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Leading travel agency, Thomas Cook, has issued a second profit warning in the space of two months, causing its share price to plummet more than 20%.

The £30m profit warning shows that the operations arm of Thomas Cook was dramatically down by £88m during 2018.

Worries mount over the company’s debt which currently stands at £389m, as the share value continues to tumble.

Thomas Cook attributes the drop in profit to highly discounted holidays being available in the last-minute holiday industry.

The UK summer heatwave also fell in line with the peak booking season for Thomas Cook, with more potential holidaymakers choosing to enjoy the sun at home rather than jet off abroad, having a massive impact on profits.

“However, there do appear to be clearer skies ahead for the travel sector. The Group’s airline business recorded profit growth of £35m and 2019 bookings are up by 11% compared to last year. Additionally, with plans to launch at least 20 new hotels in the New Year, Thomas Cook may well have its route to recovery booked.

Chief Executive for Thomas Cook, Peter Fankhauser, said that the dip in profit was due to a “larger-than anticipated decline in gross margin following the prolonged period of hot weather in our key summer trading period.”

Commenting on the full year results from Thomas Cook, Julie Palmer, partner at RBR Advisory, commented: 

“The results from Thomas Cook only serves to highlight the impact the British summer weather had on the travel sector, with the prolonged heatwave either seeing customer delay overseas holiday bookings, or not take a holiday abroad at all. These times of turbulence, in combination with the rapid increase in oil prices, has led to share prices dropping by 70% in the last 12 months and the travel operator posting an annual loss of £163m.

“However, there do appear to be clearer skies ahead for the travel sector. The Group’s airline business recorded profit growth of £35m and 2019 bookings are up by 11% compared to last year. Additionally, with plans to launch at least 20 new hotels in the New Year, Thomas Cook may well have its route to recovery booked.”

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