Thomas Cook
Thomas Cook

Shares in Thomas Cook slipped in early trading on Tuesday (28 March), even after the tour operator reiterated its profit guidance as the holiday market was gradually beginning to recover.

The FTSE 250-listed group said 42% of its summer holidays are already sold, a 1% improvement compared to the corresponding period last year, while total bookings were 10% ahead of last year.

Thomas Cook attributed the improvement to strong demand for holidays to Greece and other European destinations, including Cyprus, Bulgaria, Croatia and Portugal, with the former recording a 40% increase in bookings for summer holidays.

The latest performance is in stark contrast with the corresponding period in 2016, when demand was weakened by geopolitical issues, such as the bombing of a Russian passenger plane from the popular Egyptian resort of Sharm el-Sheikh and a failed military coup in Turkey.

Travellers were slowly returning to Turkey, while sales of holidays to Spain and long-haul destinations such as the Dominican Republic also performed well.

Group chief executive Peter Fankhauser admitted political and economic concerns remained on the agenda, although customers' demand was back on the rise.

"Customers' appetite to go abroad on holiday this summer is good across all our markets despite continued political and economic uncertainty," he said.

However, Fankhauser warned increased competition in the airline sector could squeeze the company's margins.

"Competition is particularly intense in the airline sector, putting downward pressure on pricing," he added.

Meanwhile, winter holidays are 90% sold, which represents a 1% year-on-year increase, and the group said it expects its full year underlying operating result to be in line with current market expectations.