Thomas Cook Regulatory News (TCG)

29 September 2011

Thomas Cook Group plc

Pre-close trading update

Many of our businesses have performed well this year, notably Northern Europe, Central Europe and our German airline. However, our overall performance has been impacted by our UK business and the disruption in the MENA region, particularly on our French business. Summer booking trends in our key markets have remained largely in line with expectations since we last reported.

·; Underlying operating profit expected to be broadly in line with market expectations;

·; Cashflow performance is strong;

·; Variety of measures underway to strengthen the balance sheet;

·; Actions underway to increase UK cost base flexibility as part of the overall UK business review.

The Group delivered steady results for July and August, in line with our expectations, but September has been a more challenging month, particularly in our French business. However, we still expect to deliver a result broadly in line with market expectations.

Our focus on cashflow continues to deliver benefits, with a £78m improvement in free cash flow for the 11 months to 31 August 2011, driven by lower capex and cash exceptionals and good working capital management. As at the 28 September 2011, we had circa £830m headroom of available cash and committed bank facilities.

Our objective is to see a substantial reduction in net debt over the next two to three years. We have already taken steps to enable us to achieve this aim, including the following:

·; We are making good progress on our previously announced asset disposal programme, targeting proceeds of up to £200m. We have sold our stakes in two assets and exchanged contracts on a further two assets. Whilst these disposals are not material, the combined proceeds are circa £40m and they are all expected to complete by the end of the calendar year;

·; The Board has decided not to declare any further dividend payments whilst the Group re-builds the balance sheet. The previously declared interim dividend of 3.75p per share will be paid on 7 October 2011.

The Group is focused on improving its financial flexibility, particularly around the seasonal cash low point at the end of December. Therefore we are working closely and constructively with our banking group to achieve this. In light of the actions outlined above, the Board is confident that agreement will be reached shortly.

Progress on our previously announced UK review is good, having highlighted a range of short, medium and longer term actions to improve profitability and better position the business for the future. We have already taken actions which will have a more immediate benefit, including:

·; Simplification of the UK organisational structure, facilitating faster decision making;

·; Reducing the current fleet of 41 aircraft by six aircraft to better align capacity with demand;

·; Rationalising and refocusing the UK mainstream hotel portfolio, already delisted circa 500 hotels from S12 programme and added circa 100 new, mainly differentiated, hotels;

·; Focusing on margins through better yield and capacity management;

·; Consulting on the closure of 24 loss-making retail stores at the end of their lease periods;

·; Reviewing call centre rostering to improve efficiency and align staffing with demand.

We continue to scope out our plans and will provide a full update on the review, the intended actions, timescales and the benefits and associated costs at the year end results presentation on 24 November 2011.

Our summer programme is now almost complete, with cumulative bookings mostly in line or ahead of capacity. Pricing trends are broadly in line with those reported in August and our departed load factor remains high.

Note: Figures as at 24/25 September. In Central 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.

Winter 11/12

It is a mixed picture for Winter 11/12, with comparators distorted by the impact of MENA. Where appropriate we have taken a cautious stance on risk capacity to ensure that we are well placed should demand worsen.

Note: Figures as at 24/25 September. In Central and West/East Europe, bookings represent all bookings including cars/overland, however for West/East Europe capacity represents airline seat capacity only. Northern Europe winter season is October-March.

UK bookings are slightly behind capacity reductions of 5%. These largely relate to long haul, where we have cut capacity significantly. Average selling price is distorted by the reduction in higher priced long haul bookings. Prices in short haul are currently ahead of prior year and we would therefore expect the ASP to trend up as the season progresses.

In line with its strategy, Central Europe has reduced its committed flight capacity to increase flexibility but is still targeting a modest increase in passengers for winter. Bookings are down but selling prices are up 6% as we focus on margin.

Capacity has been cut 35% in France due to the weakness of MENA destinations. Overall for the West/East Europe segment, bookings are ahead of capacity and pricing is benefitting from an increase in long haul.

The capacity increase in Northern Europe largely reflects the growth in the market, with bookings trending towards planned capacity as the season progresses. Pricing reflects the strategy to sell the commodity product early, so that it is not left to discount in the lates market.

In our German airline, further capacity has been added following the success of new continental and intercontinental routes. Bookings, up 26%, are significantly ahead of planned capacity of +17%, in part through the timing of promotions in our continental business. As a result of a significantly higher share of short haul bookings, pricing is down, but we are seeing yield increases on intercontinental routes.

Hedging

We are almost fully hedged for the Winter 2011/12 season and continue to build up our positions for Summer 12.

Note: As at 23 September 2011

On 21 September 2011, the Board announced the appointment of Frank Meysman as Chairman designate from 1 October 2011. He will become Chairman from 1 December 2011, when Michael Beckett retires from the Board.

Peter Marks, Group Chief Executive, The Co-operative Group, will also join the Board as a Non-Executive Director on 1 October 2011, the date of completion of the UK retail joint venture with The Co-operative Group.

Enquiries

A conference call for investors and analysts will take place today at 8am (UK time). Dial-in and replay details for the call are below. The replay will be available for seven days.

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

Conference name Thomas Cook

Replay dial-in +44 (0) 20 8196 1998

Access number 5359244#

Thomas Cook Group plc will announce its full year results on 24 November 2011.