens £14m

Thomas Cook Group PLC closed 2018 with an operational loss as a mix of market conditions, weather and currency movement impacted its quarterly earnings.

The company has reported revenues of £1.66bn for the three months to December 31, a year-on-year uptick of 1%.

But its operating loss widened by £14m on a like-for-like basis to £60m during the first quarter of its 2018/19 financial year.

Announcing the results this morning (February 7), Thomas Cook pointed to a combination of factors it says stifled Q1 earnings.

Group revenues were bolstered by a strong demand for holidays in Turkey and North Africa, which offset a weaker demand for breaks in Spain.

But the firm said gross margins were lower due to competitive UK market conditions at the end of the summer and a weaker demand for winter holidays in Nordic regions.

Currency movements, meanwhile, put a £4m dent in the results.

Thomas Cook chief executive Peter Fankhauser commented: “As expected, the knock-on effect from the prolonged summer heatwave and high prices in the Canaries have impacted customer demand for winter sun.

“Where Summer 2018 bookings started very strongly, bookings for Summer 2019 reflect some consumer uncertainty, particularly in the UK, and our decision to reduce capacity which will both mitigate risk in our tour operator business and help our airline to consolidate the strong growth achieved last year.”

He continued: “We’ve made further good progress in transforming our business with a rigorous focus on managing our cost base while innovating to deliver high-quality holidays for our customers. Our strategic alliance with Expedia is now live in all our key markets.

“In addition, we are set to open 20 new own brand hotels this summer, including three Casa Cooks and eight Cook’s Clubs, and have announced two new hotel projects with Fosun in China.”

Speaking further, Mr Fankhauser said the firm recognises that it needs “greater financial flexibility and increased resources” and to invest in “strengthening our own-brand hotel portfolio; further digitising our sales channels; and driving greater efficiencies across the business”.

He added: “As a result, we are today announcing a strategic review of our Group Airline. We are at an early stage in this review process which will consider all options to enhance value to shareholders and intensify our strategic focus. We will provide an update on this process in due course.”