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Thomas Cook slumps to £1.46bn half-year loss as Brexit hits holiday demand

(c) Sky News 2019: <a href="http://news.sky.com/story/thomas-cook-slumps-to-163146bn-half-year-loss-as-brexit-hits-holiday-demand-11721113">Thomas Cook slumps to £1.46bn half-year loss as Brexit hits holiday demand</a>
 

Thomas Cook has reported a half-year loss of £1.46bn as it counted the cost of Brexit uncertainty causing UK consumers to delay holiday plans.

Shares opened 21% lower after it also warned of "challenging" trading over the peak summer season putting profits for the remainder of the financial year under pressure. The shares later partly recovered but were still almost 15% lower by the close.

Thomas Cook also said it was cutting 150 jobs at its head office in Peterborough as it continues to reduce costs.

The bulk of the loss for the six months to the end of March was caused by Thomas Cook's decision to write down the value of part of the business by £1.1bn in the light of the weak trading environment.

Chief executive Peter Fankhauser said: "There is now little doubt that the Brexit process has led many UK customers to delay their holiday plans for the summer."

Thomas Cook said political uncertainty related to Britain's exit from the EU had led to "softer demand for summer holidays across the industry" while tough competition has meant it had to increase cut-price offers.

It added that that there had been "no tangible change to booking patterns in recent weeks since the announcement of a delay to Brexit".

The half-year result covers the winter period when travel companies traditionally struggle to turn a profit, but was still several times larger than the loss of £303m for the same period a year ago.

The company pointed to last summer's prolonged heatwave and high prices in the Canaries, as well as Brexit, as factors influencing its latest results, as they had reduced customer demand for winter sun.

It also blamed the currency changes and the timing of Easter as its revenues for the six-month period fell by 6% to £3.02bn.

Thomas Cook has already closed 21 stores with the loss of 300 jobs, put up its airline business for sale - confirming today that it had received "multiple bids" for the business - and reduced capacity as it faces up to the challenges facing the sector.

It has also now agreed a new £300m banking facility with lenders to help see it through this winter.

Mr Fankhauser said that "continued competitive pressure resulting from consumer uncertainty" combined with higher fuel and hotel costs was "creating further headwinds to our progress over the remainder of the year".

The results come a day after rival TUI also cited Brexit as it reported widening half-year losses.

EasyJet said last month that "unanswered questions" over Britain's departure from the EU were weakening demand.