Package holiday firm Dart Group (DTG) looks set to exceed its own expectations for profit after the demise of Thomas Cook.
In a trading update, the Jet2 owner said it had experienced increased levels of customer demand since the liquidation of Thomas Cook while demand for both its flight-only and package holiday products was ‘continuing to strengthen’.
The firm also said it had received ‘encouraging’ levels of later season bookings. The shares responded accordingly, soaring over 15% to £10.82.
The autumn and winter period is typically quieter for travel firms – Thomas Cook was desperately seeking cash from its backers so that it could keep operating over this quieter period – so higher levels of later season bookings would indeed be encouraging.
RIVALS BENEFIT FROM DART UPDATE
Dart’s news has raised hopes of a similar boost for other Thomas Cook rivals. Shares in German travel giant Tui (TUI) jumped markedly, up more than 7% to 985p.
JET2 'NATURAL HOME' FOR THOMAS COOK CUSTOMERS
AJ Bell investment director Russ Mould said Dart Group was always a likely beneficiary from Thomas Cook’s collapse because it offers both flight-only and package holidays and is a ‘natural home’ for customers looking for something similar to Thomas Cook’s proposition.
He added that its Jet2 brand is also well-placed to strengthen its ‘market leading positions’ on the Iberian Peninsula given that the region represented a third of Thomas Cook’s capacity.
Mould said, ‘With Dart’s profit guidance for the current year to March upgraded, the question for investors is whether the business will just enjoy a short-term lift or enjoy something more lasting.’
MANAGEMENT STILL CAUTIOUS
Management at the firm have maintained that they are still cautious on the outlook going forward, even going as far as saying they are ‘very cautious’.
Mould added, ‘There are several reasons for this, including the weak pound – which as well as increasing costs undermines the purchasing power of UK holidaymakers – plus the wider uncertainty associated with Brexit.
‘The performance of Jet2 in the coming months and the fate of Hays Travel, which agreed to buy 555 Thomas Cook stores this week, could help reveal if reports of the death of package holidays were greatly exaggerated or not.’