Thomas Cook has reported a pre-tax loss of £485 million for the 12 months to 30 September, which is up from the £398 million pre-tax loss reported for last year. After tax, the company’s loss was £590 million, also up from £518 million last year. Group revenue was down 3% from £9.8 billion to £9.5 billion, while like-for-like revenue fell due to planned capacity management measures taken in the US and West Europe. This is even after including £240 million from acquisitions.
Underlying gross profit at Thomas Cook dropped from £2.2 billion to £2.1 billion, which mostly reflects capacity reductions, a £110 million increase in fuel costs and tough trading conditions. However, the company’s overall gross margin remained at circa 22% with improved yield management and a decline in unprofitable capacity, especially in the UK. Underlying operational profit fell from £304 million to £156 million, including an £11 million gain from the Indian business that was disposed over the year.
Thomas Cook’s summer programme finished at the end of October with collective bookings in line with reductions in capacity. The company’s departed load factor slightly rose to 92.3%, and pricing trends are in line with September’s. The summer season ended strong in Northern Europe, while its German carrier performed better during the second half despite a difficult 2011 winter season. The political turmoil in the Middle East and North Africa significantly impacted their French business, while overcapacity caused their North American business to suffer.
For its winter programme, bookings are ahead of capacity in every market, while pricing trends remain robust. Dedicated capacity is being managed to reach a greater balance between customer demand and adding more flexible options to capacity if demand exceeds expectations. Mainstream capacity reductions in the UK target both short- and medium-haul holidays as unprofitable routes are axed and leased planes are returned. Average booking prices are robust and backed with an increase in long-haul bookings. Independent bookings are up 6% and account for more of the winter programme.
In Germany bookings are ahead of dedicated capacity on the back of long-haul and special interest bookings. Trading across Belgium, the Netherlands and France is still a challenge and behind in all markets compared to last year. Average booking price hikes throughout the segment are a reflection of success in passing on cost inflation. Its French business is still being made safer with a reduction in capacity, as they have 39% less left to sell. Booking trends are ahead of capacity cuts, and average prices are up 7%.
In Northern Europe, capacity has been dropped to less popular destinations, especially Thailand. Capacity has been moved to different long-haul destinations, mostly the Caribbean. In Hurghada, the group’s new Sunwing location has become very popular and driving a rise in Egypt bookings. Overall, booking trends are ahead of committed capacity, and their programme is 71% sold, which is better than last year.
Thomas Cook Group chief executive Harriet Green said more than 23 million customers enjoyed holidays with them this year, and half went on a flexible or independent break. They have a great opportunity to unlock the full potential of their brands and appeal to more customers if they build on their core strengths and continue improving their proposition with new, different products. As they develop their transformation plans, they will continue putting their staff and customers at the centre of their business. By leveraging an established best practice and focusing on harnessing technology, efficiency and delivering commitments, they are addressing current challenges and building a platform for growth in the future.
Green added that these results mirror the big issues the group has faced over the year, but they mask the improvement made over the fourth quarter. Their brand has shown its strength by recovering the ground lost during this tough period, and they have identified substantial efficiency improvements. The year to come is the opening phase of this recovery, and they are optimistic about the future.