News Column

Travel Thomas Cook shares dip despite reforms

May 16, 2014

Shares in Thomas Cook fell nearly 13% yesterday, just two days after its chief executive Harriet Green was named Veuve Cliquot businesswoman of the year and lauded for a turnaround at the company she joined in 2012.

The company, Europe's second biggest tour operator by revenues, announced a cost-saving plan for the three years after 2015, but some analysts said it did not go as far as they were anticipating and pointed out average holiday prices in Britain for this summer were 3% lower than last year.

The company said it was confident of hitting 2015 targets as cost-savings ticked ahead and helped it weather a slump in bookings for Egypt and the lower British holiday prices.

On Tuesday Green's leadership was praised for providing a "model for years to come and an example of how business can reform".

The world's oldest travel firm launched a turnaround plan in 2012 after two years when the eurozone debt crisis and political turmoil in Egypt and Tunisia left it struggling with its debt load. The shares have gained 21% over the last six months but much of that gain was wiped out yesterday.

Announcing the second stage of the turnaround yesterday, which will cover the three years from 2015, Thomas Cook said it was targeting a profit improvement of over pounds 400m, having identified pounds 150m of savings already.

The first part of the plan, which covers the period to 2015, was ahead of target, Thomas Cook said, adding that it had identified pounds 20m of extra savings, taking its 2015 profit improvement target to pounds 460m.

For its current financial year to the end of September, Thomas Cook said cost savings would help offset the weaker prices in Britain, which it blamed partly on customers opting for holidays of shorter duration.

The FTSE 250 group reported an underlying operating loss of pounds 187m, a 6% improvement on the same period last year, and in line with analyst forecasts, for the six months to 31 March. Reuters

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Source: Guardian (UK)