Travel agent Thomas Cook has faced an uphill battle during the past two years, with a lack of disposable income and desire to save causing consumers to cut back on their foreign holidays. As such, the chain was forced to post a string of losses which, had they continued, could have spelled the end for the world’s oldest travel firm.
Fortunately, thanks to the end of the recession and a heightening of consumer confidence, this dry spell appears to have come to an end. Thomas Cook is now back in the black for the first time in two years, having posted a third quarter operating profit of £1 million.
While this may seem like a very small achievement, it becomes hugely respectable when last year’s third quarter loss of £45 million is taken into account.
At present, the firm has sold around 85 per cent of holiday capacity for the current summer 2013 season, a factor which has been improved by a reduction of 3 per cent in UK capacity. There are also 9 per cent fewer late-booking packages than at this point last year.
Chief executive Harriet Green believes the success of the firm’s restructuring programme has played a huge part in bringing Thomas Cook back to prosperity.
She says; “The success of our recent GBP1.6 billion capital refinancing has enabled yet more focus on the transformation, which continues apace.
“Since the announcement of our half year results 11 weeks ago, we have again delivered improved operating results, stronger margins, further cost out benefits, improved cash conversion and a number of exciting new web and other product developments.
“However, this is just the start – we see huge potential in Thomas Cook and its realisation remains our overriding priority.”
The 172 year old firm has certainly pulled out all the stops to ensure the transformation programme proves to be a success. Now at the halfway point of the three year initiative, 195 underperforming commercial properties have been closed so far, translating to the loss of around 2,500 jobs.
In place of these commercial outlets, Thomas Cook has channelled much of its energy and funding into raising its digital presence in order to draw in e-consumers. A recent Greenlight report named thomascook.com as the “most visible holiday website on Google UK”, indicating that the digital aspect of the turnaround strategy is proving to be highly successful.
With the company also managing to have halved its considerable debts in only a year, it seems that the sun is certainly shining on Thomas Cook. However, with political unrest in Egypt and the ongoing issues blighting the Eurozone, it would be premature to claim that the holiday firm is out of the woods yet.
Do you feel more comfortable booking a foreign holiday in the current economic climate than you would have at this point last year, or do you think the London Olympics were the primary reason for Thomas Cook’s substantial losses last summer?
Previous Post
Government to Propose Shops to Homes Plan
