Round and round we go on the ever-dizzying and nauseating Brexit roundabout. The most recent instance of delay to the proceedings has caused a direct hit on UK travel agency Thomas Cook Group, with a reported half-year loss of £1.46 billion, store closures and job losses, as Brits delay holiday plans in line with Brexit uncertainty.
In a statement, Thomas Cook’s Chief Executive Peter Fankhauser said: “The first six months of this year have been characterised by an uncertain consumer environment across all our markets. The prolonged heatwave last summer and high prices in the Canaries 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.”
Fankhauser said that the £1.4-billion loss reflected a non-cash impairment of historic goodwill, ‘largely related to the merger with MyTravel in 2007’ – a merger that the company has now re-valued following the ‘weak trading environment’.
Shortly after the company announced its loss margin, Bloomberg reported that stocks for the company fell 22 per cent – dropping to the lowest since November 2012. And Thomas Cook has also since closed 21 stores (laying off some 300 retail employees), is set to review Thomas Cook Money and has put its airline business up for sale – Fankhauser adds that the airline has already received ‘multiple bids’ for the business.
The company has also agreed a new £300-million banking facility with lenders to help see it through this winter. “As we look ahead to the remainder of the year, it’s clear that, notwithstanding our early decision to mitigate our exposure in the 'lates' market by reducing capacity, the continued competitive pressure resulting from consumer uncertainty is putting further pressure on margins. This, combined with higher fuel and hotel costs, is creating further headwinds to our progress over the remainder of the year,” said Fankhauser.
Still, Fankhauser detailed that Thomas Cook is making good headway in its plans to instate itself as a leading sun and beach hotel company in Europe – opening 12 new own-brand hotels out of 20 in the last two months. The rest are expected to be launched by the end of 2019.
“Outside of Europe,” he added, “we have taken an important next step in the development of our China joint venture with the announcement of two new hotel projects in partnership with Fosun, including our first Casa Cook in Asia. We have also secured a leading position in the Russian market with the development of a new joint venture to buy the number one tour operator Biblio Globus.”
Winter has always been a tough time for the travel industry, but Thomas Cook’s loss was still exponentially larger than the same period of the previous year – when the agency made a loss of £303 million. And Thomas Cook is not the only company to struggle in light of the unstable Brexit environment – TUI and EasyJet have also reported financial struggles following Britain’s departure from the EU.
Nonetheless, Thomas Cook’s half-year results come at a time when tensions around Brexit are high and ears are hypersensitive to any economic impacts, good or bad, that the UK absorbs. Ongoing uncertainty and idle talk around Brexit will surely only act to damage the UK’s economy. And who can say what effect the delay will have in the long run.