Thomas Cook Regulatory News (TCG)

29 March 2011

Thomas Cook Group plc

Pre-close Trading Update

Thomas Cook Group will report its Interim results for the six months ending 31 March 2011 on 9 May. Prior to entering into a close period, Thomas Cook announces the following update on winter and summer bookings. 

Commenting on recent trading, Manny Fontenla-Novoa, Group CEO said:

"Overall, the business is performing well, given the disruption caused by the unrest in Egypt and Tunisia.

Summer holiday bookings are ahead of last year across most segments, with particularly strong growth in our German tour operator and airline, as well as in Northern Europe. It is a weaker picture in the UK where recent trading has also been affected by fragile consumer sentiment. In response, we have taken a more prudent approach to capacity."

Update on Tunisia and Egypt political unrest

The Group's operational response to the political unrest in North Africa was excellent and passengers in affected areas were repatriated quickly, in line with the advice of national Governments.

Restrictions on travel were substantially eased across the majority of source markets at the end of February and flights have now resumed to both destinations from the UK, Germany, the Netherlands, France and Belgium. Northern Europe will begin flying again to Egypt in April and to Tunisia at the end of May. Hoteliers are offering attractive discounts to rebuild confidence in the area.

Travel restrictions to Egypt and Tunisia resulted in approximately 150,000 cancellations, of which 110,000 were for travel to Egypt and 40,000 to Tunisia. As a result of the cancellations and the time required for demand to build back up to normal levels, we estimate that our programme to Egypt and Tunisia will operate at approximately 70% of the level originally planned.

The cost of the disruption in the second quarter is expected to be around £20 million, comprising approximately £5 million of repatriation costs and £15 million of lost margin. We have redirected our flying programme and secured additional accommodation at alternative destinations to meet our customers' holiday requirements, validating the flexibility of our operating model.

Bookings, capacity and booked load factors across all markets for mass market winter season holidays are lower than previously reported mainly reflecting the effect of cancellations and capacity realignments made in response to the political disruption in Tunisia and Egypt. Increases in average selling prices remain broadly as previously reported.

Excluding the impact of Tunisia and Egypt, trading in most of our European markets has progressed well, supported by an improving economic backdrop.

Note: Figures as at 26/27 March. In Central Europe and West / East Europe, bookings represent all bookings including cars/overland, however capacity represents airline seat capacity only. Northern Europe winter season is October-March. Central Europe bookings and ASPs include Oeger Tours.

Summer 11

Summer bookings and average selling prices have held up well across most markets as consumers respond positively to the rebalancing of the programme and the wide choice of holiday destinations and formats on offer. Cumulative bookings remain ahead in most markets, although the rate of booking intake has slowed noticeably in the UK as a result of continued economic uncertainty, and in West / East Europe, due to the popularity of North Africa as a destination. However, booked load factors are flat or ahead of last year in most markets.

Note: Figures as at 26/27 March . In Central Europe and West / East Europe, bookings represent all bookings including cars/overland, however capacity represents airline seat capacity only. Northern Europe summer season is April-September. Central Europe bookings and ASPs include Oeger Tours.

UK: Although bookings are 1% ahead of last year, capacity has been reduced to around last year's level in response to the continuing tough trading environment in the UK. As a result, the programme is now 55% booked, 1% ahead of last year. Average selling prices are up 4%, reflecting changes in mix towards more all-inclusive product.

Central Europe (Germany, Austria and Switzerland): Central Europehas continued to trade well with bookings 4% ahead of last year and pricing up 3%. 48% of flight capacity has been sold. Contracted flight capacity has been reduced, reflecting the growth in dynamic packages which reduces the need to contract ahead for flight capacity. Following the acquisition and integration of Oeger Tours, bookings to Turkey are enjoying strong growth.

West / East Europe (France, Belgium, the Netherlands, Eastern Europe): Bookings are 1% lower than last year, reflecting the importance of destinations in North Africa for French and Belgian customers. Contracted flight capacity is 48% booked, down 1% compared with last year. The segment retains flexibility to adjust capacity if required.

Northern Europe: Trading remains strong with bookings up 11%. The segment is benefitting from lower accommodation costs, as a result of a strong Swedish Krona, which it has passed on to customers. The programme is 47% booked, broadly in line with last year.

Airlines Germany: Bookings are 9% ahead of prior year and ahead of capacity increases of 6%, resulting in a booked load factor of 42%, up 1% on last year. Yields are up 2%, with continental yields down 1% and intercontinental yields up 5%.

Hedging

We are well hedged for both seasons but fuel prices have risen approximately 20% since the start of the calendar year. As a result, we have introduced fuel supplements in some markets.

As at 25 March 2011

M&A Update

On 6 March, our request to refer our proposed UK high street travel merger with The Co-operative Group to the Competition Commission in the UK was granted. The Competition Commission has 24 weeks, until mid-August, to reach its conclusion. We continue to work closely with the authorities to reach an expedited clearance.

We anticipate receiving competition clearance and completing our joint venture with Intourist in Russia in May, following a later than expected filing with the Competition authorities.

Credit Rating

As separately announced today, Thomas Cook Group plc has received long term corporate credit ratings of BB- from Standard & Poor's Rating Services and BB- from Fitch Ratings. The outlook assigned to each rating is stable. The same ratings have also been assigned to the €400m senior unsecured notes due 2015 and the £300 million senior unsecured notes due 2017.

Enquiries

Conference call for investors and analysts

A conference call for investors and analysts will take place today at 8.30am (GMT). Dial-in details for the call are as follows:

Dial-in number: +44 (0) 20 3003 2666

Password: Thomas Cook Pre Close Analyst Call

A replay facility will be available for 7 days:

Dial-in number +44 (0) 20 8196 1998 (from within the UK)

Access PIN 9812544#