March 24, 2017

Thomas Cook disappoints with first-quarter update as caution remains

11 February 2017, 12:35 | Felicia Christensen

Thomas Cook disappoints with first-quarter update as caution remains

Holiday prices up 9 per cent for summer 2016

Revenue for the first quarter rose by 1 per cent to £1,618m, with the usual seasonal loss £1m lower at £49m.

In response, Thomas Cook said it would limit payouts to a maximum of 200 per cent of base salary - and to delay the scheme until after the end of the current financial year.

"We have delivered a solid performance for the first three months in line with our expectations, against a backdrop of continued uncertainty", Thomas Cook chief executive Peter Fankhauser said.

While summer sales in northern and continental Europe are well ahead of past year, United Kingdom demand may be moderating, with bookings up 1 percent and package holiday reservations "slightly behind".

Countries including Bulgaria, Croatia, Cyprus and Portugal are reaping some of the fastest growth in bookings for next summer, Thomas Cook said Thursday. But the former only rose by £14m to £1.618bn and a £49m loss compared to £50m past year is nothing to write postcards home about.

However, UK bookings for the key summer period are now flat, with average selling prices two per cent higher.

The asset manager used its clout to vote against several of the remuneration resolutions put forward by Thomas Cook - including the re-election of the remuneration committee chairman and its members - at the travel company's February 9 annual meeting.

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

Intense competition between low-priced airlines means that flight-only prices for the coming summer are no higher than a year ago.

Moreover, its summer 2017 season was 32 percent sold, with a 9 percent rise in bookings year-on-year.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: " 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".

But there are concerns over a clause that would allow Mr Fankhauser to claim up to 225% of his £703,800 annual salary - a potential £1.6 million - according to investor group Institutional Shareholder Services.

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