Thomas Cook issues second profit warning in two months after UK heatwave
Thomas Cook has warned that its annual profits are set to be about £30m lower than expected, its second profit warning in two months. Earnings at its tour operator unit were £88m lower in the year to September, as people delayed booking holidays because of the prolonged heatwave at home.
It also said its bookings for this winter were 3% down on last year and suspended its dividend. Shares in the company dropped by 28% when the markets opened.
Chief executive Peter Fankhauser said it had been a “disappointing year”.
He added: “The UK was particularly hard hit with very high levels of promotional activity coming on top of an already competitive market for holidays to Spain.
“Looking ahead, we must learn the lessons from 2018 and go into the new year focused on where we can make a difference to customers in our core holiday offering.”
The heatwave and mild winter weather are also having an impact on bookings for winter holidays, with bookings for the 2018-19 season in continental Europe down by 2%.
Fewer people have arranged holidays for the Canary Islands, with holidaymakers switching to cheaper trips to Turkey, Egypt and Tunisia instead.
Thomas Cook’s underlying earnings will be £250m to the end of September, £58m lower than in 2017.
Additional charges, including disruption to flights, were partly responsible for this decline, the company said.
Despite the slump in holiday bookings, the company’s airline business recorded profit growth of £35m and its future bookings are 11% ahead of last year. Sales of holidays to its own-brand hotels were up by 15%.