Thomas Cook cuts profit forecast

  • Business
  • Friday, 29 Jul 2016

FRANKFURT: Thomas Cook Group Plc cut its earnings forecast for fiscal 2016 after a string of terror attacks from Turkey to the French Riviera depressed demand from summer vacationers.

For the year ending Sept 30, underlying earnings before interest and taxes would be about £300mil, the company said in a statement. That compares to a May forecast for operating profit to be in a range of £310mil to £335mil. With the new figure roughly in line with analyst estimates, the shares bounced back from a recent sell-off, rising as much as 9.7%.

“These are dismal results, however the market was expecting that,” Stuart Gordon, an analyst with Berenberg. “The story is certainly not getting any better.”

Tour operators are struggling to offer clients enough destinations that seem safe for vacation, after attacks last year effectively closed large parts of Egypt and Tunisia, and a string of incidents in Turkey, including the failed coup, sapped demand for one of the industry’s most important destinations.

Germany, the company’s biggest market by customers, also saw a string of attacks this month.

“We are operating in a challenging geopolitical environment, with repeated disruption in some of our key source and destination markets,” chief executive officer Peter Fankhauser said in the statement. “In addition, while Brexit has had no noticeable impact on our bookings so far, it has added to a general sense of uncertainty.”

Booking for the important summer season are down 5%, Thomas Cook said, depressed by falling demand from Belgium, which suffered a double attack at its main airport and a subway station in Brussels in March. The group’s summer programme is 81% sold. — Bloomberg

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