A disastrous year for Thomas Cook has been brought to light as the travel company announced that losses increased to £485 million in a period in which the company nearly collapsed and its chief executive resigned.
The company suffered from lower passenger numbers, higher fuel charges and civil unrest at some of its most popular destinations, resulting in 1,250 job losses.
It also made a loss on its sponsorship as the accredited travel operator of the London Olympics – the latest in a long line of businesses to suffer at the hands of the Games.
However new boss Harriet Green, who was enlisted four months ago from electronics company Premier Farnell, said she believed the “unacceptable” losses could be overturned and has revealed savings of £100 million within three years.
She added that nearly 80 per cent of staff in top level positions had left their jobs as she enforced an extensive overhaul of the business, which was forced to break its banking contracts or risk collapse.
Green said: “These results reflect the major issues that Thomas Cook faced last year, but they mask the material improvement that we made in the fourth quarter.
“Last year represents a trough that can only be improved. We need to build a much more effective organisation and that’s why two-thirds of top leaders have changed.”
She also warned Thomas Cook could suffer unless the government brought in a regional plan for the future of the airline industry.
“I believe we need a truly regional strategy in aviation and need to make sure facilities across the country, whether in Bristol, Birmingham, Newcastle or London, are maintained properly”, she added.
Closer to home, the answer to Thomas Cook’s success is shrinking its debt mountain, which fell £108 million to £788 million in the last year.
In May, bosses were forced to ask its investors to extend loans by three years and secured a £1.4 billion refinancing package that jeopardized the 171-year-old company’s future. It followed an emergency £200 million bailout loan last year.
The group’s UK plane fleet decreased by six this year to 35 and 149 high street stores have shut down along with five head office buildings.
Higher hotel and fuel rates hit UK profits by £62 million, while bosses estimate they lost £30 million from bad publicity after the organisation’s near-collapse at a time when several smaller businesses had failed, leaving vacationers stranded abroad.
Hopes of cashing in on the Olympics were also left in ruins, as the company confessed it made a total loss of £17.2 million from a deal that management described as “onerous”.
Thomas Cook sold accommodation and ticket packages exclusively and made a trading profit of £9.6 million on the deals. Yet, the business made a loss after the huge cost of obtaining the licence from organisers.
Nevertheless, Green, who replaced Manny Fontenla-Novoa in July, believes she can turn around the struggling company.
She said: “Thomas Cook is not broken. It is viable and working. It is an iconic brand and we have a lot to do but we are starting a new chapter.”
Green is planning to focus on remodeling the company’s website and looking at cost-cutting measures that could include further job losses. She will announce her overhaul approaches fully in the spring.
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