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By JANE WARDELL
AP Business Writer
Thomas Cook profit up despite recession, swine flu71 days ago
(AP:LONDON) Thomas Cook Group PLC, Europe's second-largest tour operator, posted better-than-expected full-year results on Monday after reducing capacity and enticing recession-weary customers with better value deals.
Thomas Cook also painted a positive picture for the year ahead, after largely shrugging off the travel deterrent of the swine flue virus, saying that bookings for next summer remained on track and that winter bookings had recently strengthened.
Net profit rose 46 percent to 15.8 million pounds ($26.2 million), from 10.8 million pounds a year ago.
Revenue rose 6 percent to 9.27 billion pounds from 8.75 billion pounds as the company sold more all-inclusive four and five star vacations, while at the same time using its buying power to cut its 3 billion pound annual spending on accommodation.
Underlying pretax profits came in at 308.2 million pounds, broadly level with last year despite a consensus forecast of a 3 percent fall.
"While the late booking trend is still evident, our winter 09/10 trading position continues to improve and trend towards our planned capacity," said Chief executive Manny Fontenla-Novoa. "It is still early in the summer booking cycle, however we are confident we can manage trading in line with demand."
Fontenla-Novoa said the results were "particularly pleasing" against the backdrop of recession and the swine flu outbreak, which cost it an estimated 8 million pounds in Britain.
Thomas Cook shares were up 1.1 percent at 218.6 pence in midmorning trade.
"Given the compelling valuation and attractive risk/reward profile we retain our buy recommendation and 310 pence price target," Panmure Gordon stockbrokers said in a note.
The company, which carries around six million British holidaymakers each year, said that medium-haul destinations like Turkey and Egypt were particularly strong for the summer because of the weakness of the British pound.
The company has cut its lower-margin short-haul capacity in favour of more medium-haul destinations to match demand for non-euro resorts. Selling prices for medium- and long-haul holidays are up 7 percent overall.
Thomas Cook merged with the former Airtours business MyTravel in 2007 _ it said cost savings from the tie-up had been a higher-than- expected 215 million pounds _ while TUI Travel, Europe's largest operator, merged with First Choice two years ago as competition from low-budget airlines impacted on package tour operators.
Fontenla-Novoa said that consolidation had kept tour operators in business over the economic downturn.
"I actually think that, had there been four (travel agents) going into this recession, one player and maybe two would have gone bust," he said.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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