It Was a Terrible, Horrible, No Good, Very Bad Year: In the wake of an anemic first quarter of the 2018-2019 financial year in which its losses increased by £14 million ($18.1 million) to £60 million ($77.6 million) year-on-year, Thomas Cook Group has launched a strategic review of its airline divisions in Great Britain, Germany (it operates under the Condor brand), Scandinavia and Spain.
In a prepared statement, the company, which is the oldest largest tour operator in the UK, said the airline review process “which will consider all options to enhance value to shareholders and intensify our strategic focus,” adding, “our strategy for the airline has been to profitably grow as a leading European leisure airline with a reliable, customer-focused service.”
While group revenue for the quarter was largely unchanged, gross margins fell, suggesting a continuation of the “highly competitive” market conditions in the UK at the end of the summer, and weaker demand for winter holidays in Nordic markets.
Weak Performance by Tour Operator Sector: Leading the company’s seasonal loss was its tour operator businesses, where a weaker performance in the UK and northern Europe was partially offset by a good performance in continental Europe.
For 2019, the group reported, its summer program is 30 percent sold, slightly ahead of last year with bookings described as being are consistent with capacity cuts “to closely manage our risk capacity throughout the year,” the company said, noting that, “as a result, tour operator bookings are down 12 percent, helping to support pricing, which is up in all key segments, and 4 percent higher overall.”
The group’s airlines, with a fleet of 103 aircraft, carried more than 20 million passengers in 2018 and generated £3.5 billion ($4.53 billion) in revenue, with underlying operating profits growing 37 percent year-on-year to £129 million ($167 million).
An item in the trade publication International Flight Network suggested this: “An indirect reason to sell the airline is the uncertainty around the Summer 2019 business as more and more people tend to book their holiday last minute, which makes it hard to plan ahead for the airlines. As a result, the carriers will reduce capacity slightly to ensure that they won’t be forced to operate mostly empty aircraft.”
How important are the carriers to Visit USA business? INBOUND checked the websites of both Thomas Cook and Condor and found that Thomas Cook says it serves 133 U.S. destinations and Condor indicates that it has service to 101 U.S. destinations.