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Aviation: Thomas Cook considers selling airlines

United Kingdom-based Thomas Cook Group is exploring options that could include the sale of its airline unit which includes Thomas Cook Airlines, Thomas Cook Airlines Scandinavia and Condor Flugdienst. A sale could help reduce the group's £1.59bn debt and enable it to open more exclusive hotels to strengthen its brand in holiday resorts.

Group CEO Peter Fankhauser said that bookings for summer 2019 - which are currently down 12% - reflect consumer uncertainty, particularly in the UK.

Thomas Cook's airline operations are under review. (Lasse B.)

He admitted that “some customers appear to be putting off bookings because of concerns about Brexit" and explained that there would be a review of the group's airline business. Fankhauser continued: "We are at an early stage in this process which will consider all options to enhance value to shareholders and intensify our strategic focus."

Profitable airline - loss-making tour operator

Profit at the three carriers, which operate 103 aircraft, increased by 37% to £ 129m in 2018 - around £6 per passenger. Together they generated revenue of £3.5bn and carried 20m customers. Around half of the airline unit's capacity is used by Thomas Cook's tour operator business for package holidays, while the rest is sold direct on a seat-only basis. The three airlines have significant slot holdings at London Gatwick and Manchester airports in the UK, as well as Frankfurt and Munich in Germany.

Although the airlines trading position is positive and improving, overall group losses widened by £14m to £60m in the first quarter of the year despite revenue increasing by 1% to £1.65bn. Thomas Cook's package holidays business is operating in a challenging market and it needs to upgrade properties to compete with rivals such as TUI and Jet2 Holidays. The firm needs to fund an expansion of its own-brand hotels portfolio, which will add 20 properties this summer.