Thomas Cook shares jump on resumed dividend payments

Thomas Cook resumed dividend payments yesterday after a five-year break despite falling profits as the holidays giant said it had been impacted by the terror attacks in Europe and political volatility in Turkey.

Shares in the company jumped 7 per cent as the group also said it had seen an encouraging start to bookings for next summer.

Thomas Cook’s underlying profits fell £2 million to £308m in the year to end-september compared with the previous 12 months after the security issues in Turkey meant it had to move flight and hotel capacity away from there to Spain.

Meanwhile, it said demand in Belgium was knocked by the Brussels terrorist atrocity. Group profits beat a consensus analyst forecast of £296m, adding to City cheer on the resumed dividend, with the group recommending a payout of 0.5p for 2016, to be paid next year.

Statutory pre-tax profits, including exceptional charges, were 47 per cent lower at £42m. Thomas Cook chief executive Peter Fankhauser said: “In what’s been a difficult year for tourism, I’m pleased with the progress that we’ve made.

“The early actions we took to shift our holiday programme into the western Mediterranean and long-haul, together with the benefits of a stronger euro, helped us to maintain revenue at group level.”

However, he remained cautious over prospects. “We’ve had an encouraging start to bookings for summer 2017 in our key markets, but it is early days,” Fankhauser said.

He added that apart from a boost due to the weaker pound after June’s European Union referendum in the UK, there had not been “any noticeable impact” from Brexit on trading.

Ahead of Chancellor Philip Hammond’s Autumn Statement yesterday, the Thomas Cook boss also urged the UK government to cut air passenger duty (APD) on flights for UK passengers. Fankhauser said: “APD is by far the highest in Europe and among the highest in the world. If the Government wants to help families, they should make it cheaper for them to enjoy a hard-earned holiday.”

His comments followed similar pleas earlier this week for APD to be cut or scrapped by leading members of the Airlines for Europe lobby group, Willie Walsh of British Airways-owning International Airlines Group and his counterparts at Ryanair and Easyjet.

Thomas Cook said it was confident current year profits would meet market expectations.