Thomas Cook collapses

Thomas Cook released a first-quarter trading statement on Thursday for the three months ended 31 December. The company has said that the financial year has begun in line with expectations, making no changes to its full-year expectations outlined last November. However, the company said it had been hit by a reduced demand for winter sun and British consumer uncertainty.

First-quarter revenue was up 1% to £1,656 million. Underlying operating loss increased by £14 million to £60 million against a strong period the year earlier.

Thomas Cook’s announcement comes hours after its rival TUI issued an unscheduled update, warning of a UK profit squeeze.

Chief Executive of Thomas Cook, Peter Frankhauser, said:

“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.”

This consumer uncertainty could reflect the wider unpredictability of consumer spending patterns as the UK Brexit date looms.

“As expected, the knock-on effect from the prolonged summer heatwave and high prices in the Canaries have impacted customer demand for winter sun,” 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.”

In November, Thomas Cook announced a second profit warning in two months. It warned that profits were set to be £30 million lower than expected. By the end of the year, however, the CEO of Thomas Cook said that bookings seemed more promising for 2019. For the UK, this increase in bookings does not seem so optimistic.

At 15:19 GMT today, shares in Thomas Cook Group plc (LON:TCG) were trading at +4.31%.