29 September 2011 – trading update

Troubled travel group Thomas Cook has issued a pre-close update confirming that underlying operating profit is expected to be in line with expectations.  Steady results were seen in July and August, although September was more challenging.  The group’s focus on cashflow is producing benefits although the objective of debt reduction remains a priority and to this end the group intends to raise up to £200m through disposals.  In addition, the group has decided not to pay any dividends for the forseeable future until the balance sheet has been restored.  The previously announced UK business review is progressing well and further news will be announced with the final results due on 24 November.  The update is encouraging and the shares have responded positively.  Although much remains to be done the shares are a SPECULATIVE BUY.