Thomas Cook slumps 18% on terror warningComments Off on Thomas Cook slumps 18% on terror warning
A shock profit warning and bookings slump sent Thomas Cook’s shares spinning to a three-year low as the disappearance of an EgyptAir passenger jet sent another jolt through the tourist industry.
Cook’s share price collapsed 18%, or 16.35p, to 73.15p, the lowest since March 2013, as the holidays firm revealed summer bookings were down 5% on last year.
As the City reacted to news of the passenger jet flying from Paris to Egypt falling off radar screens, the company warned terrorist attacks had left demand in Belgium “at a standstill”.
Bookings for Turkey, its second-biggest market last year, have plummeted, largely because of a spate of deadly bombings, including an attack in Istanbul which killed 11 German tourists in January.
Last year, 23% of Thomas Cook’s holidays were to Turkey. The company’s German airline, Condor, is the market leader for the country but has found it difficult to shift its business to other destinations.
Sales of holidays to the Balearic islands, mainland Spain and long-haul destinations including Cuba were not compensating for the loss of bookings to Turkey despite the company’s early efforts to reschedule more than 1.2 million seats.
Thomas Cook’s earnings will now be at the lower end of a range of £310 million to £335 million.
Analysts had previously been looking at a range from £310 million to £359 million. Shares in rival TUI today fell 3%, or 25p, to 1008p and engine-maker Rolls-Royce fell 2.9% to 637p.
Peter Fankhauser, chief executive of Thomas Cook Group, said: “This is a season like I have never seen before. The current market environment remains difficult.”
Besides the problems in Turkey, Belgians, who make up 5% of Thomas Cook’s revenues, have virtually stopped booking since the terrorist attack on Brussels airport in March, in which 35 people lost their lives.
In continental Europe, bookings are down 10% on last year, while in the UK they dropped 3%. Excluding Turkey, summer bookings for 2016 were up 6% compared with the same point last year.
Fankhauser remained confident that an increasing trend to late booking this year, would see many holidaymakers opt for Turkey in the end.
He said: “I think they will still go to Turkey, which offers really good value. We have had about a million bookings for Turkey so far.”
Analysts at Credit Suisse said that the tour operator’s earnings were likely to be about £40 million lower than it had expected, due to poor Belgian trading and weakness at Condor.