LONDON (Alliance News) - Travel operator Thomas Cook Group PLC on Thursday adopted a cautious stance on the rest of its financial year as its first quarter results met expectations despite a drag from a decline in demand for holidays to Turkey.
Later in the day, Thomas Cook also revealed a significant backlash from its shareholders its its executive pay plans, following from reports last week of investor concerns about the bonus Chief Executive Peter Fankhauser will receive later this year.
Thomas Cook said 22% of its shareholders voted against approving its remuneration policy at its annual general meeting on Thursday, while 23% voted against approving its remuneration report. In addition to that, 33% of shareholders voted against approving the company's 2017 Strategic Share Incentive Plan.
Last week, The Telegraph reported that the Institutional Voting Information Service, a shareholders' representative group, has written to Thomas Cook investors to express concerns about changes to its long-term incentive plans, which would give Fankhauser a larger pay packet.
On Thursday, Standard Life Investments confirmed it had voted against several of the remuneration proposals at the AGM in an emailed statement. "We disagreed with the introduction of a potential payment to executives above the remuneration policy?s normal upper limit. In addition, we opposed the introduction of new elements to the remuneration plan as we strongly believe these should be dealt with in the existing policy," Standard Life Investments said.
The group, the asset management arm of FTSE 100 life insurer Standard Life PLC, owns a 13% stake in Thomas Cook.
Earlier on Thursday, Thomas Cook said it made revenue of GBP1.62 billion in the three months to the end of December, up from GBP1.41 billion a year before. On a like-for-like basis, however, stripping out any foreign exchange fluctuations and the impact of fuel costs, revenue rose by 1.0%.
The travel operator made an underlying loss before interest and tax of GBP49.0 million in the quarter, flat year-on-year. The underlying number strips out any one-off items.
Thomas Cook said its winter 2016-17 season is around 82% sold, in line with its expectations, while its summer 2017 season is 32% sold, with bookings up 9.0% year-on-year.
"We have delivered a solid performance for the first three months in line with our expectations, against a backdrop of continued uncertainty," said CEO Fankhauser.
"We remain cautious about the rest of the year, given the uncertain political and economic outlook. It's still relatively early in the selling cycle for summer holidays, but based on current trading, and supported by further financial benefits from implementing our strategy, we expect our full-year operating results to be in line with current market expectations," he added.
Despite maintaining its expectations, that caution appeared to worry investors, with Thomas Cook shares down 8.5% to 84.20 pence on Thursday, the worst performer in the FTSE 250 index.
For the winter season, Thomas Cook said bookings have been supported by good demand for Spain and Greece, in addition to long-haul destinations such as the Dominican Republic. This offset a decline in demand for trips to Turkey. Appetite for travelling to Turkey on holiday has evaporated following political instability in the country - including a failed coup in July last year - and a series of terror attacks which have hit Istanbul and elsewhere in the country.
Total bookings for the winter season rose 1.0% year-on-year in the first quarter, Thomas Cook said, and would have risen 5.0% without the drag from Turkey.
Winter bookings from the UK rose 5.0% in the quarter, with good growth in seat-only sales. Online bookings in the UK rose by a fifth year-on-year.
Bookings from Northern Europe, however, were down 1.0%, and average selling prices were off 3.0%. While demand for holidays to the Canary Islands remained strong, the decline in demand for Turkey has hit Northern Europe sales, though the overall performance remains in line with the company's expectations.
A similar story was seen in Continental Europe, where demand from holidaymakers in Germany and Belgium slumped, mostly due to the Turkey avoidance. This has been partly offset by a good performance for the group's Russian and French businesses, it said.
Winter bookings for Condor, Thomas Cook's airline, were down 1.0%, again hit by Turkey demand. Average selling prices were lower, as well, down 1.0%, due to soft consumer demand and overcapacity, particularly for flights to the Canary Islands.
Turning to the summer 2017 season, while Turkey has continued to drag, this has been offset by growing demand for holidays to Greece, where Thomas Cook has expanded its holiday offering to take advantage of the strength in bookings.
Bookings have been robust for destinations such as Cyprus, Bulgaria, Croatia and Portugal, while demand has strengthened for trips to Egypt and Morocco. Bookings for the Balearics and Canary Islands for the summer have levelled off after a strong prior year, Thomas Cook said.
Summer trading for Northern and Continental Europe is significantly stronger year-on-year, Thomas Cook said, with prices holding firm. UK summer bookings are up 1.0% overall, with particularly good demand for Greece and Cyprus. Condor is trading in line with expectations for the period.
The group will publish interim results on May 18.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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