Losses down, share price down: are Thomas Cook investors being unfair on Harriet Green?

The turnaround titan's cost-cutting plan is on track, but revenues have fallen as tourists avoid Egypt like the biblical plague.

by Rachel Savage
Last Updated: 08 Mar 2016

- Read MT's interview with Thomas Cook's Harriet Green

Thomas Cook chief exec Harriet Green has done a pretty impressive job turning around the 173-year-old travel company since she took up the controls in August 2012, especially as it almost went bankrupt in 2011. However, rescuing a business from imminent demise and making it profitable are two very different things.

The tour operator reported revenues fell £213m to just over £3bn for the six months to 31 March, 6.6% lower than the same period last year. Tourists scared off by political unrest in Egypt hit sales by £131m and cut profits by £14m, as 250,000 fewer travelled to sun themselves in the Sahara.

However, Green succeeded in bringing down pre-tax losses by 7.1% to £366m, from £394m last year. Her radical cost-cutting plan was also £20m ahead of plan, prompting the company to raise its target to £460m of savings by the end of its 2015 financial year. Green, who told MT sleep is ‘over-rated’, is also aiming to slash another £400m from costs by 2018.

Online bookings are also on the rise at the travel company, up 39% compared to last year. Web bookings now account for £3bn of Thomas Cook’s annual sales, while mobile and tablet reservations bring in £0.5bn.

However, investors weren’t impressed by the company’s falling revenues, sending shares down almost 6% to 168p in mid-morning trading. To put that in perspective, Green, who won the Veuve Clicquot business woman of the year award this week, has overseen a rise of more than 900% in the business’ value since she took over and a 23% climb in the past year.

Nonetheless, as Investec analyst James Hollins put it, ‘the pressure is on’.

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