Thomas Cook summer bookings strong

Thomas Cook, Europe's second-largest travel company, reported strong summer bookings on Tuesday, showing its resilience to the consumer slowdown and lifting its shares as well as those of rival TUI Travel.

The group, created last year from the tie-up of German retailer Arcandor's travel unit and Britain's MyTravel, also reported a 15 percent narrowing in its first-half operating loss to 177.5 million pounds ($348.9 million).

Thomas Cook Group Plc, which has over 3,000 outlets including more than 1,000 in Britain, said it continues to target 480 million pounds ($943.4 million) operating profit in fiscal 2010 and was confident of meeting expectations for the current year.

Average selling prices in the UK for Thomas Cook's holidays, which range from a week's self catering in the Mediterranean island of Ibiza to upmarket P&O cruises, are 5 percent ahead of the year-on-year after capacity was cut by 9 percent.

Margins are ahead of the prior year, the group said.

In northern Europe as a whole, bookings are 4 percent ahead of last year, with average selling prices up 10 percent. In continental Europe, bookings are 2 percent up with average selling prices 4 percent higher.

Mark Brumby of Blue Oar Securities said the market had expected an upbeat trading statement and got one. "There are few cracks showing here and the bears will have little to pick at," he said.

Thomas Cook shares, which have outperformed the FTSE All Share Travel & Leisure Index by 11 percent since the start of the year, were up 1.8 percent at 238-1/2 pence at 0835 GMT, with TUI Travel 2.3 percent higher at 210-1/2p.

RESILIENT MARKET

The group's Chief Executive Manny Fontenla-Novoa has repeatedly emphasised the resilience of the package holiday industry in times of a consumer slowdown, saying people are reluctant to sacrifice their annual holiday, even when household budgets are tight.

British consumer confidence fell in May to its weakest since 1990, according to a survey by GfK NOP last month, on concerns over the state of the economy and their own personal finances.

Thomas Cook said it has 19 percent fewer holidays to sell for summer 2008 in Britain compared with last year, which it said would stand it in good stead in the late bookings market -- which is usually characterised by deep discounting.

The major tour operators have been cutting capacity to reduce the level of unsold holidays, improve load factors and help support price rises for remaining holidays.

Group fuel requirements for the rest of the year have been hedged to 100 percent for crude and 93 percent for jet fuel.

Foreign currency requirements for the remainder of the year are hedged to 100 percent.

Fontenla-Novoa told reporters he foresaw increased acquisition opportunities in Europe as the trading environment gets harder and the impact of rising fuel costs kicks in.

"There were a lot of people struggling last year when fuel was at $80 a barrel. At $100 plus, I think there's going to be some big opportunities out there," he said.

Fontenla-Novoa also confirmed that the group is in talks with two potential joint venture partners in Russia and expects a deal to be completed by the end of the year.

The group is paying an interim dividend of 3.25 pence per share.

Thomas Cook also said Ludger Heuberg is to step down as chief financial officer for family reasons, with Juergen Bueser replacing him from July 1. Bueser has held the position of chief financial officer of Thomas Cook UK & Ireland since 2005.