Thomas Cook expresses sunny outlook despite continued price pressure

Although recent trading has not been universally good and prices have remained under pressure, holidays group Thomas Cook has taken confidence from improved trading in continental and northern Europe in recent weeks.

While trading remained tough in some markets, the FTSE 250 company said the improving market indicated a "later booking pattern" this year.

Thomas Cook has sold 54% of its summer season capacity and said the business was trading in line with management expectations, ahead of last year, thanks in part to bookings growth from winter sun holidays.

The winter 2014/15 season is now 95% sold, although average selling prices are 2% lower due to product mix changes.

Airlines Germany continued its good performance with bookings for winter up 10% and load factors ahead of 2014, though again selling prices were down 2% due to price pressures in the short and medium haul sector.

Summer 2015 was said to be "developing satisfactorily", with the 54% of capacity sold being 2% higher than at the same point last year and improving trends seen across most markets since the February first-quarter update.

Total bookings for the summer are 1% lower than last year, as Continental bookings are down 4% but showing signs of an improving market that indicates a later booking pattern in the year, with average selling prices also 1% lower due to capacity-management plans and customers demanding more flexible products.

The UK has continued to be strong, with bookings 4% higher than last year.

The market trend towards online and mobile continues to progress, with bookings on thomascook.com up 10% on the prior year, with conversions up 19%, while mobile and tablet bookings are up 63% and now represent a third of the total, up from 20% last year.

There were no further details on the recent deal with the new Chinese owners of Club Med.

On outlook, chief executive Peter Fankhauser, who took over after previous boss Harriet Green was forced out in November, said he remained confident in the strategy of profitable growth through the firm's new product and digital initiatives, supported by cost efficiencies.

"We therefore continue to expect further growth in financial year 2015, consistent with our expectations at our full year results in November, on a constant currency basis."

Broker Shore Capital said the company appeared to be running behind its full-year profit and earnings forecast, suggesting downward pressure to earnings, but would not change to its forecasts as it felt "management’s confidence of meeting market expectations was driven by the improving booking backdrop, this has continued throughout Q2".