Thomas Cook to axe 500 jobs as profits fall
Dec 2 2010 Huddersfield Daily Examiner
TRAVEL firm Thomas Cook said it had axed 500 back-office roles in the UK in a bid to recover from a tough year.
The company expects to generate up to £50m of savings after cutting 350 managerial and support staff jobs and leaving 150 vacancies unfilled – as well as renegotiating supplier costs and upgrading IT.
The travel group also revealed plans to revamp its fleet of aircraft in a five-year replacement programme for an undisclosed sum.
Good early-summer weather in the UK, the closure of European airspace in April due to the volcanic ash cloud and the weak pound all contributed to a 34% fall in UK adjusted operating profits to £107.5m in the year to September 30.
Thomas Cook said growth in central Europe and Germany slightly offset the decline in Britain, with group revenues dropping by 5% to £8.9bn in the year. Adjusted, underlying pre-tax profits fell by 6% to £277m.
The group undertook a review earlier this year of its UK workforce, which ranges between 13,000 and 15,000, to help combat uncertain economic conditions in the wake of public spending cuts.
Manny Fontenla-Novoa, Thomas Cook chief executive, said the actions would “simplify and streamline” the UK business, resulting in significant cost savings on an annualised basis.
“I am confident that the actions we have now taken to reinforce the UK business, together with continued progress on our strategic initiatives, leave us well positioned to make progress in the current year,” he added.
The group has also entered into joint ventures at home and abroad in a bid to broaden its customer base, including a move into the Russian market through a partnership with VAO Intourist and a merger of its high street travel business with the Co-op.
The deal with Co-operative Travel and the Midlands Co-Operative will create around 1,300 shops, and the newly-formed company will be the UK’s largest travel agent and second biggest in foreign exchange. But Mr Fontenla-Novoa said there were no plans for further mergers or takeovers.
The group said the volcanic ash cloud resulted in £52.9m of direct exceptional costs to manage the welfare of customers, while the lost margin from not being able to operate its holiday programme was about £29.2m.
