Thomas Cook Group

Airline capacity expands 10% for summer 2018 on good package bookings

Thomas Cook Group today announced a 10% air capacity expansion for this summer, mostly on routes from Germany, after good sales so far and solid Q1 results.

February 08, 2018
Condor will take off with more Germany capacity this summer
Photo: Condor

Europe’s second-largest tourism group said that Thomas Cook Group Airlines will increase its capacity for summer 2018 by 10%, following the acquisition of Air Berlin assets and the launch of its new Palma-based airline, Thomas Cook Airlines Balearics. “These new platforms for growth will support the addition of 10 aircraft to Thomas Cook Group Airlines, consistent with its plans to grow capacity to meet increased customer demand in its key markets of Germany and the UK in recent months,” the group said.

This additional capacity allows Thomas Cook Group Airlines to expand its route portfolio by over 70 new routes for summer 2018, including new destinations on the Adriatic coast of Croatia such as Rijeka and Zadar from Germany, Dubrovnik from the UK and a further expansion of its USA programme, including Manchester to Seattle, and Frankfurt to Phoenix. The growth in capacity will also create more than 500 new jobs across its flight operations in the UK, Germany and Palma.

A significant proportion of the capacity growth will come from an increase in short and medium haul flights by Condor. The group’s German airline plans to operate six additional aircraft through newly-acquired Air Berlin Aviation, which last week gained its Air Operator Certificate (AOC) from German aviation authorities.

In addition, Thomas Cook Airlines Balearics, the group’s recently-formed Spanish airline, will operate five aircraft for use across Thomas Cook’s existing airlines according to demand. This will provide greater operational flexibility at a competitive cost, while allowing the group to maintain closer control over the quality and customer experience than its current third-party lease arrangements. Moreover, Thomas Cook Airlines UK will operate one additional aircraft for summer 2018, focusing its growth on short and medium haul destinations.

Christoph Debus, Chief Airlines Officer, said: “This is an opportunity for Thomas Cook Group Airlines to take an important step forward in our growth plans and to secure our position as one of Europe’s leading leisure airlines. These new operating platforms mean we are able to increase the choice for customers while improving our flexibility as one European airline.”

For the first quarter of 2017/18, covering October – December 2017, the group reported strong revenue growth of 7% to £1,749 million while the seasonal underlying operating loss was reduced by £10 million to £42 million.

CEO Peter Fankhauser said: “While it remains early in our sales cycle, we’ve got the year off to a good start. A particularly strong performance from our Group Airline, taking advantage of the disruption in the UK and German markets by providing a high quality and reliable service to customers, has helped deliver revenue growth of 7% and a £10 million improvement in the seasonal underlying operating loss for the first quarter.”

For summer 2018, Thomas Cook Group has so far sold 3% more holidays and flights than this time last year. In terms of core destinations, Turkey, Egypt and Greece are seeing good growth across all source markets while very strong demand seen for Spain over the last two to three years “appears to be normalising”, according to the company.

Fankhauser commented: “From all that we see so far, customers’ appetite for a summer holiday abroad shows no sign of slowing down. We’ve taken early action to meet strong demand for destinations in the Eastern Mediterranean. This has enabled us to shift capacity out of the Spanish islands where we have seen a continuation of the margin pressures we experienced last summer, particularly for the UK market.”

Among source markets, there is a 3% rise in UK bookings on a 6% increase in average selling prices, although there is still significant margin pressure in holidays to Spain, the largest destination. Summer bookings for Northern Europe are well ahead of last year, driven by higher demand for our own-brand holiday offering, with positive pricing. Bookings have also increased in Germany, France and Belgium.

The Group Airline has achieved double-digit bookings growth after increasing short and medium haul capacity to take advantage of good customer demand in Germany and the UK, including from third-party tour operators.

Winter 2017/18 bookings are up 8%, supported by continuing demand for the Canaries and a strong recovery in demand for Egypt, although average selling prices (ASP) are 1% lower overall, reflecting a shift in the mix from long haul to short and medium haul destinations. Continental Europe, including the large German market has flat bookings and a 2% rise in ASP for the winter season.

Looking ahead, Fankhauser said: “This remains a highly competitive – and, at times, unpredictable – market, as the disruption in the airlines sector in recent months demonstrates. However, based on current trading and the continued progress we are making on implementing our customer-focused strategy for profitable growth, we expect to deliver a performance in line with current expectations for the full year.”

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