Thomas Cook mulls future of its airline after quarterly loss

  • Thomas Cook mulls future of its airline after quarterly loss

Thomas Cook mulls future of its airline after quarterly loss

The company will explore options for its airline branch "to enhance value to shareholders and intensify our strategic focus", a press release on Thursday said.

After the announcement of Thomas Cook about the possible sale of the airline, the tour operator's shares jumped 13% in price. Just under half of its airline seats are used by the tour operator's own customers, with the remainder sold to rivals and the public. "We will provide an update on this process in due course".

'As a result, we are today announcing a strategic review of our Group Airline. We now operate a fleet of 103 aircraft, of which a quarter serve long-haul destinations.

"Our Group Airline delivered strong growth in 2018, despite facing industry-wide disruption".

"There isn't a need for anyone to rush in and buy 103 aircraft from Thomas Cook unless it wants access to specific markets and in that case, the primary focus would be on slots", Nuala McMahon, analyst at Goodbody, said.

Its underlying loss from operations in the three months to the end of December expanded to £60 million.

The latest funds will be used to buy two hotels in Spain, a 250-room hotel in the Canary Islands and a 300-room hotel in the Balearics.

Although the airline is largely profitable - with earnings before tax and financing costs at £129 million for 2018 - it was losing money in the final quarter of a year ago.

In contrast, Thomas Cook's airline is largely profitable. Credit Suisse Group lowered their price objective on shares of Thomas Cook Group from GBX 140 ($1.83) to GBX 108 ($1.41) and set an outperform rating for the company in a research note on Thursday, November 15th. The Group Airline continued to perform well, delivering a seasonal underlying loss in line with a strong comparative period past year.

A good run of warm weather over the summer period meant fewer people booked overseas holidays while high hotel prices in the Canary Islands hit demand in this area.

The oldest travel company in the world, Thomas Cook was hurt by a heatwave that gripped northern Europe a year ago and deterred holiday makers from booking lucrative last minute deals. Capacity reductions led to a 4% rise in prices.

"As expected, the knock-on effect from the prolonged summer heatwave and high prices in the Canaries have impacted customer demand for winter sun", Fankhauser said.

Despite the operating losses, the tour operator performed well previous year, earning £6 per passenger in profit.

Sky reported this morning that CEO of the group, Peter Fankhauser, said that "bookings for summer 2019 reflect consumer uncertainty, particularly in the United Kingdom".