Thomas Cook slumps to £1.5bn loss as 'Brexit hits holiday plans'
Video report by ITV News Business Editor Joel Hills
Thomas Cook has slumped to a £1.5 billion half-year loss as it warned Brexit uncertainty had seen Britons delay their summer holiday plans.
The holiday giant's pre-tax losses widened from £303 million a year earlier, and the firm warned “challenging” trading over the peak summer season was set to put the full-year result under pressure.
It now expects underlying earnings to fall over the second half as holiday firms cut prices to boost Brexit-hit demand and costs of fuel and hotels rise.
It also confirmed “multiple” bids have been made for all or part of its airline, which was put up for sale in February, and said it was assessing the bids.
Peter Fankhauser, chief executive of Thomas Cook, told ITV News that selling the profitable airline wing of the business was a "good way" to reduce the company's debt.
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He said: "We are very proud of our airline, it makes profit our airline and that's why why are using the airline to get the money for paying back the debts."
Thomas Cook is planning further cost savings in the second half to offset tougher trading and higher fuel expenses, following its decision in March to shut 21 stores and axe more than 300 retail roles.
Whenpressed on the future of Thomas Cook's remaining stores, Mr Fankhauser said he "can't predict" any potential closures because the company is "following the customer trends".
He said: "The more customers are moving online, the more we are closing, one after the other, the shops."
He said political uncertainty surrounding Brexit has resulted in some customers delaying bookings but claimed the business was suffering the same way in other countries.
"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 told the Press Association.
He added: “As we look ahead to the remainder of the year, it’s clear that, notwithstanding our early decision to mitigate our exposure in the ‘lates’ market by reducing capacity, the continued competitive pressure resulting from consumer uncertainty is putting further pressure on margins.
“This, combined with higher fuel and hotel costs, is creating further headwinds to our progress over the remainder of the year.”
Explaining the decision to sell the airline wing of the firm, Mr Fankhauser told ITV News Thomas Cook has a "high debt burden".
"That means you have to pay a lot of interest just to pay the interest on your debt and that is something we have to address," he said.
"Very early in the cycle we said we have to review whether we need an airline or not and we did a strategic review."