Thomas Cook chief executive quits

Thomas Cook's chief executive has resigned following a disastrous year for the holiday giant.

Manny Fontenla-Novoa, who took the helm in 2007 after the merger with MyTravel, has presided over three profit warnings in the last year as the firm struggles to turn around its UK business.

It is understood that Mr Fontenla-Novoa accepted responsibility for the poor performance in the UK, resulting in his resignation.

Europe's second largest travel firm said deputy chief executive Sam Weihagen will run the business until a new chief executive is found.

Mr Fontenla-Novoa joined the group in 1996 after it acquired SunWorld, a business he founded and the UK's fourth largest travel operator at the time.

He said today: "Thomas Cook and its people have a sound heritage and I have been proud to have been part of the company."

Thomas Cook's latest profits warning last month showed profits would be some £60 million below expectations, stemming from the turmoil in the Middle East and North Africa, rising fuel prices and the squeeze in UK consumer spending.

The group is in the middle of a strategic review of its UK business as it looks at the mix of holidays it offers and the utilisation of its airline fleet.

Shares have slumped nearly 70% in six months but rallied 4% today as an accompanying statement revealed trading had got no worse since the last warning.

Full year underlying operating profits are still expected to reach the £320 million indicated in the latest warning, while the firm will push ahead with a £200 million asset disposal programme to cut borrowings.

That is likely to include the sale of several hotels and a European office, as well as its stake in the air traffic control service NATS.

The company has seen its debt burden rise to more than £900 million but recently renegotiated its bank facilities with a £200 million loan and £850 million credit facility through to May 2014.

Wyn Ellis, an analyst at broker Numis, said investors should have "few illusions" about how difficult the turnaround is likely to be, with significant near-term risks to trading and lending covenants.

Last week, Thomas Cook secured the go-ahead for plans to merge its 780 UK travel stores with 360 owned by the Co-op and 100 run by the Midlands Co-operative.

It has promised savings of around £35 million a year from the merger, part of the plan to strengthen the competitiveness of the UK business.

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