Thomas Cook shares fall as holiday prices stagnate compared to rival
Thomas Cook posted a narrower first-quarter loss yesterday but its failure to raise the prices of its holidays contrasted unfavourably with rival TUI, sending its shares almost 5pc lower.
The world's oldest travel group, in the middle of a cost-saving plan and with a new chief executive in place, confirmed it was still on track to grow this year, despite facing tough trading conditions in mainland Europe.
In the three months to December 31, the company said its underlying operating loss narrowed by £7m to £53m, which some analysts saw as only modest progress.
For the coming summer, the season when holiday companies make the bulk of their profits, Thomas Cook said average selling prices in Britain were 1pc lower, while in mainland Europe and the Nordic region, they were flat. That compared to the 1pc higher average selling prices TUI said it was seeing on Tuesday.
Thomas Cook is facing a renewed challenge from TUI, the tourism company formed in December from the merger of London-listed TUI Travel and German majority owner TUI.
TUI has annual sales of $20bn compared to Thomas Cook's of around $13bn. Thomas Cook chief executive Peter Fankhauser, appointed to replace Harriet Green in a surprise announcement last November, said the company was well placed despite current headwinds.
"The trading environment in many of our markets continues to be tough, but we believe the measures we are taking to improve our businesses will continue to strengthen our competitive position," he said.
Shares in Thomas Cook retreated 4.6pc to erase gains they made on Tuesday.
Thomas Cook said its German market was being affected by a tendency for customers to book their holidays later, but there were signs of a pick-up over the last four weeks.
In Britain, however, it was seeing strong demand for holidays with summer bookings 5pc higher than last year.