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Thomas Cook slumps 17% as it says challenging summer will hinder profits

Sean Gallup | Getty Images

Travel group Thomas Cook said economic and political uncertainty would affect profits this summer after it reported higher first-half losses on Thursday, adding it had received multiple bids for its airline unit after it was put up for sale.

The oldest travel company in the world stumbled badly last year when a heatwave in northern Europe deterred holiday makers from booking lucrative last minute deals, leading to two major profit warnings and talk of a need to raise funds.

The company said it made an underlying loss before interest and tax of 245 million pounds ($315 million) in the six months to March 31, compared with a loss of 65 million pounds in the same period a year earlier, reflecting pressure on margins.

It forecast second-half underlying earnings before interest and tax would be below the same period last year, and that it had agreed a 300 million pound bank facility to provide more liquidity for the 2019/20 Winter season.

“Trading for the Group has been challenging to date, reflecting an uncertain consumer environment which has led to a slower pace of bookings across all markets,” it said.

Thomas Cook company said consumer uncertainty from factors such as Brexit was causing competitive pressure, meaning it was having to spend more on promotional activity.

In February, the firm said it was willing to sell its profitable airline business to raise cash to fund its fight back from losses racked up in 2018 and to cope with a tough year ahead.

It said on Thursday it had received multiple bids for all and part of Group Airline, which consists of Germany’s Condor, as well as British, Scandinavian and Spanish divisions.

Lufthansa has said it wants to buy Condor with an option to acquire the remaining airlines, while Virgin Atlantic is also reportedly interested in the UK-based long-haul part of the business.

Thomas Cook added it had taken an impairment of 1.1 billion pounds relating to a 2007 merger with MyTravel.

The firm’s shares were down 17% during morning trade, reaching their lowest level since November 2012. 

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