Thomas Cook profits ‘to fall’

Holiday giant Thomas Cook is expected to lay bare the impact of a European heatwave and a fall in demand for last-minute trips abroad this week.

A consensus of City analysts expects the firm to post a 15% dive in underlying operating profit to £280 million for the full year to September.

The FTSE 250 group said earlier this year that an “unprecedented” prolonged period of hot weather across the Continent meant more people spent summer at home.

However, the firm’s trading performance is expected to have improved or at least stabilised since its September warning.

Since then, holiday bookings for European destinations have not waned, broker Numis said, despite fears of a potential hard Brexit.

Kathryn Leonard, analyst at Numis, said: “The data suggests that demand has improved since Thomas Cook last reported.

“Indeed, the growth of keyword search terms versus the prior year have, on average, improved by circa 5% in the UK and by circa 17% in the Nordics.”

Adding credence to the data, budget carrier easyJet recently said forward bookings for 2019 are “slightly ahead” of this summer, while Ryanair said Brexit had not affected demand.

Numis said the comments from airlines are “supportive for the wider UK-listed travel sector, as investors remain vigilant of any slowdown in demand and later booking cycle”, which would negatively impact profitability and working capital.

However, it still flagged Brexit as a “key risk” for 2019.