City & finance Keep up to date with the travel industry’s financial news and results at ttglive.com


Cook set for talks with bonus critics


THOMAS COOK is to meet with shareholders who voted against bonuses awarded to the tour operator’s bosses.


Nearly 40% of Thomas Cook shareholders


voted against bonuses after a leading investor group criticised Cook for changing the way its share-based bonuses were calculated. The Association of British Insurers was unhappy that this change in policy meant that the £82m cost of last year’s ash cloud crisis was not taken into account when working out Cook’s bonuses. This led to 39% of shareholders voting against the tour operator’s remuneration report at Cook’s annual general meeting in London. Around 11% of investors also voted against the


re-election of Cook chairman Michael Beckett. Cook said that Peter Middleton, the chairman of the company’s remuneration committee, would meet with shareholders “to listen to their concerns and to discuss with them why the board took certain decisions”. “Although over 60% of votes supported the


group’s remuneration policies and practices, the board takes the issues raised by shareholders seriously,” Cook said in a statement.


Expedia reports $65bn total sales


ONLINE TRAVEL giant Expedia saw operating profit increase by 28% to $732m during 2010 thanks to sales growth of 14%. The US-based company said that total transaction value increased from $57.6bn in 2009 to $65.6bn last year, helped by a strong final three months of 2010. Expedia said there had been growth in both hotel and flight sales with its business travel arm Egencia recording a sales rise of 33% in the final three months of 2010 compared with the previous year. Chief executive Dara Khosrowshahi said: “We


believe that we have significant potential ahead of us on product improvements, resulting from our technology investments.”


14 18.02.2011


City ‘worried’ by aviation shares


Rob Gill. FEARS OVER the rising cost of oil and excess capacity have dragged European airline shares down over the last week. Aviation shares, including British Airways’ new holding company International Airlines Group and Lufthansa, were down after competitor Air France-KLM issued a profit warning last week. IAG’s price has fallen around 9% in the last week – from £2.68 on February 9 to £2.44 at the close of trading on Monday. Over the same period, Air France-KLM’s shares fell 9% to ¤12.40 while Lufthansa dropped 2% to ¤15.50. The price falls came after Air France-KLM said it would miss its full-year operating profit target of ¤300m due to a combination of bad weather, strikes and over-capacity on some routes. Andrew Lobbenberg, an aviation analyst with


Air France-KLM share price (¤)


12.5 13.5 14.5 15.5


Royal Bank of Scotland, said the City was concerned about over-capacity and the effect of increasing oil prices on aviation profits. “Expectations for financial performance


across the sector are coming down,” he said. Lobbenberg added that IAG was suffering


from an extra “range of pressures” such as potential strike action in both the UK and Spain. Douglas McNeill, an aviation analyst with Charles Stanley Securities, said: “We have been worrying about over-capacity for some time and now it’s starting to worry the rest of the market. “This is a well-established trend in aviation and


always happens as the industry starts to recover.” Broker UBS has already cut its estimated price target for IAG’s shares from £3.60 to £2.90 although it said the airline’s shares were still worth buying at their current price.


International Consolidated Airlines Group share price (£) 08 Jan 27 Jan 14 Feb


2.40 2.60 2.90 3.10


020 7921 8011 rgill@ttglive.com


Rob Gill


08 Jan


27 Jan


14 Feb InterContinental posts 22% profit


A STRONG recovery in business travel has helped InterContinental Hotels to increase profits by 22%. The British hotels group made an operating


profit of $444m for the year ending in December 2010 although it added that the unrest in Egypt is set to cost $3m. Chief executive Andrew Cosslett said 2010 had


“exceeded all expectations” and the group’s priority now was to increase market share and improve margins in an industry that was set to grow over the next few years, particularly in China. Cosslett added: “We had a good set of results for 2010 as business travellers returned.


“Egypt has been a concern but it’s a relatively small part of our business. We only have five hotels in Cairo and they operated during the crisis.” Revenue per available room was up by 6.2% for the year.


Sleeping easy: InterContinental London Park Lane


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