By By Christina Zander
Source: The Wall Street Journal
Companies in the European travel business are crossing their fingers for Egypt, after political unrest in late 2013 put another dent in the North African nation’s appeal as a vacation destination.
British travel companies Thomas CookTCG.LN -0.05% and TUITT.LN +1.29%, and Helsinki-based FinnairFIA1S.HE -0.74% all cited slack demand for winter holidays in their most recent earnings calls. “The whole European travel industry was hit by the decline in the Egypt market and we were no exception,” Thomas Cook Chief Executive Harriet Green said in a call Tuesday.
The direct impact could be seen at Finnair, a Nordic carrier with hefty reliance on flights to warmer locales, such as Thailand or Southern Europe. The airline said fourth-quarter leisure traffic sagged 20% compared with the prior year, and a lack of interest in Egypt played “a major part” in the decline.
Finland’s largest airline by passenger numbers posted a net loss of $18.7 million in the fourth quarter, compared with a loss of EUR4.8 million the same period 2012, as sales fell by 8.5% to $767 million.
While many travel companies have avoided Egypt altogether, even customers interested in visiting face complications. Insurers, for instance, have been hesitant to write policies for package tours due to the uncertain situation in the country.
Thomas Cook posted 0.9% drop in sales in the three months ended Dec. 31 to $2.78 billion. Excluding Egypt, first-quarter revenue grew 4.1% compared with the same period a year earlier.
Thomas Cook’s Ms Green said the company was “very encouraged to see people beginning to return, particularly from the U.K., Germany and Russia.”
No such optimism could be detected from Finnair. For 2014, the airline said uncertain economic outlook in Europe and Asia is contributing to weak consumer demand in some of its main markets. The carrier noted in its report for the third quarter that the impact of Egypt cancellations would be reflected in the fourth quarter as well as in the first quarter 2014.
Finnair said Egypt package tour cancellations will also impact the first quarter and the drop in leisure traffic can be seen in the traffic data for January that the company reported last week.
British travel operator TUI also cited Egypt as a challenge. “We had pretty much no customers there during the month of October,” Chief Financial Office William Waggot said in an earnings call last week. ”And the program for the rest of winter is about 50% down on where we were planning to be.”
- Jana Weigand contributed to this article
Link: http://blogs.wsj.com/corporate-intelligence/2014/02/11/abandoning-egypt-travel-operators-report-further-declines/?mod=yahoo_hs.
