Thomas Cook enters ‘red numbers’ and loses 183 million in his last fiscal year

Closes the year with a 3% drop in revenues in Spain due to lower demand at the destination
Thomas Cook Group lost 163 million pounds sterling (183.2 million euros) in its last fiscal year, ended on September 30, compared to the gains of nine million (10 million euros) of the previous one and after three consecutive positive years .

The British tour operator, which lowered its annual forecasts for the third time this week, had already warned that its adjusted net operating result (Ebit) would be 250 million pounds sterling (almost 281 million euros), 58 million pounds (65 million euros) less.

The company has decided to suspend the dividend charged to the annual accounts after the net losses recorded during the year, which includes a charge of 153 million pounds sterling (171.8 million euros) derived from the costs of transformation of the group, between others.

The group increased its turnover by 6.4% in the fiscal year, to 9,584 million pounds (10,764 million euros), while the profit from operations amounted to 97 million pounds sterling (108.9 million euros) , which is 57.2% less.

The CEO of the company, Peter Fankhauser, has again stressed that the year 2018 was “disappointing” for Thomas Cook in which the business of the tour operator in the United Kingdom was affected after four years of growth in profits in this market, which adds a more competitive environment for holidays in Spain.

DIFFICULT EXERCISE IN THE UNITED KINGDOM AND SPAIN

The operator figures in a cut of 88 million pounds sterling (almost 99 million euros) the negative impact on its margins due to poor performance in the United Kingdom. In addition, it registered a 3% drop in revenues in Spain, reflecting the displacement of travelers to other destinations, with a turnover level of 70 million pounds sterling (78.6 million euros).

In general terms, the adjusted net operating profit (Ebit) of its touroperation business in its entire network was 161 million pounds sterling (180.9 million euros), 34.5% less than the previous year.

“Although all of our home markets were affected, we saw a particular impact on our business in the United Kingdom, where the deceleration in reserves added to an already competitive market for Spanish holidays,” the company acknowledges. has a specific plan to address the decline registered by the tour operator in the United Kingdom that will be implemented throughout 2019 with capacity adjustments and replacement of more dynamic packages.

In continental Europe saw its reserves fall by 2% largely due to lower demand for travel to the Canary Islands, key destination in winter, and the diversion of travelers to competing destinations (Turkey, Tunisia, and Egypt) seeking alternatives to high prices of hotels in the Canarian archipelago.

RECOVERY OF TURKEY, TUNISIA AND EGYPT

The growth of its sales is explained by the return of tourists to destinations such as Turkey and Tunisia and Egypt, in North Africa, with a 44% increase in turnover, to 545 million pounds sterling (612 million euros) . It also highlights the demand to Greece that remained strong for the fifth consecutive year.

The sales of vacations to hotels of his mark grew 20%, central axis of his strategy of business. In all its destinations, sales to Turkey and Egypt grew significantly, by 70% and 95% respectively, while Spain was cut by 9% in part due to higher hotel prices in a particularly competitive environment where there is still more pressure on its margins, particularly due to the slowdown in reserves due to the summer heat wave.

TAKE OFF IN THE AIR BUSINESS

The poor performance in the British market contrasts with the strong increase in the profits of the group’s airlines, which reported 35 million pounds sterling (39 million euros), despite the costs derived from the interruption of flights in Europe, which meant costs of four million pounds sterling (4.49 million euros) to the airline business of the group and the challenge of increasing capacity to take advantage of the gap left by Air Berlin.

The revenues of the airlines increased by 14%, to 3,519 million pounds sterling (3,955 million euros), with an Ebit of 129 million pounds sterling (145 million euros), 12% more, and a gross result of exploitation before depreciation and rents (Ebitdar) of 456 million pounds (512.6 million euros), 7.2% more.