Thomas Cook profits hit as terror takes its toll
THOMAS Cook is set to announce a fall in profits after a string of terrorist attacks affected key destinations.
However, the tour operator is expected to say that a buoyant Spanish market, currency hedging and the strength of the euro for its continental clients have helped it through a year even more difficult than last.
This time last year the firm, led by Peter Fankhauser, was still recovering from terrorist attacks in Tunisia, Egypt and Turkey. It had also faced controversy over revelations in The Mail on Sunday that it failed to pass on damages won from a hotel to the family of two children who died from carbon monoxide poisoning in Corfu in 2006.
In the last 12 months, terror attacks – this time in Paris, Nice and Belgium – have again hit the travel industry as did May’s EgyptAir plane crash.
‘It’s been a really difficult year for Thomas Cook,’ said an industry source. ‘Tunisia is still effectively shut to British tourists, as is Sharm-el-Sheik – though Thomas Cook does fly elsewhere in Egypt. Turkey, where it was market leader, has had repeated problems.
‘But it was quick to move capacity to Western Europe and long-haul destinations, including the US.’
Analysts predict the company will record sales of £7.9billion in the year to September 30, 2016, up from £7.8billion the previous year. However, pretax profits are expected to be £157million before exceptional items, compared with £177million the previous year.
The bright spot for Thomas Cook is the booming Spanish market, both mainland and the Balearics and Canary Islands.
The source said: ‘The size of the Spanish market is huge, with great hotels, but that does mean it is more competitive.’
Thomas Cook is expected to have been protected from the pound’s plunge as it hedges about 70 per cent of its currency. It also has a German airline and divisions in Central, Northern and Western Europe, so two-thirds of its sales are not in sterling, and these have benefited from the relative strength of the euro recently.