Job fears as Thomas Cook and Co-op merge travel agencies

Thomas Cook and the Co-operative Group have agreed to merge their high street travel agent and foreign exchange businesses in a deal that is set to lead to "hundreds" of job losses as the combined group seeks to achieve cost savings of £35m a year.

The move will create the UK's biggest high street travel network with more than 1,200 shops – along with 4.3 million customers – and the second-largest provider of retail foreign exchange services.

While no cash will change hands, Thomas Cook will own 70 per cent of the new company with the Co-operative Group, which also has grocery, banking, funeral and pharmacy divisions, holding the remaining shares. Both firms will retain their separate branding, but about 70 of Thomas Cook's Going Places outlets will be rebranded The Co-operative Travel.

At a time when the travel industry is in the doldrums, the group aims to drive through annual savings of £35m through measures including combining headquarters, back office functions and reducing supplier contracts.

The deal increases Thomas Cook's footprint in the North and Midlands, where The Co-operative Travel is stronger, and reaffirms both firms' commitment to the high street. It is the third big deal that the Co-operative Group has completed over the past two years. In 2009, the Co-op acquired the local grocery chain Somerfield and Britannia Building Society.

Manny Fontenla-Novoa, the chief executive of Thomas Cook, stressed the complementary product offer, referring to its "four- to five-star" holidays, and the Co-Op's "three- to 3.5 star" and value products. If the deal gets regulatory clearance in December, the £35m annual savings will be achieved in 2012.

On job cuts, Mr Fontenla-Novoa said: "It is too early to give specific numbers on job cuts as we are awaiting regulatory approval for the merger. However, we do anticipate a limited number of job cuts, mostly as a result of combining headquarters and back-office functions, the consolidation of IT systems and, where there is crossover, some shop closures."

He added there would be "hundreds, not thousands" of job losses among the combined workforce of 9,000.

Both companies estimate the cost of achieving the savings targets at £30m.

Given the plans to consolidate head office operations, Co-op's travel staff at its Manchester headquarters are likely to bear the brunt of the cuts.

But the union Usdaw was largely supportive of the deal as its secures the long-term future of the Co-op's travel business. Usdaw said it will begin consultations with the Co-operative Group over the coming months to secure as many jobs as possible.

Peter Marks, the chief executive of the Co-operative Group, said: "Through our new-found scale we will secure a profitable and successful business together, which will be good for our people and our members." The Co-operative Travel retail business will post an operating profit of just £0.1m for the year 1 January. The Co-operative Group has described 2010 as "the most challenging year for the travel industry", citing the Icelandic volcanic ash cloud disruption among other events.

While Thomas Cook has also been buffeted by conditions, it has fared better and is forecast to deliver operating profit of £12.4m for the year to 30 September. Ian Derbyshire, the current chief executive of Thomas Cook's UK business, will hold the same position at the new company and Mr Fontenla-Novoa will be its chairman.

The merged entity will not include or any of its UK tour-operating businesses. Shares in Thomas Cook closed up 6.1p at 185.7p.

Start your day with The Independent, sign up for daily news emails
Seth Rollins cashes in his Money in the Bank contract to win the WWE World Heavyweight Championship
WWERollins win the WWE World Heavyweight title in one of the greatest WrestleMania's ever seen
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
tvPoldark, TV review
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor