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Thomas Cook profits hit by Tunisia attack and Greek debt crisis Thomas Cook profits hit by Tunisia attack and Greek debt crisis
(about 4 hours later)
Thomas Cook has warned that disruption caused by the terrorist attack on tourists in Tunisia and the Greek debt crisis will reduce the company’s profits by about £25m this year. Thomas Cook has warned that disruption caused by last month’s terrorist attack on tourists in Tunisia and the Greek debt crisis will reduce the company’s profits by about £25m this year.
The travel company said it cancelled almost its entire programme of holidays to Tunisia this summer after a gunman killed 38 people, 30 of whom were British, on a beach. Cancelled holidays, changes to flights and flying customers back from Tunisia will reduce underlying earnings before interest and tax by £20m, Thomas Cook said. The travel company said it cancelled almost its entire programme of Tunisia holidays this summer after a gunman killed 38 people, 30 of whom were British, on a beach in Sousse. Cancelled holidays, changes to flights and flying customers back from Tunisia will reduce underlying earnings before interest and tax by £20m, Thomas Cook said.
Demand for Greek holidays fell during the standoff between the Greek government and its creditors, forcing more discounting than expected. The cost to earnings will be about £5m, the company said. Demand for Greek holidays also dropped during the standoff between the Greek government and its creditors, forcing more discounting than expected. The cost to earnings will be a further £5m, the company said.
Thomas Cook revealed the cost of the crises as it reported a £44m loss before tax for the three months to the end of June, its third quarter. The loss shrank from £81m a year earlier. Underlying earnings for the quarter fell to £30m from £33m.Thomas Cook revealed the cost of the crises as it reported a £44m loss before tax for the three months to the end of June, its third quarter. The loss shrank from £81m a year earlier. Underlying earnings for the quarter fell to £30m from £33m.
The company said that before the scheduled trading update analysts had expected annual underlying earnings of about £340m, up from £323m last year. Analysts at the stockbroker Numis now forecast underlying earnings to fall to £309m this year.The company said that before the scheduled trading update analysts had expected annual underlying earnings of about £340m, up from £323m last year. Analysts at the stockbroker Numis now forecast underlying earnings to fall to £309m this year.
Thomas Cook’s chief executive, Peter Fankhauser, said demand for Greek holidays had returned to normal but that the group’s results next year could be affected by continued doubts over Tunisia, which makes up about 10% of UK holidays at the group. Thomas Cook’s chief executive, Peter Fankhauser, said demand for Greek holidays had returned to normal but that the group’s results next year could be affected by continued doubts over Tunisia, which makes up about 10% of holidays booked by British customers at the group.
The Foreign Office advises against travelling to Tunisia. Thomas Cook normally flies 35 planes a week to the north African country in the summer, delivering 630,000 holidaymakers. The Foreign Office advises against travelling to Tunisia. Thomas Cook normally flies 35 planes a week to the north African country in the summer, delivering 630,000 holidaymakers. It flew more than 15,000 customers out of Tunisia after the attack on 26 June.
Fankhauser said: “For next summer [in Greece] I expect a totally normal situation. For next year it’s too early to say [about Tunisia] because there are too many factors including the UK government’s travel advisory and how successfully we can find alternative locations and holidays our customers will be happy with so that is a business challenge as well.” Fankhauser said: “For next summer [in Greece] I expect a totally normal situation. For next year it’s too early to say [regarding Tunisia] because there are too many factors, including the UK government’s travel advisory and how successfully we can find alternative locations and holidays our customers will be happy with, so that is a business challenge as well.”
He said he expected Tunisia to become popular again as a holiday spot but that Thomas Cook would have to decide on whether to offer holidays there by November. He said he expected Tunisia to become popular again as a holiday spot, but that Thomas Cook would have to decide whether to offer holidays there by November.
“Tunisia is really a popular holiday destination with a great value for money product and we definitely expect it to come back ... Of course we are already now planning alternatives and putting up different scenarios: what if?” he said.“Tunisia is really a popular holiday destination with a great value for money product and we definitely expect it to come back ... Of course we are already now planning alternatives and putting up different scenarios: what if?” he said.
Thomas Cook’s shares, which have fallen about 13% since the massacre on 26 June, were down less than 1% in late morning trading. Thomas Cook’s shares have fallen about 13% since the terrorist attack.
The Numis analysts said: “We expect consensus forecasts to be cut quite substantially today – possibly by a double-digit percentage. We are cutting our [share] price target from 145p to 130p and see no rush to get involved in the shares.”The Numis analysts said: “We expect consensus forecasts to be cut quite substantially today – possibly by a double-digit percentage. We are cutting our [share] price target from 145p to 130p and see no rush to get involved in the shares.”
The group said the weakness of the euro and the Swedish krona against the pound would reduce annual profits by about £39m compared with an earlier estimate of £25m.The group said the weakness of the euro and the Swedish krona against the pound would reduce annual profits by about £39m compared with an earlier estimate of £25m.
Fankhauser, who became chief executive in November, said that excluding the currency movements and the Greek and Tunisian crises, Thomas Cook’s performance was better than expected. Fankhauser, who became chief executive in November, said that excluding the currency movements and the Greek and Tunisian crises, Thomas Cook’s performance was better than expected. It has sold 78% of summer holidays, unchanged from the year before.
Bookings were unaffected by the company’s handling of compensation for the parents of two children who died at a hotel in Corfu nine years ago, Fankhauser said. He met the parents of Bobby and Christi Shepherd in May and agreed to a financial gesture of goodwill following an outcry over Thomas Cook’s treatment of the family.Bookings were unaffected by the company’s handling of compensation for the parents of two children who died at a hotel in Corfu nine years ago, Fankhauser said. He met the parents of Bobby and Christi Shepherd in May and agreed to a financial gesture of goodwill following an outcry over Thomas Cook’s treatment of the family.