Thomas Cook suffers $ 937.9 m loss


Published — Thursday 29 November 2012

Last update 28 November 2012 11:20 pm

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LONDON: Travel firm Thomas Cook yesterday posted deepening losses, hit by the euro zone crisis, Middle East unrest and high fuel costs, and added it was mulling options for its French and North American units.
Thomas Cook said in a results statement that it had suffered a loss after taxation of 585.9 million pounds ($ 937.9 million, 725.5 million euros) in the year to September, compared with a shortfall of 520.7 million pounds in 2010/2011.
Total revenues fell 3.2 percent to 9.5 billion pounds in a "difficult" trading environment, as customers in Europe shunned destinations in the Middle East and North Africa (MENA) area — particularly in Egypt, Tunisia and Morocco.
The debt-laden company's performance was hit by high fuel costs of 100 million pounds and reduced capacity.
Thomas Cook added that it cut net debt by 103 million pounds to 788 million pounds, partly through asset disposals.
The company, Europe's second-largest travel group, added that it was reviewing all options for its French operations.
"The French management team ... is reviewing various options to help the business reach its full potential, either through a restructuring, a disposal of certain assets or a corporate transaction such as a merger or a sale."
In recent times, Thomas Cook has been battered by the weak global economy, recession in Britain, restructuring charges, high fuel costs, and unrest in the MENA region.
"The West Europe segment has continued to be affected by the ongoing political unrest in the MENA region and the economic uncertainty caused by the European debt crisis," Thomas Cook added in yesterday's earnings release.
"In the MENA region, we have seen some recovery in demand for Tunisia but less than anticipated for Morocco and the important market of Egypt has deteriorated further."
West Europe revenues tumbled by 13.9 percent after capacity reductions in all markets, especially in France.
North American revenues meanwhile slumped 15.2 percent, hit by persistent market overcapacity, a very mild Canadian winter and the loss of a key premium hotel contract.
"We saw a continuation of the previously announced poor trading in our French and North American businesses and we are taking steps to minimize cash requirements and considering the best long term options for these businesses.
"The French market is acutely impacted by both domestic economic uncertainty and the political unrest in the MENA region, as the French-speaking destinations of Tunisia and Morocco are very popular with our French customers."
The debt-plagued group came close to collapse in November 2011 when it was forced to request a vital credit line from banks.
Earlier this year, it clinched a 1.4-billion-pound deal with lenders to extend the maturity of its bank loans to 2015.
As part of a key turnaround strategy, Thomas Cook has sold its aircraft fleet and five Spanish hotels. It also agreed to dispose of its Indian division.
Chief Executive Harriet Green, who was appointed in May to help overhaul the group, added that the its strategy was on course and bookings for the current winter season were strong.
"These results reflect the major issues that Thomas Cook faced last year, but they mask the material improvement that we made in the fourth quarter."

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