UPDATE: Thomas Cook To Perform In Line With Own Views
25 März 2010 - 11:14AM
Dow Jones News
Travel operator Thomas Cook Group PLC (TCG.LN) said Thursday
that its performance this year will be in line with its
expectations, echoing comments by larger rival TUI Travel PLC
(TT.LN) a day earlier.
As the winter 2009/10 season draws to a close, the company said
trading has continued to show progress and summer bookings have
continued to pick up across all major markets.
Chief Executive Manny Fontenla-Novoa said there was a return in
confidence, especially in the U.K., as customers relied on trusted
brands following the collapse of U.K. tour operators XL Leisure in
2008 and, more recently, Globespan.
For the winter season that runs from November to the end of
April, aircraft load factor--a measure of how efficiently it fills
planes--was 93%. Average selling prices were up 6% year-on-year,
with cumulative bookings down 9%. It sold 91% of winter holidays,
in line with last year.
For the summer season, the company has lowered capacity in the
U.K. by 3% as cumulative bookings fell 2%. However, over the past
four weeks, bookings have risen 30%, boosted in part by a
television advertising campaign that has run longer than usual.
Average selling prices for the summer in the U.K. are up 2%
year-on-year, which reflect the shift in mix away from higher
priced long-haul vacations to lower priced but higher margin
medium-haul holidays. In the U.K., Thomas Cook has sold 54% of its
summer program.
Thomas Cook so far has seen 50% fewer cancellations in the U.K.
for summer holidays as customers book closer to departures and
higher deposits discourage holiday makers from walking away.
Fontenla-Novoa said bookings were returning to Spain as
hoteliers cut prices amid a realization that the shift in travel to
Egypt and Turkey was not just a fad influenced by foreign-exchange
rate movements. He added that Turkey, which is popular with the
British, now also is gaining popularity with German travelers.
Numis Securities analyst Wyn Ellis said Thomas Cook's trading
was positive but lacked the punch provided by TUI Travel. Ellis
raised his price target to 250 pence from 230 pence but maintained
his hold recommendation.
TUI Travel PLC (TT.LN) Wednesday said it was seeing "a
significant recovery in consumer demand for leisure holidays" and
added it's well positioned to meet its own expectations for the
year ending Sept. 30.
Both operators have adopted strategies to cut capacity that
would help buoy selling prices and maintain margins.
However, in February, Thomas Cook posted a wider first-quarter
operating loss as lower demand forced it to cut capacity, but it
said it's confident it will perform in line with its own
expectations as it undertakes a program of cost cutting.
Fontenla-Novoa said a deal to enter the Russian travel market
through the acquisition of a stake in a local operator has now
reached final negotiations, with price the only sticking point.
Media reports have identified Intourist, owned by Sistema
(AFKS.RS), as the likely target.
Fontenla-Novoa added that Thomas Cook is keen to enter the
Russian market through a bolt-on acquisition and would walk away
from any deal if the price is too high.
The Russian market is considered by industry watchers as
potentially lucrative as European countries become more relaxed
about handing out travel visas to Russians.
In 2008, some 11.3 million Russians traveled abroad, up from the
9.4 million in 2007 and 5.1 million in 2002.
At 0942 GMT, Thomas Cook shares traded up 8 pence, or 3.2%, at
264 pence.
-By Kaveri Niththyananthan, Dow Jones Newswires; 4420 7842 9299;
kaveri.niththyananthan@dowjones.com
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