The Co-operative Group has reported a 70% fall in profits in its travel division to £400,000 for the first half of this year.
The group blamed a series of problems that have hit the travel industry in the first six months of this year including problems in destinations, the BA strikes, the ash cloud crisis and the early year heavy snow.
Overall Co-op group chief executive Peter Marks gave a downbeat assessment of the state of the UK economy saying he did not expect to see signs of recovery until late 2011.
Talking about the Co-op’s travel arm Marks said: “The year began with the heavy snow that stalled the traditional early-booking period, and continued with an earthquake in Chile, riots in Bangkok, civil unrest in Greece, BA strikes and finally the unprecedented volcanic eruption in Iceland, which brought the industry to a standstill for a week.”
The Co-op’s travel business saw a 6.6 per cent drop in sales to £126m. Managing director of The Co-operative Travel, Mike Greenacre, said: “This is the worst year for trading in my memory, so to emerge with a profitable performance is pleasing although clearly there is a lot of work to be done.
“Margins remain under severe pressure in what is a fiercely competitive market, and it is a testament to the dedication and commitment of everyone at The Co-operative Travel that we have remained profitable in this incredibly difficult year.
“With over 13 significant failures this year, including many of a high profile nature, this has had the effect of knocking consumer confidence, already at a low level, through the uncertainty of potential job losses.
“Clarity on the issue of consumer financial protection coupled with a growing confidence in the stability of the general economy would help enormously to increase current booking levels.”
For the Co-operative Group as a whole, pre-tax profits were down 30% to £169.2 million from £244.5 million. Underlying operating profits were up 14% at £307 million.
Marks said: “As we expected, 2010 has been challenging so far, and we do not expect to see the signs of recovery until late 2011 at the earliest. Our focus is, as ever, upon our members and customers who are feeling the pinch due to the ongoing impact of the recession.”