Thomas Cook shares (LON:TCG) rallied on Thursday after the company updated the market on its first quarter trading for 2019.
The travel company said that performance proved in line with expectations, with revenue up 1% to £1,656 million for the three months to December-end.
Whilst group revenue rose marginally, the firm said that group margins had been lower as a result of “highly competitive market conditions” in the UK as well as weaker demand for winter holidays in the Nordics.
However, investors reacted positively to news that Thomas Cook is considering the sale of its airline business, with shares rallying following the announcement.
In the statement, Thomas Cook said it was conducting a “strategic review” of its airline, as it looks to expand its hotels.
Peter Fankhauser, Chief Executive of Thomas Cook commented:
“As expected, the knock-on effect from the prolonged summer heatwave and high prices in the Canaries have impacted customer demand for winter sun. Where Summer 2018 bookings started very strongly, bookings for Summer 2019 reflect some consumer uncertainty, particularly in the UK, and our decision to reduce capacity which will both mitigate risk in our tour operator business and help our airline to consolidate the strong growth achieved last year.
“At the same time, we recognise that we need greater financial flexibility and increased resources to accelerate the execution of our strategy of differentiation: to invest in strengthening our own-brand hotel portfolio; further digitising our sales channels; and driving greater efficiencies across the business. As a result, we are today announcing a strategic review of our Group Airline. We are at an early stage in this review process which will consider all options to enhance value to shareholders and intensify our strategic focus. We will provide an update on this process in due course.”
Whilst Thomas Cook’s airline has remained profitable, many European budget airlines have been facing turbulence.
Norwegian Airlines (OTCMKTS: NWARF) recently launched a an emergency £270 million share rights issue after a takeover bid from IAG fell through.
Similarly, Flybe (LON:FLYB) recently agreed its sale after its financial situation increasingly deteriorated.
Airlines have been particularly struggling as of late due to a combination of rising fuel prices, lower fares and increased competition.
Shares in Thomas Cook are currently +10.62% as of 13:27PM (GMT).