Introduction to Thomas Cook Group

7/27/2019 Introduction to Thomas Cook Group

1/25

Thomas Cook Group

An Introduction


2/25

Leading Global Travel Group


3/25

Page 3Page 3Page 3

A leading global travel group

Industry leading margins and focused on cash generation

Leading portfolio of travel brands

No 1 or 2 in our core markets

Flexible asset light business model

Strategy to deliver top line and margin growth

Experienced management team

Who we are


4/25

Key facts

21%

21

415m (4.5%)

9.3b

EBIT (margin)

Source markets

Passengers

Retail outlets

Aircraft

Shareholder structure

Employees

22m

3,400

94

100% Free float

31,000

Revenue

Online bookings

FY 2009


5/25

Page 5

Strong portfolio of travel brands

Global umbrella brand

Major local brands

Other local brands
http://www.crestaholidays.co.uk/


6/25

Our Strategy


7/25

Page 7

Our strategy continues to serve us well

Strategic objectivesStrengthening our business and investing for growth

Financial rigourBrandsCustomer insightTechnology

Resultsorientated

Obsessed withcustomer service

United as one team Driving robustdecisions

Pioneering ourfuture

Values

Product

Enablers

Become aleading

independenttravel provider

Becomethe leading

travel-relatedfinancialservicesprovider

Capturegrowth and

value throughM&A and

partnerships

Maximisevalue of

mainstream

Growth dr ivers

Vision

P R O U D


8/25

Page 8

There is top line growth in our model

Mainstream

travel

Independent

travel

Financial Services

Mergers & Acquisitions

New high growth and/or high margin markets (e.g. BRIC markets)

Bolt-on/ consolidation opportunities

Continued growth from completed acquisitions

Travel-related financial services

New markets and product line extensions

Maximising distribution and cross-sell opportunities

Independent travel

OTA market

Online third party largely a new market for TCG

Greater wholesale distribution to third party agents

Growth of scheduled packages (e.g. Thomas Cook Signature)

Mainstream travel

ASP increases from better product mix and pricing activities

Share gain from smaller operators

Channel shift into faster growing online channel


9/25

Page 9

We also have a large cost base to go after

Cost of providing tourism services Operating expenses

Other Opex

Accommodation

Personnel

Aviation excl. fuel

Fuel

Commission/ Other

Commission & Other

Greater control of distribution and commission rate reductions

Reduced agent costs in-destination

Aviation and fuel

Better buying of aviation services across the Group

Best practice sharing between airlines e.g. on fuel efficiency

Accommodation costs

Better buying process and use of Group buying power

Co-ordination of activities and best practice sharing

Operating expenses

Operating leverage; spread fixed costs over higher volumes

Adopt a common approach to airline, personnel, IT etc.


10/25

Page 10

Medium term margin growth potential

+ + +

Total 100-150 bps

+ + + + +

= = = = =

110-130 bps 130-150 bps 10-20 bps N/A ~(150) bps

Mainstream

travel

Independent

travel

Financial

servicesM&A Margin pressure

Cost efficienciesEuropean OTA

growthForex growth

Market

developmentNew acquisitions

Distribution gainsImproved cross-

sell ratesWholesale growth

ASP and trading

margin growth

New product

launchesExecution risk

Scheduled

package growth

Disposals of

non-core assets

Note: Basis points improvement applies to total Group medium term revenue


11/25

Our Marketplace


12/25

Page 12

Our core markets account for ~30% of global travel spend

Leisure

CorporateCorporate

Leisure

Leisure

Corporate

Canada UK

GermanyFrance

Belgium

NetherlandsNordics

Note: Excludes spend on food, drink, fuel, entertainment, shopping, etc;

