Given the capacity tension in the European airline industry, it may come as a surprise to see Thomas Cook's (TCG) carrier, Condor, as a bright spot in the travel group's half-year results. Group chief executive Peter Fankhauser emphasised the airline's “reliable and high quality” service, amid a turnaround in the business and the sector-wide disruption brought on by the collapse of Air Berlin and Monarch. If anything, Thomas Cook has benefited; the purchase of an Air Berlin unit, alongside the launch of a Palma-based airline, has helped boost capacity by 10 per cent. As a result, 70 new routes have been added, and summer bookings are up 18 per cent – contributing to a 9 per cent rise in group airline revenue to £1.3bn at the half-year point.
A decent performance from the airline business has helped to offset the margin squeeze in the UK, caused by a weaker pound and hotel bed cost inflation, and which would likely have put a greater dent in the gross margin than the 20 basis point contraction to 20.8 per cent seen in the period. This has prompted a cut in capacity to Spain, and a shift in focus to Eastern Mediterranean destinations. Summer 2018 holidays are 59 per cent sold, a slight decline on 61 per cent this time last year, with Turkey, Greece and Egypt proving popular destinations.
Analysts at Stifel expect pre-tax profit of £226m for the September 2018 year-end, giving EPS of 11.2p, compared with £186m and 9.3p in FY2017.
| THOMAS COOK GROUP (TCG) | ||||
| ORD PRICE: | 142p | MARKET VALUE: | £2.18bn | |
| TOUCH: | 141.8-142p | 12-MONTH HIGH: | 150p | LOW: 88p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 89 | |
| NET ASSET VALUE: | 2.4p* | NET DEBT: | £886m | |
| Half-year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 2.99 | -314 | -17.4 | nil |
| 2018 | 3.23 | -303 | -16.6 | nil |
| % change | +8 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes £3.1bn of intangible assets, or 199p a share | ||||
