Thomas Cook’s Q3 Profit Down, Cuts Outlook

Thomas Cook has lowered its full-year profit forecast as attacks in Europe and the failed coup in Turkey made people change their travel plans.

The company’s operating profit in the third quarter fell 93 percent to GBP£2 million, from GBP£30 million a year ago, while summer bookings were down 5 percent compared to last year.

It said it expected to report operating profit for its full-year of GBP£300 million, compared with a forecast in May of between GBP£310 million and GBP£335 million.

Europe's travel industry has been hit in recent months as travel groups and airlines struggled to respond to attacks in France, Belgium and Germany, prolonged security issues in Turkey and uncertainty caused by Britain's vote to leave the EU.

Thomas Cook, the world's oldest travel firm, said its underlying operating profit had fallen 93 percent in the third quarter, as it worked to move its holiday packages from the eastern to the western Mediterranean.

"We are operating in a challenging geopolitical environment, with repeated disruption in some of our key source and destination markets," chief executive Peter Fankhauser said.

"In addition, while Brexit has had no noticeable impact on our bookings so far, it has added to a general sense of uncertainty - for our business and our customers alike."

Thomas Cook launched a turnaround plan in 2012 after two years when the euro zone debt crisis and political turmoil in Egypt and Tunisia left it struggling with its debt.

It has since shifted airline seats from Turkey, Tunisia and Egypt to the Canaries, Balearics and mainland Spain.

While the efforts have put Thomas Cook on a stronger footing, the firm has struggled with the repeated security problems across the region, especially in Turkey, its fourth most important market.

Adding to the uncertainty, Britain's vote to leave the EU means the pound is down 12 percent against the US dollar and 8.5 percent lower against the euro, making overseas holidays more expensive for Britons.

Fankhauser said Thomas Cook customers should not see any immediate rise in costs because the group had hedged against currency moves until next summer.