Thomas Cook: Bookings for summer holidays in Greece up

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Shares in Thomas Cook have fallen sharply after the travel firm reported a drop in profits at its United Kingdom business.

Thomas Cook's United Kingdom business has reported a fall in profit of 40 percent after a mixture of hotel price increases and a weak pound took their toll. It also has to pay to look after 10,000 passengers affected by Hurricane Irma in the US.

The company said it planned to take legal action against people who make false illness claims.

The wider company had a better financial year - with profit before tax growing 12% to £46m. Underlying earnings rose £24m to £330m.

The groups chief executive Peter Fankhauser vowed to boost efforts to overturn the downturn across its United Kingdom business, he said: "While conditions are challenging in the United Kingdom, we have implemented a set of actions to improve performance".

Looking forward, Thomas Cook expects its Continental Europe and Northern Europe tour operator businesses "to continue their good performance", and said it has acted to improve its United Kingdom performance as a result of "challenging conditions". Lower margins in the United Kingdom, however, pushed underlying EBIT down £1 million to £250 million.

     LESS CHANGE Brits are forking out more money to go on holiday to Spain
GETTY LESS CHANGE Brits are forking out more money to go on holiday to Spain

"The increased competition is a double whammy for Thomas Cook, pushing up the cost of beds while piling the pressure on pricing as well".

"We are also making good progress in implementing our strategy for profitable growth, with more satisfied customers, a stronger holiday offering and more efficient operations, underpinned by market-leading innovation".

Fankhauser said: "Looking to the year ahead, we can see real momentum in our Group Airline, and expect our Continental Europe and Northern Europe tour operator businesses to continue their good performance". Its UK division saw margins drop after four years of growth.

It said current trading was in line with expectations - with bookings up 1% in the United Kingdom - led by a return in demand for winter breaks in Egypt and the Canaries.

He added that the "strong performance" of Thomas Cook's group airline "in what has been a hard year for European aviation is a particularly encouraging sign of our progress".

"With destinations in the eastern Mediterranean out of favour following political unrest, holiday providers are dashing headlong into Spanish resorts", commented Nicholas Hyett, equity analyst at Hargreaves Lansdown.

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