Thomas Cook sticks with cost cutting mission

 
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SHARES in Thomas Cook took a 12.6 per cent dive yesterday, despite the holiday firm narrowing its losses as expected and raising its cost-saving targets.

Analysts pointed to a cautious outlook for UK holiday sales, made worse by the ongoing difficulties in Egypt, as well as investors taking profits following a 43 per cent increase in the share price in the past year.

Thomas Cook, which is part-way through a restructuring, posted a 6.6 per cent fall in revenues on a year ago to £3bn for the six months to the end of March.

Losses excluding interest and tax shrank from £314m to £283m, in spite of a £14m hit from a slump in Egyptian holiday sales.

“While the impact of Egypt makes the achievement of our [2014] milestone more challenging, we remain confident that, supported by our encouraging new product momentum, we will achieve our sales growth target of more than 3.5 per cent in 2015,” Thomas Cook said in a statement.

The firm raised its cost-cutting goal to £460m by 2015, having started its overhaul in 2012 with a target of £400m. It expects to save a further £400m by 2018.

Bookings for the summer are down one per cent on last year in the UK business, while prices are three per cent lower as holidaymakers plump for shorter breaks.

“UK summer trading gives us cause for concern,” Investec analyst James Hollins said.

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