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'Uncertain times' for Thomas Cook after wave of terror attacks

Published 25/11/2015

Thomas Cook posted profits after tax of £19 million - its first positive profit after tax since 2010
Thomas Cook posted profits after tax of £19 million - its first positive profit after tax since 2010

The boss of holiday firm Thomas Cook said he had never experienced such "unprecedented" disruption in his 30-year career after the deadly terrorist attacks in Tunisia, Egypt and Paris.

Peter Fankhauser, chief executive of Thomas Cook, said while Paris was not a major market for the group, the attacks in the city have hit consumer confidence.

He said it was too early to put a figure on the financial impact of flight suspensions to Sharm el-Sheikh in Egypt after the terrorist bombing of a Russian airliner last month.

But the group revealed the hit so far from the cancellation of holidays to Tunisia after the beach and hotel terrorist attacks in June, which cost it £130 million in sales in its year to September 30, with underlying earnings impacted by around £22 million.

Tunisia holidays still remain suspended for most markets, while airlines including Thomas Cook are meeting with the Department of Transport today to discuss flight bans to Sharm el-Sheikh.

But Thomas Cook posted its first annual bottom line profit for five years despite the Tunisia impact and said the new financial year had got off to a good start in the face of "an unprecedented level of disruption".

Mr Fankhauser said: "In my 30 years I've never experienced anything like it."

He added: "We operate in uncertain times, however we also know that when consumers want to travel, they recognise the greater security that tour operators like ourselves can offer."

Since the recent attacks, holidaymakers have been switching to destinations such as the Canary Islands, Cape Verde and long-haul resorts, according to Thomas Cook.

The group posted profits after tax of £19 million for the year to September 30 - its first positive profit after tax since 2010 - while underlying earnings rose 11% to £310 million.

It comes in spite of a year of "considerable challenges" after also becoming embroiled in a crisis over its handling of the deaths of two children nine years ago f rom carbon monoxide poisoning at a hotel booked through the travel company.

Mr Fankhauser said the group had "confronted its mistakes" following the Bobby and Christi Shepherd tragedy.

Thomas Cook shares surged by 10% after the group's upbeat full-year results and assurances over current trading.

The firm said UK bookings for the winter holiday season were 8% higher than a year earlier, with average selling prices up 2%.

Bookings for summer 2016 are 5% up year-on-year, with average selling prices up 3%.

Mr Fankhauser said it was "early days" following the latest attack in Paris, but added that "experience shows us that consumer confidence comes back quite quickly".

Thomas Cook had to bring 1,700 holidaymakers back from Sharm el-Sheikh in Egypt after flights were cancelled to and from the resort.

Mr Fankhauser is also leading an overhaul of the company's practices and culture after a report found earlier this month that Thomas Cook prioritised cost cutting over customers and still needs to address safety issues nine years after the Corfu tragedy.

Bobby and Christi, aged six and seven, died in 2006 as a result of a faulty boiler at a bungalow attached to the Louis Corcyra Beach hotel on Corfu.

Thomas Cook was slow to respond to their deaths and was insensitive in its dealings with their parents, said the report commissioned by Thomas Cook and overseen by former Sainsbury's boss Justin King.

As part of its efforts to refocus on customers, the group is this month rolling out the launch of a 24-hour satisfaction promise for key hotels, with front line staff given greater powers to resolve complaints on the ground.

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