Thomas Cook has reported it reduced its year-on-year loss in its first trading quarter, but warns it remains “cautious” for the coming year with an uncertain outlook across Europe.
Shares fell by as much as 9.78 per cent in morning trading in London.
The group’s losses in the quarter fell by £1m to £49m year-on-year in the three months to the end of the year.
Margins nudged up by 10 basis points to 22.1 per cent.
Revenue for the quarter grew to £1.6bn, a like-for-like gain of one per cent year-on-year.
Online bookings were up by 20 per cent in the UK and 40 per cent in Germany.
Current trading bookings for the summer are nine per cent ahead of last year, with booking to Greece up by more than 40 per cent, after an expansion in the destination.
Why it’s interesting
Thomas Cook had an eventful year, with the macroeconomic uncertainties that everyone so enjoyed during 2016 as well as a spate of terrorist attacks giving the company a bumpy ride.
The terrorist attacks, and particularly unrest in Turkey after an attempted coup, have led the travel company and rivals to refocus on the Western Mediterranean to allay security fears.
Europe has less horrendous and more predictable challenges ahead, with the small possibility of political and economic chaos if various anti-euro politicians win elections, particularly in France, the Netherlands, and Germany.
After last year’s big dislocation in European politics, the Brexit vote, the effects were not as bad as might have been expected for Thomas Cook. With a significant chunk of revenues made abroad and a currency exchange business the FTSE 250 company actually benefited from the fall in the pound in the short term.
However, in the long term it may not enjoy the inflationary pressure set to weigh on UK household incomes as much if consumers cut back on holiday purchases.
What Thomas Cook said
Peter Fankhauser, chief executive of Thomas Cook, said: “We have delivered a solid performance for the first three months in line with our expectations, against a backdrop of continued uncertainty.
We remain cautious about the rest of the year, given the uncertain political and economic outlook.
He added: “It's still relatively early in the selling cycle for summer holidays, but based on current trading, and supported by further financial benefits from implementing our strategy, we expect our full year operating results to be in line with current market expectations."
Bookings for the year ahead have risen but Thomas Cook won’t be putting its feet up just yet as it looks over a year strewn with potential obstacles.