Thomas Cook looks at options for airline as losses grow
Thomas Cook is exploring options to potentially sell its airline business amid concerns over the company’s future.
The travel giant said on Thursday that it will conduct a strategic review of the airline arm, which will look at “all options to enhance value to shareholders”.
The decision comes after the firm’s shares were hammered at the end of last year following its third profit warning of 2018 and stinging full-year losses.
Thomas Cook has been stung by charges related to flight disruptions, writedowns on money owed by hotels and transformation costs.
It was also hit by delayed demand for its tour holidays due to the summer heatwave.
Boss Peter Fankhauser said: “We are today announcing a strategic review of our group airline.
“We are at an early stage in this review process which will consider all options to enhance value to shareholders and intensify our strategic focus. We will provide an update on this process in due course.”
The firm operates a fleet of 103 aircraft, carrying more than 20 million passengers, and generated £3.5 billion in revenue last year, with underlying operating profits growing 37% to £129 million.
The announcement came as Thomas Cook reported a 1% rise in first-quarter revenue to £1.65 billion, led by strong demand for Turkish and North African destinations, offsetting weaker demand for Spain.
However, underlying operating losses increased by £14 million to £60 million.
“As expected, the knock-on effect from the prolonged summer heatwave and high prices in the Canaries have impacted customer demand for winter sun,” Mr Fankhauser added.
“Where summer 2018 bookings started very strongly, bookings for summer 2019 reflect some consumer uncertainty, particularly in the UK, and our decision to reduce capacity will both mitigate risk in our tour operator business and help our airline to consolidate the strong growth achieved last year.”
For its winter seasons, total bookings are up 8%, but average selling prices are 10% lower overall.
The summer 2019 programme is 30% sold, slightly ahead of last year, and tour operator bookings are down 12%.