industry

Thomas Cook gets burnt in the heatwave


Shares in the FTSE 250 firm plunged 21¾p or 28 per cent to a 56p two-year low after it warned annual underlying pre-tax earnings would be 13 per cent lower than previously anticipated at £280million.

It sparked further jitters among investors by announcing that chief financial officer Bill Scott will step down at the end of November after less than a year in the job.

Cook admitted that while summer bookings were up 12 per cent on last year due to the return in popularity of holidays to Turkey, Egypt, Tunisia and Greece, overall average selling prices are 5 per cent lower.

Chief executive Peter Fankhauser said prolonged high temperatures meant “customers spent June and July enjoying the sunshine at home and putting off booking foreign holidays, leading to even tougher competition and higher than usual levels of discounting in the ‘lates’ market”.

Along with other travel companies, its profit margins were already under pressure due to fierce competition for Spanish holidays.

He added: “Our recent trading performance is clearly disappointing. The impact of the hot summer is continuing to be felt into winter trading. However, despite the recent challenges we continue to make good strategic progress.”

One bright spot for Cook was its airline, which has seen double-digit growth in short and medium-haul destination bookings.

Edison Investment Research’s Paul Hickman said: “It seems bizarre for a holiday company to blame hot weather. But that is the substance of Thomas Cook’s profit warning.

“Those lazy days at home this summer meant customers put off booking their holidays abroad, impacting the usual late booking market in August and September, which became discounted as rival operators sought to shift excess capacity.”



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