Unfortunately, natural disasters and man-made tragedies like last month’s terror attack near Sousse in Tunisia are occupational hazards in the travel business. Package operator Thomas Cook today said that it expected the latter would reduce this year’s profits by £25m, when combined with continuing concerns about a Grexit.
Boss Peter Fankhauser was quick to praise his company’s handling of the situation. ‘In response to the tragic events in Tunisia, we acted swiftly and decisively, evacuating more than 15,000 guests on approximately 60 flights,’ he said. ‘Our people have shown exemplary commitment during these crises.’
As the firm surely will have learned from the tragic Corfu boiler debacle, however, getting it right rarely gets as much attention as getting it wrong. It’s hard to know the impact that particular reputational mess has had on the business, in financial terms.
Thomas Cook did say, however, that bookings for the crucial summer season are so far in line with last year. It doesn’t expect the fallout from the terror attacks or the strong pound – which it believes will reduce profits by a further £39m – to keep it from growth.
The three months to June 30 were the twelfth consecutive quarter of growth, the firm said, though that’s really a matter of definition. Operational profits before tax and interest were £3m, up by £53m on a like-for-like basis, the difference mostly due to reduced costs from restructuring, litigation and onerous contracts.
Technically, once net finance charges and other items are involved, the firm made a £44m loss, though the situation’s improving – net debt fell by 23% to £392m.
On an underlying basis, however, Thomas Cook certainly is profitable, and its deal with Chinese firm Fosun appears set to pay off. It expects its joint venture in China to be operational by autumn, and announced the two firms will form an investment vehicle to acquire 30 to 50 hotels and resorts over the next three to five years, focusing on Thomas Cook’s core Mediterranean markets.
All in all, the outlook’s fairly sunny then, but perhaps not worth sending a postcard home for. Shares rose 1% by lunchtime to 127.6p.