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Thomas Cook - Bookings down 5% in the first half

Nicholas Hyett | 19 May 2016 | A A A
Thomas Cook - Bookings down 5% in the first half

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Thomas Cook Group plc Ordinary Eur0.01

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Despite broadly flat like-for-like revenues and gross margins in the first half, Thomas Cook now expects underlying EBIT for the full year to be £310m-£335m, at the bottom end of analyst expectations. Underlying losses from operations improved slightly in H1, from £173m to £153m.

Overall bookings fell 5% in the first half as turmoil in Turkey, Thomas Cook's second largest market in 2015, impacted bookings. Excluding Turkey, bookings rose 6% as alternative markets, including Long Haul destinations, delivered strong performances. Average sale prices were flat.

Thomas Cooks' shares reacted with a 16% fall in morning trading. This is against the background of the disappearance of an EgyptAir flight between Paris and Cairo which has knocked the sector by 2-4%.

Summer 2016 is 63% sold for the group as a whole, 2% lower than this time last year, despite the group rebalancing away from Turkey, Tunisia and Egypt. The group has seen a strong performance from alternative destinations, including Spain, the USA, Cuba and Mexico. Bookings are down 3% in the UK, 2% in Northern Europe, 10% in Continental Europe and 4% at Airlines Germany.

Winter 2016/17 is 10% booked, up 16% on last year with average selling prices up 2%.

Balance Sheet:

Underlying net debt increased by £50m to £825m, up 18% on a year previously.

The company is embarking on a program to reduce its fixed term debt, £100m in outstanding bonds are expected to be purchased shortly, with the objective of reducing interest costs, which cost the group £42m in the first half. Moody's have increased the company's credit rating by a single notch to B1.

Thomas Cook continues to expect to begin paying a dividend out of FY16 profits, targeting a payout ratio of 20%-30% of reported net profit.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research for more information.

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