Thomas Cook cuts staff and writes off £580m
Thursday 15 December 2011
Thomas Cook wrote off more than half a billion pounds yesterday and unveiled plans to shut up to 200 shops at a likely cost of 660 jobs.
The stand-in chief executive Sam Weihagen also conceded that its arch-rival Tui Travel, the owner of Thomson Holidays, had outmanoeuvred its chief competition.
Asked why Tui is in better shape, Mr Weihagen replied: "I think they have a model that is functioning better. Their organisation is not as complex as ours. They got the capacity right. All of these things we are addressing."
The turnaround plan unveiled yesterday includes measures to sell planes and underperforming hotels, increase margins by dropping "unnecessary discounting" and seek other cost cuts across the business.
These moves were overshadowed by the results for the year to September, which show a company in serious jeopardy. The write-offs and impairment charges total £573m, plunging Thomas Cook into a £398m loss. Debts now stand at £891m, lower than two weeks ago thanks to the sale on Monday of some Spanish hotels.
The group sells more than 22 million holidays a year in the UK. It delayed its results last month as it revealed it had gone back to its lenders to ask for an additional £100m lifeline. Cook also plans to boost its online offer. The statement said: "We expect to see the current 25 per cent share of total UK online bookings increase to between 40 per cent and 50 per cent over time."
Nick Batram at Peel Hunt said: "The results came in below our expectations and the extent of the deterioration in the UK reflects the structural issues faced by the group. The £573m exceptional charge was higher than we expected at this stage but there is perhaps more to come. There is a turnaround plan for the UK but the market backdrop remains poor and the risks high and we would continue to avoid the shares."
Mr Weihagen conceded it has been a "very challenging year for the group". He said customers remain "supportive" despite attempts by Tui to gain advantage from its rival's strife. He can take some comfort in a 10 per cent rise in sales to £9.8bn, which suggests the package holiday is far from dead.
Not everyone in the City is convinced that Tui is immune to the problems affecting Thomas Cook.
One fund manager, who has a short position on Tui shares, said: "While they may be able to convince punters in the short term that they are better than Thomas Cook and benefit from a short-term bounce in revenues, the same structural issues that Thomas Cook have experienced will, despite a reputation for great management, come back to haunt Tui."
- 1 Forget 'The Dress': Here are five of the biggest news stories you might have missed
- 2 The black and blue dress: Makers considering a white and gold version
- 3 PornHub turns masturbation into energy in bid to save the planet
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 Saudi Muslim cleric claims the Earth is 'stationary' and the sun rotates around it
British are sexually uptight, dirty and drink too much – according to Spanish book
PornHub turns masturbation into energy in bid to save the planet
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
White and gold or blue and black – what colour is the dress? An eyewitness gives a definitive answer
Saudi Muslim cleric claims the Earth is 'stationary' and the sun rotates around it
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...