These ten markets

account for over 90% of total Group revenues; Sweden Norway, Finland, Denmark

Source: UNWTO; Euromonitor, Thomas Cook Management analysis and estimates

Thomas Cook core markets

Japan

3.0%

25.8%

Other

Europe

24.4%

Rest of

World

22.1%

US

8.4%

BRICs

8.7%

Canada

2.8%

Nordics

4.8%

World leisure travel market

820bn

Netherlands,

UK, Belgium,

France, Germany

Thomas Cook core markets Other markets


13/25

Page 13Page 13

Travel intermediary

Thomas Cook Group focus

Travel intermediaries

Intermediaries between capacity suppliers and consumers

Direct suppliers

Asset owners supplying capacity direct to consumers or intermediaries

Mainstream

travelPre-packaged

holidays, primarilycharter packages

Independent

travelIndividual components

or dynamicallycreated packages

Travel-related

Financial ServicesTravel money

Travel assuranceTravel finance

+ +

Asset light

Asset heavy

Leisure travel market


14/25

Page 14Page 14

Leisure travel market 2009

Our market place in 2009

Travel market Travel intermediary market

Mainstream travel

Independent travel

Financial Services

274b 96b

Source: Euromonitor

Thomas Cook definition

Travel

Intermediaries96b

Direct Suppliers

178b

Other 9b

Fly-drive 7b

City break 7b

Accom only 11bFlight only 22b

Cruise 6b

Package

holiday 29b

FS 5b


15/25

Page 15

Online growth will be faster than offline

Offline 72b

Online 34b

FS 5b

68b

24b

4b

2009 2014

7.3%

Online as a %: 25% 31%

96b

110b

1.1%

2.8%

1.1%

TCG market

share FY09

~6%

~11%

~9%

CAGR

(09-14)Travel intermediary market

Note:

Growth rates are real growth; TCG market share figures are management estimates

Source: Euromonitor


16/25

Our Business by Segment


17/25

Page 17

Turkey

No.1 50% share

Egypt

No.2 39% share

Tunisia

No.1

60% share

Thomas Cook UK

Note: NB

narrow body; WB

wide body

Product mix

focus on higher margin

Highly integrated and higher margin business

Distribution

Controlled distribution:

~80%

Retail outlets: 796

In-house flyingThomas Cook airline

c.92%

Aircraft:

summer

33 NB, 11 WB

winter

27 NB, 10 WB

Accommodation

Exclusive & differentiated

c.40%

Drivers of margin performance

Strong retail, travel and foreign exchange brand

Flexibility in capacity and destination

Focus on higher margin products:

Medium haul, 4* & 5* and all inclusive

Exclusive and differentiated

Focus on destination castles

Yield management improvements

Growing strong independent Travel proposition

Strengthening financial services position

Capacity (%) FY09 FY08

Medium haul 72% 65%4* and 5* 45% 41%

Al l inc lusive 41% 31%

Destination castles


18/25

Page 18Page 18

Distribution


84%

Internet distribution 54%

Retail outlets:

11

In-house flyingThomas Cook airline

c.85%

Aircraft:

summer

8 NB, 3 WB

winter

8 NB, 4 WB

Accommodation

Concept hotels

25%

Exclusive hotels

90%

Majorca

No.1 50% share

Gran Canaria

No.1 45% share

Tenerife

No.1

40% share

Rhodes

No.1

35% share

Antalya

No.1

25% share

Thomas Cook Northern Europe

Product mix


Highly integrated and highest margin business Drivers of margin performance

Leading market position and No.1 brands

Stable, rational market

Volume concentrated to destinations where most

Nordic customers travel

Unique concept hotels (40% higher margin)

Growth of online bookings (FY09: 54%, FY08 46%)

Controlled distribution (FY09: 83%, FY08: 79%)

On board tax free sales

Most cost efficient aircraft


4* and 5* 49% 48%Of which

Concept hotels

27% 26%

Destination castles

Note:Based on hotel utilisation


19/25

Page 19

Thomas Cook Central Europe

Product mix


Asset light business

Distribution


27%

Internet distribution:

7%

Retail outlets: 1254(1054 franchise)

Transport

Condor

43% of flight holidays

Car

33% of holidays

Accommodation

Exclusive hotels

24%


Strong brand awareness -

Neckermann

Improving retail positioning

Dynamic packaging


Focus on differentiated product:

Links to 300 concept hotels

Strategic partnerships (Sentido, Iberostar)

Consolidation opportunities

Total Capacity (%) FY09 FY08

4* and 5* 64% 64%Al l inc lusive 32% 32%

Exclusive hotels 24% 25%

Outbound destination castles

Balearics

No.1 32% share (S10)

Canaries

No.2 24% share (S10)

Turkey

No.2

13% share (S10)

Egypt

No.2

14% share (W09/10)
http://www.bucher-reisen.de/http://www.neckermann-reisen.de/


20/25

Page 20

Thomas Cook West/ East Europe

Product mix


Partially integrated, diverse businesses

Distribution


51%


13%

Retail outlets: 1,102

(528 franchise)

