Thomas Cook sees UK earnings fall in ‘challenging’ market

Travel giant Thomas Cook has revealed a 40% plunge in UK earnings as it suffered amid “challenging” trading and a hit from the weak pound.

The holiday giant reported underlying earnings of £52 million for the UK division in the year to September 30, down from £86m the previous year after it was knocked by rising hotel prices, the pound and intense competition in the Spanish market.

It also said its costs were sent surging after facing a torrent of fraudulent illness claims and after supporting 10,000 customers caught up in Hurricane Irma.

But the group said it has launched action to return its UK division to profitable growth by slashing costs, taking legal action against illness fraudsters and focusing on fast-growing holiday destinations Turkey and Egypt as demand to visit the countries returns.

The wider group enjoyed a better year, with pre-tax profits rising to £46m from £34m a year earlier thanks to a turnaround at its German airline Condor and improved customer demand.

Underlying earnings rose £24m to £330m.

Peter Fankhauser, chief executive, said: “2017 was a milestone year in the strategic development of Thomas Cook.

“By delivering what we promised on strategy, we’ve inspired more customers to choose our holidays for their hard-earned weeks in the sun.”

He added: “Looking to the year ahead, we can see real momentum in our Group Airline, and expect our Continental Europe and Northern Europe tour operator businesses to continue their good performance.

“While conditions are challenging in the UK, we have implemented a set of actions to improve performance.”

Thomas Cook has been struggling amid a price war for Spanish holidays, which partly contributed to the collapse of smaller rival Monarch last month.

The company’s shares dropped 8.38% or 10.20p to close at 111.50p.