United Kingdom tour operator sees strong Turkey demand

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United Kingdom tour operator sees strong Turkey demand

The company's shares fell 13.7 percent in early deals, hitting its lowest level since July, after it announced that its margins in Britain were lower after four consecutive years of profit growth.

Average selling prices in the United Kingdom are 6% higher year-on-year for next summer, which Thomas Cook said was mainly down to "input price inflation".

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".

Despite the weak performance at its United Kingdom division, underlying earnings across the Thomas Cook group as a whole rose by £24 million to £330 million, helped by a recovery at its German airline Condor.

The holiday giant reported underlying earnings of £52 million for the United Kingdom division in the year to September 30, down from £86 million the previous year after it was knocked by rising hotel prices, the pound and intense competition in the Spanish market.

The tour operator said on Wednesday underlying earnings before interest and tax (EBIT) was 330 million pounds ($437.6 million) in 2016-17, a little higher than an analyst consensus of 327 million pounds.

Thomas Cook saw costs rise because of a spate of fraudulent illness claims and the help it offered customers caught up in Hurricane Irma.

"We have taken a robust approach towards illness claims including improving our handling and assessment processes, and taking legal action against fraudsters - as a result, the claim rate has declined dramatically".

Thomas Cook also said it continues to re-position the business to accelerate the shift towards online distribution. "Together, we expect that these actions will help to return the business to its former profitable growth trajectory", the company said.

The wider group enjoyed a better year, with pre-tax profits rising to £46 million from £34 million a year earlier thanks to a turnaround at its German airline Condor and improved customer demand.

"This year was a milestone year in the strategic development of Thomas Cook".

"My experience tells me that (the Spanish market) is balancing out", Chief Executive Peter Fankhauser told reporters on Wednesday.

"While conditions are challenging in the United Kingdom, we have implemented a set of actions to improve performance", said chief executive Peter Fankhauser.

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