Belfast Telegraph

Thomas Cook to give trading update after difficult year for tourism

Thomas Cook will update the market on its first quarter trading figures next week as the travel sector looks to recover from a year that saw European terror attacks and political instability in Turkey dent bookings.

City analysts forecast that losses at the travel giant will widen in the three months to the end of December, with the group's Nordic and German airline operations dragging on its performance.

Jeffrey Harwood, at Stifel, said: " Last year a £49 million operating loss was incurred in the first quarter. We expect some increase in the loss this year, reflecting lower profits in Nordics, difficult trading at Condor and adverse currency translation movements."

Last year Thomas Cook boss Peter Fankhauser bemoaned a "difficult year for tourism" after the group revealed that underlying profits dropped to £308 million in the year to September 30 from £310 million a year earlier.

Political ruptures in Turkey and the terrorist atrocity in Brussels knocked demand, although it said that moves to shift to alternative destinations helped limit the blows.

Wyn Ellis, analyst at Numis Securities, said: "We remain unenthusiastic about the investment merits of Thomas Cook: we believe that the basic business model continues to face structural challenges."

Nevertheless, Mr Ellis still expects the travel giant to report an "upbeat" set of results on Thursday amid a backdrop of steady demand and softer comparatives.

He said: "Underlying trading and demand trends have been quite encouraging.

"Travel agents in the UK have also reported brisk bookings in recent weeks in a very competitive market in which the tour operators are in a strong relative position ... Consequently, we anticipate a relatively upbeat first quarter update."

Mr Ellis also flagged the closure of the Sharm el-Sheikh beach resort in Egypt last year, which saw Thomas Cook's figures take a hit in the first three months of 2016.

Similarly, Mr Harwood said that "despite Brexit and the weakness of sterling, demand for overseas holidays remains robust" in the UK.

"At the results in November, management indicated it was confident in achieving a result in line with expectations in 2017.

"While it is still early days, we consider that market conditions remain largely unchanged and accordingly the February update is likely to give a similar message on the prospects for the current year," he added.

Analysts also expect the firm to reveal it cost £2 million to repatriate customers from Gambia following unrest in the African nation last month.