Thomas Cook profits suffer as Britons stay at home

Thomas Cook followed arch rival Tui Travel today, reporting that Brits are not holidaying like they used to.

Inflation, which is biting into wages, and fear of — as well as actual — unemployment is causing many to forgo the usual summer getaway, or book later and more cheaply.

That is hurting the two package holiday kings. Yesterday Tui, owner of Thomson Holidays, warned that profits would be at the bottom end of City forecasts.

Thomas Cook now says the same, blaming "softer" trading at its main UK business due to the "uncertain economic environment".

The travel company also said the weaker euro is having an adverse affect on its earnings in countries that use the single currency.

Manny Fontenla-Novoa, Thomas Cook's chief executive, said: "We always expected this year to be challenging given the uncertain economic environment.

"In anticipation, we cut winter capacity, chose not to increase overall summer capacity and have continued to address our cost base."

He added: "Whilst bookings have improved since the end of the World Cup, price increases have not been sufficient to compensate for weaker bookings."

Thomas Cook puts the cost of the Icelandic volcanic ash disruption at £82 million. That's a little higher than the company's previous worst-case estimate.

Revenues for the nine months to June 30 were £5.5 billion, down from £5.9 billion the year before.

Pre-tax losses were £368.8 million, even worse than the £306 million deficit in the same period last year. The shares lost 1.9p to 182p.

The strife at the travel companies comes as wider consumer spending appears to be slowing.

The British Retail Consortium said yesterday that retail sales growth slowed sharply last month because of fears over the impact of government spending cuts.