Greg Wright: Reports of the death of the package holiday have been exaggerated

Library image of Jet2.com's base at Leeds Bradford airport.
Library image of Jet2.com's base at Leeds Bradford airport.
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LIKE the demise of a head of state, the collapse of a corporate giant can create opportunities for rivals who covet its crown.

Nobody took any pleasure from the collapse of Thomas Cook, which had been a fixture in the business world since the days of the great Railway Mania.

But its sudden exit has left thousands of customers seeking a company to look after their holiday needs.

The Leeds-based Dart Group, the owner of airline and tour operator Jet2, raised its profit guidance on Friday as it reported an increase in demand following Thomas Cook’s collapse. Investors loved the update. Dart’s shares soared.

Dart, which runs Britain’s third-biggest airline in terms of passenger numbers behind easyJet and British Airways, said it will continue to assess the impact that Thomas Cook’s collapse will have on its business in the coming months.

“Dart’s integrated business model has been well proved and we see the company being a LT (leisure travel) industry winner,” Stifel analysts said. “The next couple of years could prove to be a landmark period for the group.”

European tourism group TUI said last month it was assessing the impact of Thomas Cook’s collapse but stuck to its full-year forecast.

TUI said it would boost its travel portfolio for German tourists and attract 500,000 new German customers next year, as it is offering partnerships to travel agencies affiliated to insolvent Thomas Cook.

However, Dart, a canny Yorkshire company, is not getting carried away. Like its peers, Dart has flagged headwinds due to rising costs related to fuel, carbon and other operating charges.

Russ Mould, investment director at AJ Bell: said: “Dart was always a likely beneficiary 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.

“In particular, Jet2 was well placed to strengthen its market leading positions on the Iberian Peninsula given that the region represented a third of Thomas Cook’s capacity.

“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. Perhaps unsurprisingly management are cautious on the outlook. It is notable they even go so far as being ‘very cautious’.

“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.”

Analysts from Langton Capital, the financial advisory company, described Dart’s statement as a realistic update.

In a note, it added: “Dart is making hay while the sun shines but the longer term outlook is perhaps clouded.

“Tui has responded to the collapse of Thomas Cook by upping its capacity for summer 2020 by 2m seats.”

Langton Capital said there is more evidence that capacity does not disappear from the tour operating market for long. There is no sign that the traditional package holiday will suffer the same fate as Thomas Cook. Firms with a relentless focus on customer service will continue to outperform the market, even in the face of unexpected economic headwinds.