City checks out of Thomas Cook after Spanish price war
BARGAIN-hunting holidaymakers should look beyond the eurozone, Thomas Cook said today as cut-throat competition in Spain led to a plunge in its shares.
The tour operator’s stock fell by 10.9% to 109p, as investors worried about the health of the business where margins were hit.
“Spain is not unaffordable for families but other destinations offer a better price quality relationship,” Peter Fankhauser, chief executive of Thomas Cook said.
“At least in Turkey you can pay in sterling, rather than having to pay with the euro,” he said.
Turkey, where Thomas Cook was the market leader, is coming back strongly after terrorist attacks put off holidaymakers, and destinations such as Morocco, Cyprus and Cape Verde are also selling well.
Winter bookings are up 5% on last year and there has been a strong recovery in demand for Egypt, although it is a long way off the popularity it reached before the Arab Spring in 2010.
Thomas Cook said that this year was a milestone year for the company, which has been on a slow path back to recovery after a £1.6 billion debt restructuring four years ago.
It revealed an increase in pre-tax profits from £5 million last year to £12 million and said it would increase its dividend payout by 20%, as revenues rose by 9% to £9 billion for the year to the end of September. It has also reduced its net debt by £89 million to £40 million.
The tour operator said its recent initiatives, including a tie-up on city hotels with Expedia and a partnership with Swiss hotel investor LMEY which will enable Thomas Cook to open more of its own brand hotels, would lead to more profitable growth.
Fankhauser added that Thomas C o o k ’s airline was performing well, particularly on the Continent, and was in a good position to benefit from the collapse of Monarch, the charter airline.
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