Swine flu has already had a bigger impact on travel than anticipated with Thomas Cook reporting a £12.6 million loss of profit due to cancellations and loss of bookings to Mexico, but also due to wider concern among holidaymakers in Germany.
Thomas Cook outlined the losses in group finanical results for the nine months to the end of June, revealing a £175.6 million loss for the period – marginally more than a year ago.
However, the group reported the nine-month loss on operations at £49.5 million, before exceptional items and losses due to swine flu – a 43% reduction on the same period last year. The exceptional items of £107.3 million relate to the costs of completing the merger with MyTravel.
Thomas Cook described trading as “robust” and reported an operating profit for April-June of £61.4 million, with UK summer bookings down 11% year on year to date – in line with reduced capacity – and average selling prices up 8%.
The group has more UK long-haul holidays left to sell than last year, “as a result of the shift in demand from Cancun following swine flu“, but less left to sell in the UK overall.
Bookings in Continental Europe, including the major market of Germany, were down 12% – also in line with capacity – but with selling prices flat year on year due to “aggressive pricing” in the German market.
Thomas Cook reported “some caution with respect to swine flu, particularly in relation to Majorca, which has impacted our German airline business”.
Chief executive Manny Fontenla-Novoa said: “Prices are flat or ahead of last year in all major markets, and cumulative bookings have continued to build towards our planned capacity levels. This has been achieved despite the later booking trends and impact of swine flu, which has been more significant than anticipated.”
Fontenla-Novoa reported UK trading for this winter down 13% on last year, against capacity reduced by 6%, but with prices up 4%. He was confident that capacity reductions were in line with demand, but said: “We are preparing for continued tough market conditions.”
The group has dropped a previously stated target of achieving an operating profit of £480 million by next year, stating: “It is not realistic to think market conditions could recover sufficiently to allow this target to be achieved in 2010.”
Group revenue for the nine months to June was up by more than 10% at £5.85 billion.
Image: Andrew Hasson / Rex Features