Travel firm Thomas Cook has warned of “further headwinds” for the rest of the year after reporting a £1.5bn loss for the first half of the year.
It said there was “now little doubt” that Brexit had caused customers to delay their summer holiday plans.
Some £1.1bn of the loss was caused by the decision to write-down the value of My Travel, the business it merged with in 2007.
The firm also said it had received “multiple” bids for its airline.
It has sought bidders for its fleet of 105 jets as it tries to raise funds for the business. Thomas Cook has issued a series of profit warnings that have sparked a plunge in its share price from 140p a year ago.
The first-half results were accompanied by its third profit warning in less than a year, driving the shares down 17% to 18p, close to lows they traded at in 2012 when it was in financial difficulty.
The company has closed 21 of its stores, its currency arm Thomas Cook Money is under review and more “cost efficiencies” are planned.
Thomas Cook said more of its 566 stores could close as leases end, and that 150 roles would be cut from its Peterborough head office.
Peter Fankhauser, chief executive, said that during the first six months of the year there had been “an uncertain consumer environment across all our markets”.
“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 added.
‘Concerned about delays’
“We normally have a holiday in France every year. We hire a house in the summer and drive through the Channel Tunnel and make overnight stops in hotels en route,” says David Turner.
“We have delayed booking this year until there is clarity over Brexit.
“We are concerned that there will be long delays at customs as passports and vehicles are checked and further delay and queues on both sides of the channel leading to the tunnel.”
Travel companies usually report a first-half loss – last year’s was £303m – but this year the loss was deeper because of the decision to revalue MyTravel “in light of the weak trading environment”. The companies merged in 2007.
Mr Fankhauser said that looking to the rest of the year “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.”
Profits in the second half of the year would be lower than the same period last year, the company said.
Thomas Cook has cut its capacity in anticipation of a slowdown, but said continued to “face intense competition, particularly in our UK business”.
Mr Fankhauser said customers were “having a great deal this summer”.
Julie Palmer, partner at Begbies Traynor, said that pressure was mounting on Thomas Cook to sell off its airline.
“Although it says it has received multiple bids for its airline, in the current climate with an environmental movement suggesting people are trying to make fewer journeys via air, the number of potential investors and the amount they are willing to pay could start to shrink.
“This means Thomas Cook’s need to sell its airline business to balance out the books will become increasingly urgent as time runs down to get the best price,” she said.
Thomas Cook’s underlying loss for the half-year was £245m compared with a £170m loss a year ago, while the company has secured £300m of loans ahead of the winter 2019/20 season.
The company is moving into the Russian and Chinese markets, and is also aiming to expand in the more profitable hotels business.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said the results made “grim reading”.
“Thomas Cook’s scaled back the holidays it’s offering in response to lower consumer demand, but the competitive environment means that even so, it’s having to offer discounts to get customers to part with their cash,” he said.