Thomas Cook puts in-house airline up for sale after increased losses
The carrier made a profit of over £6 per passenger in the last financial year
One of the UK’s biggest holiday firms is seeking a buyer for its airline.
Thomas Cook, which has just announced increased first-quarter losses, says it will consider all options for its flying business “to enhance value to shareholders and intensify our strategic focus”.
The tour operator stressed that flights will continue as normal and that any deal will require the buyer to provide the same level of carrying capacity for package holidays.
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The airline operates in the UK, the Nordic nations and Germany, where it uses the Condor brand. It is a mid-sized carrier with 103 aircraft, flying around 20 million customers a year to 120 destinations – mostly in Europe but with long-haul operations particularly across the Atlantic.
Unlike some other airlines of a similar scale, Thomas Cook Airlines is in reasonably good health. It made a profit per passenger of over £6 in the most recent financial full year.
Just under half of its capacity is currently used by the tour operation arm for providing seats for package holidaymakers. The remainder is sold to other holiday firms or direct to travellers.
A sale would help Thomas Cook to reduce its debt, currently at £1.59bn, and accelerate its strategy of differentiation by opening exclusive hotels. This summer it will open 20 new own-brand hotels.
Thomas Cook's underlying loss for the first quarter, covering October to December, rose by £14 million to £60 million.
Margins were lower, which Thomas Cook said reflected “the highly competitive market conditions in the UK at the end of the summer season, and weaker demand for winter holidays in the Nordics”.
Strong demand for Turkey, Egypt and Tunisia is offsetting weaker demand for Spain.
Peter Fankhauser, Thomas Cook’s chief executive, said: “As expected, the knock-on effect from the prolonged summer heatwave and high prices in the Canaries have impacted customer demand for winter sun.
“Bookings for summer 2019 reflect some consumer uncertainty, particularly in the UK, and our decision to reduce capacity which will both mitigate risk in our tour operator business and help our airline to consolidate the strong growth achieved last year.”
Bookings for the summer of 2019 are 12 per cent down, reflecting a capacity cut aimed at reducing exposure and shoring up prices – which are 4 per cent higher overall.
Mr Fankhauser said: “Some customers appear to be putting off bookings because of concerns about Brexit.” But he told The Independent: “We are really confident we will be able to offer high-quality holidays even in the event of a no-deal Brexit.”