Thomas Cook reviews future of its airline

Thomas Cook reviews future of its airline

The future of Thomas Cook’s airline business is under review as part of chef executive Harriet Green’s turnaround plans for the loss-making group.

The disclosure came in the wake of moves to dispose of unspecified non-core assets to bring in as much as £150 million.

Green yesterday announced an additional £50 million of cost savings, taking the total to £350 million by 2015. This helped lift Cook shares almost 16% to 100.75p.

Part of those savings include £65 million from bringing its four airlines, which have 86 aircraft and employ 6,500 people, into one group.

Green would not rule out the disposal of all or part of the airline business.

“Does Thomas Cook need to have an airline in the future?” she told the Financial Times. “We have options. We are reviewing whether we should continue with the airlines that we have.”

The group had “over-complicated the business” through a series of acquisitions, including airlines, said Green.

“In essence, it is not a complex business that shouldn’t demand huge amounts of debt,” she said.

Green believed the group had become weak in its city break and winter sun offers, and would start to offer new products pitched at women and children.

The restructuring includes the closure of 195 high street agencies, contributing to the loss of 2,500 jobs.

New targets include 50% online sales and an earnings before interest and tax margin of 5%, both by 2015.

Cook earns about one-third of its revenues from online sales and the remainder from its outlets, according to the FT.

The group confirmed that a review of its capital structure could result in a future share placing.

“When that review is complete we will decide on what action we should take, if any, including whether to raise new debt and/or equity capital and the amount and structure of any such capital raising,” the company said.

Wyn Ellis, analyst with Numis, told the newspaper: “We wait to see how it progresses: a lot of hard work needs to be done if it is to succeed with its ‘high-tech, high-touch’ approach.”

James Hollins, analyst at Investec, said: “There is no update on a potential equity issue or refinancing...Current trading is stated to be ‘progressing well’ for the key summer period and the full-year 2013 outlook is ‘encouraging’.”


This is a community-moderated forum.
All post are the individual views of the respective commenter and are not the expressed views of Travel Weekly.
By posting your comments you agree to accept our Terms & Conditions.

More in News