Thomas Cook chief executive Harriet Green has responded to a dip in the group’s share price following yesterday’s trading update.
She told Sky News: “The sector is more challenged in these turbulent times. We’re not over-performing, we’re absolutely delivering.
“This is a long term transformation so watching the share price on any given day is probably not the right thing to do. It’s about delivering results first for our shareholders.”
She admitted that Germany was suffering from a “sensitive consumer environment” but said Cook’s business in the country had been “extremely strong” in the first half of the year.
“What we are seeing is a moderation,” she added. “Thankfully vacations are pretty high up there on the agenda.”
Responding to Monday’s news that Tui Travel is to merger with its German counterpart Tui AG, Green stressed that Cook’s transformation had made it into an “asset light” model without ownership of cruise ships and other items.
“There’s room for both businesses and it will be interesting to see how those very different strategies pan out for the consumer,” she said.
“Because Thomas Cook is now so much more relevant; in the past 22 months the new UK website that we rolled out and now across the rest of the businesses is over 200% up on business placed by smartphone, so we’ve added tis much younger audience.
“The quality of our product is improving and so we’ve become more relevant, customers are choosing us and that’s healthy for consumers.”
Leisure analyst Langton Capital said: “Thomas Cook has announced that Germany is slowing and that it has work to do in France and Russia.
“The UK continues to improve at an underlying level although sluggish bookings in June and July have impacted margins.
“There was a degree of hesitancy over the conference call and the group’s shares, which have now lost more than 10% of their value in two trading sessions, reacted accordingly. Forecasts have been edged down and it would appear that the recovery has indeed been pushed a little out to the right.
“That doesn’t necessarily mean that TCG [Thomas Cook Group] is not doing the right things. Rather it reminds us that leisure travel is a volatile and low-margin industry.
“This should not come as a surprise but, to those observers who perhaps expected not to encounter bumps in the road, it serves as a reality check.”
Warren Ruhomon, a market analyst at finspreads.com, added: “Thomas Cook is making fair progress, but investors are comparing it with its UK rival, TUI Travel.
“TT just agreed to go all in with its majority owner, Germany’s TUI AG to make the biggest tourism company in the world, worth about £5.19bn.
“It looks like investors are deciding TT will be able to draw on the free cash of its huge owner, enabling TT to afford big retail discounts which Thomas Cook would struggle to match. This is why Thomas Cook’s shares are being hit today.
“Thomas Cook already said it’s noticing a weaker pricing trend (the German consumer slowdown isn’t helping) and is cutting costs.
“Thomas Cook expects to make £315m to £335m in full-year earnings. That would be basically in line with our forecasts.”