Travel giant Thomas Cook has reported a group revenue increase of 7% to £1,749m in the first quarter, with more customers and higher pricing in both its tour operating and airline businesses.
Gross profit of £376m was £16m higher than last year, while gross margin of 21.5% represents a decline of 50 basis points over the same period last year, due to higher Spanish hotel bed cost inflation and a lower mix of long haul sales in the quarter.
The Group's seasonal underlying loss from operations improved by £10m to £42m, reflecting a good performance by Group Airline, against a weak comparative period for Condor in particular.
Condor's turnaround has continued in line with expectations, leading to an underlying loss of £13m, an improvement of £9m.
The Group Airline, including Condor, carried 3.5 million customers during the period, an increase of 8% compared to last year. Seat load factor increased by 80 basis points to 88%, driven by higher short and medium haul demand.
The Group Tour Operator's underlying loss improved by £1m to £22 million, with all segments achieving a similar result to last year. Corporate costs were £7 million, also in line with last year.
Net debt at end of December 2017 was £1,296m, an increase of £71m over the last 12 months. This includes non-recurring payments totalling £88 million to The Co-operative Group in connection with exiting our UK retail joint venture. On a like-for-like basis, excluding these payments and the effects of currency changes, net debt improved by £65m.
Commenting on the latest figures Peter Fankhauser, Chief Executive of Thomas Cook said:"While it remains early in our sales cycle, we've got the year off to a good start.
"A particularly strong performance from our Group Airline, taking advantage of the disruption in the UK and German markets by providing a high quality and reliable service to customers, has helped deliver revenue growth of 7% and a £10m improvement in the seasonal underlying operating loss for the first quarter.
He added: “We've made good progress in strengthening our Group Airline. This includes expanding our capacity by 10% for Summer 2018 to meet the increased customer demand we have experienced in recent months and builds on the strong recovery in our German airline, Condor.
"This remains a highly competitive - and, at times, unpredictable - market, as the disruption in the airlines sector in recent months demonstrates. However, based on current trading and the continued progress we are making on implementing our customer-focused strategy for profitable growth, we expect to deliver a performance in line with current expectations for the full year."
Despite the relatively upbeat first quarter numbers, City watchers are clearly still concerned about margin pressures and management of debt. Thomas Cook's share price fell in mid-morning trading- down 5.18% to 118.96