* Says UK pricing 3 pct lower this year than last
* Second stage of turnaround plan targets profit improvement
* H1 seasonal loss narrows by 6 pct, meets expectations
* Shares fall 5 pct
(Adds CEO comments, analyst comment, share price)
By Sarah Young
LONDON, May 15 British holiday operator Thomas
Cook said it was confident of hitting 2015 targets as
cost-savings ticked ahead and helped it weather a slump in
bookings for Egypt and lower holiday prices in Britain.
The company, Europe's second biggest tour operator by
revenues, also on Thursday announced a cost-saving plan for the
three years after 2015, which some analysts said did not go as
far as they were anticipating.
Thomas Cook shares lost 5 percent of their value in morning
trading. The stock has gained 21 percent over the last six
months. Analysts attributed the fall to disappointment with the
2015-18 cost saving plan and average holiday prices in Britain
which for this summer were 3 percent lower than last year.
The world's oldest travel firm launched a turnaround plan in
2012 after two years when the euro zone debt crisis and
political turmoil in Egypt and Tunisia left it struggling with
its debt load.
Announcing the second stage of the turnaround, which it
calls "wave 2" and will cover the three years from 2015, Thomas
Cook said it was targeting a profit improvement of over 400
million pounds, having identified 150 million pounds of savings
"The announced wave 2 figure of 400 million pounds is a
touch below previous guidance of more than 440 million pounds,
if we are being picky, while UK summer trading gives us cause
for concern," Investec analyst James Hollins said.
Another analyst who declined to be named said he had
expected more than 150 million pounds of savings to have been
identified for "wave 2".
The first part of the turnaround plan, which covers the
period to 2015, was ahead of target, Thomas Cook said, adding
that it had identified 20 million pounds of extra savings,
taking its 2015 profit improvement target to 460 million pounds.
For its current financial year to the end of September,
Thomas Cook said cost savings would help offset the weaker
prices in Britain which it blamed partly on customers opting for
holidays of shorter duration.
The FTSE 250 group reported an underlying operating loss of
187 million pounds, a 6 percent improvement on the same period
last year, and broadly in line with analyst forecasts, for the
six months to March 31.
Like most European tour operators and airlines, Thomas Cook
generally reports a loss in the traditionally weaker first part
of the year and makes the bulk of its profits in the summer
months when its customers tend to take more holidays.
Instability in Egypt continues to bite, it said, with fewer
customers booking holidays there, resulting in a
14-million-pound hit to its bottom line over the 122 months to
March 31, and lowering first-half sales by 0.7 percent.
The company said Egypt's difficulties made hitting its
targets more challenging but it remained confident of achieving
a sales growth target of over 3.5 percent for the full-year
2015, as it introduces more of its new, more expensive concept
hotels, and bookings for this winter were up 11 percent.
Thomas Cook also sells holidays in Russia - its business
there made a loss of 10.5 million euros in the year to Sept.
2013 - where it said it was watching events carefully given the
crisis with neighbouring Ukraine.
"We've seen a little bit of a curtailment of booking
activity but nothing too dramatic," chief executive Harriet
Green told reporters on a conference call.
Thomas Cook's bigger rival TUI Travel on Tuesday
posted an improvement in its first-half loss, beating analyst
expectations and said it was on track to increase underlying
operating profit by 7-10 percent this financial year.
(Editing by Mark Heinrich)