“Tourism is the second largest source of foreign exchange for poorest countries – so it can change people’s lives” INTERVIEW WITH G ADVENTURES’ FOUNDER BRUCE POON TIP, P30
Comment: Jonathan Wall, managing director, Elman Wall Travel Accountants
THE TWO UK travel giants have just reported trading updates for the six months to March 31. You need to understand that these trading statements are written in a standard format and the comments are written for the benefit of shareholders and City types. Thomas Cook reported first and clearly needed to get the message across that it was once again stable, after all the speculation that Cook was going bust or being bought. In a fairly short statement, the word “stable” was used seven times and “in line with” six times. Nothing spectacular in the numbers, Cook just wants to show that management is once again in control and it’s business as usual. It talked about the proposed disposal of its Indian business to assuage the City’s
concern about its mountain of debt. Strategically, Cook got most, if not all the bad news out of the way a few months back and therefore lowered the City’s expectation of its current forecasts, so being stable or slightly ahead of that point is maybe not a huge achievement. It is still having it tough and the City knows it. On March 28 when the update
was released, the day’s trading for Thomas Cook shares fell by 0.49p to 22.76p. A reduction of the day of 2.11% which I think the directors would not be too upset with, bearing in mind the share price is still only 12% off its 52-week high. We clearly saw the effect of the City being surprised by very poor trading on the day of its share collapse. The City appears today to be more concerned by the company’s failure to announce
So 24 hours later, Tui released
a new chief executive within the time frame it had previously set, than the trading statement itself. Thomas Cook’s market capitali- sation stands at £199m which is over seven times lower than Tui’s capitalisation of £1.4bn.
its pre-close trading update. Tui is comfortable in its own skin and professional investors are pretty relaxed. It of course also refers to the “current challenging macroeconomic environment”, but apart from the first line of its statement that “overall trading remains in line with our expectations” there are no other references to that phrase, and no “stable” whatsoever. Instead, there are words like “pleased”, “improved” and “confident”. The share price has also fallen by a similar amount to Cook, as the perception is the travel industry is sluggish. Well, the City doesn’t like to see surprises! ■
elmanwall.co.uk
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