Thomas Cook hit as Brits shun holidays

TOUR operator Thomas Cook yesterday warned full-year operating profit would be at the lower end of forecasts after a slowdown in bookings as Britain’s emergency Budget forced holidaymakers into ditching their plans to go abroad.

Europe’s second-biggest tour operator also said the impact from disruption caused by a volcanic ash cloud closing airspace in April and May had been worse than expected while unfavourable currency movements hit profits.

Thomas Cook added that good summer weather and the World Cup had contributed to holidaymakers opting to stay in Britain.

Chief executive Manny Fontenla-Novoa said: “The fine summer weather enjoyed over much of the UK and the uncertain economic environment have meant that bookings have been softer, which has resulted in lower margins.”

He said the company now expected to make full-year EBIT (earnings before interest and tax) of between £404m and £405m compared with a consensus forecast among analysts of £415m.

The total cost of the volcanic ash disruption is now expected to be £82m compared with the company’s previous forecast of £60m to £80m, he added.

The company said its strategy will include concentrating in more upmarket holiday destinations on countries including Turkey. Four or five-star hotels account for more than 40 per cent of its business.

That proportion will rise to between 54 per cent and 57 per cent next year, Fontenla-Novoa said.