Thomas Cook disappoints with first-quarter update as caution remains

With the European travel outlook remaining highly uncertain and a shareholder battle over bonuses is brewing, Thomas Cook started the year in muted fashion but is still confident it can hit full year targets.

Revenue in the three months to the end of December was up 1% to £1.6bn but seasonal underlying operating losses were only improved by £1m to £49m.

Summer 2017 is so far 31% sold, which is 9% ahead of this time last year, while the current winter season is only 82% sold, as expected.

Chief executive Peter Fankhauser said it was a "solid performance" in light of the backdrop of continued uncertainty, with growth in holidays to Greece, Spain and long-haul destinations.

But he said: "We remain cautious about the rest of the year, given the uncertain political and economic outlook.

"It's still relatively early in the selling cycle for summer holidays, but based on current trading, and supported by further financial benefits from implementing our strategy, we expect our full year operating results to be in line with current market expectations."

Last week, the influential Institutional Voting Information Service group wrote to investors over concerns about the size of Fankhauser's bonus.

In the first quarter, Condor continued to endure pressure in the German airline market, which was mostly offset by the UK and Northern Europe businesses continuing the summer's strong performance, while the tour operating business in Continental Europe also improved. Condor is expect to start to see the benefits of a rejig coming through in the second half.

Fankhauser said an expanded holiday offering to Greece and a number of smaller destinations across Europe was paying off, with bookings to Greece currently up by over 40%, while demand for destinations such as Cyprus, Bulgaria, Portugal and Croatia has been strong. "These positive trends are making up for continued weak demand for Turkey."

Shares in Thomas Cook were down 6% to 86.61p at 0830 GMT on Thursday.

Analyst Laith Khalaf at Hargreaves Lansdown said the broadly flat like-for-like revenues and losses probably represented a small victory against the unfriendly backdrop.

"Times are tough in the European travel industry and Thomas Cook isn’t having the best of it, though the good news is things don’t seem to be getting any worse," he said.

But he added that there was "little in its latest trading figures to suggest Thomas Cook is going to stave off a shareholder rebellion over its executive remuneration package, which looks to be brewing".