Thomas Cook, Preussag See End to Weak Holiday Demand

Thomas Cook, owned 50/50 by German national carrier Deutsche Lufthansa AG and German retailer KarstadtQuelle AG, said in its latest business report that bookings and revenue would be down only slightly on the previous year.

Group chief executive Stefan Pichler earlier forecast a drop in revenue of as much as 15 percent.

"We are expecting a lasting recovery in the demand for holidays up until the next winter season 2002/03," Pichler said at Thomas Cook's results conference in Mainz.

But at 21 percent, the drop in bookings in the first quarter of the current winter season was so strong that the company was unlikely to match the booking volume of 14.1 million holidays in the previous year, he said.

Light at the end of the tunnel

The European travel market as a whole is expected to close 2002 with a slight loss, its first in years. In its 2000/2001 business year, which ended on 30 September 2001, Thomas Cook's earnings before taxes and amortizations (ebta) came in at 155.2 million euros.

As a result of its cost-cutting program, which it has already initiated, Thomas Cook is now expecting to be able to more or less able to match this result as early as the current business year, Pichler said. In the first quarter of the year – the winter season of November to January – the year-on-year decline in ebta was kept down to 1 percent, even though the drop in revenue was by a two-digit percentage.

Betting on summer success

But it is the all-important summer business, which accounts for three quarters of group revenue, that will determine Thomas Cook's year. Because of a growing trend among customers towards last-minute bookings, the company will decide only in the next few weeks by how much it will have to reduce its flight and hotel capacity.

Pichler said it is unlikely that the adjustments will be as drastic as the 17 percent reductions made for the winter season. Meanwhile, Preussag said that it, too, expects the decline in bookings to come to an end soon.

The company, whose main brand is TUI, said that bookings in the winter season were starting to increase and were currently down by just a single-digit percentage from the year-ago figure.