Terror fears hit trading at Thomas Cook

Travel firm’s warning on day jet crashes into Med

SHARES in Thomas cook plunged to three-year lows after the world’s oldest travel operator warned terrorist fears were hitting sales.

Travellers are waiting to book holidays and switching to ‘safe’ destinations such as Spain’s Balearic and canary islands.

Bookings were down by 5pc and fullyear profit will now be at the bottom end of market forecasts.

Thomas cook issued its financial update on the day that an EgyptAir flight travelling from Paris to cairo vanished over the Mediterranean – compounding woes suffered by an industry already besieged by the spectre of global terrorist attacks.

‘We made good progress during the first half in a really volatile trading environment,’ said chief executive Peter Fankhauser. But when asked about the impact of this latest suspected terrorist strike he told the Mail: ‘We are not fortune tellers.’

Fankhauser said there has been a big shift in demand from destinations such as Turkey, Tunisia and Egypt towards long-haul destinations like the uSA and South Africa. ‘We are trading well other than in Turkey,’ he said.

Turkey had been the group’s second- most popular market before ten German tourists were killed in a suicide bombing in Istanbul in January.

Now, few Brits and even fewer Germans are choosing to holiday in the country – opting instead for Spain and, increasingly, Greece – but Thomas cook has yet to make up for the Turkish shortfall.

The Belgian market has been similarly impacted by sharp declines following the attack at Brussels airport in March. The group said full-year numbers are expected to come in at the lower end of expectations after reporting slightly lower first-half revenues of £2.67bn compared with £2.74bn in the same period of the previous year.

Pre- tax losses narrowed to £288m from £303m.

Analysts at Numis cut their fullyear forecasts to £316m following the results and suggested that short-haul package holidays are down significantly. They said: ‘We remain unenthusiastic about the investment merits of Thomas cook: we believe that the basic business model continues to face structural challenges.’

It wasn’t all bad news: the uK consumer has more disposable income thanks to the low price of oil but there’s a nervousness in the market and customers are booking their summer holidays two weeks later than this time last year.

Thomas cook typically releases holidays 18 months before departure but the delay in bookings means the prices rise the closer they are booked to departure.

‘We do everything we can to encourage customers to book as early as possible’ in order to avoid the often-punishing prices during school holidays, Fankhauser said.

In defence of the industry, he said Thomas cook is also relying on suppliers and contractors – who hike their prices – during peak periods of school holidayfuelled demand.

In Germany different regions stagger the school holidays ‘which gives us a chance to accommodate everyone,’ he said. ‘It really helps.’

The group saw bookings drop by 4pc in its German Airlines condor business, mainly due to the later bookings to Turkey, where it is market leader.

Talks to merge its airline business with a rival appear to have gone cold with Fankhauser saying the flight business remains key.

looking ahead, Thomas cook said it has seen strong early trading for the winter season, as it pledged to reintroduce a dividend after abandoning it five years ago.

The group expects full-year earnings before interest and tax to be £310m to £335m, which compares with analyst expectations of £310m-£359m. Shares in the group slid 19pc, or 17.05p, to 72.45p.