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UPDATE 2-Thomas Cook says more to come after restructuring yields profit
August 1, 2013 / 6:51 AM / in 4 years

UPDATE 2-Thomas Cook says more to come after restructuring yields profit

By Rhys Jones

LONDON, Aug 1 (Reuters) - Thomas Cook made its first third-quarter profit since staving off bankruptcy in 2011 and told investors to expect more from a restructuring that has seen it cut jobs, divest businesses, shut branches and merge its airline operations.

The company has also halved its debt pile in order to help it recover from slumping sales due to the euro zone debt crisis, high fuel costs and social and political turmoil in popular holiday destinations such as Greece and Tunisia.

Earnings before interest and tax (EBIT) were 1 million pounds ($1.52 million) in the three months to July, up from the 45 million pound loss it reported in the same period a year ago, the world’s oldest travel firm said.

“This is just the start ... we look forward to delivering much more,” said Harriet Green, who took over as CEO a year ago.

Green has pledged to boost profits by $500 million by 2015 by streamlining the business and moving more operations online.

The 172-year-old group, saved by an emergency bail-out from its lenders two years ago, is half way through a three-year turnaround plan, which has seen it cut 2,500 jobs and close 195 underperforming outlets in Britain.

Thomas Cook shares rose as much as 5.3 percent to 161.9 pence, their highest level in more than 16 months. By 1020 GMT the stock was up 2 percent.

The company has sold 85 percent of its planned capacity for the summer 2013 season and has 9 percent fewer packages left to sell in the late-bookings market than last year.

Green did warn, however, that that market last year was particularly strong due to bad weather around much of Europe, which is not a factor this year. The group is always profitable in its fourth quarter, following the summer holiday period.

The tour operator said it delivered an additional 31 million pounds of cost cuts during the third quarter, taking the cumulative total for 2012-13 to 138 million. Net debt more than halved to 452 million in the last 12 months, it said.

“Thomas Cook is delivering, and we expect it to continue to do so,” said Jefferies analyst Ian Rennardson. “With a strengthened balance sheet and cost savings on track, with more promised, the company is well on the road to rehabilitation.”

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