Thomas Cook books a profit for first time in two years

'Transformation' of long-troubled tour operator has begun, analyst says
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Thomas Cook showed further signs that it was putting its financial woes behind it yesterday as it swung back into the black for the first time in two years.

The chief executive Harriet Green, who was appointed to rescue the ailing tour operator exactly a year ago, called the slender third-quarter operating profit of £1m a "milestone" but admitted there was a "long way to go".

The 172-year-old travel agent faced crisis in the autumn of 2011 as a weak economy, floods in Thailand and civil unrest in Egypt forced it to raise emergency funding from banks.

But yesterday's trading update cheered the City. The firm said it had sold 85 per cent of its holidays and has 9 per cent fewer left to sell than it did at this time last year.

In the UK, where sales are flat year on year, Thomas Cook has reduced its capacity by 3 per cent and prices are 5 per cent ahead of last year. The company's shares, which hit a low of 10p in 2011, rose by nearly 4 per cent or 6.1p to 159.7p.

Ms Green said it was "too early" to assess the impact of the recent heatwave on bookings, although she said slower bookings in hot weather was "normal". "In our experience good weather delays decisions rather than deterring them," she added.

Recent turmoil in Egypt and protests in Turkey are "not currently having a significant impact" on the group, although Thomas Cook scaled back the number of its Egyptian holiday packages after the original protests which toppled President Hosni Mubarak more than two years ago.

The chief executive, who also steered through a £1.6bn refinancing of the company's debts in May, now appears to be sorting out the balance sheet. Its net debt more than halved from £1.1bn to £452m at the end of June. Ms Green said yesterday she had identified another £10m of cost savings, lifting the overall target to £400m by 2015.

Karl Burns, an analyst at Panmure Gordon, said: "We believe Thomas Cook is at the beginning of its transformation project and the confidence displayed by the management team leads us to believe that there remains much more cost to be removed from the group.

"We believe there is scope for potential dividends in 2014."