Thomas Cook grew its group revenue by 7% to £1,749 million in the three months to 31 December, driven by more customers and higher pricing in its tour operating and airline businesses. The gross profit increased by £16 million to £376 million, but the gross margin fell 50 basis points to 21.5% because of higher Spanish hotel bed cost inflation and a lower mix of long haul sales. The group's seasonal underlying loss from operations improved by £10 million to £42 million, reflecting a good performance by Group Airline, against a weak comparative period for Condor in particular. Condor's turnaround has continued, leading to an underlying loss of £13 million for Group Airline, an improvement of £9 million. Group Airline, including Condor, carried 3.5 million customers during the period, an increase of 8% compared to last year. Tour Operator underlying loss improved by £1 million to £22 million, with all segments achieving a similar result to last year. Corporate costs were £7 million, also in line with last year. Net debt at 31 December 2017 was £1,296 million, an increase of £71 million over the last 12 months. This includes non-recurring payments totalling £88 million to The Co-operative Group in connection with exiting its UK retail joint venture. On a like-for-like basis, excluding these payments and the effects of currency changes, net debt improved by £65 million. Winter trading for the group is in line with expectations, with 80% of the programme sold, a similar level to last year. Total bookings are up 8%, supported by continuing demand for the Canaries and a strong recovery in demand for Egypt. Average selling prices are 1% lower overall, reflecting a shift in the mix from long haul to short and medium haul destinations. Tour Operator bookings are ahead by 1% with pricing up 4%. Group Airline bookings are 10% ahead, with pricing 10% higher to short and medium haul destinations, and 2% higher to long haul destinations. The group said it has made an encouraging start to trading for summer 2018, with its holiday and flight programme now 34% sold, 3% higher than this time last year. In the UK tour operator, which tends to have an earlier booking pattern compared to other markets, bookings are up by 3%, while average selling prices are up by 6%. Peter Fankhauser, chief executive of Thomas Cook, said: "From all that we see so far, customers' appetite for a summer holiday abroad shows no sign of slowing down. We've taken early action to meet strong demand for destinations in the Eastern Mediterranean. This has enabled us to shift capacity out of the Spanish islands where we have seen a continuation of the margin pressures we experienced last summer, particularly for the UK market." He added: "This remains a highly competitive - and, at times, unpredictable - market, as the disruption in the airlines sector in recent months demonstrates. However, based on current trading and the continued progress we are making on implementing our customer-focused strategy for profitable growth, we expect to deliver a performance in line with current expectations for the full year."
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