Thomas Cook rides out the storm

Tourism company Thomas Cook reaps the benefits of British travellers’ determination to seek out sunnier climes.

London - Britons remain keen to splash the cash on holidays in sunnier climes, buoyed by a mix of rock-bottom interest rates, low inflation and cheap petrol, the boss of Thomas Cook claimed on Thursday.

“Our (UK) customers still want to go on holiday,” Peter Fankhauser, the tour operator's chief executive, said. “And with low petrol prices and low inflation, they have more money in their pockets.”

However, Thomas Cook expects sales to Turkey to fall by almost 30 percent this summer, after the terrorist attack in Istanbul last month led to a sharp drop in bookings. Turkey usually attracts around a fifth of Thomas Cook's customers and the company has cut capacity accordingly, even though it said that there were already signs of bookings recovering.

Its rival Tui Group reported a 40 percent fall in bookings to Turkey earlier this week and said tourists were shifting to Spain, the Canary Islands and Greece.

Thomas Cook said that geopolitical volatility was prompting increasing numbers of people to choose package holidays, because of the greater security they offer.

Customers have been switching from Turkey to Spain, Cyprus, Bulgaria and Greece, as well as to long-haul holidays in the US and Cuba. Demand for Spanish holidays is “boiling”, Fankhauser noted.

Thomas Cook added that it had only seen a minor effect on bookings to the Caribbean following the outbreak of the Zika virus in Central and South America.

“In November I said that 2015 was one of the toughest years I have ever seen - and it has not got easier,” Fankhauser said.

The company has maintained its full-year guidance, from which analysts are expecting profits of around £350m.

Total bookings in the first quarter fell by 2 per cent year on year, while total revenue dropped 7.2 per cent to £1.4bn. However, the tour operator is confident that it can cope with the switch in demand to western European destinations because it began adding hotel capacity and flights in the autumn, when it became clear that there would be no holidays in Egypt or Tunisia in the wake of terrorist atrocities.

Thomas Cook said it would receive a £100m benefit from lower jet fuel costs, which it expects to pass on to customers because the market is so competitive. Its shares fell 1.8p to 94p.

THE INDEPENDENT