Media reports of a glut of bargain holidays are misplaced, says Thomas Cook, despite a UK market that has weakened since April.
Thomas Cook UK chief executive officer Ian Derbyshire told Travel Weekly: “Prices in August are very good. We have 2% less to sell than last year. If there were bargains, they would have been June.”
A spate of newspaper headlines have reported bargain deals after Thomas Cook followed rival Tui Travel this week in forecasting annual profits lower than previously expected.
But Derbyshire insisted: “We always said the market would be difficult this year, and we took appropriate measures.” He added: “Package holidays offer outstanding value for money, but that does not mean cheap deals.”
Thomas Cook reduced UK capacity year on year by 1% for the summer, while Tui Travel added about 2%. However, both companies offer considerably fewer holidays than two or three years ago.
Referring to Thomas Cook’s latest profit forecast, Derbyshire said: “It is a very good performance in a difficult market. The reaction of [financial] analysts says a lot.”
The market became more difficult from May onwards, following the ash cloud in April, after demand up to Easter had been strong. “But the market has been good in August,” said Derbyshire.
Thomas Cook has maintained capacity for the coming winter at similar levels to a year ago and plans the same for summer 2011, but retains the ability to add or subtract holidays in response to demand.
Announcing the latest figures, group financial officer Paul Hollingworth warned yesterday of a need for “more radical” cost cutting at Thomas Cook, while chief executive Manny Fontenla-Novoa said there could be job cuts – though “not in the thousands”.
However, Derbyshire sought to reassure agency staff, saying: “We are very committed to the high street.” He said the group intends to remain at about 800 shops.
The promised Online Travel Agency, to be launched in October, “will be geared to growing business” at the expense of other online retailers, he said.