Thomas Cook slumps to £1.5bn loss as Brexit chaos hits travel plans

https://www.theguardian.com/business/2019/may/16/thomas-cook-slumps-to-loss-as-brexit-chaos-hits-travel-plans

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Thomas Cook plunged deeper into the red and issued a fresh profits warning as the struggling travel company warned that UK customers had postponed travel plans for this summer because of Brexit uncertainty.

Shares tanked 17% to 19p after the company made a pre-tax loss of £1.5bn for the six months to 31 March, which was mainly down to a £1.1bn write-down of the value of MyTravel, the UK package holiday business that it bought in 2007. If followed a £303m loss in the same period last year. Thomas Cook said it had revalued MyTravel “in light of the weak trading environment”.

Thomas Cook has closed 21 UK branches and cut the number of holidays it offers in response to weaker demand.

Peter Fankhauser, the chief executive, said: “The first six months of this year have been characterised by an uncertain consumer environment across all our markets.

“The prolonged heatwave last summer and high prices in the Canaries reduced customer demand for winter sun, particularly in the Nordic region, while there is now little doubt that the Brexit process has led many UK customers to delay their holiday plans for this summer.”

The company said it was also being hit by higher fuel and hotel costs, which would affect it over the rest of the year. Underlying profits in the second half of 2019 will be behind the same period last year, Thomas Cook warned.

The firm has sold 57% of its summer holidays and said tour operator bookings were down 12%.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Trading in the UK market is challenging, with consumers delaying holiday plans until there’s some clearer direction on Brexit. With last year’s heat wave fresh in the memory, many British holidaymakers will no doubt be thinking it’s best to stay put this summer.

“Thomas Cook’s scaled back the holidays it’s offering in response to lower consumer demand, but the competitive environment means that even so, it’s having to offer discounts to get customers to part with their cash.”