Thomas Cook Raises Savings Goal as Capacity Management Pays OffRichard Weiss
Thomas Cook Group Plc said current bookings were in line with its forecasts as the 172-year-old U.K. tour operator had fewer trips left to sell and raised a savings target.
“Current bookings match our expectations and we are optimistic that we will maintain satisfactory prices and margins during the remainder of the summer season,” the company said in a statement today.
The company raised a goal for cutting costs and improving profit by 10 million pounds ($15 million) to 400 million pounds by fiscal year 2015. Committed capacity left to sell declined 9 percent from a year earlier, the company said, after strong bookings along with planned reductions in committed capacity of about 6 percent. Sales in the quarter ended June 30 rose 4.9 percent to 2.35 billion pounds, while the loss before taxes narrowed to 79 million pounds, from 84 million pounds last year.
Chief Executive Officer Harriet Green, at the helm for one year, is refinancing debt under a three-year turnaround plan to improve margins, closing underperforming stores, cutting costs and selling non-core assets, including hotels in Spain. Summer season bookings in the company’s mainstream business currently are flat compared with last year, Green told journalists on a conference call today.
“We make sure supply and demand are well-aligned,” she said.
The stock rose as much as 2.3 percent in London and was trading up 2.1 percent to 156.8 pence as of 8:38 a.m. local time. The shares have more than tripled this year, making them the best performer on the 11-member Bloomberg Europe Leisure Time Index.
“We continue to believe that the ‘real’ costs-out target for fiscal 2015 is 500 million pounds and we welcome the ongoing progress toward this ultimate figure,” James Hollins, an analyst with Investec Bank plc in London, said in a note to clients. “Current trading remains positive.”
Recent unrest in Egypt and Turkey is not having a significant effect on the company, while hot weather in Europe may slow late bookings, Thomas Cook said.
“We do recognize that the ‘lates’ market last year was particularly strong due to inclement weather throughout much of Europe, which has not been replicated this year,” the company said.