Thomas Cook unveils £328m loss
Beleaguered travel firm Thomas Cook has racked up £300 million of losses after admitting that its brand was hit by its near-collapse last year.
The 170-year-old company said that the negative publicity it suffered after it went to its banks for an additional £200 million of loans to secure its future had weakened sentiment towards it.
But its efforts to stabilise the business were bearing fruit, it said, as various turnaround initiatives will now boost UK profits by £140 million over the next three years, £30 million more than previously thought.
Underlying pre-tax losses rose 41% to £328.3 million in the seasonally quieter six months to the end of March, although these had been signalled in a recent circular to shareholders.
The widening losses reflected difficult conditions in all its markets, particularly in France where bookings to the Middle East and north Africa were hit by the Arab uprisings. Shares were down 10% on Thursday, meaning they have lost nearly 90% of their value in the past year.
But the group said it was pleased that summer bookings in the UK were only 1% down on the previous year, boosted by Olympics packages although margins were under pressure.
Chief executive Sam Weihagen said a recent £1.4 billion deal with lenders to extend the maturity of its loans to 2015, the sale of its Indian business and the sale and leaseback of some of its aircraft provided evidence of its turnaround. From this platform, we can re-energise our business and begin to rebuild profitability, reduce debt and continue to provide a fantastic holiday experience for our customers."
The group recently appointed Harriet Green, the boss of electrocomponents distributor Premier Farnell, as its new chief executive. James Hollins, an analyst at Investec, said he was confident of the group's survival and has maintained his buy rating on the stock.
The group's UK turnaround plans have seen it focus more on independent and exclusive holidays and remove 500 underperforming mainstream hotels - around 22% of its properties - from its summer programme.
This trend was evident in its summer bookings, which saw a 10% rise in specialist and independent holidays, boosted by strong demand for Olympics packages. In addition, it has reduced the number of planes in its fleet by six, which will result in 300 staff leaving the business.