Slump sees Thomas Cook boss resign

The chief executive of Thomas Cook, has quit the tour operator after a calamitous year in which it has issued three profit warnings.

Click HERE to view graphic (174k jpg)

Manny Fontenla-Novoa – who had been at the helm since June 2007 and with Thomas Cook for 15 years – has stepped down with immediate effect, as the group again blamed a "weak performance" from UK business for a 22 per cent slump in operating profits to £20.1m in the quarter to 30 June.

Thomas Cook said Sam Weihagen, the deputy chief executive, will head the company on an interim basis, while it continues to search for a permanent chief executive.

While Thomas Cook said Mr Fontenla-Novoa's pay-off had not been finalised, it is understood his 12-month contract will be honoured. He was paid a salary of £850,000 last year.

The group – which is currently conducting a strategic review of its UK business – also said that it was taking actions to strengthen its balance sheet, including selling off assets to raise up to £200m. These disposals could include some hotels, office buildings and possibly its shareholding in the air-traffic manager NATS.

Thomas Cook has fared worse recently than its big rival TUI, which runs Thomson Holidays, which Shore Capital's Karl Burns attributed in part to TUI's heavier focus on highermargin, upmarket holidays. Some City analysts were "surprised" that Mr Fontenla-Novoa's departure was unveiled yesterday and not on 12 July when the company warned on lower operating profits of £320m for the year to the end of September.

Thomas Cook tried to put a brave face on its latest results by reaffirming earlier full-year profit guidance and touting the strong performance from the rest of the group – outside the UK – particularly in central and northern Europe. The group's revenues rose by 13 per cent to £2.46bn, boosted by higher selling prices and its acquisition of the Oger tour business in Germany.

But the group said that margins for its UK summer 2011 programme remained below last year and that it was having to discount to shift some holidays. Indeed, little appears to have gone right for Thomas Cook since it blamed "softer" trading in the UK for a group profit warning in August 2010.

In February, the group said its sales would take a £20m hit from the political unrest in Egypt and Tunisia.

As the unrest of the "Arab Spring" spread to countries in the Middle East and the UK struggled, Thomas Cook warned in May that losses had jumped by £36m to £166m in the first half.

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