Thomas Cook Group

Fankhauser dismisses airline speculation as bookings melt away in the heat

Thomas Cook CEO Peter Fankhauser has again ruled out a sale of the airline business and warned about the impact of Brexit on business as the current heatwave hits summer bookings.

August 01, 2018
Peter Fankhauser had clear words on airline speculation and Brexit uncertainties.
Photo: Claus Brechenmacher, Reiner Baumann

The heatwave in top European source markets is having a direct impact on Thomas Cook’s business as many customers delay their summer holiday bookings and enjoy local beaches instead of flying to Mediterranean destinations.

Overall, summer 2018 bookings for Europe’s second-largest tourism group are 11% ahead of last year (as of July 21), driven by stronger demand for Turkey, Egypt and Greece. But this growth is largely due to a 15% rise in airline bookings following capacity expansion, especially at Condor.

“This has helped to offset a slowdown in package holiday bookings in recent weeks with customers across our European markets delaying decisions about their summer holidays as they enjoy the record temperatures at home,” Fankhauser commented.

Tour operator bookings are stagnant at last year’s levels, although average prices are up by 4%. Bookings in Northern Europe (+2%) and the UK (+1%) are slightly outperforming Continental Europe (-1%), where higher bookings in Germany, France, Belgium and Russia contrast with a drop in the Netherlands and hotel-only sales.

The latest figures indicate a significant slowdown in bookings over the last three months. In early May, Cook said that tour operator bookings for summer 2018 were up by 7% in Northern Europe, 4% in the UK and 2% in Continental Europe, including 4% in Germany.

The heatwave is also likely to impact on business for the whole business year (ending September), since last-minute prices will come under pressure the longer bookings are delayed. “Based on our current view, we now expect growth in full year underlying operating profit to be at the lower end of market expectations,” Fankhauser said.

In the April – June third quarter, Thomas Cook’s revenue increased by 10% to nearly £2.5 billion and underlying EBIT improved by 8% to £14 million.

Meanwhile, Fankhauser made clear that the group has no current plans to sell off its airline business, responding to a Sunday Times report speculating about a possible disposal. “There were these reports a year ago and they have not become any more correct this year,” he declared on a Q3 results call.

The Cook CEO also had clear words about the potential impact of Brexit on the British company. “The clock is ticking and we are concerned about the many uncertainties.” His message to politicians was: “A sensible agreement is necessary for everyone. Think about the British and other holidaymakers who want to enjoy their holidays.” Cook is preparing for all possible kinds of Brexit and has ensured that Condor and the Scandinavian airlines are EU-owned in order to protect their intra-EU and international air traffic rights.

Thomas Cook has also made headlines this week with its decision to drop two animal attractions featuring live orcas – Sea World in Orlando and Loro Parque on Tenerife – in response to changing customer views and criticism by animal rights campaigners about such shows.

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