Travelers: Thomas Cook is even worse than Ryanair

Thomas Cook today said it will close 200 travel shops over the next two years as it battles for survival.

The warning comes as the travel giant announced pre-tax losses of almost £400million.

Thomas Cook today said it will close 200 travel shops over the next two years as it battles for survival.

The warning comes as the travel giant announced pre-tax losses of almost £400million.

It had already warned that 75 sites would have to close following its merger with the Co-op’s UK high street travel business, but today said a further 125 will be shut, putting around 1,000 jobs under threat.

And in a further blow to the travel giant, Thomas Cook Airlines has been named as the worst short-haul carrier by a consumer watchdog.

The company had the poorest results for overall customer satisfaction and the likelihood of being recommended to a friend, in a survey that placed it below even Ryanair.

Staff in 115 of the stores are expected to be informed that their branch is due to close today, leading to the loss of 661 jobs. The rest of the store closures will be announced over the next two years.

Today the group revealed it had slumped to a £398million pre-tax loss in the year to September 30, compared with a £42million profit in the previous year, after it was hit by poor trading in the UK and the Arab Spring put tourists off travelling to Tunisia and Egypt.

Underlying profits in the UK fell 68 per cent to £34.1 million after margins dropped to just 1 per cent and disruption from the Arab spring cost it some £15million.

The group said the first half of its current financial year would continue to be hit by the uncertain economic environment across Europe and the fall in demand for holidays in the Middle East and North Africa.

Stripping out exceptional charges of £573million, the group made underlying profits of £175million, which was a 29 per cent reduction on the previous year.

It expects ‘another challenging year’ but hopes it will start to see the benefits of its UK turnaround plan in the second half.

Bottom-line losses were driven by £428 million of impairments and write-downs on its UK and Canadian businesses and for a large IT project.

The group, which sells more than 22million holidays a year in the UK, delayed its results last month as it revealed it had gone back to its lenders to ask for an additional £100 million lifeline.

The group said the first quarter of its new financial year had got off to a slow start.

While there had initially been an ‘adverse impact’ on bookings in the UK following its announcement, it said it was encouraged by customers’ response to its recent summer promotion.

Bookings from UK customers for next summer were 8 per cent ahead of last year although it has also cut capacity by 8 per cent. But UK bookings for the current winter season are down 11 per cent.

The results will do little to allay fears of the group’s very survival, as shares fell more than 5 per cent in early trading before making back some of the lost ground.

Before today analysts had said any continuation of the slowdown in sales that forced the 170-year-old company to go back to its banks last month could prove disastrous

Thomas Cook’s shares slumped 75 per cent in just a day after it delayed results until today to give it time to convince its lenders to see it through the winter fallow period.

A steep decline in sales in France and Belgium was behind the need for the short-term lifeline and analysts will be keenly watching to see if the trend has been reversed.

Industry experts have also speculated that UK consumers in particular may have deserted the tour operator after reading of its woes, generating a self-fulfilling prophecy of the firm’s demise.

Efforts to raise £200million through asset sales made progress yesterday, as the firm announced that it had sold its interest in five hotels and a golf club in Spain for £81million.

Added to around £40million already collected through the sale of Dutch business premises and hotels in Mexico and Tenerife, the company still has around £80million of sales to get through.

Asset sales are aimed at whittling down a £1.1biliion debt burden.

Meanwhile, in a customer satisfaction survey a panel of more than 8,000 Which? members gave the airline a rating of 37 per cent, while Ryanair scored just 38 per cent.

The cabin environment of Thomas Cook Airlines was given one star out of five, and Ryanair got the same rating for the quality of its boarding process.

Both airlines were given two stars for their value for money.

But Ian Ailles, CEO of Mainstream for Thomas Cook UK & Ireland said: ‘The Which? Airline Satisfaction Survey results are in stark contrast to the high levels of satisfaction our customers tell us about.

‘From our own survey – which is 84 times larger than the Which? report – customer satisfaction scores have increased year on year with 89 per cent of our customers rating their flight as either excellent or good for their holiday last summer.

‘It’s impossible to see how this offers consumers a like-for-like comparison when Which? is comparing airlines with completely different product offerings that appeal to completely different customers.

If Mrs Smith wants to fly with her family to Spain, a smaller scheduled airline with restricted flying programme is not going to be able to help her.’

‘Unlike scheduled airlines, for most of our customers, our flights form part of their package holiday with us. An important factor is about getting them to their holiday destination on time and we came first in the CAA’s on time performance table last year, and expect to perform similarly well when the new report is out.’

In the Which? survey Swiss International Air Lines was voted as the best short-haul carrier with a satisfaction rating of 76 per cent. Aer Lingus came second with 67 per cent.

In the long-haul category, Singapore Airlines came number one with 89 per cent. Air New Zealand was second (88 per cent) and Emirates third (80 per cent).

Rochelle Turner, head of research at Which? Travel, said: ‘The airline you choose can have a big impact on your trip, making the difference between arriving feeling tired or refreshed.

‘The top-rated airlines all score highly for both the cost and value for money of the flight and most still include free hold luggage, plus onboard drinks and snacks in the ticket price – something clearly prized by travellers.’

The survey questioned 8,277 Which? members about their most recent return flight. Some 2,179 had travelled long haul, and 6,048 short haul.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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