Thomas Cook Losses Widen Due To Capacity Cuts
11 Februar 2010 - 9:31AM
Dow Jones News
Thomas Cook Group PLC (TCG.N) Thursday said its first-quarter
operating loss was wider than expected as falling demand forced it
to cut capacity, but said it's confident it will perform in line
with its own expectations as it undertakes a program of cost
cutting.
The U.K.'s big travel companies were initially resilient to the
recession as they kept up prices by taking capacity out of the
market to meet lower demand, but as time has gone on the lower
number of holidays being sold has hit revenues and profits.
However, Thomas Cook Chief Executive Manny Fontenla-Novoa said
he is confident for the year as a whole because the company will
cut costs and because its summer holidays will earn more for the
company.
"The full year results are underpinned by our strong summer
programme weighted towards higher margin, medium haul
destinations," Fontenla-Novoa said. "As a result of this and our
cost reduction plans, we are confident that the Group will perform
in line with Board expectations."
Thomas Cook in the three months to Dec. 31 posted an operating
loss before exceptional items of GBP41.3 million, wider than the
GBP27.4 million loss it posted last year, mainly as a result of
capacity reduction. Revenue fell 5.6% to GBP1.70 billion from
GBP1.80 billion, or down 12% on a constant capacity basis.
Due to seasonal distortions, travel companies usually make
losses in the first half.
"Recent bookings for both winter and summer have recovered well
following the disruption caused by poor weather conditions across
Europe and particularly in the UK. We are underpinning our margins
by reducing input costs across all our markets." Fontenla-Novoa
said.
For the summer 2010 season, the company has decreased capacity
in the U.K. by 3% as customer bookings fell 8% from Dec. 1. Average
selling prices for the summer in the U.K. are up 2% year-on-year,
which it said "reflect the shift in mix away from higher priced
long haul to lower priced but higher margin medium haul."
Average selling prices for the winter season 2009/2010 were down
6% in Continental Europe with bookings off 2% in the past four
weeks. Across Northern Europe prices, rose 11% as bookings rose 16%
in recent weeks. Prices were up 6% in the U.K. despite bookings
dropped 6%.
Over the past 3 months. Thomas Cook's shares have gained 11% and
closed Wednesday at 232 pence.
-By Kaveri Niththyananthan, Dow Jones Newswires; 4420 7842 9299;
kaveri.niththyananthan@dowjones.com
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