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Risk Warning
01/12/2009
HOLIDAYMAKERS' determination to take their summer break despite the recession helped travel giant Thomas Cook post forecast-beating results.
The firm, which flies from Leeds Bradford airport, said bookings for next summer are on track, with "continued strong growth" expected from destinations such as Turkey and Egypt as customers shun Eurozone countries due to the weakness of the pound.
Chief executive Manny Fontenla-Novoa said: "Recent customer research shows that UK holidaymakers remain intent on taking their holidays abroad next summer."
Thomas Cook recently revealed plans to expand its presence at Leeds Bradford airport, adding three new destinations. It now flies 17 routes from Leeds Bradford airport and has one aircraft based there.
During this winter it added flights to Sharm el Sheikh in Egypt and Monistir in Tunisia, while its summer 2010 schedule now includes flights to Antalya in Turkey as well as Sharm el Sheikh.
The group's underlying pre-tax profits came in at £308.2m for the year to September, broadly level with last year despite City predictions of a three per cent fall to about £299m.
Mr Fontenla-Novoa said the results were "particularly pleasing" against the backdrop of recession and the swine flu outbreak, which cost it an estimated £8m in the UK. He added while conditions this year could be even more challenging, the group is confident it can meet expectations, even taking into account the impact of rising unemployment, consumer spending, weak sterling and next summer's football World Cup.
"We always thought that 2009/10 was going to be very tough, perhaps even tougher than the year just finished," said Mr Fontenla-Novoa. "We've been planning for this for the last 12 months, reviewing our cost base and negotiating hard with our suppliers and particularly our hoteliers. We've shown that we can trade our way through difficult circumstances."
Thomas Cook has reduced the number of holidays it sells by more than a quarter in the last two years, enabling it to increase its average selling prices and avoid having to offer heavy discounts at the last minute to fill empty slots. This strategy has helped it lift profits and margins throughout the recession, while smaller operators have struggled to stay afloat. Britain's third-biggest travel firm, XL Leisure, fell into administration last year.
Thomas Cook carries around six million UK holidaymakers a year. Despite customers booking later, the firm said winter bookings had "strengthened in our major markets".
The travel agent's average UK selling prices are up six per cent, mainly due to the pound's weakness against the euro and fuel costs.
Thomas Cook has also 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 seven per cent overall.
"For Thomas Cook to maintain its performance in current uncertain economic conditions has to be regarded as quite a coup, with the positive forecast for next year underpinning the sentiment towards the company," said Richard Curr at Prime CFDs.
Airport targets the States
Leeds Bradford airport has launched a drive to forge transatlantic ties with the United States. Currently the airline does not have any flights to America, but aims to attract airlines to introduce services to the US.
Under a plan dubbed Project America, owner Bridgepoint Capital aims to tap into tourist and business travel between Yorkshire and America. It estimates about 250,000 passengers travel between Yorkshire and the Humber region and the US annually, with 750 American-owned businesses in the region. It believe the bulk of this trade is lost to Manchester airport.
The airport hopes to begin talks with airlines including Continental, American, Delta and US Airlines. Tony Hallwood, the airport's commercial director, said: "Leeds is the largest city in the UK that does not have a direct service to the US. "Project America is really to raise the profile of Leeds. Clearly if Leeds is to be taken seriously on a world stage it needs to introduce a number of gateway services."
Leeds Bradford hopes the first services will be introduced by 2012. "This is a long burn," said Mr Hallwood. "We are looking to introduce services to open up the whole of America to the business and leisure community of Yorkshire."
Bridgepoint bought the airport in 2007 and outlined a £70m masterplan designed to improve facilities and increase passenger numbers to 5.1 million a year by 2016.
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