10:13 GMT +322 October 2019
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    An Airbus A321 aircraft of the Thomas Cook carrier at the Manchester Airport (File photo).

    Stocks TUMBLE After Thomas Cook Issues Profit Warnings, Loses £1.5bn in Profits

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    The company's shares plummeted 17 percent to 19p, a £1.5bn loss before taxes six months before 31 March, with UK holiday business company MyTravel writing down £1.1bn of its value.

    UK holidaymaking firm Thomas Cook has issued a fresh profit warning on Thursday after revealing that UK travellers had cited Brexit uncertainty as reasons for postponing travel plans. 

    Thomas Cook bought MyTravel in 2007 following amid a £303m loss in profits and revalued the package holiday company "in light of the weak trading environment".

    To date, Thomas Cook has closed 21 branches across the UK and slashed its available holiday packages due to weakening sales. 

    Thomas Cook CEO Peter Fankhauser said: "The first six months of this year have been characterised by an uncertain consumer environment across all our markets. 

    READ MORE: TUI Profit Losses Double, Company Cites N Europe Heatwave, Weak British Pound

    He added that last summer's "prolonged heatwave", in addition to higher prices in the Canaries, had "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." 

    Rising fuel and hotel costs have also impacted the firm's profits and are predicted to do so for the rest of the year, the statement said, adding that it had sold just 57 percent of its summer holiday packages and that tour operator bookings had fallen 12 percent.

    Hargreaves Lansdown senior analyst Laith Khalaf said: "Trading in the UK market is challenging, with consumers delaying holiday plans until there's some clearer direction on Brexit. With last year's heat wave fresh in the memory, many British holidaymakers will no doubt be thinking it's best to stay put this summer."

    He added that Thomas Cook had scaled back holiday packages "in response to lower consumer demand," but that also the increasingly competitive market meant that the firm had "offer discounts to get customers to part with their cash." 

    Other UK travel firms have voiced similar complaints over the holiday market, with Ryanair restructuring its own business after company chairman David Bonderman was voted down for re-election amid company strikes and rising fuel costs, causing the company to lose £17.2 in revenues since March 2014. Thomas Cook also made similar allegations in February, stating that "highly competitive" market conditions in summer 2018, as well as weaker demand for winter holidays in the Nordics and growing demand for travels to Turkey, Tunisia and Egypt were affecting its profits. The firm would sell of parts of its business to reduce £1.59bn in incurred debts and would allow the company to focus on building its hotel franchise, with plans to open 20 hotels in the summer.

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    Tags:
    profit warning, tourism economy, tourism industry, tour companies, sales decline, travel, Thomas Cook, United Kingdom
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