Thomas Cook's summer bookings rise but affected by low demand for Turkey, Brussels

27th Sep 2016 08:06

(ShareCast News) - FTSE 250 listed Thomas Cook reported a rise in bookings this summer across some destinations apart from Turkey, while demand for the winter is line with the previous year.The travel agent said expectations for full year underlying operating profit remained unchanged.Bookings were up 8% year -on-year, but excluding Turkey which has experienced low demand due to security concerns, bookings were down 4%.The summer programme is 89% sold, 3% below the same period last year with high demand for destinations such as the Balearic and Canary Islands, the US, Bulgaria and Cuba.In the UK, bookings rose slightly by 1% and charter risk average selling prices remained at 2% above last year, due to a shift towards premium destinations. UK average selling prices were down 5% due investment in the seat-only business, which has lower selling prices compared with package holidays.Northern Europe bookings were 6% lower, which was in line with capacity cuts and against a strong performance last summer and pricing was up 3%.In continental Europe, bookings are 9% lower due to weak consumer confidence, including in Belgium where demand was low due to the Brussels terror attacks. Overall pricing was 3% below last year's levels. In Germany, bookings were 6% lower but the company said it outperformed the wider tour operating industry.For Condor or Airlines Germany, the company's subsidiary, bookings were down 3% and pricing was down 2% due to overcapacity and competition in the short and medium haul market, while the company took steps to move capacity away from Turkey.Laith Khalaf, senior analyst at Hargreaves Lansdown, said it had been a difficult year for the travel agent due to political unrest in Turkey and the threat of terrorist activity in some of its most popular destinations.He said: "The good news is things haven't got worse since the beginning of the summer, but the weaker demand for Turkey as a destination continues to weigh heavily on the tour operator's German airline business in particular."Thomas Cook expects to bank a significantly lower fuel bill this year, but as it tries to hedge more of its 2017 exposure it will have to contend with the impact of a stronger dollar."For the upcoming winter the company said 27% of holidays were sold, which was consistent with the same period last year, and pricing is down 1%.In the UK, bookings are up 8% and selling prices down 3%, due to a higher mix of seat-only bookings. In Northern Europe bookings are down 3%, with pricing down 1%.While it is still early in the booking cycle for continental Europe, there was weak demand, particularly in Germany and Belgium.For summer 2017 bookings are ahead across all markets, particularly in continental Europe and northern Europe while selling prices are ahead of last year.Chief executive Peter Fankhauser, said: "We've taken big steps forward in recent months with the agreement of a new hotel sourcing partnership with Webjet and the launch of Thomas Cook China. However, we're particularly proud of the improvements we've delivered in customer satisfaction thanks to the work we've done to strengthen the quality of our offering." Shares in Thomas Cook were down 1.86% to 68.70p at 0927 BST.