Thomas Cook has better bookings in Germany this summer with several destinations combining to make up for weak demand for Turkey.
Europe’s second-largest tourism group has a 9% rise in summer 2017 bookings across all source markets combined. UK bookings are up by just 1% but there is strong growth in Continental Europe, although precise figures were not disclosed, and Northern Europe bookings show double-digit growth.
“For summer 2017, summer trading is significantly stronger in both Northern Europe and Continental Europe than at this point last year. In Continental Europe, bookings are well ahead of last year in most markets, with prices holding firm at last year’s levels,” the group stated in its quarterly results presentation.
In terms of destinations, CEO Peter Fankhauser said: “In preparation for the summer season, we have expanded our holiday offering to Greece and a number of smaller destinations across Europe, and I’m pleased that this early action is paying off. Bookings to Greece are currently up by over 40%, while demand for destinations such as Cyprus, Bulgaria, Portugal and Croatia is also strong. These positive trends are making up for continued weak demand for Turkey.” He did not comment on trends for Spain, where demand has been strong in recent months.
Condor is performing “in line with our expectations” for this summer, according to the group. “The German airline market continues to be impacted by weak demand for Turkey and overcapacity to the Canaries. However, strong demand for Greece, together with capacity reductions on certain routes, is helping to mitigate the impact.”
The leisure airline will operate diverse new routes from Germany this summer, including to Bulgaria (Burgas), Croatia (Dubrovnik, Split), Cyprus (Larnaca, Paphos), Greece (Samos, Thessaloniki, Volos), Malta, Portugal (Porto Santo) and the USA (Las Vegas, New Orleans, Pittsburgh, San Diego, Seattle).
Thomas Cook’s summer season performance is better than for the current winter season. Continental Europe bookings are currently 3% lower due to continued weak demand in Germany and Belgium, particularly for Turkey, although average prices are 2% higher. Condor bookings are 1% lower, ahead of capacity reductions of 5%, due primarily to the shift away from Turkey. As expected, yields to both short and long haul destinations remain weak, with average selling prices down by 1% overall, reflecting general soft consumer demand and overcapacity, particularly to the Canaries.
In the October – December quarter, covering the low season, Continental Europe improved underlying EBIT by £5 million to a seasonal loss of £19 million, reflecting planned cost reduction initiatives through the New Operating Model, which helped to mitigate challenging market pressures in Germany. But underlying EBIT in Condor (Airlines Germany) declined by £13 million to a loss of £7 million, as profitability was impacted by overcapacity in the short-haul market and weak demand.
Fankhauser said: “Our businesses in the UK and Northern Europe continued last summer’s strong performance into the first quarter, while our tour operating business in Continental Europe also improved. This helped to offset the pressures that Condor is experiencing in the German airline market. We have taken measures to address Condor’s challenges and expect to start to see the benefits come through in the second half, as we set out in November.”