Thomas Cook's half year loss narrows, but Egypt weighs

British holiday operator Thomas Cook posted a smaller first-half loss after strong demand for more expensive hotels and growing online reservations helped it to weather the slump in bookings for Egypt. 

The company also said a cost-saving project was ahead of plan, giving it confidence in meeting its 2015 targets for sales growth and margin improvement. 

For the six months to March 31, Thomas Cook reported an underlying operating loss of £187m, a 6% improvement on the same period last year, and broadly in line with forecasts. 

Like most European tour operators and airlines, Thomas Cook generally reports a loss in the weaker first part of the year and makes the bulk of its profits in summer when its customers tend to take more holidays. 

This year its first-half was also affected by the lucrative Easter holiday falling outside the period, when last year it fell within.
              
Thomas Cook launched a turnaround plan in 2012, after two years when the euro zone debt crisis and political turmoil in Egypt and Tunisia left the world's oldest travel firm struggling with its debt load. 

Ongoing instability in Egypt continues to impact the company. Thomas Cook said fewer customers booked holidays to Egypt, resulting in a £14m hit to its bottom lineover the twelve months to March 31, and resulting in a 0.7% fall in first-half sales.
              
"While the impact of Egypt makes the achievement of our FY2014 milestone more challenging, we remain confident that, supported by our encouraging new product momentum, we will achieve our sales growth target of more than 3.5% in full-year 2015," the company said in a statement.
              
The first part of the turnaround plan, which covers the period to 2015, was ahead of target, Thomas Cook said today, adding that it had identified £20m more of savings, taking its 2015 profit improvement target to £460m.
              
The company's bigger rival TUI Travel earlier this week posted an improvement in its first-half loss, beating analyst expectations and said it was on track to grow underlyingoperating profit by 7-10% this financial year.