Thomas Cook looks ahead from ‘hectic six months’
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Thomas Cook has said its UK turnaround strategy has made ‘good progress’ with bookings up in the past four weeks after what its group CEO called a ‘hectic six months’.
The group’s CEO Sam Weihagen said he believes the company has been stabilised, including its pricing.
“There has been a quick integration of our new discount discipline, with the average discount at 3% and not 5% as it was last year,” explained Weihagen. “Thomas Cook’s price policy changed prices daily but created a lot of irritation and complaints with customers, but this has now been stabilised and hope to increase loyalty”.
In its results in the six months up to 31 May 2012, mainstream bookings in the UK are down 8% while its specialist sales are up 10% and average selling price has risen 4%. Consumer demand for Olympics packages is said to be strong, although weak bookings from the corporate market has dented its results. Some of its corporate packages will now be transferred to consumer breaks but will cause lower margins. Its seasonal losses were mainly hit by the French and North American markets, with Air Canada’s new flights pushing back its Canada bookings.
Bookings at the group are said to have improved in all markets since April, although generally summer bookings in the UK are down 1% but ahead of its capacity reductions with the load factor up 3%.
“When Britain went into growth in April and it rained we saw a good improvement in summer bookings,” said Weihagen. “Should there be more rain, we expect more bookings…but we are not as dependent on the late market as we were last year”.
With its finances widely reported in the media, the group has secured long-term flexible banking to May 2015, with agreements on £200m debt reduction and £183m of aircraft sales or leaseback, further helped by the sale of its India business. In what Paul Hollingworth, CFO of Thomas Cook called a ‘difficult first half’, the group saw the Co-op merger cause losses, with operating profit at £263m but figures to balance in the second half of the year.
Looking ahead, Hollingworth said the company is currently closing 15 shops and has agreed the leaseback of a total of 19 aircraft, mainly cutting back its long-haul operations.
Weihagen is confident new CEO Harriet Green has the “stabilisation to move forward” and said of her appointment it is “good to have someone who can look on the business with fresh eyes”.
