Thomas Cook shares slide after latest profit warning
BRITISH travel group Thomas Cook issued its third profit warning in less than a year yesterday, sending shares tumbling to a six-and-a-half year low as it said discounting and higher fuel and hotel costs would hurt it during the peak summer season.
Thomas Cook said it had received multiple bids for its airline unit, but this was overshadowed by what chief executive Peter Fankhauser called a "difficult trading environment" despite a delay to Britain's exit from the EU.
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"With a lot of holidays left to sell across the market, there are high levels of discounting at this early stage of the season... This is putting further pressure on margins," Mr Fankhauser told reporters, adding that a delay to Brexit from March 29 until October had brought no respite.
"There's no doubt that we have had a decline in consumer confidence during this whole Brexit phase in the run-up to March, but we have seen no material change to booking patterns in recent weeks since the delay to Brexit was announced," he added.
Thomas Cook warned that second-half underlying earnings before interest and tax would be below the same period last year and added it had agreed a £300m (€343m) bank facility to provide more liquidity for the 2019/20 winter season.
Shares fell as much as 23pc in early deals to their lowest level since November 2012, taking the value of the company below £300m. Later yesterday they had pared losses to trade 17.4pc lower at 19 pence. The cost of insuring corporate debt jumped, and credit default swap (CDS) markets implied a 96pc probability of default over the next five years, according to Refinitiv data.
The oldest travel company in the world stumbled badly last year when a heatwave in northern Europe deterred holiday makers from booking lucrative last-minute deals, leading to two major profit warnings and talk of a need to raise funds.
Thomas Cook said the outlook for bookings across Europe was lower than last year. Germany and Sweden were impacted by economic weakness, with the latter also seeing a growing environmental movement against air travel.
The firm said that it saw stronger demand for travel to Turkey, Egypt and Tunisia but hotel costs were rising.
Thomas Cook wants to sell its airline business, which includes German holiday carrier Condor, to cut debt and allow it to invest in its core holiday operations.
Net debt rose to £1.25bn by the end of March from £886m million a year earlier.