Thomas Cook issues profit warning
Thomas Cook slipped into the red during the third quarter of the financial year, prompting the travel agent to issue a profit warning ahead of its full year results.
In the three months ended June 30th the company made a pre-tax loss of £116.6 million, compared to a pre-tax profit of £2.9 million in the same part of last year.
Revenue was also down nine per cent when compared to a year earlier, largely reflecting remaining winter capacity reductions and losses associated with the volcanic ash cloud.
Thomas Cook now calculates the total financial impact of the volcanic ash cloud which closed European airspace earlier this year to be £81.9 million – ahead of an initial £60 million estimate.
In a statement to markets group chief executive, Manny Fontenla-Novoa, warned operating profits for the full year would now be at the “lower end” of market expectations.
““We always expected this year to be challenging given the uncertain economic environment and the impact of the weak sterling on our UK business,” he added.
“In anticipation, we cut winter capacity, chose not to increase overall summer capacity, and have continued to address our cost base.
“These actions and our flexible business model have demonstrated our resilience in weathering the tough trading environment.”
The company now expected to make full-year earnings before interest and tax of between £404 and £405 million, compared with a consensus forecast among analysts of £415 million previously.
Falling booking volumes in the UK hit TUI earlier this week, casting further gloom over the British economy.
Both TUI and Thomas Cook have also been hit by good summer weather at home and the FIFA 2010 World Cup.
“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,” concluded Mr Fontenla-Novoa.