The British travel group Thomas Cook suffered a net loss of 1.474 billion pounds in the six-month period ending in March 2019, due largely to Brexit-induced uncertainty that has caused people in Britain to delay their vacations. This was much higher than the 254 million pounds lost during the corresponding period of 2017-2018, the group said on Thursday in a press release.
Hit by particularly unfavourable market conditions, the company felt obliged to reduce the value of its activities by 1.1 billion pounds, which has weighed heavily on its half-yearly accounts. This decision is linked to a large extent on a 2007 merger with MyTravel, which Thomas Cook re-evaluated against the weak market environment, the company’s Chief Executive, Peter Fankhauser, explained.
The group stressed that it suffered from a slump in demand last winter after a summer heatwave in Europe caused tourists to stay home rather than fly to their usual sunny holiday destinations. Another factor, it said, was high prices in Spain’s Canary Islands.
The travel group also highlighted the effects of the uncertainties surrounding the British withdrawal from the European Union, which was to have taken effect in March, but was postponed to late October. Fankhauser said there was little doubt that the Brexit process led many British clients to put off their summer vacation plans this year.
Thomas Cook said it had responded by reducing its offer but still faced fierce competition, particularly in the United Kingdom, which is likely to keep up the pressure on its profit margins. Barring exceptional developments, it expects its operational profit for the second semester to be less than it was a year earlier.
The group had announced in February that it was thinking of selling off its airline so as to reward its shareholders and focus on its holiday operations. On Thursday, it announced that it had received “multiple bids” for all or part of its airline activities, which include the Condor carrier that it operates out of Germany.
For the moment, only the German airline Lufthansa has stated its interest publicly, although the British press also mentioned a possible offer from Virgin Atlantic of the United States.
The announcements have sent Thomas Cook’s shares tumbling on the London Stock Exchange, where they plunged by 16.72% to 19.15 pence on Thursday (at around 11 a.m.).