In-house flying

Belgium only

58% of flight holidays

Aircraft: 6 NB

Car

42% of holidays

AccommodationDifferentiated & Exclusive hotels

42%


Brand strength in all markets


Focus on higher margin products:

Differentiated hotels

Increasing exclusive content

Belgium

benefit of high vertical integration

France

transformative acquisition (Jet Tours)


4* and 5* 64% 63%

Al l inc lusive 36% 34%

Outbound destination castles

Belgium France Netherlands

Antalya 29% 14% 15%Djerba 40% 23% 21%

Monastir 30% 23% 19%

Crete 42% 13% 20%
http://www.neckermann-reisen.de/


21/25

Page 21

Distribution


14%


38%

Retail outlets: 52

In-house flying

Thomas Cook airline

49%

Aircraft:

winter

8 WB

summer

-

AccommodationDifferentiated and exclusive hotels

70%

Thomas Cook North America

Independent destination trends (% of volume)

Mainstream -

partially integrated Drivers of margin performance

Year round profitable volume

Product differentiation (hotel exclusivity)

Group buying power

Continual aircraft utilization improvements

Service excellence and cost leadership

Responsible capacity growth

Strong brands, including TC brand (Jan 2011)

Independent strength, less reliant on mainstream

Mainstream destination trends (% of volume)

Mexico - 40%

Dominican Republic -

21%

Cuba - 25%

USA -

70%

Europe -

10%

Sun destinations -

13%

Note: NB

narrow body; WB

wide body


22/25

Page 22

Thomas Cook Airlines Germany

Condor business model

Sales split by Sold sales (%)

Sold Seats FY09: 5.9m

Aircraft: 25 narrow-body

9 wide-body

Airport bases:

10

Average load factor FY09: 87.1%

Daily block hours/aircraft FY09:

10.8

Summer season weekly flights: >350

S10 destinations: 28 continental

29 intercontinental

Most frequented destinations: Palma de Mallorca

(80 flights per week)Antalya

(60 flights per week)

Operating statistics

20% 32%21%

33%

59%35%

FY04 FY09

Seat only 3P tour operator TC TO

Strong, profitable stand alone airline

Arms length transactions with German TO

Balanced seat sales allow optimum yields

Low cost base, ongoing efficiency programmes(airline synergies)

Concentrated airport hubs (reduced from

22 to 10)

No. 1 leisure carrier in Frankfurt

Peak airport slots


23/25

Financial Overview


24/25

Page 24Page 24

Group financials

7,879

8,754

9,269

FY 07 FY 08 FY 09

244366

4153.1

4.24.5

FY 07 FY 08 FY 09

17.1

24.126.4

9.75 10.75

FY 07 FY 08 FY 09

274294

205

FY 07 FY 08 FY 09

Revenue - m EBIT (m) and margin (%)

progressive dividend policy

payout 40-50% EPS*

EPS*and DPS (p)

Operating cash flow** (m)

30 Sep 2007

394

30 Sep 2008

(292)

30 Sep 2009

(675)

Net cash/(debt) (m)

+9%CAGR

Revenue (m)

+30%CAGR

* pre-exceptional EPS

** Definition: cash generated by operations


25/25

Page 25Page 25

Segment financials

Segment Revenue % Revenue EBIT EBIT

margin

% EBIT **

UK and Ireland,

India and Middle East3,098m

2008: 3,097m

162m

2008: 143m

5.2%

2008: 4.6%

Continental Europe 4,000m

2008: 3,620m

127m

2008: 106m

3.2%

2008: 2.9%

Northern Europe 1,059m

2008: 972m

86m

2008: 86m

8.2%

2008: 8.9%

North America 370m

2008: 384m

18m

2008: 6m

4.8%

2008: 1.6%

Airlines Germany 1,061m

2008: 978m

47m

2008: 45m

4.5%

2008: 4.6%

36.8%

28.8%

19.6%

4.1%

10.7%

33.4%

43.2%

11.4%

4.0%

8.0%*

* The percentage of Group revenue for Airlines Germany has been calculated using the external revenue figure of 741m.

** The contribution to Group has been based on the profit from operations figure of 441m, which excludes corporate costs of 26m.

Introduction to Thomas Cook Group

Documents

Transcript of Introduction to Thomas Cook Group