Thomas Cook upbeat as revenue and earnings rise

Thomas Cook reported a “good performance” in its third quarter on Thursday, with group revenue rising 14% on a like-for-like basis to £2.27bn, despite what the company called a “competitive environment”.

The FTSE 250 travel giant said customer satisfaction was also higher, with its net promoter score up seven points year-on-year in the three months to 30 June, while gross profit was higher at £47m.

It experienced pressure on its margin, however, due to stronger competition in Spain.

Thomas Cook’s underlying EBIT was ahead £10m on a like-for-like basis at £19m, which the board said was supported by a recovery in its Condor brand, while net debt improved £115m, which it put down to a timing benefit from strong summer bookings.

“Our increased focus on the customer is reflected in a good performance for the third quarter,” said chief executive Peter Fankhauser.

“Strong demand for our holidays across the Group combined with an improved performance in our German airline to deliver a £10-million increase in profit versus the same period last year.

“This improved performance means Condor remains on track to return to profitability for the full year.”

On the demand side, Thomas Cook reported “strong demand” for the 2017 summer, with positive momentum continuing into winter.

It said overall group bookings for the summer season were ahead 11%, which pricing up 1%.

Significant growth was seen in Greece, where bookings were up 22%, as well as Bulgaria with growth of 19% and Cyprus with a 14% rise, along with long-haul destinations.

Thomas Cook said demand for Turkey was recovering well, having taken a hit previously due to political instability.

"So far, we are taking one and a half million more customers on holiday this summer than we did three years ago, showing the growth in demand for our modern package and flight offer,” said Peter Fankhauser.

“We continue to innovate to broaden our appeal with the launch of a 'Choose Your Room' option in 300 of our core hotels for summer 2018.”

Looking ahead to winter 2017/18, the company said the season was around 30% sold already, with bookings ahead in all markets.

"An 11% increase in bookings for this summer reflects good demand across all destinations,” Fankhauser added.

“The pick-up in demand for Turkey we reported earlier in the year has continued, as customers are attracted to the quality and value on offer.”

The Thomas Cook board confirmed it expected full-year underlying operating profit to be in line with market forecasts.

“As we go into the peak summer season, our holiday offering is in great shape,” claimed Fankhauser.

“We have opened 11 new own-brand hotels for this summer, including a second Casa Cook, in Kos, offering affordable chic on the beach.

“We have also rolled out our 24-hour Satisfaction Promise to 2,000 hotels, giving 80% of customers in our core sun & beach hotels an added level of reassurance.”

Fankhauser said those initiatives helped to deliver the seven-point increase in customer satisfaction year-on-year.

“As we said in May, we are experiencing pressure on margins to Spain in what is a competitive environment, though this is being mitigated by our focus on our own-brand and core hotel offering and supported by strong overall demand for our summer holidays.

“As a result, we continue to expect our full year underlying operating result to be in line with current market expectations.”