Tuesday 22 March 2016

European Travel Group, Airlines Hit By Terrorism Fears

Shares in European airlines and travel groups fell on Tuesday after explosions in Brussels raised fears about the ongoing threat of terrorism in Europe. Ryanair and easyJet suffered falls of about 4 per cent following the blasts at the Belgian capital’s airport and a metro station near the EU quarter — before recovering in the early afternoon. Travel groups InterContinental Hotels, Thomas Cook and Tui were also hit.

The attacks in Belgium came as Thomas Cook, the UK tour operator, warned in a trading statement that “the uncertain geopolitical environment is causing some customers to postpone booking their holidays”.

It said holidaymakers were cautious about booking their breaks away in the wake of terrorist attacks in previously popular destinations such as Turkey, Tunisia and Egypt.

The tour operator last month said the attacks in Paris in November and a bomb blast in Istanbul’s Sultanahmet Square in January were causing delays to bookings.

Thomas Cook said it had sold 2 per cent fewer of its summer holidays than at the same point a year ago. Chief executive Peter Fankhauser said the company “continues to operate in a volatile market environment” and that customers were taking more time to “consider their options”.

Last year the company returned to profit for the first time in five years but in the first quarter its loss before tax grew from £115m a year earlier to £116m.

Tour operators have been changing their summer holiday programmes to reflect holidaymakers’ concerns about travelling to parts of the world where terrorism is deemed to be a greater threat. The companies have offered more packages to destinations in the western Mediterranean such as Spain.

On Tuesday, Thomas Cook said bookings to Turkey were “significantly lower” while overall conditions “continue to be disrupted by a volatile geopolitical backdrop”.

Simon French, analyst at Cenkos Securities, said “sentiment will continue to hold the stock back”. He added that the company’s full-year guidance “requires a sustained recovery in consumer confidence”.
Destinations such as Spain, the US and Cuba remained popular.

Rival Tui warned last month that summer bookings to Turkey had fallen sharply and holidaymakers were choosing Spain and Greece instead.

Culled from: Financial Times

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