Thomas Cook cuts profit goal, sus­pends div­i­dend

The Gulf Today - Business - - INTERNATIONAL -

LON­DON: Thomas Cook lost a third of its value af­ter the hol­i­day op­er­a­tor cut its profit guid­ance for the sec­ond time in two months and sus­pended its div­i­dend, burned by the ef­fects of a hot Bri­tish sum­mer and one-off charges.

The old­est travel com­pany in the world, Thomas Cook has been hurt by the heat­wave that gripped north­ern Europe this year, de­ter­ring hol­i­day­mak­ers from book­ing lu­cra­tive last minute deals and send­ing its shares down 70 per cent in 12 months.

On Tues­day it up­dated the mar­ket two days ahead of sched­ule to cut its un­der­ly­ing op­er­at­ing profit again, this time by 11 per cent. It said it had not breached the terms of its lend­ing agree­ments and would con­tinue to in­vest in the busi­ness.

Shares in the com­pany fell an ini­tial 33 per cent at the open. They were down 24 per cent to 37 pence, giv­ing it a mar­ket value of around 570 mil­lion pounds. Shares in ri­val TUI Group were down 3 per cent.

“I’m not happy with the fi­nan­cial re­sult,” Chief Ex­ec­u­tive Pe­ter Fankhauser said. “This is not where we wanted to be.”

Thomas Cook makes all its profit in the sum­mer when its cus­tomers in north­ern Europe, in­clud­ing Bri­tain, Ger­many and Scan­di­navia seek the sun in south­ern Euro­pean des­ti­na­tions such as Spain, Turkey and Greece.

How­ever record tem­per­a­tures in much of north­ern Europe this year meant the com­pany was forced to warn in July and Sep­tem­ber that de­mand for hol­i­days had been dam­aged.

It said on Tues­day it had also taken around 30 mil­lion pounds of charges to ac­count for costs linked to changes to its busi­ness, flight dis­rup­tions and un­paid his­toric ho­tel bills.

Thomas Cook, which had re­built it­self from a 2011 col­lapse when the eu­ro­zone debt cri­sis and po­lit­i­cal tur­moil brought it to its knees, said it would push ahead with its strat­egy of open­ing its own ho­tels, which tend to drive higher re­turns and cus­tomer loy­alty.

“Across the group, we will con­tinue to stream­line our cost base and man­age our ca­pac­ity to give us greater op­er­a­tional flex­i­bil­ity and fi­nan­cial dis­ci­pline,” Fankhauser said.

Reuters

A Thomas Cook air­craft at Manch­ester Air­port in Bri­tain.

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