Troubled Thomas Cook says Brexit hitting holiday plans as it posts £1.5bn loss
Travel firm Thomas Cook has warned of “further headwinds” for the rest of the year after reporting a £1.5bn loss for the first half of the year.
It said there was “now little doubt” that Brexit had caused customers to delay their summer holiday plans. Some £1.1bn of the loss was caused by the decision to write-down the value of My Travel, the business it merged with in 2007.
The firm also said it had received “multiple” bids for its airline. It sought bidders for its fleet of 103 jets as it sought more funds for the business, which has issued a series of profits warnings that have sparked a plunged in its share price from 140p a year ago.
The first half results were accompanied by its third profits warning in less than a year, driving the shares down 17% at 18p, close to lows they traded at in 2012 when it was in financial difficulty.
Some 21 retail stores have been closed, Thomas Cook Money, its currency arm, is under review and the company said more “cost efficiencies” were planned.
The company said more of its 566 stores could close as leases end and that 150 roles would be cut from its Peterborough head office.
Peter Fankhauser, chief executive, said that during the first six months of the year there had been “an uncertain consumer environment across all our markets”.
“The prolonged heatwave last summer and high prices in the Canaries reduced customer demand for winter sun, particularly in the Nordic region, while there is now little doubt that the Brexit process has led many UK customers to delay their holiday plans for this summer,” he added.
Travel companies usually report a first half loss – last year’s was £303m – but this year the loss was deeper because of the decision to revalue MyTravel “in light of the weak trading environment”. The companies merged in 2007.
Mr Fankhauser said that looking to the rest of the year “the continued competitive pressure resulting from consumer uncertainty is putting further pressure on margins”.
“This, combined with higher fuel and hotel costs, is creating further headwinds to our progress over the remainder of the year.”
Profits in the second half of the year would be lower than the same period last year, it said.
The business has cut its capacity in anticipation of a slowdown but said it continued to “face intense competition, particularly in our UK business”. Mr Fankhauser said customers were “having a great deal this summer”.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said the figures made “grim reading”.
“Thomas Cook’s scaled back the holidays it’s offering in response to lower consumer demand, but the competitive environment means that even so, it’s having to offer discounts to get customers to part with their cash,” he said.
The underlying loss was £245m compared with a £170m loss a year ago, while the company has secured £300m of loans ahead of the winter 2019/20 season.