Thomas Cook blames swine flu for widening losses

Thomas Cook blames swine flu for widening losses

Thomas Cook has blamed the swine flu pandemic on its losses extending to £286m in the nine months to June, up 21 percent year-on-year.

The travel company also warned that trading conditions in 2010 would be even tougher than this year, which would inevitably lead to further capacity cuts this winter to meet the demand shortfall.

It said in a trading update: “Although up to now we have continued to regard this as relevant, the prevailing economic environment means that it is not realistic to think that market conditions could recover sufficiently to allow this target to be achieved in 2010,”

Bookings for the winter season are down 13 percent in the UK and 27 percent in mainland Europe. It estimated that it would cut capacity 6 percent and 7 percent respectively.

Like its rival Tui reported yesterday, Thomas Cook said it too was experiencing more late bookings for this summer but that the proportion of holidays sold remained similar to last year due to the reductions in capacity.


Bookings for summer 2009 were down 11 percent in the UK and 12 percent in Europe.

Manny Fontenla-Novoa, the chief executive, said that he was “not overly worried at this stage”.

He said: “The ski market is only 5 percent down in the UK, and the first month of departures are in good shape,” he said.

“The load factor in the UK is only 3 percent down year on year. We are confident people will book, they are just leaving it later to do so.”

Fontenla-Novoa also said the company was “well-placed” to meet analyst’s expectations of a £430m-£435m operating profit in the 2010 financial year, and denied that the £480m target it set when it merged with MyTravel in November 2007 was unrealistic.

“It was never a target,” he said. “It was put out in November 2007, when the dollar was two to the pound. We were trying to give the market an idea of the size of the group. The budget we had was somewhat different.”

The company says that the swine flu outbreak in Mexico has cost it an estimated £12.6m to date, Losses excluding swine flu and exceptional costs, due mainly to the restructuring after the MyTravel merger, were down 43 percent, from £87.4m to £49.5m.