Warm European weather takes toll on Thomas Cook’s profit forecast

Thomas Cook makes all its profit in the summer when its customers in northern Europe go on holiday, primarily in southern European destinations such as Spain, Turkey and Greece. (Reuters)
Updated 31 July 2018
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Warm European weather takes toll on Thomas Cook’s profit forecast

LONDON: British travel company Thomas Cook Group said its annual profit would come in at the lower end of expectations after hot summer weather in Europe affected late holiday bookings.

Thomas Cook makes all its profit in the summer when its customers in northern Europe such as Britain, Germany and Scandinavia go on holiday, primarily in southern European destinations such as Spain, Turkey and Greece.

But northern Europe has experienced warmer than average weather over the summer so far, affecting late bookings. Thomas Cook said that full-year underlying operating profit would now be at the lower end of market expectations.

The downgraded outlook comes after the company was reported by a British newspaper to be considering splitting off its airline and selling a stake to an outside investor to reduce debt.

The company runs both a tour operator business and an airline, and said in its third quarter statement on Tuesday that a strong performance from its airline, especially in Germany, had helped to offset the impact of a warm summer.

“The sustained period of hot weather in June and July has led to a delay in customer bookings in the tour operator, restricting our ability to drive margins in the ‘lates’ market,” Thomas Cook said in a statement on Tuesday.

Thomas Cook had guided in May that it was on track to meet analysts’ expectations of a 7 percent rise in its post-operating profit to £352 million ($462.04 million) for the 12 months to Sept. 30, on a constant currency basis.


Tesla rival Lucid Motors wants to build factory in Saudi Arabia

Updated 16 min ago
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Tesla rival Lucid Motors wants to build factory in Saudi Arabia

  • Lucid Motors eyes production plant in Kingdom after raising more than $1bn from the Public Investment Fund
  • California-based electric-car maker hopes to sell first vehicles for more than $100,000 

LONDON: A US-based electric-vehicle company that raised more than $1 billion from Saudi Arabia wants to build a factory in the Kingdom, and says its mission to build “the best car in the world” is well underway. 

The California-based Lucid Motors is developing its first model, the Air, which it hopes to sell for more than $100,000 when it enters production in less than two years’ time. 

Financial backing from Saudi Arabia’s Public Investment Fund (PIF), announced last year, will allow Lucid to proceed with the development of the all-electric sedan, as well as fund the $240 million cost of building the first phase of its factory in the US.

Peter Rawlinson, chief technology officer at Lucid Motors — and a former engineer at rival Tesla — said the company wants to eventually build a production plant in Saudi Arabia, and sees a “long-term” partnership with the Kingdom.

“I can see a really bright future, with a tangible manufacturing facility or facilities,” Rawlinson told Arab News.

“We’d love to do that … We’re currently in a period where we are investigating all these options. 

“There is a vision that there will be some sort of production facility in the future.”

Rawlinson added that it is “early days” for such a plan, but said he sees many opportunities for electric vehicles in Saudi Arabia — not least, because of the abundant sunshine and potential for solar power.

“We are undertaking the appropriate studies, but I’m really excited about the potential of this. This partnership is huge for us; we can benefit the Kingdom of Saudi Arabia in a significant, meaningful and long-term manner,” he said. 

“One of the great assets of the Kingdom is its endless reserves of sunshine, and how that can be harvested with solar energy. We’re a battery-storage technology company; that’s a way we could contribute. We’re exploring a number of avenues along those lines.”

Lucid is positioning itself in the luxury market, and Rawlinson said its Air model is looking to compete with the likes of the Mercedes-Benz S-Class. The Lucid Air is the company’s first car, but Rawlinson said an initial public offering (IPO) could be on the cards to develop future models.

The engineer brushed off the idea of a competitive threat from Elon Musk’s Tesla, where he once worked as chief engineer for the Model S.

“We don’t see Tesla as a key, direct competitor. We see the German gasoline cars — the petrol engine cars … as our core competitive set,” he said. 

“I’ve spoken to many people … who would gladly buy an electric car but say they’re not going to give up their Mercedes-Benz to buy a Tesla because of the interior. You’ve only got to step inside a Tesla to realize it’s not true luxury.”