Thomas Cook says profit for its full financial year will be lower than it had hoped – probably around 364 million euros.
Europe’s second-biggest travel company blamed a fall in bookings on the economic situation in Britain and unrest in the Middle East and North Africa.
Travel industry watchers were surprised at the size of the downgrade. KBC Peel Hunt analyst Nick Batram said: “This raises questions about just how flexible the business model is, or whether management just called it badly wrong.”
Thomas Cook’s shares, which have lost nearly 60 percent of their value since January, slumped 27 percent soon after the market opened. Rival TUI Travel’s shares also fell.
Thomas Cook said the profitability of its British business continued to be hit by difficult trading conditions, mainly as a result of the continued squeeze on disposable income, and it would conduct a fundamental and strategic review.
A proposed merger of Thomas Cook’s British retail operations with those of the Co-operative Group is being examined by the UK’s Office of Fair Trading.
TUI Travel said in May it was on track to meet full-year expectations as increased demand for alternative destinations offset the impact of unrest in Egypt and Tunisia.