Brexit Preventing People From Holidaying, Says Thomas Cook

There would be further headwinds for the rest of year, warned the travel firm Thomas Cook as it also reported a loss of £1.5bn for the first half of the current year. The company said that the company now had “little doubt” that consumers had decided to postpone their summer holiday plans because of the impact of and uncertainty of Brexit.

The company however also mentioned that a write-down of the value of My Travel which Thomas Cook had merged in 2007 also partly accounted for a part of the £1.1bn of the loss. “Multiple” bids for its airline has also been received by the company, it said.

In its attempt to raise funds for its business, Thomas Cook is seeking to sell of its fleet of 105 jets and has asked for bidding for the same. The share prices of the company have dropped from 140p a year ago because of a number of profit warnings issued by the company throughout the year.

The company also issued its third profit warning in less than a year along with the first-half results which resulted in its shares dropping by 17 per cent to 18p. That value was near the lows of the share price that it touched in 2012 – at a time when it was facing stiff financial difficulties.

The company has planned a number of cost effective strategies which include reviewing its currency business unit Thomas Cook Money aside from the closure of 21 of its stores. The company has also said that as many as 566 of its stores could be shut down after the end of their lease periods and there could be abolishing of 150 posts at its Peterborough head office.

There had been “an uncertain consumer environment across all our markets” during the first six months of the year, said Peter Fankhauser, chief executive of the company.

“The prolonged heatwave last summer and high prices in the Canaries reduced customer demand for winter sun, particularly in the Nordic region, while there is now little doubt that the Brexit process has led many UK customers to delay their holiday plans for this summer,” he added.

“We normally have a holiday in France every year. We hire a house in the summer and drive through the Channel Tunnel and make overnight stops in hotels en route,” says David Turner.

Till such time there is clarity over Brexit, the company has delayed bookings, said Turner.

“We are concerned that there will be long delays at customs as passports and vehicles are checked and further delay and queues on both sides of the channel leading to the tunnel,” he added.

Looking to the rest of the year “the continued competitive pressure resulting from consumer uncertainty is putting further pressure on margins,” Fankhauser said. “This, combined with higher fuel and hotel costs, is creating further headwinds to our progress over the remainder of the year.”

The company also said that the in the second half of the current year, the profits would be lower compared to the same period last year.

(Adapted from BBC.com)

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Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability, Uncategorized

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